Document:

Exhibit 10.1

 

EXECUTION VERSION

 

 

 

STOCK PURCHASE AGREEMENT

 

dated as of July 26, 2013

 

by and among

 

Rockwood Specialties Group, Inc.,

 

BYK Chemie GmbH

 

and

 

Altana AG, as Guarantor

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I            PURCHASE AND SALE OF SHARES
    	
1
    
	
 
    	
 
    	
 
    
	
1.1
    	
Purchase and Sale
    	
1
    
	
 
    	
 
    	
 
    
	
1.2
    	
Purchase Price and Payment
    	
1
    
	
 
    	
 
    	
 
    
	
1.3
    	
Closing
    	
1
    
	
 
    	
 
    	
 
    
	
1.4
    	
Deliveries at the Closing
    	
2
    
	
 
    	
 
    	
 
    
	
1.5
    	
Closing Working Capital Adjustment
    	
4
    
	
 
    	
 
    	
 
    
	
1.6
    	
Withholding
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE II           REPRESENTATIONS AND WARRANTIES OF   PARENT
    	
7
    
	
 
    	
 
    	
 
    
	
2.1
    	
Organization and Good Standing
    	
8
    
	
 
    	
 
    	
 
    
	
2.2
    	
Capitalization
    	
8
    
	
 
    	
 
    	
 
    
	
2.3
    	
Authority, Approvals and Consents
    	
9
    
	
 
    	
 
    	
 
    
	
2.4
    	
Financial Statements
    	
10
    
	
 
    	
 
    	
 
    
	
2.5
    	
Absence of Undisclosed Liabilities; Indebtedness
    	
11
    
	
 
    	
 
    	
 
    
	
2.6
    	
Absence of Certain Changes or Events
    	
11
    
	
 
    	
 
    	
 
    
	
2.7
    	
Taxes
    	
12
    
	
 
    	
 
    	
 
    
	
2.8
    	
Legal Matters
    	
14
    
	
 
    	
 
    	
 
    
	
2.9
    	
Property
    	
14
    
	
 
    	
 
    	
 
    
	
2.10
    	
Material Contracts
    	
16
    
	
 
    	
 
    	
 
    
	
2.11
    	
Labor Matters
    	
18
    
	
 
    	
 
    	
 
    
	
2.12
    	
Employee Benefits
    	
19
    
	
 
    	
 
    	
 
    
	
2.13
    	
Transactions with Affiliates; Enterprise Agreements
    	
22
    
	
 
    	
 
    	
 
    
	
2.14
    	
Environmental Matters
    	
22
    
	
 
    	
 
    	
 
    
	
2.15
    	
Intellectual Property
    	
23
    
	
 
    	
 
    	
 
    
	
2.16
    	
Permits
    	
24
    

 

 

	
2.17
    	
Insurance
    	
25
    
	
 
    	
 
    	
 
    
	
2.18
    	
Customers and Suppliers
    	
25
    
	
 
    	
 
    	
 
    
	
2.19
    	
Compliance with Foreign Corrupt Practices Act
    	
25
    
	
 
    	
 
    	
 
    
	
2.20
    	
Brokers
    	
25
    
	
 
    	
 
    	
 
    
	
2.21
    	
Product Liabilities
    	
25
    
	
 
    	
 
    	
 
    
	
2.22
    	
NO OTHER REPRESENTATIONS OR WARRANTIES
    	
26
    
	
 
    	
 
    	
 
    
	
ARTICLE III          REPRESENTATIONS AND WARRANTIES OF   BUYER
    	
27
    
	
 
    	
 
    	
 
    
	
3.1
    	
Incorporation of Buyer
    	
27
    
	
 
    	
 
    	
 
    
	
3.2
    	
Power; Authorization; Consents
    	
27
    
	
 
    	
 
    	
 
    
	
3.3
    	
Litigation
    	
28
    
	
 
    	
 
    	
 
    
	
3.4
    	
Brokers
    	
28
    
	
 
    	
 
    	
 
    
	
3.5
    	
Investment Intent of Buyer
    	
28
    
	
 
    	
 
    	
 
    
	
3.6
    	
Cash Resources
    	
28
    
	
 
    	
 
    	
 
    
	
ARTICLE IV          COVENANTS
    	
28
    
	
 
    	
 
    	
 
    
	
4.1
    	
Access; Confidentiality
    	
28
    
	
 
    	
 
    	
 
    
	
4.2
    	
Announcements
    	
29
    
	
 
    	
 
    	
 
    
	
4.3
    	
Conduct of Business Prior to the Closing
    	
30
    
	
 
    	
 
    	
 
    
	
4.4
    	
Consents; Cooperation
    	
33
    
	
 
    	
 
    	
 
    
	
4.5
    	
Competition Filings
    	
33
    
	
 
    	
 
    	
 
    
	
4.6
    	
Use of Name
    	
35
    
	
 
    	
 
    	
 
    
	
4.7
    	
Notification of Certain Matters
    	
35
    
	
 
    	
 
    	
 
    
	
4.8
    	
Retention of Books and Records
    	
36
    
	
 
    	
 
    	
 
    
	
4.9
    	
Permits
    	
36
    
	
 
    	
 
    	
 
    
	
4.10
    	
Intercompany Agreements
    	
36
    
	
 
    	
 
    	
 
    
	
4.11
    	
Indebtedness
    	
37
    

 

ii

 

	
4.12
    	
Guarantees
    	
37
    
	
 
    	
 
    	
 
    
	
4.13
    	
Title Insurance
    	
37
    
	
 
    	
 
    	
 
    
	
4.14
    	
Restructurings
    	
38
    
	
 
    	
 
    	
 
    
	
4.15
    	
Restrictive Covenants
    	
38
    
	
 
    	
 
    	
 
    
	
4.16
    	
Cooperation in Litigation
    	
39
    
	
 
    	
 
    	
 
    
	
4.17
    	
Assistance Obligations of Buyer
    	
39
    
	
 
    	
 
    	
 
    
	
4.18
    	
Further Assurances
    	
40
    
	
 
    	
 
    	
 
    
	
4.19
    	
Insurance
    	
40
    
	
 
    	
 
    	
 
    
	
4.20
    	
Privileged Matters; Waiver of Conflicts
    	
40
    
	
 
    	
 
    	
 
    
	
4.21
    	
Post-Closing Confidentiality
    	
41
    
	
 
    	
 
    	
 
    
	
4.22
    	
Enterprise Agreements
    	
41
    
	
 
    	
 
    	
 
    
	
4.23
    	
Parent Release
    	
42
    
	
 
    	
 
    	
 
    
	
4.24
    	
ECC America Agreement
    	
43
    
	
 
    	
 
    	
 
    
	
4.25
    	
UK Pensions
    	
43
    
	
 
    	
 
    	
 
    
	
4.26
    	
Post-Closing Asset Transfers
    	
43
    
	
 
    	
 
    	
 
    
	
ARTICLE V           CONDITIONS TO THE OBLIGATIONS OF   BUYER
    	
44
    
	
 
    	
 
    	
 
    
	
5.1
    	
Representations and Warranties; Covenants
    	
44
    
	
 
    	
 
    	
 
    
	
5.2
    	
Competition Law Clearances
    	
44
    
	
 
    	
 
    	
 
    
	
5.3
    	
No Injunctions or Restraints
    	
44
    
	
 
    	
 
    	
 
    
	
5.4
    	
Material Adverse Effect
    	
44
    
	
 
    	
 
    	
 
    
	
5.5
    	
Restructurings
    	
44
    
	
 
    	
 
    	
 
    
	
5.6
    	
Closing Deliveries
    	
44
    
	
 
    	
 
    	
 
    
	
ARTICLE VI          CONDITIONS TO THE OBLIGATIONS OF   PARENT
    	
45
    
	
 
    	
 
    	
 
    
	
6.1
    	
Representations and Warranties; Covenants
    	
45
    
	
 
    	
 
    	
 
    
	
6.2
    	
Competition Law Clearances
    	
45
    

 

iii

 

	
6.3
    	
No Injunctions or Restraints
    	
45
    
	
 
    	
 
    	
 
    
	
6.4
    	
Restructurings
    	
45
    
	
 
    	
 
    	
 
    
	
6.5
    	
Closing Deliveries
    	
45
    
	
 
    	
 
    	
 
    
	
ARTICLE VII        TERMINATION
    	
45
    
	
 
    	
 
    	
 
    
	
7.1
    	
Termination
    	
45
    
	
 
    	
 
    	
 
    
	
7.2
    	
Effect of Termination
    	
46
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII       SURVIVAL AND INDEMNIFICATION
    	
46
    
	
 
    	
 
    	
 
    
	
8.1
    	
Survival
    	
46
    
	
 
    	
 
    	
 
    
	
8.2
    	
Indemnification Obligations of Parent
    	
47
    
	
 
    	
 
    	
 
    
	
8.3
    	
Indemnification Obligations of Buyer
    	
48
    
	
 
    	
 
    	
 
    
	
8.4
    	
Limitations on Indemnification
    	
48
    
	
 
    	
 
    	
 
    
	
8.5
    	
Mitigation and Recovery from Third Persons
    	
51
    
	
 
    	
 
    	
 
    
	
8.6
    	
Procedure
    	
51
    
	
 
    	
 
    	
 
    
	
8.7
    	
Further Limitations on Indemnification
    	
52
    
	
 
    	
 
    	
 
    
	
8.8
    	
Tax Treatment of Payments
    	
53
    
	
 
    	
 
    	
 
    
	
ARTICLE IX         TAX AND EMPLOYEE MATTERS
    	
53
    
	
 
    	
 
    	
 
    
	
9.1
    	
Certain Tax Matters
    	
53
    
	
 
    	
 
    	
 
    
	
9.2
    	
Certain VAT Matters
    	
58
    
	
 
    	
 
    	
 
    
	
9.3
    	
U.S. Employee Matters
    	
59
    
	
 
    	
 
    	
 
    
	
9.4
    	
Non-U.S. Employee Benefit Plan Matters
    	
62
    
	
 
    	
 
    	
 
    
	
ARTICLE X           MISCELLANEOUS
    	
62
    
	
 
    	
 
    	
 
    
	
10.1
    	
Expenses
    	
62
    
	
 
    	
 
    	
 
    
	
10.2
    	
Headings
    	
63
    
	
 
    	
 
    	
 
    
	
10.3
    	
Notices
    	
63
    
	
 
    	
 
    	
 
    
	
10.4
    	
Assignment
    	
64
    

 

iv

 

	
10.5
    	
Entire Agreement
    	
64
    
	
 
    	
 
    	
 
    
	
10.6
    	
Amendment; Waiver
    	
64
    
	
 
    	
 
    	
 
    
	
10.7
    	
Counterparts
    	
65
    
	
 
    	
 
    	
 
    
	
10.8
    	
Governing Law; Consent to Jurisdiction; Waiver of Jury   Trial
    	
65
    
	
 
    	
 
    	
 
    
	
10.9
    	
Specific Performance
    	
65
    
	
 
    	
 
    	
 
    
	
10.10
    	
Interpretation; Absence of Presumption
    	
65
    
	
 
    	
 
    	
 
    
	
10.11
    	
Third Person Beneficiaries
    	
66
    
	
 
    	
 
    	
 
    
	
10.12
    	
Representations and Warranties; Schedules
    	
66
    
	
 
    	
 
    	
 
    
	
10.13
    	
Severability
    	
67
    
	
 
    	
 
    	
 
    
	
10.14
    	
Guaranty
    	
67
    

 

 

EXHIBITS

 

Exhibit A                Certain Definitions

Exhibit B                List of Companies

Exhibit C                Allocation of Purchase Price

Exhibit D                Form of Transition Services Agreement

 

v

 

STOCK PURCHASE AGREEMENT

 

THIS AGREEMENT (this “Agreement”) is made as of July 26, 2013, by and among Rockwood Specialties Group, Inc., a Delaware corporation (“Parent”), BYK Chemie GmbH, a company with limited liability organized under the laws of Germany (“Buyer”), and Altana AG, a corporation organized under the laws of Germany (“Guarantor”).  Capitalized terms not otherwise defined in this Agreement are used as defined in Exhibit A.

 

Buyer desires to purchase and Parent desires to sell, or cause to be sold, all of the issued and outstanding shares of capital stock or other equity interests in the Entities listed on Exhibit B (collectively, the “Companies”), on the terms and subject to the conditions set forth herein.

 

Accordingly, in consideration of the premises and mutual representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

 

ARTICLE I

 

PURCHASE AND SALE OF SHARES

 

1.1          Purchase and Sale.  Upon the terms and subject to the conditions set forth in this Agreement, and for the consideration set forth in Section 1.2, Parent will sell (and will cause the other Sellers to sell) to Buyer at the Closing, and Buyer will purchase from Parent and the other Sellers at the Closing, all of the Shares, free and clear of any Encumbrances.

 

1.2          Purchase Price and Payment.  The aggregate consideration for the Shares shall be U.S.$635.0 million, increased or decreased, as applicable, on a dollar-for-dollar basis by (i) the amount by which Closing Working Capital is more than U.S.$46.0 million or less than U.S.$46.0 million and (ii) the amount by which the Retained Cash Balances are more than U.S.$5.0 million or less than U.S.$5.0 million and decreased by (x) the amount of the Transferred Company Indebtedness, if any, and (y) the Capex Shortfall, if any (the “Purchase Price”).  The Purchase Price will be allocated among the Shares in accordance with Exhibit C. .

 

1.3          Closing.  The closing of the transactions contemplated hereunder (the “Closing”) will take place at the New York offices of Hughes Hubbard & Reed LLP, at 10:00 a.m., Eastern Time, (i) on the tenth (10th) Business Day after the satisfaction or written waiver of the last of the conditions required to be satisfied or waived in writing pursuant to Articles V and VI (other than those requiring the delivery of a certificate or other document or the taking of other action at the Closing, and subject to the satisfaction or written waiver of such conditions) or (ii) at such other time, on such other date and such other place as may be mutually agreed in writing by Buyer and Parent; provided, however, that the Closing shall not occur on any date prior to October 1, 2013.  The date on which the Closing occurs is referred to herein as the “Closing Date.”  The Closing shall be deemed to be effective between the parties as of 12:01 a.m. (Eastern Time) on the Closing Date.

 

 

1.4          Deliveries at the Closing.  Subject to the provisions of Article V and Article VI, at the Closing:

 

(a)           Parent shall deliver, or cause the other Sellers to deliver, to Buyer:

 

(i)            stock certificates representing all of the Shares of Newco, accompanied by stock powers duly executed in blank, in proper form for transfer of such Shares from Parent to Buyer;

 

(ii)           (1) share certificates (or customary indemnities in respect of any such share certificates that are lost) representing all of the U.K. Shares, accompanied by stock transfers duly executed by RSL in favor of Buyer in respect of the U.K. Shares, and (2) an irrevocable power of attorney duly executed by RSL in favor of Buyer, for the purpose of exercising the rights attached to the U.K. Shares and securing the interest of Buyer in the U.K. Shares during the period between the Closing and the registration of Buyer as the holder of the U.K. Shares in the U.K. Company’s register of members;

 

(iii)          an executed version of a notarial share transfer and assignment agreement (Anteilsübertragungs- und Abtretungsvertrag) effecting the transfer of all the Shares in Rockwood Clay Additives from RSGG to Buyer and an irrevocable power of attorney duly executed by RSGG in favor of Buyer, for the purpose of exercising the rights attached to the Shares in Rockwood Clay Additives and securing the interest of Buyer in such Shares during the period between the Closing and the point in time when Buyer is deemed to be the holder of the Shares pursuant to Sec. 16 Para. 1 Sentence 1 of the German limited liability company act (GmbHG);

 

(iv)          public deeds by virtue of which Buyer has acquired ownership title in respect of all of the Shares of Rockwood Spain, and the shareholders’ registry book (libro registro de socios) of Rockwood Spain updated in respect of the sale and purchase of such Shares by Buyer from Parent;

 

(v)           the written resignations of each director, officer and company secretary of the Transferred Companies as set forth in Schedule 1.4(a)(v) of the Disclosure Letter, such resignations to take effect subject to and as of the Closing;

 

(vi)          except as Buyer may otherwise specify to Parent in writing not later than three (3) Business Days prior to the Closing, the written resignation of the auditors of the U.K. Company, such resignation to take effect subject to and as of the Closing;

 

(vii)         a Transition Services Agreement substantially in the form of Exhibit D (the “Transition Services Agreement”), duly executed by Parent;

 

(viii)        copies of resolutions adopted by the board of directors of Parent and of Rockwood, certified as of the Closing Date by the Secretary or an Assistant Secretary of Parent and of Rockwood, as applicable, approving the execution and delivery of this Agreement by Parent, and the Ancillary Documents to be executed and delivered by Parent and the performance by Parent of its obligations hereunder and thereunder;

 

2

 

(ix)          copies of resolutions adopted by the board of directors (or comparable governing bodies) of each Seller (other than Parent), certified as of the Closing Date by the Secretary or an Assistant Secretary (or comparable officers) of such Seller, approving the sale of all of the Shares held by such Seller pursuant to the terms of this Agreement and the execution and delivery of the Ancillary Documents to be executed and delivered by such Seller and the performance by such Seller of its obligations thereunder;

 

(x)           copies of resolutions adopted by the board of directors of the U.K. Company approving, subject only to the consummation of the Closing, the following: (1) the registration of each of the transfers relating to the U.K. Shares, subject only to the receipt of the relevant stock transfer forms duly stamped;  (2) the resignations (if any) of the existing directors and secretary referred to in Section 1.4(a)(v);  (3) any changes in the situation of the registered office, the accounting reference date and instructions to banks as Buyer may reasonably specify; and (4) the resignation of the auditors referred to in Section 1.4(a)(vi) above;

 

(xi)          U.C.C. termination statements and/or other appropriate releases, in form and substance reasonably satisfactory to Buyer, with respect to any recorded Security Interests on any Business Assets, other than Permitted Encumbrances;

 

(xii)         a certificate to the effect that Parent is not a “foreign person” in form and substance required by Treasury Regulation Section 1.1445-2(b)(2) so that Buyer is exempt from withholding any portion of the Purchase Price thereunder;

 

(xiii)        the certificate required to be delivered by Parent pursuant to Section 1.5(b).

 

(xiv)        the certificate required to be delivered by Parent pursuant to Section 5.1;

 

(xv)         the certificate required to be delivered by Parent pursuant to Section 5.4;

 

(xvi)        a good standing certificate with respect to each of the Transferred Companies organized and existing within the United States, certified by the Secretary of State or equivalent person of the state or jurisdiction of incorporation, as of a date not more than three (3) Business Days prior to the Closing Date;

 

(xvii)       documentary evidence of the termination of the agreements and arrangements contemplated by Section 4.10; and

 

(xviii)      notarized copies of (A) the shareholder resolution(s) resolving the amendment of the fiscal year of Rockwood Clay Additives to a short fiscal year (Rumpfgeschaeftsjahr) ending on September 30, 2013 and the termination of the Enterprise Agreement with effect as of September 30, 2013; (B) an excerpt from the commercial register confirming the amendment of the fiscal year of Rockwood Clay Additives to a short fiscal year (Rumpfgeschaeftsjahr) ending on September 30, 2013; (C) the shareholder resolution of the shareholder of Rockwood Clay Additives shareholder resolving the termination of the Enterprise

 

3

 

Agreement with effect as of September 30,2013 and (D) the application filed with the competent commercial register regarding the termination of the Enterprise Agreement.

 

(b)           Buyer shall deliver, or cause to be delivered, to Parent:

 

(i)            the Estimated Purchase Price in immediately available funds by wire transfer to the following bank account set forth on Schedule 1.4(b)(i) of the Disclosure Letter;

 

(ii)           the Transition Services Agreement, duly executed by Buyer;

 

(iii)          copies of resolutions adopted by the sole shareholder of Buyer, certified as of the Closing Date by the General Counsel of the sole shareholder of Buyer, approving the execution and delivery of this Agreement and the Ancillary Documents to be executed and delivered by Buyer and the performance by Buyer of its obligations hereunder and thereunder;

 

(iv)          the certificate required to be delivered by Buyer pursuant to Section 6.1.

 

(c)           At the request of Buyer or Parent, Buyer and Parent shall enter into, and shall cause their applicable Affiliates to execute one or more additional agreements, instruments and documents in such form reasonably agreed by Buyer and Parent (a “Local Share Transfer Agreement”), in order to effectuate the transfer of the Shares of one or more Companies in a particular jurisdiction.

 

1.5          Closing Working Capital Adjustment.

 

(a)           At least five (5) Business Days prior to the Closing Date, Parent shall prepare and deliver to Buyer, or shall cause to be prepared and delivered to Buyer, a statement (the “Estimated Closing Statement”) setting forth its good faith estimate of Closing Working Capital, Retained Cash Balances, Capex Shortfall, and Transferred Company Indebtedness, determined in accordance with the definitions of Closing Working Capital, Retained Cash Balances, Capex Shortfall, Transferred Company Indebtedness and, except as set forth on Schedule 2.4(a) of the Disclosure Letter, GAAP applied on a basis consistent with the application of such principles in the preparation of the Balance Sheet; provided that the Retained Cash Balances and Transferred Company Indebtedness included in the Estimated Closing Statement shall not include any Retained Cash Balances or Transferred Company Indebtedness arising under any Enterprise Agreements, which amount, if any, shall be included in the final determination of the Retained Cash Balances and Transferred Company Indebtedness.

 

(b)           The Purchase Price payable on the Closing Date shall be calculated in accordance with Section 1.2 as if Parent’s estimate of Closing Working Capital, Retained Cash Balances and Transferred Company Indebtedness set forth in the Estimated Closing Statement was the actual amount of Closing Working Capital, Retained Cash Balances and Transferred Company Indebtedness.  The Purchase Price as so estimated is referred to as the

 

4

 

“Estimated Purchase Price.” The Estimated Closing Statement shall be accompanied by a certificate executed by a senior financial officer of Parent to the effect that the Estimated Closing Statement has been prepared in good faith in accordance with this Section 1.5.

 

(c)           On or prior to the date that is ninety (90) days following the Closing Date, Buyer shall prepare and deliver to Parent a statement (the “Final Closing Statement”) setting forth in reasonable detail its calculation of Closing Working Capital, Retained Cash Balances and Transferred Company Indebtedness, determined in accordance with the definitions of Closing Working Capital, Retained Cash Balances and Transferred Company Indebtedness, and GAAP applied on a basis consistent with the application of such principles in the preparation of the Balance Sheet.  The Final Closing Statement shall be accompanied by a certificate executed by a senior financial officer of Buyer to the effect that the Final Closing Statement has been prepared in good faith in accordance with this Section 1.5(c).  The Final Closing Statement shall also set forth, and explain, in reasonable detail, any differences between Buyer’s calculation of Closing Working Capital, Retained Cash Balances and Transferred Company Indebtedness from Parent’s estimate of Closing Working Capital, Retained Cash Balances and Transferred Company Indebtedness set forth in the Estimated Closing Statement.

 

(d)           Buyer shall make available to Parent all workpapers and other books and records utilized by Buyer in the preparation of the Final Closing Statement, and shall make available to Parent those employees and representatives involved in the preparation of the Final Closing Statement.  If Buyer employs a firm of independent accountants in connection with the preparation of the Final Closing Statement, subject to the execution by Parent of a customary non-reliance letter, Buyer shall cause such independent accountants to deliver to Parent and its representatives any computations and workpapers used in the preparation of the Final Closing Statement.  Parent shall notify Buyer in writing within forty-five (45) days after Parent’s receipt of the Final Closing Statement that it accepts the Final Closing Statement or that there is a dispute (a “Dispute Notice”) as to any item reflected thereon (the “Disputed Items”).  The Dispute Notice shall set forth, and explain, Parent’s objections, if any, to the Final Closing Statement in reasonable detail and Parent’s calculation of Closing Working Capital, Retained Cash Balances and Transferred Company Indebtedness.  If Parent timely delivers to Buyer a Dispute Notice, only the Disputed Items shall be deemed to be in dispute, and all other matters included in the Final Closing Statement delivered by Buyer shall be deemed to be final and binding on the parties hereto.  The failure by Parent to deliver to Buyer the Dispute Notice within such period shall be deemed to constitute Parent’s acceptance of the Final Closing Statement.  After delivery of the Dispute Notice by Parent, the parties will use all reasonable efforts to resolve any Disputed Items, and any resolution by Parent and Buyer of such Disputed Items shall be final and binding on the parties hereto.

 

(e)           If any Disputed Items cannot be resolved by the parties within forty-five (45) days after Parent delivers the Dispute Notice to Buyer, such Disputed Items shall be referred to BDO USA, LLP (the “Selected Accountant”).  The determination of the Selected Accountant shall be conclusive and binding on each party.  The fees and expenses of the Selected Accountant shall initially be shared equally by Parent and Buyer; provided, that such fees shall ultimately be allocated in accordance with Section 1.5(h).  Not later than thirty (30) days after the referral of any Disputed Items to the Selected Accountant, Parent and Buyer shall

 

5

 

simultaneously submit written statements to the Selected Accountant (with a copy to the other party) setting forth their respective positions regarding the Disputed Items which remain in dispute.  Parent and Buyer shall instruct the Selected Accountant to render its decision resolving the dispute within 30 days after submission of the written statements, and during such period, the parties shall make available to the Selected Accountant such employees, information, books and records as may be reasonably requested by the Selected Accountant to make its final determination.  In resolving any Disputed Item, the Selected Accountant (i) shall be bound by the provisions of this Section 1.5 and the definitions of the Closing Working Capital, Retained Cash Balances and Transferred Company Indebtedness, (ii) shall limit its review to the Disputed Items submitted to the Selected Accountant for resolution, and shall be instructed not to otherwise investigate matters independently and (iii) shall further limit its review of the Disputed Items solely to whether the Final Closing Statement has been prepared in accordance with this Section 1.5 or contains any mathematical or clerical error.  The determination of any Disputed Items cannot, however, be in excess of, or less than, the greatest or lowest value, respectively, claimed for any such item in the Final Closing Statement or the Dispute Notice.  Parent and Buyer agree that the resolution by the Selected Accountant of any Disputed Items shall be final and binding on the parties hereto.  Parent and Buyer agree that the procedure set forth in this Section 1.5 for resolving disputes with respect to Closing Working Capital, Retained Cash Balances and Transferred Company Indebtedness shall be the sole and exclusive method for resolving such disputes, provided that the parties hereto agree that judgment may be entered upon the determination of the Selected Accountant in any court having jurisdiction over the party against which such determination is to be enforced.

 

(f)            If the Purchase Price as finally determined pursuant to this Section 1.5 (f) is less than the Estimated Purchase Price, Parent shall pay to Buyer an amount equal to the shortfall, or (ii) is more than the Estimated Purchase Price, Buyer shall pay to Parent an amount equal to the excess.  Any such payment pursuant to the preceding sentence will be made by wire transfer of immediately available funds, to an account (or accounts) designated by Buyer or Parent, as the case may be, on the later of (x) the second (2nd) Business Day after acceptance or deemed acceptance by Parent of the Final Closing Statement (as contemplated by paragraph (d) above) or (y) the second (2nd) Business Day following resolution (as contemplated by paragraphs (d) or (e) above) of any Disputed Items; provided, however, that if the parties are disputing the final calculation of the Purchase Price, to the extent part of any payment that would be payable pursuant to this paragraph (f) is not in dispute, the payor shall pay the amount not in dispute on the date the payment would otherwise be due but for such dispute by wire transfer of immediately available funds to an account (or accounts) designated by the recipient.  All payments made pursuant to this paragraph (f) shall be accompanied by interest at a rate equal to the Prime Rate per annum from the Closing Date through (but excluding) the date such payment is made.  “Prime Rate” shall mean, for any day, the rate of interest per annum (over a year of 360 days) announced by JPMorgan Chase Bank, N.A. (or any successor thereto) from time to time, as its “base rate” in effect on such date.  Any amounts payable by either party pursuant to this paragraph (f) may not be reduced by set-off against any amount(s) payable (whether at such time or in the future or upon the occurrence of a contingency) by the recipient or any Affiliate of the recipient to the payor or any Affiliates of the payor.  Any payment required pursuant to this paragraph (f) shall constitute a payment in respect of the Purchase Price.

 

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(g)           If the delivery deadline date for the Final Closing Statement or the Dispute Notice is a day that is not a Business Day, the applicable delivery deadline date shall be the immediately following Business Day.

 

(h)           In the event Parent and Buyer refer any Disputed Items to the Selected Accountant for resolution as provided in this Section 1.5, the responsibility for the fees and expenses of the Selected Accountant shall be as follows:

 

(i)            if the Selected Accountant resolves all such Disputed Items in favor of Buyer’s position (the Purchase Price so determined is referred to herein as the “Low Value”), then Parent shall be responsible for all of the fees and expenses of the Selected Accountant;

 

(ii)           if the Selected Accountant resolves all such Disputed Items in favor of Parent’s position (the Purchase Price so determined is referred to herein as the “High Value”), then Buyer shall be responsible for all of the fees and expenses of the Selected Accountant; and

 

(iii)          if the Selected Accountant neither resolves all such Disputed Items in favor of Buyer’s position nor resolves all such Disputed Items in favor of the Parent’s position (the Purchase Price so determined is referred to herein as the “Actual Value”), then that fraction of the fees and expenses of the Selected Accountant equal to (x) the difference between the High Value and the Actual Value over (y) the difference between the High Value and the Low Value shall be paid by Parent and Buyer shall be responsible for the remainder of the fees and expenses of the Selected Accountant.

 

1.6          Withholding.  Buyer shall be entitled to deduct and withhold any Taxes from any amount otherwise payable under this Agreement such amounts as it reasonably determines that it is required by Legal Requirements to deduct and withhold with respect to the making of such payment.  To the extent that Buyer so withholds any such amounts, such amounts shall be (A) paid over to the appropriate Governmental Authority and (B) treated for all purposes of this Agreement as having been paid to the applicable Person in respect of which such deduction and withholding was made.  For the avoidance of doubt, Buyer and Seller agree that VAT, which is governed by Section 9.2(a), does not constitute a withholding Tax for purposes of this section.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF PARENT

 

Except as set forth in the Disclosure Letter (subject to Section 10.12), dated as of the date of this Agreement, delivered by Parent to Buyer contemporaneously with the delivery of this Agreement (the “Disclosure Letter”), Parent hereby represents and warrants to Buyer as follows:

 

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2.1          Organization and Good Standing.

 

(a)           Parent is a corporation validly existing and in good standing under the laws of the State of Delaware.  Each of the other Sellers is a corporation (or other Entity) validly existing and (if such Entity is organized in a jurisdiction in which the concept of good standing or its functional equivalent is applicable) in good standing or its functional equivalent under the laws of its jurisdiction of organization.  Schedule 2.1 of the Disclosure Letter lists each Company and each Subsidiary of the Companies (together with the Companies, the “Transferred Companies”) and the business entity form and place of organization for each of the Transferred Companies.

 

(b)           Each Transferred Company is (i) validly existing and (if such Transferred Company is organized in a jurisdiction in which the concept of good standing or its functional equivalent is applicable) in good standing or its functional equivalent under the laws of its jurisdiction of organization, and (ii) qualified to do business and in good standing or its functional equivalent in each jurisdiction in which the Assets owned, leased or operated by it or the nature of the business conducted by it requires such qualification, in each case, if such concepts or their functional equivalent are applicable in such jurisdiction, except, if applicable, for such failures to be so qualified and in good standing or its functional equivalent which are not material to the operation of the Business, taken as a whole.  Each Transferred Company has all requisite corporate (or other Entity) authority under the Legal Requirements pursuant to which it is organized to own, lease or operate the Assets owned, leased or operated by it and to carry on the business as it is now being conducted by it.  Schedule 2.1(b) of the Disclosure Letter sets forth each jurisdiction in the United States in which each of the Transferred Companies is licensed or qualified to do business.

 

(c)           Parent has made available to Buyer true and complete copies of each Transferred Company’s certificate of incorporation and by-laws (or comparable organizational documents) and all amendments thereto (the “Organizational Documents”) to the date of this Agreement, as in effect on the date of this Agreement. The Organizational Documents of each of the Transferred Companies are in full force and effect and the Transferred Companies are not in violation of their respective Organizational Documents.

 

2.2          Capitalization.  Schedule 2.2 of the Disclosure Letter sets forth with respect to each Transferred Company the authorized capital stock or other equity interests of each Transferred Company and the number of shares of such stock or equity interests that are issued and outstanding as of the date of this Agreement.  The ownership as of the date of this Agreement and following the consummation of the Restructurings of all issued and outstanding shares or other equity interests owned by the applicable Seller or Transferred Company in each Transferred Company is set forth on Schedule 2.2 of the Disclosure Letter.  All of the Shares and the Subsidiary Shares have been validly authorized and issued, are fully paid and, in respect of such jurisdictions where such concept is applicable, nonassessable and have not been issued in violation of any preemptive rights.  Except as contemplated by this Agreement, there is no security, option, warrant, right, call, subscription agreement, commitment or understanding of any nature whatsoever to which a Seller or a Transferred Company is a party, that directly or indirectly (a) calls for the issuance, sale, pledge or other disposition of any shares of capital stock

 

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or other equity interests of a Transferred Company or any securities convertible into, or other rights to acquire, any shares of capital stock or other equity interests of a Transferred Company, (b) obligates a Transferred Company to participate in or make any capital contribution or future equity investment in any Persons, (c) obligates a Transferred Company to grant, offer or enter into any of the foregoing or (d) relates to the voting or control of such capital stock or other equity interests.  No Transferred Company is a party to, or otherwise bound by, any voting trust, proxy or other agreement, restricting or otherwise relating to the voting, dividend rights or disposition of any Shares or any Subsidiary Shares.  None of the Transferred Companies own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interests in any Person, other than a Transferred Company.  Following the consummation of the Restructurings, the applicable Seller shall own the Shares to be sold by such Seller free and clear of any Encumbrances, other than Permitted Encumbrances, and the Sellers will transfer to Buyer at the Closing, good title to the Shares, free and clear of any Encumbrances.

 

2.3          Authority, Approvals and Consents.

 

(a)           Parent has the corporate power and authority to execute, deliver and perform this Agreement and the Ancillary Documents to be executed and delivered by Parent and to consummate the transactions contemplated hereby and thereby.  At the Closing, each other Seller will have the corporate (or other Entity) power and authority to execute, deliver and perform the Ancillary Documents to be executed and delivered by such Seller and to consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance by Parent of this Agreement and each of the Ancillary Documents to which it will at Closing be a party, and the consummation by Parent of the transactions contemplated hereby and thereby have been, and at the Closing the execution, delivery and performance by each other Seller of the Ancillary Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby by such other Sellers will have been, duly authorized and approved by the board of directors (or comparable governing body) of each of the Sellers and no other corporate (or other Entity) proceedings on the part of Sellers or the shareholders or other equity holders of Sellers are necessary to authorize and approve this Agreement and the Ancillary Documents to be executed and delivered by Sellers and the transactions contemplated hereby and thereby.  This Agreement has been duly executed and delivered by Parent, and the Ancillary Documents to be executed and delivered by any Seller at the Closing will be duly executed and so delivered by such Seller.  This Agreement constitutes, and at the Closing each Ancillary Document to be executed and delivered by any Seller will constitute, a valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as such enforceability may be limited by the Bankruptcy and Equity Exceptions.

 

(b)           The execution, delivery and performance by Parent of this Agreement and by Parent and the applicable Sellers of the Ancillary Documents to be executed and delivered by Parent or any of the other Sellers and the consummation by Parent and the applicable Sellers of the transactions contemplated hereby and thereby, do not and will not:

 

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(i)            contravene any provisions of the Organizational Documents of Sellers or any Transferred Company;

 

(ii)           conflict with, result in a breach of any provision of, constitute a default under, result in the modification or cancellation of, or entitle any Person (with or without due notice or lapse of time or both) to terminate, cancel, accelerate, modify or call a default with respect to, or increase or decrease any benefit or obligation under any contract, agreement, lease, order, arbitration award, judgment or decree or other commitment to which any of the Sellers are a party or to which any of the Sellers or any of their Assets is subject, except, in each case, as would not be material to (A) the operation of the Business, taken as a whole or (B) Parent’s or the other Sellers’ ability to perform timely their obligations under this Agreement and the Ancillary Documents to be executed and delivered by Parent or the other Sellers and to consummate the transactions contemplated hereby and thereby;

 

(iii)          conflict with, result in a breach of any provision of, constitute a default under, result in the modification or cancellation of, or entitle any Person (with or without due notice or lapse of time or both) to terminate, cancel, accelerate, modify or call a default with respect to, or increase or decrease any benefit or obligation under any contract, agreement, lease, or other commitment to which any of the Transferred Companies are a party or to which any of the Transferred Companies or any of their Assets is subject, except, in each case, as would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect;

 

(iv)          violate or conflict with any Legal Requirements applicable to any Seller or any Transferred Company or any of their businesses or Assets; provided, that Parent makes no representation or warranty in this Section 2.3(b)(iv) with respect to any Antitrust Law; or

 

(v)           require any Seller or any Transferred Company to obtain, secure or make any material Approval, except for (x) Approvals in respect of Permits, (y) the Approvals set forth on Schedule 2.3 of the Disclosure Letter and (z) compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”).

 

2.4          Financial Statements.

 

(a)           Attached as Schedule 2.4(a) of the Disclosure Letter are (i) the unaudited combined balance sheet of the Business as of December 31, 2012 (the “Balance Sheet”, and such date, the “Balance Sheet Date”) and the related unaudited combined statements of profits and losses and cash flows, in each case, for the twelve-month period then ended, and (ii) the unaudited combined balance sheet of the Business as of March 31, 2013 and the related unaudited combined statements of profits and losses and cash flows, in each case, for the three-month period then ended (all such financial statements, the “Financial Statements”).  The Financial Statements fairly present in all material respects the financial position of the Business as of the dates indicated and the results of operations of the Business for the periods indicated, in accordance with GAAP applied on a consistent basis throughout the periods specified, except as expressly set forth therein and except that the Financial Statements (x) do not contain footnotes

 

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and the disclosures required therein and (y) as of and for the three-month period ended on March 31, 2013 are subject to normal year-end adjustments (the effect of which would not be material).

 

(b)           The Transferred Companies maintain systems of internal accounting controls sufficient in all material respects to enable officers of Rockwood to give the certifications called for by Rule 13a-14(a) and (b) under the Securities Exchange Act of 1934, as amended.

 

(c)           Since the Lookback Date, no director or officer of Parent or of any of the Transferred Companies or, to Parent’s Knowledge, non-officer employee, external auditor, external accountant or similar authorized representative of Parent or any of the Transferred Companies, has received or otherwise been made aware of any material written complaint, allegation or claim regarding the accounting or auditing practices, procedures, methodologies or methods of any of the Transferred Companies or their respective internal accounting controls, including any material written complaint, allegation or claim that any of the Transferred Companies has engaged in questionable accounting or auditing practices.

 

2.5          Absence of Undisclosed Liabilities; Indebtedness.

 

(a)           As of the date of this Agreement, the Transferred Companies do not have any liabilities, whether accrued or contingent (and whether or not required under GAAP to be reflected on a balance sheet or the notes thereto), except (i) as and to the extent reflected or reserved against on the Balance Sheet, (ii) liabilities incurred or arising in the ordinary course of business after the date of the Balance Sheet, (iii) those arising under Benefit Plans, Business Agreements, Leases and Permits in the ordinary course of business (excluding, for the avoidance of doubt, any liabilities resulting from any Transferred Company’s breach of thereof), (iv) as disclosed in Schedule 2.5 of the Disclosure Letter, (v) liabilities for Taxes (provided, for the avoidance of doubt, that this clause (v) shall in no way limit any of the representations or obligations of Parent under Section 2.7 or Articles VIII or IX hereof) and (vi) other liabilities that would not be material to the Business, taken as a whole.

 

(b)           Schedule 2.5(b) of the Disclosure Letter sets forth a list of all agreements or arrangements with respect to Indebtedness of the Transferred Companies as of the date of this Agreement.

 

2.6          Absence of Certain Changes or Events.

 

(a)           Since the date of the Balance Sheet, (i) the Business has been operated in all material respects in the ordinary course of business and (ii) there has not been any change, event or occurrence that has had, individually or in the aggregate, a Material Adverse Effect.

 

(b)           Without limiting the foregoing, except for the Restructurings, between the Balance Sheet Date and the date of this Agreement there has not been, occurred or arisen:

 

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(i)            any physical damage, destruction or loss to any Business Assets that is material to the operation of the Business, taken as a whole; or

 

(ii)           any action or event that would have required Buyer’s consent pursuant to Section 4.3(b) had such event occurred after the date hereof.

 

2.7          Taxes.

 

(a)           The Transferred Companies have timely filed or have had filed on their behalf, taking into account any applicable extensions, all material Tax Returns which are required to be filed by them, and such Tax Returns are true and complete and correct in all material respects.

 

(b)           All material Taxes required to be paid by the Transferred Companies have been timely paid, after giving effect to any applicable extensions.

 

(c)           The Transferred Companies have withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder, or other third Person, and all forms required by applicable Legal Requirements with respect thereto have been properly completed and timely filed.

 

(d)           There are no actions, suits, proceedings, audits, or claims pending against the Transferred Companies relating to material Taxes.

 

(e)           Neither Parent nor any Transferred Company has been a party to any “reportable transaction” as defined in Code Section 6707A(c)(1) and Treasury Regulation Section 1.6011-4(b).

 

(f)            There is no outstanding power of attorney authorizing anyone to act on behalf of any of the Transferred Companies in connection with any Tax, Tax Return or proceeding relating to a Tax that will remain in effect following the Closing, other than any such power of attorney authorizing a person to act on behalf of a consolidated, combined or unitary group in which a Transferred Company is included.

 

(g)           None of the Transferred Companies has distributed the stock of another Person, or had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code within the two year period ending on the date hereof.

 

(h)           Subject to Section 4.22, none of the Transferred Companies is a party to or bound by any Tax sharing agreement or Tax allocation agreement that will remain in effect after the Closing Date.  Without limiting the forgoing, none of the Transferred Companies (i) has been a member of an affiliated group filing a consolidated U.S.  federal income Tax Return (other than a group the common parent of which is Rockwood) during any Tax year with respect to which the relevant statute of limitations remains open or (ii) has any liability for the Taxes of any other Person (other than members of an affiliated group filing a consolidated U.S. 

 

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federal income Tax Return the common parent of which is Rockwood) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or non-U.S. law), as a transferee or successor or by contract (other than pursuant to customary Tax indemnification provisions in commercial contracts such as leasing and financing agreements).  For German corporate income tax, trade tax and value added tax purposes, Rockwood Clay Additives is, and has been during any Tax year with respect to which the relevant statute of limitations remains open, a member of a valid tax group (steuerliche Organschaft).

 

(i)            There are no material deficiencies for Taxes with respect to the Transferred Companies that have been claimed, proposed or assessed in writing by any Governmental Authority that have not been resolved and paid in full, no written claim has been made by a Governmental Authority in a jurisdiction where a Transferred Company does not file Tax Returns that the Transferred Company is or may be subject to material taxation by that jurisdiction, and there are no liens for material Taxes (other than Permitted Encumbrances) upon any of the assets of a Transferred Company.

 

(j)            Parent has identified to Buyer (i) all Income Tax Returns filed with respect to the Transferred Companies for taxable periods ended on or after the Lookback Date and (ii) all of those Tax Returns (other than any Tax Return for a combined, unitary or consolidated group with respect to which a Transferred Company is not the parent) that are currently the subject of audit.  Parent has delivered or made available to Buyer true and complete copies of all such Income Tax Returns (or in the case of an Income Tax Return for a combined, unitary or consolidated group with respect to which a Transferred Company is not the parent, the pro forma Tax Return relating to the Transferred Company) and any examination reports or statements of deficiencies assessed against or agreed to by Transferred Companies since the Lookback Date.  No Transferred Company has waived any statute of limitations in respect of material Taxes or agreed to any extension of time with respect to a material Tax assessment or deficiency claimed against a Transferred Company, other than waivers or extensions made on behalf of the Transferred Companies with respect to combined, unitary or consolidated groups with respect to which a Transferred Company is not the parent.

 

(k)           None of the Transferred Companies will be required to include any material item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (A) change in method of accounting for a taxable period ending on or prior to the Closing Date; (B) closing agreement (as described in Code Section 7121 or any corresponding or similar agreement with any state, local, or non-U.S. taxing authority) executed on or prior to the Closing Date; (C) intercompany transactions or any excess loss account (as described in Treasury Regulations under Code Section 1502 or any corresponding or similar provision of state, local, or non-U.S. income Tax law); (D) installment sale or open transaction disposition made on or prior to the Closing Date; or (E) election under Code Section 108(i).

 

(l)            None of the Transferred Companies has benefited from any fiscal advantage or similarly favorable Tax regime in exchange for undertakings or obligations by which it is still bound or in respect of which it shall incur any material additional Tax burden 

 

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after the Closing Date.  None of the Transferred Companies has received any material Tax subsidies that may be, or may become, repayable following the Closing Date.

 

(m)          None of the Transferred Companies has made or taken any extraordinary write-down or reduction of the book value of any fixed assets (other than deductions for depreciation or amortization) prior to or on the Closing Date that could be subject to a material taxable add-back, write-up or other reversal after the Closing Date.

 

(n)           None of the Transferred Companies will have any of their tax attributes reduced under the unified loss rules of Treasury Regulations Section 1.1502-36 as a result of the transactions contemplated by this Agreement.

 

2.8          Legal Matters.

 

(a)           As of the date of this Agreement, (i) there is no material Litigation pending or, to the Knowledge of Parent, threatened in writing, (A) against any Transferred Company or any Business Assets (including the Real Property) before or by any Governmental Authority or (B) that would, if adversely determined, materially impair the ability of Parent or any of the other Sellers to consummate the transactions contemplated by this Agreement and the Ancillary Documents, and (ii) no Transferred Company is subject to any material judgment, decree, writ, injunction or order of any Governmental Authority, other than those of general applicability.

 

(b)           The Business is being and, since the Lookback Date, has been, conducted in all material respects in compliance with all statutes, laws, ordinances, codes, rules, regulations or other legal requirement enacted, adopted, promulgated or applied by any Governmental Authority (collectively “Legal Requirements”).  Since the Lookback Date and prior to the date of this Agreement, no Seller (as it relates to the Business) or Transferred Company has received any written or, to the Knowledge of Parent, oral notice alleging any material non-compliance with any Legal Requirement which remains outstanding and unresolved.

 

2.9          Property.

 

(a)           Schedule 2.9(a) of the Disclosure Letter sets forth a true and complete list as of the date of this Agreement of all real property owned by the Transferred Companies (collectively, the “Owned Real Property”).  The Transferred Companies have good and marketable title to the Owned Real Property, free and clear of all Encumbrances other than Permitted Encumbrances.

 

(b)           Schedule 2.9(b) of the Disclosure Letter sets forth a true and complete list as of the date of this Agreement of all leases, subleases, license agreements and other instruments, agreements, arrangements (together with all amendments and supplements thereto), to which any of the Transferred Companies is a party and by which such Transferred Company (in the capacity of a lessee or sublessee or another similar capacity) leases, subleases, licenses, or otherwise holds or has a possessory right in or to any real property, whether surface, mineral or both, or any similar interest therein, in each case, other than the Owned Real Property, 

 

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with rental or royalty payments that would reasonably be expected to be in excess of U.S.$50,000 in any fiscal year (all such leases, subleases, license agreements and other instruments, agreements, arrangements, collectively, the “Leases”).  Other than as set forth in Schedule 2.9(b) of the Disclosure Letter, no Lease has been amended, supplemented, assigned, subleased or otherwise modified.  Each Lease grants the lessee a valid 100% undivided leasehold interest, free of Encumbrances permitted or caused to be suffered by the applicable Transferred Company, other than the Permitted Encumbrances.  Each Lease is in full force and effect and constitutes a valid and legally binding obligation of the applicable Transferred Company and, to the Knowledge of Parent, of each other party thereto, enforceable against such Transferred Company and, to the Knowledge of Parent, each other party thereto, in accordance with its terms, except as such enforceability may be limited by the Bankruptcy and Equity Exceptions.  Neither any Transferred Company nor, to the Knowledge of Parent, any other party to any Lease is in material breach or default of or under any such Lease, and the execution, delivery and performance by Parent of this Agreement and the Ancillary Documents to be executed and delivered by Parent or any of the other Sellers, and the consummation of the transactions contemplated hereby and thereby by Parent and the other Sellers, do not and will not, in any material respect, conflict with, result in the modification or cancellation of, or give rise to any right of termination in respect of (with due notice or lapse of time or both) any such Lease.  Parent has made available to Buyer true and complete copies in all material respects of all Leases (including amendments and supplements thereto).

 

(c)           To the Knowledge of Parent, no condemnation, eminent domain or expropriation or compulsory acquisition, closing, demolition or clearance proceeding against or affecting all or any portion of the Owned Real Property or the Leased Real Property is pending or threatened.

 

(d)           Except as disposed of in the ordinary course of business since the Balance Sheet Date, as of the date of this Agreement, the Transferred Companies have good and valid title to all material tangible personal property reflected on the Balance Sheet or acquired by it after the Balance Sheet Date, and such property is held free and clear of all Encumbrances other than Permitted Encumbrances.

 

(e)           After giving effect to capital expenditures budgeted to be undertaken in the calendar year 2013 by the Transferred Companies, all material improvements and fixtures on all the Owned Real Property and Leased Real Property, and all material machinery, equipment and other tangible property owned by or leased to the Transferred Companies (“Property”), are in all material respects fit for the purposes in which they are currently being used and in good condition, except for ordinary wear and tear.

 

(f)            The Real Property comprises all of the material real property or interests therein used in the operation of the Business as of the date of this Agreement, and the Property, together with the Administrative Assets and after taking into account Assets, goods and services purchased or leased by the Transferred Companies in the ordinary course of business, is and will be at Closing sufficient for the conduct of the Business in all material respects as it is conducted as of the date of this Agreement and as of the Closing Date, as applicable.

 

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(g)           Other than Permitted Encumbrances or as required by Legal Requirements, no commitments have been made to any Governmental Authority or to any other organization, group or individual that would impose an obligation upon any Transferred Company to make any material contribution or dedication of money or land (including but not limited to any rights of access or reciprocal easement agreements) or to construct, install or maintain any material improvements upon or in the vicinity of such lot, parcel or tract of land.

 

(h)           The Transferred Companies have in all material respects duly performed and observed all covenants, restrictions, real burdens, servitude conditions, reservations, conditions, agreements, statutory requirements, byelaws, orders, building regulations and other stipulations and regulations affecting the Real Property and the use of the Real Property and no Transferred Company has received any written complaint alleging material breach or non-observance in respect of them which remains outstanding and unresolved.

 

2.10        Material Contracts.  Schedule 2.10 of the Disclosure Letter sets forth a true and complete list as of the date of this Agreement of each of the following Business Agreements (collectively, the “Material Contracts”):

 

(a)           any mortgage, indenture, note or other instrument or agreement for or relating to the borrowing of money by any Transferred Company (other than those in respect of trade payables arising in the ordinary course of business);

 

(b)           any guaranty by the Transferred Companies of any obligation for borrowed money (other than guaranties of credit cards of officers and employees of the Transferred Companies), excluding endorsements made for collection in the ordinary course of business;

 

(c)           any obligation to make payments, contingent or otherwise, arising out of the prior acquisition of any Assets or businesses of third Persons (other than accounts payable and accrued liabilities constituting current liabilities);

 

(d)           any Business Agreement creating any Encumbrance on any of the Business Assets, other than a Permitted Encumbrance;

 

(e)           any Business Agreement containing non-competition, non-solicitation or other limitations restricting any Transferred Company’s ability to compete in any line of business, geographic area or with any Person or to solicit the employees or customers of any Person (other than confidentiality restrictions contained in any Business Agreement);

 

(f)            any Business Agreement (other than (x) for the purchase or sale of goods and services on a purchase order basis in the ordinary course of business and (y) Leases) which involved the payment of consideration to or by a Transferred Company, in each case, by or to a third Person, in excess of U.S.$750,000 during the fiscal year ended December 31, 2012;

 

(g)           any Business Agreement that is a partnership, joint venture or similar agreement;

 

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(h)           any hedging agreement (such as a currency exchange, interest rate exchange, commodity exchange or similar contract) that will be binding on a Transferred Company after the Closing;

 

(i)            any Business Agreement (i) granting to a Transferred Company any right (including a license, covenant not to sue, release or immunity) in, under or to any Third-Party Intellectual Property (other than licenses for “off-the-shelf” shrinkwrap, clickwrap or other similar commercially available non-custom Software on generally standard terms and conditions), (ii) pursuant to which Sellers or a Transferred Company has granted to a third Person (including the Sellers and their Affiliates (other than the Transferred Companies)) any right (including a license, covenant not to sue, release or immunity) in, under or to any Owned Intellectual Property other than a grant of a non-exclusive license of a Trademark of a Transferred Company pursuant to a sales, distribution or agency agreement entered into in the ordinary course of business, where such license is related to the sale or distribution of a product of such Transferred Company to its customers;

 

(j)            any Business Agreement that requires any Transferred Company to purchase its total requirements of any product or service from any Person or contains a “take or pay” or similar provision;

 

(k)           any Business Agreement that contains a “most-favored-nation” clause or similar term that provides preferential pricing or treatment;

 

(l)            any Business Agreement that contains any product or service guaranty or warranty or right of return that is not consistent with the terms customarily provided by the Business in the ordinary course of business; and

 

(m)          any Business Agreement relating to any future capital expenditures by the Transferred Companies, individually or collectively, in excess of $500,000.

 

Each Material Contract is in full force and effect and constitutes a valid and legally binding obligation of the applicable Transferred Company and, to the Knowledge of Parent, of each other party thereto, enforceable against such Transferred Company and, to the Knowledge of Parent, each other party thereto, in accordance with its terms, except as such enforceability may be limited by the Bankruptcy and Equity Exceptions.  Neither any Transferred Company nor, to the Knowledge of Parent, any other party to any Material Contract is in material breach or default of or under any such Material Contract, no event has occurred which within the passage of time or the giving of notice or both would constitute a material breach or default of or under any Material Contract, no Transferred Company has received written notice of any material breach or default of or under any such Material Contract and the execution, delivery and performance by Parent of this Agreement and the Ancillary Documents to be executed and delivered by Parent or any of the other Sellers, and the consummation of the transactions contemplated hereby and thereby by Parent and the other Sellers, do not and will not, in any material respect, conflict with, result in the modification or cancellation of, or give rise to any right of termination in respect of (with due notice or lapse of time or both) any 

 

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Material Contract.  Parent has made available to Buyer, prior to the date of this Agreement, true and complete copies of all Material Contracts (including all amendments thereto).

 

2.11        Labor Matters.

 

(a)           Since the Lookback Date and through the date of the Agreement, there has been no labor strike, organized work stoppage, or lockout or, to the Knowledge of Parent, is such a strike, stoppage or lockout threatened against the Transferred Companies in relation to the Business Employees.

 

(b)           To the Knowledge of Parent, since the Lookback Date and through the date of the Agreement, there has been, no union organization campaign or material dispute with any works council or other employee representative body relating to any Business Employees.

 

(c)           Schedule 2.11(c) of the Disclosure Letter provides a true and complete list, as of the date of this Agreement, of all material collective bargaining agreements and any material works agreements (Betriebsvereinbarungen) on the group level (Konzernbetriebsvereinbarungen) or on the level of the individual Transferred Companies (Einzelbetriebsvereinbarungen), in each case, binding upon any of the Transferred Companies in relation to the Business on the date of this Agreement.  Parent has made available to Buyer true and complete copies of each such collective bargaining agreement.

 

(d)           As of the date of this Agreement, Southern Clay Products has not, and to the Knowledge of Parent, none of its respective representatives or employees has, committed any unfair labor practice in connection with the operation of the Business in the United States.  As of the date of this Agreement, there is no charge, complaint or other action against the Transferred Companies by the National Labor Relations Board or comparable Governmental Authority pending, or to the Knowledge of the Parent, threatened with respect to the Business Employees.  As of the date of this Agreement, the Transferred Companies have complied in all material respects with all Legal Requirements relating to employment and employment practices, including without limitation terms and conditions of employment, worker classification, tax withholding, prohibited discrimination, equal employment, immigration status, employee safety and health, wages, compensation and hours of work.

 

(e)           Since January 1, 2013 through the date of this Agreement, none of the Transferred Companies has effectuated (i) a “plant closing” (as defined in the Worker Adjustment and Retraining Notification Act (the “WARN Act”) or any similar state, local or foreign law) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of Transferred Companies or (ii) a “mass layoff” (as defined in the WARN Act, or any similar state, local or foreign law) affecting any site of employment or facility of Transferred Companies.

 

(f)            Parent will deliver to Buyer on the date of this Agreement a separate Schedule 2.11(f), which will contain a true and complete list, as of the date of this Agreement, of (x) all of the Business Employees (on an anonymous basis), indicating their (i) job title, (ii) current base salary or wage rate and (iii) 2012 bonus, and (y) any consultants or 

 

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independent contractors (on an anonymous basis) engaged by the Transferred Companies, indicating their function and their wage rate or fee arrangement.  After the date hereof, Parent will cooperate in providing Buyer with (i) the fringe benefits, 2013 holiday or vacation entitlement and immigration status of the Business Employees of the U.K. Company, and (ii) the fringe benefits of the Business Employees of Rockwood Clay Additives.

 

(g)           No Transferred Company is bound by (i) any restriction with respect to closure, downsizing or other restructuring affecting its workforce or a portion thereof, except for any restrictions under applicable Legal Requirements or (ii) any obligation to guarantee a certain number of employees at any of its sites.

 

(h)           None of the Business Employees listed on Schedule 2.11(h) of the Disclosure Letter has as of the date of this Agreement (i) either given notice in writing to the Transferred Companies, Parent or any of its Affiliates, or been given notice by the Transferred Companies, Parent or its Affiliates, of termination of or an intent to terminate their employment or engagement with the Transferred Companies, Parent or its Affiliates, and (ii) to the Knowledge of Parent, no such Business Employee has expressed an intention of delivering any such notice.

 

2.12        Employee Benefits.

 

(a)           Schedule 2.12(a) of the Disclosure Letter sets forth a true and complete list, as of the date of this Agreement, of (x) each material “employee benefit plan” within the meaning of Section 3(3) of ERISA (whether or not subject to ERISA), (y) any other material employee benefit plan, agreement, arrangement, program fund or commitment (whether of an individual or collective nature), including any stock option, stock purchase, stock award, deferred compensation, pension, retirement, death, old-age part-time (e.g. Altersteilzeit), savings, profit sharing, incentive, bonus, health, life insurance, cafeteria, flexible spending, dependent care, fringe benefit, anniversary, jubilee, holiday, paid time off, disability, or severance pay plan and (z) any material employment, consulting, indemnification, severance, termination, retention or change-in-control agreement, in each case, which is sponsored or maintained by Parent, the Transferred Companies or any of their Affiliates, or to which Parent, the Transferred Companies or any of their Affiliates is required to make contributions or pursuant to which the Parent, the Transferred Companies or any of their Affiliates has any liability, direct or indirect, contingent or otherwise, on behalf of any current or former directors, officers, employees or consultants of the Transferred Companies (other than, with respect to any plan or arrangement not sponsored or

maintained by the Transferred Companies or to which the Transferred Companies are not required to contribute, the Resigning Officers and Directors) (collectively, “Benefit Plans”).  Benefit Plans that are sponsored or maintained solely by one or more of the Transferred Companies are denoted by asterisk on Schedule 2.12(a) of the Disclosure Letter and are referred to herein as “Transferred Company Benefit Plans.”  Benefit Plans shall not include any statutory non-U.S. plans with respect to which any Transferred Company, Parent or any of their Affiliates are obligated to make contributions or comply with under applicable Legal Requirements.

 

(i)            With respect to each of the Transferred Company Benefit Plans, the Parent has made available to the Buyer a current, accurate and complete copy (or, to 

 

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the extent no such copy exists, an accurate description) thereof (including any amendments thereto) and, to the extent applicable, (A) any related trust agreement, annuity or insurance contract or other funding instrument; (B) any summary plan description (including any amendments thereto), (C) the most recent annual Form 5500 with respect to such Transferred Company Benefit Plan, (D) if such Transferred Company Benefit Plan is intended to be a qualified plan under section 401(a) of the Code, the most recent unrevoked favorable determination letter received from the IRS, and (E) the most recent actuarial reports concerning the obligations of the Transferred Companies under the Transferred Company Benefit Plans.

 

(ii)           With respect to each U.S. Benefit Plan, either (A) the Parent has made available to the Buyer a current, accurate and complete copy of  summary plan descriptions (including any amendments thereto) or other written summaries of such plans, or (B) a copy of such plan has been made publicly available as a filing to (or incorporation by reference on) the exhibits to Rockwood’s annual report on Form 10-K for the fiscal year ended December 31, 2012 (or any subsequent document filed with the SEC and made publically available).

 

(b)           Since the Lookback Date and through the date of the Agreement, there has been no material audit or investigation of any Transferred Company Benefit Plan by any Governmental Authority or, to the Knowledge of Parent, is such an audit or investigation threatened.

 

(c)           The obligations of the Transferred Companies with respect to German Transferred Company Benefit Plans are funded in accordance with and to the extent required by applicable Legal Requirements and the requirements of such German Transferred Company Benefit Plans.  With respect to the Business Employees, all contributions and premium payments in respect of the Transferred Company Benefit Plans (also including with respect to pension guaranty funds) currently outstanding that are required to have been paid under or with respect to such Transferred Company Benefit Plans will have been timely paid as of the Closing Date and all amounts which are not yet due have been properly accrued and recorded on the books of the Transferred Companies and, to the extent required by GAAP or other applicable Legal Requirement, adequate reserves are reflected on the Financial Statements.  Rockwood Clay Additives is the policyholder of all insurances that fund pension obligations of Rockwood Clay Additives.

 

(d)           With such exceptions as are individually or in the aggregate not material, (i) each U.S. Transferred Company Benefit Plan is, and since the Lookback Date has been, in compliance with all applicable Legal Requirements and administered in accordance with its terms, (ii) each U.S. Transferred Company Benefit Plan intended to be tax-qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS as to its tax-qualified status under the Code and, to Parent’s Knowledge, there are no, and have not been any, circumstances or events that have resulted, or are likely to result, in the revocation of any such determination letter or disqualification of any such U.S. Transferred Company Benefit Plan, and (iii) to the Knowledge of Parent, no event has occurred and no condition exists with respect to any employee benefit plan or arrangement currently or previously maintained or contributed to by any ERISA Affiliate of the Transferred Companies that could subject the Transferred 

 

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Companies, directly or indirectly, to a material liability under Code Section 412 or 430 or Title IV of ERISA.  As of the date of this Agreement, to the Knowledge of Parent, there are no actions, suits or claims pending or threatened (other than routine claims for benefits) with respect to any U.S. Transferred Company Benefit Plan or the Assets, fiduciaries or administrators thereof, which are likely to result in the imposition of liability on any Transferred Company.  No U.S. Transferred Company Benefit Plan is a “single-employer” plan (within the meaning of Section 4001(a)(15) of ERISA), a “multiemployer plan” (within the meaning of Section 3(37) of ERISA), or a “multiple employer plan” (within the meaning of Section 413(c) of the Code), and Southern Clay Products has no outstanding material liability with respect to any such plans it previously maintained or to which it was required to contribute.

 

(e)           No U.S. Transferred Company Benefit Plan provides retiree health or life insurance or other retiree welfare benefits to any Person, except as required by the Consolidated Omnibus Reconciliation Act of 1985, as amended (“COBRA”) or other applicable Legal Requirements, and to the Knowledge of Parent, there has been no communication to any U.S. Business Employee that could reasonably be expected to promise or guarantee any such retiree health or life insurance or other retiree welfare benefits.

 

(f)            The execution of this Agreement and the consummation of the transactions contemplated herein will not by itself or in conjunction with any other event, (i) entitle any Business Employee of Rockwood Clay Additives or Rockwood Additives Limited to terminate their employment or engagement, (ii) result in any payment (whether of severance pay or otherwise) or benefit (or any enhancement or improvement to any payment or benefit) becoming due or required to be provided from or under any Benefit Plan to any current or former director, officer, employee or consultant of the Transferred Companies, (iii) result in the vesting, acceleration, funding  or increase in the amount of any payment due or benefit payable to or in respect of any current or former director, officer, employee or consultant of the Transferred Companies, or (iv) result in the payment of any amount that would not be deductible by reason of Section 280G of the Code.  None of the Transferred Companies have any indemnity obligations for excise taxes which may be imposed under Section 4999 of the Code.

 

(g)           To the Knowledge of Parent, no Transferred Company has given any indemnity, undertaking or guarantee in relation to the U.K. Retirement Plan.  There is no amount which is, or to the Knowledge of Parent might in the future be, treated as a material debt due from any Transferred Company to the trustees of any occupational pension scheme (other than the U.K. Retirement Plan) under section 144 of the Pension Schemes Act 1993, section 75 or 75A of the Pensions Act 1995, section 43 of the Pensions Act 2004 (Financial support directions) or section 47 of the Pensions Act 2004 (Contribution notices where non-compliance with financial support direction).  To the Knowledge of Parent, no person connected or associated with the Transferred Companies participates, or has participated, as an employer in a U.K. occupational pension scheme to which the Transferred Companies have any continuing material liability other than (a) the U.K. Retirement Plan, or (b) a money purchase scheme (as defined in section 181 of the Pension Schemes Act 1993, but reading that Act as if Part 4 of the Pensions Act 2011 were already in force).  For purposes of this paragraph, “connected” and “associated” are to be interpreted in accordance with sections 249 and 435 respectively of the Insolvency Act 1986.

 

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2.13        Transactions with Affiliates; Enterprise Agreements.

 

(a)           Schedule 2.13(a) of the Disclosure Letter sets forth a true and complete list as of the date of this Agreement of (i) all Business Agreements (other than intercompany purchase orders) between one or more of the Transferred Companies, on the one hand, and Parent and/or one or more of its Affiliates (other than the Transferred Companies), on the other hand, in effect as of the date of this Agreement and (ii) other material transactions in effect as of the date of this Agreement between one or more of the Transferred Companies, on the one hand, and Parent and/or one or more of its Affiliates (other than the Transferred Companies), on the other hand.

 

(b)           Schedule 2.13(b) of the Disclosure Letter sets forth a true and complete list of all control agreements, profit and loss transfer agreements or other enterprise agreements within the meaning of Section 291 of the German Stock Corporation Act (Aktiengesetz) (the “AktG”) to which Rockwood Clay Additives is a party as of the date of this Agreement (collectively, the “Enterprise Agreements”).

 

2.14        Environmental Matters.

 

(a)           The Transferred Companies are and since July 26, 2008 have been in all material respects in compliance with all Environmental Requirements.

 

(b)           During the five-year period preceding the date of this Agreement, the Transferred Companies have not received (i) written notice or a written request for information from any Governmental Authority with respect to any material Environmental Condition or (ii) written notice that any Transferred Company has been or may be identified in any action, suit, litigation, investigation or proceeding as a responsible party or a potentially responsible party for any material liability under Environmental Requirements which remains outstanding and unresolved.  To the Knowledge of Parent, no such notice or request has been threatened in writing.

 

(c)           As of the date of this Agreement, there is no material Litigation pending or, to the Knowledge of Parent, threatened in writing, against any Transferred Company or any Business Assets before or by any Governmental Authority pursuant to Environmental Requirements or relating to an Environmental Condition, and no Transferred Company is subject to any material judgment, decree, writ, injunction or order of any Governmental Authority, pursuant to Environmental Requirements or relating to an Environmental Condition.

 

(d)           The Transferred Companies hold, and are in all material respects in compliance with, all material Permits required under Environmental Requirements for the Transferred Companies to conduct the Business in all material respects in the manner it is conducted on the date of this Agreement.  All such Permits are on the date of this Agreement in all material respects in full force and effect, and no event has occurred and is continuing which requires, or after notice or lapse of time or both would require, any modification, revocation, non-renewal or termination of any such Permit.

 

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(e)           None of the Transferred Companies have entered into any material written agreements or undertakings with any Person relating to any Remedial Action that remains in effect as of the date of this Agreement (except that the Leases and Permits may contain indemnities and/or agreements regarding such liabilities).

 

(f)            To Parent’s Knowledge, there are no material Environmental Conditions present at or migrating to or from the Owned Real Property or Leased Real Property or otherwise relating to the Business.

 

(g)           There are no underground storage tanks located on the Owned Real Property or the Leased Real Property, and no asbestos, asbestos-containing materials, polychlorinated biphenyls (PCBs) or PCB wastes are now located, contained, used or stored by the Transferred Companies in or at the Owned Real Property or the Leased Real Property (including the buildings, structures and all improvements and machinery and equipment thereon or thereat).

 

(h)           The Parent has delivered to, or has otherwise made available for inspection by Buyer, all material investigation reports, studies or test results for the five-year period preceding the date of this Agreement in the possession, control or custody of the Parent or any Transferred Company related to Environmental Conditions at, environmental, health or safety matters in respect of, or Hazardous Substances in or on, the Real Property.

 

2.15        Intellectual Property.

 

(a)           Schedule 2.15(a) of the Disclosure Letter sets forth a true and complete list of the following categories of Intellectual Property that is registered, issued or subject to a pending application for registration or issuance in the name of any Transferred Company or that is otherwise owned by any Transferred Company:  (i) Patents; (ii) Trademarks; (iii) Copyrights; and (iv) domain names, in each case listing, as applicable, (A) the name of the current owner of record, (B) the jurisdiction where the application or registration is located, (C) the application or registration number and (D) the current status thereof.

 

(b)           (i) To the Knowledge of Parent, no Person is infringing, misappropriating or violating, nor during the two (2) years preceding the date of this Agreement have there been any infringements, misappropriations or violations, by any person of any Owned Intellectual Property, and (ii) no such action, suit or proceeding has been threatened in writing by Parent or its Affiliates (including the Transferred Companies) during such two (2) year period.

 

(c)           Except as would not reasonably be expected to as material to the Business taken as a whole, neither the Transferred Companies nor the conduct of the Business infringes, misappropriates or violates any Intellectual Property of any other Person.  Neither Parent nor any of the Transferred Companies has received any written notice from any other Person, and there is no Litigation pending (nor, to the Knowledge of Parent, threatened), alleging (i) that any Transferred Company or the conduct of the Business has infringed upon, misappropriated or violated the Intellectual Property of any other Person or (ii) the Owned Intellectual Property is invalid, unenforceable or not owned by the Transferred Companies, in each case, which claim is still pending or otherwise unresolved.

 

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(d)           Except as otherwise set forth in Section 4.6 or in Schedule 2.15(a) of the Disclosure Letter, (i) the Transferred Companies are the sole and exclusive owners of the Intellectual Property scheduled in Schedule 2.15(a) of the Disclosure Letter and each other item of Owned Intellectual Property free and clear of any Encumbrances other than Permitted Encumbrances and (ii) the Owned Intellectual Property and the Intellectual Property licensed to the Transferred Companies pursuant to the Business Agreements listed in Section 2.10(i)(i) constitute in all material respects the Intellectual Property required to conduct the Business in the manner in which it is conducted as of the date of this Agreement (other than licenses for “off the shelf” shrinkwrap, clickwrap or other similar commercially available non-custom Software on generally standard terms and conditions), and each of the Transferred Companies shall have all such rights in the foregoing immediately following the Closing.

 

(e)           Except as otherwise set forth in Schedule 2.15(a) of the Disclosure Letter, the Intellectual Property scheduled thereon is valid, subsisting and enforceable.  To the Knowledge of Parent, each of the Sellers and the Transferred Companies have complied with and are in compliance with all Legal Requirements (including payment of all applicable fees) with respect to any such Intellectual Property.

 

(f)            Each of the Transferred Companies has taken reasonable measures to protect the secrecy, confidentiality and value of all Trade Secrets included in the Owned Intellectual Property, including establishing a policy that requires each employee and consultant of each Transferred Company and any other Person with access to such Owned Intellectual Property to agree to protect the security confidentiality and value of such Trade Secrets, and, to the Knowledge of Parent, there has not been any unauthorized disclosure of any Trade Secrets included in the Owned Intellectual Property.

 

(g)           Each of the Transferred Companies has taken reasonable measures to ensure that all former and current employees, consultants and contractors of any Transferred Company who contribute or have contributed to the creation or development of any material Intellectual Property in the course of their employment or engagement or otherwise for or on behalf of the Transferred Companies execute written instruments with such Transferred Company that assign to such Transferred Company all rights, title and interest in and to any such contributions or otherwise validly assign all such right, title and interest to such Transferred Company that the Transferred Company does not already own by operation of law.

 

(h)           Parent and its Affiliates (other than the Transferred Companies) do not own, and do not have any license or right to use, any Intellectual Property used in the Business, and do not have the Trade Secrets used in the Business.

 

2.16        Permits.  The Transferred Companies hold, and are in all material respects in compliance with, all material Permits (other than Permits required under Environmental Requirements, which are addressed in Section 2.14) required to conduct the Business in all material respects in the manner in which it is conducted as of the date of this Agreement.  All such material Permits are in full force and effect, and no event has occurred and is continuing which permits, or after notice or lapse of time or both would permit, any modification, revocation, non-renewal or termination of any such Permit.

 

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2.17        Insurance.  All material assets and risks of the Transferred Companies are covered by valid insurance policies in such types and amounts and covering such risks as are consistent with customary practices and standards of companies engaged in businesses and operations and with an ownership structure similar to that of the Business, taken as a whole.  All such insurance policies are in full force and effect and all premiums due and payable thereon have been paid in full.  As of the date of this Agreement, no written notice has been received by Parent or any of the Transferred Companies that would reasonably be expected to be followed by a written notice of cancellation, alteration of coverage or non-renewal of any such insurance policy.

 

2.18        Customers and Suppliers.  Schedule 2.18 of the Disclosure Letter sets forth a true and complete list of the fifteen (15) largest customers and distributors and the fifteen (15) largest suppliers of the Business, as measured by the dollar amount of purchases therefrom or thereby, during the fiscal year ended December 31, 2012, showing the approximate total sales by the Transferred Companies to each such customer and the approximate total purchases by the Transferred Companies from each such supplier, during such period.  Since December 31, 2012 and prior to the date of this Agreement, no customer or supplier listed on Schedule 2.18 of the Disclosure Letter has terminated in writing its relationship with any Transferred Company or materially reduced, or adversely changed the pricing of, its business with any Transferred Company and, to the Knowledge of Parent, no customer or supplier listed on Schedule 2.18 of the Disclosure Letter has notified any Transferred Company that it intends to terminate or materially reduce, or adversely change the pricing of, its business with any Transferred Company.

 

2.19        Compliance with Foreign Corrupt Practices Act.  Since the Lookback Date, none of the Transferred Companies, or any director, officer, agent, employee or other person acting on behalf of any Transferred Company, has violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act of 2010 or similar laws of any jurisdiction.  Since the Lookback Date, none of the Transferred Companies has received any written communication that alleges that any of the Transferred Companies, or its representative, has or may have violated or have any liability under such Legal Requirements.

 

2.20        Brokers.  Except for Lazard Frères & Co. LLC, whose fees and expenses will be paid by Parent or one of its Affiliates (other than the Transferred Companies), no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby based upon any agreements, written, oral or otherwise made by or on behalf of Parent or any of its Affiliates (including the Transferred Companies).

 

2.21        Product Liabilities.  Since the Lookback Date, (i) no Transferred Company has received any written claim alleging Losses in an amount in excess of $200,000 as a result of any defect or other deficiency (whether of design, materials, workmanship, labeling, instructions, or otherwise) with respect to any products designed, manufactured, sold, leased, licensed, or delivered, or any service provided by the Transferred Companies, whether incurred by reason of any express or implied warranty (including any warranty of merchantability or fitness), any doctrine of common law (tort, contract, or other), any other Legal Requirement or otherwise, (ii)

 

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no Governmental Authority has alleged that any product designed, manufactured, sold, leased, licensed, or delivered by any Transferred Company is defective or unsafe or fails to meet any product warranty or any standards promulgated by any such Governmental Authority and no product designed, manufactured, sold, leased, licensed, or delivered by any Transferred Company has been recalled and (iii) no Transferred Company has received any written notice of recall of any such product from any Governmental Authority.  Except for normal returns and allowances which, individually or in the aggregate, have not been, and would not reasonably be expected to be, material to the Business, taken as a whole, no event has occurred or circumstance exists that (with or without notice or lapse of time or both) could result in any such Losses or recall.

 

The parties hereto agree as follows:

 

2.22        NO OTHER REPRESENTATIONS OR WARRANTIES.  EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE II, PARENT MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WRITTEN OR ORAL, AND PARENT HEREBY DISCLAIMS TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS ANY SUCH REPRESENTATION OR WARRANTY (INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE), WHETHER BY PARENT, THE OTHER SELLERS, THE TRANSFERRED COMPANIES, THEIR AFFILIATES OR ANY OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OR ANY OTHER PERSON, WITH RESPECT TO THE TRANSFERRED COMPANIES, THE BUSINESS, THE SHARES, THE BUSINESS ASSETS, THE LIABILITIES OF THE BUSINESS OR THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY OTHER MATTER WHATSOEVER, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO BUYER, ANY AFFILIATE OF BUYER OR ANY OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OR ANY OTHER PERSON OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY PROJECTIONS OR DUE DILIGENCE REPORTS) BY PARENT, THE OTHER SELLERS, THE TRANSFERRED COMPANIES, OR ANY OF THEIR AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OR ANY OTHER PERSON WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.  BUYER ACKNOWLEDGES THAT IN ENTERING INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY IT IS NOT RELYING ON ANY INFORMATION OTHER THAN THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE II.  NOTHING HEREIN SHALL LIMIT THE LIABILITY OF ANY PARTY FOR INTENTIONAL FRAUD.

 

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ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer hereby represents and warrants to Parent as follows:

 

3.1          Incorporation of Buyer.  Buyer is a company with limited liability, validly existing and in good standing under the laws of Germany, and the share capital of Buyer has been fully paid in.

 

3.2          Power; Authorization; Consents.

 

(a)           Buyer has the corporate power and authority to execute, deliver and perform this Agreement and the Ancillary Documents to be executed and delivered by Buyer and to consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance by Buyer of this Agreement and the Ancillary Documents to be executed and delivered by Buyer and the consummation of the transactions contemplated hereby and thereby by Buyer have been duly authorized and approved by the sole shareholder of Buyer and no other corporate proceedings on the part of Buyer or its sole shareholder are necessary to authorize and approve this Agreement and the Ancillary Documents to be executed and delivered by Buyer and the transactions contemplated hereby and thereby.  This Agreement has been duly executed and delivered by Buyer, and the Ancillary Documents to be executed and delivered by Buyer at the Closing will be duly executed and so delivered by Buyer.  This Agreement constitutes, and at the Closing each Ancillary Document to be executed and delivered by Buyer will constitute, a valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by the Bankruptcy and Equity Exceptions.

 

(b)           The execution, delivery and performance by Buyer of this Agreement and the Ancillary Documents to be executed and delivered by Buyer and the consummation of the transactions contemplated hereby and thereby do not and will not:

 

(i)            contravene any provisions of the certificate of incorporation or by-laws (or comparable organization documents) of Buyer;

 

(ii)           in any material respect, conflict with, result in a breach of any provision of, constitute a default under, or entitle any Person (with due notice or lapse of time or both) to terminate, cancel, accelerate, modify or call a default with respect to, any material contract, agreement, lease, order, arbitration owed, judgment or decree or other material commitment, to which Buyer is a party or to which any of its Assets is subject;

 

(iii)          in any material respect, violate or conflict with any material Legal Requirements applicable to Buyer or any of their businesses or Assets; provided, that Buyer makes no representation or warranty in this Section 3.2(b)(iii) with respect to any Antitrust Law; or

 

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(iv)          require Buyer or any of its Affiliates to obtain, secure or make any material Approval, except for compliance with and filings under the HSR Act and the Non-U.S. Antitrust Approvals.

 

3.3          Litigation.  As of the date of this Agreement, there is no Litigation pending or, to the knowledge of Buyer, threatened in writing, against Buyer or any of its Affiliates that would, if adversely determined, materially impair the ability of Buyer to consummate the transactions contemplated by this Agreement and the Ancillary Documents to which Buyer is a party.

 

3.4          Brokers.  No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby based upon any agreements, written, oral or otherwise made by or on behalf of Buyer or any of its Affiliates.

 

3.5          Investment Intent of Buyer.  Buyer has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of purchasing the Shares.  Buyer is acquiring the Shares pursuant to this Agreement for its own account for investment purposes only, and not with the view to or in connection with any distribution thereof.  Buyer acknowledges and agrees that the Transferred Companies, the Shares and Business are being sold “as is”, except as expressly set forth in this Agreement.  Buyer acknowledges and agrees that it has conducted its own independent inspection, examination and determination with respect to the Shares, the Business, the Business Assets and the condition of the Transferred Companies (financial, Tax or otherwise).  Without limiting the generality of the foregoing, Buyer acknowledges that Parent makes no representation or warranty with respect to (i) any projections, estimates or budgets delivered to or made available to Buyer or its representatives of future revenues, future results of operations (or any component thereof), future cash flows or future financial condition (or any component thereof) of the Transferred Companies or the Business or the future business and operations of the Transferred Companies or the Business or (ii) except as expressly set forth in this Agreement, any other information or documents made available to Buyer or its representatives with respect to the Transferred Companies, the Shares or the Business.

 

3.6          Cash Resources.  Buyer, together with its Affiliates, including Guarantor, will have at the Closing sufficient funds to enable Guarantor to pay the Purchase Price on behalf of Buyer and for Buyer to perform its obligations under this Agreement and the Ancillary Documents to which it is or at the Closing will be a party.

 

ARTICLE IV

 

COVENANTS

 

4.1          Access; Confidentiality.

 

(a)           Between the date of this Agreement and the Closing, Parent will, and will cause the Transferred Companies to, during normal business hours and upon reasonable prior notice, (i) provide to Buyer and its representatives reasonable access to the premises,

 

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property, books and records of the Transferred Companies related to the Business, (ii) furnish to Buyer and its representatives financial information, operating data and other information pertaining to the Business and the Business Assets, (iii) make available for inspection and copying by Buyer copies of any documents relating to the foregoing and (iv) permit Buyer and its representatives to conduct reasonable interviews of executive officers of the Business; provided, however, that (x) Buyer shall exercise its right under this Section 4.1(a) in such a manner as to not unreasonably interfere with the operation of the Business, (y) for the avoidance of doubt, Buyer’s right under this Section 4.1(a) shall in no way include the right to any invasive environmental investigation or invasive procedure or investigation, including any sampling, testing or removal of materials (other than documents to the extent permitted hereunder) from the offices, factories and properties of Parent, the other Sellers or the Transferred Companies without the consent of Parent, and (z) Parent may limit such access described in clauses (i) through (iv) above to the extent such access (A) would, in the opinion of Parent’s counsel, violate or give rise to liability under applicable Legal Requirements, including any Antitrust Laws, (B) would require Parent or any of its Affiliates to waive any attorney-client privilege or (C) conflicts with any confidentiality obligations to which Parent or any of its Affiliates is bound; provided, that Parent shall use commercially reasonable efforts to establish a process that, through customary steps, such as targeted redactions, providing information to counsel to review and summarize for Buyer or using a clean room environment, will provide Buyer with timely access to the fullest extent possible in a manner that allows Parent to avoid such consequences; provided, further, that the access to any information provided by Parent or knowledge obtained by Buyer pursuant to this Section 4.1 shall not (i) affect or be deemed to affect or modify any representation, warranty, covenant or agreement contained herein, the conditions to the obligations of the parties to consummate the Closing in Articles V and VI or otherwise prejudice in any way the rights and remedies of Buyer hereunder, including pursuant to Article VII, (ii) be deemed to affect or modify Buyer’s reliance on the representations, warranties, covenants and agreements made by Seller in this Agreement or (iii) be deemed to amend or supplement the Disclosure Letter or prevent or cure any misrepresentation, breach of warranty or breach of covenant by Parent.

 

(b)           Subject to Section 4.21, all information provided to Buyer or its representatives by or on behalf of Parent, the other Sellers, the Transferred Companies, their Affiliates or their representatives (whether pursuant to this Section 4.1 or otherwise) prior to the Closing will be governed and protected by the Confidentiality Agreement between Parent and Buyer dated July 1, 2013 (the “Confidentiality Agreement”).

 

4.2          Announcements.  Prior to the Closing, no party shall, and each party shall cause its Affiliates and representatives, including any financial advisors, not to, issue any press release or otherwise directly or indirectly make any public statement or announcement with respect to the transactions contemplated hereby without the prior consent of the other party, except as may be required by applicable Legal Requirements or the rules of any stock exchange on which their securities (or securities of any of their Affiliates) are listed (in which case the party required (or whose Affiliate or representative is required) to make the release, statement or announcement shall, to the extent practicable under the circumstances, allow the other party reasonable time to comment on such release or announcement in advance of its issuance (the first party being under no obligation to accept any such comments)).

 

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4.3          Conduct of Business Prior to the Closing.

 

(a)           During the period from the date of this Agreement and continuing until the Closing, except as expressly provided in or otherwise contemplated by this Agreement or as set forth on Schedule 4.3(a) of the Disclosure Letter and except for the Restructurings, to the extent that Buyer otherwise shall consent (which consent shall not be unreasonably withheld, delayed or conditioned), Parent (to the extent related to the Business) shall, and shall cause the other Sellers (to the extent related to the Business) and the Transferred Companies to, conduct the Business in all material respects in the ordinary course of business and use commercially reasonable efforts to keep available in all material respects the services of their present officers and other key employees to preserve in all material respects the Business Assets and their relationships with material customers, suppliers, landlords, licensors, licensees, distributors and others having material business dealings with them, and continue making expenditures, collecting accounts receivable and paying accounts payable in the ordinary course of business.

 

(b)           Without limiting the generality of the foregoing, during the period from the date of this Agreement and continuing until the Closing, except as expressly provided in or otherwise contemplated by this Agreement or as set forth on Schedule 4.3(b) of the Disclosure Letter and except for the Restructurings, to the extent that Buyer otherwise shall consent (which consent shall not be unreasonably withheld, delayed or conditioned) or as required by changes in applicable Legal Requirements, Parent (to the extent related to the Business) shall not, and shall not permit any of the other Sellers (to the extent related to the Business) or Transferred Companies to, do any of the following:

 

(i)            amend the certificates of incorporation or by-laws (or comparable organizational documents) of any Transferred Company;

 

(ii)           (A) issue additional shares of capital stock or other equity interests of any Transferred Company or (B) sell, subject to any Encumbrance or dispose of any Shares, any Subsidiary Shares or any other shares of capital stock or other securities of, or other ownership interests in, any Transferred Company or grant options, warrants, calls or other rights to purchase or otherwise acquire Shares, Subsidiary Shares or other shares of the capital stock or other securities of, or other ownership interests in, any Transferred Company, other than (1) in the case of subclauses (A) and (B), any issuances, sales, dispositions or grants to one or more Transferred Companies as contemplated by the Restructurings or (2) in the case of subclause (B), any Encumbrances that will be released prior to the Closing;

 

(iii)          sell, transfer, license, sublicense, lease, abandon, allow to lapse or otherwise dispose of any of the material Business Assets (including any Owned Intellectual Property), except for a grant of a non-exclusive license of a Trademark of a Transferred Company pursuant to a sales, distribution or agency agreement entered into  in the ordinary course of business, where such license is related to the sale or distribution of a product of such Transferred Company to its customers;

 

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(iv)          alter in any manner the base salary or other compensation or benefits due or payable (or that may become due or payable) to any Business Employee or class or group of Business Employees, other than (x) in the ordinary course of business consistent with past practice with respect to Business Employees with annual base salaries of less than $150,000, (y) as required by Benefit Plans or Business Agreements, in each case, as in effect as of the date of this Agreement, or any collective bargaining agreements (including any Verbandstarifverträge) or any other agreements with any labor unions or works council as in effect on the date hereof or as entered into or amended consistent with the terms of this Agreement, or (z) as required by applicable Legal Requirements;

 

(v)           terminate or materially amend any Benefit Plan or adopt any new agreement, plan or arrangement that would have been a Benefit Plan had it existed as of the date hereof, other than (x) a termination, amendment or adoption that does not materially increase the cost to the Transferred Companies, (y) as required by Benefit Plans or Business Agreements, in each case, as in effect as of the date of this Agreement, or any collective bargaining agreements or any other agreements with any labor unions or works council as in effect on the date hereof or as entered into or amended consistent with the terms of this Agreement, or (z) as required by applicable Legal Requirements;

 

(vi)          (x) forgive any loans to any Business Employee with an annual base salary of more than $150,000 and (y) forgive any loans to any other Business Employee other than in the ordinary course of business consistent with past practice;

 

(vii)         terminate, or transfer to Parent or any of its Affiliates other than a Transferred Company, the employment or engagement of any Business Employee, other than (w) as necessary to comply with the requirements of Section 9.4(b) of this Agreement, (x) with respect to the Resigning Officers and Directors, (y) with respect to the employees listed on Schedule 4.3(b)(vii) of the Disclosure Letter (the “Retained Employees”) or (z) for cause with prior reasonable notice to Buyer and in the ordinary course of business;

 

(viii)        enter into, amend, or terminate, in any material respect, any collective bargaining agreement, works council agreement or other arrangement with a union, works council or similar representative of any Business Employee, other than in the ordinary course of business or as required by applicable Legal Requirements; provided, however, that Southern Clay Products will reasonably consult with Buyer with respect to the negotiations and renewal of the Chemical Workers CBA;

 

(ix)          make any changes in the senior management of the Transferred Companies other than with respect to (x) any voluntary resignations from employment, or (y) any termination of employment for cause;

 

(x)           make any material change in any accounting method or practice with respect to the Business, except as may be required by GAAP;

 

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(xi)          declare, set aside or pay any non-cash dividend or distribution in respect of any shares of capital stock or other equity security of any Transferred Company, or purchase, redeem or acquire any shares of capital stock or other equity security of any Transferred Company;

 

(xii)         subject to any voluntary Encumbrance (other than Permitted Encumbrances) any Business Assets which Encumbrance shall not be released or satisfied prior to the Closing;

 

(xiii)        make or enter into any Business Agreement that would be a Material Contract or Lease, other than any Business Agreement made or entered into in the ordinary course of business, or enter into any Business Agreement containing any obligations of the types described in Section 2.10(e), (j) or (k);

 

(xiv)        accelerate, renew (other than in the ordinary course of business), terminate, restate, or in any material respect, amend, supplement or waive, any material rights under any Material Contract or Lease;

 

(xv)         settle, pay, discharge, satisfy or compromise any material action, suit, litigation, investigation, proceeding or claim relating to, or, other than in the ordinary course of business, waive, release, grant or transfer any material rights of, the Transferred Companies, the Business or the Business Assets (in each case, other than with respect to Tax matters which shall be governed by Section 4.3(b)(xvii));

 

(xvi)        enter into or agree to enter into any merger or consolidation with any Entity, engage in any new material line of business, discontinue an existing line of business or invest in, make a loan, advance or capital contribution to, or otherwise acquire the securities, of any other Person, other than extensions of trade credit or loans or advances to employees, in each case, in the ordinary course of business;

 

(xvii)       make a material change in its Tax accounting methods or annual Tax accounting period, or, in respect of Taxes, change or rescind any material election, amend any material Tax Return, enter into any closing agreement in respect of material Taxes, settle any material claim or assessment, surrender any right to claim a refund, consent to any extension or waiver of the limitation period applicable to any material Tax claim or assessment or take any similar action relating to the filing of any material Tax Return or the payment of any material Tax, in each case, which could reasonably be expected to materially increase the Tax liability, or materially decrease any Tax attribute, of any Transferred Company for any taxable period beginning after the Closing Date;

 

(xviii)      except as expressly contemplated by the Restructurings, create any Subsidiary of a Transferred Company;

 

(xix)        enter into any commitment for capital expenditures other than expressly provided for in the budget of the Transferred Companies or in excess of $500,000 in the aggregate; or

 

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(xx)         agree or otherwise become obligated, whether in writing or otherwise, to do any of the foregoing.

 

Notwithstanding any provision of this Agreement, (x) the Transferred Companies may distribute some or all of their cash, short term investments and cash equivalents to their stockholders or other equity holders at or prior to the Closing and take such actions as may be required to effect the foregoing, (y) prior to the Closing, Sellers may continue to manage the Transferred Companies’ cash through intercompany accounts and cash management arrangements consistent with past practices and (z) Sellers and the Transferred Companies may take any of the actions specified on Schedule 4.3 of the Disclosure Letter at or prior to the Closing.

 

4.4          Consents; Cooperation.  Subject to the terms and conditions hereof, Parent and Buyer will use their respective commercially reasonable efforts (and to the extent necessary, will use their respective commercially reasonable efforts to cause their Affiliates to use their respective commercially reasonable efforts):

 

(a)           to obtain, secure or make prior to the earlier of the date required (if so required) or the Closing Date, any Consents or Approvals of, to or with any Governmental Authority or any other third Person (subject to Section 4.9) that are required for the consummation of the transactions contemplated by this Agreement;

 

(b)           subject to Section 4.5, to defend, consistent with applicable Legal Requirements, any lawsuit or other legal proceeding, whether judicial or administrative, whether brought derivatively or on behalf of third Persons (including Governmental Authorities) challenging this Agreement or the transactions contemplated hereby;

 

(c)           subject to Section 4.1, to furnish to each other such information and assistance as may reasonably be requested in connection with the foregoing; and

 

(d)           subject to Section 4.5(c), to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement including satisfaction, but not waiver, of the closing conditions set forth in Articles V and VI.

 

4.5          Competition Filings.

 

(a)           In furtherance of the respective obligations of Buyer and Parent contained in Section 4.4, Parent and Buyer shall (i) as promptly as practicable, but in no event later than ten (10) Business Days, following the execution and delivery of this Agreement, file or cause to be filed with the Federal Trade Commission (“FTC”) and the United States Department of Justice (“DOJ”) the initial notification and report form under the HSR Act required for the transactions contemplated hereby, (ii) if required by any Applicable Non-U.S. Antitrust Law, as promptly as practicable following the date of this Agreement, notify the transactions contemplated hereby to any other Governmental Authority with competent jurisdiction to review the transactions contemplated hereby pursuant to such Applicable Non-U.S. Antitrust Laws, (iii) cooperate (and shall cause their respective Affiliates to cooperate) in promptly responding to and

 

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promptly providing the information requested by (A) any request for additional information and documentary material under the HSR Act or (B) any requests for information from any Governmental Authority pursuant to any Applicable Non-U.S. Antitrust Law, (iv) seek to terminate any waiting periods under the HSR Act or  applicable suspensory periods during which the Closing cannot occur under any other applicable Antitrust Laws as soon as practicable, (v) obtain any required consents or approvals pursuant to any Applicable Non-U.S. Antitrust Law, and (vi) furnish the other party and the other party’s counsel as promptly as practicable with all such information and reasonable assistance as may be reasonably required in order to effectuate the foregoing actions.  Neither party to this Agreement shall agree to any voluntary extension or delay of any waiting periods or applicable suspensory periods during which the Closing cannot occur under the HSR Act or under any Applicable Non-U.S. Antitrust Law, or otherwise withdraw its notification and report form under either the HSR Act or any Applicable Non-U.S. Antitrust Law, in each case, unless both Parent and Buyer have given their prior written consent to such extension, delay or withdrawal.

 

(b)           Buyer and Parent shall use their commercially reasonable efforts to defend any challenge, administrative process or litigation brought by any Governmental Authority or third person seeking to restrain or prohibit any of the transactions contemplated by this Agreement under any Antitrust Laws, and to vacate any relevant restraining order, injunction or adverse decision that prohibits the consummation of the transactions contemplated by this Agreement, in each case, so as to permit the transactions contemplated by this Agreement to be consummated as expeditiously as possible.

 

(c)           Subject to the terms and conditions herein provided, and without limitation by the foregoing, Buyer shall offer to take, or cause to be taken, all commercially reasonable actions and do, or cause to be done, all other commercially reasonable things necessary, proper or advisable to eliminate any objection that any Governmental Authority has to the transactions contemplated by this Agreement under applicable Antitrust Laws and to consummate the transactions contemplated by this Agreement, in each case, as expeditiously as possible.

 

(d)           Subject to applicable Legal Requirements, the preservation of the attorney-client privilege and the instructions of any Governmental Authority, Parent and Buyer shall each keep the other informed of the status of matters relating to the completion of the transactions contemplated by this Agreement, including promptly furnishing the other with copies of notices or other communications between Parent or Buyer, as the case may be, or any of their respective Affiliates (with any competitively sensitive information being provided on an external counsel basis only and excluding any internal business documents of Buyer), and any third Person and/or any Governmental Authority with respect to such transactions.  Parent and Buyer shall permit counsel for the other party reasonable opportunity to review in advance, and consider in good faith the views of the other party in connection with, any proposed written communication to any Governmental Authority with respect to such transactions.  Parent and Buyer each agree not to participate in any substantive meeting or discussion, either in person or by telephone, with any Governmental Authority in connection with the transactions contemplated by this Agreement unless it consults with the other party in advance and, to the 

 

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extent not prohibited by such Governmental Authority, gives the other party the opportunity to attend and participate.

 

4.6          Use of Name.

 

(a)           Buyer agrees that (except as expressly set forth in this Section 4.6(a)), after the Closing neither Buyer nor its Affiliates (including the Transferred Companies) shall have any rights in and to the mark “Rockwood” or any Trademark  related thereto or containing or comprising any of the foregoing, including any mark or term confusingly similar thereto or derivative thereof (the “Seller Marks”), and will not at any time after the Closing market, promote, advertise or offer for sale any products, goods or services utilizing any of the Seller Marks or otherwise hold itself out as having any affiliation with Parent or any of its Affiliates.  Buyer agrees that, after the expiration of the license contained in this Section 4.6(a), if any of the Business Assets, including any promotional materials, bear the Seller Marks, Buyer shall, prior to distributing, selling or otherwise making use (other than internal use) of such Business Assets, remove, delete or render illegible the Seller Marks as they may appear on such Business Assets; provided that Buyer shall use its commercially reasonable efforts to remove, delete or render illegible any Seller Marks from any Business Assets used for internal use as promptly as practicable following the expiration of such license.  Notwithstanding the foregoing, Parent hereby grants to Buyer and the Transferred Companies a non-exclusive, non-assignable, fully paid-up, royalty-free, worldwide license for a period of one hundred and twenty (120) days after the Closing Date to use the Seller Marks to distribute, sell and offer for sale, products and services, including for the display of marketing, promotional and advertising materials, business cards, stationery, packaging materials, displays, signs, promotional materials and other similar materials that include one or more of the Seller Marks (collectively, “Supplies”), provided such Supplies (i) were included within the inventory of Business Assets as of the Closing, (ii) are used solely in connection with the promotion, marketing, advertising and sale of the Business’ products of the type sold, and in a manner consistent with that used, prior to the Closing and (iii) clearly indicate that (x) the Transferred Companies are not affiliated with Parent or any of Parent’s Affiliates and (y) the inclusion of the Seller Marks in the Supplies shall not be construed as an endorsement of any of the Business’ products by Parent or any of Parent’s Affiliates.  Buyer shall indemnify and hold harmless the Seller Indemnitees against all Losses asserted against or imposed upon them as a consequence of the use of the Seller Marks by Buyer and its Affiliates (including the Transferred Companies) following the Closing, except for any Losses asserted against or imposed upon them as a consequence of any claim that the use of the Seller Marks infringes the rights of any third Person.

 

(b)           Buyer agrees to cause each Transferred Company whose name includes the name “Rockwood” to, promptly following the Closing, and in any event within fifteen (15) Business Days after the Closing Date, change its name such that its name does not include the name “Rockwood.”

 

4.7          Notification of Certain Matters.  Between the date of this Agreement and the Closing, (a) Parent will give prompt notice in writing to Buyer of (i) any written notice or other written communication it receives from any Governmental Authority in connection with the transactions contemplated by this Agreement, to the extent permitted by Legal Requirements,

 

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(ii) any written notice from any Person alleging that the Consent or Approval of such Person is or may be required in connection with the transactions contemplated by this Agreement or any of the Ancillary Documents, or (iii) any specific event or circumstance of which it has Knowledge, or of which it receives written notice, that (x) has had or could reasonably be expected to have, individually or in the aggregate, taken together with other events or circumstances, a Material Adverse Effect or (y) will result, or has a reasonable prospect of resulting, in the failure to satisfy a condition specified in Article V by the Outside Date, and (b) Buyer will give prompt notice in writing to Parent of (i) any written notice or other written communication it receives from any Governmental Authority in connection with the transactions contemplated by this Agreement, to the extent permitted by Legal Requirements, (ii) any written notice from any Person alleging that the Consent or Approval of such Person is or may be required in connection with the transactions contemplated by this Agreement or any of the Ancillary Documents, or (iii) any specific event or circumstance of which it has knowledge, or of which it receives notice, that will result, or has a reasonable prospect of resulting, in the failure to satisfy a condition specified in Article VI by the Outside Date; provided, however, that the delivery of any notice by Parent and the information or knowledge obtained by Buyer pursuant to this Section 4.7 shall not (i) affect or be deemed to affect or modify any representation, warranty, covenant or agreement contained herein, the conditions to the obligations of the parties to consummate the Closing in Articles V and VI or otherwise prejudice in any way the rights and remedies of Buyer hereunder, including pursuant to Article VII, (ii) be deemed to affect or modify Buyer’s reliance on the representations, warranties, covenants and agreements made by Seller in this Agreement or (iii) be deemed to amend or supplement the Disclosure Letter or prevent or cure any misrepresentation, breach of warranty or breach of covenant by Parent.

 

4.8          Retention of Books and Records.  Buyer will retain, or cause its Affiliates (including the Transferred Companies) to retain, all books, records and other documents pertaining to the Business in existence on the Closing Date and to make the same available after the Closing Date for examination and copying by Parent or its representatives, at Parent’s expense, upon reasonable notice and subject to entry into customary confidentiality obligations.  Buyer agrees that no such books, records or documents will be destroyed by Buyer or its Affiliates (including the Transferred Companies) until the later of (i) seven (7) years following the Closing or (ii) the expiration of the statute of limitations for the assessment of Taxes in the jurisdiction to which such books, records and documents relate, and that thereafter no such books, records or documents will be destroyed without first advising Parent in writing and providing to Parent a reasonable opportunity to obtain possession or make copies thereof at Parent’s expense.

 

4.9          Permits.  Buyer shall be responsible for effecting all updates and amendments and reissuances of Permits required in connection with or as a result of the transactions contemplated hereby.  Parent will, and will cause its Affiliates to, reasonably cooperate with Buyer in effecting such updates, amendments and reissuances.

 

4.10        Intercompany Agreements.

 

(a)           As of the Closing, all Business Agreements and transactions between Parent and its Affiliates (other than the Transferred Companies) on the one hand, and

 

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the Transferred Companies, on the other hand(other than the Business Agreements or other transactions listed on Schedule 4.10 of the Disclosure Letter) will either be terminated or amended to remove or replace the applicable Transferred Company or Affiliate of Parent, as the case may be, as a party to such agreement, as applicable, without further liability to any Transferred Company that is a party thereto with respect to periods following the Closing.

 

(b)           Parent shall, and shall cause its Affiliates (including the other Sellers and the Transferred Companies) to take such actions as are necessary to ensure that the Retained Cash Balances do not exceed U.S.$10.0 million at Closing; provided that any amounts deemed to be Retained Cash Balances pursuant to Section 4.22 shall not be Retained Cash Balances for these purposes.

 

4.11        Indebtedness.  Prior to the Closing, except for any Indebtedness arising under any Enterprise Agreement, Parent will cause each Transferred Company to pay, discharge, compromise, settle, terminate or otherwise satisfy (or cause to be paid, discharged, compromised, settled, terminated, contributed to the capital of the applicable Transferred Company or otherwise satisfied) in full all Indebtedness of the Transferred Companies, including any intercompany Indebtedness owing from any Transferred Company to Parent or any of its Affiliates (other than the Transferred Companies) and all Indebtedness listed on Schedule 2.5(b) of the Disclosure Letter.  In addition, Parent will cause all intercompany Indebtedness owing from Parent or any of its Affiliates (other than the Transferred Companies) to the Transferred Companies to be paid, discharged, compromised, settled, terminated, contributed to the capital of Parent or the applicable Affiliate or otherwise satisfied in full prior to the Closing.

 

4.12        Guarantees.  The parties shall use their commercially reasonable efforts to obtain, on or before the Closing Date, and in any event within ninety (90) days following the Closing Date, the release of each of the obligations of Parent (or any Affiliate thereof, other than the Transferred Companies) to guaranty the liabilities listed on Schedule 4.12 of the Disclosure Letter, and Buyer shall provide such guarantees as shall be reasonably required to obtain such release.  Buyer shall indemnify and hold harmless Parent in respect of any liability or expense incurred by Parent (or any Affiliate thereof, other than the Transferred Companies) in respect of any claim made in respect of any such liability or expense arising or incurred after the Closing Date.

 

4.13        Title Insurance.  Prior to the Closing, Parent will cause the Transferred Companies to reasonably cooperate with Buyer in Buyer’s efforts to obtain title insurance or title reports in respect of the Real Property located in the United States.  Such cooperation will include the execution of such customary instruments by Parent reasonably requested by Buyer’s title insurance company to enable Buyer to obtain such insurance and desired endorsements; provided, however, that Parent and its Affiliates (other than the Transferred Companies) shall not be required to execute any instrument which expands in any way the representations and warranties contained herein or the liabilities of Parent hereunder (for purposes of this Agreement, any instrument executed by the Transferred Companies pursuant to this Section 4.13 shall be deemed to have been executed and delivered following the Closing).  The premiums for such title insurance will be Buyer’s responsibility.

 

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4.14        Restructurings.  Parent shall cause the Restructurings to be consummated in accordance with Schedule A-2 of the Disclosure Letter and shall use commercially reasonable efforts to consummate the Restructurings prior to the date the Closing would otherwise be required to occur pursuant to this Agreement without giving effect to the conditions to the consummation of the Closing set forth in Sections 5.5 and 6.4.  All fees, expenses and other liabilities, other than Taxes (liability for which Buyer is indemnified for to the extent provided in Section 9.1(a)(iii)), in connection with the Restructurings shall be Parent’s responsibility.

 

4.15        Restrictive Covenants.

 

(a)           Parent agrees, to the maximum extent not violative of applicable Legal Requirements, that for a period of two (2) years following the Closing Date, Parent will not, nor will it permit any of its Affiliates to, directly or indirectly, solicit for employment or hire any Business Employee who is or has been employed by any of the Transferred Companies, at, or at any time within one (1) year prior to, the time of the act of solicitation; provided, however, that (i) general solicitations, such as through newspaper advertisements not directed at Business Employees, will not be deemed to violate this Section 4.15(a) and (ii) this Section 4.15(a) shall not apply in respect of any Business Employee whose employment with Buyer or any of its Affiliates, including the Transferred Companies, is terminated by Buyer or any of its Affiliates.

 

(b)           Parent agrees, to the maximum extent not violative of applicable Legal Requirements, that for a period of three (3) years following the Closing Date, Parent will not, and will not permit any of its Affiliates to, engage in the Business in any country (the “Restricted Territory”) in which the Business conducts operations as of the Closing Date (the “Restricted Business”); provided, however, that nothing herein shall be construed to prevent Parent or its Affiliates from (w) acquiring or owning, directly or indirectly, up to 5% of a class of equity securities issued by any Person that engages, directly or indirectly, in the Restricted Business in the Restricted Territory that is publicly traded or listed on any stock exchange or automated quotation system, (x) conducting any business conducted by them on the Closing Date (other than those conducted through the Transferred Companies), (y) acquiring any Entity or business or owning such acquired Entity or business that, directly or indirectly, engages in the Restricted Business in the Restricted Territory; provided, however, that if more than 15% of the aggregate net revenue derived from the last complete fiscal year of such acquired Entity or business (calculated on a consolidated basis) was attributed to the Restricted Business in the Restricted Territory, Parent will or will cause its applicable Affiliate to, as the case may be, use commercially reasonable efforts to dispose of such portion of such Entity or business to the extent that it engages in the Restricted Business in the Restricted Territory within nine (9) months of the consummation of such acquisition by Parent or such Affiliate, or (z) performing its obligations under this Agreement or any Ancillary Document.

 

(c)           Notwithstanding anything herein to the contrary, the restrictions set forth in Sections 4.15(a) and 4.15(b) will apply only to Rockwood and Entities “controlled by” (as such term is defined in the definition of the term “Affiliate”) Rockwood, and shall not apply to any third Person or the Affiliates of such third Person (other than Rockwood, and any Entities “controlled” by Rockwood) that acquires Rockwood or any Entities “controlled” by

 

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Rockwood, whether as a result of a merger, consolidation, other business combination, or acquisition of all or substantially all of its assets or business.

 

(d)           Parent acknowledges and agrees that the covenants set forth in this Section 4.15 are reasonable in geographical and temporal scope and in all other respects, and any violation of these restrictions would cause substantial injury to Buyer and that Buyer would not have entered into this Agreement without receiving the additional consideration offered by Parent in binding itself and its Affiliates to these restrictions.  In the event of a breach or a threatened breach by Parent or any of its Affiliates of these restrictions, Buyer will be entitled to seek an injunction restraining Parent or such Affiliate from such breach or threatened breach without the necessity of proving the inadequacy as a remedy of money damages; provided, however, that the right to injunctive relief will not be construed as prohibiting Buyer from pursuing any other available remedies, whether at law or in equity, for such breach or threatened breach.

 

(e)           If any court determines that any provision included in this Section 4.15 is unenforceable, such court will have the power to reduce the duration or scope of such provision, as the case may be, or terminate such provision and, in reduced form, such provision shall be enforceable; it is the intention of the parties hereto that the foregoing restrictions shall not be terminated, unless so terminated by a court, but shall be deemed amended to the extent required to render them valid and enforceable, such amendment to apply only with respect to the operation of this Agreement in the jurisdiction of the court that has made the adjudication.

 

4.16        Cooperation in Litigation.  Buyer and Parent shall (and shall cause their respective Affiliates to) reasonably cooperate with each other at the requesting party’s expense in the prosecution or defense of any claim, litigation or other proceeding arising from or related to the conduct of the Business prior to the Closing and involving one or more third Persons.  The party requesting such cooperation shall pay the reasonable out of pocket expenses incurred in providing such cooperation (including reasonable legal fees and disbursements) by the party providing such cooperation and by its Affiliates and its and their officers, directors, employees and agents, but shall not be responsible for reimbursing such party or its Affiliates or its and their officers, directors, employees and agents for their time spent in such cooperation.

 

4.17        Assistance Obligations of Buyer.  After the Closing, Buyer will (and will cause the Transferred Companies and its other Affiliates to) reasonably assist Parent and its Affiliates in preparing information for various Governmental Authorities or third party insurance providers under policies held by Parent or its Affiliates after the Closing to the extent that such information relates to the transactions contemplated by this Agreement, the Business, the Business Assets and/or the liabilities of the Business.  Such information includes, but is not limited to, information required by Parent and its Affiliates to (i) comply with their financial reporting requirements and (ii) to submit any claims that would reasonably be expected to be covered under the insurance policies of Parent or its Affiliates or their respective self-insurance programs in respect of events, circumstances and occurrences prior to Closing.  Parent shall reimburse Buyer for all reasonable out-of-pocket expenses (excluding internal costs) actually

 

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incurred by Parent and its Affiliates in connection with the compliance by Parent with its obligations under this Section 4.17.

 

4.18        Further Assurances.  Any time after the Closing, Parent and Buyer will, and Buyer will cause the Transferred Companies to, promptly execute, acknowledge and deliver any other assurances or documents reasonably requested by Buyer or Parent, as the case may be, to satisfy or in connection with its obligations hereunder or to consummate or implement the transactions and agreements contemplated hereby.

 

4.19        Insurance.  From and after the Closing Date, the Transferred Companies shall cease to be insured by Parent’s or Parent’s Affiliates’ (other than the Transferred Companies’) insurance policies or by any of Parent’s or Parent’s Affiliates’ (other than the Transferred Companies’) self-insured programs.  From and after the Closing, Parent shall be responsible for the administration and payment of all claims made by any of the Transferred Companies prior to the Closing under any of Parent’s or Parent’s Affiliates’ (other than the Transferred Companies) insurance policies or self-insured programs, and Buyer and its Affiliates (including the Transferred Companies) shall reasonably cooperate with any reasonable requests of Parent in connection with administration and payment of such claims.  For the avoidance of doubt, following the Closing, Parent and its Affiliates shall retain all rights to control its insurance policies and programs, including the right to exhaust, settle, release, commute, buy back or otherwise resolve disputes with respect to any of its insurance policies and programs, notwithstanding whether any such policies or programs apply to any liabilities of Buyer or the Transferred Companies.  Prior to and after the Closing, Parent and its Affiliates (including, prior to the Closing Date, the Transferred Companies) shall reasonably cooperate with Buyer to assist Buyer in obtaining replacement insurance policies.

 

4.20        Privileged Matters; Waiver of Conflicts.  The parties hereto acknowledge and agree that the information relating to or arising out of the legal advice or services that have been or will be provided prior to the Closing Date for the benefit of both Parent or its Affiliates (other than the Transferred Companies) and the Transferred Companies shall be subject to a shared privilege between Parent, on the one hand, and the Transferred Companies, on the other hand, and Parent and the Transferred Companies shall have equal right to assert all such shared privileges in connection with privileged information under any applicable Legal Requirements and no such shared privilege may be waived by (a) Parent without the prior written consent of Buyer or (b) by Buyer or any Transferred Company without the prior written consent of Parent; provided, however, that any information relating to or arising out of any legal advice or services provided, whether before or after the Closing Date, with respect to any matter for which an Indemnifying Party has an indemnification obligation hereunder, shall be subject to the sole and separate privilege of such Indemnifying Party, and such Indemnifying Party shall be entitled to control the assertion or waiver of all such separate privileges under any applicable Legal Requirements in connection with any privileged information, whether or not such information is in the possession of or under the control of any Indemnified Party.  Buyer, on behalf of itself and its Affiliates, including, following the Closing, the Transferred Companies, hereby irrevocably waives any conflicts arising out of the representation of the Transferred Companies by Hughes Hubbard & Reed LLP or Willkie Farr & Gallagher LLP prior to the Closing that may, following the Closing, prevent such firms from representing Parent and its Affiliates in any matter

 

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(including with respect to claims and legal proceedings arising under or with respect to this Agreement and the transactions contemplated hereby).

 

4.21        Post-Closing Confidentiality.  For five (5) years following the Closing, Parent shall keep confidential, and shall cause its Affiliates and its and their representatives to keep confidential, all information relating to the Business, the Transferred Companies and the Business Assets (“Confidential Information”), except (a) with the prior written consent of Buyer, (b) to the extent necessary to comply with applicable Legal Requirements, including federal securities laws, the valid order of a court of competent jurisdiction or any judicial or administrative process, in which event, to the extent permitted by such Legal Requirement, order or process, Parent shall notify Buyer as promptly as practicable (and, if possible, prior to the making of such disclosure) and disclose only that information that Parent determines (with the advice of counsel) is required by such applicable Legal Requirements to be disclosed, (c) to the extent such Confidential Information is available to the public through no fault of the Parent or any Affiliate of Parent, (d) to the extent such Confidential Information was or becomes available to Parent or any Affiliate of Parent from a third Person who is under no confidential or fiduciary obligation to Buyer or its Affiliates with respect to such Confidential Information, (e) to the extent such Confidential Information is independently developed by Parent or its Affiliates without violating this Section 4.21 or (f) to the extent such Confidential Information is used in the enforcement of any of the rights of Parent or any of its Affiliates under this Agreement or the other Ancillary Documents or in the defense of any action, suit, litigation, investigation or proceeding brought against Parent or one of its Affiliates.

 

4.22        Enterprise Agreements

 

(a)           Parent shall cause the Enterprise Agreements to be terminated by RSGG with effect as near to (but not after) the Closing Date as is reasonably practicable (the effective date of such termination, the “Termination Date”).  Within seventy-five (75) days following the Closing Date, Buyer shall cause Rockwood Clay Additives to prepare and complete, in cooperation with RSGG, the annual financial accounts of Rockwood Clay Additives for the fiscal period commencing on January 1 of the calendar year during which the Termination Date occurs and ending as of the Termination Date (the “German Controlled Entity Profit Pooling Accounts”), which accounts shall be prepared in accordance with generally accepted accounting principles in Germany as in effect on the Termination Date and, to the extent permitted by applicable Legal Requirements, consistent with the past practices of Rockwood Clay Additives, including by applying the policies, procedures, practices and elections applied by Parent in the preparation of the annual financial accounts of Rockwood Clay Additives prior to the Closing Date on a consistent basis.  Any amounts included in the German Controlled Entity Profit Pooling Accounts as payable by RSGG to Rockwood Clay Additives as of the Termination Date under an Enterprise Agreement shall be treated as Retained Cash Balances for purposes of determining the Purchase Price, and such amount shall be included in the Retained Cash Balances included in the Final Closing Statement delivered by Buyer to Parent pursuant to Section 1.5(c), and any disputes over such amount shall be resolved pursuant to Section 1.5.  Any amounts included in the German Controlled Entity Profit Pooling Accounts as payable by Rockwood Clay Additives to RSGG under an Enterprise Agreement as of the Termination Date shall be treated as Transferred Company Indebtedness for purposes of

 

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determining the Purchase Price, and such amount shall be included in the Transferred Company Indebtedness included in the Final Closing Statement delivered by Buyer to Parent pursuant to Section 1.5(c), and any disputes over such amount shall be resolved pursuant to Section 1.5.  Promptly, and in any event, within two (2) Business Days following the final determination of the Purchase Price pursuant to Section 1.5, (i) Buyer shall cause Rockwood Clay Additives to pay to RSGG any amounts payable to RSGG under the Enterprise Agreements as of the Termination Date, and (ii) Parent shall cause RSGG to pay to Rockwood Clay Additives any amounts payable to Rockwood Clay Additives under the Enterprise Agreements as of the Termination Date.

 

(b)           Following the Closing Date, Buyer shall not, and shall cause its Affiliates (including Rockwood Clay Additives) not to, amend, re-file or otherwise modify the German Controlled Entity Profit Pooling Accounts without the prior written consent of Parent (not to be unreasonably withheld, delayed or conditioned).  Upon Parent’s reasonable request, Buyer shall, and shall cause Rockwood Clay Additives to, amend the German Controlled Entity Profit Pooling Accounts in accordance with the written instructions of Parent, if and to the extent required in order to maintain the fiscal unity of Rockwood Clay Additives with RSGG and its Affiliates in accordance with the applicable Enterprise Agreement for any period ending on or prior to the Termination Date.  In the event that, following the Closing Date, a Governmental Authority of competent jurisdiction makes a determination which is not subject to appeal that the amount of profits transferred or the losses paid, as the case may be, under an Enterprise Agreement with respect to any period ending on or prior to the Termination Date were not transferred or paid, as the case may be, in accordance with the applicable Enterprise Agreement or applicable Legal Requirements, (i) Parent will cause RSGG to pay any such amounts so determined to be payable by RSGG to Rockwood Clay Additives, or (ii) Buyer shall cause Rockwood Clay Additives to pay such amounts so determined to be payable by Rockwood Clay Additives to RSGG, as the case may be, by wire transfer of immediately available funds to a bank account designated in writing by Parent or Buyer, as the case may be, to the other party.  Concurrently with any payment by RSGG to Rockwood Clay Additives pursuant to the previous sentence, Buyer shall pay to Parent an amount equal to such payment and, concurrently with any payment by Rockwood Clay Additives to RSGG, as the case may be, pursuant to the previous sentence, Parent shall pay to the Buyer an amount equal to such payment, in each case, by wire transfer of immediately available funds to a bank account designated in writing by Parent or Buyer, as the case may be, to the other party.

 

4.23        Parent Release.  Except (a) for the rights and remedies in respect of this Agreement and the Ancillary Documents, (b) with regard to those items listed on Schedule 4.10 of the Disclosure Letter or (c), with respect to any director, officer or employee of a Transferred Company, for any breaches or violations of the Rockwood Code of Business Conduct and Ethics or similar policies, effective upon the Closing, Parent, on behalf of itself and each of its Affiliates (other than the Transferred Companies), hereby irrevocably and unconditionally releases, discharges and covenants not to sue and otherwise agrees not to enforce any claim, cause of action, right, title or interest against, any Transferred Company and each director, officer and employee of each Transferred Company and their respective successors and permitted assigns of, from and with respect to any and all claims, charges, complaints, debts, covenants, agreements, obligations, liabilities, actions or demands of any kind or character,

 

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based upon any fact or circumstance, whether known or unknown, suspected or unsuspected, which presently exists or has ever existed in the past, that Parent or such of its Affiliates have or may have in any manner whatsoever, either singly or jointly with others against any of such Persons.

 

4.24        ECC America Agreement.  Following the date of this Agreement and prior to the Closing Date, Parent shall use its commercially reasonable efforts to obtain the consent to assign in part the ECC America Agreement to Buyer or one if its Affiliates from the counterparties to such agreement; provided that such efforts shall not include an obligation by Parent or any of its Affiliates to pay any consideration or other amounts to any third Person in connection with obtaining such consent.  In the event the ECC America Agreement is not assigned in part to Buyer or one of its Affiliates at the Closing, following the Closing and until the ECC America Agreement is assigned in part to Buyer or one of its Affiliates, Parent shall, at the cost and expense of Buyer and its Affiliates, use its commercially reasonable efforts to provide, and shall cause its Affiliates to use their respective commercially reasonable efforts to provide, Buyer and its Affiliates, including Southern Clay Products, the benefits under the ECC America Agreement to which Buyer and its Affiliates, including Southern Clay Products, are entitled, including using its commercially reasonable efforts to pursue any claims for indemnification available to Buyer and its Affiliates, including Southern Clay Products, under the ECC America Agreement in accordance with the terms thereof.  Buyer agrees to provide, and to cause its Affiliates, including Southern Clay Products, to provide, such cooperation and information reasonably requested by Parent in connection with such indemnification claims.

 

4.25        UK Pensions.  Parent will use reasonable efforts to reach an agreement with the trustees of the U.K. Retirement Plan prior to the Closing under which any and all liabilities of Rockwood Additives Limited in relation to the U.K. Retirement Plan are apportioned to Parent or any of its Affiliates other than the Transferred Companies.   Notwithstanding the foregoing, if Rockwood Additives Limited, Buyer or any of their Affiliates following the Closing are or may become required to pay any amount to or in respect of the U.K. Retirement Plan (whether under section 75 or 75A of the Pensions Act 1995 or otherwise), Parent acknowledges that the relevant provisions of Section 8.2 of this Agreement shall apply.

 

4.26        Post-Closing Asset Transfers.  If after the Closing, either Buyer or Parent in good faith identifies any Asset (other than any Administrative Asset) of Parent or its Affiliates which is primarily used or held for use primarily in the operation of the Business as the Business is conducted as of the date of the Agreement that is not owned by a Transferred Company at the Closing, then either Buyer or Parent, as applicable, will provide written notice to the other Party identifying such Asset, then Parent will, or will cause its Affiliates to, as promptly as practicable and at no further cost to Buyer, transfer, convey, assign, deliver, or cause to be transferred, conveyed, assigned, or delivered to Buyer, all of the right, title and interest of Parent and its Affiliates in and to such Asset.

 

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ARTICLE V

 

CONDITIONS TO THE OBLIGATIONS OF BUYER

 

The obligations of Buyer under this Agreement to consummate the Closing are subject to the satisfaction at or prior to the Closing of the following conditions (each of which may be waived in writing in whole or in part by Buyer):

 

5.1          Representations and Warranties; Covenants.  Each of the representations and warranties of Parent contained (a) in Section 2.2 shall be true and complete at and as of the Closing Date in all but de minimis respects and (b) the other Sections of Article II of this Agreement shall be true and complete (disregarding for purposes of this condition any materiality or Material Adverse Effect qualification therein) at and as of the Closing Date, with the same effect as though made at and as of the Closing Date (or, if given as of a specific date or time other than the Closing Date, as of such date or time), except for such failures of the representations and warranties to be true and complete as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  Parent shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by Parent at or prior to the Closing.  At the Closing, Parent shall have furnished to Buyer a certificate dated as of the Closing Date, and signed by a senior executive officer of Parent to the effect that the conditions set forth in this Section 5.1 have been satisfied.

 

5.2          Competition Law Clearances.  The waiting period under the HSR Act shall have expired or been terminated, and the Non-U.S. Antitrust Approvals shall have been obtained (and, to the extent relevant, shall remain in full force and effect).

 

5.3          No Injunctions or Restraints.  No temporary restraining order, preliminary or permanent injunction, or other similar legal restraint or prohibition, shall have been issued by a Governmental Authority, and shall remain in effect, that restrains, enjoins or otherwise prohibits in any material respect the consummation of the transactions contemplated by this Agreement to be consummated at the Closing.

 

5.4          Material Adverse Effect.  Between the date of this Agreement and the Closing Date, there shall have been no change, event or occurrence that has had individually or in the aggregate, a Material Adverse Effect. At the Closing, Parent shall have furnished to Buyer a certificate dated as of the Closing Date, and signed by a senior executive officer of Parent to the effect that the conditions set forth in this Section 5.4 have been satisfied.

 

5.5          Restructurings.  The Restructurings shall have been completed.

 

5.6          Closing Deliveries.  Parent shall have delivered, or caused the Sellers to deliver, each of the documents, contracts and instruments required to be executed and delivered by them pursuant to Section 1.4(a).

 

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ARTICLE VI

 

CONDITIONS TO THE OBLIGATIONS OF PARENT

 

The obligations of Parent to consummate the Closing are subject to the satisfaction at or prior to the Closing of the following conditions (each of which may be waived in writing in whole or in part by Parent):

 

6.1          Representations and Warranties; Covenants.  Each of the representations and warranties of Buyer contained in this Agreement shall be true and complete (disregarding for purposes of this condition any materiality qualification therein) at and as of the Closing Date, with the same effect as though made at and as of the Closing Date, except for such failures of the representations and warranties to be true and complete as would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of Buyer or its Affiliates to consummate the transactions contemplated to be consummated by Buyer or its Affiliates hereunder.  Buyer shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by Buyer at or prior to the Closing.  At the Closing, Buyer shall have furnished to Parent a certificate dated the Closing Date, and signed by a senior executive officer of Buyer to the effect that the conditions set forth in this Section 6.1 have been satisfied.

 

6.2          Competition Law Clearances.  The waiting period under the HSR Act shall have expired or been terminated, and the Non-U.S. Antitrust Approvals shall have been obtained (and, to the extent relevant, shall remain in full force and effect).

 

6.3          No Injunctions or Restraints.  No temporary restraining order, preliminary or permanent injunction, or other similar legal restraint or prohibition, shall have been issued by a Governmental Authority, and shall remain in effect, that restrains, enjoins or otherwise prohibits in any material respect the consummation of the transactions contemplated by this Agreement to be consummated at the Closing.

 

6.4          Restructurings.  The Restructurings shall have been completed.

 

6.5          Closing Deliveries.  Buyer shall have delivered each of the documents, contracts and instruments required to be executed and delivered by them pursuant to Section 1.4(b).

 

ARTICLE VII

 

TERMINATION

 

7.1          Termination.  This Agreement may be terminated at any time prior to the Closing:

 

(a)           by mutual written consent of Buyer and Parent;

 

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(b)           by Buyer or Parent by giving written notice to the other party, if there shall be in effect a final, nonappealable order, injunction, judgment, decree or ruling of any Governmental Authority restraining, enjoining or otherwise prohibiting in any material respect the consummation of the transactions contemplated hereby; provided, however, that the right to terminate this Agreement under this Section 7.1(b) shall not be available to any party whose failure (or whose Affiliate’s failure) to fulfill any obligation under this Agreement has been the primary cause of, or resulted in, such order, injunction, judgment, decree or ruling;

 

(c)           by Buyer by giving written notice to Parent, if any condition contained in Article V shall become incapable of satisfaction prior to the Outside Date (other than as a result of action or inaction by Buyer or its Affiliates in contravention of this Agreement);

 

(d)           by Parent by giving written notice to Buyer, if any condition contained in Article VI shall become incapable of satisfaction prior to the Outside Date (other than as a result of action or inaction by Parent or its Affiliates in contravention of this Agreement); or

 

(e)           by Buyer or Parent by giving written notice to the other party, on or after January 2, 2014 (the “Outside Date”), if the Closing has not occurred (other than as a result of action or inaction by the party seeking to terminate this Agreement (or its Affiliates) in contravention of this Agreement).

 

7.2          Effect of Termination.  Upon termination of this Agreement pursuant to Section 7.1 hereof, except for the obligations contained in Section 4.1(b), this Section 7.2, Section 9.1(h)  and Section 10.1 and the representations and warranties contained in Sections 2.20 and 3.4, which will survive any termination of this Agreement, this Agreement will forthwith become null and void, and no party hereto or any of their respective officers, directors, employees, agents, consultants, stockholders or principals will have any liability hereunder or with respect hereto, except that nothing contained herein shall relieve any party from liability for any failure to comply with any covenant or agreement contained herein.

 

ARTICLE VIII

 

SURVIVAL AND INDEMNIFICATION

 

8.1          Survival.  The representations and warranties contained in or made pursuant to this Agreement will survive the Closing, but will terminate on, and be of no further force after, the date that is the eighteen (18) month anniversary of the Closing Date; provided, however, that (a) the representations and warranties set forth in Sections 2.1, 2.2, 2.3 (other than Section 2.3(b)(iii)), 2.5(b) and 2.20 (the “Specified Representations”) and Sections 2.8(b) (solely with respect to Antitrust Laws), 2.19, 3.1, 3.2 and 3.4 shall terminate on, and be of no further effect after, the expiration of the statute of limitation applicable to the matter to which such representation or warranty relates, (b) each representation and warranty set forth in Section 2.7 shall terminate on, and be of no further effect after the date that is (i) thirty (30) days following the expiration of the applicable statute of limitations in the case of any representations relating to 

 

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Taxes other than German Taxes, and (ii) six (6) months after the Tax assessment becomes binding and unappealable (formell und materiell bestandskraftige) in the case of representations relating to German Taxes, and (c) each representation and warranty set forth in Section 2.14 shall terminate on, and be of no further effect after, the date that is the fifth (5th) anniversary of the Closing Date; provided further, however, that such representations, warranties and rights of indemnification shall survive to the extent a claim for indemnification or other claim based upon, resulting from or arising out of a breach or inaccuracy of such a representation and warranty or under such rights of indemnification is made with reasonable specificity in accordance with this Article VIII prior to such date until such claim is finally resolved.  All other provisions of this Agreement will survive the Closing indefinitely in accordance with their terms.

 

8.2          Indemnification Obligations of Parent.  If the Closing shall occur, Parent, subject to the limitations set forth in this Article VIII, will indemnify and hold harmless Buyer and its Affiliates (including the Transferred Companies) and their respective directors, officers and employees of the foregoing Persons (collectively, the “Buyer Indemnitees”), on a Net After-Tax Basis, against and in respect of any and all Losses, which may be incurred by Buyer Indemnitees based upon, resulting from or arising out of:

 

(a)           any inaccuracy or breach of any representation or warranty made by Parent in Article II of this Agreement as if made on and as of the Closing Date, except for representations and warranties that speak as of a specific date or time other than the Closing Date (which shall be made for this purpose on and as of such date or time);

 

(b)           any breach by Parent of or failure by Parent to perform any of its covenants or agreements contained in this Agreement;

 

(c)           any Indebtedness of the Transferred Companies as of the Closing Date;

 

(d)           any Third-Party Claim asserted against a Transferred Company arising out of any business, operation or activities conducted, or alleged to be conducted, by the Transferred Companies prior to the Closing Date other than the Business;

 

(e)           the Restructurings;

 

(f)            subject to compliance by Buyer and its Affiliates, including the Transferred Companies, with the Back-to-Back Obligations, any Back-to-Back Amounts;

 

(g)           the ownership, existence or business operations of Rockwood Absorbents (Baulking) Limited;

 

(h)           the U.K. Retirement Plan;

 

(i)            the Transaction Bonuses;

 

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(j)            any asbestos, talc or silica related Third-Party Claims asserted against a Transferred Company to the extent the underlying exposure or cause of action arises out of any product sold by a Transferred Company prior to the Closing Date;

 

(k)           any Pre-Closing Widnes Environmental Condition.

 

8.3          Indemnification Obligations of Buyer.  If the Closing shall occur, Buyer, subject to the limitations set forth in this Article VIII, will indemnify Parent and its Affiliates and their respective directors, officers and employees of the foregoing Persons (collectively, the “Seller Indemnitees”), on a Net After-Tax Basis, against and in respect of any and all Losses which may be incurred by Seller Indemnitees based upon, resulting from or arising out of:

 

(a)           any inaccuracy or breach of any representation or warranty made by Buyer in Article III of this Agreement as if made on and as of the Closing Date, except for representations and warranties that speak as of a specific date or time other than the Closing Date (which shall be made for this purpose on and as of such date or time);

 

(b)           any breach by Buyer of or failure by Buyer to perform any of its covenants or agreements contained in this Agreement; and

 

(c)           any claims for the granting by RSGG of collateral under Section 303 of the AktG.

 

8.4          Limitations on Indemnification.  Notwithstanding anything to the contrary in this Agreement and except in the case of fraud, intentional misrepresentation or willful misconduct:

 

(a)           the aggregate liability of Parent and Buyer pursuant to Section 8.2 (other than Sections 8.2(d) or (e)) or Section 8.3, as the case may be, will not exceed the Purchase Price (excluding Retained Cash Balances and Transferred Company Indebtedness), except that the aggregate liability of Parent (i) pursuant to Section 8.2(a) (other than in respect of any inaccuracy or breach of the Specified Representations or the representations and warranties set forth in Sections 2.8(b) (solely with respect to Antitrust Laws) or 2.19) shall not exceed an amount equal to 20% of the Purchase Price (excluding Retained Cash Balances and Transferred Company Indebtedness) and (ii) pursuant to Section 8.2(k) shall not exceed U.S.$20.0 million;

 

(b)           no Indemnified Party will be entitled to recover indirect, special, consequential, incidental, punitive or business interruption damages, or lost revenues, profits, cost savings or synergies pursuant to Sections 8.2 or 8.3, except to the extent such Losses were (i) other than in the case of punitive or special damages, reasonably foreseeable or (ii) actually paid to a third Person (including pursuant to a binding contractual obligation) pursuant to a final, non-appealable award, decree or settlement in any Third-Party Claim.

 

(c)           no claim for indemnification may be made by a Buyer Indemnitee pursuant to Section 8.2 or by a Seller Indemnitee pursuant to Section 8.3 unless written notice of such claim (describing the facts or events, the existence or occurrence of which constitute or have resulted in the alleged inaccuracy or breach of a representation or warranty made in this 

 

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Agreement or which otherwise form the basis of the claim with reasonable specificity, to the extent known) has been given to the party from whom indemnification is sought (the “Indemnifying Party”) during the relevant survival period set forth in Section 8.1 (which, for purposes of Sections 8.2(a) and 8.3(a), will be the survival period of the representation and warranty alleged to have been breached);

 

(d)           Parent shall have no liability pursuant to Section 8.2(a): (i) for any Losses with respect to an individual matter or series of related matters until the cumulative aggregate amount of the Losses with respect to such matter or series of related matters arising out of the same facts or circumstances exceeds U.S.$150,000 (the “Threshold Amount”), in which case the amount of all such Losses (including those that are less than the Threshold Amount) shall be included for purposes of computing the Losses that are indemnifiable hereunder and/or applicable against the Basket Amount pursuant to clause (ii) below; and (ii) until the aggregate amount of the Losses of the Buyer Indemnitees for which indemnification would otherwise be available under Section 8.2(a) exceeds 0.5 % of the Purchase Price (excluding Retained Cash Balances and Transferred Company Indebtedness) (the “Basket Amount”), after which Parent will be obligated to indemnify for only that portion of such Losses of the Buyer Indemnitees that exceed the Basket Amount; provided that the limitations set forth in subclause (ii) of this clause (d) shall not apply to Losses incurred by a Buyer Indemnitee by reason of any inaccuracy or breach of a Specified Representation; and

 

(e)           Parent shall have no liability pursuant to Section 8.2 for any Loss to the extent a reserve with respect to such Loss is included in or taken into account in the calculation or determination of Closing Working Capital, Capex Shortfall or Transferred Company Indebtedness.

 

(f)            Notwithstanding any other provision of this Agreement, Parent’s obligations under Section 8.2(a) in respect of any asserted breach or inaccuracy of the representations and warranties set forth in Section 2.14 shall, to the extent such obligations involve a Remedial Action, be limited to the minimum reasonable cost approach to such Remedial Action, taking into account Buyer’s or its successor’s continued industrial use of the relevant property or facility, that is legally available (or otherwise required by any Governmental Authority).

 

(g)           Parent shall have no liability  for Losses relating to any Environmental Condition (i) under Section 8.2(a)-(j) to the extent occurring as a result of or triggered by the closure, decommissioning or demolition after the Closing of any part of any facility or structure of any Transferred Company or (ii) under Section 8.2 to the extent occurring as a result of or triggered by any sampling, monitoring, testing, or surface or subsurface investigation conducted after the Closing that is not (A) expressly required pursuant to an Environmental Requirement of any Governmental Authority (except where the Governmental Authority has requested such Remedial Action by reason of a request initiated by a Buyer or its Affiliates or its or their representatives) or (B) otherwise the reasonable action of a prudent businessperson taken for a reason other than the assertion of an indemnity claim under this Agreement.

 

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(h)           For purposes of Section 8.2, Losses shall not include (i) any Losses arising from any change to a non-industrial use of the Real Property, (ii) any Losses resulting from any increase, worsening or other adverse impact on any Environmental Condition that arises from any act or omission attributable to Buyer or any Transferred Company (and their Affiliates, agents and contractors and Persons acting on their behalf) following the Closing that is a failure to act reasonably with respect to an Environmental Condition, and (iii) any expense related to management or employee time (whether opportunity costs, direct costs or otherwise).

 

(i)            For the purposes of determining whether a breach of representation or warranty has occurred for the purposes of Section 8.2(a) or 8.3(a), as the case may be, and calculating the amount of Losses related thereto, any qualification as to materiality or Material Adverse Effect contained in Articles II and III shall be disregarded (it being understood that the word “Material” in the defined term “Material Contract(s)” and the qualifications as to “material”, “material respects” or “Material Adverse Effect” contained in Sections 2.4(a) (second sentence), 2.6(a)(ii), 2.11(c), 2.12(a), and 4.3(b) (to the extent incorporated into Section 2.6(b)) shall not be disregarded for any of such purposes).

 

(j)            Notwithstanding anything to the contrary herein, except for the qualification of the representations and warranties in Articles II and III by the Disclosure Letter as expressly provided for in Section 10.10(b), the rights and remedies of the Indemnified Parties after the Closing shall not be limited by the fact that any Indemnified Party had actual or constructive knowledge (regardless of whether such knowledge was obtained through such Indemnified Party’s own investigation or through disclosure by Parent, Buyer or any third party, as applicable) of any breach, event or circumstance, whether before or after the Closing.

 

(k)           For purposes of Section 8.2(k):

 

(i)            Parent shall have no liability for any Losses with respect to an individual Environmental Condition or series of related Environmental Conditions until the cumulative aggregate amount of the Losses with respect to such Environmental Condition or series of related Environmental Conditions arising out of the same facts or circumstances exceeds U.S.$50,000, after which Parent will be obligated to indemnify for only that portion of such Losses of the Buyer Indemnitees that exceed such amount;

 

(ii)           Parent shall be liable only for (A) 75% of the Losses of the Buyer Indemnitees incurred prior to and including the tenth (10th) anniversary of the Closing Date and (B) 50% of the Losses of the Buyer Indemnitees incurred after the tenth (10th) anniversary of the Closing Date and prior to and including the fifteenth (15th) anniversary of the Closing Date;

 

(iii)          Parent shall not be liable for any Losses of the Buyer Indemnitees incurred following the fifteenth (15h) anniversary of the Closing Date; and

 

(iv)          Buyer Indemnitees shall not be entitled to indemnification under clauses (d), (e), (g) or (j) of Sections 8.2 for any Pre-Closing Widnes Environmental Condition.

 

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(l)            Notwithstanding anything to the contrary in this Agreement, including Article VIII, Parent shall have no liability for any Losses incurred by the Buyer Indemnitees based upon, resulting from or arising out of the remediation, removal or disposal of any asbestos at the facility of the U.K. Company in Widnes, Cheshire, United Kingdom identified in the surveys described in Schedule 2.14(g) of the Disclosure Letter.

 

8.5          Mitigation and Recovery from Third Persons.

 

(a)           Buyer and Parent shall each take, and shall cause their respective Affiliates to take, all reasonable steps to mitigate any Loss for which indemnification may be sought hereunder promptly upon a responsible officer of an Indemnified Party or its Affiliates becoming aware of such Loss, and neither Buyer nor Parent shall be liable for any Loss to the extent the Indemnified Party or its Affiliates could have mitigated such Loss by taking reasonable steps after a responsible officer of such Indemnified Party or its Affiliates becomes aware thereof.

 

(b)           The amount of any Loss for which indemnification is provided under this Article VIII (before giving effect to the other limitations on indemnification set forth in this Article VIII) shall be net of any amounts recovered by the Indemnified Party (or any Affiliate thereof) under insurance policies, or otherwise recovered by the Indemnified Party (or any Affiliate thereof) from other Persons (in each case, net of any costs incurred for the recovery of such amounts), with respect to such Loss.  Buyer and Parent each agree that, unless the other party shall otherwise direct in writing, it will (and cause its Affiliates to) use commercially reasonable efforts to recover any such amounts to the extent such recoveries would reduce amounts required to be paid by the other party pursuant to this Article VIII; provided that, no Indemnified Party (or any Affiliate thereof) shall be required to seek recovery of any Loss for which indemnification is provided under this Article VIII from any employees or managers of any Transferred Companies in order to recover the full amount of the Loss.

 

8.6          Procedure.  Any claim for indemnification under Section 8.2 or Section 8.3 will be made in accordance with this Section 8.6.  In the case of any claim for indemnification arising from a claim or demand of a third Person (a “Third-Party Claim”), the Indemnified Party will give prompt written notice, and in any event, no more than fifteen (15) Business Days following such Indemnified Party’s receipt of such claim or demand, to the Indemnifying Party describing in reasonable detail the basis of such claim or demand as to which it may request indemnification hereunder; provided, however, that any such notice need only specify such information to the knowledge of the Indemnified Party as of the date of such notice and shall not limit or prejudice any of the rights or remedies of any Indemnified Party (including pursuant to Section 8.1) on the basis of any such limitations on the information included in such notice or any limitations made in good faith to preserve the attorney-client privilege, work product doctrine or any other privilege, provided, further that the failure to notify or delay in notifying an Indemnifying Party as provided in this sentence or the next sentence will not relieve the Indemnifying Party of its obligations pursuant to Sections 8.2 or 8.3 above, as applicable, except to the extent that such failure actually harms the Indemnifying Party (it being understood that any claim for indemnity pursuant to Sections 8.2(a) or 8.3(a) above must be made by notice given as provided in this sentence or the next sentence within the applicable survival period 

 

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specified in Section 8.1 above).  Any other claim for indemnification will be made as promptly as practicable after the time the Indemnified Party becomes aware of the facts forming the basis of such claim.  The Indemnifying Party will have the right, at its sole expense, to defend and to direct the defense against and management and settlement of any such claim or demand, in its name or in the name of the Indemnified Party, with counsel or other representatives selected by the Indemnifying Party and reasonably acceptable to the Indemnified Party, provided that the Indemnifying Party may not assume the defense, management or settlement of any such claim if (i) such claim seeks injunctive or other equitable relief against the Indemnified Party or (ii) the Indemnified Party has determined in good faith that Losses that may be incurred as a result of such claim, either individually or when aggregated with all other outstanding indemnification claims under this Article VIII, would exceed the amount specified in Section 8.4(a).  The Indemnifying Party may not settle or compromise any such claim or demand without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, delayed or conditioned) unless the relief consists solely of monetary Losses to be paid by the Indemnifying Party and includes as an unconditional term thereof the giving by the Person asserting such claim to all Indemnified Parties of an unconditional release from all liability with respect to such claim.  Each party will cooperate with the other party and make available its officers and employees and relevant files and records (and those of its Affiliates), and agrees to promptly provide such information as to the defense of any such claim or demand as the other party shall reasonably request.  The Indemnified Party will have the right to participate in (but not control) the defense of any claim or demand with counsel of its choice employed by it at the expense of the Indemnified Party and will have the right, but not the obligation, to assert any and all cross-claims and counterclaims it may have.  In the event the Indemnifying Party does not notify the Indemnified Party within thirty (30) days of the receipt of notice of a Third-Party Claim that it elects to undertake the defense thereof or is not permitted or, shall fail to, defend, contest or otherwise protect against the imposition of any such damages as to any such claim, the Indemnified Party shall have the right, but not the obligation, to defend, contest or assert any cross-claim or counterclaim or otherwise protect against such claim and may make any compromise or settlement thereof and recover from and be indemnified by the Indemnifying Party for the entire reasonable cost thereof, including reasonable fees and disbursements of counsel; provided that the Indemnifying Party will have no indemnification obligations with respect to any such claim or demand which is settled by the Indemnified Party without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, delayed or conditioned).

 

8.7          Further Limitations on Indemnification.

 

(a)           Following the Closing, except with respect to matters covered by Section 1.5, the rights of the parties under Sections 8.2 and 8.3 (and under Article IX) will be the exclusive remedy of the parties (and the Transferred Companies) with respect to any claims a party may have against the other party or such other party’s Affiliates under, relating to or in

connection with this Agreement and the transactions contemplated hereby, and except with respect to the matters covered by Section 1.5, or for the obligations of Parent under Section 8.2 (and under Article IX), Parent shall have no liability to Buyer or its Affiliates under, relating to or in connection with this Agreement or the transactions contemplated hereby; provided, however, that nothing in this Section 8.7 limits or modifies any rights of either party to seek 

 

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specific performance or specific enforcement of, or other injunctive or equitable relief in respect of, any express provision of this Agreement.

 

(b)           In the event that an Indemnifying Party is obligated to indemnify an Indemnified Party pursuant to this Article VIII, the Indemnifying Party will, upon payment of such indemnity, be subrogated to all rights of the Indemnified Party with respect to claims to which such indemnification relates.

 

(c)           Notwithstanding anything to the contrary herein, (i) other than with respect to the survival of the representations or warranties set forth in Section 2.7, this Article VIII shall have no application with respect to indemnification for Taxes, which shall otherwise be covered exclusively by Sections 9.1 and 9.2 and (ii) nothing in this Article VIII shall limit the rights or remedies of any Person under this Agreement based upon or in connection with fraud, intentional misrepresentation or willful misconduct.

 

8.8          Tax Treatment of Payments.  Any indemnification payment made pursuant to this Article VIII shall be treated for all Tax purposes as an adjustment to the Purchase Price to the extent permitted by applicable Legal Requirements.

 

ARTICLE IX

 

TAX AND EMPLOYEE MATTERS

 

9.1          Certain Tax Matters.

 

(a)           (i) To the extent permitted by applicable Legal Requirements, at the request of Parent, Buyer shall cooperate with Parent in making any elections or taking any other actions that will result in any taxable periods of the Transferred Companies that begin prior to the Closing Date ending on or prior to the Closing Date.  Parent, Buyer and their Affiliates shall cooperate and shall make such elections and take such other actions necessary to terminate the Tax year of the U.K. Company as of the Closing Date.

 

(ii)           Parent will cause to be prepared and filed all Income Tax Returns (including any consolidated, unitary or combined Income Tax Returns) required to be filed with respect to any Transferred Company for any taxable period ending on or before the Closing Date (any such period, a “Pre-Closing Period”).  Parent shall cause to be delivered to Buyer drafts of any such material Income Tax Returns (other than any Income Tax Returns filed by a combined, unitary or consolidated group with respect to which a Transferred Company is not the parent) at least fifteen (15) Business Days prior to the due date for filing such Income Tax Return for Buyer’s review and comment (which Parent shall not be obligated to accept) within five (5) Business Days after receipt of the drafts from Parent.  Parent will include (or cause to be included) the income of Southern Clay Products in the consolidated federal Income Tax Returns filed by Rockwood for all taxable years ending on or before the Closing Date.  Buyer will cause to be prepared and filed all Tax Returns other than Income Tax Returns (any such Tax Returns, “Non-Income Tax Returns”) required to be filed with respect to any Transferred Company for any Pre-Closing Period that are due after the Closing; provided, however, that (A) drafts of any such Non-Income Tax Returns (other than monthly returns for 

 

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VAT, wage tax and social security) shall be provided to Parent for its review and comment at least thirty (30) days prior to filing and the parties will use all reasonable efforts to resolve any dispute with respect to such Non-Income Tax Returns, but if such dispute cannot be resolved by the parties within fifteen (15) days after Buyer receives notice of such dispute, it shall be referred to the Selected Accountants, (B) such Non-Income Tax Returns shall be prepared in a manner consistent with past practice, except as otherwise required by applicable Legal Requirements and (C) Parent may assume responsibility for preparing and filing any such Non-Income Tax Returns (other than monthly returns for VAT, wage tax and social security) upon notice to Buyer at least thirty (30) days before any such Non-Income Tax Return is due.  Neither Buyer nor any of its Affiliates (including, after the Closing, the Transferred Companies) shall amend any Tax Return for a Pre-Closing Period without Parent’s consent (not to be unreasonably withheld, delayed or conditioned).

 

(iii)          Parent will pay, and will indemnify and hold harmless Buyer and its Affiliates from and against, on a Net After-Tax Basis, Taxes imposed upon or incurred by any Transferred Company (A) for any Pre-Closing Period or that relate to the portion of any Straddle Period ending on the Closing Date (including, without limitation, any Taxes for a Pre-Closing Period as a result of the Restructurings or the satisfaction of the Transferred Companies’ Indebtedness pursuant to Section 4.11) or (B) that result from (I) a breach of a representation or warranty in Section 2.7(f), (g), (h), (k), (l), (m), or (n) or a covenant in Section 4.3, (II) secondary liabilities for Taxes under Treasury Regulation § 1502-6 or any comparable provision of state, local or non-U.S. law or of any Transferred Companies having been, on or before the Closing Date, a member of a consolidated, combined or affiliated group for Tax purposes or (III) payment of the Transaction Bonuses described in Section 9.3(h), except in the case of (A) and (B) above, to the extent that the liability for such Taxes was included in the calculation of Closing Working Capital; provided, however, that Buyer will pay, and will indemnify and hold harmless Parent and its Affiliates from and against, on a Net After-Tax Basis, any Taxes imposed as a result of (A) any action outside the ordinary course of business effected by Buyer or its Affiliates (including, after the Closing, the Transferred Companies) on the Closing Date, (B) any Tax election made by Buyer or its Affiliates (including, after the Closing, the Transferred Companies), except for any such election directed by Parent or required pursuant to this Agreement, or (C) the breach by Buyer of any of its covenants hereunder. To the extent that the accrued liability with respect to any such Taxes in the calculation of Closing Working Capital exceeds the actual liability, Buyer shall cause the Transferred Companies to pay such excess to Parent within fifteen (15) days after filing the relevant Tax Return for such Pre-Closing Period or Straddle Period, as the case may be.  Notwithstanding anything to the contrary in this Section 9.1(a)(iii), Parent shall have no liability pursuant to this Section 9.1(a)(iii) for any Tax to the extent a reserve for such Tax is included or taken into account in the calculation or determination of Transferred Company Indebtedness.

 

(b)           (i) (A) Buyer will cause to be prepared and filed all Tax Returns required to be filed by or on behalf of any Transferred Company for any taxable period beginning before and ending after the Closing Date (any such period, a “Straddle Period”); provided, however, that drafts of any such Tax Return (other than a monthly return for VAT, wage tax and social security) shall be provided to Parent for its review and comment at least thirty (30) days prior to filing, and such Tax Returns shall be subject to Parent’s review and 

 

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approval.  To the extent that any dispute with respect to the preparation of a Straddle Period Tax Return cannot be resolved by the parties at least fifteen (15) days prior to the due date of the Tax Return, it shall be referred to the Selected Accountants for resolution.  Except as otherwise consented to by Parent or as required by applicable Legal Requirements, any such Tax Returns will be prepared on a basis consistent with past practices of the Transferred Companies.

 

(ii)           In the case of any Taxes that are payable for a Straddle Period, the portion of such Tax which relates to the portion of such Straddle Period ending on the Closing Date shall (A) in the case of any Taxes in the nature of property Taxes, be deemed to be equal to the amount of such Tax for the entire tax period multiplied by a fraction, the numerator of which is the number of days in the portion of the Straddle Period ending on the Closing Date and the denominator of which is the number of days in the entire Straddle Period and (B) in the case of any Taxes other than Taxes in the nature of property Taxes, be equal to the amount which would be payable if the relevant Tax period ended on the Closing Date assuming a deemed closing of the books, except that exemptions, allowances and deductions (such as depreciation deductions) calculated on an annual basis shall be prorated between the portion of the applicable Straddle Period that ends on the Closing Date and the portion after the Closing Date on a per diem basis.

 

(iii)          Subject to Section 9.1(a)(iii), Buyer shall reimburse Parent, and will indemnify and hold harmless Parent and its Affiliates from and against, on a Net After-Tax Basis from any Taxes imposed upon Parent or its Affiliates for any Taxes, attributable to the Post-Closing portion of any Straddle Period, except to the extent such Taxes are imposed as a result of any breach by Parent of any of its covenants hereunder.  Any Taxes (including estimated Taxes) paid by the Transferred Companies with respect to any Straddle Period prior to the Closing shall be credited against Parent’s liability pursuant to Section 9.1(a)(iii).  Neither Buyer nor any of its Affiliates (including, after the Closing, the Transferred Companies) shall amend any Tax Return for a Straddle Period without Parent’s written consent (not to be unreasonably withheld, delayed or conditioned).

 

(c)           Buyer shall be responsible for, and shall indemnify and hold harmless Parent and its Affiliates from and against, on a Net After-Tax Basis, any Taxes of the Transferred Companies for taxable periods beginning after the Closing Date, except to the extent that such Taxes are imposed as a result of the breach by Parent of any of its covenants under this Agreement.

 

(d)           Parent or, respectively, Buyer will be entitled to retain, or receive prompt payment from Buyer or, respectively, Parent of, to the extent not included in the calculation of Closing Working Capital, any refund or credit for overpayment of Taxes for which Parent or, respectively, Buyer (including by way of offset) is responsible pursuant to Sections 9.1(a) or (b) plus any interest received with respect thereto from the relevant taxing authorities. Buyer will, if Parent so reasonably requests in good faith and at Parent’s expense, cause the Transferred Companies to promptly file for and obtain any refunds or credits to which Parent is entitled under this Section 9.1(d); provided that such claim for refund or credit would not reasonably be expected to have a material adverse effect on Buyer after the Closing Date.  Buyer will permit Parent to control (at Parent’s expense) the prosecution of any such claim for refund 

 

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and, when deemed appropriate by Parent, will cause the relevant Entity to authorize by appropriate power of attorney such person as Parent may designate to represent such Entity with respect to such refund claimed.  For purposes of this Section 9.1(d), a party will be deemed to have made prompt payment of a refund or credit if such payment is made within ten (15) days of the receipt by such party of such refund or of the use by such party of such credit.

 

(e)           If and to the extent that any audit or other adjustment to a Tax Return filed by or on behalf of a Transferred Company for a Pre-Closing Period results not only in an increase in Tax liability for which Parent is responsible pursuant to Section 9.1(a) or (b) (including, without limitation, any liability with respect to a consolidated, combined or unitary Tax) but also in a corresponding Tax benefit to Buyer (or any of its Affiliates, including the Transferred Companies) for any taxable period or portion thereof following the Closing (including, without limitation, as a result of income having been accelerated from a period following the Closing to a Pre-Closing period, deductions or credits being deferred from a Pre-Closing Period to a period following the Closing, or increased depreciation or amortization deductions being allowed following the Closing), within thirty (30) days following such adjustment, Buyer shall pay over to Parent an amount equal to the net present value of any such corresponding Tax benefit (less any related costs) to Buyer (or any of its Affiliates) up to, but not in excess of, the corresponding Tax liability, it being understood that the net present value of a Tax benefit shall be calculated based on the relevant applicable Tax rate and using a 5.5% annual discount rate.

 

(f)            Buyer will promptly notify Parent in writing upon receipt by Buyer or any of its Affiliates (including, after the Closing, the Transferred Companies) of notice of any pending or threatened audit or assessment with respect to Taxes for which Parent would be required to pay or indemnify Buyer or any of its Affiliates pursuant to Sections 9.1(a) or (b) (each an “Indemnifiable Tax Claim”); provided that the failure to so notify shall not relieve the Parent of its obligations under Sections 9.1(a) or (b), except to the extent (and only to the extent) that Parent is actually prejudiced thereby.  Except as otherwise required by applicable Legal Requirements, Parent shall have thirty (30) days after receipt of such notice to assume the conduct and control, through counsel reasonably acceptable to Buyer at the expense of Parent, of the defense of the Indemnifiable Tax Claim, and Buyer shall cooperate with Parent in connection therewith; provided that Parent shall not, except with the consent of Buyer (which consent shall not be unreasonably withheld, delayed or conditioned), compromise or settle any such proceeding, or provide any consents or waivers to extend applicable statutes of limitations.  If Parent shall assume the conduct and control of any Indemnifiable Tax Claim, Parent shall permit Buyer to participate, at Buyer’s own expense, in such defense (including, for the avoidance of doubt, by permitting reasonable opportunity for Buyer to review and comment upon any proposed representations to be made, or caused to be made, by Parent in respect of an Indemnifiable Tax Claim)  through counsel chosen by Buyer (and the fees and expenses of such counsel shall be borne by Buyer).  So long as Parent is reasonably so contesting the Indemnifiable Tax Claim in good faith, Buyer shall not, and shall not permit any Transferred Company to, pay or settle the Indemnifiable Tax Claim; provided that, notwithstanding the foregoing, Buyer shall have the right to pay or settle, or cause to be paid or settled, the Indemnifiable Tax Claim if Buyer waives its right to indemnification with respect to such Indemnifiable Tax Claim and Parent shall have consented to such payment or settlement (such 

 

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consent not to be unreasonably withheld, conditioned or delayed).  If Parent does not notify Buyer within thirty (30) days after the receipt of the Buyer’s notice of an Indemnifiable Tax Claim that it elects to undertake the defense thereof, Buyer shall have the right to contest, settle or compromise the Indemnifiable Tax Claim but shall not thereby waive any right to indemnity therefor pursuant to this Agreement, and Buyer shall be entitled to reimbursement of any reasonable costs and expenses (including reasonable attorney fees and disbursements of counsel) with respect thereto.  Buyer and Parent shall, at their own expense, jointly control any audit, examination, administrative or court proceeding in respect of Taxes related to any Straddle Period.

 

(g)           After the Closing Date, each of Buyer and Parent will (at its own expense) provide the other with such assistance as may reasonably be requested by the other party in connection with the preparation of any return, report, or form with respect to Taxes or any audit or administrative or judicial proceeding (such assistance to include assistance in data collection and responses to information requests) relating to liability for Taxes of the Transferred Companies or any affiliated, consolidated, combined or unitary group in which any of the Transferred Companies is included.

 

(h)           Buyer will be responsible for payment of, and will indemnify and hold Parent and its Affiliates harmless from and against all documentary, stamp, transfer, sales, use, excise and similar Taxes imposed upon Parent or Buyer or their respective Affiliates (including the Transferred Companies) in connection with this Agreement and the transactions contemplated hereby; provided, for the avoidance of doubt, that Parent shall be responsible for any Taxes arising in connection with the Restructurings.  Buyer will be responsible for preparing and timely filing any forms required with respect to any such Taxes.  Promptly following the filing of each such return, Buyer will provide to Parent a true copy of such return as filed and evidence of the timely filing thereof and a receipt showing payment of any Taxes owed.

 

(i)            Subject to Section 4.22, any Tax sharing agreement or arrangement between or among Parent or any of its Affiliates (other than the Transferred Companies), on the one hand, and the Transferred Companies, on the other hand, shall be terminated or cancelled, and Parent and its Affiliates shall take such additional steps as may be required so that, in each case, as of the Closing Date any such agreement or arrangement shall have no further effect for any taxable year (whether the current year, a future year or a past year), and after the Closing Date none of Parent or any of its Affiliates (other than Transferred Companies) shall make any claim against any Transferred Company in respect of such an agreement or arrangement.

 

(j)            Any amount paid by or on behalf of any party to or on behalf of another party pursuant to this Section 9.1 shall be treated for all Tax purposes as an adjustment to the Purchase Price to the extent permitted by applicable Legal Requirements.

 

(k)           Parent shall be subrogated to any rights (including rights to indemnification) that Buyer or its Affiliates (including the Transferred Companies) may have against third parties (other than employees and managers of the Transferred Companies) with respect to Taxes paid or indemnified by Parent pursuant to this Section 9.1, so long as such rights are exercised in a commercially reasonable manner.

 

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(l)            The indemnification obligations in this Section 9.1 shall survive until the date that is (x) thirty (30) days following the expiration of the applicable statute of limitations in the case of any Taxes other than German Taxes, and (y) six (6) months after the Tax assessment becomes binding and unappealable (formell und materiell bestandskraftige) in the case of German Taxes.

 

9.2          Certain VAT Matters.

 

(a)           Buyer and Parent are of the opinion that the transactions contemplated by this Agreement are not subject to VAT and Buyer and Parent agree not to take, or cause to be taken, any action that could reasonably be expected to cause VAT to become due.  Parent shall, and shall procure that the other Sellers undertake, not to opt to treat the transactions contemplated hereunder as being subject to VAT (or other Tax of a similar nature in any jurisdiction).  To the extent that the transactions contemplated in this Agreement are confirmed by an applicable Governmental Authority to be subject to VAT (or any other Tax of a similar nature in any jurisdiction), Buyer shall pay, and shall indemnify and hold harmless Parent, Sellers and each of their Affiliates from, such VAT (or any other tax of a similar nature in any jurisdiction), in addition to the Purchase Price, except to the extent that such VAT (or any other tax of a similar nature in any jurisdiction) is triggered by actions of Sellers which actions are not contemplated by this Agreement. To the extent so required, VAT (or any other tax of a similar nature in any jurisdiction) shall be payable by Buyer immediately upon receipt from the Sellers an invoice which complies with the respective VAT provisions of the respective VAT Code or other applicable Legal Requirement.

 

(b)           With respect to the VAT fiscal unity (umsatzsteuerliche Organschaft) between RSGG as the common parent company (Organträger) and Rockwood Clay Additives as controlled entity (Organgesellschaft) (the (“Controlled VAT Member”), (i) the Controlled VAT Member shall, and the Buyer shall procure that the Controlled VAT Member will, reimburse RSGG for any output VAT (Umsatzsteuer), which relates to supplies rendered or advance payments received by such Controlled VAT Member until and including the Closing Date and is paid or otherwise settled by RSGG in its capacity as the common parent, and (ii) RSGG shall reimburse the Controlled VAT Member for any input VAT (Vorsteuer), which relates to supplies or advanced payments received by the Controlled VAT Member until and including the Closing Date and is credited to RSGG in its capacity as the common parent.

 

(c)           The Controlled VAT Member shall not be required to reimburse RSGG pursuant to Section 9.2(b)(i), and RSGG shall not be required to reimburse the Controlled VAT Member pursuant to Section 9.2(b)(ii) if, and to the extent that, the Controlled VAT Member effected payment of the respective output VAT amount to RSGG or received payment of the respective input VAT amount from RSGG, as the case may be, on or prior to the Closing Date.  Moreover, the Controlled VAT Member shall not be required to reimburse RSGG, and RSGG shall not be required to compensate the Controlled VAT Member, as the case may be, with respect to any amounts that were not reflected as a liability or asset in the calculation of Closing Working Capital or as Transferred Company Indebtedness.  RSGG and the Controlled VAT Member shall, and Buyer shall procure that the Controlled VAT Member will reasonably 

 

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cooperate to reduce the financial burden from such amounts, in particular if, and to the extent that such reduction does not result in any material cost to Buyer or the Controlled VAT Member.

 

(d)           For the avoidance of doubt, this Section 9.2 relates solely to those VAT matters referred to herein and the provisions of Section 9.1 shall control with respect to all other Tax matters.

 

9.3          U.S. Employee Matters.

 

(a)           From and after the Closing Date until the twelve (12) month anniversary thereof, Buyer shall, or shall cause Southern Clay Products to, provide (other than with respect to any U.S. Business Employees who are represented by a collective bargaining agreement) (i) a base salary or base wages to each U.S. Business Employee whose employment continues following the Closing (each a “Continuing U.S. Employee”) at an annual rate that is no less than the annual rate of the base salary or base wages that was provided to such employee immediately prior to the Closing Date and (ii) employee benefits to the Continuing U.S. Employees that are substantially equivalent in the aggregate to either (A) the employee benefits provided to such employees immediately prior to the Closing Date or (B) to similarly situated employees of Buyer or its Affiliates, disregarding (except as contemplated by the terms of this Agreement) any, equity or equity-based compensation, Transaction Bonuses or change of control arrangements.  Effective as of the Closing, Buyer shall, and shall cause Southern Clay Products to, honor the terms of any collective bargaining agreement and union shutdown agreement covering any of the Continuing U.S. Employees and to continue to provide any compensation or employee benefits required to be provided under the terms of any such agreements.  With respect to those Continuing U.S. Employees whose services are performed pursuant to an employment agreement, effective as of the Closing, Buyer shall, and shall cause Southern Clay Products to, honor the terms of such employment agreement.

 

(b)           Buyer shall ensure that, at all times following the Closing, each Continuing U.S. Employee receives full credit for purposes of eligibility, vesting and benefit accruals (solely, in the case of benefit accruals, for purposes of determining vacation and severance) for all service that was recognized by Southern Clay Products or any of its Affiliates under Benefit Plans with respect to such employee under each of the comparable employee benefit plans, programs or policies of Buyer or its Affiliates (including Southern Clay Products) in which such employee becomes or may become a participant, provided that no such service recognition shall result in any duplication of benefits.

 

(c)           Effective as of the Closing, Southern Clay Products shall withdraw from participation in all Benefit Plans other than U.S. Transferred Company Benefit Plans, and Buyer and its Affiliates (including Southern Clay Products), shall continue to be responsible for any U.S. Transferred Company Benefit Plans.

 

(d)           Buyer shall, or shall cause Southern Clay Products to, provide severance pay and benefit entitlements to any Continuing U.S. Employee whose employment is terminated by Buyer or any of its Affiliates (including Southern Clay Products), other than for cause, within twelve (12) months after the Closing Date, in an amount no less favorable than 

 

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either (i) the amount of severance pay and benefit entitlements, if any, determined in accordance with the severance policy or agreement applicable to such Continuing U.S. Employee as in effect immediately prior to the Closing or (ii) the amount of severance pay and benefit entitlements, if any, to which similarly situated employees of Buyer or its Affiliates would be entitled.

 

(e)           Effective as of the Closing, Buyer shall (i) establish or maintain, or cause to be established or maintained, one or more group health plans which shall cover all Continuing U.S. Employees and dependents who immediately prior to the Closing were covered under any group health plan maintained by Parent or any of its Affiliates, (ii) waive any waiting period and any exclusion or limitation for preexisting conditions which were covered  under the health plan maintained by Parent or any of its Affiliates in which the Continuing U.S. Employee and any eligible dependents participated immediately prior to the Closing to the same extent recognized by Parent or any of its Affiliates immediately Closing and (iii) grant credit (for purposes of annual deductibles, co-payments and out-of-pocket limits) for any covered claims incurred or payments made prior to the Closing Date during the plan year in which the Closing Date occurs.

 

(f)            (i)            Buyer shall take all steps necessary to permit each Continuing U.S. Employee who has received an eligible rollover distribution (as defined in Section 402(c)(4) of the Code) from the Rockwood Retirement Plan to roll over such eligible rollover distribution as part of any lump sum cash distribution into an account(s) under a 401(k) plan maintained by Buyer or its Affiliates (the “Buyer 401(k) Plan”).

 

(ii)           With respect to each Continuing U.S. Employee who is a participant in the Rockwood Retirement Plan on the Closing Date and who continues in employment with Buyer or any of its Affiliates (including Southern Clay Products) through December 31, 2013:

 

(A)          Parent shall pay to Buyer an amount equal to the product of (x) the “covered compensation” under the Rockwood Retirement Plan earned by such Continuing U.S. Employee from the beginning of the Rockwood Retirement Plan’s 2013 plan year through the Closing Date and (y) the “Applicable Percentage.”  The Applicable Percentage shall mean the profit sharing contribution percentage up to a maximum of 4% of a Continuing U.S. Employee’s “covered compensation,” as determined by Parent it its sole discretion, that would have been made by Parent with respect to the Continuing U.S. Employee for the Rockwood Retirement Plan’s 2013 plan year if the Continuing U.S. Employee had remained in “eligible employment” under the Rockwood Retirement Plan through the end of the 2013 plan year.  The aggregate amount, if any, payable with respect to the Continuing U.S. Employees pursuant to this Section 9.3(f)(ii)(A) (the “Parent PSP Contribution”) shall be paid to Buyer as soon as practicable (but not more than thirty (30) days) after the date that Parent determines to make a profit sharing contribution under the Rockwood Retirement Plan with respect to the 2013 plan year.  Each Continuing U.S. Employee’s allocable share of the Parent PSP Contribution shall be credited by Buyer to the Continuing U.S. Employee under the Buyer 401(k) Plan.

 

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(B)                               Parent shall pay to Buyer an amount equal to the product of (x) the “covered compensation” under the Rockwood Retirement Plan earned by such Continuing U.S. Employee from the beginning of the Rockwood Retirement Plans’ 2013 plan year through the Closing Date and (y) 3%.  The aggregate amount payable with respect to the Continuing U.S. Employees pursuant to this Section 9.3(f)(ii)(B) (the “Parent Nonelective Contribution”) shall be paid to Buyer as soon as practicable (but not more than thirty (30) days) after Parent makes nonelective contributions under the Rockwood Retirement Plan with respect to the 2013 plan year.  Each Continuing U.S. Employee’s allocable share of the Parent Nonelective Contribution shall be credited by Buyer to the Continuing U.S. Employee under the Buyer 401(k) Plan.

 

(iii)                               For the avoidance of doubt, neither the Parent PSP Contribution nor the Parent Nonelective Contribution, nor any assets or liabilities associated therewith, shall be reflected in the Final Closing Statement or be taken into account in the calculation of Closing Working Capital.

 

(g)                                  Following the Closing, Buyer shall (i) pay to the Continuing U.S. Employees such amounts with respect to the Parent’s or any of its Affiliate’s (including the Transferred Companies’) bonus plans for the 2013 bonus plan year (the “Bonus Plans”) as are reflected in the calculation of Closing Working Capital and taken into account in the calculation of the Final Closing Statement and (ii) provide each Continuing U.S. Employee with an opportunity to earn bonus compensation amounts with respect to the balance of the 2013 bonus plan year immediately following the Closing Date, that are no less favorable than the bonus compensation amounts that each such Continuing U.S. Employee had the opportunity to earn under the Bonus Plans immediately prior to the Closing.  Any amounts payable by Buyer pursuant to this Section 9.3(g) shall be subject to the same terms and conditions as would have applied, and paid at such times and in such manner as such amounts would have been payable, under the Bonus Plans.

 

(h)                                 Parent shall pay or cause to be paid the full amount that may become due or payable under, taking into account any forfeiture or cancellation in accordance with the terms of, any transaction or retention incentives, bonuses or awards made as a result or in connection with the transactions contemplated by this Agreement (the “Transaction Bonuses”) to Business Employees and directors of the Transferred Companies.

 

(i)                                     Upon reasonable request, Parent shall provide to Buyer, and Buyer shall provide to Parent, such documents, data and information as may reasonably be necessary to implement the provisions of this Section 9.3 and to administer their respective benefit plans.

 

(j)                                    Nothing contained herein, expressed or implied, (i) shall confer upon any of the employees of Parent, Buyer, the Transferred Companies or any of their Affiliates, any rights or remedies, including any right to benefits or employment, or continued benefits or employment, for any specified period, of any nature or kind whatsoever by reason of this Agreement, or (ii) shall be construed to establish, amend or modify any benefit plan, program, agreement or arrangement.  This shall not prevent the parties entitled to enforce this Agreement from enforcing any provision in this Agreement, but no other party shall be entitled 

 

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to enforce any provision in this Agreement on the grounds that it is an amendment to such benefit plan, program, agreement or arrangement.  If a party not entitled to enforce this Agreement brings a lawsuit or other action to enforce any provision in this Agreement as an amendment to such benefit plan, program, agreement or arrangement and that provision is construed to be such an amendment despite not being explicitly designated as one in this Agreement, that provision shall lapse retroactively as of its inception, thereby precluding it from having any amendatory effect.

 

9.4                               Non-U.S. Employee Benefit Plan Matters.

 

(a)                                 Rockwood Clay Additives is a member of, and the parties understand that it will be able to continue its membership in, the pension fund Pensionskasse für die deutsche Wirtschaft e.V. after the Closing.

 

(b)                                 Parent shall cause the individuals set forth on Schedule 9.4(b) of the Disclosure Letter (“Remote Employees”), to cease to be employed by Parent or its Affiliates, effective as of the Closing, and Buyer shall (or shall cause its Subsidiaries to) make an offer of employment, effective as of the Closing, to each Remote Employee.

 

(c)                                  Upon reasonable request, Parent shall provide to Buyer, and Buyer shall provide to Parent, such documents, data and information as may reasonably be necessary to implement the provisions of this Section 9.4 and to administer their respective benefit plans.

 

(d)                                 Nothing contained herein, expressed or implied, (i) shall confer upon any of the employees of Parent, Buyer, the Transferred Companies or any of their Affiliates, any rights or remedies, including any right to benefits or employment, or continued benefits or employment, for any specified period, of any nature or kind whatsoever by reason of this Agreement, or (ii) shall be construed to establish, amend or modify any benefit plan, program, agreement or arrangement.  This shall not prevent the parties entitled to enforce this Agreement from enforcing any provision in this Agreement, but no other party shall be entitled to enforce any provision in this Agreement on the grounds that it is an amendment to such benefit plan, program, agreement or arrangement.  If a party not entitled to enforce this Agreement brings a lawsuit or other action to enforce any provision in this Agreement as an amendment to such benefit plan, program, agreement or arrangement and that provision is construed to be such an amendment despite not being explicitly designated as one in this Agreement, that provision shall lapse retroactively as of its inception, thereby precluding it from having any amendatory effect.

 

ARTICLE X

 

MISCELLANEOUS

 

10.1                        Expenses.  Except as otherwise set forth in this Agreement, the fees and expenses (including the fees of any lawyers, accountants, investment bankers or others engaged by such party) in connection with this Agreement and the transactions contemplated hereby whether or not the transactions contemplated hereby are consummated will be paid by Buyer 

 

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with respect to Buyer and its Affiliates and will be paid by Parent with respect to Parent and its Affiliates.

 

10.2                        Headings.  The headings, subheadings and captions in this Agreement, the Disclosure Letter and in any Exhibit or Schedule hereto or thereto are for reference purposes only and are not intended to affect the meaning or interpretation of this Agreement.

 

10.3                        Notices.  All notices and other communications required or permitted under this Agreement shall be in writing and given by certified or registered mail, return receipt requested, nationally recognized overnight delivery service, such as Federal Express, facsimile (or like transmission) with confirmation of transmission by the transmitting equipment or personal delivery against receipt to the party to whom it is given and accompanied by a copy sent by electronic mail (which such email copy shall not constitute notice), in each case, at such party’s address, facsimile number or email address set forth below:

 

(a)                                 In the case of Parent, to:

 

Rockwood Specialties Group, Inc.
 100 Overlook Center
 Princeton, NJ 08540
 Fax:  609-514-8722
 Email:  triordan@rocksp.com and mvalente@rocksp.com
 Attn:  Thomas J. Riordan and Michael W. Valente

 

with a copy to:

 

Hughes Hubbard & Reed LLP
 One Battery Park Plaza
 New York, New York 10004
 Fax:  212-422-4726
 Email:  modlin@hugheshubbard.com
  Attn:  James Modlin, Esq.

 

(b)                                 In the case of Buyer, to:

 

Altana AG
  Abelstraße 43

46483 Wesel

Germany

Fax: 49 (0) 281 670-60500

Email: volker.mansfeld@altana.com

Attn: Volker Mansfeld

Legal Department

 

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with a copy to:

 

Cleary Gottlieb Steen and Hamilton LLP
 One Liberty Plaza 
 New York, NY  10006-1470
 Fax: 1 212 225-3999
 Email:  boreilly@cgsh.com
 Attn: Benet J. O’Reilly

 

or to such other address as the party may have furnished in writing in accordance with the provisions of this Section.  Any such notice or other communication shall be deemed to have been given as of the date so personally delivered or transmitted by facsimile or like transmission (or if delivered or transmitted after the recipient’s normal business hours, on the next Business Day), on the next Business Day when sent by overnight delivery services or five (5) days after the date so mailed if by certified or registered mail.  A party may change the address to which notices are to be addressed by giving the other party notice in the manner herein set forth.

 

10.4                        Assignment.  This Agreement and all provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, that neither this Agreement nor any right, interest, or obligation hereunder may be assigned by any party hereto without the prior written consent of the other party, except that (a) Buyer may assign any right hereunder, in whole or in part, including the right to purchase the Shares, to Guarantor or any wholly-owned Subsidiary of Guarantor that agrees (without limitation or release of Buyer’s liabilities hereunder) to be bound by and responsible for Buyer’s liabilities hereunder and (b) Parent may assign any right hereunder, in whole or in part, to any Affiliate of Parent that agrees (without limitation or release of Parent’s liabilities hereunder) to be bound by and responsible for Parent’s liabilities hereunder; and provided, further that no party hereto or successor or assignee has the ability to subrogate any other Person to any right or obligation under this Agreement.  Any purported assignment or delegation in violation of this Agreement shall be null and void ab initio.

 

10.5                        Entire Agreement.  This Agreement (including the Disclosure Letter and any Schedule or Exhibit hereto or thereto), the Confidentiality Agreement and the Ancillary Documents contain the entire agreement and understanding of the parties with respect to the transactions contemplated hereby and thereby and supersede all prior written or oral commitments, arrangements or understandings with respect hereto and thereto (other than the Confidentiality Agreement, which will terminate at the Closing but survive any termination hereof).

 

10.6                        Amendment; Waiver.  This Agreement may only be amended or modified in writing signed by the party against whom enforcement of any such amendment or modification is sought.  No breach of any covenant, agreement, representation or warranty made herein shall be deemed waived unless expressly waived in writing by the party who might assert such breach.  The waiver by any party hereto of a breach of any term or provision of this Agreement will not be construed as a waiver of any subsequent breach.

 

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10.7                        Counterparts.  This Agreement may be executed in one or more counterparts, all of which will be considered one and the same agreement and each of which will be deemed an original.

 

10.8                        Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.

 

(a)                                 This Agreement shall be governed by the laws of the State of New York, without regard to any conflicts of law rules or principles that would result in the application of the laws of another jurisdiction.

 

(b)                                 Each party hereto hereby consents to, and confers exclusive jurisdiction upon, the courts of the State of New York and the Federal courts of the United States of America located in the County of New York in the State of New York, and appropriate appellate courts therefrom, over any action, suit or proceeding arising out of or relating to this Agreement or any Ancillary Document.  Each party hereto hereby waives, and agrees not to assert, as a defense in any such action, suit or proceeding that it is not subject to such jurisdiction or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that this Agreement or any Ancillary Document may not be enforced in or by said courts or that its Assets are exempt or immune from execution, that such action, suit or proceeding is brought in an inconvenient forum, or that the venue of such action, suit or proceeding is improper.  Parent and Buyer covenant not to initiate any such action, suit or proceeding in any other jurisdiction.  Service of process in any such action, suit or proceeding may be served on any party anywhere in the world, whether within or without the State of New York, as provided in Section 10.3 herein.

 

(c)                                  Each party hereby waives to the fullest extent permitted by applicable Legal Requirements, any right it may have to a trial by jury in respect of any proceeding directly or indirectly arising out of, under or in connection with this Agreement or any Ancillary Document or any transaction contemplated hereby or thereby.  Each party (i) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this paragraph.

 

10.9                        Specific Performance.  The parties hereto recognize that any breach of the terms of this Agreement may give rise to irreparable harm for which money damages would not be an adequate remedy, and accordingly agree that, in addition to all other remedies available to it, any nonbreaching party shall be entitled to seek to enforce the terms of this Agreement by a decree of specific performance, without the necessity of proving the inadequacy as a remedy of money damages.

 

10.10                 Interpretation; Absence of Presumption.

 

(a)                                 For the purposes of this Agreement, (i) words in the singular shall be held to include the plural and vice versa, (ii) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits hereto and the Disclosure Letter) and not to 

 

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any particular provision of this Agreement, and Article, Section, Exhibit and Schedule references are to the Articles, Sections, Exhibits, and Schedules to this Agreement or the Disclosure Letter unless otherwise specified, (iii) except where the context otherwise requires, references to a “party” or “parties” shall mean Buyer or Parent, or both of them as the context requires, (iv) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified, (v) the word “or” shall not be exclusive, (vi) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or thing extends, and such phrase shall not mean simply “if”, (vii) unless a contrary intent is apparent, any contract, instrument or Legal Requirement defined or referred to herein means such contract, instrument or Legal Requirement as from time to time amended, modified or supplemented, including by succession of comparable successor Legal Requirement, (viii) except as otherwise set forth in this Agreement, any accounting terms shall be given their definition under GAAP, (ix) the phrase “ordinary course of business” shall mean “ordinary course of business consistent with past practice” and (x) any document or information shall be deemed to have been “made available” only if such document or information was posted to the electronic dataroom created for the purpose of aiding in Buyer’s diligence investigation or otherwise delivered to Buyer on or before the date that is prior to the date hereof.

 

(b)                                 With regard to each and every term and condition of this Agreement and any and all agreements and instruments subject to the terms hereof, the parties understand and agree that the same have or has been mutually negotiated, prepared and drafted, and if at any time the parties hereto desire or are required to interpret or construe any such term or condition or any agreement or instrument subject hereto, no consideration will be given to the issue of which party actually prepared, drafted or requested any term or condition of this Agreement or any agreement or instrument subject hereto.

 

10.11                 Third Person Beneficiaries.  This Agreement is not intended to confer upon any other Person any rights or remedies hereunder.  Each of Buyer and Parent may assert the rights of Buyer Indemnitees and Seller Indemnitees, respectively, pursuant to Article VIII hereof.

 

10.12                 Representations and Warranties; Schedules.  Neither the specification of any dollar amount in the representations and warranties set forth in Article II nor the indemnification provisions of Article VIII nor the inclusion of any items in any Schedule of the Disclosure Letter will be deemed to constitute an admission by Parent or Buyer, or otherwise imply or create any presumption, that any such amounts or the items so included are material for the purposes of this Agreement, or that any such item meets any or all of the criteria set forth in this Agreement for inclusion in such Schedule to the Disclosure Letter or any other Schedule to the Disclosure Letter.  It is understood and agreed that nothing in the Disclosure Letter is intended to broaden the scope of any representation or warranty of Parent set forth in Article II of this Agreement.  Disclosure of any fact or item in any Schedule of the Disclosure Letter will be deemed to be disclosed only with respect to the Section of this Agreement to which such Schedule corresponds and to any other Schedule of the Disclosure Letter to the extent the relevance of such disclosure to such other Schedule of the Disclosure Letter is reasonably apparent on the face of such disclosure.  Any capitalized terms used in the Disclosure Letter or 

 

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any Schedule hereto or thereto but not otherwise defined therein shall be defined as set forth in this Agreement.

 

10.13                 Severability.  Except as provided in Section 4.15(e), if any one or more of the provisions of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Agreement will not be affected thereby, and Parent and Buyer will use their reasonable efforts to substitute one or more valid, legal and enforceable provisions which insofar as practicable implement the purposes and intent hereof.  To the extent permitted by applicable Legal Requirements, each party waives any provision of applicable Legal Requirements which renders any provision of this Agreement invalid, illegal or unenforceable in any respect.

 

10.14                 Guaranty.  Guarantor irrevocably guarantees each obligation of Buyer, and the full and timely performance by Buyer of its obligations, in each case, under the provisions of this Agreement and the Ancillary Documents.  This is a guarantee of payment and performance, and Guarantor acknowledges and agrees that this guarantee is full and unconditional, and no release or extinguishment of Buyer’s liabilities and obligations (other than in accordance with the terms of this Agreement or the Ancillary Documents, as applicable), whether by decree in any bankruptcy proceeding or otherwise, will affect the continuing validity and enforceability of this guarantee.  Guarantor hereby waives, for the benefit of Parent, (i) any right to require Parent, as a condition of payment or performance of Guarantor, to proceed against Buyer or pursue any other remedies whatsoever and (ii) to the fullest extent permitted by Legal Requirements, any defenses or benefits that may be derived from or afforded by Legal Requirements that limit the liability of or exonerate guarantors or sureties, except to the extent that any such defense is available to Buyer under this Agreement.  Guarantor understands that Parent is relying on this guarantee in entering into this Agreement.

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

	
 
    	
ROCKWOOD   SPECIALTIES GROUP, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Seifi Ghasemi
    
	
 
    	
 
    	
Name:   Seifi Ghasemi
    
	
 
    	
 
    	
Title:   Chairman and Chief Executive Officer
    

 

[Signature Page to Stock Purchase Agreement]

 

 

	
 
    	
BYK   CHEMIE GMBH
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Dr. Andreas Jerschensky
    
	
 
    	
 
    	
Name:   Dr. Andreas Jerschensky
    
	
 
    	
 
    	
Title:   Head of M&A
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ALTANA   AG, as Guarantor
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Dr. Matthias L. Wolfgruber
    
	
 
    	
 
    	
Name:   Dr. Matthias L. Wolfgruber
    
	
 
    	
 
    	
Title:   CEO
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Martin Babilas
    
	
 
    	
 
    	
Name:   Martin Babilas
    
	
 
    	
 
    	
Title:   CFO
    

 

[Signature Page to Stock Purchase Agreement]

 

 

EXHIBIT A

 

Certain Definitions

 

“Actual Value” shall have the meaning specified in Section 1.5(h)(iii).

 

“Administrative Assets” shall mean Assets utilized by Parent and its Affiliates (other than the Transferred Companies) in providing administrative, accounting, book and record keeping, tax, finance, insurance, legal, employee benefits, information technology and other like services to the Transferred Companies.

 

“Affiliate” shall mean, with respect to a Person, another Person, directly or indirectly, through one or more intermediaries, controlled by, under common control with or which controls, the Person specified at such time.  For purposes of this definition, “control” (including, with correlative meanings, “controlled by” and “under common control with”) shall mean the possession of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.  For purposes of this Agreement and the Ancillary Documents, no Person shall be deemed to control Rockwood.

 

“Agreement” shall have the meaning specified in the Preamble.

 

“Ancillary Documents” shall mean the Transition Services Agreement, the Local Share Transfer Agreements (if any), the Share transfer instruments described in Sections 1.4(a)(i) - (iv) and the certificates described in Sections 1.4(a)(xiii) and 1.4(b)(iv).

 

“Antitrust Laws” shall mean any Legal Requirements governing competition, monopolies, restrictive trade practices or competition-related premerger notifications, including Legal Requirements relating to merger control or foreign investments.

 

“AktG” shall have the meaning specified in Section 2.13(b).

 

“Applicable Non-U.S. Antitrust Law” shall mean the Antitrust Law of any applicable Governmental Authority other than the DOJ or FTC.

 

“Applicable Percentage” shall have the meaning specified in Section 9.3(f)(ii)(A).

 

“Approval” shall mean any franchise, license, certificate of compliance, authorization, consent, order, permit, approval or other action of, or any filing, registration or qualification with, any Governmental Authority.

 

“Assets” shall mean all properties, assets, privileges, rights, interests and claims, personal, tangible and intangible, of every type and description.

 

“Back-to-Back Obligations” shall mean the obligations of a member of a Back-to-Back Group (as defined in the Environmental Deed) to comply with and in all respects be bound by the provisions of the Environmental Deed.

 

 

“Back-to-Back Amounts” shall mean any Protected Losses (as defined in the Environmental Deed) suffered or incurred by any Buyer Indemnitee following the Closing Date solely to the extent indemnification for such Protected Losses is available to Parent or its Affiliates pursuant to the Environmental Deed.

 

“Balance Sheet” shall have the meaning specified in Section 2.4(a).

 

“Balance Sheet Date” shall have the meaning specified in Section 2.4(a).

 

“Bank Accounts” shall mean each bank account any Transferred Company has (other than accounts which will be closed or transferred to Parent or any of its Affiliates (other than the Transferred Companies) prior to the Closing.

 

“Bankruptcy and Equity Exceptions” shall mean applicable Legal Requirements relating to bankruptcy, insolvency, reorganization, moratorium or other similar Legal Requirements relating to or affecting creditors’ rights generally and except as such enforceability is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

 

“Basket Amount” shall have the meaning specified in Section 8.4(d).

 

“Benefit Plans” shall have the meaning specified in Section 2.12(a).

 

“Bonus Plans” shall have the meaning specified in Section 9.3(g).

 

“Business” shall mean the business conducted by the Transferred Companies, individually, jointly or in collaboration with or through third parties, including researching, producing, manufacturing, marketing, developing, distributing, trading, importing, exporting and selling (i) natural and synthetic clay-based rheology modifiers and additives, polymer-based rheology modifiers and additives used in a variety of applications to modify viscosity, thickness and flow characteristics and keep solids in suspension, (ii) acid activated clays and (iii) clay-based feed additives.

 

“Business Agreement” shall mean any contract, lease, license, franchise, obligation, instrument or other commitment or arrangement, to which any Transferred Company is a party or by which any Transferred Company or any of the Business Assets is bound (other than Benefit Plans and Permits).

 

“Business Assets” shall mean all Assets of the Transferred Companies, other than the Administrative Assets or Seller Marks.

 

“Business Day” shall mean a day other than Saturday or Sunday or other day on which banks in New York City, Luxembourg City, Luxembourg or Frankfurt, Germany are required to or may be closed.

 

“Business Employees” shall mean any of the directors, officers or employees employed by the Transferred Companies as of and following the date of this Agreement and the

 

A-2

 

Remote Employees, but excluding (i) the Resigning Officers and Directors and (ii) the Retained Employees.

 

“Buyer” shall have the meaning specified in the Preamble.

 

“Buyer 401(k) Plan” shall have the meaning specified in Section 9.3(f)(i).

 

“Buyer Indemnitees” shall have the meaning specified in Section 8.2.

 

“Capex Shortfall” shall mean the greater of (a) the amount by which (x) the Target Capex exceeds (y) the sum of all amounts incurred after January 1, 2013 for additions to tangible fixed assets (PPE) and either paid prior to the Closing or included as a current liability in the determination of Closing Working Capital and (b) zero. A sample calculation of the Capex Shortfall is set forth on Schedule A-4 of the Disclosure Letter.  In determining the Capex Shortfall, foreign currencies shall be converted into U.S. dollars at the exchange rates in effect on the Closing Date.

 

“Chemical Workers CBA” means the Agreement between Southern Clay Products Inc. and International Chemical Workers Union Council/UFCS, Local 15-C (September 30, 2010 — September 30, 2013).

 

“Closing” shall have the meaning specified in Section 1.3.

 

“Closing Date” shall have the meaning specified in Section 1.3.

 

“Closing Working Capital” shall mean, with respect to the Business, (i) the value of the current assets of the categories described on Schedule A-1 of the Disclosure Letter of the Business, minus (ii) the value of the current liabilities of the categories described on Schedule A-1 of the Disclosure Letter of the Business, in each case, determined as of 12:01 a.m. (Eastern Time) on the Closing Date (and after giving effect to the provisions hereof that have the effect of releasing the Transferred Companies from liabilities upon the Closing) in accordance with GAAP applied on a basis consistent with the application of such principles in the preparation of the Balance Sheet.  A sample calculation of the calculation of Closing Working Capital as of December 31, 2012 is set forth on Schedule A-1 of the Disclosure Letter.  In determining Closing Working Capital, foreign currencies shall be converted into U.S. dollars at the exchange rates in effect on the Closing Date.

 

“COBRA” shall have the meaning specified in Section 2.12(e).

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Companies” shall have the meaning specified in the Recitals.

 

“Confidentiality Agreement” shall have the meaning specified in Section 4.1(b).

 

“Confidential Information” shall have the meaning specified in Section 4.21.

 

A-3

 

“Consent” shall mean any consent or approval of, or notice, declaration, report or statement filed with or submitted to, any Person (other than an Approval).

 

“Continuing U.S. Employee” shall have the meaning specified in Section 9.3(a).

 

“Controlled VAT Member” shall have the meaning specified in Section 9.2(b).

 

“Disclosure Letter” shall have the meaning specified in Article II.

 

“Disputed Items” shall have the meaning specified in Section 1.5(d).

 

“Dispute Notice” shall have the meaning specified in Section 1.5(d).

 

“DOJ” shall have the meaning specified in Section 4.5(a).

 

“ECC America Agreement” shall mean the Stock Purchase Agreement between ECC America, Inc. and Laporte Inc.

 

“Encumbrance” shall mean any charge, claim, community property interest, lien (statutory of other), pledge, encumbrance, mortgage, deed of trust, charge, easement, right of way, encroachment, right of way, security interest, option, right of first refusal, right of first offer, title defect, or any other similar right, restriction or interest.

 

“Enterprise Agreements” shall have the meaning specified in Section 2.13(b).

 

“Entity” shall mean any corporation, partnership, limited liability company, joint venture, trust, unincorporated organization, other form of business or legal entity or Governmental Authority.

 

“Environmental Condition” means any condition of the Environment with respect to the Real Property that violates any Environmental Requirements or, even though not violative of any Environmental Requirements, nevertheless results in any liability or obligation to take Remedial Action under any Environmental Requirement.

 

“Environmental Deed” shall mean the Environmental Deed, dated as of September 25, 2000, between Laporte plc and K-L Holdings, Inc. (n/k/a Rockwood Holdings, Inc.) entered into in connection with the closing of the transactions contemplated by the Business and Sale Purchase Agreement, dated as of September 5, 2000, between Laporte plc and K-L Holdings, Inc.

 

“Environmental Requirements” shall mean all Legal Requirements concerning non-employee human health and safety or the protection of the environment or natural resources from contamination or pollution, including the generation, treatment, storage, disposal, investigation, remediation or, release of any Hazardous Substances.

 

“Environment” means soil, surface water, groundwater, land, sediments, surface or subsurface strata, ambient air or indoor air.

 

A-4

 

“ERISA” shall mean the Employee Retirement Income Securities Act of 1974, as amended.

 

“ERISA Affiliate” shall mean with respect to any entity, any other entity that, together with such first entity, would be treated as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of the Code.

 

“Estimated Closing Statement” shall have the meaning specified in Section 1.5(a).

 

“Estimated Purchase Price” shall have the meaning specified in Section 1.5(b).

 

“Final Closing Statement” shall have the meaning specified in Section 1.5(c).

 

“Financial Statements” shall have the meaning specified in Section 2.4(a).

 

“FTC” shall have the meaning specified in Section 4.5(a).

 

“GAAP” shall mean generally accepted accounting principles in the United States.

 

“German Controlled Entity Profit Pooling Accounts” shall have the meaning specified in Section 4.22.

 

“German Transferred Company Benefit Plan” shall mean each Transferred Company Benefit Plan covering any current or former employees Rockwood Clay Additives.

 

“Governmental Authority” shall mean any national, federal, state, provincial, county or municipal government, domestic or foreign, any agency, board, bureau, commission, court, department, branch or any political or other subdivision or instrumentality of any such government, any self-regulatory body (including any securities exchange) or any arbitrator in any case that has jurisdiction over a party or any of its Assets, and shall include for the avoidance of doubt, any competition authority with jurisdiction to review the transactions contemplated hereby.

 

“Guarantor” shall have the meaning specified in the Preamble.

 

“Hazardous Substances” shall mean any substance, material or waste that (i) is regulated under any Environmental Requirement, (ii) without limitation of the generality of clause (i), is deemed under or by any Environmental Requirement or Governmental Authority to be “hazardous,” “toxic,” a “contaminant,” “solid waste,” “waste,” a “nuisance,” a “pollutant” or words with similar meaning, and includes hydrocarbons, petroleum and petroleum products, crude oil or any fraction or by-product thereof, polychlorinated biphenyls (PCBs), PCB wastes, asbestos or asbestos containing products and materials and radioactive substances or (iii) the presence of which requires Remedial Action pursuant to applicable Environmental Requirements.

 

“High Value” shall have the meaning specified in Section 1.5(h)(ii).

 

A-5

 

“HSR Act” shall have the meaning specified in Section 2.3(b)(v).

 

“Income Taxes” shall mean any Taxes in the nature of income or franchise Taxes.

 

“Income Tax Return” shall mean any Tax Return relating to Income Taxes.

 

“Indebtedness” of any Person shall mean all obligations of such Person under the applicable governing documentation to pay principal, interest, penalties, fees, guarantees, reimbursements, damages, costs of unwinding and other liabilities with respect to (i) all indebtedness of such Person for borrowed money, whether current or funded, fixed or contingent, secured or unsecured (ii) all obligations of such Person for the deferred purchase price of property or services (excluding trade payables arising in the ordinary course of business), (iii) all obligations of such Person evidenced by notes, bonds, debentures, mortgages or other similar instruments or debt securities, (iv) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (v) all obligations of such Person as lessee under leases that are required, in accordance with GAAP, to be capitalized, (vi) obligations under interest rate swap, hedging or similar agreements and (vii) all indebtedness or obligations of others of the kinds referred to in clauses (i) though (vi) above in respect of which such Person has entered into or issued any guarantee or other form of credit support.

 

“Indemnifiable Tax Claim” shall have the meaning specified in Section 9.1(f).

 

“Indemnified Party” shall mean Buyer Indemnitees or Seller Indemnitees, as the case may be, seeking indemnification pursuant to Article VIII.

 

“Indemnifying Party” shall have the meaning specified in Section 8.4(c).

 

“Intellectual Property” shall mean, collectively, any and all intellectual property rights in any jurisdiction, whether registered or unregistered, including such rights in and to: (i) trade secrets, business, technical, non-public, confidential or proprietary information,  know-how and rights to limit the use or disclosure thereof by any person (collectively, “Trade Secrets”), (ii) patents and patent applications, and any and all divisions, continuations, continuations-in-part, reissues, continuing patent applications, reexaminations and extensions thereof, any counterparts claiming priority therefrom, statutory invention registrations and rights in respect of utility models or industrial designs and like rights (collectively, “Patents”), and inventions and invention disclosures, whether or not patentable, (iii) trademarks, trade names, service marks, certification marks, trade dress, logos, corporate names and other source identifiers, emblems, signs or insignia, and similar rights and applications to register any of the foregoing, and all goodwill associated with any of the foregoing throughout the world (collectively, “Trademarks”), (iv) copyrights, copyrightable works and databases (or other collections of information, data, works or other materials) (collectively, “Copyrights”), (v) software, including without limitation data files, source code, object code, application programming interfaces, computerized databases and other software-related specifications and documentation (collectively, “Software”), (vi) domain names, (vii) all moral rights and other protectable intellectual property and proprietary rights of a similar nature; in each case of (i) to (vi) above,

 

A-6

 

including any registrations of, applications to register, and renewals and extensions of, any of the foregoing with or by any Governmental Authority in any jurisdiction.

 

“IRS” shall mean the United States Internal Revenue Service.

 

“Knowledge of Parent” or “Parent’s Knowledge” shall mean the actual knowledge as of the date of this Agreement of Alison Avery, Frank Wright, Robin Bryne, Hubert Schießling, Donald Poucher, Tim Love, Helmut Coutelle and Andy Smallwood.

 

“Leased Real Property” shall mean the real property leased by a Transferred Company pursuant to the Leases.

 

“Leases” shall have the meaning specified in Section 2.9(b).

 

“Legal Requirements” shall have the meaning specified in Section 2.8(b).

 

“Litigation” shall mean any civil, criminal or administrative claims, actions, suits, demands, proceedings, arbitrations, hearings or investigations.

 

“Local Share Transfer Agreement” shall have the meaning specified in Section 1.4(c).

 

“Lookback Date” means July 26, 2010.

 

“Losses” shall mean losses, costs, damages, liabilities, interest, deficiencies, settlements, awards, judgments, fines, assessments, penalties, obligations, demands, claims, actions, causes of action and reasonable expenses of defense thereof (including (but subject to the penultimate sentence of Section 8.6) reasonable fees and disbursements of counsel).

 

“Low Value” shall have the meaning specified in Section 1.5(h)(i).

 

“Material Adverse Effect” shall mean a state of facts, circumstance, condition, event, change, development, occurrence, result or effect (each, an “Effect”) that, individually or in combination with any other Effect, is or would reasonably be expected to be materially adverse to (i) the financial condition, capitalization, results of operations, or Assets of the Business or the Transferred Companies taken as a whole or (ii) Parent’s or the other Sellers’ ability to perform timely their obligations under this Agreement and the Ancillary Documents to be executed and delivered by Parent and the other Sellers and to consummate the transactions contemplated hereby and thereby, disregarding, with respect to clause (i) above, each of the following, and any Effects thereof:  (a) changes in the general economic, financial, credit or securities markets, including prevailing interest rates or currency rates, or regulatory or political conditions, (b) events or changes to the extent that they generally affect the industry or industries, or market or markets, in which the Business operates, (c) any natural disaster, outbreak or escalation of hostilities, act or acts of war (whether or not declared) or terrorism, military actions or other national or international calamity or crisis, (d) the suspension of trading in securities on any United States or foreign stock exchange, or a disruption in securities settlement, payment or clearance services in the United States or elsewhere, (e) changes in applicable Legal Requirements or GAAP or any formal pronouncements related thereto, (f) the

 

A-7

 

announcement of the Agreement, (h) the identity of, or actions or omissions of, Buyer or its Affiliates, or any action taken or failed to be taken pursuant to or in accordance with the Agreement (other than pursuant to or in accordance with Section 4,3 or the Restructurings) or expressly at the request of Buyer or (i) any failure by the Business to meet any estimates, expectations, projections, forecasts, guidance or revenue or earnings predictions for any period ending prior to, on or after the date of this Agreement, provided that the underlying cause of such failure shall not be excluded; provided, however, that the exceptions contained in the foregoing clauses (a), (b), (c), (d) and (e) shall not apply to the extent that such effect or change has a disproportionate adverse effect on the Business taken as a whole, as compared to the adverse impact such Effect has on other companies operating in the industry or markets in which the Business operates (but taking into account for purposes of determining whether a Material Adverse Effect has occurred only the disproportionate adverse effect).

 

“Material Contract” shall have the meaning specified in Section 2.10.

 

“Net After-Tax Basis” shall mean, with respect to the calculation of any indemnification payment owed to any party pursuant to the Agreement, calculation thereof in a manner taking into account any Taxes owing by the Indemnified Party or its Affiliates as a result of receipt or accrual of the indemnity payment and any savings in Taxes realized by the Indemnified Party or its Affiliates as a result of the indemnified liability. Such calculation shall be made assuming that the Indemnified Party is subject to the highest combined marginal Tax rates in effect in the relevant jurisdictions and shall disregard benefits derived from net operating losses and unrelated deductions and credits

 

“Newco” shall mean a newly formed Delaware corporation to be formed following the date of the Agreement, which will be a wholly-owned Subsidiary of Parent.

 

“Non-Income Tax Returns” shall have the meaning specified in Section 9.1(a)(ii).

 

“Non-U.S. Antitrust Approvals” shall mean any Approval required to be obtained from, or any filings or other notifications required to be made to or with, any non-United States Governmental Authority in a jurisdiction listed in Section 2.3 of the Disclosure Letter in connection with the transactions contemplated hereby under Antitrust Laws.

 

“Organizational Documents” shall have the meaning specified in Section 2.1(c).

 

“Outside Date” shall have the meaning specified in Section 7.1(e).

 

“Owned Intellectual Property” shall mean any Intellectual Property owned, or purported to be owned, by the Transferred Companies.

 

“Owned Real Property” shall have the meaning specified in Section 2.9(a).

 

“Parent” shall have the meaning specified in the Preamble.

 

“Parent PSP Contribution” shall have the meaning specified in Section 9.3(f)(ii)(A).

 

A-8

 

“Parent Nonelective Contribution” shall have the meaning specified in Section 9.3(f)(ii)(B).

 

“Permit” shall mean any permit or authorization of the Transferred Companies issued by any Governmental Authority in connection with the Business or any of the other Business Assets.

 

“Permitted Encumbrances” shall mean (i) Encumbrances for Taxes, assessments and other governmental charges which are not due and payable and which may thereafter be paid without penalty, or which are being contested in good faith, in each case, only if adequate reserves with respect thereto have specifically been established therefor, (ii) the title and other interests of a lessor under a capital or operating lease, (iii) a non-exclusive license of a Trademark of a Transferred Company pursuant to a sales, distribution or agency agreement entered into  in the ordinary course of business, where such license is to the extent necessary for the sale or distribution of a product of such Transferred Company to its customers, (iv) Encumbrances arising or resulting from any action taken by Buyer or any of its Affiliates, (v) Encumbrances identified in the Disclosure Letter, (vi) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Encumbrances arising in the ordinary course of business that relate to amounts which are not yet due and payable, (vii) zoning, building codes and other land use laws regulating the use or occupancy of the Real Property or the activities conducted thereon that are imposed by any Governmental Authority having jurisdiction over such Real Property which are not violated by the current use or occupancy of such Real Property in the conduct of the Business, easements, licenses or other restrictions on the use of any Owned Real Property or other minor irregularities in title thereto or encumbrances thereon not securing an obligation to pay money, so long as the same do not, individually or in the aggregate, materially interfere with or impair the use of such Owned Real Property in the manner normally used or impair the market value of such Owned Real Property, (viii) Encumbrances disclosed in any title reports or title documents which have been made available to Buyer or otherwise disclosed to Buyer in writing so long as the same do not, individually or in the aggregate, materially interfere with or impair the use of such Owned Real Property in the manner normally used or impair the market value of such Owned Real Property, in each case prior to the date of this Agreement, (ix) Encumbrances that would be reflected in a survey of the Owned Real Property, (x) Encumbrances securing the Indebtedness of Parent and its Affiliates that will be released on or prior to Closing and (xi) any matters of record with respect to Owned Real Property that are not identified as title defects on any title insurance policies with respect thereto.

 

“Person” shall mean any individual or Entity.

 

“Pre-Closing Period” shall have the meaning specified in Section 9.1(a)(ii).

 

“Pre-Closing Widnes Environmental Condition” shall mean, with respect to any buildings, facilities, structures, equipment or Real Property at the Widnes, Cheshire, United Kingdom property, any Environmental Condition to the extent occurring or existing prior to or as of the Closing Date, regardless of whether the Environmental Condition is known or discovered before or after the Closing Date.

 

“Prime Rate” shall have the meaning specified in Section 1.5(f).

 

A-9

 

“Property” shall have the meaning specified in Section 2.9(e).

 

“Purchase Price” shall have the meaning specified in Section 1.2.

 

“RCA Income Tax Returns” shall have the meaning specified in Section 9.1(a)(ii).

 

“Real Property” shall mean the Owned Real Property and the Leased Real Property.

 

“Remedial Action” shall mean all action necessary:  (i) to cleanup, close, remove, treat or in any other way remediate any Hazardous Substance; (ii) to prevent or contain the release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or within any building, structure, facility or fixture of any Hazardous Substance so that it does not endanger or otherwise adversely affect the environment or public health or welfare or (iii) to perform studies, investigations or monitoring, in, under or of any real property, tangible assets or facilities.

 

“Remote Employees” shall have the meaning specified in Section 9.4(b).

 

“Resigning Officers and Directors” shall mean each individual listed on Schedule 1.4(a)(v) of the Disclosure Letter.

 

“Restricted Business” shall have the meaning specified in Section 4.15(b).

 

“Restricted Territory” shall have the meaning specified in Section 4.15(b).

 

“Restructurings” shall mean the transactions described in Schedule A-2 of the Disclosure Letter.

 

“Retained Cash Balances” shall mean all unrestricted cash and cash equivalents in Bank Accounts at the Closing.

 

“Retained Employees” shall have the meaning specified in Section 4.3(b)(vii).

 

“Rockwood” shall mean Rockwood Holdings, Inc., a Delaware corporation.

 

“Rockwood Spain” shall mean Rockwood Industries Spain, S.L., a Sociedad de Responsabilidad Limitada organized under the laws of Spain.

 

“RSL” shall mean Rockwood Specialties Limited, a limited company organized under the laws of England and Wales

 

“Rockwood Clay Additives” means Rockwood Clay Additives GmbH, a Gesellschaft mit beschränkter Haftung organized under the laws of Germany.

 

“RSGG” shall mean Rockwood Specialties Group GmbH, a Gesellschaft mit beschränkter Haftung organized under the laws of Germany.

 

A-10

 

“Security Interest” shall mean any pledge, mortgage, deed of trust, security interest or other lien, in each case to secure payment or performance of any Indebtedness.

 

“Selected Accountant” shall have the meaning specified in Section 1.5(e).

 

“Seller Indemnitees” shall have the meaning specified in Section 8.3.

 

“Seller Marks” shall have the meaning specified in Section 4.6(a).

 

“Sellers” shall mean Parent, RSGG and RSL.

 

“Shares” shall mean, with respect to a Company, the shares of capital stock or other equity interests of such Company, owned or to be owned as of the Closing Date by the applicable Seller as set forth on Schedule 2.2 of the Disclosure Letter.

 

“Southern Clay Products” shall mean Southern Clay Products, Inc. a Texas corporation.

 

“Specified Representations” shall have the meaning specified in Section 8.1.

 

“Straddle Period” shall have the meaning specified in Section 9.1(b)(i)(A).

 

“Subsidiary” shall mean, with respect to any Person, another Person of which such Person, directly or indirectly through one or more Subsidiaries, beneficially owns capital stock or other equity interests having in the aggregate fifty percent (50%) or more of the total combined voting power, without giving effect to any contingent voting rights, in the election of directors (or Persons fulfilling similar functions or duties) of such owned Person.

 

“Subsidiary Shares” shall mean, with respect to a Subsidiary of a Company, the shares of capital stock, the issued shares or other equity interests of such Subsidiary set forth on Schedule 2.2 of the Disclosure Letter.

 

“Supplies” shall have the meaning specified in Section 4.6(a).

 

“Target Capex” shall mean the sum of (x) U.S.$9.352 million and (y) U.S.$1.0 million; provided, however, that the amount in clause (x) shall be pro-rated based on the number of days in 2013 occurring prior to the Closing to the extent that the Closing Date occurs prior to December 31, 2013.

 

“Taxes” shall mean all taxes, charges, fees, levies or other assessments (including, for the avoidance of doubt, any such amounts imposed under Section 3 of the General Tax Code of Germany), and all estimated payments thereof, including but not limited to income, excise, license, severance, stamp, occupation, premium, profits, windfall, customs duties, capital stock, employment, disability, registration, alternative or add-on minimum, property, sales, use, value added, environmental (including Taxes imposed under Section 59A of the Code), franchise, payroll, transfer, gross receipts, withholding, social security or similar unemployment taxes, and any other tax of any kind whatsoever (including any requirement to reverse or repay any entitlement under a Tax incentive program or any Tax credits, subsidies or grants, including any

 

A-11

 

such entitlements, credits, subsidies or grants received or accrued pursuant to an agreement with an applicable Governmental Authority), imposed by any Governmental Authority, including any secondary liabilities for such amounts imposed by statute or contract (including respective liability claims under civil law) and any interest, penalties and additions to tax relating to such taxes, charges, fees, levies or other assessments.

 

“Tax Return” shall mean any return, report, form or other information filed with any Governmental Authority with respect to Taxes.

 

“Termination Date” shall have the meaning specified in Section 4.22(a).

 

“Third-Party Claim” shall have the meaning specified in Section 8.6.

 

“Third-Party Intellectual Property” shall mean any Intellectual Property owned by or exclusively licensed to any Person, other than Parent and its Affiliates.

 

“Threshold Amount” shall have the meaning specified in Section 8.4(d).

 

“Transferred Companies” shall have the meaning specified in Section 2.1(a).

 

“Transferred Company Benefit Plans” shall have the meaning specified in Section 2.12(a).

 

“Transferred Company Indebtedness” shall mean the aggregate amount, without duplication, of (i) all liabilities set forth on Schedule A-3 of the Disclosure Letter and (ii) any other Indebtedness of each of the Transferred Companies as of the Closing Date owing to any third Person, other than to one or more Transferred Companies, plus any accrued and unpaid interest thereon, in each case, determined as of 12:01 a.m. (Eastern Time) on the Closing Date in accordance with GAAP applied on a basis consistent with the application of such principles used in the preparation of the Balance Sheet (and after giving effect to the transactions contemplated hereby).  A sample calculation of the calculation of Transferred Company Indebtedness as of December 31, 2012 is set forth on Schedule A-3 of the Disclosure Letter.  In determining Transferred Company Indebtedness, foreign currencies shall be converted into U.S. dollars at the exchange in effect on the Closing Date.

 

“Transaction Bonuses” shall have the meaning specified in Section 9.3(h).

 

“Transition Services Agreement” shall have the meaning specified in Section 1.4(a)(vii).

 

“U.C.C.” shall mean the Uniform Commercial Code, as amended, and any successor thereto.

 

“U.K. Company” shall mean Rockwood Additives Limited, a limited company organized under the laws of England and Wales.

 

“U.K. Retirement Plan” shall mean the Rockwood UK Retirement Plan.

 

A-12

 

“U.K. Shares” shall mean the shares of capital stock or other equity interests of the U.K. Company set forth on Schedule 2.2 of the Disclosure Letter, subject Schedule 4.3(a) of the Disclosure Letter.

 

“U.S. Benefit Plan” shall mean each Benefit Plan (other than a Transferred Company Benefit Plan) covering current or former directors, officers, employees or consultants of Southern Clay Products.

 

“U.S. Business Employees” shall mean those Business Employees employed and/or engaged in the portion of the Business conducted in the United States.

 

“U.S. Transferred Company Benefit Plan” shall mean each Transferred Company Benefit Plan covering any current or former directors, officers, employees or consultants of Southern Clay Products.

 

“VAT” shall mean Value Added Tax as stipulated by European Council Directive 2006/112/EC of 28 November 2006 and the respective national VAT Acts.

 

“WARN Act” shall have the meaning specified in Section 2.11(e).

 

A-13

 

EXHIBIT B
  List of Companies

 

1.              Rockwood Additives Limited, a limited company organized under the laws of England and Wales

 

2.              Rockwood Clay Additives GmbH, a Gesellschaft mit beschränkter Haftung organized under the laws of Germany

 

3.              Rockwood Industries Spain, S.L., a Sociedad de Responsabilidad Limitada organized under the laws of Spain

 

4.              Newco, a newly formed Delaware corporation to be formed following the date of the Agreement, which will be a wholly-owned Subsidiary of Parent

 

 

EXHIBIT C

Allocation of the Purchase Price

 

The Purchase Price shall be allocated to the Shares as follows:

 

	
Newco
    	
 
    	
76.0
    	
%
    
	
Rockwood Additives Ltd
    	
 
    	
10.9
    	
%
    
	
Rockwood Clay Additives GmbH
    	
 
    	
13.0
    	
%
    
	
Rockwood Industries Spain, S.L.
    	
 
    	
0.1
    	
%
    

 

 

EXHIBIT D

Form of Transition Services Agreement
 (see attached)Exhibit 10.1

 

EXECUTION VERSION

 

	
 
    	
 
    

 

CREDIT AGREEMENT

 

dated as of

 

July 30, 2013

 

among

 

HEMISPHERE MEDIA HOLDINGS, LLC and

INTERMEDIA ESPAÑOL, INC.

 

as Borrowers,

 

HMTV, LLC,

 

as Holdings,

 

THE LENDERS PARTY HERETO

 

and

 

DEUTSCHE BANK AG NEW YORK BRANCH,

 

as Administrative Agent

 

 

DEUTSCHE BANK SECURITIES INC. and

GE CAPITAL MARKETS, INC.,

 

as Joint Lead Arrangers,

 

DEUTSCHE BANK SECURITIES INC.,

 

as Lead Bookrunner

 

and

 

GENERAL ELECTRIC CAPITAL CORPORATION,

 

as Syndication Agent

 

	
 
    	
 
    

 

 

Table of Contents

 

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
Defined Terms
    	
1
    
	
Section 1.02
    	
Terms Generally
    	
52
    
	
Section 1.03
    	
Accounting Terms
    	
52
    
	
Section 1.04
    	
Pro Forma Calculations
    	
53
    
	
Section 1.05
    	
Classification of Loans   and Borrowings
    	
53
    
	
Section 1.06
    	
Currency Equivalents   Generally
    	
54
    
	
Section 1.07
    	
Rounding
    	
54
    
	
Section 1.08
    	
References to Laws
    	
54
    
	
Section 1.09
    	
Times of Day
    	
54
    
	
Section 1.10
    	
Covenant Compliance   Generally
    	
54
    
	
Section 1.11
    	
Available Amount   Transactions
    	
54
    
	
Section 1.12
    	
Interest Rate   Calculations
    	
54
    
	
 
    	
 
    	
 
    
	
ARTICLE II Term Loan Facilities
    	
55
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
Commitments
    	
55
    
	
Section 2.02
    	
Term Loans
    	
55
    
	
Section 2.03
    	
Borrowing Procedure
    	
56
    
	
Section 2.04
    	
Evidence of Debt;   Repayment of Loans
    	
57
    
	
Section 2.05
    	
Fees
    	
58
    
	
Section 2.06
    	
Interest on Loans
    	
58
    
	
Section 2.07
    	
Default Interest
    	
59
    
	
Section 2.08
    	
Alternate Rate of   Interest
    	
59
    
	
Section 2.09
    	
Termination of Initial   Term Loan Commitments
    	
59
    
	
Section 2.10
    	
Conversion and   Continuation of Borrowings
    	
59
    
	
Section 2.11
    	
Repayment of Term   Borrowings
    	
61
    
	
Section 2.12
    	
Voluntary Prepayment
    	
63
    
	
Section 2.13
    	
Mandatory Prepayments
    	
64
    
	
Section 2.14
    	
Reserve Requirements;   Change in Circumstances
    	
66
    
	
Section 2.15
    	
Change in Legality
    	
67
    
	
Section 2.16
    	
Breakage
    	
68
    
	
Section 2.17
    	
Pro Rata Treatment
    	
69
    
	
Section 2.18
    	
Sharing of Setoffs
    	
69
    
	
Section 2.19
    	
Payments
    	
70
    
	
Section 2.20
    	
Taxes
    	
70
    
	
Section 2.21
    	
Assignment of   Commitments under Certain Circumstances; Duty to Mitigate
    	
73
    
	
Section 2.22
    	
Incremental Term Loans
    	
74
    
	
Section 2.23
    	
New Term Loan Facility
    	
76
    
	
Section 2.24
    	
New Incremental Notes
    	
79
    

 

i

 

Table of Contents

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 2.25
    	
Extensions of Term   Loans
    	
80
    
	
Section 2.26
    	
Refinancing Amendments
    	
83
    
	
Section 2.27
    	
Lead Borrower
    	
84
    
	
 
    	
 
    	
 
    
	
ARTICLE III Representations and Warranties
    	
84
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Organization; Powers
    	
84
    
	
Section 3.02
    	
Authorization
    	
84
    
	
Section 3.03
    	
Enforceability
    	
85
    
	
Section 3.04
    	
Governmental Approvals
    	
85
    
	
Section 3.05
    	
Financial Statements
    	
85
    
	
Section 3.06
    	
No Material Adverse   Effect
    	
85
    
	
Section 3.07
    	
Title to Properties;   Possession Under Leases
    	
85
    
	
Section 3.08
    	
Subsidiaries
    	
86
    
	
Section 3.09
    	
Litigation; Compliance   with Laws
    	
86
    
	
Section 3.10
    	
Designation of   Indebtedness
    	
86
    
	
Section 3.11
    	
Federal Reserve   Regulations
    	
86
    
	
Section 3.12
    	
Investment Company Act
    	
87
    
	
Section 3.13
    	
Use of Proceeds
    	
87
    
	
Section 3.14
    	
Tax Returns
    	
87
    
	
Section 3.15
    	
No Material   Misstatements
    	
87
    
	
Section 3.16
    	
Employee Benefit Plans
    	
87
    
	
Section 3.17
    	
Environmental Matters
    	
88
    
	
Section 3.18
    	
[Reserved
    	
88
    
	
Section 3.19
    	
Security Documents
    	
88
    
	
Section 3.20
    	
Location of Real   Property and Leased Premises
    	
89
    
	
Section 3.21
    	
Labor Matters
    	
90
    
	
Section 3.22
    	
Solvency
    	
90
    
	
Section 3.23
    	
[Reserved]
    	
90
    
	
Section 3.24
    	
Sanctioned Persons;   Sanctions Laws and Regulations
    	
90
    
	
Section 3.25
    	
Foreign Corrupt   Practices Act
    	
90
    
	
Section 3.26
    	
Intellectual Property
    	
91
    
	
Section 3.27
    	
Special Representations   Relating to FCC Licenses, Etc
    	
91
    
	
 
    	
 
    	
 
    
	
ARTICLE IV Conditions of Lending
    	
92
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
All Credit Events
    	
92
    
	
Section 4.02
    	
First Credit Event
    	
92
    
	
 
    	
 
    	
 
    
	
ARTICLE V Affirmative Covenants
    	
95
    

 

ii

 

Table of Contents

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 5.01
    	
Existence; Compliance   with Laws; Businesses and Properties
    	
95
    
	
Section 5.02
    	
Insurance
    	
96
    
	
Section 5.03
    	
Obligations and Taxes
    	
97
    
	
Section 5.04
    	
Financial Statements,   Reports, etc
    	
97
    
	
Section 5.05
    	
Litigation and Other   Notices
    	
100
    
	
Section 5.06
    	
Information Regarding   Collateral
    	
101
    
	
Section 5.07
    	
Maintaining Records;   Access to Properties and Inspections; Maintenance of Ratings
    	
101
    
	
Section 5.08
    	
Use of Proceeds
    	
101
    
	
Section 5.09
    	
Employee Benefits
    	
101
    
	
Section 5.10
    	
Covenant to Guarantee   Obligations and Give Security
    	
102
    
	
Section 5.11
    	
Compliance with   Environmental Laws
    	
104
    
	
Section 5.12
    	
[Reserved]
    	
104
    
	
Section 5.13
    	
Further Assurances
    	
104
    
	
Section 5.14
    	
Maintenance of Company   Separateness of Unrestricted Subsidiaries
    	
105
    
	
Section 5.15
    	
Designation of   Subsidiaries
    	
106
    
	
Section 5.16
    	
Post-Closing Items
    	
106
    
	
 
    	
 
    	
 
    
	
ARTICLE VI Negative Covenants
    	
107
    
	
 
    	
 
    	
 
    
	
Section 6.01
    	
Indebtedness
    	
107
    
	
Section 6.02
    	
Liens
    	
110
    
	
Section 6.03
    	
Sale and Lease-back   Transactions
    	
113
    
	
Section 6.04
    	
Investments, Loans and   Advances
    	
113
    
	
Section 6.05
    	
Mergers, Consolidations   and Dispositions
    	
115
    
	
Section 6.06
    	
Restricted Payments;   Restrictive Agreements
    	
118
    
	
Section 6.07
    	
Transactions with   Affiliates
    	
121
    
	
Section 6.08
    	
Change in Nature of   Business
    	
121
    
	
Section 6.09
    	
Other Indebtedness and   Agreements
    	
121
    
	
Section 6.10
    	
[Reserved]
    	
122
    
	
Section 6.11
    	
Certain Equity   Securities
    	
122
    
	
Section 6.12
    	
Holdings
    	
122
    
	
 
    	
 
    	
 
    
	
ARTICLE VII Events of Default
    	
123
    
	
 
    	
 
    	
 
    
	
Section 7.01
    	
Events of Default
    	
123
    
	
Section 7.02
    	
Application of Proceeds
    	
126
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII The Administrative Agent and the Collateral Agent;   etc.
    	
127
    
	
 
    	
 
    	
 
    
	
ARTICLE IX Miscellaneous
    	
133
    

 

iii

 

Table of Contents

(continued)

 

	
 
    	
 
    	
Page
    
	
Section 9.01
    	
Notices; Electronic   Communications
    	
133
    
	
Section 9.02
    	
Survival of Agreement
    	
136
    
	
Section 9.03
    	
Binding Effect
    	
136
    
	
Section 9.04
    	
Successors and Assigns
    	
136
    
	
Section 9.05
    	
Expenses; Indemnity
    	
144
    
	
Section 9.06
    	
Right of Setoff
    	
146
    
	
Section 9.07
    	
Applicable Law
    	
146
    
	
Section 9.08
    	
Waivers; Amendment
    	
146
    
	
Section 9.09
    	
Interest Rate   Limitation
    	
148
    
	
Section 9.10
    	
Entire Agreement
    	
148
    
	
Section 9.11
    	
Waiver of Jury Trial
    	
149
    
	
Section 9.12
    	
Severability
    	
149
    
	
Section 9.13
    	
Counterparts
    	
149
    
	
Section 9.14
    	
Headings
    	
149
    
	
Section 9.15
    	
Jurisdiction; Consent   to Service of Process
    	
149
    
	
Section 9.16
    	
Confidentiality
    	
150
    
	
Section 9.17
    	
Lender Action
    	
150
    
	
Section 9.18
    	
USA PATRIOT Act Notice
    	
151
    
	
Section 9.19
    	
Judgment Currency
    	
151
    
	
Section 9.20
    	
Waiver of Sovereign Immunity
    	
151
    
	
Section 9.21
    	
Accounting Matters
    	
152
    
	
Section 9.22
    	
Electronic Execution of   Assignments and Certain Other Documents
    	
152
    
	
Section 9.23
    	
Use of Name, Logo. etc
    	
152
    
	
Section 9.24
    	
Joint and Several   Liability of the Borrowers
    	
152
    

 

iv

 

Table of Contents

(continued)

 

SCHEDULES

 

	
Schedule 1.01(b)
    	
-
    	
Subsidiary Guarantors
    
	
Schedule 2.01
    	
-
    	
Lenders and Commitments
    
	
Schedule 3.08
    	
-
    	
Subsidiaries
    
	
Schedule 3.09
    	
-
    	
Litigation
    
	
Schedule 3.16
    	
-
    	
ERISA Events
    
	
Schedule 3.17
    	
-
    	
Environmental Matters
    
	
Schedule 3.19(a)
    	
-
    	
UCC Filing Offices
    
	
Schedule 3.20(a)
    	
-
    	
Owned Real Property
    
	
Schedule 3.20(b)
    	
-
    	
Leased Real Property
    
	
Schedule 3.21
    	
-
    	
Labor Matters
    
	
Schedule 3.27
    	
-
    	
FCC Licenses
    
	
Schedule 4.02(a)
    	
-
    	
Local Counsel
    
	
Schedule 5.16
    	
-
    	
Post-Closing Items
    
	
Schedule 6.01
    	
-
    	
Existing Indebtedness
    
	
Schedule 6.02
    	
-
    	
Existing Liens
    
	
Schedule 6.04
    	
-
    	
Existing Investments
    
	
Schedule 6.06
    	
 
    	
Existing Restrictive Agreements
    
	
Schedule 6.07
    	
-
    	
Existing Transactions with Affiliates
    
	
 
    	
 
    	
 
    
	
EXHIBITS
    	
 
    	
 
    
	
Exhibit A
    	
-
    	
Form of Administrative   Questionnaire
    
	
Exhibit B
    	
-
    	
Form of Assignment and Acceptance
    
	
Exhibit C
    	
-
    	
Form of Borrowing Request
    
	
Exhibit D
    	
-
    	
Security Agreement
    
	
Exhibit E
    	
-
    	
Form of Guaranty
    
	
Exhibit F
    	
-
    	
Form of Affiliate Subordination   Agreement
    
	
Exhibit G-1
    	
-
    	
Form of Opinion of Paul, Weiss,   Rifkind, Wharton & Garrison LLP
    
	
Exhibit G-2
    	
-
    	
Form of Puerto Rico Counsel Opinion
    
	
Exhibit G-3
    	
-
    	
Form of FCC Counsel Opinion
    
	
Exhibit H
    	
-
    	
Form of Officer’s Certificate
    
	
Exhibit I
    	
-
    	
Form of Solvency Certificate
    
	
Exhibit J
    	
-
    	
Form of United States Tax   Compliance Certificate
    

 

v

 

CREDIT AGREEMENT dated as of July 30, 2013, among HEMISPHERE MEDIA HOLDINGS, LLC, a Delaware limited liability company (the “Lead Borrower”), INTERMEDIA ESPAÑOL, INC., a Delaware corporation (“WAPA PR” and, together with the Lead Borrower, the “Borrowers”), HMTV, LLC, a Delaware limited liability company (“Holdings”), the Lenders (such term and each other capitalized term used but not defined in this introductory statement having the meaning given to it in Article I), DEUTSCHE BANK AG NEW YORK BRANCH, as administrative agent and collateral agent for the Lenders (in such capacity, including any successor thereto, the “Administrative Agent” and the “Collateral Agent” respectively), DEUTSCHE BANK SECURITIES INC. (“DBSI”) and GE CAPITAL MARKETS, INC. as joint lead arrangers (“Joint Lead Arrangers”), DBSI as lead bookrunner (“Lead Bookrunner”) and GENERAL ELECTRIC CAPITAL CORPORATION as syndication agent (in such capacity, the “Syndication Agent”).

 

PRELIMINARY STATEMENTS

 

The Borrowers have requested that, upon the satisfaction in full of the conditions precedent set forth in Article IV below, the Lenders make available Initial Term Loans on the Closing Date denominated in Dollars to the Borrowers (as allocated among them in the Borrowing Request) in an aggregate principal amount of $175,000,000 pursuant to this Agreement.

 

The proceeds of the Initial Term Loans will be used to (i) repay the Existing Indebtedness, (ii) pay all fees and expenses incurred in connection with the Transaction and (iii) provide for working capital needs and general corporate purposes (including Permitted Acquisitions) of the Borrowers and their Subsidiaries.

 

The Lenders are willing to provide the Initial Term Loans on the terms and subject to the conditions set forth herein.  In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

ARTICLE I

 

Definitions

 

Section 1.01          Defined Terms.  As used in this Agreement, the following terms shall have the meanings specified below:

 

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

 

“Acquired Entity” shall have the meaning assigned to such term in Section 6.04(f).

 

“Acquisition Representations” shall mean (a) the representations made by the seller with respect to the Acquired Entity in connection with any Permitted Acquisition as are material to the interests of the Lenders, but only to the extent that Borrowers or any of their Subsidiaries has the right (determined without regard to any notice requirement thereof) to 

 

 

terminate their obligations in connection with such Permitted Acquisition or decline to consummate such Permitted Acquisition (in each case pursuant to the terms thereof) as a result of a breach of one or more of such representations in the acquisition agreement in connection with such Permitted Acquisition and (b) the representations and warranties made solely by the Borrowers and the Restricted Subsidiaries (x) in Section 3.22 (solely with respect to the Borrowers and their Restricted Subsidiaries on a consolidated basis) and (y) Sections 3.01(a) and (d), 3.02(a) and (b)(i)(A) (limited to the constitutive documents of Holdings and the Borrowers), 3.03, 3.11, 3.12, 3.19 (limited to creation, validity and perfection), 3.24 and 3.25 (solely with respect to the Borrowers and Holdings as applicable), in each case, after giving effect to such Permitted Acquisition.

 

“Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum equal to the product of (i) the LIBO Rate in effect for such Interest Period and (ii) Statutory Reserves.

 

“Administrative Agent” shall have the meaning assigned to such term in the introductory statement hereto.

 

“Administrative Questionnaire” shall mean an Administrative Questionnaire in the form of Exhibit A, or such other form as may be supplied from time to time by the Administrative Agent.

 

“Affiliate” shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

“Affiliate Subordination Agreement” shall mean an Affiliate Subordination Agreement in the form of Exhibit F pursuant to which intercompany obligations and advances owed by any Loan Party are subordinated to the Obligations.

 

“Affiliated Lender” shall mean the Permitted Investors and their respective Affiliates (other than Holdings, the Borrowers and any of their respective Subsidiaries).

 

“Agents” shall mean the Collateral Agent, the Administrative Agent and the Syndication Agent.

 

“Agreement” shall mean this Credit Agreement dated as of July 30, 2013.

 

“Agreement Currency” shall have the meaning assigned to such term in Section 9.19.

 

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%, (c) the Adjusted LIBO Rate applicable for an Interest Period of one month beginning on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1% and (d) in respect of Initial Term Loans only, 2.25%; provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the rate 

 

2

 

determined on such day at approximately 11:00 a.m. (London time) by reference to the British Bankers’ Association Interest Settlement Rates (or any other person which takes over the administration of that rate) for deposits in Dollars (as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association (or any other person which takes over the administration of that rate) as an authorized vendor for the purpose of displaying such rates).  If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective as of the opening of business on the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, as the case may be.

 

“Applicable Excess Cash Flow Percentage” shall mean 50%; provided that, so long as no Default or Event of Default exists on the respective Excess Cash Flow Payment Date, (i) if the First Lien Net Leverage Ratio as of the last day of the respective Excess Cash Flow Payment Period is less than or equal to 3.50:1.00 but greater than 2.75:1.00, then the Applicable Excess Cash Flow Percentage instead shall be 25% and (ii) if the First Lien Net Leverage Ratio as of the last day of the respective Excess Cash Flow Payment Period is less than or equal to 2.75:1.00, then the Applicable Excess Cash Flow Percentage instead shall be 0%.

 

“Applicable Law” shall mean all applicable provisions of constitutions, laws, statutes, ordinances, rules, treaties, regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities and all orders and decrees of all courts and arbitrators.

 

“Applicable Margin” shall mean, for any day (a) with respect to any Eurodollar Loan, 5.00% per annum and (b) with respect to any ABR Loan, 4.00% per annum.

 

“Asset Sale” shall mean the sale, transfer or other disposition (by way of merger or otherwise) by the Lead Borrower or any of its Restricted Subsidiaries to any Person other than the Lead Borrower or any Subsidiary Guarantor of (a) any Equity Interests of any of the Restricted Subsidiaries (other than directors’ qualifying shares) or (b) any other assets of the Lead Borrower or any of its Restricted Subsidiaries.

 

“Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, in the form of Exhibit B or such other form as shall be approved by the Administrative Agent.

 

“Available Amount Basket” shall mean, at any date (the “Reference Date”), the sum of:

 

(a)           $5,000,000;

 

(b)           Cumulative Retained Excess Cash Flow Amount; plus

 

3

 

(c)           the amount of any capital contributions or Net Cash Proceeds from Permitted Equity Issuances (or issuances of debt securities that have been converted into or exchanged for Qualified Capital Stock) received or made by the Lead Borrower (or any direct or indirect parent thereof and contributed by such parent to the Lead Borrower) during the period from and including the Business Day immediately following the Closing Date through and including the Reference Date; plus

 

(d)           to the extent not (A) included in clause (b) above or (B) already reflected as a return of capital with respect to such Investment for purposes of determining the amount of such Investment, the aggregate amount of all cash dividends and other cash distributions received by the Lead Borrower or any of its Restricted Subsidiaries from any Minority Investments or Unrestricted Subsidiaries during the period from and including the Business Day immediately following the Closing Date through and including the Reference Date; plus

 

(e)           to the extent not (A) included in clause (b) above or (B) already reflected as a return of capital with respect to such Investment for purposes of determining the amount of such Investment, the aggregate amount of all cash repayments of principal received by the Lead Borrower or any of its Restricted Subsidiaries from any Minority Investments or Unrestricted Subsidiaries during the period from and including the Business Day immediately following the Closing Date through and including the Reference Date in respect of loans or advances made by the Lead Borrower or any of its Restricted Subsidiaries to such Minority Investments or Unrestricted Subsidiaries; plus

 

(f)            to the extent not (A) included in clause (b) above, (B) already reflected as a return of capital with respect to such Investment for purposes of determining the amount of such Investment or (C) required to be applied to prepay Term Loans in accordance with Section 2.13(a), the aggregate amount of all Net Cash Proceeds received by the Lead Borrower or any of its Restricted Subsidiaries in connection with the sale, transfer or other disposition of its ownership interest in any Minority Investment or Unrestricted Subsidiary during the period from and including the Business Day immediately following the Closing Date through and including the Reference Date; plus

 

(g)           any Declined Amounts; minus

 

(h)           the aggregate amount of Restricted Payments thereof made after the Closing Date and on or prior to such date pursuant to Section 6.06(a)(vii); minus

 

(i)            the aggregate amount of payments thereof made after the Closing Date and on or prior to such date pursuant to Section 6.09(b)(i)(1); minus

 

(j)            any Cumulative Retained Excess Cash Flow Amount used to make Investments pursuant to Section 6.04(n)(y) after the Closing Date and on or prior to such date.

 

“Board” shall mean the Board of Governors of the Federal Reserve System of the United States of America.

 

4

 

“Borrower Materials” shall have the meaning assigned to such term in Section 9.01.

 

“Borrowers” shall have the meaning assigned to such term in the introductory statement hereto.

 

“Borrowing” shall mean Loans of the same Class and Type made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

 

“Borrowing Request” shall mean a request by the Lead Borrower (on behalf of itself or WAPA PR) in accordance with the terms of Section 2.03 and substantially in the form of Exhibit C, or such other form as shall be approved by the Administrative Agent.

 

“Breakage Event” shall have the meaning assigned to such term in Section 2.16.

 

“Business Day” shall mean (i) any day other than a Saturday, Sunday or day on which banks in New York City are authorized or required by law to close and (ii) if such day relates to any interest rate settings as to a Eurodollar Loan denominated in Dollars, any fundings, disbursements, settlements and payments in Dollars in respect of any such Eurodollar Loan, or any other dealings in Dollars to be carried out pursuant to this Agreement in respect of any such Eurodollar Loan, shall mean any such day described in clause (i) above that is also a London Banking Day.

 

“Capital Expenditures” shall mean, for any period, the additions to property, plant and equipment and other capital expenditures of the Lead Borrower and its Restricted Subsidiaries that are (or should be) set forth in a consolidated statement of cash flows of the Lead Borrower for such period prepared in accordance with GAAP but excluding in each case any such expenditure made to restore, replace or rebuild property to the condition of such property immediately prior to any damage, loss, destruction or condemnation of such property, to the extent such expenditure is made with insurance proceeds, condemnation awards or damage recovery proceeds relating to any such damage, loss, destruction or condemnation.

 

“Capital Lease Obligations” of any Person shall mean the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

 

“Cash Equivalents” shall mean:

 

(a)           direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of issuance thereof;

 

5

 

(b)           investments in commercial paper maturing within 270 days from the date of issuance thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

 

(c)           investments in certificates of deposit, banker’s acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, the Administrative Agent or any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000 and that issues (or the parent of which issues) commercial paper rated at least “Prime 1” (or the then equivalent grade) by Moody’s or “A 1” (or the then equivalent grade) by S&P;

 

(d)           fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria of clause (c) above;

 

(e)           investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all of whose assets are invested in investments of the type described in clauses (a) through (d) above; and

 

(f)            other short-term investments utilized by Foreign Subsidiaries in accordance with normal investment practices for cash management in investments of a type analogous to the foregoing.

 

“Cash Management Bank” shall mean any Person that is a Lender or an Affiliate of a Lender at the time it initially provides any Cash Management Services, whether or not such Person subsequently ceases to be a Lender or an Affiliate of a Lender.

 

“Cash Management Obligations” shall mean obligations owed by the Lead Borrower or any of its Restricted Subsidiaries to any Cash Management Bank in respect of or in connection with any Cash Management Services and designated by the Cash Management Bank and the Lead Borrower in writing to the Administrative Agent as “Cash Management Obligations”.

 

“Cash Management Services” shall mean any agreement or arrangement to provide cash management services, including treasury, depository, overdraft, credit card processing, credit or debit card, purchase card, electronic funds transfer and other cash management arrangements.

 

“Casualty Event” shall mean any event that gives rise to the receipt by the Lead Borrower or any of its Restricted Subsidiaries of any insurance proceeds or condemnation awards in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.

 

“CFC” shall mean a “controlled foreign corporation” within the meaning of section 957(a) of the Code.

 

6

 

“CFC Holding Company” shall mean with respect to the Term Loans any Subsidiary of the Lead Borrower that owns one or more CFCs, either directly or indirectly through other entities that are disregarded entities or partnerships for U.S. federal income tax purposes, and substantially all the assets of such entities (excluding equity interests in each other) consist of equity interests of such CFCs.

 

“Change in Control” shall be deemed to have occurred if (a) any “person” or “group” (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the Closing Date), other than the Permitted Investors, shall  own, directly or indirectly, beneficially or of record, shares representing the greater of (i) more than 35% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Parent and (ii) more than the percentage of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Parent directly or indirectly owned by the Permitted Investors, (b) a majority of the seats (other than vacant seats) on the board of directors of the Parent shall at any time be occupied by persons who were neither (i) nominated by the board of directors of the Parent (or any committee thereof with the authority to nominate directors) or the Permitted Investors nor (ii) appointed by directors so nominated, (c) any change in control (or similar event, however denominated) with respect to the Parent, Holdings or the Lead Borrower shall occur under and as defined in any indenture or agreement in respect of Material Indebtedness (including any Permitted First Priority Refinancing Debt, any Permitted Second Priority Refinancing Debt, any Permitted Unsecured Refinancing Debt, any New Incremental Notes and any Permitted Ratio Debt), (d) Parent shall cease to directly own, beneficially and of record, 100% of the issued and outstanding Equity Interests of Holdings, (e) Holdings shall cease to directly own, beneficially and of record, 100% of the issued and outstanding Equity Interests of the Lead Borrower or (f) the Lead Borrower shall cease to directly or indirectly own, beneficially and of record, 100% of the issued and outstanding Equity Interests of WAPA PR.

 

“Change in Law” shall mean (a) the adoption of any law, rule or regulation after the Closing Date, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender (or, for purposes of Section 2.14, by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date. For purposes of this definition and Section 2.14, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in implementation thereof, and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case, pursuant to Basel III, shall in each case described in clauses (i) and (ii) above, be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued, provided that increased costs as a result of any Change in Law pursuant to clause (i) or (ii) above, shall only be reimbursable by the Loan Parties to the extent the applicable Lender is requiring reimbursement therefor from similarly situated borrowers under comparable syndicated credit facilities.

 

“Charges” shall have the meaning assigned to such term in Section 9.09.

 

7

 

“Class” shall mean (a) when used with respect to Lenders, refers to whether such Lenders are Term Loan Lenders or Extending Term Loan Lenders, (b) when used with respect to Commitments, refers to whether such Commitments are Initial Term Loan Commitments or Other Term Loan Commitments and (c) when used with respect to Loans, refers to whether such Loans are Term Loans, Other Term Loans or Extended Term Loans, in each case, under this Agreement, of which such Loan or Commitment shall be a part.

 

“Closing Date” shall mean the date of the making of the Initial Term Loans under this Agreement.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral” shall mean all the “Collateral” as defined in any Security Document and shall also include the Mortgaged Properties.

 

“Collateral and Guarantee Requirement” shall mean, at any time, the requirement that:

 

(a)           the Collateral Agent shall have received each Collateral Document required to be delivered on the Closing Date pursuant to Section 4.02 or pursuant to Section 5.10 or Section 5.13 or Section 5.16 at such time, duly executed by each Loan Party thereto;

 

(b)           all Obligations shall have been unconditionally guaranteed by Holdings, each Restricted Subsidiary of a Borrower that is a wholly owned Material Domestic Subsidiary and not an Excluded Subsidiary including those that are listed on Schedule 1.01(b) hereto (each, a “Guarantor”), and any Subsidiary of a Borrower that Guarantees any Indebtedness incurred by such Borrower pursuant to any Credit Agreement Refinancing Indebtedness (or any Permitted Refinancing thereof) shall be a Guarantor hereunder;

 

(c)           the Obligations and the Guaranty shall have been secured by a first-priority security interest (subject to nonconsensual Liens permitted by Section 6.02) in (i) all the Equity Interests of the Lead Borrower, (ii) all Equity Interests of each direct, wholly owned Domestic Subsidiary (other than a Domestic Subsidiary described in the following clause (iii)(A)) that is directly owned by a Borrower or any Subsidiary Guarantor and (iii) 65% of the issued and outstanding Equity Interests of (A) each wholly owned Domestic Subsidiary that is directly owned by a Borrower or by any Subsidiary Guarantor and that is a disregarded entity for United States federal income tax purposes and substantially all of the assets of such Domestic Subsidiary consist of Equity Interests in one or more Foreign Subsidiaries and (B) each wholly owned Foreign Subsidiary that is directly owned by a Borrower or by any Subsidiary Guarantor;

 

(d)           except to the extent otherwise provided hereunder, including subject to Liens permitted by Section 6.02, or under any Security Document, the Obligations and the Guaranty shall have been secured by a perfected first-priority security interest (to the extent such security interest may be perfected by delivering certificated securities, filing financing statements under the Uniform Commercial Code or making any necessary filings with the United States Patent and Trademark Office or United States Copyright Office or the execution and delivery of

 

8

 

control agreements) in substantially all tangible and intangible personal property of each Borrower and each Guarantor including accounts (other than Excluded Accounts), inventory, equipment, investment property, contract rights, applications and registrations of intellectual property filed in the United States, other general intangibles, and proceeds of the foregoing), in each case, with the priority required by the Security Documents, in each case subject to exceptions and limitations otherwise set forth in this Agreement and the Security Documents; and

 

(e)           the Collateral Agent shall have received (i) counterparts of a Mortgage with respect to each Material Owned Real Property (other than any Excluded Property), if any, required to be delivered pursuant to Section 5.10 and 5.13(b) (the “Mortgaged Properties”) duly executed and delivered by the record owner of such property; provided, that, with respect to the PR Mortgage, which the Loan Parties represent has been duly filed and recorded in the corresponding Section of the Puerto Rico Registry of Property, (except for the Deed of Amendment, which has been filed and is pending recordation in the corresponding Section of the

Puerto Rico Registry of Property) the Collateral Agent shall have received the PR Mortgage Note, without any endorsement to any party, counterparts of the PR Mortgage Note Pledge and Security Agreement, and the corresponding financing statement, (ii) a policy or policies of title insurance issued by a nationally recognized title insurance company insuring the Lien of each such Mortgage as a valid Lien on the property described therein, free of any other Liens except as expressly permitted by Section 6.02, together with such endorsements, coinsurance and reinsurance as the Collateral Agent may reasonably request, and (iii) such surveys, abstracts, appraisals (if required under FIRREA), flood certifications under Regulation H of the Board (together with evidence of federal flood insurance for any such property located in a flood hazard area) and such customary legal opinions and other documents as the Collateral Agent may reasonably request with respect to any such Mortgaged Property.

 

The foregoing definition shall not require the creation, perfection or maintenance of pledges of or security interests in, or the obtaining of title insurance, surveys, abstracts or appraisals with respect to, Excluded Property and any other particular assets if and for so long as, in the reasonable judgment of the Collateral Agent and the Borrower, the cost of creating, perfecting or maintaining such pledges or security interests in such assets or obtaining title insurance, surveys abstracts or appraisals in respect of such assets shall be excessive in view of the fair market value (as determined by the Borrowers in its reasonable judgment) of such assets or the practical benefit to the Lenders afforded thereby.

 

The Collateral Agent may grant extensions of time for the perfection of security interests in or the obtaining of title insurance and surveys with respect to particular assets (including extensions beyond the Closing Date for the perfection of security interests in the assets of the Loan Parties on such date) where it reasonably determines, in consultation with the Borrower, that perfection cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required by this Agreement or the Security Documents.

 

“Collateral Agent” shall mean Deutsche Bank AG New York Branch or any successor thereto in such capacity.

 

9

 

 

“Collateral Coverage Requirement” shall mean, as of any date, the requirement that (x) the Consolidated Total Assets of (or attributable to) the Loan Parties constitutes at least 75.0% of the Consolidated Total Assets of the Lead Borrower and its Restricted Subsidiaries as of such date and (y) the Consolidated EBITDA of the Loan Parties constitutes at least 75.0% of the Consolidated EBITDA of the Lead Borrower and its Restricted Subsidiaries for the Test Period most recently ended prior to such date for which the financial statements and certificates required by Section 5.04(a) or 5.04(b), as the case may be, have been delivered.

 

“Commitment” shall mean the Initial Term Loan Commitment, any Other Term Loan Commitment, any Incremental Term Loan Commitment and any New Term Loan Commitment.

 

“Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

 

“Communications” shall have the meaning assigned to such term in Section 9.01.

 

“Communications Act” shall mean the Communications Act of 1934, as amended.

 

“Company” shall mean any corporation, limited liability company, partnership or other business entity (or the adjectival form thereof), where appropriate.

 

“Company Competitor” shall mean any person that competes in any material respect with the business of the Borrowers and their Subsidiaries from time to time, in each case as specifically identified by the Lead Borrower to the Administrative Agent from time to time in writing.

 

“Confidential Information Memorandum” shall mean the Confidential Information Memorandum of the Lead Borrower dated July, 2013.

 

“Consolidated Cash Taxes” shall mean, as of any date for the applicable period ending on such date with respect to the Lead Borrower and it Restricted Subsidiaries on a consolidated basis, the aggregate of all taxes based on income, profits or capital of the Lead Borrower and its Restricted Subsidiaries (including (i) federal, state, franchise, excise and similar taxes and foreign withholding taxes, (ii) penalties and interest related to such taxes or arising from any tax examinations and (iii) taxes in respect of repatriated funds), paid in cash during such period to the extent they exceed the amount of taxes deducted in determining Consolidated Net Income for such period.

 

“Consolidated Current Assets” shall mean, with respect to the Lead Borrower and its Restricted Subsidiaries on a consolidated basis at any date of determination, all assets (other than cash and Cash Equivalents) that would, in accordance with GAAP, be classified on a consolidated balance sheet of the Lead Borrower and its Restricted Subsidiaries as current assets at such date of determination, other than amounts related to current or deferred Taxes based on income or profits.

 

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“Consolidated Current Liabilities” shall mean, with respect to the Lead Borrower and its Restricted Subsidiaries on a consolidated basis, all liabilities in accordance with GAAP that would be classified as current liabilities on the consolidated balance sheet of such Person, but excluding (a) the current portion of Indebtedness to the extent reflected as a liability on the consolidated balance sheet of such Person, (b) the current portion of interest, (c) accruals for current or deferred taxes based on income or profits, (d) accruals of any costs or expenses related to restructuring reserves, (e) deferred revenue, (f) escrow account balances and (g) any letter of credit obligations or swing line loans or revolving loans under any revolving credit facility.

 

“Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for such period (without giving effect to (x) any extraordinary gains (or losses) and any related provisions for taxes on such extraordinary gains (or losses), and (y) any gains or losses from sales of assets other than inventory sold in the ordinary course of business), adjusted by:

 

(A) adding thereto (in each case to the extent deducted in determining Consolidated Net Income for such period (other than with respect to clauses (viii) and (xii) below)), without duplication, the amount of:

 

(i)            total interest expense (inclusive of amortization of deferred financing fees and other original issue discount and banking fees, charges and commissions (e.g., letter of credit fees and commitment fees, non-cash interest payments, the interest component of Capital Lease Obligations, net payments, if any, pursuant to interest rate protection agreements with respect to Indebtedness, the interest component of any pension or other post-employment benefit expense, in each case to the extent included as interest expense under GAAP)) of the Lead Borrower and its Restricted Subsidiaries determined on a consolidated basis for such period;

 

(ii)           provision for taxes based on income, profits or capital and foreign withholding taxes and franchise, state single business unitary and similar taxes for the Lead Borrower and its Restricted Subsidiaries determined on a consolidated basis for such period;

 

(iii)          all depreciation and amortization expense of the Lead Borrower and its Restricted Subsidiaries determined on a consolidated basis for such period, including but not limited to amortization or impairment of intangibles (including, but not limited to goodwill), non-cash write offs of debt discounts and debt issuances, non-cash costs and commissions, non-cash discounts and other non-cash fees and charges with respect to Indebtedness and Hedging Agreements;

 

(iv)          other unusual or non-recurring cash charges, or expenses of the Lead Borrower and its Restricted Subsidiaries during such period;

 

(v)           the amount of all other non-cash charges, losses or expenses (including non-cash employee and officer equity compensation expense (including stock options), or asset write-offs, write-ups or write-downs) of the Lead Borrower and its Restricted Subsidiaries determined on a consolidated basis for such period (but excluding any additions to bad debt reserves or bad debt expense and any non-cash charge to the extent it represents amortization of a prepaid cash item that was paid in a prior period unless such prepaid cash item was deducted in such prior period);

 

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(vi)          cash restructuring charges or reserves, including any restructuring costs and integration costs incurred in connection with, Permitted Acquisitions or Specified Dispositions or other Specified Transactions occurring after the last day of the period covered by the Historical Financial Statements, costs related to the closure and/or consolidation of facilities, retention charges, contract termination costs, recruiting, relocation, severance and signing bonuses and expenses, transaction fees and expenses in each case to the extent established or incurred after March 31, 2013; provided that the aggregate amount of any such charges or reserves under this clause (vi), when aggregated with any add-backs or adjustments pursuant to clause (vii) below, shall not exceed in any period 20.0% of Consolidated EBITDA for such period (calculated before giving effect to any such add-backs and adjustments);

 

(vii)         the amount of cost savings, operating expense reductions, other operating improvements and synergies projected by the Lead Borrower in good faith to be realized in connection with any Specified Transaction or the implementation of an operational initiative (including the termination, abandonment or discontinuance of operations and product lines) after the Closing Date (calculated on a Pro Forma Basis as though such cost savings, operating expense reductions, other operating improvements and synergies had been realized on the first day of such period and as if such cost savings, operating expense reductions, other operating improvements and synergies were realized during the entirety of such period), net of the amount of actual benefits realized during such period from such actions; provided that (A) a duly completed certificate signed by a Responsible Officer of the Lead Borrower shall be delivered to the Administrative Agent together with the Officer’s Certificate required to be delivered pursuant to Section 5.04(c), certifying that (x) such cost savings, operating expense reductions, other operating improvements and synergies are reasonably identifiable, reasonably anticipated to be realizable and factually supportable in the good faith judgment of the Lead Borrower, and (y) such actions are to be taken within 12 months after the consummation of the Specified Transaction or the implementation of an operational initiative, which is expected to result in such cost savings, expense reductions, other operating improvements or synergies, (B) projected amounts (and not yet realized) may no longer be added in calculating Consolidated EBITDA pursuant to this clause (vii) to the extent occurring more than four (4) Fiscal Quarters after the specified action taken in order to realize such projected cost savings, operating expense reduction, other operating improvements and synergies and (C) no cost savings, operating expense reductions and synergies shall be added pursuant to this clause (vii) to the extent duplicative of any expenses or charges otherwise added to Consolidated EBITDA, whether through a pro forma adjustment or otherwise, for such period; provided that the aggregate amount of all add-backs made pursuant to this clause (vii) shall not exceed in any period 20.0% of Consolidated EBITDA, when aggregated with any add-backs or adjustments pursuant to section (vi) above, for such period (for this purpose, determined without regard to this clause (vii));

 

(viii)        other accruals, up-front fees, transaction costs, commissions, expenses, premiums or charges related to any equity offering, permitted investment, acquisition, disposition, recapitalization or incurrence, repayment, amendment or modification of Indebtedness permitted by this Agreement (whether or not successful, and including costs and expenses of the Administrative Agent and Lenders that are reimbursed);

 

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(ix)          Transaction Expenses;

 

(x)           expenses to the extent covered by contractual indemnification, insurance or refunding provisions in favor of the Lead Borrower or any of its Subsidiaries and actually paid by such third parties;

 

(xi)          to the extent covered by business interruption insurance and actually reimbursed or otherwise paid, expenses or losses relating to business interruption; and

 

(xii)         to the extent that any Holdings Specified Expenses would have been added back to Consolidated EBITDA pursuant to clauses (i) through (xi) above had such change, tax or expense been incurred directly by the Lead Borrower, such Holdings Specified Expenses; and

 

(B) subtracting therefrom (to the extent not otherwise deducted in determining Consolidated Net Income for such period and without duplication the amount of (i) all cash payments or cash charges made (or incurred) by the Lead Borrower or any of its Restricted Subsidiaries for such period on account of any non-cash charges added back to Consolidated EBITDA in a previous period, (ii) income and gain items corresponding to those referred to in clauses (A)(iv) and (A)(v) above (other than (i) accrual of revenue and amortization of deferred revenue in the ordinary course or (ii) reversals of prior accruals or reserves, to the extent such accruals or reserves had the effect of reducing Consolidated EBITDA in a prior period), (iii) gains related to pensions and other post-employment benefits, (iv) federal, state, local and foreign income tax credits and (v) the amount of any Holdings Specified Expenses,

 

provided that to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA for any period any adjustments resulting from the application of Statement of Financial Accounting Standards No. 133 and International Accounting Standard No. 39 and their respective related pronouncements and interpretations.

 

Notwithstanding anything to the contrary contained above, for purposes of determining Consolidated EBITDA for any Test Period which ends prior to the first anniversary of the Closing Date, Consolidated EBITDA for all portions of such period occurring prior to the Closing Date shall be calculated in accordance with the definition of “Test Period” contained herein.

 

“Consolidated Net Income” shall mean, for any period, the net income (or loss) of the Lead Borrower and its Restricted Subsidiaries determined on a consolidated basis (after deduction for minority interests) for such period (taken as a single accounting period) in accordance with GAAP, provided that the following items shall be excluded in computing Consolidated Net Income (without duplication):

 

(i)            the net income (or loss) for such period of any Person that is not a Restricted Subsidiary of the Lead Borrower or that is accounted for by the equity method of accounting; provided that Consolidated Net Income shall be increased by the amount of dividends or distributions that are actually paid in cash or Cash Equivalents by such Person to the Lead Borrower or one of its Restricted Subsidiaries during such period;

 

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(ii)           except for determinations expressly required to be made on a Pro Forma Basis, the net income (or loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary of the Lead Borrower or all or substantially all of the property or assets of such Person are acquired by a Restricted Subsidiary of the Lead Borrower;

 

(iii)          the net income of any Restricted Subsidiary of the Lead Borrower that is not also a Guarantor to the extent that the declaration or payment of cash dividends or similar cash distributions by such Restricted Subsidiary of such net income is not at the time permitted by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation or law applicable to such Restricted Subsidiary;

 

(iv)          any net income or loss attributable to the early extinguishment or cancellation of Indebtedness; and

 

(v)           purchase accounting effects of adjustments to deferred revenue required or permitted by GAAP.

 

“Consolidated Total Assets” shall mean, as of any date, the amount which, in accordance with GAAP, would be set forth under the caption “Total Assets” (or any like caption) on a consolidated balance sheet of the Lead Borrower and its Restricted Subsidiaries, as of the end of the most recently ended Fiscal Quarter for which internal financial statements are available.

 

“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings correlative thereto.

 

“Corrective Term Loan Extension Amendment” shall have the meaning assigned to such term in Section 2.25(e).

 

“Credit Agreement Refinancing Indebtedness” shall mean (a) Permitted First Priority Refinancing Debt, (b) Permitted Second Priority Refinancing Debt, (c) Permitted Unsecured Refinancing Debt or (d) other Indebtedness incurred pursuant to a Refinancing Amendment (including, without limitation, Other Term Loans), in each case, issued, incurred or otherwise obtained (including by means of the extension or renewal of existing Indebtedness) in exchange for, or to extend, renew, replace or refinance, in whole or part, existing Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans, or any then existing Credit Agreement Refinancing Indebtedness (“Refinanced Debt”); provided that (i) such Indebtedness does not mature prior to the maturity date of, or have a shorter Weighted Average Life to Maturity than the Refinanced Debt (other than to the extent of nominal amortization for periods where amortization has been eliminated or reduced as a result of prepayments of such Refinanced Debt), (ii) such Indebtedness shall not have a greater principal amount than the principal amount of the Refinanced Debt plus accrued interest, fees and premiums (if any) thereon and reasonable fees and expenses associated with the refinancing, extension, renewal or replacement, unless otherwise permitted hereby and (iii) such Refinanced Debt shall be repaid, defeased or satisfied and discharged, and all accrued interest, fees and premiums (if any) in

 

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connection therewith shall be paid, on the date such Credit Agreement Refinancing Indebtedness is issued, incurred or obtained.

 

“Credit Event” shall have the meaning assigned to such term in Section 4.01.

 

“Cumulative Retained Excess Cash Flow Amount” shall mean, at any date, an amount, not less than zero, determined on a cumulative basis equal to the amount of Excess Cash Flow for all fiscal years of the Lead Borrower starting with the fiscal year ending December 31, 2014 that was not (and, in the case of any fiscal year of the Lead Borrower where the respective required date of prepayment has not yet occurred pursuant to Section 2.13(b), will not on such date of required prepayment be) required to be applied as a mandatory prepayment in accordance with Section 2.13(b) (which Section 2.13(b) shall, for purposes of this definition, be construed without giving effect to any deduction pursuant to clause (B) of such Section 2.13(b)).

 

“Debtor Relief Laws” shall mean the Bankruptcy Code of the United States and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

 

“Declined Amounts” has the meaning specified in Section 2.13(g).

 

“Declining Lender” has the meaning specified in Section 2.13(g).

 

“Default” shall mean any event or condition which upon notice, lapse of time or both would constitute an Event of Default.

 

“Deposit Account” shall mean all “deposit accounts” as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York (other than Excluded Accounts).

 

“Deposit Account Control Agreement” shall mean a “control agreement” in form and substance reasonably acceptable to the Administrative Agent and the Lead Borrower and containing terms providing “control” (for purposes of the UCC) over the Deposit Account governed by such Deposit Account Control Agreement.

 

“Deed of Amendment” shall mean that certain Deed of Amendment of Mortgage Number 6, executed before Notary Public Gladys O. Fontanez Reyes on June 28, 2011 by and between Televicentro of Puerto Rico, LLC, as the mortgagor, and The Bank of Nova Scotia, as then holder of the PR Mortgage Note.

 

“Deed of Mortgage” shall mean that certain Deed of Mortgage Number 6, executed before Notary Public Luis Morales-Steinmann on March 30, 2007 by Televicentro of Puerto Rico, LLC, as the mortgagor.

 

“Designated Non-cash Consideration” shall mean the fair market value (as determined in good faith by the applicable Borrower) of non-cash consideration received by the

 

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Borrowers or any of their respective Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an officer’s certificate executed by a Responsible Officer of the Lead Borrower and delivered to the Administrative Agent, setting forth the basis of such valuation, less the amount of Cash Equivalents received in connection with a subsequent sale of such Designated Non-cash Consideration.

 

“Disposition” or “Dispose” shall mean the sale, transfer, license, lease or other disposition of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

 

“Disqualified Institution” shall mean (a) each bank, financial institution or other institutional lender and Company Competitor or Affiliate of a Company Competitor identified on a list made available to the Lenders on the Platform or another similar electronic system on or prior to the commencement of syndication of the Initial Term Loans (as such list may be supplemented from time to time by the Lead Borrower pursuant to clause (b) below) and (b) any other person designated in writing to the Administrative Agent after the Closing Date to the extent such person is or becomes a Company Competitor or is or becomes an Affiliate of a Company Competitor, which designation shall become effective two days after delivery of each such written supplement to the Administrative Agent, but which shall not apply retroactively to disqualify any persons that have previously acquired an assignment or participation interest in the Loans; provided that a Company Competitor or an Affiliate of a Company Competitor shall not include any bona fide debt fund or investment vehicle that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of business which is managed, sponsored or advised by any person controlling, controlled by or under common control with such Company Competitor or Affiliate thereof, as applicable, and for which no personnel involved with the investment of such Company Competitor or Affiliate thereof, as applicable, (i) makes (or has the right to make or participate with others in making) any investment decisions or (ii) has access to any information (other than information publicly available) relating to the Loan Parties or any entity that forms a part of the Loan Parties’ business (including their subsidiaries).

 

“Disqualified Stock” shall mean any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than upon an asset sale or change in control, if such right is subject to the prior payment in full of the Obligations), in whole or in part, or requires the payment of any cash dividend or any other scheduled payment constituting a return of capital, in each case at any time on or prior to the first anniversary of the Maturity Date, or (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Equity Interest referred to in clause (a) above, in each case at any time prior to the first anniversary of the Latest Maturity Date.

 

“Dollars” or “$” shall mean lawful money of the United States of America.

 

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“Domestic Subsidiaries” shall mean all Subsidiaries incorporated or organized under the laws of the United States of America, any State thereof or the District of Columbia.

 

“Effective Yield” shall mean, as to any Initial Term Loans, Incremental Term Loans, New Term Loans or Replacement Term Loans of any tranche, the effective yield on such loans as reasonably determined by the Administrative Agent (consistent with generally accepted financial practices), taking into account the applicable interest rate margins (but not any fluctuations in LIBO Rate), any interest rate floors, and all fees, including recurring, up-front or similar fees or original issue discount (amortized over the shorter of (x) the weighted average life of such loans and (y) the four years following the date of incurrence thereof) payable generally to Lenders making such loans, but excluding (i) any arrangement, structuring or other fees payable in connection therewith that are not generally shared with the Lenders thereunder and (ii) any customary consent fees paid generally to consenting Lenders.

 

“Eligible Assignee” shall mean (i) any Lender, any Affiliate of any Lender and any Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof) and (ii) any commercial bank, insurance company, investment or mutual fund or other entity (other than a natural person) that extends credit or buys loans and that is approved by the Administrative Agent but excluding, (x) any Affiliated Lender, except to the extent expressly provided in Section 9.04(f), (y) Holdings, the Borrowers and their respective Subsidiaries, except to the extent expressly provided in Section 9.04(f) and (z) any Disqualified Institution.

 

“Environmental Laws” shall mean all former, current and future federal, state, local and foreign laws (including common law), treaties, regulations, rules, ordinances, codes, decrees, judgments, directives, orders (including consent orders), and agreements in each case, relating to protection of the environment, natural resources, human or public health and safety or the presence, Release of, or exposure to, Hazardous Materials, or the generation, manufacture, processing, distribution, use, treatment, storage, transport, recycling or handling of, or the arrangement for such activities with respect to, Hazardous Materials.

 

“Environmental Liability” shall mean all liabilities, obligations, damages, losses, claims, actions, suits, judgments, orders, fines, penalties, fees, expenses and costs (including administrative oversight costs, natural resource damages and remediation costs), whether contingent or otherwise, arising out of or relating to (a) compliance or non-compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“Equity Interests” shall mean shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity interests in any Person, and any option, warrant or other right entitling the holder thereof to purchase or otherwise acquire any such equity interest.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

 

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“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414(m) or (o) of the Code.

 

“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan, (b) the failure to satisfy the minimum funding standard (as defined in Section 412 or 430 of the Code or Section 303 or 304 of ERISA) with respect to any Plan, whether or not waived, (c) a determination that any Plan is in “at-risk status” or any Multiemployer Plan is in “endangered status” or “critical status” (as each is defined in Section 303 and 305 of ERISA, respectively), (d) the incurrence by the Lead Borrower or any of its ERISA Affiliates of any material liability under Title IV of ERISA with respect to the termination of any Plan or the withdrawal or partial withdrawal of the Lead Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan, (e) the receipt by the Lead Borrower or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, (f) the receipt by the Lead Borrower or any of its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from the Lead Borrower or any of its ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA or (g) the occurrence of a non-exempt “prohibited transaction” with respect to which the Lead Borrower or any of its Restricted Subsidiaries is a “disqualified person” (each within the meaning of Section 4975 of the Code) that results in material liability to the Borrower.

 

“Eurodollar”, when used in reference to any Loan or Borrowing, shall refer to whether such Loan, or the Loans comprising such Borrowing, is bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

 

“Events of Default” shall have the meaning assigned to such term in Section 7.01.

 

“Excess Cash Flow” shall mean, with respect to any Excess Cash Flow Payment Period, an amount, not less than zero, equal to:

 

(a)           the sum, without duplication, of (i) Consolidated Net Income of the Lead Borrower and its Restricted Subsidiaries for such Excess Cash Flow Payment Period, plus (ii) the amount of all non-cash charges (including depreciation, amortization and deferred tax expense) deducted in arriving at such Consolidated Net Income, plus (iii) the aggregate net amount of non-cash loss on Dispositions by the Lead Borrower and its Restricted Subsidiaries during such Excess Cash Flow Payment Period (other than sales of inventory in the ordinary course of business), to the extent deducted in arriving at such Consolidated Net Income, plus (iv) the aggregate amount of any non-cash loss for such period attributable to the early extinguishment of Indebtedness, Hedging Agreements or other derivative instruments, to the extent deducted in arriving at such Consolidated Net Income, plus (v) to the extent not otherwise included in determining Consolidated Net Income, the aggregate amount of cash receipts for such period attributable to Hedging Agreements or other derivative instruments, minus

 

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(b)           the sum, without duplication (in each case, for the Lead Borrower and its Restricted Subsidiaries on a consolidated basis), of:

 

(i)            Capital Expenditures, except to the extent made using proceeds, payments or any other amounts available from events or circumstances that were not included in determining Consolidated Net Income during such period (including any proceeds from Indebtedness), that are (A) actually made in cash during such Excess Cash Flow Payment Period or (B) committed although not actually made in cash during such Excess Cash Flow Payment Period, so long as such Capital Expenditures are actually made in cash within six months after the end of such Excess Cash Flow Payment Period; provided that (x) if any Capital Expenditures are deducted from Excess Cash Flow pursuant to (B) above, such amount shall be added to the Excess Cash Flow for the immediately succeeding Excess Cash Flow Payment Period if the expenditure is not actually made in cash within such six-month period and (y) no deduction shall be taken in the immediately succeeding Excess Cash Flow Payment Period when such amounts deducted pursuant to clause (B) are actually spent;

 

(ii)           to the extent not otherwise deducted from Consolidated Net Income, Consolidated Cash Taxes;

 

(iii)          the aggregate amount of all principal payments of Indebtedness of the Lead Borrower and its Restricted Subsidiaries (including (A) the principal component of payments in respect of Capital Lease Obligations, (B) the amount of any repayment of Loans pursuant to Section 2.11, (C) the amount of any mandatory prepayment of Loans pursuant to Section 2.13(a) to the extent required due to an Asset Sale that resulted in an increase to such Consolidated Net Income and not in excess of the amount of such increase and (D) the amount of any voluntary prepayments of Loans made by Holdings, any Borrower or any of their respective Subsidiaries pursuant to Section 9.04(f) (in an amount equal to the discounted amount actually paid in respect of the principal amount of such Loans) (provided that (I) such prepayments or repurchases are otherwise permitted hereunder and (II) such prepayments or repurchases are not made, directly or indirectly, using (1) proceeds, payments or any other amounts available from events or circumstances that were not included in determining Consolidated Net Income during such period (including any proceeds from Indebtedness) or (2) the Cumulative Retained Excess Cash Flow Amount) but excluding (X) all other prepayments of Loans (other than those specified in preceding clauses (iii)(C) and (D))and (Y) payments in respect of any Permitted Ratio Debt, any New Incremental Notes and Indebtedness constituting Permitted Second Priority Refinancing Debt, Permitted Unsecured Refinancing Debt or any Subordinated Indebtedness, except in each case to the extent permitted to be paid pursuant to Section 6.09 or occurring in connection with a refinancing of such Indebtedness permitted in accordance with the terms of this Agreement) made during such period, in each case except to the extent financed with the proceeds of Funded Debt of the Lead Borrower or any of its Restricted Subsidiaries;

 

(iv)          to the extent not deducted in arriving at Consolidated Net Income,  Restricted Payments made in cash during such period by the Lead Borrower to the extent that such Restricted Payments are made under Sections 6.06(a)(ii) and 6.06(a)(iii), solely to the extent made, directly or indirectly, with the net cash proceeds from events or circumstances that were included in the calculation of Consolidated Net Income;

 

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(v)           (A) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by any Borrower during such period that are required to be made in connection with any prepayment or satisfaction and discharge of Indebtedness of the Lead Borrower or any of its Restricted Subsidiaries (except to the extent financed with the proceeds of Funded Debt other than the Loans) to the extent that the amount so prepaid, satisfied or discharged is not deducted from Consolidated Net Income for purposes of calculating Excess Cash Flow and (B) to the extent included in determining Consolidated Net Income, the aggregate amount of any income for such period attributable to the early extinguishment of Indebtedness, Hedging Agreements or other derivative instruments (other than commodity Hedging Agreements);

 

(vi)          cash payments made by the Lead Borrower or any of its Restricted Subsidiaries during such period (to the extent not deducted in arriving at such Consolidated Net Income) in satisfaction of non-current liabilities (excluding payments of Indebtedness for borrowed money) not made directly or indirectly using (1) proceeds, payments or any other amounts available from events or circumstances that were not included in determining Consolidated Net Income during such period (including any proceeds from Indebtedness) or (2) the Cumulative Retained Excess Cash Flow Amount;

 

(vii)         to the extent not deducted in arriving at Consolidated Net Income, fees, expenses and purchase price adjustments paid in cash during such period by the Lead Borrower or any of its Restricted Subsidiaries in connection with the Transaction or, in each case to the extent permitted hereunder, any Investment permitted under Section 6.04, issuance of Equity Interests or issuance of Indebtedness (whether or not consummated) and any Restricted Payment made in cash by the Lead Borrower or any of its Restricted Subsidiaries pursuant to Sections 6.06(a)(ii) and 6.06(a)(iii) to pay any of the foregoing;

 

(viii)        to the extent not deducted in arriving at Consolidated Net Income, the aggregate amount of expenditures actually made in cash from operations by the Lead Borrower or any of its Restricted Subsidiaries during such period (including expenditures for payment of financing fees) to the extent such expenditures are (1) not expensed during such period and (2) made with cash from operations;

 

(ix)          cash from operations used by the Lead Borrower or any of its Restricted Subsidiaries or committed to be used by the Lead Borrower or any of its Restricted Subsidiaries to consummate a Permitted Acquisition or Investment permitted under Sections 6.04(e), (f), (l) or (n) (if such Permitted Acquisition or Investment has been consummated or committed to during such period prior to the date on which a prepayment of Loans would be required pursuant to Section 2.13(b) with respect to such Excess Cash Flow Payment Period); provided, however, that if any amount is deducted from Excess Cash Flow pursuant to this clause (ix) with respect to any Excess Cash Flow Payment Period as a result of a Permitted Acquisition or Investment that has been committed to be consummated but not yet actually consummated during such period then (x) such amount shall not be deducted from Excess Cash Flow pursuant to this clause (ix) as a result of such Permitted Acquisition or Investment, as the case may be, being actually consummated in the immediately succeeding Excess Cash Flow Payment Period and (y) such amount shall be added to Excess Cash Flow for the immediately succeeding Excess Cash Flow

 

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Payment Period if the Permitted Acquisition or Investment is not actually consummated during such succeeding period;

 

(x)           the amount of cash payments made in respect of pensions and other postemployment benefits in such period to the extent not deducted in arriving at such Consolidated Net Income;

 

(xi)          the amount of cash expenditures in respect of Hedging Agreements during such fiscal year to the extent they exceed the amount of expenditures expensed in determining Consolidated Net Income for such period;

 

(xii)         the aggregate principal amount of all mandatory prepayments of Term Loans made during such Excess Cash Flow Payment Period pursuant to Section 2.13(a), or reinvestments of Net Cash Proceeds in lieu thereof, to the extent that the applicable Net Cash Proceeds resulted in an increase of Consolidated Net Income (and are not in excess of such increase) for such Excess Cash Flow Payment Period; and

 

(xiii)        the aggregate net amount of any non-cash gains to the extent included in arriving at Consolidated Net Income; minus

 

(c)           any increase in Net Working Capital during such Excess Cash Flow Payment Period (measured as the excess, if any, of Net Working Capital at the end of such Excess Cash Flow Payment Period minus Net Working Capital at the beginning of such Excess Cash Flow Payment Period) or increases in long term accounts receivable and decreases in the long-term portion of deferred revenue for such period (other than any such increases or decreases, as applicable, arising from acquisitions or Dispositions of property by the Lead Borrower, and its Restricted Subsidiaries during such period), except as a result of the reclassification of items from short term to long term or vice versa; plus

 

(d)           any decrease in Net Working Capital during such Excess Cash Flow Payment Period (measured as the excess, if any, of Net Working Capital at the beginning of such Excess Cash Flow Payment Period minus Net Working Capital at the end of such Excess Cash Flow Payment Period) or decreases in long-term accounts receivable and increases in the long-term portion of deferred revenue for such period (other than any such decreases or increases, as applicable, arising from acquisitions or Dispositions of property by the Lead Borrower or any of its Restricted Subsidiaries completed during such period), except as a result of the reclassification of items from short term to long term or vice versa.

 

“Excess Cash Flow Payment Date” shall mean the date occurring on the earlier to occur of (x) the delivery of the financial statements for such fiscal year pursuant to Section 5.04 and (y) 90 days after the end of each fiscal year of the Lead Borrower (commencing with the fiscal year of the Lead Borrower ending December 31, 2014).

 

“Excess Cash Flow Payment Period” shall mean, with respect to the repayment required on each Excess Cash Flow Payment Date, the immediately preceding fiscal year of the Borrower.

 

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“Excluded Accounts” shall mean, (A) payroll and other employee wage and benefit accounts, (B) tax accounts, including, without limitation, sales tax accounts, (C) escrow accounts, (D) fiduciary or trust accounts and (E) Immaterial Accounts and, in the case of clauses (A) through (E), the funds or other property held in or maintained in any such account.

 

“Excluded Property” shall mean, with respect to any Loan Party, (a) (i) any leasehold interest (including any ground lease interest) in real property, (ii) any fee-owned real property with a fair market value not in excess of $3,500,000 and (iii) any fixtures affixed to any real property to the extent (A) such real property has a fair market value below $3,500,000 or (B) a security interest in such fixtures may not be perfected by a UCC financing statement (or equivalent) in the jurisdiction of organization of the applicable Loan Party or the jurisdiction of location of such assets, as applicable, but for greater certainty excluding any fixtures in connection with a mortgage on real property that is not Excluded Property by operation of clause (a)(ii) above, (b) any lease, license, franchise, charter, authorization, contract or agreement to which any Loan Party is a party, and any of its rights or interest thereunder, if and to the extent that a security interest (i) is prohibited by or in violation of any law, rule or regulation applicable to any Loan Party, except to the extent such prohibition is rendered ineffective under the UCC (or equivalent applicable foreign law), or requires any governmental or third party consent or approval (provided, that such Loan Party has used commercially reasonable efforts (which for the avoidance of doubt shall not include any payment of non-de minimis amounts) to obtain such consent or approval) or (ii) is prohibited by or in violation of a term, provision or condition of any such lease, license, franchise, charter, authorization, contract or agreement; provided, however, that the Collateral shall include (and such security interest shall attach) at such time as the contractual or legal prohibition shall no longer be applicable (provided, that to the extent such prohibition requires any third party consent, such Loan Party has used commercially reasonable efforts (which for the avoidance of doubt shall not include any payment of non-de minimis amounts) to obtain such consent), shall attach to any portion of such lease, license, franchise, charter, authorization, contract or agreement not subject to the prohibitions specified in (i) or (ii) above (in each case, after giving effect to the applicable anti-assignment provisions of the UCC (or equivalent applicable foreign law); provided, further, that the exclusions referred to in this clause (b) shall not include any proceeds of any such lease, license, franchise, charter, authorization, contract or agreement, (c) motor vehicles and other assets subject to certificates of title, including, without limitation, aircraft, airframes, aircraft engines or helicopters, or any equipment or other assets constituting a part thereof, in each case to the extent subject to Federal Aviation Act registration requirements (or equivalent applicable foreign law), and rolling stock, (d) letters of credit and letter of credit rights that do not constitute supporting obligations in respect of other Collateral, except to the extent such letter of credit rights may be perfected by the filing of a UCC financing statement (or equivalent), (e) commercial tort claims with a value not in excess of $2,500,000 in the aggregate, (f) assets, if and to the extent that a security interest in such asset (i) is prohibited by or in violation of any law, rule or regulation applicable to any Loan Party, (ii) requires a consent (provided that any Loan Party has used its commercially reasonable efforts to obtain such consent) of any governmental authority or any third party that has not been obtained, except, in the case of clauses (f)(i) and (f)(ii), to the extent such prohibition or consent is rendered ineffective under the UCC (or equivalent applicable foreign law), or (iii) to the extent a security interest in such assets would result in a material adverse tax consequences (including as a result of the operation

 

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of Section 956 of the Code or any similar law or regulation in any applicable jurisdiction) as reasonably determined by the Lead Borrower, (g) (i) any “intent-to-use” application for registration of a trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051 (or comparable applicable foreign law), prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act (or comparable applicable foreign law), to the extent that, and during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use application under applicable federal law  and (ii) any Intellectual Property located or titled outside the U.S. with respect to which any actions in any non-U.S. jurisdiction or under the laws of any non-U.S. jurisdiction is required to create or perfect any security interest in such Intellectual Property, including any Intellectual Property registered in any non-U.S. jurisdiction, and (h) (x) in respect of the Collateral, Equity Interests in excess of 65% of the voting capital stock of any Foreign Subsidiary or CFC Holding Company owned by any Loan Party, (y) Equity Interests in joint ventures or any non-Wholly Owned Subsidiaries to the extent not permitted by the terms of such person’s organizational or joint venture documents existing on the Closing Date or existing at the time of acquisition thereof after the Closing Date, and (z) Equity Interests of Foreign Subsidiaries that are held by a Foreign Subsidiary; (i) perfection by “control” (other than in respect of certificated Collateral pledged pursuant to the Security Agreements or any accounts (other than Excluded Accounts)) with respect to any Collateral (j) FCC (or foreign equivalent) licenses to the extent the pledge thereof is prohibited by the Communications Act or any other Applicable Law (for the avoidance of doubt, this clause (j) does not extend to the proceeds of such FCC (or foreign equivalent) licenses; and (k) Excluded Accounts.  Other assets shall be deemed to be “Excluded Property” if the Administrative Agent and the Lead Borrower agree in writing that the cost of obtaining or perfecting a security interest in such assets is excessive in relation to the value of such assets as Collateral. Notwithstanding anything herein to the contrary the foregoing provisions of this paragraph shall not exclude any rights and remedies incident or appertaining to any FCC (or foreign equivalent) licenses or any rights to receive any and all proceeds derived from, or in connection with, any disposition of all or any portion of such licenses or any television or cable film channel owned by a Borrower or any of its Restricted Subsidiaries.

 

“Excluded Subsidiary” shall mean (a) any Subsidiary that is not a wholly owned Subsidiary of a Borrower or a Guarantor, (b) any Domestic Subsidiary that is a disregarded entity for United States federal income tax purposes substantially all of the assets of which consist of Equity Interests in one or more Foreign Subsidiaries, (c) any Domestic Subsidiary that is a direct or indirect Subsidiary of a Foreign Subsidiary, (d) any Subsidiary that is prohibited or restricted by Applicable Law, or by an contractual obligation existing on the of date of acquisition of such Subsidiary (if not entered into in contemplation thereof) from providing a Guaranty or if such Guaranty would require governmental (including regulatory) consent, approval, license or authorization (provided that the Loan Parties have used commercially reasonable efforts (which for the avoidance of doubt shall not include payment of non-de minimis amounts) to obtain such consent), (e) any Subsidiary that is a not-for-profit organization, (f) any other Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent (confirmed in writing by notice to the Lead Borrower), the cost or other consequences (including any adverse tax consequences) of providing the Guaranty shall be excessive in view of the benefits to be obtained by the Lenders therefrom and (h) each Immaterial Subsidiary.

 

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“Excluded Swap Obligation” shall mean, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guaranty of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal

 

“Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrowers hereunder, (a) income, capital or franchise Taxes imposed on (or measured by) its net income by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes or any similar tax imposed by a jurisdiction described in clause (a) above, (c) any withholding tax that (i) is imposed on amounts payable to such recipient at the time such recipient becomes a party to this Agreement (other than, for purposes of this clause (c)(i), an assignee pursuant to a request by the Lead Borrower under Section 2.21(a)), (ii) is imposed on amounts payable to such recipient at the time such recipient designates a new lending office or (iii) is attributable to such recipient’s failure to comply with Section 2.20(f) or (g), except, in cases described in clauses (i) and (ii), to the extent that such recipient (or its assignor, if any) was entitled, at the time of such assignment or designation of a new lending office, to receive additional amounts from the applicable Loan Party with respect to such withholding tax pursuant to Section 2.20(a), and (d) any U.S. federal withholding Taxes imposed under FATCA.

 

“Existing Indebtedness” shall mean the Indebtedness outstanding under (i) the Loan Agreement, dated as of March 31, 2011, by and among InterMedia Español, Inc. and Televicentro of Puerto Rico, LLC, as Borrowers, the financial institutions party thereto, as Lenders, The Bank of Nova Scotia and RBC Capital Markets, as Joint Lead Arrangers, Banco Popular de Puerto Rico, as Syndication Agent, and The Bank of Nova Scotia , as Administrative Agent (for the purposes of this definition, with all capitalized terms as defined therein) and, (ii) the Amended and Restated Credit Agreement, dated as of June 17, 2011, by and among Cine Latino, Inc., as the Borrower, the other persons party thereto that are designated as Credit Parties, General Electric Capital Corporation, as Agent, the other financial institutions party thereto, as Lenders, GE Capital Markets, Inc., as Sole Lead Arranger and Bookrunner and Royal Bank of Canada, as Syndication Agent (for the purposes of this definition, with all capitalized terms as defined therein).

 

“Extended Term Loans” shall have the meaning assigned to such term in Section 2.25(a).

 

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“Extending Term Loan Lender” shall have the meaning assigned to such term in Section 2.25(a).

 

“Extension” shall have the meaning assigned to such term in Section 2.25(a).

 

“Extension Offer” shall have the meaning assigned to such term in Section 2.25(a).

 

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

 

“FCC” shall mean the Federal Communications Commission (or any successor agency, commission, bureau, department or other political subdivision of the United States of America).

 

“FCC Licenses” shall mean broadcasting and other licenses, authorizations, waivers and permits which are issued from time to time by the FCC to the Lead Borrower or any of its Restricted Subsidiaries in connection with the operation of the Stations.

 

“Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

 

“Fee Letter” shall mean the Fee Letter dated July 9, 2013, among the Borrowers, DBSI and the Administrative Agent.

 

“Fees” shall mean the fees referred to in Section 2.05(a) and the Prepayment Fee.

 

“Financial Officer” of any Person shall mean the chief financial officer, principal accounting officer, treasurer or controller of such Person.

 

“First Lien Net Leverage Ratio” shall mean, on any date, the ratio of (a) an amount equal to the excess of (i) Total Debt that is secured on a first lien basis by a Lien on any asset of the Lead Borrower or any of its Restricted Subsidiaries on such date over (ii) the aggregate amount of unrestricted cash and Cash Equivalents (up to a maximum aggregate amount of $10,000,000) that are included in the consolidated balance sheet of the Lead Borrower and its Restricted Subsidiaries as of such date to (b) Consolidated EBITDA for the period of four consecutive Fiscal Quarters most recently ended on or prior to such date.

 

“Fiscal Quarter” shall mean each calendar quarter.

 

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“Fiscal Year” shall mean the fiscal year of the Lead Borrower and its Restricted Subsidiaries ending on December 31.

 

“Foreign Benefit Event” shall mean, with respect to any Foreign Pension Plan, (a) the existence of unfunded liabilities in excess of the amount permitted under any applicable law, or in excess of the amount that would be permitted absent a waiver from a Governmental Authority, (b) the failure to make the required contributions or payments, under any applicable law, on or before the due date for such contributions or payments, (c) the receipt of a notice by a Governmental Authority relating to the intention to terminate any such Foreign Pension Plan or to appoint a trustee or similar official to administer any such Foreign Pension Plan, or alleging the insolvency of any such Foreign Pension Plan, (d) the incurrence of any material liability by Holdings, the Borrowers or any of their respective Restricted Subsidiaries under applicable law on account of either (i) the complete or partial termination of such Foreign Pension Plan or (ii) the complete or partial withdrawal of any participating employer therein, or (e) the occurrence of any transaction that is prohibited under any applicable law and that could reasonably be expected to result in the incurrence of any material liability by Holdings, the Lead Borrower or any of its Restricted Subsidiaries (including by a Governmental Authority’s imposition on Holdings, the Lead Borrower or any of their respective Restricted Subsidiaries of any fine, excise tax or penalty resulting from any non-compliance with any applicable law.

 

“Foreign Casualty Event” shall have the meaning assigned to such term in Section 2.13(e).

 

“Foreign Disposition” shall have the meaning assigned to such term in Section 2.13(e).

 

“Foreign Lender” shall mean any Lender that has a Commitment to or holds an Obligation of the Lead Borrower that is not a United States person within the meaning of Section 7701(a)(30) of the Code.

 

“Foreign Pension Plan” shall mean any defined benefit pension plan that is not subject to United States law and under applicable law is required to be funded through a trust or other funding vehicle other than a trust or funding vehicle maintained exclusively by a Governmental Authority.

 

“Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic Subsidiary.

 

“Funded Debt” of any Person shall mean Indebtedness for borrowed money of such Person that (x) by its terms matures more than one year after the date of its creation or (y) matures within one year from any date of determination but (in the case of this clause (y)) is renewable or extendible, at the option of such Person, to a date more than one year after such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year after such date, including Indebtedness in respect of the Loans.

 

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“GAAP” shall mean generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

 

“Government Official” shall have the meaning assigned to such term in Section 3.25.

 

“Governmental Authority” shall mean any federal, state, provincial territorial, local or foreign court or governmental agency, authority, instrumentality or regulatory body (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Granting Lender” shall have the meaning assigned to such term in Section 9.04(g).

 

“Guarantee” of or by any Person shall mean any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other monetary obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other monetary obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness or other monetary obligation, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other monetary obligation of the payment of such Indebtedness or other monetary obligation or (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other monetary obligation; provided, however, that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.

 

“Guarantor” shall mean any of Holdings, each Borrower and the Subsidiary Guarantors; provided that the term “Guarantor” shall mean and include each Borrower solely as it relates to any obligations that are incurred by any other Loan Party as opposed to obligations directly incurred by it.

 

“Guaranty” shall mean the guaranty made by Holdings, each Borrower, and the Subsidiary Guarantors, substantially in the form of Exhibit E.

 

“Hazardous Materials” shall mean (a) any petroleum products or byproducts and all other hydrocarbons, coal ash, radon gas, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, chlorofluorocarbons and all other ozone-depleting substances and (b) any chemical, material, substance or waste that is prohibited, limited or regulated by or pursuant to any Environmental Law.

 

“Hedge Termination Value” shall mean, in respect of any one or more Secured Hedging Agreements, after taking into account the effect of any legally enforceable netting

 

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agreement relating to such Hedging Agreements, for any date on or after the date such Hedging Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s).

 

“Hedging Agreement” shall mean any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement, excluding spot foreign exchange transactions.

 

“Hedging Bank” shall mean any Person that is an Agent, a Lender, a Lead Bookrunner or an Affiliate of any of the foregoing on the Closing Date or at the time it enters into a Secured Hedging Agreement, in its capacity as a party thereto, whether or not such Person subsequently ceases to be an Agent, a Lender, a Lead Bookrunner or an Affiliate of any of the foregoing.

 

“Historical Financial Statements” shall mean:

 

(a)           audited consolidated statements of financial position, operations, shareholders’ equity and comprehensive income and cash flows of Cine Latino, Inc.as of and for the fiscal years ended December 31, 2012, December 31, 2011 and December 31, 2010 in each case with an accompanying opinion of McGladrey LLP, independent public accountants; and

 

(b)           audited consolidated statements of financial position, operations, shareholders’ equity and comprehensive income and cash flows of InterMedia Español Holdings, LLC as of and for the fiscal years ended December 31, 2012, December 31, 2011 and December 31, 2010 in each case with an accompanying opinion of McGladrey LLP, independent public accountants.

 

“Holdings” shall have the meaning assigned to such term in the introductory statement hereto.

 

“Holdings Specified Expenses” shall mean any charge, tax or expense incurred or accrued by Holdings (or any parent company thereof) during any period to the extent that the Lead Borrower has made a Restricted Payment to Holdings (or any parent company thereof) in respect thereof pursuant to Sections 6.06(a)(ii) and 6.06(a)(iii), in each case, to the extent such change, tax or expense would have reduced Consolidated Net Income had it been made by the Lead Borrower.

 

“Immaterial Account” shall mean any Deposit Account with an average monthly balance of less than $500,000, provided, that the average monthly balance of all Immaterial Accounts shall not exceed $3,000,000 at any time.

 

“Immaterial Subsidiary” shall mean, as of any date of determination, any Restricted Subsidiary of the Lead Borrower whose consolidated total assets (as set forth in the most recent consolidated balance sheet of the Lead Borrower and its Restricted Subsidiaries delivered to the Lenders pursuant to this Agreement and computed in accordance with GAAP)

 

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do not constitute more than 2.5% of the amount set forth under the caption “Total Assets” (or any like caption) on a consolidated balance sheet of the Lead Borrower and its Restricted Subsidiaries as of the end of the most recently ended Fiscal Quarter for which internal financial statements are available; provided that the consolidated total assets (as so determined) of all Immaterial Subsidiaries shall not exceed 5.0% of the amount set forth under the caption “Total Assets” (or any like caption) on a consolidated balance sheet of the Lead Borrower and its Restricted Subsidiaries as of the end of the most recently ended Fiscal Quarter for which internal financial statements are available.  For the avoidance of doubt, Azteca Acquisition Corporation shall be an Immaterial Subsidiary on the Closing Date.

 

“Incremental Commitment Requirements” shall mean, with respect to the provision of any Incremental Facility, the satisfaction of each of the following conditions on any such date:  (i) no Default or Event of Default then exists or would result therefrom; provided that in connection with the provision of any Incremental Facility the proceeds of which are to be applied to finance a Permitted Acquisition the only Default or Event of Default required not to exist or result therefrom shall be Sections 7.01(b), (c), (g) or (h); (ii) all of the representations and warranties contained herein and in the other Loan Documents are true and correct in all material respects at such time (it being understood that (x) any representation and warranty that is qualified by materiality or Material Adverse Effect shall be required to be true and correct in all respects and (y) any representation and warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects (or all respects, as the case may be) as of such earlier date); provided that in connection with the provision of any Incremental Facility the proceeds of which are to be applied to finance a Permitted Acquisition only the Acquisition Representations need be true and correct in all material respects (as qualified in clause (x) and (y) above); (iii) the delivery by the Lead Borrower to the Administrative Agent on or prior to such date of an officer’s certificate executed by a Responsible Officer of the Lead Borrower and (x) certifying as to compliance with preceding clauses (i) and (ii) and, (y) designating as to whether the respective Incremental Facility is to be incurred under clause (a) and/or clause (b), as applicable, of the definition of “Maximum Incremental Amount” and (z) certifying that the full amount of such Incremental Facility (assuming the full utilization of commitments thereunder) may be incurred without violating any Material Indebtedness of Holdings, the Lead Borrower and its Restricted Subsidiaries; (iv) to the extent reasonably requested by the Administrative Agent, the delivery by the Lead Borrower to the Administrative Agent of an opinion or opinions, in form and substance reasonably satisfactory to the Administrative Agent, from counsel to the Loan Parties dated such date, covering such of the matters set forth in the opinions of counsel delivered to the Administrative Agent on the Closing Date pursuant to Section 4.02(a); and (v) the delivery by the Lead Borrower to the Administrative Agent of such officers’ certificates (including solvency certificates), board of director resolutions, reaffirmation agreements, supplements or amendments to the Security Documents (to the extent applicable) and evidence of good standing as the Administrative Agent shall reasonably request.

 

“Incremental Facility” shall mean (i) each Incremental Term Loan, (ii) each New Term Loan and (iii) any New Incremental Notes.

 

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“Incremental Term Lender” shall have the meaning assigned to such term in Section 2.22(b).

 

“Incremental Term Loan” shall have the meaning assigned to such term in Section 2.22(a).

 

“Incremental Term Loan Assumption Agreement” shall mean an Incremental Term Loan Assumption Agreement among, and in form and substance reasonably satisfactory to, the Lead Borrower, the Administrative Agent and one or more Incremental Term Lenders.

 

“Incremental Term Loan Borrowing Date” shall mean with respect to each Class of Incremental Term Loans, each date upon which Incremental Term Loans of such Class are incurred pursuant to Section 2.01(b) and as otherwise permitted pursuant to Section 2.22

 

“Incremental Term Loan Commitment” shall mean, for any Lender, any commitment by such Lender to make Term Loans under any Incremental Term Loan Facility pursuant to Section 2.01(b) as agreed to by such Lender in the respective Incremental Term Loan Assumption Agreement delivered pursuant to Section 2.22.

 

“Indebtedness” of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (excluding (i) trade accounts payable and accrued obligations incurred in the ordinary course of business, (ii) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and, if not paid, after becoming due and payable, (iii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligation of the applicable seller and (iv) any Indebtedness defeased by such Person or by any subsidiary of such Person), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all Synthetic Lease Obligations of such Person, (j) net obligations of such Person under any Hedging Agreements, valued at the Hedge Termination Value thereof, (k) all obligations of such Person in respect of Disqualified Stock of such Person or any other Person, (l) all obligations of such Person as an account party in respect of letters of credit and (m) all obligations of such Person in respect of bankers’ acceptances.  The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner, other than to the extent that the instrument or agreement evidencing such Indebtedness expressly limits the liability of such Person in respect thereof.  The amount of Indebtedness of any Person for purposes of clause (f) shall be deemed to be equal to the lesser of (A) the aggregate unpaid amount of such Indebtedness and (B) the fair market value of the property encumbered thereby as determined by such Person in good faith.

 

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“Indemnified Taxes” shall mean Taxes other than Excluded Taxes and Other Taxes.

 

“Indemnitee” shall have the meaning assigned to such term in Section 9.05(b).

 

“Information” shall have the meaning assigned to such term in Section 9.16.

 

“Initial Maturity Date” shall mean July 30, 2020.

 

“Initial Term Loan Commitment” shall mean (a) as to any Lender, the obligation of such Lender to make a portion of the Initial Term Loan available for the account of the Lead Borrower hereunder on the Closing Date in an aggregate principal amount not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01, as such amount may be increased, reduced or otherwise modified at any time or from time to time pursuant to the terms hereof and (b) as to all Lenders, the aggregate commitment of all Lenders to make such Initial Term Loans.  The aggregate Initial Term Loan Commitment with respect to the Initial Term Loan of all Lenders on the Closing Date shall be $175,000,000.

 

“Initial Term Loan Facility” shall mean the term loan facility established pursuant to Section 2.01(a).

 

“Initial Term Loans” shall mean the term loan made, or to be made, to the Borrowers by the Lenders pursuant to Section 2.01(a).

 

“Intellectual Property” shall have the meaning assigned to such term in the Security Agreement.

 

“Intellectual Property Security Agreement” shall mean, collectively, each intellectual property security agreement (dated the date hereof) executed by the Loan Parties, substantially in the form of the exhibits to the Security Agreement, together with each other intellectual property security agreement or intellectual property security agreement supplement executed and delivered by a Loan Party pursuant to Section 5.13.

 

“Intercreditor Agreements” shall mean, collectively, any Pari Passu Intercreditor Agreement (if entered into) and any Junior Lien Intercreditor Agreement (if entered into).

 

“Interest Payment Date” shall mean (a) with respect to any ABR Loan, the last Business Day of each March, June, September and December, and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Term Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day that would have been an Interest Payment Date had successive Interest Periods of three months’ duration been applicable to such Borrowing.

 

“Interest Period” shall mean, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3, 6, or if available to all Lenders, 12 months or less than 1 month thereafter, as the Lead

 

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Borrower may elect; provided, however, that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period and (c) no Interest Period for any Loan shall extend beyond the maturity date of such Loan.  Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

“Investment” shall mean, as to any Person, any direct or indirect acquisition or investment by such Person, by means of (a) the purchase or other acquisition of Equity Interests or debt or other securities of another Person, (b) a loan, advance or capital contribution to, or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor incurs debt of the type referred to in clause (h) of the definition of Indebtedness in respect of such Person or (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested (measured at the time made), without adjustment for subsequent increases or decreases in the value of such Investment but, other than in the case of Section 6.04(q), giving effect to any returns or distributions of capital or repayment of principal actually received in cash by such Person with respect thereto (but only to the extent that the aggregate amount of all such returns, distributions and repayments with respect to such Investment does not exceed the principal amount of such Investment and less any such amounts which increase the Available Amount Basket) and “Invested” shall have a corresponding meaning.

 

“IRS” shall mean the U.S. Internal Revenue Service or any successor agency thereto.

 

“Joint Lead Arrangers” shall have the meaning assigned to such term in the introductory statement hereto.

 

“Judgment Currency” shall have the meaning assigned to such term in Section 9.19.

 

“Junior Financing” shall mean, collectively any Permitted Unsecured Refinancing Debt, any Permitted Second Priority Refinancing Debt, any Permitted Ratio Debt, any New Incremental Notes (other than first lien New Incremental Notes), any other Indebtedness that is unsecured, any Subordinated Indebtedness or any Indebtedness incurred pursuant to one or more

 

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successive Permitted Refinancings of any of the foregoing; provided that Junior Financing shall not include any intercompany loans.

 

“Junior Lien Intercreditor Agreement” shall mean a “junior lien” intercreditor agreement among the Administrative Agent and one or more representatives for the holders of Permitted Second Priority Refinancing Debt, in form and substance reasonably satisfactory to the Administrative Agent.

 

“Latest Maturity Date” shall mean, at any date of determination, the latest maturity or expiration date applicable to any Loan or Commitment hereunder at such time, including the latest maturity or expiration date of any New Term Loan, any Other Term Loan or any Extended Term Loan, in each case as extended in accordance with this Agreement from time to time.

 

“Lead Bookrunner” shall have the meaning assigned to such term in the introductory statement hereto.

 

“Lead Borrower” shall have the meaning assigned to such term in the introductory statement hereto.

 

“Lender Parties” shall have the meaning assigned to such term in Section 7.02(c).

 

“Lenders” shall mean (a) the Persons listed on Schedule 2.01 (other than any such Person that has ceased to be a party hereto pursuant to an Assignment and Acceptance) and (b) any Person that has become a party hereto pursuant to an Assignment and Acceptance, an Incremental Term Loan Assumption Agreement, a New Term Loan Commitment Agreement or a Refinancing Amendment.

 

“LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the higher of (a) the rate per annum determined by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the commencement of such Interest Period by reference to the British Bankers’ Association Interest Settlement Rates (or any other person which takes over the administration of that rate) for deposits in Dollars (as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association (or any other person which takes over the administration of that rate)as an authorized information vendor for the purpose of displaying such rates) for a period equal to such Interest Period; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the “LIBO Rate” shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in Dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period and (b) solely in respect of Initial Term Loans, 1.25%.

 

“Lien” shall mean, with respect to any asset, (a) any Mortgage, hypothec, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention

 

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agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

“Loan Documents” shall mean this Agreement, the Fee Letter, the Guaranty, the Security Documents, each Incremental Term Loan Assumption Agreement, each New Term Loan Commitment Agreement, each Refinancing Amendment, the promissory notes, if any, executed and delivered pursuant to Section 2.04(e) and any other document executed in connection with the foregoing, including any guaranty or guaranty supplement required to be delivered pursuant to Section 5.13.

 

“Loan Parties” shall mean Holdings, the Borrowers and the Subsidiary Guarantors.

 

“Loans” shall mean the collective reference to the Term Loans.

 

“London Banking Day” shall mean any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank market.

 

“Margin Stock” shall have the meaning assigned to such term in Regulation U.

 

“Material Adverse Effect” shall mean (a) a material adverse change in, or a material adverse effect on, the operations, business, assets, properties, liabilities (actual or contingent) or financial condition of Holdings, the Lead Borrower and its Restricted Subsidiaries taken as a whole; (b) a material adverse effect on the ability of any Loan Party to perform its material obligations under any of the Loan Documents to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or the enforceability against any Loan Party of any of the Loan Documents to which it is a party.

 

“Material Domestic Subsidiary” shall mean, as of the Closing Date and thereafter at any date of determination, each of the Borrower’s Domestic Subsidiaries, other than an Immaterial Subsidiary.

 

“Material Indebtedness” shall mean Indebtedness (other than the Loans), or obligations in respect of one or more Hedging Agreements, of any one or more of Holdings, the Borrowers or any of their respective Restricted Subsidiaries in an aggregate principal amount exceeding $5,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of Holdings, the Borrowers or any of their respective Restricted Subsidiaries in respect of any Hedging Agreement at any time shall be the Hedge Termination Value of such Hedging Agreement at such time.

 

“Material Lease” shall have the meaning assigned to such term in Section 3.20(b).

 

“Material Owned Real Property” shall have the meaning assigned to such term in Section 3.20(a).

 

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“Maturity Date” shall mean, with respect to the Initial Term Loans, the Initial Maturity Date; provided that the reference to Maturity Date with respect to (w) Other Term Loans shall be the final maturity date as specified in the applicable Refinancing Amendment, (x) Extended Term Loans shall be the final maturity date as specified in the applicable Extension Offer, (y) Incremental Term Loans shall be the final maturity date as specified in the applicable Incremental Term Loan Assumption Agreement and (z) any New Term Loans shall be the final maturity date as specified in the applicable New Term Loan Commitment Agreement; provided further that if any such day is not a Business Day, the applicable Maturity Date shall be the Business Day immediately succeeding such day.

 

“Maximum First Lien Net Leverage Requirement” shall mean, with respect to any request pursuant to Article II for an Incremental Facility, the requirement that, the First Lien Net Leverage Ratio shall be less than or equal to 4.00:1.00, determined on a Pro Forma Basis after giving effect to such increase, New Term Loans or New Incremental Notes and assuming that in each case such Incremental Facility is fully drawn, as of the last day of the Test Period most recently ended for which financial statements have been delivered pursuant to Section 5.04(a) or 5.04(b); provided that when calculating the First Lien Net Leverage Ratio for purposes of this definition, (x) all Indebtedness incurred pursuant to Sections 2.22, 2.23 and 2.24 and any refinancing thereof (pursuant to Section 2.26, any Credit Agreement Refinancing Indebtedness, any Permitted Refinancing of any other refinancings and successive refinancings thereof) (in each case, whether or not such Indebtedness is unsecured) shall be deemed to constitute Total Debt that is secured by a first ranking Lien on the assets of the Lead Borrower or any of its Restricted Subsidiaries, and (y) the cash proceeds of any such Incremental Facility shall not be included in the amount of unrestricted cash and Cash Equivalents to be netted in calculating such ratio.

 

“Maximum Incremental Amount” shall mean, at any date of determination, the sum of (a)(i) $20,000,000 minus (ii) the sum of (A) the aggregate principal amount of Incremental Term Loans made pursuant to Section 2.22, prior to such date in reliance on clause (a)(i) plus (B) the aggregate principal amount of New Term Loans made pursuant to Section 2.23 prior to such date in reliance on clause (a)(i) plus (C) the aggregate principal amount of New Incremental Notes issued or incurred pursuant to Section 2.24 prior to such date in reliance on clause (a)(i), provided that the maximum amount deducted pursuant to this clause (a)(ii) shall not exceed $20,000,000, plus (b) an additional amount if, after giving effect to the incurrence of such additional amount, the Maximum First Lien Net Leverage Requirement and the Maximum Total Net Leverage Requirement have been satisfied.

 

“Maximum Rate” shall have the meaning assigned to such term in Section 9.09.

 

“Maximum Total Net Leverage Requirement” shall mean, with respect to any request pursuant to Article II for an Incremental Facility, the requirement that, the Total Net Leverage Ratio shall be less than or equal to 6.00:1.00, determined on a Pro Forma Basis after giving effect to such increase, New Term Loans or New Incremental Notes and assuming that in each case such Incremental Facility is fully drawn as of the last day of the Test Period most recently ended for which financial statements have been delivered pursuant to Section 5.04(a) or 5.04(b); provided that when calculating the Total Net Leverage Ratio for purposes of this

 

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definition, the cash proceeds of any such Incremental Facility shall not be included in the amount of unrestricted cash and Cash Equivalents to be netted in calculating such ratio.

 

“Minimum Extension Condition” shall have the meaning assigned thereto in Section 2.25(b).

 

“Minority Investment” shall mean any Person other than a Subsidiary in which the Lead Borrower or any of its Restricted Subsidiaries owns any Equity Interests.

 

“Moody’s” shall mean Moody’s Investors Service, Inc., or any successor thereto.

 

“Mortgaged Properties” shall have the meaning specified in paragraph (e) of the definition of “Collateral and Guarantee Requirement.”

 

“Mortgages” shall mean the mortgages, deeds of trust, hypothecs, debentures, assignments of leases and rents, modifications and other security documents delivered pursuant to Sections 5.13 or 5.16.

 

“Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Lead Borrower or any ERISA Affiliate currently makes or is obligated to make contributions or to which the Lead Borrower or any ERISA Affiliate has made or was obligated, within the preceding five years, to make contributions.

 

“Net Cash Proceeds” shall mean (a) with respect to any Asset Sale, the cash proceeds thereof (including (x) cash proceeds subsequently received (as and when received) in respect of non-cash consideration initially received, (y) in the case of a casualty, insurance proceeds and (z) in the case of a condemnation or similar event, condemnation awards and similar payments), net of (i) selling expenses (including reasonable broker’s fees or commissions, legal fees, transfer and similar taxes and the Lead Borrower’s good faith estimate of income taxes paid or payable in connection with such sale), (ii) amounts provided as a reserve, in accordance with GAAP, against any liabilities under any indemnification obligations or purchase price adjustment associated with such Asset Sale (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds) and (iii) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money which is secured by the asset sold in such Asset Sale and which is required to be repaid with such proceeds (other than (x) any such Indebtedness assumed by the purchaser of such asset, (y) Indebtedness under the Loan Documents and (z) any Indebtedness secured by the Collateral on a pari passu or junior basis); provided, however, that, if (A) the Lead Borrower shall deliver a certificate of a Financial Officer to the Administrative Agent at the time of receipt thereof setting forth the Lead Borrower’s intent to reinvest such proceeds in productive assets of a kind then used or usable in the business of the Lead Borrower or its Restricted Subsidiaries within the time period specified in this definition and (B) no Default or Event of Default shall have occurred and shall be continuing at the time of such certificate or at the proposed time of the application of such proceeds, such proceeds shall not constitute Net Cash Proceeds except to the extent not so used (1) within 365 days following the receipt of such proceeds, at which time such proceeds shall be deemed to be Net Cash Proceeds or (2) if the Lead Borrower or the relevant Restricted Subsidiary enters into a legally binding

 

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commitment to reinvest such Net Cash Proceeds within 365 days following the receipt thereof, such 365 days period will be extended with respect to the amount of Net Cash Proceeds so committed until such Net Cash Proceeds are required to be applied in accordance with such agreement (but such extension will in no event be for a period longer than 180 days); (b) with respect to any issuance or incurrence of Indebtedness, the cash proceeds thereof, net of all taxes and customary fees, commissions, costs and other expenses incurred in connection therewith; and (c) with respect to any Permitted Equity Issuance by any direct or indirect parent of the Lead Borrower, the amount of cash from such Permitted Equity Issuance contributed to the capital of the Lead Borrower.

 

“Net Working Capital” shall mean, with respect to the Lead Borrower and its Restricted Subsidiaries on a consolidated basis, Consolidated Current Assets minus Consolidated Current Liabilities.

 

“New Incremental Notes” shall have the meaning assigned thereto in Section 2.24(a).

 

“New Term Loan” shall have the meaning assigned thereto in Section 2.23(a).

 

“New Term Loan Borrowing Date” shall mean, with respect to each Class of New Term Loans, each date on which New Term Loans of such Class are incurred pursuant to Section 2.01(c) and as otherwise permitted pursuant to Section 2.23.

 

“New Term Loan Commitment” shall mean, for each Lender, any commitment to make New Term Loans provided by such Lender pursuant to Section 2.23, in such amount as agreed to by such Lender in the respective New Term Loan Commitment Agreement.

 

“New Term Loan Commitment Agreement” shall mean a New Term Loan Commitment Agreement among the Borrowers, the Administrative Agent and one or more New Term Loan Lenders on the same terms as this Agreement provided that (a) the Effective Yield in respect of such New Term Loans may exceed the then current Effective Yield in respect of the Initial Term Loans, (b) the Maturity Date of such New Term Loans may be later than (but not earlier) than the Latest Maturity Date, (c) such New Term Loans may not have a shorter Weighted Average Life to the then outstanding Initial Term Loans, (d) such New Term Loan Lenders may agree less favorable treatment with respect to mandatory prepayment provisions than those under the Initial Term Loans and (e) any other departures from the terms of this Agreement shall be reasonably satisfactory to the Administrative Agent.

 

“New Term Loan Facility” shall mean any term loan facility established pursuant to Section 2.23.

 

“New Term Loan Lender” shall have the meaning assigned thereto in Section 2.23(b).

 

“Obligations” shall mean all obligations of any of the Loan Parties from time to time arising under or in respect of the due and punctual payment of (i) the principal of and premium, if any, and interest (including any post-petition interest (as defined in the Security

 

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Agreement) on the Loans and any other loans outstanding under this Agreement, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any proceeding under any Debtor Relief Laws naming such Loan Party as the debtor in such proceeding, regardless of whether allowed or allowable in such proceeding), of the Loan Parties under the Loan Documents, (iii) obligations of any Loan Party arising under any Secured Hedging Agreement (excluding any Excluded Swap Obligations) and (iv) Cash Management Obligations.

 

“OFAC” shall have the meaning assigned to such term in Section 3.24.

 

“Officer’s Certificate” shall mean a certificate of the chief financial officer or the treasurer of the Lead Borrower substantially in the form attached as Exhibit H or such other form as shall be approved by the Administrative Agent.

 

“Other Applicable Indebtedness” shall have the meaning assigned to such term in Section 2.13(a).

 

“Other Taxes” shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

 

“Other Term Loan Borrowing Date” shall mean, with respect to each Class of Other Term Loans, each date on which Other Term Loans of such Class are incurred pursuant to Section 2.01(d) and as otherwise permitted pursuant to Section 2.26.

 

“Other Term Loan Commitments” shall mean one or more Classes of Term Loan Commitments hereunder that result from a Refinancing Amendment.

 

“Other Term Loans” shall mean one or more Classes of Term Loans that result from a Refinancing Amendment.

 

“Parent” shall mean Hemisphere Media Group, Inc.

 

“Pari Passu Intercreditor Agreement” shall mean a “pari passu” intercreditor agreement among the Administrative Agent and one or more representatives for the holders of Permitted First Priority Refinancing Debt, in form and substance reasonably satisfactory to the Administrative Agent.

 

“Participant Registrar” shall have the meaning assigned to such term in Section 9.04(c).

 

“Payment Office” shall mean the office of the Administrative Agent located at 60 Wall Street, New York, New York 10005 or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.

 

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“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

 

“Perfection Certificate” shall mean the perfection certificate substantially in the form of Exhibit II to the Security Agreement.

 

“Permitted Acquisition” shall have the meaning assigned to such term in Section 6.04(f).

 

“Permitted Encumbrance” shall mean, with respect to any Mortgaged Property located in the United States, such exceptions to title as are set forth in any Mortgage Policy delivered with respect thereto, all of which exceptions must be acceptable to the Administrative Agent in its reasonable discretion or, with respect to any Mortgaged Property located in any jurisdiction other than then United States, the equivalent exceptions (if any) that apply under any applicable Law.

 

“Permitted Equity Issuance” shall mean any sale or issuance of any Qualified Capital Stock of the Lead Borrower or any direct or indirect parent of the Lead Borrower, in each case to the extent permitted hereunder.

 

“Permitted First Priority Refinancing Debt” shall mean any secured Indebtedness incurred by the Lead Borrower in the form of one or more series of senior secured notes or loans; provided that (a) such Indebtedness is secured by the Collateral on a pari passu basis (but without regard to the control of remedies) with the Obligations and is not secured by any property or assets of the Lead Borrower or any of its Restricted Subsidiaries other than the Collateral, (b) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness, (c) such Indebtedness is not at any time guaranteed by any Subsidiaries other than Subsidiaries that are Guarantors, (d) the holders of such Indebtedness (or their representative) and the Administrative Agent shall be party to a Pari Passu Intercreditor Agreement, and (e) such Indebtedness has covenants and default and remedy provisions that in the good faith determination of the Lead Borrower are no more restrictive taken as a whole, than those set forth in this Agreement.

 

“Permitted Investors” shall mean:

 

(a)           InterMedia Partners VII, L.P., a Delaware limited partnership;

 

(b)           any Affiliate or Related Party of any Person specified in clause (a), other than another portfolio company thereof (which means a company actively engaged in providing goods and services to unaffiliated customers) or a company controlled by a “portfolio company”; and

 

(c)           any Person both the Equity Interests of such Person and the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of such Person of which (or in the case of a trust, the beneficial interests in which) are owned 50% or more by Persons specified in clauses (a) and (b).

 

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“Permitted Junior Debt Conditions” shall mean that such applicable debt (a) is not scheduled to mature prior to the date that is 180 days after the then Latest Maturity Date, (b) does not mature or have scheduled amortization payments of principal or payments of principal and is not subject to mandatory redemption, repurchase, prepayment or sinking fund obligations (except customary asset sale or change of control provisions that provide for the prior repayment in full of Loan and all other Obligations), in each case prior to the Latest Maturity Date at the time such Indebtedness is incurred, (c) such Indebtedness is not at any time guaranteed by any Restricted Subsidiaries other than Restricted Subsidiaries that are Guarantors and (d) has covenants and default and remedy provisions that are no more restrictive taken as a whole, than those set forth in this Agreement; provided that a certificate of a Responsible Officer of the Lead Borrower delivered to the Administrative Agent in good faith at least five (5) Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Lead Borrower has determined in good faith that such terms and conditions satisfy the requirement set out in the foregoing clause (d), shall be conclusive evidence that such terms and conditions satisfy such requirement unless the Administrative Agent provides notice to the Lead Borrower of an objection during such five (5) Business Day period (including a reasonable description of the basis upon which it objects).

 

“Permitted Ratio Debt” shall mean Indebtedness of the Lead Borrower or any of its Restricted Subsidiaries; provided that (a) such Indebtedness is either (x) senior unsecured Indebtedness ranking pari passu in right of payment to the Obligations or (y) subordinated in right of payment to the Obligations, (b) such Indebtedness does not mature prior to the date that is 91 days after the Latest Maturity Date at the time such Indebtedness is incurred, (c) such Indebtedness has no scheduled amortization or scheduled payments of principal and is not subject to mandatory redemption, repurchase, prepayment or sinking fund obligation (other than customary offers to repurchase upon a change of control, asset sale or casualty event and customary acceleration rights after an event of default) prior to the date that is 91 days after the Latest Maturity Date at the time such Indebtedness is incurred, (d) no Default or Event of Default shall then exist or result therefrom, (e) immediately after giving effect thereto and to the use of the proceeds thereof, the Lead Borrower shall be in Pro Forma Compliance with a Total Net Leverage Ratio of 6.00:1.00 as of the most recently ended Test Period for which financial statements have been delivered pursuant to Sections 5.04(a) and 5.04(b), (f) the covenants, events of default, guarantees and other terms of such Indebtedness are customary for similar Indebtedness in light of then-prevailing market conditions and in any event, when taken as a whole (other than interest rate and redemption premiums), are not more restrictive to the Lead Borrower and its Restricted Subsidiaries than those set forth in this Agreement (provided that a certificate of a Responsible Officer of the Lead Borrower delivered to the Administrative Agent in good faith at least five (5) Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Lead Borrower has determined in good faith that such terms and conditions satisfy the requirement set out in the foregoing clause (f), shall be conclusive evidence that such terms and conditions satisfy such requirement unless the Administrative Agent provides notice to the Lead Borrower of an objection during such five (5) Business Day period (including a reasonable description of the basis upon which it objects)), (g) in respect of which no Restricted Subsidiary of the Lead

 

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Borrower that is not a Guarantor under the Loan Documents is an obligor, (h) if such Indebtedness is subordinated, (x) the subordination provisions shall be reasonably satisfactory to the Administrative Agent and (y) the Term Loan Facilities shall have been, and while the Term Loan Facilities remain outstanding no other Indebtedness is or is permitted to be, designated as “designated senior debt” or its equivalent in respect of such Indebtedness and (i) at least (5) Business Days prior to the incurrence of such Permitted Ratio Debt, the Lead Borrower shall have delivered to the Administrative Agent an officer’s certificate executed by a Responsible Officer of the Lead Borrower certifying to such officer’s knowledge, compliance with the requirements of this definition, including reasonably detailed calculations required to demonstrate compliance with the Total Net Leverage Ratio required by clause (e) above.

 

“Permitted Refinancing” shall mean, with respect to any Person, any modification, refinancing, refunding, renewal, replacement, exchange or extension of any Indebtedness of such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed, replaced, exchanged or extended except by an amount equal to accrued and unpaid interest and a reasonable premium thereon plus other reasonable amounts paid, and fees and expenses reasonably incurred (including original issue discount and upfront fees), in connection with such modification, refinancing, refunding, renewal, replacement, exchange or extension and by an amount equal to any existing commitments unutilized thereunder; (b) such modification, refinancing, refunding, renewal, replacement, exchange or extension has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended; (c) if the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended is subordinated in right of payment to the Obligations, such modification, refinancing, refunding, renewal, replacement, exchange or extension is subordinated in right of payment to the Obligations on terms, taken as a whole, as favorable in all material respects to the Lenders (including, if applicable, as to Collateral) as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended; (d) if the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended is (i) unsecured, such modification, refinancing, refunding, renewal, replacement, exchange or extension is unsecured or (ii) secured by Liens, such modification, refinancing, refunding, replacement, renewal or extension is either (x) unsecured or is not secured by any Liens that do not also secure the Obligations or (y) if secured by Liens that also secure the Obligations, to the extent that such Liens are subordinated to, or (but only if, and to the extent, the Indebtedness being modified, refinanced, refunded, renewed or extended was secured equally and ratably with the Obligations) secured equally and ratably with, Liens securing the Obligations and/or such security interests were subject to (or required at the time such Indebtedness was originally incurred to be subject to) any intercreditor arrangements (including, if applicable, an Intercreditor Agreement) for the benefit of the Lenders, such modification, refinancing, refunding, replacement, renewal or extension is secured and subject to intercreditor arrangements on terms, taken as a whole,  as favorable in all material respects to the Lenders (including as to Collateral) as those contained in the documentation (including any intercreditor or similar agreements) governing the Indebtedness being modified, refinanced, replaced, refunded, replaced, renewed or extended or

 

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otherwise on terms reasonably satisfactory to the Administrative Agent; (e) the terms and conditions (including, if applicable, as to collateral) of any such modified, refinanced, refunded, renewed, replaced, exchanged or extended Indebtedness are, (A) either (i) customary for similar debt securities in light of then-prevailing market conditions (it being understood that such Indebtedness shall not include any financial maintenance covenants) or (ii) not materially less favorable to the Loan Parties or the Lenders, taken as a whole, than the terms and conditions of the Indebtedness being modified, refinanced, refunded, renewed, replaced, exchanged or extended, and (B) when taken as a whole (other than interest rate and redemption premiums), not more restrictive to the Lead Borrower and its Restricted Subsidiaries than those set forth in this Agreement (provided that a certificate of a Responsible Officer of the Lead Borrower delivered to the Administrative Agent in good faith at least five Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Lead Borrower has determined in good faith that such terms and conditions satisfy the requirement set out in this clause (e), shall be conclusive evidence that such terms and conditions satisfy such requirement unless the Administrative Agent provides notice to the Lead Borrower of its objection during such five Business Day period (including a reasonable description of the basis upon which it objects); (f) such modification, refinancing, refunding, renewal, replacement, exchange or extension does not add guarantors or other obligors from that which applied to the Indebtedness being modified, refinanced, refunded, renewed, replaced or extended (unless such guarantors or obligors are also added to support the Obligations); and (g) at the time thereof, no Event of Default shall have occurred and be continuing.

 

“Permitted Second Priority Refinancing Debt” shall mean secured Indebtedness incurred by the Lead Borrower in the form of one or more series of second lien secured notes or second lien secured loans; provided that (a) such Indebtedness is secured by the Collateral on a second priority basis to the Liens securing the Obligations and the obligations in respect of any Permitted First Priority Refinancing Debt and is not secured by any property or assets of the Lead Borrower or any of its Restricted Subsidiaries other than the Collateral, (b) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness (provided, that such Indebtedness may be secured by a Lien on the Collateral that is junior to the Liens securing the Obligations and the obligations in respect of any Permitted First Priority Refinancing Debt, notwithstanding any provision to the contrary contained in the definition of “Credit Agreement Refinancing Indebtedness”), (c) the holders of such Indebtedness (or their representative) and the Administrative Agent shall be party to a Junior Lien Intercreditor Agreement,  and (d) such Indebtedness meets the Permitted Junior Debt Conditions.

 

“Permitted Unsecured Refinancing Debt” shall mean unsecured Indebtedness  incurred by the Lead Borrower in the form of one or more series of senior unsecured notes or loans; provided that (i) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness and (ii) meets the Permitted Junior Debt Conditions.

 

“Person” shall mean any natural person, corporation, business trust, joint venture, association, company, limited liability company, partnership, Governmental Authority or other entity.

 

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“Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Platform” shall have the meaning assigned to such term in Section 5.04.

 

“PR Mortgage” shall mean that certain Deed of Mortgage Number 6, executed before Notary Public Luis Morales-Steinmann on March 30, 2007 by Televicentro of Puerto Rico, LLC, as the mortgagor, as amended by that certain Deed of Amendment of Mortgage Number 6, executed before Notary Public Gladys O. Fontanez Reyes on June 28, 2011 by and between Televicentro of Puerto Rico, LLC, as the mortgagor, and The Bank of Nova Scotia, as then holder of the PR Mortgage Note.  The PR Mortgage shall constitute a Mortgage pursuant to the terms of this Agreement.

 

“PR Mortgage Note” shall mean that certain $10,000,000 mortgage note issued by Televicentro of Puerto Rico, LLC on March 30, 2007 and secured by the PR Mortgage.

 

“PR Mortgage Note Pledge and Security Agreement” shall mean a mortgage note pledge and security agreement executed on the date hereof and through which Televicentro of Puerto Rico, LLC pledges the PR Mortgage Note to the Collateral Agent as collateral guaranteeing the Loans.

 

“Prepayment Amount” shall have the meaning assigned to such term in Section 2.13(f).

 

“Prepayment Date” shall have the meaning assigned to such term in Section 2.13(f).

 

“Prepayment Fee” shall have the meaning assigned to such term in Section 2.05(b).

 

“Prime Rate” shall mean the rate of interest per annum determined from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City and notified to the Borrower.  The prime rate is a rate set by the Administrative Agent based upon various factors including the Administrative Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such rate.

 

“Pro Forma Basis” shall mean, with respect to compliance with any test, covenant or calculation of any ratio hereunder, the determination or calculations of such test, covenant or ratio (including in connection with Specified Transaction) in accordance with Section 1.04.

 

“Pro Forma Compliance” shall mean, with respect to any test, covenant or calculation of any ratio hereunder, compliance on a Pro Forma Basis in accordance with Section 1.04.

 

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“Public Lender” shall have the meaning assigned to such term in Section 9.01.

 

“Qualified Capital Stock” of any Person shall mean any Equity Interest of such Person that is not Disqualified Stock.

 

“Qualified ECP Guarantor” shall mean, in respect of any Swap Obligation, each Loan Party that has total assets exceeding $10,000,000 at the time the relevant Guaranty or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

“Qualified Holding Company Indebtedness” shall mean unsecured Indebtedness of Holdings (A) that is not subject to any Guarantee by any Subsidiary of Holdings, (B) that will not mature prior to the date that is 91 days after the Latest Maturity Date of any Term Loan Facility in effect on the date of issuance or incurrence thereof, (C) that has no scheduled amortization or scheduled payments of principal and is not subject to mandatory redemption, repurchase, prepayment or sinking fund obligation (it being understood that such Indebtedness may have mandatory prepayment, repurchase or redemption provisions satisfying the requirements of clause (E) below), (D) that does not require any payments in cash of interest or other amounts in respect of the principal thereof prior to the earlier to occur of (1) the date that is four (4) years from the date of the issuance or incurrence thereof and (2) the date that is 91 days after the Latest Maturity Date of any Term Loan Facility in effect on the date of such issuance or incurrence, and (E) that has mandatory prepayment, repurchase or redemption, covenant, default and remedy provisions customary for senior discount notes of an issuer that is the parent of a borrower under senior secured credit facilities, and in any event, with respect to covenant, default and remedy provisions, no more restrictive (taken as a whole) than those set forth in this Agreement (other than provisions customary for senior discount notes of a holding company); provided that the Lead Borrower shall have delivered a certificate of a Responsible Officer to the Administrative Agent at least five Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Lead Borrower has reasonably determined in good faith that such terms and conditions satisfy the foregoing requirement (and such certificate shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement unless the Administrative Agent notifies the Lead Borrower within such five Business Day period that it disagrees with such determination (including a reasonably detailed description of the basis upon which it disagrees)); provided, further, that any such Indebtedness shall constitute Qualified Holding Company Indebtedness only if immediately after giving effect to the issuance or incurrence thereof and the use of proceeds thereof, no Event of Default shall have occurred and be continuing.

 

“Refinanced Debt” shall have the meaning assigned to such term in the definition of the Credit Agreement Refinancing Indebtedness in this Section 1.01.

 

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“Refinanced Term Loans” shall have the meaning assigned to such term in Section 9.08(e).

 

“Refinancing Amendment” shall mean an amendment to this Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Lead Borrower executed by each of (a) the Borrowers and Holdings, (b) the Administrative Agent, and (c) each additional Lender and existing Lender that agrees to provide any portion of the Credit Agreement Refinancing Indebtedness being incurred pursuant thereto, in accordance with Section 2.25.

 

“Register” shall have the meaning assigned to such term in Section 9.04(b).

 

“Regulation T” shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

“Regulation U” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

“Regulation X” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

“Related Fund” shall mean, with respect to any Lender that is a fund or commingled investment vehicle that invests in bank loans, any other fund that invests in bank loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

 

“Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

 

“Release” shall mean any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within or upon any building, structure, facility or fixture.

 

“Replacement Term Loans” shall have the meaning assigned to such term in Section 9.08(e).

 

“Repricing Transaction” shall mean the prepayment, refinancing, substitution or replacement of all or a portion of the Initial Term Loans with the incurrence by the Borrowers or any of their respective Restricted Subsidiaries of any new or replacement tranche of term loans with an effective interest cost or weighted average yield (with the comparative determinations to be made by the Administrative Agent consistent with generally accepted financial practices, after giving effect to, among other factors, margin, interest rate floors, upfront or similar fees or original issue discount shared with all providers of such financing, but excluding the effect of any arrangement, structuring, syndication or other fees payable in connection therewith that are not shared with all providers of such financing, and without taking into account any fluctuations in the LIBO Rate) that is less than the effective interest cost or weighted average yield (as determined by the Administrative Agent on the same basis) of such Term Loans, including

 

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without limitation, as may be effected through any amendment to this Agreement relating to the interest rate for, or weighted average yield of, such Term Loans; provided that it shall not constitute a Repricing Transaction if the applicable replacement indebtedness is incurred or the applicable amendment is effected in connection with a Change in Control.

 

“Required Lenders” shall mean, at any time, Lenders having Loans and unused Commitments representing more than 50% of the sum of all Loans outstanding and unused Commitments at such time; provided, however, that any Loans or Commitments held by Holdings or the Affiliated Lenders in their capacity as Lenders shall be disregarded in the determination of the Required Lenders at any time.

 

“Responsible Officer” of any Person shall mean any executive officer, authorized person or Financial Officer of such Person and any other officer or similar official thereof responsible for the administration of the obligations of such Person in respect of this Agreement.

 

“Restricted Indebtedness” shall mean Indebtedness of Holdings, the Borrowers or any of their respective Restricted Subsidiaries, the payment, prepayment, repurchase or defeasance of which is restricted under Section 6.09(b).

 

“Restricted Payment” shall mean any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in Holdings, the Borrowers or any of their respective Restricted Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in Holdings, the Borrowers or any Restricted Subsidiary of the Lead Borrower.

 

“Restricted Subsidiary” shall mean, with respect to any Person, any subsidiary of that Person other than an Unrestricted Subsidiary.

 

“Returns” shall have the meaning assigned to such term in Section 3.14.

 

“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto.

 

“Sanctions Laws and Regulations” shall mean (i) any sanctions or requirements imposed by, or based upon the obligations or authorities set forth in, the PATRIOT Act, the Executive Order No. 13224 of September 23, 2001, entitled Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), the U.S. International Emergency Economic Powers Act (50 U.S.C. §§ 1701 et seq.), the U.S. Trading with the Enemy Act (50 U.S.C. App. §§ 1 et seq.), the U.S. Syria Accountability and Lebanese Sovereignty Act, the U.S. Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 or the Iran Sanctions Act, Section 1245 of the National Defense Authorization Act of 2012, all as amended, or any of the foreign assets control regulations (including but not limited to 31 C.F.R., Subtitle B, Chapter V, as amended)  or any other law or executive order relating thereto administered by the U.S. Department of the Treasury Office of Foreign Assets Control, and any similar law, regulation, or executive order enacted in the United States after the date of this Agreement and (ii) any sanctions or

 

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requirements imposed under similar laws or regulations enacted by the European Union or the United Kingdom that apply to the Borrowers or the Restricted Subsidiaries.

 

“Scheduled Extended Term Loan Repayment” shall have the meaning assigned to such term in Section 2.11(a)(iii).

 

“Scheduled New Term Loan Repayment” shall have the meaning assigned to such term in Section 2.11(a)(ii).

 

“Scheduled Other Term Loan Repayment” shall have the meaning assigned to such term in Section 2.11(a)(iv).

 

“SEC” shall mean the Securities and Exchange Commission, and any successor agency thereto.

 

“Secured Hedging Agreement” shall mean any Hedging Agreement permitted under Section 6.01(j) that is entered into by and between any Loan Party and any Hedging Bank, except for any such Hedging Agreement designated by the Lead Borrower in writing to the Administrative Agent as an “unsecured hedging agreement” as of the Closing Date or, if later, as of the time of entering into such Hedging Agreement; provided that for purposes of Section 7.02, any obligations outstanding under Secured Hedging Agreements shall be valued in accordance with the definition of Hedge Termination Value and further provided that that for the purposes of the Loan Documents in no circumstances shall any Excluded Swap Obligations constitute Obligations with respect to any Secured Hedge Agreement.

 

“Secured Parties” shall mean, collectively, the Administrative Agent, the Collateral Agent, the Lenders, each Hedging Bank, each Cash Management Bank and each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 8.01.

 

“Securities Laws” shall mean the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 and, in each case, the rules and regulations of the SEC promulgated thereunder, and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the Public Company Accounting Oversight Board, as each of the foregoing may be amended and in effect on any applicable date under this Agreement.

 

“Security Agreement” shall mean, collectively, the Security Agreement executed by the Loan Parties, substantially in the form of Exhibit D, together with each security agreement supplement executed and delivered pursuant to Section 5.10.

 

“Security Documents” shall mean the Mortgages, the Security Agreement, the Affiliate Subordination Agreement, the PR Mortgage, the PR Mortgage Note, the PR Mortgage Note Pledge and Security Agreement and corresponding financing statements, any Pari Passu Intercreditor Agreement (if entered into), any Junior Lien Intercreditor Agreement (if entered into) and each of the security agreements, mortgages and other instruments and documents executed and delivered pursuant to any of the foregoing or pursuant to Section 5.13.

 

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“Solvency Certificate” shall mean a certificate of the chief financial officer of Holdings substantially in the form attached as Exhibit I or such other form as shall be reasonably satisfactory to the Administrative Agent.

 

“Specified Acquired Collateral” shall have the meaning assigned to such term in Section 6.04(f).

 

“Specified Disposition” shall mean any Disposition which generates net cash proceeds of at least $1,000,000.

 

“Specified Transactions” shall mean any incurrence or repayment of Indebtedness (other than for working capital purposes) or Term Loan or Investment that results from a Person becoming a Restricted Subsidiary or an Unrestricted Subsidiary (including pursuant to Section 5.15), any Permitted Acquisition, any Specified Disposition, any Investment in excess of $2,000,000 or any Restricted Payment in excess of $2,000,000.

 

“SPV” shall have the meaning assigned to such term in Section 9.04(g).

 

“Stations” shall mean all radio and television broadcast stations owned by the Lead Borrower or any of its Restricted Subsidiaries.

 

“Statutory Reserves” shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board and any other banking authority, domestic or foreign, to which the Administrative Agent or any Lender (including any branch, Affiliate or other fronting office making or holding a Loan) is subject for Eurocurrency Liabilities (as defined in Regulation D of the Board).  Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities (as defined in Regulation D of the Board) and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D.  Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

“Subordinated Indebtedness” shall mean any Indebtedness of the Borrowers or any of their respective Restricted Subsidiaries that is expressly subordinated in right of payment to the Obligations.

 

“subsidiary” shall mean, with respect to any Person (herein referred to as the “parent”), any corporation, partnership, limited liability company, association or other business entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power, at the time any determination is being made, directly or indirectly, owned, Controlled or held by such Person.

 

“Subsidiary” shall mean any subsidiary of the Borrower.

 

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“Subsidiary Guarantor” shall mean each Restricted Subsidiary listed on Schedule 1.01(b), and each other Restricted Subsidiary that is or becomes a party to the Guaranty; provided that no CFC Holding Company and no Subsidiary that is a CFC shall be a Subsidiary Guarantor.

 

“Swap Obligation” shall mean, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

 

“Syndication Agent” shall have the meaning assigned to such term in the introductory statement hereto.

 

“Synthetic Lease” shall mean, as to any Person, any lease (including leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) (a) that is accounted for as an operating lease under GAAP and (b) in respect of which the lessee retains or obtains ownership of the property so leased for U.S. federal income tax purposes, other than any such lease under which such Person is the lessor.

 

“Synthetic Lease Obligations” shall mean, as to any Person, an amount equal to the capitalized amount of the remaining lease payments under any Synthetic Lease that would appear on a balance sheet of such person in accordance with GAAP if such obligations were accounted for as Capital Lease Obligations.

 

“Synthetic Purchase Agreement” shall mean any swap, derivative or other agreement or combination of agreements pursuant to which Holdings, the Borrowers or any of their respective Restricted Subsidiaries is or may become obligated to make (a) any payment in connection with a purchase by any third party from a Person other than Holdings, the Borrowers or any of their respective Restricted Subsidiaries of any Equity Interest or Restricted Indebtedness or (b) any payment (other than on account of a permitted purchase by it of any Equity Interest or Restricted Indebtedness) the amount of which is determined by reference to the price or value at any time of any Equity Interest or Restricted Indebtedness; provided that no phantom stock or other equity-based plan providing for payments only to current or former directors, officers, consultants, advisors or employees of Holdings, the Borrowers, the Restricted Subsidiaries or their respective Affiliates (or to their heirs or estates) shall be deemed to be a Synthetic Purchase Agreement.

 

“Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“Televicentro of Puerto Rico, LLC” shall mean a Delaware limited liability company authorized to conduct business in the Commonwealth of Puerto Rico, which is subsidiary of InterMedia Español, Inc., and which will, concurrently with this Agreement, execute the PR Mortgage Note Pledge and Security Agreement and provide to the Collateral Agent, as collateral and guaranty of the Loans a pledge of the PR Mortgage Note.

 

“Term Borrowing” shall mean a Borrowing comprised of Term Loans.

 

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“Term Loan Facility” shall mean the Initial Term Loan Facility, any New Term Loan Facility, any term loan facility comprised of Incremental Term Loans, any term loan facility comprised of Other Term Loans and any term loan facility comprised of Extended Term Loans (in each case, including any increase thereto pursuant to Section 2.22).

 

“Term Loan Lender” shall have the meaning assigned to such term in Section 2.02(a).

 

“Term Loan Percentage” shall mean, (x) as to any Lender, after the applicable Term Loans are made, the ratio of (a) the outstanding principal balance of such Term Loan or Term Loans of such Lender to (b) the aggregate outstanding principal balance of all such Term Loans of all Lenders and (y) as to a Class of Term Loans, at any time, a fraction (expressed as a percentage), the numerator of which is equal to the aggregate outstanding principal amount of all Term Loans of such Class at such time and the denominator of which is equal to the aggregate outstanding principal amount of all Term Loans of all Classes at such time.

 

“Term Loan Repayment Dates” shall have the meaning assigned to such term in Section 2.11(a).

 

“Term Loans” shall mean the Initial Term Loans, any Incremental Term Loans, any New Term Loans, any Other Term Loans, and any Extended Term Loans.

 

“Term Note” shall have the meaning assigned to such term in Section 2.04(e).

 

“Test Period” shall mean each period of four (4) consecutive Fiscal Quarters of the Lead Borrower then last ended, in each case taken as one accounting period; provided that in the case of any Test Period which includes any Fiscal Quarter ended on or prior to March 31, 2013, the rules set forth in the immediately succeeding sentence shall apply; provided further, that in the case of determinations of the First Lien Net Leverage Ratio and the Total Net Leverage Ratio pursuant to this Agreement, such further adjustments (if any) as described in Section 1.04 contained herein shall be made to the extent applicable.  If the respective Test Period (i) includes the Fiscal Quarter of the Lead Borrower ended June 30, 2012, Consolidated EBITDA for such Fiscal Quarter shall be deemed to be $9,900,000, (ii) includes the Fiscal Quarter of the Lead Borrower ended September 30, 2012, Consolidated EBITDA for such Fiscal Quarter shall be deemed to be $8,700,000, (iii) includes the Fiscal Quarter of the Lead Borrower ended December 31, 2012, Consolidated EBITDA for such Fiscal Quarter shall be deemed to be $13,800,000 and (iv) includes the Fiscal Quarter of the Lead Borrower ended March 31, 2013, Consolidated EBITDA for such Fiscal Quarter shall be deemed to be $8,500,000; provided that further adjustments may be made on Pro Forma Basis to the amounts specified above to the extent provided herein.

 

“Total Debt” shall mean, at any time, the total Indebtedness of the Lead Borrower and its Restricted Subsidiaries at such time (excluding (1) Indebtedness of the type described in clause (i), clause (j), clause (k), clause (l) and clause (m) of the definition of such term, except, in the case of such clause (j), to the extent any Hedging Agreement has been terminated and the obligations thereunder have not been settled, in the case of such clause (k), to the extent the specified payment obligations in respect of such Equity Interests are then due and

 

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payable and, in the case of such clauses (l) and clause (m), to the extent of any unreimbursed drawings thereunder and (2) Guarantees if the guaranteed Indebtedness is already included).

 

“Total Net Leverage Ratio” shall mean, on any date, the ratio of (a) an amount equal to the excess of (i) Total Debt on such date over (ii) the aggregate amount of unrestricted cash and Cash Equivalents (up to a maximum aggregate amount of $10,000,000) that are included in the consolidated balance sheet of the Lead Borrower and its Restricted Subsidiaries as of such date to (b) Consolidated EBITDA for the period of four consecutive Fiscal Quarters most recently ended on or prior to such date.

 

“Transaction Expenses” shall mean fees and expenses payable or otherwise borne by the Lead Borrower and its Restricted Subsidiaries in connection with the Transactions and incurred before, or on or about, the Closing Date, including the costs of legal and financial advisors to the Lead Borrower and the agents or trustees under this Agreement and prepayment fees and penalties in connection with the prepayment of the Existing Indebtedness on or about the Closing Date.

 

“Transactions” shall mean, collectively, (a) the execution, delivery and performance by the Loan Parties of the Loan Documents to which they are a party and the making of the Term Loans, (b) the repayment of the Existing Indebtedness and the termination of any Liens in respect of the Existing Indebtedness and (c) the payment of the Transaction Expenses.

 

“Type”, when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined.  For purposes hereof, the term “Rate” shall mean the Adjusted LIBO Rate and the Alternate Base Rate, as applicable.

 

“UCC” shall mean the Uniform Commercial Code as in effect in the relevant jurisdiction, as amended or modified from time to time.

 

“United States Tax Compliance Certificate” shall have the meaning assigned to such term in Section 2.20(f)(II)(iii).

 

“Unrestricted Subsidiary” shall mean any Subsidiary of the Lead Borrower (other than WAPA PR) that is acquired or created after the Closing Date designated by the Lead Borrower as an Unrestricted Subsidiary hereunder by written notice to the Administrative Agent in accordance with Section 5.15.

 

“USA PATRIOT Act” shall mean The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

 

“Warrants” shall mean the issued and outstanding warrants as of the Closing Date to purchase Class A common stock of the Parent.

 

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“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness, at any date, the quotient obtained by dividing (a) the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness multiplied by the amount of such payment; by (b) the sum of all such payments.

 

“Wholly Owned Subsidiary” of any Person shall mean a subsidiary of such Person of which securities (except for directors’ qualifying shares) or other ownership interests representing 100% of the Equity Interests are, at the time any determination is being made, owned, Controlled or held by such Person or one or more wholly owned Subsidiaries of such Person or by such Person and one or more wholly owned Subsidiaries of such Person.

 

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal by the Borrower or an ERISA Affiliate from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

 

Section 1.02          Terms Generally.  The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”; and the words “asset” and “property” shall be construed as having the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.  All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require.  Except as otherwise expressly provided herein, any reference in this Agreement to any Loan Document or any other document evidencing Indebtedness permitted hereunder shall mean such document as amended, restated, supplemented or otherwise modified from time to time, in each case, in accordance with the terms of this Agreement and the other Loan Documents.

 

Section 1.03          Accounting Terms.  All accounting terms not specifically or completely defined herein shall be construed in conformity with GAAP, applied on a consistent basis, as in effect from time to time and in a manner consistent with that used in preparing the audited financial statements required by Section 5.04(a), except as otherwise specifically prescribed herein (including, without limitation, as prescribed by Section 9.22).  Notwithstanding any other provision contained herein, (x) any lease that is treated as an operating lease for purposes of GAAP as of the date hereof shall not be treated as Indebtedness or as a Capital Lease Obligation and shall continue to be treated as an operating lease (and any future lease, if it were in effect on the date hereof, that would be treated as an operating lease for purposes of GAAP as of the date hereof shall be treated as an operating lease), in each case for purposes of this Agreement, notwithstanding any actual or proposed change in or application of GAAP after the date hereof, and (y) for purposes of determining compliance with any covenant (including the computation of any financial ratio) contained herein, Indebtedness of the Lead Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, 

 

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and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.

 

Section 1.04          Pro Forma Calculations.  (a)  Notwithstanding anything to the contrary herein, the First Lien Net Leverage Ratio and the Total Net Leverage Ratio shall be calculated in the manner prescribed by this Section 1.04; provided that, notwithstanding anything to the contrary in clause (b), (c) or (d) of this Section 1.04, when calculating the First Lien Net Leverage Ratio for purposes of the Applicable Excess Cash Flow Percentage the events described in this Section 1.04 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect.

 

(b)           For purposes of calculating the First Lien Net Leverage Ratio and the Total Net Leverage Ratio, Specified Transactions (and the incurrence or repayment of any Indebtedness in connection therewith) that have been made (i) during the applicable Test Period and (ii) subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a Pro Forma Basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDA and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period.  If since the beginning of any applicable Test Period any Person that subsequently became a Subsidiary or was merged, amalgamated or consolidated with or into the Lead Borrower or any of its Restricted Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section 1.04, then the First Lien Net Leverage Ratio and the Total Net Leverage Ratio shall be calculated to give pro forma effect thereto in accordance with this Section 1.04.

 

(c)           Whenever pro forma effect is to be given to a Specified Transaction, the pro forma calculations shall be made in good faith by a Responsible Officer of the Lead Borrower in accordance with the terms of this Agreement.

 

(d)           In the event that the Lead Borrower or any Restricted Subsidiary of the Lead Borrower incurs (including by assumption or guarantees) or repays (including by redemption, repayment, retirement or extinguishment) any Indebtedness included in the calculations of the First Lien Net Leverage Ratio and the Total Net Leverage Ratio, as the case may be (in each case, other than Indebtedness incurred or repaid under any revolving credit facility in the ordinary course of business for working capital purposes), (i) during the applicable Test Period and (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then the First Lien Net Leverage Ratio and the Total Net Leverage Ratio shall be calculated giving pro forma effect to such incurrence or repayment of Indebtedness, to the extent required, as if the same had occurred on the last day of the applicable Test Period.

 

Section 1.05          Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “New Term Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar New Term Loan”).  Borrowings also may be classified and referred to by Type (e.g., a “Eurodollar Borrowing”).

 

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Section 1.06          Currency Equivalents Generally.  Unless otherwise set forth herein, any amount specified in this agreement in Dollars shall include the Equivalent in Dollars of such amount in any foreign currency and if any amount described in this Agreement is comprised of amounts in Dollars and amounts in one or more foreign currencies, the Equivalent in Dollars of such foreign currency amounts shall be used to determine the total.  For purposes of this Section 1.06, “Equivalent” in Dollars of any foreign currency on any date means the equivalent in Dollars of such foreign currency by using the applicable spot rate set forth on the Bloomberg Cross Currency Rates Page for such currency.

 

Section 1.07          Rounding.  Any financial ratios required to be maintained by the Lead Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio or percentage is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

 

Section 1.08          References to Laws. Unless otherwise expressly provided herein, references to any Applicable Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Applicable Law.

 

Section 1.09          Times of Day.  Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

 

Section 1.10          Covenant Compliance Generally.  For purposes of determining compliance under Article VI, any amount in a currency other than Dollars will be converted to Dollars in a manner consistent with that used in calculating Consolidated Net Income in the annual financial statements of Parent and its Subsidiaries or Holdings and its Subsidiaries, as applicable, delivered pursuant to Section 5.04(a) or (b), as applicable.  Notwithstanding the foregoing, for purposes of determining compliance with any limitations or thresholds set forth in Dollars in Article VI, with respect to any amount in a currency other than Dollars, no breach of any basket contained in such Article shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such amount is incurred; provided that for the avoidance of doubt, the foregoing provisions of this Section 1.10 shall otherwise apply to such Article, including with respect to determining whether any amount may be incurred at any time under such Article.  If any of the baskets set forth in Article VI of this Agreement are exceeded solely as a result of fluctuations to Consolidated Total Assets for the most recently completed Fiscal Quarter after the last time such baskets were calculated for any purpose under Article VI, such baskets will not be deemed to have been exceeded solely as a result of such fluctuations.

 

Section 1.11          Available Amount Transactions.  If more than one action occurs on any given date the permissibility of the taking of which is determined hereunder by reference to the amount of the Available Amount Basket immediately prior to the taking of such action, the permissibility of the taking of each such action shall be determined independently and in no event may any two or more such actions be treated as occurring simultaneously.

 

Section 1.12          Interest Rate Calculations.  All computations of interest and other fees hereunder shall be made on the basis of a 360-day year (except for interest calculated by

 

54

 

reference to the Prime Rate, which shall be based on a year of 365 or 366 days, as applicable) and for the actual number of days elapsed (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable.

 

ARTICLE II

 

Term Loan Facilities

 

Section 2.01          Commitments.  (a)  Subject to the terms and conditions and relying upon the representations and warranties set forth herein, each Lender with an Initial Term Loan Commitment agrees, severally and not jointly, to make an Initial Term Loan to the Borrowers on the Closing Date in a principal amount not to exceed its Initial Term Loan Commitment.  Amounts borrowed under this Section 2.01(a) and subsequently repaid or prepaid may not be reborrowed.

 

(b)           Subject to the terms and conditions of this Agreement, each Lender having an Incremental Term Loan Commitment under a class pursuant to Section 2.22 severally and not jointly, agrees subject to the terms and conditions and relying upon the representations and warranties set forth herein and in the applicable Incremental Term Loan Assumption Agreement, to make Incremental Term Loans to the Borrowers, in an aggregate principal amount not to exceed its Incremental Term Loan Commitment.  Amounts paid or prepaid in respect of Incremental Term Loans may not be reborrowed.

 

(c)           Subject to the terms and conditions of this Agreement, each New Term Loan Lender with a New Term Loan Commitment for a given Class of New Term Loans pursuant to Section 2.23 severally and not jointly agrees, subject to the terms and conditions and relying upon the representations and warranties set forth herein and in the applicable New Term Loan Commitment Agreement, to make New Term Loans to the Borrowers, which New Term Loans shall not exceed for any such New Term Loan Lender at the time of any incurrence thereof, the New Term Loan Commitment of such New Term Loan Lender for such Class on the respective New Term Loan Borrowing Date.  Amounts paid or prepaid in respect of New Term Loans may not be reborrowed.

 

(d)           Subject to the terms and conditions of this Agreement, each Term Loan Lender with an Other Term Loan Commitment for a given Class of Other Term Loans severally agrees to make Other Term Loans to the Borrowers, which Other Term Loans shall not exceed for any such Term Loan Lender at the time of any incurrence thereof, the Other Term Loan Commitment of such Term Loan Lender for such Class on the respective Other Term Loan Borrowing Date. Amounts paid or prepaid in respect of Other Term Loans may not be reborrowed.

 

Section 2.02          Term Loans.  (a)  Each Term Loan shall be made as part of a Borrowing consisting of such Term Loans made by the applicable Lenders (each, a “Term Loan Lender”) ratably in accordance with their applicable Commitments, respectively; provided, however, that the failure of any Lender to make a Term Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make a Term Loan required to be made by such

 

55

 

other Lender).  The Term Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $1,000,000 and not less than $5,000,000, or (ii) equal to the remaining available balance of the applicable Commitments.

 

(b)           Subject to Sections 2.08 and 2.15 each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Lead Borrower may request pursuant to Section 2.03.  Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Term Loan; provided that any exercise of such option shall not affect the obligation of the applicable Borrower to repay such Term Loan in accordance with the terms of this Agreement.  Borrowings of more than one Type may be outstanding at the same time; provided, however, that the Lead Borrower shall not be entitled to request any Borrowing that, if made, would result in more than 8 Eurodollar Borrowings outstanding hereunder at any time.  For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings.

 

(c)           Each Lender shall make each Term Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 1:00 p.m., New York City time, and the Administrative Agent shall promptly credit the amounts so received to an account designated by the Lead Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders.

 

(d)           Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with paragraph (c) above and the Administrative Agent may, in reliance upon such assumption, make available to the applicable Borrower on such date a corresponding amount.  If the Administrative Agent shall have so made funds available then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, such Lender and the applicable Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the applicable Borrower to but excluding the date such amount is repaid to the Administrative Agent at (i) in the case of the applicable Borrower, a rate per annum equal to the interest rate applicable at the time to the Term Loans comprising such Borrowing and (ii) in the case of such Lender, a rate determined by the Administrative Agent to represent its cost of overnight or short term funds (which determination shall be conclusive absent manifest error).  If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender’s Term Loan as part of such Borrowing for purposes of this Agreement.

 

Section 2.03          Borrowing Procedure.  In order to request a Borrowing, the Lead Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00 (noon), New York City time, three Business Days

 

56

 

(or, in the case of a Borrowing on the Closing Date, on the Business Day of such Borrowing) before a proposed Borrowing, and (b) in the case of an ABR Borrowing, not later than 12:00 noon, New York City time, one Business Day before a proposed Borrowing.  Each such telephonic Borrowing Request shall be irrevocable, and shall be confirmed promptly by hand delivery or fax to the Administrative Agent of a written Borrowing Request and shall specify the following information:  (i) whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing; provided that, with respect to any Borrowing on the Closing Date, the Lead Borrower shall not be permitted to request a Eurodollar Borrowing with an Interest Period in excess of one month (unless otherwise agreed to by the Administrative Agent in its sole discretion); (ii) the date of such Borrowing (which shall be a Business Day); (iii) the number and location of the account to which funds are to be disbursed; (iv) the amount of such Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect thereto; provided, however, that, notwithstanding any contrary specification in any Borrowing Request, each requested Borrowing shall comply with the requirements set forth in Section 2.02.  If no election as to the Type of Borrowing is specified in any such notice, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period with respect to any Eurodollar Borrowing is specified in any such notice, then the Lead Borrower shall be deemed to have selected an Interest Period of one month’s duration.  The Administrative Agent shall promptly advise the applicable Lenders of any notice given pursuant to this Section 2.03 (and the contents thereof), and of each Lender’s portion of the requested Borrowing.

 

Section 2.04          Evidence of Debt; Repayment of Loans.  (a) The Borrowers hereby unconditionally promise to pay, on a joint and several basis to the Administrative Agent for the account of each Lender the principal amount of each Term Loan of such Lender made available to them as provided in Section 2.11.

 

(b)           Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Lead Borrower to such Lender resulting from each Loan made by such Lender from time to time to such Borrower, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

 

(c)           The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Class and Type thereof and, if applicable, the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the applicable Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrowers or any Guarantor and each Lender’s share thereof.

 

(d)           The entries made in the accounts maintained pursuant to paragraphs (b) and (c) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Lead Borrower to repay the Term Loans made available to them in accordance with their terms.

 

57

 

(e)           Any Lender may request that Term Loans made by it hereunder be evidenced by a promissory note (each such note, a “Term Note”).  In such event, the applicable Borrower shall execute and deliver to such Lender a promissory note payable to such Lender and its registered assigns and in a form and substance reasonably acceptable to the Administrative Agent and the Lead Borrower.  Notwithstanding any other provision of this Agreement, in the event any Lender shall request and receive such a promissory note, the interests represented by such note shall at all times (including after any assignment of all or part of such interests pursuant to Section 9.04) be represented by one or more promissory notes payable to the payee named therein or its registered assigns.

 

Section 2.05          Fees.  (a)  The Lead Borrower shall pay, or shall cause WAPA PR to pay (i) to the Administrative Agent, for its own account, the administrative fees set forth in the Fee Letter at the times and in the amounts specified therein, (ii) to the Collateral Agent, for its own account, such fees as have been separately agreed in writing in the amounts and at the times so specified and (iii) to the Administrative Agent for the account of the relevant Lenders such fees as shall have been separately agreed between the Borrowers and the Joint Lead Arrangers in respect of this Agreement in the amounts and at the times so agreed.

 

(b)           In the event that the Term Loans are prepaid in whole or in part pursuant to Section 2.12(a) or Section 2.13(c), or in the event of an assignment of Term Loans pursuant to Section 2.21(a)(iv), in each case, in connection with a Repricing Transaction on or prior to the one year anniversary of the Closing Date, the applicable Borrower shall pay to the relevant Lenders a prepayment fee (the “Prepayment Fee”) equal to 1.00% of the principal amount so prepaid or assigned.

 

(c)           All such Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent or the Collateral Agent, as the case may be.  Once paid, none of the Fees shall be refundable under any circumstances.

 

Section 2.06          Interest on Loans.

 

(a)           Subject to the provisions of Section 2.07, the Initial Term Loans of any Class comprising any ABR Borrowing shall bear interest at a rate per annum equal to the Alternate Base Rate plus the relevant Applicable Margin.

 

(b)           Subject to the provisions of Section 2.07, the Initial Term Loans comprising any Eurodollar Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin.

 

(c)           Interest on each Term Loan shall be payable on the Interest Payment Dates applicable to such Term Loan except as otherwise provided in this Agreement.  The applicable Adjusted LIBO Rate for each Interest Period or day within an Interest Period, as the case may be, and the Alternate Base Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

 

58

 

Section 2.07          Default Interest.  If any Borrower shall default in the payment of any principal of or interest on any Term Loan or any other amount due hereunder or under any other Loan Document, by acceleration or otherwise, then, until such defaulted amount shall have been paid in full, overdue principal and, to the extent permitted by law, overdue interest in respect of each Loan under this Agreement shall automatically (without the need of any vote by the Required Lenders) bear interest (after as well as before judgment) at a rate per annum equal to the rate otherwise applicable to such Loan pursuant to Section 2.06 plus 2.00% per annum and all other overdue amounts payable hereunder and under any other Loan Document shall bear interest at a rate per annum equal to the rate which is 2.00% in excess of the rate applicable to Loans that are maintained as ABR Loans from time to time. All accrued and unpaid interest under this Section 2.07 shall be due and payable on demand of the Administrative Agent.  Interest shall continue to accrue on the Obligations after the filing by or against any Borrower of any petition seeking any relief or remedy under any applicable Debtor Relief Laws.

 

Section 2.08          Alternate Rate of Interest.  In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Borrowing the Administrative Agent shall have determined that Dollar deposits, in the principal amounts of the Loans comprising such Borrowing are not generally available in the London interbank market, or that the rates at which such Dollar deposits, as applicable, are being offered will not adequately and fairly reflect the cost to the majority of Lenders of making or maintaining the applicable Eurodollar Loans during such Interest Period, or that reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall, as soon as practicable thereafter, give written or fax notice of such determination to the Lead Borrower and the Lenders.  In the event of any such determination, until the Administrative Agent shall have advised the Lead Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, any request by the Lead Borrower (on behalf of itself or WAPA PR) for a Eurodollar Borrowing pursuant to Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing.  Each determination by the Administrative Agent under this Section 2.08 shall be conclusive absent manifest error.

 

Section 2.09          Termination of Initial Term Loan Commitments.  The Initial Term Loan Commitments shall automatically terminate upon the making of the Initial Term Loans on the Closing Date.

 

Section 2.10          Conversion and Continuation of Borrowings.  Each Borrower shall have the right at any time upon prior irrevocable notice to the Administrative Agent (a) not later than 12:00 (noon), New York City time, one Business Day prior to conversion, to convert any Eurodollar Borrowing into an ABR Borrowing, (b) not later than 12:00 (noon), New York City time, three Business Days prior to conversion or continuation, to convert any ABR Borrowing into a Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar Borrowing for an additional Interest Period, and (c) not later than 12:00 (noon), New York City time, three Business Days prior to conversion, to convert the Interest Period with respect to any Eurodollar Borrowing to another permissible Interest Period, subject in each case to the following:

 

59

 

(a)           each conversion or continuation shall be made pro rata among the applicable Lenders in accordance with the respective principal amounts of the Loans comprising the converted or continued Borrowing;

 

(b)           if less than all the outstanding principal amount of any Borrowing shall be converted or continued, then each resulting Borrowing shall satisfy the limitations specified in Sections 2.02(a) and 2.02(b) regarding the principal amount and maximum number of Borrowings of the relevant Type;

 

(c)           each conversion shall be effected by each Lender and the Administrative Agent by recording for the account of such Lender the new Term Loan of such Lender resulting from such conversion and reducing the Term Loan (or portion thereof) of such Lender being converted by an equivalent principal amount; accrued interest on any Eurodollar Loan (or portion thereof) being converted shall be paid by the applicable Borrower at the time of conversion;

 

(d)           the converted or continued Borrowing shall be made in the same currency as the Borrowing being converted or continued;

 

(e)           if any Eurodollar Borrowing is converted at a time other than the end of the Interest Period applicable thereto, the applicable Borrower shall pay, upon demand, any amounts due to the applicable Lenders pursuant to Section 2.16;

 

(f)            any portion of a Borrowing maturing or required to be repaid in less than one month may not be converted into or continued as a Eurodollar Borrowing;

 

(g)           any portion of a Eurodollar Borrowing that cannot be converted into or continued as a Eurodollar Borrowing by reason of the immediately preceding clause shall be automatically converted at the end of the Interest Period in effect for such Borrowing into an ABR Borrowing;

 

(h)           no Interest Period may be selected for any Eurodollar Borrowing that would end later than a Term Loan Repayment Date, the date of a Scheduled New Term Loan Repayment, the date of a Scheduled Extended Term Loan Repayment or the date of a Scheduled Other Term Loan Repayment, as the case may be, occurring on or after the first day of such Interest Period if, after giving effect to such selection, the aggregate outstanding amount of (A) the Eurodollar Borrowings comprised of Initial Term Loans, Other Term Loans or New Term Loans, as applicable, with Interest Periods ending on or prior to such Term Loan Repayment Date,  date of a Scheduled New Term Loan Repayment, date of a Scheduled Extended Term Loan Repayment or date of a Scheduled Other Term Loan Repayment, as the case may be, and (B) the ABR Borrowings comprised of Initial Term Loans, Other Term Loans or New Term Loans, as applicable, would not be at least equal to the principal amount of ABR Borrowings to be paid on such Term Loan Repayment Date, date of a Scheduled New Term Loan Repayment, date of a Scheduled Extended Term Loan Repayment or date of a Scheduled Other Term Loan Repayment as the case may be; and

 

60

 

(i)            upon notice to the Lead Borrower from the Administrative Agent given at the request of the Required Lenders, after the occurrence and during the continuance of a Default or Event of Default, no outstanding Term Loan may be converted into, or continued as, a Eurodollar Loan.

 

Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer to this Agreement and specify (i) the identity and amount of the Borrowing that the applicable Borrower requests be converted or continued, (ii) whether such Borrowing is to be converted to or continued as a Eurodollar Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the date of such conversion (which shall be a Business Day), (iv) the currency of the continued or converted Borrowing (which shall be the same currency as the Borrowing being continued or converted) and (v) if such Borrowing is to be converted to or continued as a Eurodollar Borrowing, the Interest Period with respect thereto.  If no Interest Period is specified in any such notice with respect to any conversion to or continuation as a Eurodollar Borrowing, the Borrowers shall be deemed to have selected an Interest Period of one month’s duration.  The Administrative Agent shall advise the Lenders of any notice given pursuant to this Section 2.10 and of each Lender’s portion of any converted or continued Borrowing.  If the Borrower shall not have given notice in accordance with this Section 2.10 to continue any Borrowing into a subsequent Interest Period (and shall not otherwise have given notice in accordance with this Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the Interest Period applicable thereto (unless repaid pursuant to the terms hereof), automatically be continued as an ABR Borrowing.

 

Section 2.11          Repayment of Term Borrowings.  (a) (i) The Lead Borrower shall pay to the Administrative Agent, for the account of the applicable Lenders, on the dates set forth below, or if any such date is not a Business Day, on the next preceding Business Day (each such date being called a “Term Loan Repayment Date”), a principal amount of the Initial Term Loans incurred by it (as adjusted from time to time pursuant to Sections 2.11(b), 2.12, 2.13(e) and 2.22(d)) equal to the amount set forth below for such date, together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment:

 

	
Term Loan Repayment Date
    	
 
    	
Amount
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
September 30,   2013
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
December 31,   2013
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
March 31,   2014
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
June 30,   2014
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
September 30,   2014
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
December 31,   2014
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
March 31,   2015
    	
 
    	
$
    	
437,500
    	
 
    

 

61

 

	
 
    	
 
    	
 
    	
 
    	
 
    
	
June 30,   2015
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
September 30,   2015
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
December 31,   2015
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
March 31,   2016
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
June 30,   2016
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
September 30,   2016
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
December 31,   2016
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
March 31,   2017
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
June 30,   2017
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
September 30,   2017
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
December 31,   2017
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
March 31,   2018
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
June 30,   2018
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
September 30,   2018
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
December 31,   2018
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
March 31,   2019
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
June 30,   2019
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
September 30,   2019
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
December 31,   2019
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
March 31,   2020
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
June 30,   2020 
    	
 
    	
$
    	
437,500
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Initial   Maturity Date
    	
 
    	
$
    	
162,750,000
    	
 
    

 

(ii)           The applicable Borrower shall make scheduled quarterly installments with respect to the aggregate outstanding principal amount of each New Term Loan (if any) as determined pursuant to, and in accordance with, Section 2.23 (each such repayment, as the same may be adjusted from time to time pursuant to Sections 2.11(b), 2.12, 2.13(e) or 2.22, a “Scheduled New Term Loan Repayment”).

 

62

 

(iii)          The applicable Borrower shall make scheduled quarterly installments with respect to the aggregate outstanding principal amount of each Extended Term Loan (if any) as determined pursuant to, and in accordance with, Section 2.25 (each such repayment, as the same may be adjusted from time to time pursuant to Sections 2.11(b), 2.12, 2.13(e) or 2.22, a “Scheduled Extended Term Loan Repayment”).

 

(iv)          The applicable Borrower shall make scheduled quarterly installments with respect to the aggregate outstanding principal amount of each Other Term Loan (if any) as determined pursuant to, and in accordance with, Section 2.26 (each such repayment, as the same may be adjusted from time to time pursuant to Sections 2.11(b), 2.12, 2.13(e) or 2.22, a “Scheduled Other Term Loan Repayment”).

 

(b)           To the extent not previously paid, the Initial Term Loans, Incremental Term Loans, New Term Loans, Extended Term Loans and Other Term Loans shall be due and payable together with accrued and unpaid interest on the principal amount to be paid to but excluding the date of payment on the applicable Maturity Date.

 

(c)           All repayments pursuant to this Section 2.11 shall be subject to Section 2.16, but shall otherwise be without premium or penalty.

 

Section 2.12          Voluntary Prepayment.  (a) Each Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, upon at least three Business Days’ prior written or fax notice (or telephone notice promptly confirmed by written or fax notice) in the case of Eurodollar Loans, or written or fax notice (or telephone notice promptly confirmed by written or fax notice) at least one Business Day prior to the date of prepayment in the case of ABR Loans, to the Administrative Agent before 12:00 (noon), New York City time; provided, however, that each partial prepayment shall be in an amount that is an integral multiple of $1,000,000 and not less than $1,000,000.

 

(b)           Voluntary prepayments of Loans shall be applied (x) among each Class of Term Loans on a pro rata basis, with each Class of Term Loans to be allocated its Term Loan Percentage of the amount of such prepayment and (y) to the outstanding principal amounts due on a Term Loan Repayment Date of each such Class of Term Loans as directed by the Borrower (or in the absence of direction, in direct order of maturity).

 

(c)           Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the applicable Borrower to prepay such Borrowing by the amount stated therein on the date stated therein; provided, however, that if such prepayment is for all of the then outstanding Loans, then the applicable Borrower may revoke such notice and/or extend the prepayment date by not more than five Business Days; provided further, however, that the provisions of Section 2.16 shall apply with respect to any such revocation or extension.  All prepayments under this Section 2.12 shall be subject to Section 2.05(b) and Section 2.16 but otherwise without premium or penalty.  All prepayments under this Section 2.12 shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment.

 

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Section 2.13          Mandatory Prepayments.  (a)  Subject to Section 2.13(g), not later than the tenth Business Day following the receipt of Net Cash Proceeds by Holdings or any of its Restricted Subsidiaries in respect of (A) one or more Asset Sales in an aggregate amount in excess of $2,500,000 per annum (other than any Disposition of any property or assets permitted by Section 6.05 (except Section 6.05(b)(xi) and (b)(xvii))) or (B) one or more Casualty Events in an aggregate amount in excess of $2,500,000 per annum, the Lead Borrower shall apply the Net Cash Proceeds received with respect thereto to prepay outstanding Term Loans in accordance with Section 2.13(d); provided that if at the time any such prepayment would be required with any Net Cash Proceeds pursuant to this clause (a), the Lead Borrower is required to offer to repurchase the Permitted First Priority Refinancing Debt or any New Incremental Notes that are secured on a pari passu basis with the Obligations (or any Permitted Refinancing thereof that is secured on a pari passu basis with the Obligations) pursuant to the terms of the documentation governing such Indebtedness with such Net Cash Proceeds in respect of any such Asset Sale or any such Casualty Event (such Indebtedness (or Permitted Refinancing thereof) required to be offered to be so repurchased, “Other Applicable Indebtedness”), then the Lead Borrower may apply such Net Cash Proceeds on a pro rata basis (determined on the basis of the aggregate outstanding principal amount of the Term Loans and Other Applicable Indebtedness at such time); provided, further that the portion of such Net Cash Proceeds allocated to the Other Applicable Indebtedness shall not exceed the amount of such Net Cash Proceeds required to be allocated to the Other Applicable Indebtedness pursuant to the terms thereof, and the remaining amount, if any, of such Net Cash Proceeds shall be allocated to the Term Loans in accordance with the terms hereof) to the prepayment of the Term Loans and to the repurchase or prepayment of Other Applicable Indebtedness, and the amount of prepayment of the Term Loans that would have otherwise been required pursuant to this clause (a) shall be reduced accordingly; provided, further, that to the extent the holders of Other Applicable Indebtedness decline to have such indebtedness repurchased or prepaid, the declined amount shall promptly (and in any event within ten (10) Business Days after the date of such rejection) be applied to prepay the Term Loans pursuant to this clause (a).  Notwithstanding the foregoing, the amount of Net Cash Proceeds from any Asset Sale or Casualty Event required to be (x) reinvested in assets (other than working capital assets) used or useful in the business of the Lead Borrower and its Restricted Subsidiaries or (y) applied to repay outstanding Loans, in each case as provided in this Section 2.13(a), shall be reduced on a dollar-for-dollar basis by the amount of any investment (not funded with Net Cash Proceeds from any other Asset Sale or Casualty Event that previously reduced a Loan Party’s or its Restricted Subsidiary’s obligation to repay Loans pursuant to this Section 2.13(a)) made by the Lead Borrower or any of its Restricted Subsidiaries in assets (other than working capital assets) used or useful in the business of the Lead Borrower and its Restricted Subsidiaries (including pursuant to a Permitted Acquisition (including a Permitted Acquisition of the equity interests in another Person)) within 90 days prior to the receipt of such Net Cash Proceeds.

 

(b)           On each Excess Cash Flow Payment Date, the Lead Borrower shall make mandatory principal prepayments of the Loans in the manner set forth in clause (d) below in an amount equal to the remainder (if positive) of (A) the Applicable Excess Cash Flow Percentage of Excess Cash Flow, if any, for such Excess Cash Flow Payment Period minus (B) the aggregate amount of voluntary prepayments of any Term Loan during such Excess Cash Flow Payment Period, in each case, solely to the extent that such prepayments were made in 

 

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accordance with Section 2.12 and were not funded with the incurrence of any Funded Debt (other than revolving Funded Debt).

 

(c)           In the event that any Loan Party or any Restricted Subsidiary of a Loan Party shall receive Net Cash Proceeds from the issuance or incurrence of Indebtedness for money borrowed of any Loan Party or any Restricted Subsidiary of a Loan Party (other than any cash proceeds from the issuance of Indebtedness for money borrowed permitted pursuant to Section 6.01 (other than any Credit Agreement Refinancing Indebtedness)), the Lead Borrower shall, substantially simultaneously with (and in any event not later than the tenth Business Day next following) the receipt of such Net Cash Proceeds by such Loan Party or such subsidiary, apply an amount equal to 100% of such Net Cash Proceeds to prepay outstanding Loans in accordance with Section 2.13(d).

 

(d)           Mandatory prepayments of outstanding Loans under this Agreement shall be allocated (other than Net Cash Proceeds of any Credit Agreement Refinancing Indebtedness incurred pursuant to Section 2.25, which may, at the election of the Lead Borrower, be applied on a pro rata basis to any Class of outstanding Term Loans in respect of which such Indebtedness constitutes Credit Agreement Refinancing Indebtedness as directed by the Lead Borrower) by the Lead Borrower among each Class of outstanding Term Loans on a pro rata basis, with each Class to be allocated its Term Loan Percentage of the amount of the respective repayment and applied against the remaining scheduled installments of principal due in respect of the Term Loans to the outstanding principal amounts due under Sections 2.11(a)(i), (ii), (iii) and (iv) respectively as directed by the Lead Borrower (or in the absence of direction, in direct order of maturity),  except to the extent the terms of any Incremental Term Loans, Other Term Loans, New Term Loans or Extended Term Loans provide for a less favorable treatment of any Incremental Term Loans, Other Term Loans, New Term Loans or Extended Term Loans with respect to any such mandatory prepayments.

 

(e)           Notwithstanding any other provisions of this Section 2.13, to the extent that any or all of the Net Cash Proceeds of any Disposition by a Foreign Subsidiary (a “Foreign Disposition”) or the Net Cash Proceeds of any Casualty Event from a Foreign Subsidiary (a “Foreign Casualty Event”), in each case giving rise to a prepayment event pursuant to Section 2.13(a), or Excess Cash Flow giving rise to a prepayment event pursuant to Section 2.13(b) are or is prohibited or delayed by applicable local law from being repatriated to the United States, the portion of such Net Cash Proceeds or Excess Cash Flow so affected will not be required to be applied to repay Term Loans at the times provided in this Section 2.13 but may be retained by the applicable Foreign Subsidiary so long, but only so long, as the applicable local law will not permit repatriation to the United States (the Lead Borrower hereby agreeing to cause the applicable Foreign Subsidiary to promptly take all actions reasonably required by the applicable local law to permit such repatriation), and once such repatriation of any of such affected Net Cash Proceeds or Excess Cash Flow is permitted under the applicable local law, such repatriation will be immediately effected and such repatriated Net Cash Proceeds or Excess Cash Flow will be promptly (and in any event not later than two (2) Business Days after such repatriation) applied (net of additional taxes payable or reserved against as a result thereof) to the repayment of the Loans pursuant to this Section 2.13 to the extent provided herein and (B) to the extent that the Lead Borrower has determined in good faith that repatriation of any of or all the Net Cash 

 

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Proceeds of any Foreign Disposition, any Foreign Casualty Event or Excess Cash Flow would have a material adverse tax cost consequence (taking into account any foreign tax credit or benefit actually realized in connection with such repatriation) with respect to such Net Cash Proceeds or Excess Cash Flow, the Net Cash Proceeds or Excess Cash Flow so affected may be retained by the applicable Foreign Subsidiary, provided that, in the case of this clause (B), on or before the date on which any Net Cash Proceeds so retained would otherwise have been required to be applied to reinvestments or prepayments pursuant to this Section 2.13 (or such Excess Cash Flow would have been so required if it were Net Cash Proceeds), (x) the applicable Borrower applies an amount equal to such Net Cash Proceeds or Excess Cash Flow to such reinvestments or prepayments as if such Net Cash Proceeds or Excess Cash Flow had been received by the applicable Borrower rather than such Foreign Subsidiary, less the amount of additional taxes that would have been payable or reserved against if such Net Cash Proceeds or Excess Cash Flow had been repatriated (or, if less, the Net Cash Proceeds or Excess Cash Flow that would be calculated if received by such Foreign Subsidiary) or (y) such Net Cash Proceeds or Excess Cash Flow are applied to the repayment of Indebtedness of a Foreign Subsidiary.

 

(f)            The applicable Borrower shall deliver to the Administrative Agent, at the time of each prepayment required under this Section 2.13, (i) a certificate signed by a Financial Officer of the Lead Borrower setting forth in reasonable detail the calculation of the amount of such prepayment (the “Prepayment Amount”) and (ii) at least seven Business Days’ prior written notice of such prepayment.  Each notice of prepayment shall specify the prepayment date (the “Prepayment Date”), the Type and Class of each Term Loan being prepaid and the principal amount of each Term Loan (or portion thereof) to be prepaid.  All prepayments of Borrowings under this Section 2.13 shall be subject to Section 2.16 and Section 2.05(b), if applicable, but shall otherwise be without premium or penalty, and shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment.

 

(g)           Notwithstanding any other provisions of this Section 2.13, any Lender may (but solely to the extent the Lead Borrower elects for this clause (g) to be applicable to a given Prepayment Amount payable pursuant to Section 2.13(a)) decline to accept all (but not less than all) of its share of any such prepayment (any such Lender, a “Declining Lender”) by providing written notice to the Administrative Agent no later than five Business Days after the date of such Lender’s receipt of notice from the Administrative Agent regarding such prepayment.  If any Lender does not give a notice to the Administrative Agent on or prior to such tenth Business Day informing the Administrative Agent that it declines to accept the applicable prepayment, then such Lender will be deemed to have accepted such prepayment.  On any Prepayment Date, an amount equal to the Prepayment Amount minus the portion thereof allocable to Declining Lenders, in each case for such Prepayment Date, shall be paid to the Administrative Agent by the Borrowers and applied by the Administrative Agent ratably to prepay Term Loans owing to Lenders (other than Declining Lenders) in the manner described in Section 2.13(a) for such prepayment.  Any amounts that would otherwise have been applied to prepay Term Loans owing to Declining Lenders shall be retained by the Borrowers (such amounts, “Declined Amounts”).

 

Section 2.14          Reserve Requirements; Change in Circumstances.  (a) Notwithstanding any other provision of this Agreement, if any Change in Law shall impose, 

 

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modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of or credit extended by any Lender (except any such reserve requirement which is reflected in the Adjusted LIBO Rate) or shall impose on such Lender or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender, and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan or increase the cost to any Lender or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender to be material, then the applicable Borrower will pay to such Lender upon demand such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

 

(b)           If any Lender shall have determined that any Change in Law regarding capital adequacy has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Term Loans made pursuant hereto to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time the applicable Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

 

(c)           A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as applicable, as specified in paragraph (a) or (b) above shall be delivered to the Lead Borrower and shall be conclusive absent manifest error.  The applicable Borrower shall pay such Lender the amount shown as due on any such certificate delivered by it within 10 days after its receipt of the same.

 

(d)           Failure or delay on the part of any Lender to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrowers shall not be under any obligation to compensate any Lender under paragraph (a) or (b) above with respect to increased costs or reductions with respect to any period prior to the date that is 120 days prior to such request if such Lender knew or could reasonably have been expected to know of the circumstances giving rise to such increased costs or reductions and of the fact that such circumstances would result in a claim for increased compensation by reason of such increased costs or reductions; provided further that the foregoing limitation shall not apply to any increased costs or reductions arising out of the retroactive application of any Change in Law within such 120-day period.  The protection of this Section 2.14 shall be available to each Lender regardless of any possible contention of the invalidity or inapplicability of the Change in Law that shall have occurred or been imposed.

 

Section 2.15          Change in Legality.  (a)  Notwithstanding any other provision of this Agreement, if any Change in Law shall make it unlawful for any Lender to make or maintain any Type of Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Type of Eurodollar Loan, then, by written notice to the Lead Borrower and to the Administrative Agent:

 

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(i)            such Lender may declare that Eurodollar Loans will not thereafter (for the duration of such unlawfulness) be made by such Lender hereunder (or be continued for additional Interest Periods) and ABR Loans will not thereafter (for such duration) be converted into such Type of Eurodollar Loans, whereupon any request for such Type of a Eurodollar Borrowing (or to convert an ABR Borrowing to such Type of a Eurodollar Borrowing or to continue such Type of a Eurodollar Borrowing for an additional Interest Period) shall, as to such Lender only, be deemed a request for an ABR Loan (or a request to continue an ABR Loan as such for an additional Interest Period or to convert such Type of a Eurodollar Loan into an ABR Loan, as the case may be), unless such declaration shall be subsequently withdrawn; and

 

(ii)           such Lender may require that all outstanding Eurodollar Loans of such Type made by it be converted to ABR Loans, in which event all such Eurodollar Loans shall be automatically converted to ABR Loans as of the effective date of such notice as provided in paragraph (b) below.

 

In the event any Lender shall exercise its rights under (i) or (ii) above, all payments and prepayments of principal that would otherwise have been applied to repay the Eurodollar Loans of such Type that would have been made by such Lender or the converted Eurodollar Loans of such Type of such Lender shall instead be applied to repay the ABR Loans made by such Lender in lieu of, or resulting from the conversion of, such Eurodollar Loans of such Type.

 

(b)           For purposes of this Section 2.15, a notice to the Lead Borrower by any Lender shall be effective as to each Eurodollar Loan of such Type made by such Lender, if lawful, on the last day of the Interest Period then applicable to such Eurodollar Loan; in all other cases such notice shall be effective on the date of receipt by the applicable Borrower.

 

Section 2.16          Breakage.  Each Borrower shall indemnify each Lender against any loss (other than any lost profit or margin) or expense that such Lender may sustain or incur as a consequence of (a) any event, other than a default by such Lender in the performance of its obligations hereunder, which results in (i) such Lender receiving or being deemed to receive any amount on account of the principal of any Eurodollar Loan prior to the end of the Interest Period in effect therefor, (ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of the Interest Period with respect to any Eurodollar Loan, in each case other than on the last day of the Interest Period in effect therefor, or (iii) any Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be made pursuant to a conversion or continuation under Section 2.10) not being made after notice of a Borrowing Request to make such Term Loan or conversion notice to convert such Term Loan shall have been given by the Lead Borrower hereunder (any of the events referred to in this clause (a) being called a “Breakage Event”) or (b) any default in the making of any payment or prepayment required to be made hereunder.  In the case of any Breakage Event, such loss shall include an amount equal to the excess, as reasonably determined by such Lender, of (i) its cost of obtaining funds for the Eurodollar Loan that is the subject of such Breakage Event for the period from the date of such Breakage Event to the last day of the Interest Period in effect (or that would have been in effect) for such Term Loan over (ii) the amount of interest likely to be realized by such Lender in redeploying the funds released or not utilized by reason of such Breakage Event for such period.  A certificate of any Lender 

 

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setting forth any amount or amounts which such Lender is entitled to receive pursuant to this Section 2.16 shall be delivered to the Lead Borrower and shall be conclusive absent manifest error.

 

Section 2.17          Pro Rata Treatment.  Subject to Section 2.15, each Borrowing, each payment or prepayment of principal of any Borrowing made by or on behalf of a Borrower, each payment of interest on the Loans made by or on behalf of a Borrower, each reduction of the Commitments and each conversion of any Borrowing to or continuation of any Borrowing as a Borrowing of any Type shall be allocated pro rata among the applicable Lenders or such Class in accordance with their respective applicable Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Loans).  Each Lender agrees that in computing such Lender’s portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of such Borrowing to the next higher or lower whole Dollar amount.

 

Section 2.18          Sharing of Setoffs.  Each Lender agrees that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim against the Lead Borrower or any other Loan Party, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable Debtor Relief Laws or otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of any Loans as a result of which the unpaid principal portion of its Loans of a Class to a Borrower shall be proportionately less than the unpaid principal portion of the Loans of that Class to such Borrower of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in such Loans of such other Lender, so that the aggregate unpaid principal amount of such Loans and participations in such Loans held by each applicable Lender shall be in the same proportion to the aggregate unpaid principal amount of all such Loans then outstanding as the principal amount of such Loans and participations in such Loans held by the Lender prior to such exercise of banker’s lien, setoff or counterclaim or other event was to the principal amount of all such Loans outstanding prior to such exercise of banker’s lien, setoff or counterclaim or other event; provided, however, that (i) if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.18 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest, and (ii) the provisions of this Section 2.18 shall not be construed to apply to any payment made by a Borrower to a Lender in its capacity as such pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant.  Each Borrower and Holdings expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in a Loan deemed to have been so purchased may exercise any and all rights of banker’s lien, setoff or counterclaim with respect to any and all moneys owing by any Borrower and Holdings to such Lender by reason thereof as fully as if such Lender had made a Loan directly to the applicable Borrower in the amount of such participation.

 

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Section 2.19                             Payments.  (a)  Each Borrower shall make each payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder and under any other Loan Document not later than 2:00 p.m., New York City time, on the date when due in immediately available funds payable in Dollars without setoff, defense or counterclaim.  Each such payment shall be made to the Administrative Agent at the Payment Office.  The Administrative Agent shall promptly distribute to each Lender any payments received by the Administrative Agent on behalf of such Lender.

 

(b)                                 Except as otherwise expressly provided herein, whenever any payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder or under any other Loan Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest.

 

Section 2.20                             Taxes.  (a)  Any and all payments by or on account of any obligation of each Borrower or any other Loan Party hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Taxes unless required by applicable law; provided that, if a Borrower or any other Loan Party shall be required by applicable law to deduct any Taxes from such payments, then (i) if such Taxes are Indemnified Taxes or Other Taxes, 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 2.20) the Administrative Agent and each Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower or such Loan Party shall make such deductions and (iii) such Borrower or such Loan Party shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

 

(b)                                 In addition, each Borrower (as applicable) shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)                                  Each Borrower shall indemnify the Administrative Agent and each Lender, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with respect to any payment by or on account of any obligation of such Borrower or in the case of the Lead Borrower, any other Loan Party, hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.20) and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Lead Borrower by a Lender, or by the Administrative Agent on behalf of itself or a Lender, shall be conclusive absent manifest error.

 

(d)                                 Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any

 

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Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (d).

 

(e)                                  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by any Borrower or any other Loan Party to a Governmental Authority, the Lead Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(f)                                   (I) Except with respect to such documents set forth in Section 2.20(g) below, any Lender that is entitled to an exemption from or reduction of any withholding tax under the law of the jurisdiction in which any Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Lead Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Lead Borrower as will permit such payments to be made without withholding or at a reduced rate.  Such Lender shall promptly notify the Lead Borrower at any time it determines that it is no longer in a position to provide any previously delivered documentation to the Lead Borrower.  Notwithstanding anything to the contrary in the preceding sentence, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.20(f)(II) and 2.20(g) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

(II)                              Without limiting the generality of the foregoing, any Foreign Lender shall deliver to the Lead Borrower, Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter (i) if such Foreign Lender shall determine that any applicable form or certification has expired or will then expire or has or will then become obsolete or incorrect or that an event has occurred that requires or will then require a change in the most recent form or certification previously delivered by it to the Lead Borrower and the Administrative Agent and (ii) upon the request of the Lead Borrower or Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

 

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(i)                                     duly completed copies of IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States of America is a party;

 

(ii)                                  duly completed copies of IRS Form W-8ECI;

 

(iii)                               in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 871(h) or 881(c) of the Code:  (x) a certificate substantially in the form of Exhibit J (any such certificate, a “United States Tax Compliance Certificate”) to the effect that such Foreign Lender is not:  (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (y) duly completed copies of IRS Form W-8BEN;

 

(iv)                              to the extent a Foreign Lender is not the beneficial owner (for example, where the Foreign Lender is a partnership or participating Lender granting a typical participation), duly completed copies of IRS Form W-8IMY accompanied by duly completed IRS Form W-8ECI, IRS Form W-8-BEN, a United States Tax Compliance Certificate, IRS Form W-9 and/or other required documentation from each beneficial owner, as applicable; or

 

(v)                                 any other form prescribed by applicable law as a basis for claiming exemption from or a reduction of United States federal withholding Tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made.

 

(g)                                  If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Lead Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Lead Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Lead Borrower or the Administrative Agent as may be necessary for each Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (g), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

(h)                                 If a Lender or the Administrative Agent determines, in its sole discretion, that it has received a refund in respect of any Indemnified Taxes or Other Taxes as to which it has been indemnified by any Borrower or with respect to which any Borrower or other Loan Party has paid additional amounts pursuant to this Section 2.20, it shall pay over the amount of such refund to such Borrower or other Loan Party, as applicable (but only to the extent of indemnity payments made under this Section 2.20 with respect to the Indemnified Taxes or Other Taxes, as the case may be, giving rise to such refund), net of all out-of-pocket expenses of 

 

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such Lender or the Administrative Agent and without interest (other than interest paid by the relevant taxation authority with respect to such refund); provided that such Borrower or other Loan Party, upon the request of such Lender or the Administrative Agent, agrees to repay the amount paid over to such Borrower or other Loan Party (plus penalties, interest or other charges) to such Lender or the Administrative Agent in the event such Lender or the Administrative Agent is required to repay such refund to such taxation authority.  Notwithstanding anything to the contrary in this paragraph (h), in no event will the Lender or Administrative Agent be required to pay any amount  pursuant to this paragraph (h) the payment of which would place the Lender or Administrative Agent in a less favorable net after-Tax position than such Lender or Administrative Agent would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require such Lender or the Administrative Agent to make available its tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrowers or any other Person.

 

Section 2.21                             Assignment of Commitments under Certain Circumstances; Duty to Mitigate.  (a)  In the event (i) any Lender delivers a certificate requesting compensation pursuant to Section 2.14, (ii) any Lender delivers a notice described in Section 2.15, (iii) any Borrower is required to pay any additional amount to any Lender or any Governmental Authority on account of any Lender pursuant to Section 2.20 or (iv) any Lender refuses to consent to any amendment, waiver or other modification of any Loan Document requested by the Lead Borrower that requires the consent of a greater percentage of the Lenders than the Required Lenders and such amendment, waiver or other modification is consented to by the Required Lenders, then, in each case, the Lead Borrower may, at its sole expense and effort (including with respect to the processing and recordation fee referred to in Section 9.04(b)), upon notice to such Lender and the Administrative Agent, require such Lender to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all of its interests, rights and obligations under this Agreement (or, in the case of clause (iv) above, all of its interests, rights and obligation with respect to the Class of Term Loans or Commitments that is the subject of the related consent, amendment, waiver or other modification) to an Eligible Assignee that shall assume such assigned obligations and, with respect to clause (iv) above, shall consent to such requested amendment, waiver or other modification of any Loan Documents (which assignee may be another Lender, if a Lender accepts such assignment); provided that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction, (y) the Lead Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld or delayed, and (z) the Lead Borrower or such assignee shall have paid to the affected Lender in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans of such Lender, plus all amounts accrued for the account of such Lender hereunder with respect thereto (including any amounts under Sections 2.05(b), 2.14, 2.16 and 2.20); provided further that, if prior to any such transfer and assignment the circumstances or event that resulted in such Lender’s claim for compensation under Section 2.14, notice under Section 2.15 or the amounts paid pursuant to Section 2.20, as the case may be, cease to cause such Lender to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital, or cease to have the consequences

 

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specified in Section 2.15, or cease to result in amounts being payable under Section 2.20, as the case may be (including as a result of any action taken by such Lender pursuant to paragraph (b) below), or if such Lender shall waive its right to claim further compensation under Section 2.14 in respect of such circumstances or event or shall withdraw its notice under Section 2.15 or shall waive its right to further payments under Section 2.20 in respect of such circumstances or event or shall consent to the proposed amendment, waiver, consent or other modification, as the case may be, then such Lender shall not thereafter be required to make any such transfer and assignment hereunder.  Each Lender hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender, as assignor, any Assignment and Acceptance necessary to effectuate any assignment of such Lender’s interests hereunder in the circumstances contemplated by this Section 2.21(a).

 

(b)                                 If (i) any Lender shall request compensation under Section 2.14 or Section 2.20 or (ii) any Lender delivers a notice described in Section 2.15, then such Lender shall use reasonable efforts (which shall not require such Lender to incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any action inconsistent with its internal policies or legal or regulatory restrictions or suffer any disadvantage or burden deemed by it to be significant) (x) to file any certificate or document reasonably requested in writing by the Lead Borrower or (y) to assign its rights and delegate and transfer its obligations hereunder to another of its offices, branches or affiliates, if such filing or assignment would reduce its claims for compensation under Section 2.14 or Section 2.20 or enable it to withdraw its notice pursuant to Section 2.15, as the case may be, in the future.  Each Borrower hereby agrees to pay or cause to be paid all reasonable costs and expenses incurred by any Lender in connection with any such filing or assignment, delegation and transfer.

 

Section 2.22                             Incremental Term Loans.  (a)  The Lead Borrower may, by written notice to the Administrative Agent from time to time, request that one or more Lenders (each of which shall be entitled to agree or decline to participate in its sole discretion) and/or one or more other Persons which are Eligible Assignees and which will become Lenders, provide, after the Closing Date, an increase in any existing Class of Term Loans (except as otherwise provided in this Section 2.22, which shall be on the same terms as, and become a part of, the applicable Class of Term Loans hereunder) and, subject to the terms and conditions contained in this Agreement and in the respective Incremental Term Loan Assumption Agreement, make Term Loans (“Incremental Term Loans”) of the applicable class pursuant thereto.  Such notice shall set forth (i) the amount of the Incremental Term Loan Commitments being requested (which shall be in minimum increments of $1,000,000 and a minimum amount of $5,000,000 (or such lesser amount as may be acceptable to the Administrative Agent) and (ii) the date on which such Incremental Term Loan Commitments are requested to become effective (which shall not be less than 10 Business Days nor more than 60 days after the date of such notice); provided that:

 

(b)                                 no Lender shall be obligated to provide an Incremental Term Loan Commitment as a result of any such request by the Lead Borrower, and until such time, if any, as such Lender has agreed in its sole discretion to provide an Incremental Term Loan Commitment and executed and delivered to the Administrative Agent an Incremental Term Loan Assumption

 

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Agreement as provided in clause (b) of this Section 2.22, such Lender shall not be obligated to fund any Incremental Term Loans,

 

(c)                                  any Lender (including any Eligible Assignee who will become a Lender) may so provide an Incremental Term Loan Commitment without the consent of any other Lender,

 

(d)                                 any Affiliated Lender may provide an Incremental Term Loan Commitment; provided, that such Incremental Term Loan Commitment shall be subject to the applicable restrictions in Section 9.04(f);

 

(e)                                  the aggregate principal amount of all Incremental Term Loans pursuant to this Section 2.22 at any time shall not exceed the Maximum Incremental Amount at such time;

 

(f)                                   the up-front fees and, if applicable, any unutilized commitment fees and/or other fees, payable to each Incremental Term Loan Lender in respect of each Incremental Term Loan Commitment shall be separately agreed to by the Lead Borrower and each such Incremental Term Loan Lender,

 

(g)                                  the new Incremental Term Loans shall have the same Applicable Margin as the Class of Term Loans to which such Incremental Term Loans are being added,

 

(h)                                 the new Incremental Term Loans shall have the same repayment dates as then remain with respect to the Class of Term Loans to which such new Incremental Term Loans are being added (with the amount of each repayment of Incremental Term Loans to be made by the Lead Borrower on the repayment dates to be the same (on a proportionate basis) as is theretofore applicable to the Class of Term Loans to which such Incremental Term Loans are being added, thereby increasing the amount of each then remaining repayment of the respective Class of Term Loans proportionately),

 

(i)                                     the new Incremental Term Loans shall have the same Maturity Date as the Class of Term Loans to which such Incremental Term Loans are being added,

 

(j)                                    the proceeds of all Incremental Term Loans to be made pursuant to any Incremental Term Loan Commitments shall be used only for the purposes permitted by Section 3.13,

 

(k)                                 all Incremental Term Loans shall be Obligations under this Agreement and the other applicable Loan Documents and shall be secured by the Security Documents, and guaranteed under the Guaranty, and rank pari passu in right of payment and pari passu in right of security in respect of the Collateral with the Term Loans, and

 

(l)                                     except as otherwise provided above, such Incremental Term Loans shall have the same terms as the Class of Term Loans to which such Incremental Term Loans are being added.

 

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(m)                             At the time of the provision of the Incremental Term Loan Commitments pursuant to this Section 2.22, the Lead Borrower, the Administrative Agent and each such Lender or other Eligible Assignee which agrees to provide an Incremental Term Loan Commitment (each, an “Incremental Term Lender”) shall execute and deliver to the Administrative Agent an Incremental Term Loan Assumption Agreement and such other documentation as the Administrative Agent shall reasonably specify to evidence the Incremental Term Loan Commitment of each Incremental Term Lender.  Notwithstanding the foregoing, no Incremental Term Loan Commitment shall become effective under this Section 2.22 unless on the date of such effectiveness, all Incremental Commitment Requirements are satisfied.

 

(n)                                 The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Incremental Term Loan Assumption Agreement.  Each of the parties hereto hereby agrees that, upon the effectiveness of any Incremental Term Loan Assumption Agreement, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Incremental Term Loan Commitment and the Incremental Term Loans evidenced thereby, and the Administrative Agent and the Lead Borrower may revise this Agreement to evidence such amendments.

 

(o)                                 Each of the parties hereto hereby agrees that the Administrative Agent may, in consultation with the Lead Borrower, take any and all action as may be reasonably necessary to ensure that all Incremental Term Loans, when originally made, are included in each Borrowing of outstanding Term Loans on a pro rata basis.  This may be accomplished by requiring each outstanding Eurodollar Borrowing to be converted into an ABR Borrowing on the date of each Incremental Term Loan, or by allocating a portion of each Incremental Term Loan to each outstanding Eurodollar Borrowing on a pro rata basis.  Any conversion of Eurodollar Loans to ABR Loans required by the preceding sentence shall be subject to Section 2.16.  If any Incremental Term Loan is to be allocated to an existing Interest Period for a Eurodollar Borrowing, then the interest rate thereon for such Interest Period and the other economic consequences thereof shall be as set forth in the applicable Incremental Term Loan Assumption Agreement.  In addition the scheduled amortization payments under Sections 2.11(a)(i), (ii), (iii) and (iv), as applicable, required to be made after the making of such Incremental Term Loans shall be ratably increased by the aggregate principal amount of such Incremental Term Loans and shall be further increased for all Lenders on a pro rata basis to the extent necessary to avoid any reduction in the amortization payments to which the Lenders were entitled before such recalculation.

 

Section 2.23                             New Term Loan Facility.  (a)  The Lead Borrower shall have the right to request (by written notice to the Administrative Agent), at any time after the Closing Date, that one or more Lenders (and/or one or more other Persons which are Eligible Assignees and which will become Lenders) provide New Term Loan Commitments to the Lead Borrower and, subject to the terms and conditions contained in this Agreement and in the respective New Term Loan Commitment Agreement, make Term Loans (“New Term Loans”) pursuant thereto; it being understood and agreed, however, that:

 

(b)                                 no Lender shall be obligated to provide a New Term Loan Commitment as a result of any such request by the Lead Borrower, and until such time, if any, as such Lender has

 

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agreed in its sole discretion to provide a New Term Loan Commitment and executed and delivered to the Administrative Agent and the Lead Borrower a New Term Loan Commitment Agreement as provided in clause (b) of this Section 2.23, such Lender shall not be obligated to fund any New Term Loans;

 

(c)                                  any Lender (including any Eligible Assignees who will become a Lender) may so provide a New Term Loan Commitment without the consent of any other Lender;

 

(d)                                 any Affiliated Lender may provide a New Term Loan Commitment; provided that such New Term Loan Commitment shall be subject to the applicable restrictions in Section 9.04(f);

 

(e)                                  each Class of New Term Loan Commitments, and all New Term Loans to be made pursuant thereto, shall be denominated in Dollars;

 

(f)                                   the amount of each Class of New Term Loan Commitments shall be in a minimum aggregate amount for all Lenders which provide a New Term Loan Commitment under such Class of New Term Loans (including Eligible Assignees who will become Lenders) of at least $25,000,000 (or such lower amount as may be reasonably acceptable to the Administrative Agent) and in integral multiples of $1,000,000 in excess thereof (or such other integral multiple as may be reasonably acceptable to the Administrative Agent);

 

(g)                                  the aggregate amount of all New Term Loan Commitments provided pursuant to this Section 2.23 and the aggregate principal amount of all New Term Loans to be made pursuant thereto shall not exceed the Maximum Incremental Amount at such time;

 

(h)                                 the up-front fees and, if applicable, any unutilized commitment fees and/or other fees, payable to each New Term Loan Lender in respect of each New Term Loan Commitment shall be separately agreed to by the Lead Borrower and each such New Term Loan Lender;

 

(i)                                     each Class of New Term Loans shall (A) have a Maturity Date of no earlier than the day after the Latest Maturity Date of any Class of Term Loans then existing, (B) have a Weighted Average Life to Maturity of no less than the Weighted Average Life to Maturity as then in effect for any Class of Term Loans then existing and (C) be subject to the Applicable Margins as are set forth in the New Term Loan Commitment Agreement governing such Class of New Term Loans; provided that, if the Effective Yield for any such Class of New Term Loans, determined as of the initial funding date for such Class of New Term Loans, exceeds the Effective Yield relating to any Class of Term Loans existing immediately prior to the effectiveness of the respective New Term Loan Commitment Agreement by more than 0.50%, then the Effective Yield relating to any such Class of Term Loans thereto incurred shall be adjusted to be equal to the Effective Yield (determined as provided above) relating to such Class of New Term Loans minus 0.50%;

 

(j)                                    the proceeds of all New Term Loans shall be used only for the purposes permitted by Section 3.13;

 

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(k)                                 each New Term Loan Commitment Agreement shall specifically designate the Class or Classes of the New Term Loan Commitments being provided thereunder (which Class shall be a new Class (i.e., not the same as the Initial Term Loans or any other then existing Class of Term Loans));

 

(l)                                     all New Term Loans (and all interest, fees and other amounts payable thereon) shall be Obligations under this Agreement and the other applicable Loan Documents and shall be secured by the Security Documents, and guaranteed under the Guaranty, on a pari passu basis with all other Obligations secured by the Security Documents and guaranteed under the Guaranty;

 

(m)                             each Lender (including any Eligible Assignee who will become a Lender) agreeing to provide a New Term Loan Commitment pursuant to a New Term Loan Commitment Agreement shall, subject to the satisfaction of the relevant conditions set forth in this Agreement, make New Term Loans as specified in such New Term Loan Commitment Agreement and such New Term Loans shall thereafter be deemed to be New Term Loans under such Class for all purposes of this Agreement and the other applicable Loan Documents;

 

(n)                                 except as otherwise set forth in this Section 2.23(n) or otherwise as shall be reasonably satisfactory to the Administrative Agent and the Borrower, such New Term Loan Facility shall have the same terms as the Initial Term Loan Facility; and

 

(o)                                 each New Term Loan Facility shall share ratably in any prepayments of Term Loans (unless such New Term Loan Facility agrees to participate on a less than pro rata basis in any voluntary or mandatory prepayments or repayments).

 

(p)                                 At the time of the provision of New Term Loan Commitments pursuant to this Section 2.23, the Lead Borrower, the Administrative Agent and each such Lender or other Eligible Assignee which agrees to provide a New Term Loan Commitment (each, a “New Term Loan Lender”) shall execute and deliver to the Administrative Agent a New Term Loan Commitment Agreement, with the effectiveness of the New Term Loan Commitment provided therein (and the making of the respective New Term Loans thereunder) to occur on the date set forth in such New Term Loan Commitment Agreement, which date in any event shall be no earlier than the date on which (w) all fees required to be paid in connection therewith at the time of such effectiveness shall have been paid (including, without limitation, any agreed upon up-front or arrangement fees owing to the Administrative Agent (or any affiliate thereof)), (x) all Incremental Commitment Requirements are satisfied, (y) all other conditions set forth in this Section 2.23 shall have been satisfied (or waived in writing by the Required Lenders prior to the incurrence of such New Term Loan Commitments), and (z) all other conditions precedent that may be set forth in such New Term Loan Commitment Agreement shall have been satisfied (or waived in writing by the Lenders providing such New Term Loan Commitments).  The Administrative Agent shall promptly notify each Lender as to the effectiveness of each New Term Loan Commitment Agreement, and at such time, to the extent requested by any New Term Loan Lender, new Term Notes will be issued, at the Lead Borrower’s expense, to such New Term Loan Lender in conformity with the requirements of this Agreement.

 

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(q)                                 Notwithstanding anything to the contrary contained above in this Section 2.23, the New Term Loan Commitments provided by a New Term Loan Lender or New Term Loan Lenders, as the case may be, pursuant to each New Term Loan Commitment Agreement shall constitute a new Class, which shall be separate and distinct from the existing Classes pursuant to this Agreement (with a designation which may be made in letters (i.e., A, B, C, etc.), numbers (1, 2, 3, etc.) or a combination thereof (i.e., A-1, A-2, A-3, B-1, B-2, B-3, C-1, C-2, C-3, etc.).

 

The New Term Loan Commitment Agreement may, with the consent of the Lead Borrower and the Administrative Agent, but without the consent of any other Loan Party or the Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Lead Borrower, to effect the provisions of this Section 2.23.

 

Section 2.24                             New Incremental Notes.  (a)  The Lead Borrower shall have the right, at any time after the Closing Date, upon written notice to the Administrative Agent, specifying in reasonable detail the proposed terms thereof, to issue one or more series of senior secured notes (secured by the Collateral on an equal and ratable basis with the Obligations (or secured by the Collateral on a second lien basis)) or unsecured notes (such notes, collectively, “New Incremental Notes”); it being understood and agreed, however, that:

 

(b)                                 the aggregate amount of all New Incremental Notes permitted to be issued pursuant to this Section 2.24 shall not exceed the Maximum Incremental Amount at such time;

 

(c)                                  all Incremental Commitment Requirements must be satisfied on the date of issuance of any New Incremental Notes;

 

(d)                                 such New Incremental Notes shall (A) have a Maturity Date of no earlier than 91 days after the Latest Maturity Date applicable to any Class of Term Loans then outstanding, (B) have a Weighted Average Life to Maturity of no less than the Weighted Average Life to Maturity as then in effect for any Class of Loans then existing, and (C) not be subject to any amortization prior to the final maturity thereof, or be subject to any mandatory redemption or prepayment provisions or rights (except (1) customary assets sale or change of control provisions or (2) to the extent that prepayments are made, to the extent required under the Loan Documents, first pro rata to any then existing Class of Term Loan and any senior secured first lien New Incremental Notes);

 

(e)                                  such New Incremental Notes shall rank pari passu in right of payment (subject to the applicable provisions of the intercreditor agreement referred to in clause (f) in the case of secured New Incremental Notes), have the same guarantees as the Term Loan Facilities and, if secured, be secured solely by the Collateral;

 

(f)                                   any such secured New Incremental Notes shall be issued subject to intercreditor arrangements that are reasonably satisfactory to the Administrative Agent and;

 

(g)                                  the terms and conditions of such New Incremental Notes are customary for similar debt securities in light of then-prevailing market conditions at the time of issuance

 

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and in any event are not, taken as a whole, more restrictive to the Lead Borrower and its Restricted Subsidiaries than those set forth in this Agreement (other than with respect to interest rate and redemption provisions), except for covenants and other provisions applicable only to periods after the Latest Maturity Date of any then existing Term Loan Facility that remains outstanding after giving effect to such refinancing (provided that a certificate of a financial officer of the Lead Borrower delivered to the Administrative Agent in good faith at least five (5) Business Days prior to the incurrence of such New Incremental Notes, together with a reasonably detailed description of the material terms and conditions of such New Incremental Notes or drafts of the documentation relating thereto, stating that the Lead Borrower has determined in good faith that such terms and conditions satisfy the requirement set forth in this Section 2.24, shall be conclusive evidence that such terms and conditions satisfy such requirement unless the Administrative Agent provides notice to the Lead Borrower of its objection during such five (5) Business Day period (including a reasonable description of the basis upon which it objects)).

 

(h)                                 The Lenders hereby authorize the Administrative Agent to enter into amendments to this Agreement and the other Loan Documents with the Lead Borrower as may be necessary in order to secure any New Incremental Notes with the Collateral (other than the Canadian Collateral) and/or to make such technical amendments as may be necessary or appropriate in the reasonable opinion of the Administrative Agent and the Lead Borrower in connection with the issuance of such New Incremental Notes, in each case on terms consistent with this Section 2.24.

 

Section 2.25                             Extensions of Term Loans.  (a)  Notwithstanding anything to the contrary in this Agreement, pursuant to one or more offers (each, an “Extension Offer”) made from time to time by the applicable Borrower to all Lenders of Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans, in each case with a like Maturity Date and on a pro rata basis (based on the aggregate outstanding principal amount of the respective Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans, as the case may be, with a like Maturity Date) and on the same terms to each such Lender, such Borrower is hereby permitted to consummate from time to time transactions with individual Lenders that accept the terms contained in such Extension Offers to extend the maturity date of each such Lender’s Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans with a like Maturity Date and otherwise modify the terms of such Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans pursuant to the terms of the relevant Extension Offer (including, without limitation, by increasing the interest rate or fees payable in respect of such Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans and/or modifying the amortization schedule in respect of such Lender’s Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans with a like Maturity Date) (each, an “Extension,” and each group of Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans as so extended, as well as the original Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans (in each case not so extended), being a “tranche”; any Extended Term Loans shall constitute a separate tranche of Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans from the tranche of Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans with a like Maturity Date from which they were converted), so long as the following terms are 

 

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satisfied:  (i) no Default or Event of Default shall have occurred and be continuing at the time the offering document in respect of an Extension Offer is delivered to the Lenders; (ii) except as to interest rates, fees, amortization, final maturity date, premium, required prepayment dates and participation in prepayments (which shall, subject to immediately succeeding clauses (iii), (iv) and (v), be determined by the applicable Borrower and the Extending Term Loan Lenders and set forth in the relevant Extension Offer), the Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans of any Term Loan Lender that agrees to an Extension with respect to such Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans with a like Maturity Date (an “Extending Term Loan Lender”) extended pursuant to any Extension (“Extended Term Loans”); (iii) the final maturity date of any Extended Term Loans shall be no earlier than the then Latest Maturity Date hereunder; (iv) the Weighted Average Life to Maturity of any Extended Term Loans shall be no shorter than the remaining Weighted Average Life to Maturity of the Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans extended thereby; (v) any Extended Term Loans may participate on a pro rata basis or a less than pro rata basis (but not greater than a pro rata basis) in any voluntary or mandatory repayments or prepayments hereunder, in each case as specified in the respective Extension Offer; (vi) if the aggregate principal amount of Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans (calculated on the face amount thereof), as the case may be, in respect of which Lenders shall have accepted the relevant Extension Offer shall exceed the maximum aggregate principal amount of Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans, as the case may be, offered to be extended by the applicable Borrower pursuant to such Extension Offer, then the Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans, as the case may be, of such Lenders shall be extended ratably up to such maximum amount based on the respective principal amounts (but not to exceed actual holdings of record) with respect to which such Lenders have accepted such Extension Offer; (vii) all documentation in respect of such Extension shall be consistent with the foregoing; (viii) any applicable Minimum Extension Condition shall be satisfied unless waived by the applicable Borrower and (ix) any Extended Term Loans shall be denominated in the same currency as the Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans extended thereby.

 

(b)                                 With respect to all Extensions consummated by a Borrower pursuant to this Section 2.25, (i) such Extensions shall not constitute voluntary or mandatory payments or prepayments for purposes of Sections 2.12 and 2.13 and (ii) no Extension Offer is required to be in any minimum amount or any minimum increment, provided that such Borrower may at its election specify as a condition (a “Minimum Extension Condition”) to consummating any such Extension that a minimum amount (to be determined and specified in the relevant Extension Offer in such Borrower’s sole discretion and may be waived by such Borrower) of Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans (as applicable) of any or all applicable tranches be tendered. The Administrative Agent and the Lenders hereby consent to the Extensions and the other transactions contemplated by this Section 2.25 (including, for the avoidance of doubt, payment of any interest, fees or premium in respect of any Extended Term Loans on the same terms as may be set forth in the relevant Extension Offer) and hereby waive the requirements of any provision of this Agreement (including, without limitation, Sections 2.18 and 7.02) or any other Loan Document that may otherwise prohibit any such Extension or any other transaction contemplated by this Section 2.25.

 

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(c)                                  No consent of any Lender or the Administrative Agent shall be required to effectuate any Extensions, other than the consent of each Lender agreeing to such Extension with respect to one or more of its Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans, as the case may be (or a portion thereof).  All Extended Term Loans incurred by the Lead Borrower and all obligations in respect thereof shall be Obligations under this Agreement and the other Loan Documents that are secured by the Collateral on a pari passu basis with all other applicable Obligations under this Agreement and the other Loan Documents.  Without limiting the foregoing, in connection with any Extension, the Loan Parties shall (at their expense) amend (and the Administrative Agent is hereby directed to amend) any Mortgage that has a maturity date prior to the then Latest Maturity Date so that such maturity date is extended to the then Latest Maturity Date (or such later date as may be advised by local counsel to the Administrative Agent).

 

(d)                                 In connection with any Extension, the Lead Borrower shall provide the Administrative Agent at least five (5) Business Days’ (or such shorter period as may be agreed by the Administrative Agent) prior written notice thereof, and shall agree to such procedures (including, without limitation, rendering timing, rounding and other adjustments and to ensure reasonable administrative management of the credit facilities hereunder after such Extension), if any, as may be established by, or acceptable to, the Administrative Agent, in each case acting reasonably to accomplish the purposes of this Section 2.25.

 

(e)                                  In the event that the Administrative Agent determines in its sole discretion that the allocation of Extended Term Loans of a given tranche of Extended Term Loans to a given Lender was incorrectly determined as a result of manifest administrative error in the receipt and processing of an election by such Lender to extend all or a portion of its Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans, as the case may be, timely submitted by such Lender in accordance with the procedures set forth in the applicable documentation governing such Extension, then the Administrative Agent, the applicable Borrower and such affected Lender may (and hereby are authorized to), in their sole discretion and without the consent of any other Lender, enter into an amendment to this Agreement and the other Loan Documents (each, a “Corrective Term Loan Extension Amendment”) within 15 days following the effective date of such Extension, which Corrective Term Loan Extension Amendment shall (i) provide for the conversion and extension of Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans, as the case may be, under the applicable tranche of Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans in such amount as is required to cause such Lender to hold Extended Term Loans of the applicable tranche of Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans into which such other Initial Term Loans, Incremental Term Loans, New Term Loans or Other Term Loans were initially converted, in the amount such Lender would have held had such administrative error not occurred and had such Lender received the minimum allocation of the applicable Extended Term Loans to which it was entitled under the terms of such Extension in the absence of such error, (ii) be subject to the satisfaction of such conditions as the Administrative Agent, the applicable Borrower and such Lender may agree, and (iii) effect such other amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Lead Borrower, to effect the provisions of this Section 2.25.

 

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Section 2.26                             Refinancing Amendments.  (a)  At any time after the Closing Date, the Lead Borrower may obtain, from any Lender or any additional Eligible Assignee, Credit Agreement Refinancing Indebtedness in respect of all or any portion of the Initial Term Loans, Incremental Term Loans or New Term Loans then outstanding under this Agreement (which for purposes of this clause (a) will be deemed to include any then outstanding Other Term Loans or Other Term Loan Commitments), in the form of Other Term Loans or Other Term Loan Commitments; provided that such Credit Agreement Refinancing Indebtedness (i) incurred by the Lead Borrower will rank pari passu in right of payment and of security with the other Term Loans hereunder, (ii) will have such pricing, fees, premiums, interest or optional prepayment or redemption terms as may be agreed by the applicable Borrower and the Lenders thereof, (iii) any Credit Agreement Refinancing Indebtedness in the form of Other Term Loans or Other Term Loan Commitments shall share ratably in any prepayments of Initial Term Loans, Incremental Term Loans or New Term Loans, as the case may be (unless the Other Term Loans agree to participate on a less than pro rata basis in any voluntary or mandatory prepayments or repayments) and (iv) will have terms and conditions that are substantially identical to, or (taken as a whole) less favorable to the investors providing such Credit Agreement Refinancing Indebtedness than, the Refinanced Debt; provided further that the terms and conditions applicable to such Credit Agreement Refinancing Indebtedness may provide for any additional or different financial or other covenants or other provisions that are agreed between the applicable Borrower and the Lenders thereof and applicable only during periods after the Latest Maturity Date that is in effect on the date such Credit Agreement Refinancing Indebtedness is issued, incurred or obtained.  Each Class of Credit Agreement Refinancing Indebtedness incurred under this Section 2.26 shall be in an aggregate principal amount that is (x) not less than $10,000,000 in the case of Other Term Loans and (y) an integral multiple of $1,000,000 in excess thereof. The effectiveness of any Refinancing Amendment shall be subject to the satisfaction on the date thereof of each of the conditions set forth in Section 4.01 and, to the extent reasonably requested by the Administrative Agent, receipt by the Administrative Agent of (i) legal opinions, board resolutions and officers’ certificates consistent with those delivered on the Closing Date other than changes to such legal opinion resulting from a change in law, change in fact or change to counsel’s form of opinion reasonably satisfactory to the Administrative Agent and (ii) reaffirmation agreements and/or such amendments to the Security Documents as may be reasonably requested by the Administrative Agent (including amendments to the Mortgages) in order to ensure that the Credit Agreement Refinancing Indebtedness is provided with the benefit of the applicable Loan Documents.

 

(b)                                 The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Refinancing Amendment.  Each of the parties hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Credit Agreement Refinancing Indebtedness incurred pursuant thereto (including any amendments necessary to treat the Loans and Commitments subject thereto as Other Term Loans and/or Other Term Loan Commitments).  Any Refinancing Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Lead Borrower, to effect the provisions of this Section 2.26.

 

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Section 2.27                             Lead Borrower.  Each Borrower hereby designates the Lead Borrower as its representative and agent for all purposes under the Loan Documents, including designation of interest rates, delivery or receipt of communications, preparation and delivery of financial reports, receipt and payment of Obligations, requests for waivers, amendments or other accommodations, actions under the Loan Documents (including in respect of compliance with covenants), and all other dealings with the Administrative Agent or any Lender.  The Lead Borrower hereby accepts such appointment.  The Administrative Agent and the Lenders shall be entitled to rely upon, and shall be fully protected in relying upon, any notice or communication delivered by the Lead Borrower on behalf of any Borrower.  The Administrative Agent and the Lenders may give any notice or communication with a Borrower hereunder to the Lead Borrower on behalf of such Borrower.  Each of the Administrative Agent and the Lenders shall have the right, in its discretion, to deal exclusively with the Lead Borrower for any or all purposes under the Loan Documents.  Each Borrower agrees that any notice, election, communication, representation, agreement or undertaking made on its behalf by the Lead Borrower shall be binding upon and enforceable against it.

 

ARTICLE III

 

Representations and Warranties

 

Each of Holdings and each Borrower represents and warrants to the Administrative Agent and each of the Lenders with respect to itself and its Restricted Subsidiaries, that on and as of the Closing Date and as of the date of each Borrowing hereunder (other than a continuation or conversion of a Borrowing), except if such representation or warranty refers to a specific date or period, then as of such date or for such period:

 

Section 3.01                             Organization; Powers.  Each of Holdings, each Borrower and with respect to each Borrower, each of their respective Restricted Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted, (c) is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure so to qualify could not reasonably be expected to result in a Material Adverse Effect, and (d) has the power and authority to execute, deliver and perform its obligations under each of the Loan Documents and each other agreement or instrument contemplated thereby to which it is or will be a party and, in the case of each Borrower, to borrow hereunder.

 

Section 3.02                             Authorization.  The Transactions (a) have been duly authorized by all requisite corporate and, if required, stockholder action and (b) will not (i) violate (A) any provision of law, statute, rule or regulation, or of the certificate or articles of incorporation or other constitutive documents or by-laws of Holdings, the Borrowers or with respect to each Borrower, any of their respective Restricted Subsidiaries, (B) any order of any Governmental Authority or (C) any provision of any indenture, material agreement or other material instrument to which Holdings, the Borrowers or with respect to each Borrower, any of their Restricted Subsidiaries is a party or by which any of them or any of their property is or may be bound, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or

 

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both) a default under, or give rise to any right to accelerate or to require the prepayment, repurchase or redemption of any obligation under any such indenture, material agreement or other material instrument or (iii) result in the creation or imposition of any Lien upon or with respect to any material property or assets now owned or hereafter acquired by Holdings, the Borrowers or with respect to each Borrower, any of their respective Restricted Subsidiaries (other than any Lien created under the Security Documents).

 

Section 3.03                             Enforceability.  This Agreement has been duly executed and delivered by Holdings and each Borrower and constitutes, and each other Loan Document when executed and delivered by each Loan Party thereto will constitute, a legal, valid and binding obligation of such Loan Party enforceable against such Loan Party in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditor’s rights generally or by equitable principles relating to enforceability.

 

Section 3.04                             Governmental Approvals.  No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the Transactions, except for (a) the filing of UCC financing statements (or equivalent filings) and filings with the United States Patent and Trademark Office and the United States Copyright Office, (b) recordation of the Mortgages, (c) such as have been made or obtained and are in full force and effect and (d) the filing of certain of the Loan Documents with the FCC pursuant to the requirements of the FCC’s rules and regulations.

 

Section 3.05                             Financial Statements.  The Lead Borrower has heretofore furnished to the Lenders the Historical Financial Statements.  The Historical Financial Statements present fairly the financial condition and results of operations and cash flows of the applicable Loan Parties as of such dates and for such periods.  Such balance sheets and the notes thereto disclose all material liabilities, direct or contingent, of such Loan Parties as of the dates thereof.  Such financial statements were prepared in accordance with GAAP applied on a consistent basis, subject, in the case of unaudited financial statements, to year-end audit adjustments and the absence of footnotes.

 

Section 3.06                             No Material Adverse Effect.  No event, change or condition has occurred that has had, or could reasonably be expected to have, a Material Adverse Effect since April 4, 2013.

 

Section 3.07                             Title to Properties; Possession Under Leases.  (a)  Each of the Borrowers and their respective Restricted Subsidiaries has good and marketable title to, or valid leasehold interests in, all its material properties and assets (including all Mortgaged Property), except for minor defects in title that do not interfere with its ability to conduct its business in substantially the same manner as currently conducted or to utilize such properties and assets for their intended purposes.  All such material properties and assets are free and clear of Liens, other than Liens permitted by Section 6.02.

 

(b)                                 Each of the Borrowers and their respective Restricted Subsidiaries has complied in all material respects with all material obligations under all Material Leases to which it is a party and all such leases are in full force and effect.  Each of the Borrowers and their

 

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respective Restricted Subsidiaries enjoy peaceful and undisturbed possession under all such Material Leases.

 

(c)                                  As of the Closing Date, neither Borrower has received any notice of, nor has any knowledge of, any pending or contemplated material condemnation proceeding affecting the Mortgaged Properties or any sale or disposition thereof in lieu of condemnation.

 

(d)                                 As of the Closing Date, none of the Borrowers or any of their respective Restricted Subsidiaries is obligated under any right of first refusal, option or other contractual right to sell, assign or otherwise dispose of any Mortgaged Property or any interest therein.

 

Section 3.08                             Subsidiaries.  Schedule 3.08 sets forth as of the Closing Date a list of all Subsidiaries (with an annotation to identify the Immaterial Subsidiaries) and the percentage ownership interest of Holdings or the Borrowers therein.  The shares of capital stock or other ownership interests so indicated on Schedule 3.08 are fully paid and non-assessable and are owned by Holdings or the Borrowers, directly or indirectly, free and clear of all Liens (other than Liens created under the Security Documents and after the Closing Date, Liens permitted under Section 6.02).

 

Section 3.09                             Litigation; Compliance with Laws.  (a)  Except as set forth on Schedule 3.09, there are no actions, suits or proceedings at law or in equity or by or before any Governmental Authority now pending or, to the knowledge of any Borrower, threatened against or affecting the Borrowers or any of their respective Restricted Subsidiaries or any business, property or rights of any such Person (i) that involve any Loan Document or (ii) involve the Transactions or (iii) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could, in the case of either clause (ii) or (iii), reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

(b)                                 None of the Borrowers or any of their respective Restricted Subsidiaries or any of their respective material properties or assets is in violation of, nor will the continued operation of their material properties and assets as currently conducted violate, any law, rule or regulation (including any zoning, building, Environmental Law, ordinance, code or approval or any building permits) or any restrictions of record or agreements affecting the Mortgaged Property, or is in default with respect to any judgment, writ, injunction, decree or order of any Governmental Authority, where such violation or default could reasonably be expected to result in a Material Adverse Effect.

 

(c)                                  Certificates of occupancy and permits are in effect for each Mortgaged Property as currently constructed.

 

Section 3.10                             Designation of Indebtedness.  The Obligations constitute senior indebtedness that is entitled to the benefits of the subordination provisions of any subordinated debt documents, if any, of all Indebtedness of the Borrowers and their Subsidiaries.

 

Section 3.11                             Federal Reserve Regulations.  (a)  None of Holdings, any Borrower or with respect to the Borrowers, any of their respective Restricted Subsidiaries is

 

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engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.

 

(b)                                 No part of the proceeds of any Term Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulation T, U or X.

 

Section 3.12                             Investment Company Act.  None of Holdings, any Borrower or with respect to the Borrowers, any of their respective Restricted Subsidiaries is or is required to be registered as an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

 

Section 3.13                             Use of Proceeds.  The Borrowers will (a) use the proceeds of the Initial Term Loans to consummate the Transactions and for working capital needs and general corporate purposes (including Permitted Acquisitions) of the Borrowers and their Subsidiaries, (b) use the proceeds of Incremental Term Loans only for the purposes specified in the applicable Incremental Term Loan Assumption Agreement and (c) use the proceeds of New Term Loans only for the purposes specified in the applicable New Term Loan Commitment Agreement.

 

Section 3.14                             Tax Returns.  Each of Holdings, the Borrowers and with respect to the Borrowers, their respective Restricted Subsidiaries has filed or caused to be filed all material federal, state, local and foreign Tax returns, statements, forms and reports (“Returns”) required to have been filed by it and has paid or caused to be paid all Taxes due and payable by it on such Returns, except Taxes that are being contested in good faith by appropriate proceedings and for which Holdings, the applicable Borrower or such Restricted Subsidiary, as applicable, shall have set aside on its books adequate reserves in accordance with GAAP.

 

Section 3.15                             No Material Misstatements.  None of (a) the Confidential Information Memorandum or (b) any other written information, report, financial statement, exhibit or schedule furnished by or on behalf of Holdings or the Borrowers to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto, taken as a whole, contained, contains or will contain any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not materially misleading; provided that to the extent any such information, report, financial statement, exhibit or schedule was based upon or constitutes a forecast or projection, each of Holdings and the Borrowers represents only that it acted in good faith and utilized reasonable assumptions (based upon accounting principles consistent with the historical audited financial statements of the Borrower) and due care in the preparation of such information, report, financial statement, exhibit or schedule.

 

Section 3.16                             Employee Benefit Plans.  (a)  Each Plan is in compliance with the applicable provisions of ERISA and the Code except for non-compliances which, in the aggregate, would not have a Material Adverse Effect.  Except as set forth in Schedule 3.16, no ERISA Event has occurred within the past five years or is reasonably expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to have a

 

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Material Adverse Effect.  As of the Closing Date, the present value of all benefit liabilities of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the last annual valuation dates applicable thereto, exceed the fair market value of the assets of all such underfunded Plans by an amount that has or would be expected to have a Material Adverse Effect.

 

(b)                                 Each Foreign Pension Plan is in compliance with all requirements of law applicable thereto and the respective requirements of the governing documents for such plan except for non-compliances which, in the aggregate, would not have a Material Adverse Effect.  With respect to each Foreign Pension Plan, none of Holdings, its Affiliates or any of their respective directors, officers, employees or agents has engaged in a transaction which would subject Holdings, the Borrowers or with respect to the Borrowers, their respective Restricted Subsidiaries, directly or indirectly, to a tax or civil penalty which could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.  As of the Closing Date, the present value of the aggregate accumulated benefit liabilities of all such Foreign Pension Plans (based on those assumptions used to fund each such Foreign Pension Plan) did not, as of the last annual valuation date applicable thereto, exceed the fair market value of the assets of all such underfunded Plans by an amount that has or would be expected to have a Material Adverse Effect.

 

Section 3.17                             Environmental Matters.  (a)  Except as set forth in Schedule 3.17 and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, none of the Borrowers or with respect to the Borrowers, any of their respective Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

 

(b)                                 Since the Closing Date, there has been no change in the status of the matters disclosed on Schedule 3.17 that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

 

Section 3.18                             [Reserved].

 

Section 3.19                             Security Documents.  (a) The Security Agreement, upon execution and delivery thereof by the parties thereto, will create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral and the proceeds thereof and (i) when the Pledged Collateral (as defined in the Security Agreement) is delivered to the Collateral Agent, the Lien created under the Security Agreement shall constitute a fully perfected and first priority Lien on, and security interest in, all right, title and interest of the Loan Parties in such Pledged Collateral, in each case prior and superior in right to any other Person and (ii) when financing statements and other filings in appropriate form are filed in the offices specified on Schedule 3.19(a), the Lien created under the Security Agreement with respect to the Collateral that may be perfected by filing a financing statement and other filings will constitute a fully perfected Lien on, and security interest in, all

 

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right, title and interest of the Loan Parties in such Collateral (other than trademarks, patents and copyrights subject to the Intellectual Property Security Agreements), in each case prior and superior in right to any other Person, other than with respect to Liens permitted by Section 6.02 that by operation of law or contract are prior and superior in right to the Liens securing the Obligations.

 

(b)                                 Upon the recordation of the Intellectual Property Security Agreements (or a short-form security agreement in form and substance reasonably satisfactory to the Lead Borrower and the Collateral Agent) with the United States Patent and Trademark Office and the United States Copyright Office, together with the financing statements in appropriate form filed in the offices specified on Schedule 3.19(a), the Lien created under the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the IP Collateral (as defined in the Security Agreement) in which a security interest may be perfected by filing in the United States Patent and Trademark Office and the United States Copyright Office, in each case prior and superior in right to any other Person (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on registered trademarks, patents, copyrights and related applications of the foregoing acquired by the Loan Parties after the Closing Date).

 

(c)                                  The Mortgages are effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on all of the Loan Parties’ right, title and interest in and to the Mortgaged Property thereunder and the proceeds thereof, and when the Mortgages are filed in the corresponding recording office, each of the Mortgages shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Mortgaged Property and the proceeds thereof, in each case prior and superior in right to any other Person, other than with respect to the rights of Persons pursuant to Liens permitted by Section 6.02 that by operation of law or contract are prior and superior in right to the Liens securing the Obligations and except for any Liens or encumbrances shown on title insurance policies. Notwithstanding the foregoing, the Loan Parties represent that the PR Mortgage has been duly filed and recorded in the corresponding Section of the Puerto Rico Registry of Property (except for the Deed of Amendment, which has been filed and is pending recordation in the corresponding Section of the Puerto Rico Registry of Property).

 

Section 3.20                             Location of Real Property and Leased Premises.  (a)  Schedule 3.20(a) lists completely and correctly as of the Closing Date all real property owned by the Loan Parties with a fair market value greater than $3,500,000 (each, a “Material Owned Real Property”) and the addresses thereof.  The Loan Parties own in fee all the real property set forth on Schedule 3.20(a).

 

(b)                                 Schedule 3.20(b) lists completely and correctly as of the Closing Date all real property leased by the Loan Parties that is material to the business or operations of the Loan Parties and could not be readily replaced on terms not materially less favorable to the lessee (each, a “Material Lease”) and the addresses thereof.  The Loan Parties have valid leases in all the real property set forth on Schedule 3.20(b).

 

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Section 3.21                             Labor Matters.  The hours worked by and payments made to employees of Holdings, the Borrowers and with respect to the Borrowers, their respective Restricted Subsidiaries within the past five years have not been in violation of the Fair Labor Standards Act or any other applicable federal, state, local or foreign law dealing with such matters except as could not reasonably be expected to have a Material Adverse Effect.  Except as set forth on Schedule 3.21, the consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which Holdings, the Borrowers or with respect to the Borrowers, any of their respective Restricted Subsidiaries is bound.

 

Section 3.22                             Solvency. Immediately after the consummation of the Transactions to occur on the Closing Date and immediately following the making of each Term Loan and after giving effect to the application of the proceeds of each Term Loan, Holdings and its Restricted Subsidiaries, taken as a whole, are solvent as determined by, and determined in accordance with, the Solvency Certificate.

 

Section 3.23                             [Reserved].

 

Section 3.24                             Sanctioned Persons; Sanctions Laws and Regulations.  None of Holdings, any Borrower or with respect to the Borrowers, any of their respective Restricted Subsidiaries nor, to the knowledge of any Borrower, any director, officer, agent or employee of Holdings, the Borrowers or with respect to the Borrowers, any of their respective Restricted Subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Borrowers will not directly or indirectly use the proceeds of the Term Loans or otherwise make available such proceeds to any Person, for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.  Each of Holdings, the Borrowers, and with respect to the Borrowers, each of their respective Restricted Subsidiaries is in compliance, in all material respects, with the Sanctions Laws and Regulations.

 

Section 3.25                             Foreign Corrupt Practices Act.  Each of Holdings and the Borrowers and their respective Restricted Subsidiaries and their respective directors, officers, agents, employees of Holdings and the Borrowers and their respective Restricted Subsidiaries, and any person acting for or on behalf of Holdings or the Borrowers or their respective Restricted Subsidiaries has complied with, and will comply with, the U.S. Foreign Corrupt Practices Act of 1977, as amended from time to time or any other applicable anti-bribery or anti-corruption law, and it and they have not made, offered, promised, or authorized, and will not make, offer, promise or authorize, whether directly or indirectly, any payment of anything of value to:  (a) an executive, official, employee or agent of a governmental department, agency or instrumentality, (b) a director, officer, employee or agent of a wholly or partially government-owned or -controlled company or business, (c) a political party or official thereof, or candidate for political office or (d) an executive, official, employee or agent of a public international organization (e.g., the International Monetary Fund or the World Bank) (“Government Official”) while knowing or having a reasonable belief that all or some portion will be used for the purpose of:  (i) influencing any act, decision or failure to act by a Government Official in his or her official capacity, (ii) inducing a Government Official to use his or her influence with a

 

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government or instrumentality to affect any act or decision of such government or entity or (iii) securing an improper advantage; in order to obtain, retain or direct business.

 

Section 3.26                             Intellectual Property.  Each of Holdings, the Borrowers and with respect to the Borrowers, each of their respective Restricted Subsidiaries owns or has the right to use all the patents, trademarks, domain names, service marks, trade names, copyrights, industrial designs, licenses, inventions, trade secrets, proprietary information and know-how of any type or rights with respect to any of the foregoing, and has obtained all licenses, consents and other rights of whatever nature, sufficient for the present conduct of its business, without any known conflict with the rights of others except as could not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.

 

Section 3.27                             Special Representations Relating to FCC Licenses, Etc.  (a)  The FCC Licenses include all of the material licenses, permits and other authorizations issued by the FCC to the Borrowers or their respective Restricted Subsidiaries that are necessary or required for the Borrowers and their respective Restricted Subsidiaries to conduct their business in the manner in which it is currently being conducted.  Schedule 3.27 hereto lists each material FCC License held by the Borrowers or their respective Restricted Subsidiaries as of the Closing Date (including all pending applications for renewals thereof).  With respect to each FCC License listed on Schedule 3.27 hereto, the description includes the call sign, channel or frequency, community of license, file number, the date of grant of the most recent license renewal and the license expiration date.

 

(b)                                 All material FCC Licenses held by the Borrowers and their respective Restricted Subsidiaries are in full force and effect in accordance with their terms.  Except as set forth on Schedule 3.27, as of the Closing Date, (i) neither the Borrowers nor any of their respective Restricted Subsidiaries has received any notice of apparent liability, notice of violation, order to show cause or other writing from the FCC that could reasonably be expected to result in a Material Adverse Effect, (ii) there is no proceeding pending or, to the knowledge of the Borrowers, threatened by or before the FCC relating to the Borrowers or their respective Restricted Subsidiaries that could reasonably be expected to result in a Material Adverse Effect, (iii) to the knowledge of the Borrowers, no complaint or investigation is pending or threatened by or before the FCC (other than rulemaking proceedings of general applicability to the broadcasting industry) that could reasonably be expected to result in a Material Adverse Effect.  Except as set forth in Schedule 3.27, as of the Closing Date, the Borrowers and their respective Restricted Subsidiaries have timely filed all required reports and notices with the FCC and have paid all amounts due in timely fashion on account of fees and charges to the FCC, except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

 

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ARTICLE IV

 

Conditions of Lending

 

The obligations of the Lenders to make Term Loans hereunder are subject to the satisfaction of the following conditions:

 

Section 4.01                             All Credit Events.  On the date of each Borrowing (each such event being called a “Credit Event”) (other than a conversion or a continuation of a Borrowing):

 

(a)                                 The Administrative Agent shall have received a notice of such Borrowing as required by Section 2.03.

 

(b)                                 The representations and warranties set forth in Article III and in each other Loan Document shall be true and correct in all material respects on and as of the date of such Credit Event with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, and, in the case of a Borrowing under an Incremental Facility in connection with a Permitted Acquisition, subject to the proviso in subclause (ii) in the definition of Incremental Commitment Requirements.

 

(c)                                  At the time of and immediately after such Credit Event, no Default or Event of Default shall have occurred and be continuing, and, in the case of a Borrowing under an Incremental Facility in connection with a Permitted Acquisition, subject to the proviso in subclause (i) in the definition of Incremental Commitment Requirements.

 

(d)                                 Each Credit Event shall be deemed to constitute a representation and warranty by the Borrowers and Holdings on the date of such Credit Event as to the matters specified in paragraphs (b) and (c) of this Section 4.01.

 

Section 4.02                             First Credit Event.  On the Closing Date:

 

(a)                                 The Administrative Agent shall have received, on behalf of itself and the Lenders, a favorable written opinion of (i) Paul, Weiss, Rifkind, Wharton & Garrison LLP, counsel for Holdings and the Borrowers, substantially to the effect set forth in Exhibit G-1,  (ii) each local counsel listed on Schedule 4.02(a), substantially to the effect set forth in Exhibit G-2 and (iii) FCC counsel, substantially to the effect set forth in Exhibit G-3, in each case (A) dated the Closing Date and (B) addressed to the Administrative Agent, the Lenders and the Collateral Agent, and Holdings and the Borrowers hereby request such counsel to deliver such opinions.

 

(b)                                 The Administrative Agent shall have received (i) a copy of the certificate or articles of incorporation or equivalent organizational document, including all amendments thereto, of each Loan Party, and in the case of each Loan Party, certified as of a recent date by the Secretary of State of the state of its organization, and a certificate as to the good standing of each Loan Party as of a recent date, from such Secretary of State or other applicable similar Governmental Authority; (ii) a certificate of the

 

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Secretary, Assistant Secretary or Responsible Officer of each Loan Party dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the by-laws, operating agreement or similar governing document of such Loan Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such Person is a party and, in the case of the Borrowers, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation, equivalent organizational document, by-law, operating agreement or similar governing document of such Loan Party have not been amended (in the case of the articles of incorporation of each Loan Party since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (i) above), and (D) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party; (iii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to clause (ii) above; and (iv) such other documents as the Administrative Agent may reasonably request.

 

(c)                                  The Administrative Agent, the Collateral Agent, the Joint Lead Arrangers and the Lenders shall have received all applicable Fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all out of pocket expenses required to be reimbursed or paid by the Borrowers hereunder, under the Fee Letter or under any other Loan Document.

 

(d)                                 (i) The Guaranty shall have been duly executed by each Loan Party that is to be a party thereto.  Upon the proper filing and recordation, as applicable, of financing statements and other Security Documents, the Collateral Agent, on behalf of the Secured Parties will have a perfected security interest in the Collateral of the type and priority described in each Security Document.

 

(e)                                  The Collateral Agent shall have received (i) a supplement to the Security Agreement executed by each Person that is to be a party thereto and such supplement shall be in full force and effect on the Closing Date, (ii) a Perfection Certificate with respect to the Loan Parties dated the Closing Date and duly executed by a Responsible Officer of the Lead Borrower, (iii) the results of a search of the UCC filings made with respect to the Loan Parties in the states (or other jurisdictions) of formation of such Persons, in which the chief executive officer of each such Person is located and in the other jurisdictions in which such Persons maintain property, in each case as indicated on such Perfection Certificate, together with copies of the financing statements disclosed by such search, and accompanied by evidence satisfactory to the Collateral Agent, that the Liens indicated in any such UCC would be permitted under Section 6.02 or have been or will be contemporaneously released or terminated.

 

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(f)                                   The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.02 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a customary lender’s loss payable endorsement and to name the Collateral Agent or, as applicable, the Administrative Agent as additional insured, in form and substance reasonably satisfactory to the Administrative Agent.

 

(g)                                  All principal, premium, if any, interest, fees and other amounts due or outstanding under the Existing Indebtedness shall have been paid in full, the commitments thereunder terminated and all guarantees and security in support thereof discharged and released, and the Administrative Agent shall have received reasonably satisfactory evidence thereof.  Immediately after giving effect to the Transactions and the other transactions contemplated hereby, Holdings, the Borrowers and the Restricted Subsidiaries shall have outstanding no Indebtedness or preferred stock other than (a) Indebtedness outstanding under this Agreement and (b) Indebtedness set forth on Schedule 6.01.

 

(h)                                 The Administrative Agent shall have received a Solvency Certificate from the chief financial officer of Holdings.

 

(i)                                     The Lenders shall have received at least 3 calendar days prior to the Closing Date (unless otherwise agreed by the Joint Lead Arrangers), to the extent requested by the Administrative Agent at least 5 Business Days prior to the Closing Date, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act.

 

(j)                                    The Administrative Agent shall have received the Historical Financial Statements.

 

(k)                                 The Administrative Agent shall have received pro forma consolidated financial statements of the Parent and its Subsidiaries and related pro forma consolidated statement of income of the Parent and its Subsidiaries as of and for the twelve-month period ending on the last day of the most recently completed four-Fiscal Quarter period ended at least 45 days prior to the Closing Date, prepared after giving effect to the Transaction as if the Transaction had occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such other financial statements), which need not be prepared in compliance with Regulation S-X, or include adjustments for purchase accounting.

 

(l)                                     (i) Since April 4, 2013, there shall not have occurred any Material Adverse Effect of the type set forth in clause (A) of the definition thereof and (ii) there shall not have occurred any Material Adverse Effect of the type set forth in clauses (B) and (C) of the definition thereof.

 

(m)                             The receipt of a public rating of each Term Loan Facility by each of S&P and Moody’s and (y) a public corporate rating from S&P and a public corporate family 

 

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rating from Moody’s, which ratings shall remain in full force and effect on the Closing Date.

 

ARTICLE V

 

Affirmative Covenants

 

Each of Holdings (solely as to Sections 5.01, 5.03, 5.05, 5.06, 5.10 and 5.13) and each Borrower, in respect of itself and its Restricted Subsidiaries only, covenants and agrees with each Lender that, so long as this Agreement shall remain in effect and until the Commitments have been terminated and any Loan or other Obligation (including all Fees and all other expenses or amounts payable under any Loan Document other than contingent indemnification obligations as to which no claim has been asserted and obligations and liabilities under Cash Management Obligations and Secured Hedging Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedging Bank shall have been made) hereunder have been paid in full, unless the Required Lenders shall otherwise consent in writing, each of the Borrowers will, and (except in the case of Section 5.04), the Borrowers will cause each of their respective Restricted Subsidiaries to:

 

Section 5.01                             Existence; Compliance with Laws; Businesses and Properties.  (a)  Do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence, except as otherwise expressly permitted under Section 6.05.

 

(b)                                 Do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses (including FCC Licenses (except any auxiliary FCC Licenses no longer used in the operation of the full power broadcast television stations authorized by such FCC Licenses) or foreign equivalent, as applicable), permits, franchises, authorizations, patents, copyrights, trademarks and trade names material to the conduct of its business; comply in all material respects with all material applicable laws, rules, regulations and decrees and orders of any Governmental Authority, whether now in effect or hereafter enacted; and at all times maintain and preserve all property material to the conduct of such business and keep such property in good repair, working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times.

 

(c)                                  Operate all of the Stations in material compliance with the Communications Act and the FCC’s rules, regulations and published policies promulgated thereunder and with the terms of the FCC Licenses, (ii) timely file all required reports and notices with the FCC and pay all amounts due in timely fashion on account of fees and charges to the FCC and (iii) timely file and prosecute all applications for renewal with respect to all of the FCC Licenses, except in the case of each of the foregoing clauses, where a failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

(d)                                 Maintain ownership of all FCC Licenses held by Holdings or any of its Subsidiaries, and used in the business of Holdings and its Restricted Subsidiaries in Borrowers or

 

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Subsidiary Guarantors the equity interests of which have been pledged to the Collateral Agent for the benefit of the Secured Parties.

 

Section 5.02                             Insurance.  (a)  Keep its insurable properties adequately insured at all times by financially sound and reputable insurers in such amounts as shall be customary for similar businesses and maintain such other reasonable insurance (including, to the extent consistent with past practices, self-insurance), of such types, to such extent and against such risks, as is customary with companies in the same or similar businesses and maintain such other insurance as may be required by law or any other Loan Document.

 

(b)                                 To the extent not so endorsed, cause all such policies covering any Collateral to be endorsed or otherwise amended to include a customary lender’s loss payable endorsement, in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent, which endorsement shall provide that, if the insurance carrier shall have received written notice from the Administrative Agent or the Collateral Agent of the occurrence of an Event of Default, the insurance carrier shall pay all proceeds otherwise payable to the Borrowers or the Loan Parties under such policies directly to the Collateral Agent; cause all such policies to provide that neither the Borrowers, the Administrative Agent, the Collateral Agent nor any other party shall be a coinsurer thereunder and to contain a “Replacement Cost Endorsement”, without any deduction for depreciation, and such other provisions as the Administrative Agent or the Collateral Agent may reasonably require from time to time to protect their interests; deliver original or certified copies of all such policies to the Collateral Agent; cause each such policy to provide that it shall not be cancelled, modified or not renewed (i) by reason of non-payment of premium upon not less than 10 days’ prior written notice thereof by the insurer to the Administrative Agent and the Collateral Agent (giving the Administrative Agent and the Collateral Agent the right to cure defaults in the payment of premiums) or (ii) for any other reason upon not less than 30 days’ prior written notice thereof by the insurer to the Administrative Agent and the Collateral Agent; deliver to the Administrative Agent and the Collateral Agent, prior to the cancellation, modification or non-renewal of any such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy previously delivered to the Administrative Agent and the Collateral Agent) together with evidence satisfactory to the Administrative Agent and the Collateral Agent of payment of the premium therefor.

 

(c)                                  If at any time the improvements on any Mortgaged Property are located in an area designated as (i) a “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), obtain flood insurance in such total amount as the Administrative Agent, the Collateral Agent or the Required Lenders may from time to time require, and otherwise comply with rules and regulations promulgated under the National Flood Insurance Act of 1968 and Flood Disaster Protection Act of 1973, as each may be amended from time to time, or (ii) a “Zone 1” area, obtain earthquake insurance in such total amount as the Administrative Agent, the Collateral Agent or the Required Lenders may from time to time reasonably require.

 

(d)                                 With respect to any Mortgaged Property, carry and maintain comprehensive general liability insurance including the “broad form CGL endorsement” and

 

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coverage on an occurrence basis against claims made for personal injury (including bodily injury, death and property damage) and umbrella liability insurance against any and all claims, in no event for a combined single limit of less than that which is customary for companies in the same or similar businesses operating in the same or similar locations, naming the Collateral Agent as an additional insured, on forms reasonably satisfactory to the Collateral Agent.

 

(e)                                  Notify the Administrative Agent and the Collateral Agent promptly whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 5.02 is taken out by any Loan Party; and promptly deliver to the Administrative Agent and the Collateral Agent a duplicate original copy of such policy or policies.

 

Section 5.03                             Obligations and Taxes.  Pay its material Indebtedness and other material obligations promptly and in accordance with their terms and pay and discharge promptly when due all taxes, fees, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful claims for labor, materials and supplies or otherwise that, if unpaid, might give rise to a Lien upon such properties or any part thereof; provided, however, that such payment and discharge shall not be required with respect to any such Indebtedness, obligation, tax, assessment, charge, levy or claim so long as the validity or amount thereof shall be contested in good faith by appropriate proceedings and the applicable Borrower shall have set aside on its books adequate reserves with respect thereto in accordance with GAAP and such contest operates to suspend collection of the contested obligation, tax, assessment or charge and enforcement of a Lien and, in the case of a Mortgaged Property, there is no risk of forfeiture of such property during the pendency of such contest.

 

Section 5.04                             Financial Statements, Reports, etc.  In the case of the Lead Borrower, furnish to the Administrative Agent, which shall furnish to each Lender:

 

(a)                                 within the later of (i) 90 days after the end of each fiscal year or (ii) by the date the following statements would have been required to be filed under the rules and regulations of the SEC, giving effect to any automatic extension available under Rule 12b-25 of the Securities Exchange Act of 1934 for the filing of such statements), the Parent’s statements of financial position, operations, shareholders’ equity and comprehensive income and cash flows showing the financial condition of the Parent and its consolidated Subsidiaries as of the close of such fiscal year and the results of its operations and the operations of such Subsidiaries during such year, together with comparative figures for the immediately preceding fiscal year, all audited by McGladrey LLP or other independent public accountants of recognized national standing and accompanied by an opinion of such accountants (which opinion shall be without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements fairly present the financial condition and results of operations of the Parent’s and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, together with a customary “management discussion and analysis” provision; provided that if, during the period to which such financial statements relate, the Parent 

 

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carried on any business or owned any assets with an aggregate book value of more than $2,000,000 other than the equity in Holdings, such financial statements must be prepared for the Lead Borrower and its consolidated Subsidiaries;

 

(b)                                 within the later of (i) 45 days after the end of each of the first three Fiscal Quarters of each fiscal year or (ii) by the date the following statements would have been required to be filed under the rules and regulations of the SEC, giving effect to any automatic extension available under Rule 12b-25 of the Securities Exchange Act of 1934 for the filing of such statements), the Parent’s consolidated statements of financial position, operations and cash flows showing the financial condition of the Parent and its consolidated Subsidiaries as of the close of such Fiscal Quarter and the results of its operations and the operations of such Subsidiaries during such Fiscal Quarter and the then elapsed portion of the fiscal year, and, other than with respect to quarterly reports during the remainder of the first fiscal year after the Closing Date, comparative figures for the same periods in the immediately preceding fiscal year, all certified by one of its Financial Officers as fairly presenting the financial condition and results of operations of the Parent and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments, together with a customary “management discussion and analysis” provision; provided that if, during the period to which such financial statements relate, the Parent carried on any business or owned any assets with an aggregate book value of more than $2,000,000 other than the equity in Holdings, such financial statements must be prepared for the Lead Borrower and its consolidated Subsidiaries;

 

(c)                                  concurrently with any delivery of financial statements under paragraph (a) or (b) above, a duly completed Officer’s Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Lead Borrower certifying on behalf of the Lead Borrower that, to such officer’s knowledge after due inquiry, no Default or Event of Default has occurred and is continuing or, if any Default or Event of Default has occurred and is continuing, specifying in reasonable detail the nature and extent thereof, which certificate shall (i) if delivered with the financial statements required by Section 5.04(a), set forth in reasonable detail the amount of (and the calculations required to establish the amount of) Excess Cash Flow for the respective Fiscal Year as well as the Applicable Excess Cash Flow Percentage, (ii) identify each Subsidiary of the Lead Borrower as a Restricted Subsidiary or an Unrestricted Subsidiary as of the date of delivery of such certificate or a confirmation that there is no change in such information since the later of the Closing Date and the date of the last such certificate, (iii) identify each Immaterial Subsidiary as of the date of delivery of such certificate or confirmation that there is no change in such information since the dates of the Closing Date and the date of the last such certificate, (iv) set forth in reasonable detail (and the calculations required to establish) the Cumulative Retained Excess Cash Flow Amount and the Available Amount Basket as a result of any utilizations of such Cumulative Retained Excess Cash Flow Amount since the date of the last such certificate, (v) certify that there have been no changes to the schedules to the Security Agreement since the Closing Date or, if later, since the date of the most recent certificate pursuant to this Section 5.04(c), or if there have been any such changes, provide an updated and replacement schedule

 

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reflecting such changes, and (vi) details of the adjustments to the financial statements necessary to eliminate the contribution to such accounts by any Unrestricted Subsidiary or any assets of the Parent other than the equity in Holdings;

 

(d)                                 within 90 days after the beginning of each fiscal year of the Lead Borrower, a detailed consolidated budget for such fiscal year approved by the board of Holdings (including a projected consolidated balance sheet and related statements of projected operations and cash flows as of the end of and for such fiscal year and setting forth the assumptions used for purposes of preparing such budget);

 

(e)                                  promptly after the same become publicly available, copies of, or links to copies of, all periodic and other reports, proxy statements and other materials filed by the Parent, Holdings, the Borrowers or any of their respective Restricted Subsidiaries with the SEC, or any Governmental Authority succeeding to any or all of the functions of the SEC, or with any national securities exchange, or distributed to its shareholders, as the case may be;

 

(f)                                   promptly after the receipt thereof by Holdings or the Borrowers or any of their respective subsidiaries, a copy of any final “management letter” received by any such Person from its certified public accountants and the management’s response thereto;

 

(g)                                  unless the Parent has had an earnings call with respect to such quarterly financial statements, within 30 days after the date of delivery of the quarterly financial statements pursuant to Section 5.04(b) (or such later date agreed to by the Administrative Agent in its reasonable discretion), the Lead Borrower will hold a conference call or teleconference, at a time selected by the Lead Borrower and reasonably acceptable to the Administrative Agent, with all of the Lenders that choose to participate, to review the financial results of the previous Fiscal Quarter and the financial condition of the Lead Borrower and its Subsidiaries and the budget for the current fiscal year;

 

(h)                                 promptly after the request by any Lender, all documentation and other information that such Lender reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act; and

 

(i)                                     promptly, from time to time, such other information regarding the operations, business affairs and financial condition of Holdings, the Borrowers or any of the Borrowers’ respective Restricted Subsidiaries, or compliance with the terms of any Loan Document, as the Administrative Agent or any Lender through the Administrative Agent may reasonably request.

 

Documents required to be delivered pursuant to this Section 5.04 may be delivered electronically and, if so delivered, shall be deemed to have been delivered to the Administrative Agent and the Lenders on the date on which (i) the Lead Borrower posts such documents, or provides a link thereto, on its principal publicly accessible website or (ii) such documents are posted on the Lead Borrower’s behalf on IntraLinks/IntraAgency, Syndtrak or another similar electronic system (the “Platform”); provided that the Lead Borrower shall notify

 

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the Administrative Agent of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions of such documents.

 

Section 5.05                             Litigation and Other Notices.  Furnish to the Administrative Agent and each Lender prompt written notice of the following:

 

(a)                                 any Default or Event of Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

 

(b)                                 to the extent required to be disclosed by Securities Laws:

 

(i)                                     the filing or commencement of, or any threat or notice of intention of any Person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority, against the Borrowers or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect;

 

(ii)                                  (x) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect and (y) the occurrence of any Foreign Benefit Event that, alone or together with any other Foreign Benefit Events that have occurred, could reasonably be expected to result in a Material Adverse Effect, and in each case, Holdings, the Borrowers or the applicable Restricted Subsidiary will also furnish to the Administrative Agent and each Lender a statement of its financial officer setting forth the details as to such ERISA Event(s) or Foreign Benefit Event(s) (as applicable) and the action, if any, that such entity proposes to take with respect thereto;

 

(iii)                               any development that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect; and

 

(iv)                              the occurrence of any material fraud that involves management employees who have a significant role in the internal controls over financial reporting of the Loan Parties, in each case, as described in Securities Laws;

 

(c)                                  any change in the Lead Borrower’s corporate rating by S&P, in the Lead Borrower’s corporate family rating by Moody’s or in the ratings of the Term Loan Facility by S&P or Moody’s, or any notice from either such agency indicating its intent to effect such a change or to place the Lead Borrower or the Term Loan Facility on a “CreditWatch” or “WatchList” or any similar list, in each case with negative implications, or its cessation of, or its intent to cease, rating the Lead Borrower or the Term Loan Facility;

 

(d)                                 any change in the Fiscal Year of the Parent or any of its Subsidiaries; and

 

(e)                                  any material change in the status or terms and conditions of use of any material FCC License of the Lead Borrower or any of its Restricted Subsidiaries.

 

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Section 5.06                             Information Regarding Collateral. (a) Furnish to the Administrative Agent prompt written notice of any change (i) in any Loan Party’s corporate name, (ii) in the jurisdiction of organization or formation of any Loan Party, (iii) in any Loan Party’s identity or corporate structure or (iv) in any Loan Party’s Federal Taxpayer Identification Number.  Holdings and the Borrowers agree not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for the Collateral Agent or the Administrative Agent, as applicable to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral.  Holdings and the Borrowers also agree promptly to notify the Administrative Agent if any material portion of the Collateral is damaged or destroyed.

 

(b)                                 In the case of the Lead Borrower, each year, at the time of delivery of the annual financial statements with respect to the preceding fiscal year pursuant to Section 5.04(a), deliver to the Administrative Agent a certificate of a Financial Officer setting forth the information required pursuant to Sections I(A), I(B), I(D), and II of the Perfection Certificate or confirming that there has been no change in such information since the date of the Perfection Certificate delivered on the Closing Date or the date of the most recent certificate delivered pursuant to this Section 5.06(b).

 

Section 5.07                             Maintaining Records; Access to Properties and Inspections; Maintenance of Ratings.  (a) Keep all financial records in accordance with GAAP.  Each Loan Party will, and will cause each of its subsidiaries to, permit any representatives designated by the Administrative Agent to visit and inspect the financial records and the properties of such Person at reasonable times and as often as reasonably requested and to make extracts from and copies of such financial records, and permit any representatives designated by the Administrative Agent or any Lender to discuss the affairs, finances and condition of such Person with the officers thereof and independent accountants therefor; provided that, excluding any such visits and inspections during the continuation of an Event of Default, only the Administrative Agent or its designee on behalf of the Lenders may exercise this right under this Section 5.07 and the Administrative Agent or its designee shall not exercise such rights more often than twice during any calendar year at the Lead Borrower’s expense.

 

(b)                                 Use commercially reasonable efforts to (x) maintain a public rating of Initial Term Loan Facility by each of S&P and Moody’s and (y) use commercially reasonable efforts to maintain a public corporate rating from S&P and a public corporate family rating from Moody’s, in each case in respect of the Lead Borrower (it being understood and agreed that “commercially reasonable efforts” shall in any event include the payment by the Lead Borrower of customary rating agency fees and cooperation with information and data requests by Moody’s and S&P in connection with their ratings process).

 

Section 5.08                             Use of Proceeds.  Use the proceeds of the Term Loans only for the purposes specified in Section 3.13.

 

Section 5.09                             Employee Benefits.  Except for non-compliances which, in the aggregate, would not have a Material Adverse Effect, cause any:  (a) Plans to be in compliance in all material respects with the applicable provisions of ERISA and the Code and (b) any 

 

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Foreign Pension Plans to be in compliance in all material respects with the laws applicable to any such Foreign Pension Plans.

 

Section 5.10                             Covenant to Guarantee Obligations and Give Security.  At the Lead Borrower’s expense, subject to the provisions of the Collateral and Guarantee Requirement and any applicable limitation in any Security Document, take all action necessary or reasonably requested by the Administrative Agent or the Collateral Agent to ensure that the Collateral and Guarantee Requirement continues to be satisfied, including:

 

(a)                                 (x) upon the formation or acquisition of any new direct or indirect wholly owned Material Domestic Subsidiary (in each case, other than an Unrestricted Subsidiary or an Excluded Subsidiary) by any Loan Party, the designation in accordance with Section 5.15, of any existing direct or indirect wholly owned Material Domestic Subsidiary as a Restricted Subsidiary or any Subsidiary (other than an Unrestricted Subsidiary or a Excluded Subsidiary) becoming a wholly owned Material Domestic Subsidiary, (y) upon the acquisition of any material assets by the Borrower or any Subsidiary Guarantor or (z) with respect to any Subsidiary at the time it becomes a Loan Party, for any material assets held by such Subsidiary (in each case, other than assets constituting Collateral under a Security Document that becomes subject to the Lien created by such Security Document upon acquisition thereof (without limitation of the obligations to perfect such Lien)):

 

(i)                                     within forty-five (45) days (or such greater number of days specified below) after such formation, acquisition or designation or, in each case, such longer period as the Administrative Agent may agree in its reasonable discretion:

 

(A)                               cause each such Material Domestic Subsidiary that is required to become a Subsidiary Guarantor under the Collateral and Guarantee Requirement to furnish to the Collateral Agent a description of the Material Owned Real Property owned by such Material Domestic Subsidiary in detail reasonably satisfactory to the Collateral Agent;

 

(B)                               within forty-five (45) days (or within ninety (90) days in the case of documents listed in Section 5.13(b)) after such formation, acquisition or designation, cause each such Material Domestic Subsidiary that is required to become a Subsidiary Guarantor pursuant to the Collateral and Guarantee Requirement to duly execute and deliver to the Collateral Agent Mortgages with respect to any Material Owned Real Property, Security Agreement Supplements, Intellectual Property Security Agreements, Deposit Account Control Agreements in respect of each Deposit Account (other than Excluded Accounts) maintained by such Subsidiary and other security agreements and documents (including, with respect to Mortgages, the documents listed in Section 5.13(b)), as reasonably requested by and in form and substance reasonably satisfactory to the Collateral Agent (consistent with the Mortgages,  Security Agreement, Intellectual Property Security Agreements and other Security Documents in effect on the Closing Date), in each case granting Liens required by the Collateral and Guarantee Requirement;

 

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(C)                               cause each such Material Domestic Subsidiary that is required to become a Subsidiary Guarantor pursuant to the Collateral and Guarantee Requirement to deliver any and all certificates representing Equity Interests (to the extent certificated) that are required to be pledged pursuant to the Collateral and Guarantee Requirement, accompanied by undated stock powers or other appropriate instruments of transfer executed in blank (or any other documents customary under local law) and instruments evidencing the intercompany Indebtedness held by such Material Domestic Subsidiary and required to be pledged pursuant to the Security Documents, indorsed in blank to the Collateral Agent;

 

(D)                               within forty-five (45) days (or within ninety (90) days in the case of documents listed in Section 5.13(b)) after such formation, acquisition or designation, take and cause the applicable Material Domestic Subsidiary and each direct or indirect parent of such applicable Material Domestic Subsidiary that is required to become a Subsidiary Guarantor pursuant to the Collateral and Guarantee Requirement to take whatever action (including the recording of Mortgages, the filing of Uniform Commercial Code financing statements and delivery of stock and membership interest certificates to the extent certificated) may be necessary in the reasonable opinion of the Administrative Agent to vest in the Collateral Agent (or in any representative of the Collateral Agent designated by it) valid first-priority perfected Liens required by the Collateral and Guarantee Requirement, enforceable against all third parties in accordance with their terms, except as such enforceability may be limited by Debtor Relief Laws and by general principles of equity (regardless of whether enforcement is sought in equity or at law);

 

(ii)                                  within forty-five (45) days (or within ninety (90) days in the case of documents listed in Section 5.13(b)) after the request therefor by the Administrative Agent (or such longer period as the Administrative Agent may agree in its reasonable discretion), deliver to the Administrative Agent a signed copy of an opinion, addressed to the Administrative Agent and the Lenders, of counsel for the Loan Parties reasonably acceptable to the Administrative Agent as to such matters set forth in this Section 5.10(a) as the Administrative Agent may reasonably request; and

 

(iii)                               as promptly as practicable after the reasonable request therefor by the Administrative Agent or Collateral Agent, deliver to the Collateral Agent with respect to each applicable Material Owned Real Property, title reports, surveys, environmental assessment reports, appraisals (if required under FIRREA) and flood certifications under Regulation H of the Board (together with evidence of federal flood insurance for any  such property located in a flood hazard area); provided that the Collateral Agent may in its reasonable discretion accept any such existing report or survey to the extent prepared as of a date reasonably satisfactory to the Collateral Agent; provided, however, that there shall be no obligation to deliver to the Collateral Agent any environmental assessment report whose disclosure to the Collateral Agent would require the consent of a Person other than the Borrower or one of its Restricted Subsidiaries, where, despite the

 

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commercially reasonable efforts of the Borrower to obtain such consent, such consent cannot be obtained; and

 

(b)                                 after the Closing Date, promptly after the acquisition of any Material Owned Real Property by the Borrower or any Subsidiary Guarantor, and where such Material Owned Real Property shall not already be subject to a perfected Lien pursuant to the Collateral and Guarantee Requirement, the Borrower shall give notice thereof to the Collateral Agent and will take, or cause the relevant Restricted Subsidiary to take, the actions referred to in Section 5.13(b).

 

Section 5.11                             Compliance with Environmental Laws.  Comply, and use commercially reasonable efforts to cause all lessees and other Person occupying its properties to comply, in all material respects with all Environmental Laws applicable to its operations and properties; obtain and renew all material environmental permits necessary for its operations and properties; and conduct any remedial action in accordance in all material respects with Environmental Laws; provided, however, that none of Holdings, the Borrowers or any of the Borrowers’ respective Restricted Subsidiaries shall be required to undertake any remedial action required by Environmental Laws to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

 

Section 5.12                             [Reserved].

 

Section 5.13                             Further Assurances.  Subject to the provisions of the Collateral and Guarantee Requirement and any applicable limitations in any Security Document and in each case at the expense of the Borrower:

 

(a)                                 Promptly upon reasonable request by the Administrative Agent or the Collateral Agent or as may be required by Applicable Laws (i) correct any material defect or error that may be discovered in the execution, acknowledgment, filing or recordation of any Security Document or other document or instrument relating to any Collateral and (ii) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent or Collateral Agent may reasonably request from time to time in order to carry out more effectively the purposes of the Security Documents.

 

(b)                                 In the case of any Material Owned Real Property acquired after the Closing Date by the Borrower or a Subsidiary Guarantor, provide the Collateral Agent with a Mortgage in respect of such Material Owned Real Property within ninety (90) days (or such longer period as the Administrative Agent may agree in its sole discretion) of the acquisition of such Material Owned Real Property in each case together with:

 

(ii)                                  evidence that counterparts of the Mortgages have been duly executed, acknowledged and delivered and are in form suitable for filing or recording in all filing or recording offices that the Collateral Agent may deem reasonably necessary or desirable in order to create a valid and subsisting perfected Lien on such Material Owned Real Property in favor of the Collateral Agent for the benefit of the Secured Parties and that all

 

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filing and recording taxes and fees have been paid or otherwise provided for in a manner reasonably satisfactory to the Collateral Agent;

 

(iii)                               fully paid American Land Title Association Lender’s Extended Coverage title insurance policies or the equivalent or other form available in each applicable jurisdiction (the “Mortgage Policies”) in form and substance, with endorsements available in the applicable jurisdiction and in amount, reasonably acceptable to the Collateral Agent (not to exceed the value of the real properties covered thereby), issued, coinsured and reinsured by title insurers reasonably acceptable to the Collateral Agent, insuring the Mortgages to be valid subsisting Liens on the real property described therein, subject only to Liens permitted by Section 6.02, and providing for such other affirmative insurance (including endorsements for future advances under the Loan Documents) and such coinsurance and direct access reinsurance as the Collateral Agent may reasonably request and is available at commercially reasonable rates in the applicable jurisdiction;

 

(iv)                              opinions of local counsel for the Loan Parties in states in which such Material Owned Real Property is located, with respect to the enforceability and perfection of the Mortgages and any related fixture filings in form and substance reasonably satisfactory to the Administrative Agent;

 

(v)                                 title reports, surveys and environmental assessment reports and appraisals (if required under FIRREA), flood certifications under Regulation H of the Board (together with evidence of federal flood insurance for any such property located in a flood hazard area), provided that the Administrative Agent may in its reasonable discretion accept any such existing report or survey to the extent prepared as of a date reasonably satisfactory to the Administrative Agent; provided, however, that there shall be no obligation to deliver to the Administrative Agent any environmental assessment report whose disclosure to the Administrative Agent would require the consent of a Person other than the Borrower or one of its Subsidiaries, where, despite the commercially reasonable efforts of the Borrower to obtain such consent, such consent cannot be obtained; and

 

(vi)                              such other evidence that all other actions that the Administrative Agent or Collateral Agent may reasonably deem necessary or desirable in order to create valid and subsisting Liens on the real property described in the Mortgages has been taken.

 

Section 5.14                             Maintenance of Company Separateness of Unrestricted Subsidiaries. The Lead Borrower will cause each of its Unrestricted Subsidiaries to satisfy customary company formalities, including, as applicable, (i) the holding of regular board of directors’ and shareholders’ meetings or action by directors or shareholders without a meeting, (ii) the maintenance of separate company offices and records and (iii) the maintenance of separate bank accounts in its own name. No Unrestricted Subsidiary shall take any action, or conduct its affairs in a manner, which is likely to result in its company existence being ignored, or in its assets and liabilities being substantively consolidated with those of the Borrower or any of its Restricted Subsidiaries in a bankruptcy, reorganization or other insolvency proceeding

 

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Section 5.15                             Designation of Subsidiaries.  The Lead Borrower may at any time designate or re-designate (including, any then existing or subsequently acquired or organized Subsidiary) (x) any Restricted Subsidiary of any Borrower as an Unrestricted Subsidiary or (y) any Unrestricted Subsidiary as a Restricted Subsidiary; provided that (i) immediately before and after such designation, no Default or Event of Default shall have occurred and be continuing, (ii) no Borrower may be designated as an Unrestricted Subsidiary, (iii) as of the last date of designation thereof, no Unrestricted Subsidiary shall own any Equity Interests in any Borrower or any Loan Party or hold any Indebtedness of, or Lien on any property of any Borrower or any Loan Party, (iv) the holder of any Indebtedness of any Unrestricted Subsidiary shall not have any recourse to any Borrower or any Loan Party with respect to such Indebtedness (unless such Indebtedness is otherwise permitted under Section 6.01) or (v) any Subsidiary previously designated as an Unrestricted Subsidiary may not thereafter be re-designated as an Unrestricted Subsidiary.  The designation of any subsidiary as an Unrestricted Subsidiary shall constitute an Investment by the Borrowers therein at the date of designation in an amount equal to the portion (proportionate to such Borrower’s equity interest in such subsidiary) of the fair market value of the net assets of such Subsidiary (and such designation shall only be permitted to the extent such Investment is permitted under Section 6.04).  The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the incurrence at the time of designation of any Indebtedness or Liens of such Restricted Subsidiary existing at such time.

 

Section 5.16                             Post-Closing Items.  (a) The Loan Parties shall take all necessary actions to satisfy the items described on Schedule 5.16 within the applicable periods of time specified in such Schedule (or such longer periods as the Administrative Agent may agree in its sole discretion).

 

(b)                                 In connection with each of the Mortgaged Properties, within ninety (90) days of the Closing Date (or such longer period as the Administrative Agent may reasonably allow) (i) each of the Mortgages, in form and substance reasonably satisfactory to the Administrative Agent, relating to each of the Mortgaged Properties shall have been duly executed by the parties thereto and delivered to the Collateral Agent and shall be in full force and effect; except for the Deed of Mortgage, which the Loan Parties represent has been filed and recorded in the corresponding Section of the Puerto Rico Registry of Property and the Deed of Amendment, which the Loan Parties represent has been filed and is pending recordation in the corresponding Section of the Puerto Rico Registry of Property, (ii) each of such Mortgaged Properties shall not be subject to any Lien other than those permitted under Section 6.02 and (iii) (A) each of such Mortgages shall have been filed and recorded in the corresponding recording office (except for the Deed of Mortgage, which the Loan Parties represent has been filed and recorded in the corresponding Section of the Puerto Rico Registry of Property and the Deed of Amendment which the Loan Parties represent has been filed and is pending recordation in the corresponding Section of the Puerto Rico Registry of Property) and, in connection therewith, the Collateral Agent shall have received evidence reasonably satisfactory to it of each such filing and recordation and  (B) the Collateral Agent shall have received such other documents, including a policy or policies of title insurance issued by a nationally recognized title insurance company in an amount not to exceed the fair market value of such mortgaged property (as determined in good faith by the Lead Borrower), together with such endorsements, coinsurance and reinsurance as may be reasonably requested by the Collateral Agent and the Lenders, insuring the Mortgages 

 

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as valid first liens on the Mortgaged Properties, free of Liens other than those permitted under Section 6.02, together with such flood determinations, surveys and legal opinions required to be furnished pursuant to the terms of the Mortgages or as reasonably requested by the Collateral Agent or the Administrative Agent.

 

ARTICLE VI

 

Negative Covenants

 

Each of the Borrowers covenants and agrees with each Lender that, so long as this Agreement shall remain in effect and until the Commitments have been terminated and any Loan or other Obligation (including all Fees and all other expenses or amounts payable under any Loan Document other than contingent indemnification obligations as to which no claim has been asserted and obligations and liabilities under Cash Management Obligations and Secured Hedging Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedging Bank shall have been made) hereunder have been paid in full, unless the Required Lenders shall otherwise consent in writing, (A) except with respect to Section 6.12, it shall not, nor shall it permit any of its respective Restricted Subsidiaries to, directly or indirectly and (B) with respect to Section 6.12, Holdings shall not:

 

Section 6.01                             Indebtedness.  Incur, create, assume or permit to exist any Indebtedness, except:

 

(a)                                 Indebtedness existing on the Closing Date and set forth in Schedule 6.01 and any Permitted Refinancing thereof (or successive Permitted Refinancings thereof);

 

(b)                                 Indebtedness created hereunder and under the other Loan Documents;

 

(c)                                  (i) Indebtedness of (A) any Loan Party owing to any other Loan Party (other than Holdings), (B) any Restricted Subsidiary that is not a Loan Party owing to any other Restricted Subsidiary that is not a Loan Party, and (C) any Loan Party owing to any Restricted Subsidiary which is not a Loan Party;

 

(ii) Indebtedness of any Restricted Subsidiary that is not a Loan Party owing to any Loan Party (other than Holdings) not in excess of $5,000,000;

 

(d)                                 Indebtedness of the Lead Borrower or any of its Restricted Subsidiaries incurred to finance the acquisition, construction or improvement of any fixed or capital assets, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) such Indebtedness is incurred prior to or within 180 days after such acquisition or the completion of such construction or improvement and (ii) the aggregate principal amount of Indebtedness permitted by this Section 6.01(d), when combined with the aggregate principal amount of all Capital Lease Obligations incurred pursuant to Section 6.01(e), shall not exceed the greater of (x) $7,500,000 and (y) an amount equal to 1.75% of the Consolidated Total Assets of the Lead Borrower and its Restricted Subsidiaries, at any time outstanding;

 

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(e)                                  Capital Lease Obligations in an aggregate principal amount, when combined with the aggregate principal amount of all Indebtedness incurred pursuant to Section 6.01(d), not in excess of the greater of (x) $7,500,000 and (y) an amount equal to 1.75% of the Consolidated Total Assets of the Lead Borrower and its Restricted Subsidiaries, at any time outstanding;

 

(f)                                   Indebtedness under performance bonds or with respect to workers’ compensation claims, in each case incurred in the ordinary course of business;

 

(g)                                  Indebtedness of any Person that becomes a Restricted Subsidiary after the Closing Date; provided that (i) such Indebtedness exists at the time such Persons becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Restricted Subsidiary, (ii) neither the Borrowers nor any of their respective Restricted Subsidiaries (other than such Person or any other Person that such Person merges with or that acquires the assets of such Person) shall have any liability or other obligation with respect to such Indebtedness, (iii) immediately after such Person becomes a Restricted Subsidiary, no Default or Event of Default shall have occurred and be continuing and (iv) the Total Net Leverage Ratio shall be less than or equal to 6.00:1.00, determined on a Pro Forma Basis after giving effect to such Person becoming a Restricted Subsidiary;

 

(h)                                 (i) Indebtedness representing deferred compensation or equity based compensation to current or former officers, directors, consultants advisors or employees of Holdings, the Borrowers, any of the Borrowers’ respective Restricted Subsidiaries incurred in the ordinary course of business and (ii) Indebtedness consisting of obligations of Holdings, the Borrowers or any of the Borrowers’ respective Restricted Subsidiaries under deferred compensation or other similar arrangements incurred in connection with any investments, Loans, advances, Restricted Payments or other disbursements permitted hereunder in an aggregate amount for this Section 6.01(h) not to exceed $2,000,000 outstanding at any time;

 

(i)                                     Indebtedness issued by Holdings, the Borrowers or any of the Restricted Subsidiaries to current and former officers, directors, consultants, advisors and employees of Holdings, the Borrowers, any of the Restricted Subsidiaries or any of their respective Affiliates, in lieu of or combined with cash payments to finance the purchase of Equity Interests of Holdings, the Borrowers, or any of the Restricted Subsidiaries, in each case, to the extent such purchase is otherwise permitted hereunder and in an aggregate amount not to exceed $2,000,000 in any fiscal year;

 

(j)                                    Indebtedness in respect of those Hedging Agreements incurred in the ordinary course of business and consistent with prudent business practice;

 

(k)                                 Guarantees of (i) any Loan Party in respect of Indebtedness of any Borrower or any other Subsidiary Guarantor otherwise permitted hereunder (other than Indebtedness permitted under clause (h)), (ii) any Foreign Subsidiary in respect of Indebtedness of any other Foreign Subsidiary and (iii) any Borrower or any Restricted Subsidiary in respect of Indebtedness of any Unrestricted Subsidiary, Immaterial 

 

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Subsidiary, or Foreign Subsidiary provided that the aggregate outstanding amount of Indebtedness guaranteed under this clause (iii) shall not at any time exceed $5,000,000;

 

(l)                                     Guarantees resulting from endorsement of negotiable instruments in the ordinary course of business;

 

(m)                             obligations in respect of surety, stay, customs and appeal bonds, performance bonds and performance and completion guarantees required in the ordinary course of business or in connection with the enforcement of rights or claims of the Borrower or the Subsidiaries or in connection with judgments that have not resulted in an Event of Default under Section 7.01(i);

 

(n)                                 Indebtedness in respect of netting services, overdraft protections and similar arrangements in each case in connection with cash management and deposit accounts;

 

(o)                                 Indebtedness consisting of (i) the financing of insurance premiums in the ordinary course of business or (ii) take or pay obligations contained in supply arrangements in the ordinary course of business;

 

(p)                                 Indebtedness incurred by the Borrowers or any of their respective Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance, other Indebtedness with respect to reimbursement-type obligations regarding workers compensation claims and other Indebtedness in respect of bankers’ acceptance, letter of credit, warehouse receipts or similar facilities entered into in the ordinary course of business; provided that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within five Business Days following such drawing or incurrence;

 

(q)                                 all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (a) through (p) above and (r) through (v) below;

 

(r)                                    Permitted First Priority Refinancing Debt, Permitted Second Priority Refinancing Debt and Permitted Unsecured Refinancing Debt and any Permitted Refinancing Indebtedness in respect thereof (or successive Permitted Refinancings thereof);

 

(s)                                   New Incremental Notes incurred pursuant to Section 2.24 and any Permitted Refinancing thereof (or successive Permitted Refinancings thereof);

 

(t)                                    Permitted Ratio Debt and any Permitted Refinancing thereof (or successive Permitted Refinancings thereof); provided that the amount of Indebtedness incurred under this clause (t) by Restricted Subsidiaries that are not Subsidiary 

 

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Guarantors shall not exceed the greater of $7,500,000 and 1.75% of Consolidated Total Assets of the Lead Borrower and its Restricted Subsidiaries, at any time outstanding;

 

(u)                                 other Indebtedness of the Borrowers and their respective Restricted Subsidiaries in an aggregate principal amount not exceeding the greater of (x) $7,500,000 and (y) an amount equal to 1.75% of the Consolidated Total Assets of the Lead Borrower and its Restricted Subsidiaries, at any time outstanding;

 

(v)                                 Indebtedness of Foreign Subsidiaries in an aggregate principal amount not exceeding the greater of (x) $5,000,000 and (y) an amount equal to 1.25% of the Consolidated Total Assets of the Lead Borrower and its Restricted Subsidiaries, at any time outstanding; and

 

(w)                               to the extent constituting Indebtedness, any payable owing to a Borrower or a Restricted Subsidiary by a Subsidiary permitted under Section 6.04(m); provided that (A) any such payable shall be unsecured and (B) if such payable is owed by any Loan Party, it shall be expressly subordinated to the Obligations pursuant to an Affiliate Subordination Agreement.

 

Section 6.02                             Liens.  Create, incur, assume or permit to exist any Lien on any property or assets (including Equity Interests or other securities of any Person, including any of the Lead Borrower’s Restricted Subsidiaries) now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except:

 

(a)                                 Liens on property or assets of the Borrowers and their respective Restricted Subsidiaries existing on the Closing Date and set forth in Schedule 6.02; provided that such Liens shall secure only those obligations which they secure on the Closing Date and Permitted Refinancings thereof;

 

(b)                                 any Lien created under the Loan Documents;

 

(c)                                  any Lien existing on any property or asset prior to the acquisition thereof by the Borrowers or any of their respective Restricted Subsidiaries or existing on any property or assets of any Person that becomes a Restricted Subsidiary after the Closing Date prior to the time such Person becomes a Restricted Subsidiary, as the case may be; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Restricted Subsidiary, (ii) such Lien does not apply to any other property or assets of Holdings, the Borrowers or any of the Borrowers’ respective Restricted Subsidiaries and (iii) such Lien secures only those obligations which it secures on the date of such acquisition or the date such Person becomes a Restricted Subsidiary, as the case may be;

 

(d)                                 Liens for taxes not yet due or which are being contested in compliance with Section 5.03;

 

(e)                                  Liens of landlords, laborers and employees arising by operation of law and carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens 

 

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arising in the ordinary course of business and securing obligations that are (i) not overdue for a period of more than thirty (30) days or (ii) being contested in compliance with Section 5.03;

 

(f)                                   pledges and deposits made in the ordinary course of business (i) in compliance with workmen’s compensation, unemployment insurance and other social security laws or regulations, (ii) securing insurance premiums or reimbursement obligations under insurance policies, in each case payable to insurance carriers that provide insurance to the Borrowers or any of their respective Restricted Subsidiaries or (iii) pledges that may be required under applicable foreign laws relating to claims by terminated employees and other employee claims;

 

(g)                                  deposits to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than Capital Lease Obligations), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(h)                                 (A) survey exceptions or encumbrances, zoning or other restrictions, easements or reservations, rights of others, utilities and other similar purposes, rights-of-way, restrictions on use of real property and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, do not materially interfere with the ordinary conduct of the business of the Borrowers or any of their respective Restricted Subsidiaries and (B) with respect to any Mortgaged Property, Permitted Encumbrances;

 

(i)                                     (i) leases, licenses, subleases and sublicenses (including of Intellectual Property) granted in the ordinary course of business and that do not (A) interfere in any material respect with the business of the Borrowers or any of their respective Restricted Subsidiaries or (B) secure any Indebtedness for borrowed money or (ii) the rights reserved or vested in any Person by the terms of any lease, license, franchise, grant or permit held by the Borrowers or any of their respective Restricted Subsidiaries, or by law to terminate any such lease, license, franchise, grant or permit or to require annual or periodic payments as a condition to the continuance thereof;

 

(j)                                    in the case of leased real property, liens to which the fee interest (or any superior interest) on such property is subject;

 

(k)                                 purchase money security interests in real property, improvements thereto or equipment hereafter acquired (or, in the case of improvements, constructed) by the Borrowers or any of their respective Restricted Subsidiaries; provided that (i) such security interests secure Indebtedness permitted by Sections 6.01(d) and (e), (ii) such security interests are incurred, and the Indebtedness secured thereby is created, within 180 days after such acquisition (or construction), (iii) the Indebtedness secured thereby does not exceed the lesser of the cost or the fair market value of such real property, improvements or equipment at the time of such acquisition (or construction) and (iv) such security interests do not apply to any other property or assets of the Borrowers or any of their respective Restricted Subsidiaries;

 

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(l)            judgment Liens securing judgments not constituting an Event of Default under Article VII;

 

(m)          Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;

 

(n)           Liens consisting of (i) agreements to sell any property in a Disposition permitted under Section 6.05 and (ii) earnest money deposits made by the Borrowers or any of their respective Restricted Subsidiaries in connection with any letter of intent or purchase agreement entered into in connection with an investment permitted under Section 6.04;

 

(o)           Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into by the Borrowers or any of their respective Restricted Subsidiaries in the ordinary course of business;

 

(p)           Liens deemed to exist in connection with investments in repurchase agreements permitted under Section 6.04(b);

 

(q)           Liens arising solely by virtue of any statutory or common law or customary contractual provision granted in the ordinary course of business relating to banker’s liens, rights of set-off or similar rights and remedies as to deposit or commodity trading or brokerage accounts or other funds maintained with a creditor depository institution, provided that such accounts and funds are not primarily intended by the Borrowers or their respective Restricted Subsidiaries to provide collateral to the depository institution or the commodity intermediary;

 

(r)            Liens that are contractual rights of set-off under agreements entered into with customers of the Borrowers or their respective Restricted Subsidiaries in the ordinary course of business;

 

(s)            Liens securing obligations in respect of New Incremental Notes incurred pursuant to Section 2.24 and any Permitted Refinancing thereof (or successive Permitted Refinancings thereof);

 

(t)            Liens on the Collateral securing (x) Permitted First Priority Refinancing Debt or any Permitted Refinancing thereof (or successive Permitted Refinancings thereof), and, in each case, subject to a Pari Passu Intercreditor Agreement or (y) Permitted Second Priority Refinancing Debt or any Permitted Refinancing thereof (or successive Permitted Refinancings thereof), and, in each case, subject to a Junior Lien Intercreditor Agreement;

 

(u)           other Liens securing liabilities permitted hereunder in an aggregate amount not to exceed the greater of (x) $7,500,000 and (y) an amount equal to 1.75% of the Consolidated Total Assets of the Lead Borrower and its Restricted Subsidiaries, at any time outstanding; and

 

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(v)           Liens on assets of Foreign Subsidiaries; provided that (i) such Liens do not extend to, or encumber, assets that constitute Collateral, and (ii) such Liens secure only Indebtedness, permitted by Section 6.01(v), incurred by such Foreign Subsidiary;

 

Section 6.03          Sale and Lease-back Transactions.  Enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred unless (i) the sale or transfer of such property is permitted by Section 6.05(b) and (ii) any Capital Lease Obligations or Liens arising in connection therewith are permitted by Sections 6.01 and 6.02, as the case may be.

 

Section 6.04          Investments, Loans and Advances.  Purchase, make or hold Investments, except:

 

(a)           (i) Investments by Holdings, the Borrowers and the Borrowers’ respective Restricted Subsidiaries existing on the Closing Date in the Equity Interests of the Borrowers and the Borrowers’ respective Subsidiaries; and

 

(ii) additional investments by Holdings, the Borrowers and the Borrowers’ respective Restricted Subsidiaries in the Equity Interests of the Borrowers and the Borrowers’ respective Restricted Subsidiaries after the Closing Date; provided that (A) any such Equity Interests held by a Loan Party shall be pledged pursuant to the applicable Security Agreement (subject to the limitations applicable to voting stock of a Foreign Subsidiary or a CFC Holding Company referred to therein) and (B) after giving pro forma effect to such Investment the Collateral Coverage Requirement shall be satisfied;

 

(b)           Investments in Cash Equivalents;

 

(c)           loans or advances permitted under Section 6.01(c); provided that any such loans and advances shall (A) be unsecured and (B) if such loans and advances are owed by any Loan Party, they shall be expressly subordinated to the Obligations pursuant to an Affiliate Subordination Agreement;

 

(d)           Investments (i) received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business and (ii) consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and other credits to suppliers made in the ordinary course of business;

 

(e)           the Borrowers and their respective Restricted Subsidiaries may make loans and advances in the ordinary course of business to their respective employees so long as the aggregate principal amount thereof at any time outstanding (determined without regard to any write-downs or write-offs of such loans and advances) shall not exceed $1,000,000 at any one time;

 

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(f)            the Borrowers or any of their respective Restricted Subsidiaries may acquire all or substantially all the assets of a Person or line of business of such Person or division thereof, or not less than a majority of the Equity Interests (other than directors’ qualifying shares) of a Person (referred to herein as the “Acquired Entity”); provided that (A) the Acquired Entity shall be in a line of business permitted under Section 6.08; and (B) at the time of such transaction, or in the case of clause (1) below, if earlier, solely at the time that a binding commitment with respect to such transaction becomes effective, (1) both before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, (2) the Borrowers shall comply, and shall cause the Acquired Entity to comply, with the applicable provisions of Section 5.13 and the Security Documents (3) after giving effect thereto, the Collateral Coverage Requirement shall be satisfied (4) on the date of execution of the purchase agreement in respect of such acquisition, the First Lien Net Leverage Ratio does not exceed 4.00 to 1.00 on a Pro Forma Basis for such acquisition as of the last day of the most recently ended Test Period for which financial statements have been delivered pursuant to Section 5.04 and (5) the Lead Borrower shall have delivered a certificate of a Financial Officer, certifying as to the foregoing and containing reasonably detailed calculations in support thereof, in form and substance satisfactory to the Administrative Agent and (any acquisition of assets or an Acquired Entity meeting all the criteria of this Section 6.04(f) being referred to herein as a “Permitted Acquisition”);

 

(g)           Investments by the Borrowers in Hedging Agreements permitted under Section 6.01(j);

 

(h)           bank deposits made in the ordinary course of business;

 

(i)            promissory notes and other non-cash consideration received in connection with Dispositions permitted by Section 6.05;

 

(j)            Investments in the ordinary course of business consisting of (i) endorsements for collection or deposit and (ii) customary trade arrangements with customers consistent with past practices;

 

(k)           Investments existing on the Closing Date and set forth in Schedule 6.04;

 

(l)            Investments in joint ventures in an aggregate amount not to exceed the greater of (x) $7,500,000 and (y) an amount equal to 1.75% of the Consolidated Total Assets of the Lead Borrower and its Restricted Subsidiaries, at any time outstanding;

 

(m)          to the extent constituting Investments, any receivable that is distributed by a Subsidiary to its equity holders in lieu of a cash dividend that is otherwise permitted under Section 6.06(a); provided that (i) if such Subsidiary is a Loan Party, the recipient of such distribution shall also be a Loan Party, and (ii) if such Subsidiary is a Restricted Subsidiary, the recipient of such distribution shall also be a Restricted Subsidiary or a Borrower;

 

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(n)           in addition to Investments permitted by paragraphs (a) through (m) above, so long as no Default or Event of Default then exists or would result therefrom and additional Investments by the Borrowers and their respective Restricted Subsidiaries so long as the aggregate amount Invested pursuant to this paragraph (n) (determined without regard to any write-downs or write-offs of such Investments) does not exceed (x) the greater of (i) $10,000,000 or (ii) 2.50% of Consolidated Total Assets of the Lead Borrower and its Restricted Subsidiaries at the time of the last such investment in the aggregate plus (y) the portion, if any, of the Available Amount Basket on the date of such election that the Borrower elects to apply to this clause (y), such election to be specified in a written notice of a Responsible Officer of the Lead Borrower calculating in reasonable detail the amount of Available Amount Basket immediately prior to such election and the amount thereof elected to be so applied; and

 

(o)           Investments by any Foreign Subsidiary in any other Foreign Subsidiary.

 

Section 6.05          Mergers, Consolidations and Dispositions.  (a) Wind up, liquidate, dissolve, merge into or consolidate or amalgamate with any other Person, or permit any other Person to merge into or consolidate or amalgamate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all the assets (whether now owned or hereafter acquired) of the Borrowers or less than all the Equity Interests of any Restricted Subsidiary of the Lead Borrower, except that:

 

(ii)           (A) any Restricted Subsidiary may sell, transfer, lease or otherwise dispose of all or substantially all of its assets or all of the Equity Interests of any Restricted Subsidiary (upon voluntary winding up, liquidation, dissolution or otherwise) to the Lead Borrower or to any other Restricted Subsidiary; provided that if the transferor in such a transaction is a Guarantor, then (i) the transferee must either be the Lead Borrower or a Subsidiary Guarantor and (ii) to the extent constituting an Investment, such Investment must be an Investment in or Indebtedness of a Restricted Subsidiary which is not a Loan Party permitted to be incurred in accordance with Sections 6.01 and 6.04, respectively, (B) the Borrower may sell, transfer or otherwise dispose of all or substantially all of its assets or all of the Equity Interests of any Restricted Subsidiary to any Subsidiary Guarantors, and (C) any Foreign Subsidiary may sell, transfer, lease or otherwise dispose of all or substantially all of its assets or the Equity Interests of any Restricted Subsidiary (upon voluntary winding up, liquidation, dissolution or otherwise) to the Lead Borrower, any Subsidiary Guarantor or any other Foreign Subsidiary;

 

(iii)          (I) any Restricted Subsidiary may merge, amalgamate or consolidate with or wind up, liquidate or dissolve into (i) the Lead Borrower; provided that the Lead Borrower shall be the continuing or surviving Person or the surviving Person shall expressly assume the obligations of the Lead Borrower pursuant to documents reasonably acceptable to the Administrative Agent or (ii) any one or more other Restricted Subsidiaries; provided that when any Subsidiary Guarantor or any Borrower is merging with another Restricted Subsidiary that is not a Subsidiary Guarantor (A) the Subsidiary Guarantor shall be the continuing or surviving Person, (B) to the extent constituting an Investment, such Investment must be an Investment in or Indebtedness of a Restricted 

 

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Subsidiary which is not a Loan Party permitted to be incurred in accordance with Sections 6.01 and 6.04, respectively and (C) to the extent constituting a Disposition, such Disposition must be permitted hereunder or (II) any Foreign Subsidiary may merge, amalgamate or consolidate with or wind  up, liquidate or dissolve into (i) any other Foreign Subsidiary, (ii) the Lead Borrower; provided that the Lead Borrower shall be the continuing entity or (iii) any one or more other Restricted Subsidiaries; provided that the Restricted Subsidiary shall be the continuing or surviving Person;

 

(iv)          any Subsidiary of the Lead Borrower may dissolve, liquidate or wind up its affairs at any time; provided that such dissolution, liquidation or winding up, as applicable, could not reasonably be expected to have a Material Adverse Effect; and

 

(v)           any merger, consolidation or amalgamation in connection with an Investment permitted under Section 6.04(f).

 

(b)           Make any Disposition not otherwise permitted under paragraph (a) above, except for:

 

(ii)           Dispositions of inventory, damaged, obsolete or worn out assets and scrap, in each case disposed of in the ordinary course of business;

 

(iii)          Dispositions, transfers and other distributions of equipment (A) in a transaction where such equipment is exchanged for credit against the purchase price of similar replacement equipment or (B) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement equipment;

 

(iv)          (A) Investments permitted by Section 6.04 and (B) Restricted Payments permitted by Section 6.06 (in each case other than by reference to this Section 6.05 (or any clause under this Section 6.05));

 

(v)           Dispositions of cash and Cash Equivalents;

 

(vi)          sales, Dispositions or contributions of property (A) between Loan Parties (other than Holdings), (B) between Restricted Subsidiaries (other than Loan Parties), (C) by Restricted Subsidiaries that are not Loan Parties to the Loan Parties (other than Holdings) or (D) by Loan Parties to any Restricted Subsidiary that is not a Loan Party; provided that, in the case of clause (D), (1) the portion (if any) of any such Disposition made for less than fair market value and any non-cash consideration received in exchange for any such Disposition, shall in each case constitute an Investment in such Restricted Subsidiary and (2) the value of the property Disposed must be an amount that, if treated as an Investment, would be a permitted Investment in a Restricted Subsidiary that is not a Loan Party in accordance with Section 6.04;

 

(vii)         Dispositions in the ordinary course of business consisting of abandonment, assignment or transfer of all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights that, in the 

 

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good faith determination of the Lead Borrower, are uneconomical, negligible, obsolete or otherwise not material in the conduct of its business;

 

(viii)        Dispositions of property formerly leased by the Lead Borrower or its Restricted Subsidiaries and acquired by the Lead Borrower and sold as an alternative to terminating the lease on such property;

 

(ix)          Dispositions of current assets or receivables owned by any Foreign Subsidiary, including in connection with factoring transactions or receivables financings, in the ordinary course of business;

 

(x)           the transfer or Disposition of property pursuant to sale and leaseback transactions; provided that (A) at the time thereof and immediately after giving effect thereto no Event of Default or Default shall have occurred and be continuing or would result therefrom, (B) the aggregate fair market value of all property disposed of in reliance on this clause shall not exceed $5,000,000 since the Closing Date and (C) such transaction is for consideration at least 75 % of which is cash or Cash Equivalents;

 

(xi)          (I) Casualty Events and (II) the transfer of property that is the subject of a Casualty Event upon receipt of insurance or other proceeds arising from such Casualty Event;

 

(xii)         the Disposition of investments in joint ventures to the extent required by, or made pursuant to, any buy/sell arrangement or any similar binding arrangement between joint venture parties, in each case, that is in effect on the Closing Date;

 

(xiii)        licenses or sublicenses of intellectual property in the ordinary course of business;

 

(xiv)        leases of real property in the ordinary course of business;

 

(xv)         the Borrowers and any of their respective Restricted Subsidiaries may purchase and sell inventory in the ordinary course of business;

 

(xvi)        any Disposition or series of related Dispositions having a value not to exceed $3,000,000 in any period of twelve consecutive months most recently ended;

 

(xvii)       any Disposition as to which (A) at least 75 % of the consideration is cash or consists of Cash Equivalents, (B) such consideration is at least equal to the fair market value of the assets being sold, transferred, leased or disposed of, (C) at the time of such transaction both before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing and (D) the Lead Borrower shall have delivered a certificate of a Financial Officer, certifying as to the foregoing and containing reasonably detailed calculations in support thereof, in form and substance satisfactory to the Administrative Agent; provided that the amount of:

 

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(1)           any liabilities (as shown on the Lead Borrower’s or a Restricted Subsidiary’s most recent balance sheet or in the notes thereto) of the Lead Borrower or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Obligations) that are assumed by the transferee of any such assets or that are otherwise cancelled or terminated in connection with the transaction with such transferee,

 

(2)           any notes or other obligations or other securities or assets received by the Lead Borrower or such Restricted Subsidiary from such transferee that are converted by the Borrower or such Restricted Subsidiary into cash within 180 days of the receipt thereof (to the extent of the cash received), and

 

(3)           any Designated Non-cash Consideration received by the Lead Borrower or any of its Restricted Subsidiaries in such Asset Sale having an aggregate fair market value (as determined in good faith by the Borrower), taken together with all other Designated Non-cash Consideration received pursuant to this clause (3) that is at that time outstanding, not to exceed $3,000,000 at the time of the receipt of such Designated Non-cash Consideration (with the fair market value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value), shall be deemed to be Cash Equivalents for the purposes of Section 6.05(b)(xvii)(A); and

 

(xviii)      Dispositions between or among Foreign Subsidiaries.

 

To the extent that any Collateral is sold or otherwise Disposed of as permitted by this Section 6.05(b) (other than to Holdings or any Restricted Subsidiary thereof), such Collateral shall be sold free and clear of the Liens created by the Security Documents and such Liens shall attach to the proceeds thereof, and the Administrative Agent and the Collateral Agent are hereby authorized by the Lenders to take any actions deemed appropriate in order to effect and/or evidence the foregoing.

 

Section 6.06          Restricted Payments; Restrictive Agreements. (a) Declare or make, or agree to declare or make, directly or indirectly, any Restricted Payment (including pursuant to any Synthetic Purchase Agreement), or incur any obligation (contingent or otherwise) to do so; provided, however, that:

 

(i)            any Restricted Subsidiary of the Lead Borrower may declare and pay dividends or make other distributions ratably to its equity holders,

 

(ii)           so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Lead Borrower may, or the Lead Borrower may make distributions to Holdings (and Holdings may in turn make distributions to the Parent) so that Holdings (or the Parent) may, repurchase its Equity Interests (A) owned by current and former officers, directors, consultants, advisors or employees of the Parent, Holdings, the Borrowers or the Borrowers’ respective Restricted Subsidiaries or make payments to current and former officers, directors, consultants, advisors or employees of the Parent, Holdings, the Borrowers or the Borrowers’ respective Restricted Subsidiaries (x) in connection with the exercise of stock options, stock appreciation rights 

 

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or similar equity incentives or equity based incentives pursuant to any management incentive plan, equity based compensation plan, equity subscription agreement, equity award agreement, shareholders’ or members’ agreement or other similar agreement, plan or arrangement, or (y) in connection with the retention, promotion, separation from service, death or disability of such individuals, in an aggregate amount for subclauses (x) and (y) of this clause (ii) not to exceed $1,000,000 in any fiscal year, or (B) in respect of Warrants outstanding on the Closing Date, in an aggregate amount for this subclause (B) not to exceed $5,000,000 in any fiscal year;

 

(iii)          the Lead Borrower may make Restricted Payments to Holdings (and Holdings may in turn make Restricted Payments to the Parent) in order to allow Holdings and/or the Parent to (x) pay Holdings and/or the Parent’s administrative expenses and corporate overhead, franchise fees, public company costs (including SEC fees and auditing fees) and customary director fees, (y) pay premiums and deductibles in respect of directors and officers insurance policies and excess liability policies obtained from third-party insurers, provided that, with respect to subclauses (x) and (y), during any Fiscal Year during which the Parent carried on any business other than the ownership of the equity in Holdings, the Lead Borrower may only make Restricted Payments to Holdings (and Holdings may in turn make Restricted Payments to the Parent) only in respect of those administrative expenses and corporate overhead, franchise fees, public company costs (including SEC fees and auditing fees), customary director fees and premiums and deductibles in respect of directors and officers insurance policies and excess liability policies obtained from third-party insurers reasonably determined by the Lead Borrower to be allocable to Holdings and its Subsidiaries and (z) pay Tax liabilities attributable to Holdings and its subsidiaries in an amount not to exceed the amount of such taxes that would be payable by Holdings and its subsidiaries on a stand-alone basis (if Holdings were a corporation and parent of a consolidated group including its subsidiaries), provided that (A) any payments made pursuant to this clause (z) in any period that are not otherwise deducted in calculating Consolidated Net Income shall be deducted in calculating Consolidated Net Income for such period (and shall be deemed to be a provision for taxes for purposes of calculating Excess Cash Flow for such period) and (B) all Restricted Payments made to the Parent or Holdings pursuant to this clause (iii) shall be used by Parent or Holdings, as the case may be, for the purposes specified herein within 20 days of the receipt thereof,

 

(iv)          the Borrowers and each of their respective Restricted Subsidiaries may purchase, redeem or otherwise acquire its common Equity Interests with the proceeds received from the substantially concurrent issuance of new common Equity Interests of such Person (other than any such issuance to the Borrowers or their respective Restricted Subsidiaries),

 

(v)           Holdings, the Borrowers and the Borrowers’ respective Restricted Subsidiaries may make repurchases of Equity Interests in Holdings (or any direct or indirect parent thereof), the Borrowers or any of the Borrowers’ respective Restricted Subsidiary deemed to occur upon exercise of stock options or warrants if such Equity Interests represents a portion of the exercise price of such options or warrants,

 

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(vi)          the Borrowers or any of their respective Restricted Subsidiaries may make cash payments in lieu of issuing fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests of the Borrowers or such Restricted Subsidiaries or in connection with any Permitted Acquisition, and

 

(vii)         the Lead Borrower may make other Restricted Payments to Holdings (and Holdings may in turn make such Restricted Payments to the Parent) in an amount equal to the portion, if any, of the Available Amount Basket on such date that the Lead Borrower elects to apply to this paragraph, such election to be specified in a written notice of a Responsible Officer of the Lead Borrower calculating in reasonable detail the amount of Available Amount Basket immediately prior to such election and the amount thereof elected to be so applied and including reasonably detailed calculations required to demonstrate compliance with the First Lien Net Leverage Ratio required by clause (B) below; provided, that (A) no Default or Event of Default has occurred and is continuing or would result therefrom and (B) the First Lien Net Leverage Ratio at the time of the making of the applicable Restricted Payment, calculated on a Pro Forma Basis, would be no greater than 3.75:1.00 as of the last day of the Test Period most recently ended prior to such Restricted Payment for which the financial statements and certificates required by Section 5.04(a) or 5.04(b), as the case may be, have been delivered.

 

(b)           Enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (i) the ability of Holdings, the Borrowers or any of the Borrowers’ respective Restricted Subsidiaries to create, incur or permit to exist any Lien upon any of its or their property or assets, or (ii) the ability of any Restricted Subsidiary of the Lead Borrower to pay dividends or other distributions with respect to any of its Equity Interests or to make or repay loans or advances to the Borrowers or any other Restricted Subsidiary or to Guarantee Indebtedness of the Borrowers or any other Restricted Subsidiary; provided that (A) the foregoing shall not apply to restrictions and conditions imposed by law or by any Loan Document, any documents relating to any New Incremental Notes, any documents relating to any Extension, any documents relating to any Permitted Ratio Debt, any Credit Agreement Refinancing Indebtedness and any Subordinated Indebtedness and any refinancing of any of the foregoing, (B) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Restricted Subsidiary pending such sale, provided such restrictions and conditions apply only to the Restricted Subsidiary that is to be sold and such sale is permitted hereunder, (C) the foregoing shall not apply to restrictions and conditions imposed on any Foreign Subsidiary by the terms of any Indebtedness of such Foreign Subsidiary permitted to be incurred hereunder and (D) clause (i) of the foregoing shall not apply to (w) restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, (x) customary provisions in leases and other contracts restricting the assignment thereof,(y) restrictions and conditions existing on the Closing Date and identified on Schedule 6.06 (but shall apply to any amendment or modification expanding the scope of any such restriction or condition) and (z) restrictions and conditions contained in documents relating to Indebtedness permitted to be incurred pursuant to Section 6.01(g).

 

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Section 6.07          Transactions with Affiliates.  Except for transactions between or among Loan Parties or between or among Foreign Subsidiaries, sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except the Borrowers or any of their respective Restricted Subsidiaries may (a) engage in any of the foregoing transactions in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrowers or such Restricted Subsidiaries than could be obtained on an arm’s-length basis from unrelated third parties; (b) subject to compliance with the other terms and conditions of this Agreement, engage in any of the foregoing transactions among the Borrowers and the other Restricted Subsidiaries so long as such transactions shall be (i) in the ordinary course of business and (ii) consistent with past practices and not materially adverse to the Lenders; (c) pay customary fees payable to any directors of the Borrowers and their respective Restricted Subsidiaries and reimburse reasonable out-of-pocket costs of the directors of the Borrowers and their respective Restricted Subsidiaries; (d) enter into employment and severance arrangements with their respective officers and employees in the ordinary course of business; (e) pay customary fees and indemnities to their respective directors, officers and employees in the ordinary course of business; (f) enter into the transactions set forth on Schedule 6.07; (g) make any intercompany investments contemplated by Section 6.04; (h) enter into transactions otherwise permitted by Section 6.05(a) and Section 6.06; and (i) consummate the Transactions.

 

Section 6.08          Change in Nature of Business.  With respect to the Lead Borrower and its Restricted Subsidiaries, engage at any time in any business or business activity other than business conducted or proposed to be conducted by the Borrowers and the Restricted Subsidiaries on the Closing Date and other businesses complementary, similar or reasonably related, ancillary or incidental thereto or reasonable extensions thereof.

 

Section 6.09          Other Indebtedness and Agreements.  (a) Permit (i) any waiver, supplement, modification, amendment, termination or release of any indenture, instrument or agreement pursuant to which any Material Indebtedness (including any Permitted First Priority Refinancing Debt, any Permitted Second Priority Refinancing Debt, any Permitted Unsecured Refinancing Debt, any New Incremental Notes and any Permitted Ratio Debt) of Holdings, the Borrowers or any of the Borrowers’ respective Restricted Subsidiaries is outstanding without the prior written consent of the Administrative Agent, except (x) to the extent any of the foregoing is not adverse to the interests of the Lenders under the Loan Documents in any material respect or (y) in connection with any Permitted Refinancing of Indebtedness permitted under Section 6.01, (ii) any amendment of or change to the subordination provisions of any Subordinated Indebtedness (and the component definitions as used therein) or (iii) any waiver, supplement, modification or amendment of its certificate of incorporation, by-laws, operating, management or partnership agreement or other organizational documents to the extent any such waiver, supplement, modification or amendment would be adverse to the Lenders in any material respect.

 

(b)           (ii) Make any distribution, whether in cash, property, securities or a combination thereof, other than regular scheduled payments of principal and interest, and customary fees, premiums and indemnities as and when due (to the extent not prohibited by applicable subordination provisions), in respect of, or pay, or commit to pay, or directly or 

 

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indirectly (including pursuant to any Synthetic Purchase Agreement) redeem, repurchase, retire or otherwise acquire for consideration, or set apart any sum for the aforesaid purposes, any Junior Financing, other than in connection with (1) distributions, payments, commitments to pay, redemptions, repurchases, retirements and acquisitions for consideration in an amount equal to the portion, if any, of the Available Amount Basket on such date that the Borrowers elect to apply to this clause 6.09(b)(ii)(1), such election to be specified in a written notice of a Responsible Officer of the Lead Borrower calculating in reasonable detail the amount of Available Amount Basket immediately prior to such election and the amount thereof elected to be so applied and including reasonably detailed calculations required to demonstrate compliance with the First Lien Net Leverage Ratio required by clause (y) of the immediately succeeding proviso and (2) any Permitted Refinancing thereof; provided that (x) in the case of the foregoing clause (1), at the time of such transaction after giving effect thereto, no Default or Event of Default shall have occurred and be continuing and (y) in the case of the foregoing clause (1), the First Lien Net Leverage Ratio at the time of making such distribution, payment, commitment to pay, redemption, repurchase, retirement or acquisition for consideration, would be no greater than 3.75:1.00, calculated on a Pro Forma Basis as of the last day of the most recently ended Test Period prior to such distribution, payment, commitment to pay, redemption, repurchase, retirement or acquisition for consideration, for which the financial statements and certificates required by Section 5.04(a) or 5.04(b), as the case may be, have been delivered; or

 

(iii)          if a Default or Event of Default exists or would result therefrom, pay in cash any amount in respect of any Indebtedness or preferred Equity Interests that may at the applicable obligor’s option be paid in kind or in other securities.

 

Section 6.10          [Reserved].

 

Section 6.11          Certain Equity Securities.  Except as permitted by Section 6.01, issue any Equity Interest that is not Qualified Capital Stock.

 

Section 6.12          Holdings.  Holdings, shall not conduct, transact or otherwise engage in any material business or operations; provided, that the following shall be permitted in any event: (i) its ownership of the Equity Interests of the Lead Borrower and activities related or incidental thereto; (ii) the performance of its obligations with respect to the Loan Documents (including any Credit Agreement Refinancing Indebtedness or any Term Loan Facility), any New Incremental Notes, Subordinated Indebtedness permitted hereunder or any Permitted Ratio Debt and any Permitted Refinancing of any of the foregoing permitted in accordance with the terms of this Agreement; (iii) the consummation of the Transactions; (iv) the payment of dividends, the making of contributions to the capital of its Subsidiaries and the Guarantee of Indebtedness permitted to be incurred hereunder by any Loan Party; (v) the maintenance of its legal existence (including the ability to incur fees, costs and expenses relating to such maintenance and performance of activities relating to its employees and those of its Subsidiaries); (vi) the performing of activities in preparation for and consummating any public offering of its common stock or any other issuance or sale of its Equity Interests (other than Disqualified Stock); (vii) the participation in tax, accounting and other administrative matters as a member of the consolidated group of Parent, Holdings and the Lead Borrower, including compliance with applicable laws and legal, tax and accounting matters related thereto and 

 

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activities relating to its employees; (viii) the holding of any cash (but not operating any property); (ix) the providing of indemnification to officers, managers and directors and (x) any activities related or incidental to the foregoing.  Holdings shall not create, incur, assume or suffer to exist any Lien on any Equity Interests of the Lead Borrower and shall not incur any Indebtedness (other than in respect of Disqualified Stock, Qualified Holding Company Indebtedness, obligations pursuant to the Investment permitted by Section 6.04(k) as of the Closing Date, Indebtedness permitted by clause (ii) above or Guarantees permitted by clause (iv) above).

 

ARTICLE VII

 

Events of Default

 

Section 7.01          Events of Default.  In case of the happening of any of the following events (“Events of Default”):

 

(a)           any representation or warranty made or deemed made by Holdings, any Borrower or any other Loan Party in or in connection with any Loan Document or the borrowings hereunder, or any representation, warranty, statement or information contained in any report, certificate, financial statement or other instrument furnished in connection with or pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished by Holdings, such Borrower or such other Loan Party;

 

(b)           default shall be made in the payment of any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise;

 

(c)           default shall be made in the payment of any interest on any Loan or any Fee or any other amount (other than an amount referred to in (b) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of three Business Days;

 

(d)           default shall be made in the due observance or performance by Holdings, any Borrower or any of the Borrowers’ respective Restricted Subsidiaries of any covenant, condition or agreement contained in (i) Section 5.01(a) (with respect to any Borrower or Holdings) or 5.08 or in Article VI or (ii) Section 5.04(a), 5.04(b) or 5.05 and, in the case of clause (ii) such default shall continue unremedied for a period of 15 days;

 

(e)           default shall be made in the due observance or performance by Holdings, any Borrower or any of the Borrowers’ respective Restricted Subsidiaries of any covenant, condition or agreement contained in any Loan Document (other than those specified in (b), (c) or (d) above) and such default shall continue unremedied for a period of 30 consecutive days after the earlier of (i) notice thereof from the Administrative Agent to the Lead Borrower (which notice shall also be given at the request of any Lender) or (ii) knowledge thereof of Holdings or the Borrowers;

 

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(f)            (i) Holdings, any Borrower or any of the Borrowers’ respective Restricted Subsidiaries shall fail to pay any principal or interest, regardless of amount, due in respect of any Material Indebtedness and such failure shall continue after the applicable grace period and/or (ii) any other event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (after the applicable grace period) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (ii) shall not apply to (A) secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness or (B) obligations under any Hedging Agreement that becomes due as a result of a “Termination Event” as defined in clauses (i), (ii) or (iii) of Section 5(b) of the ISDA 2002 Master Agreement;

 

(g)           an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of Holdings, any Borrower or any of the Borrowers’ respective Restricted Subsidiaries (other than an Immaterial Subsidiary), or of a substantial part of the property or assets of Holdings, any Borrower or any of the Borrowers’ respective Restricted Subsidiaries (other than an Immaterial Subsidiary), under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Debtor Relief Laws, (ii) the appointment of a receiver, trustee, monitor, custodian, sequestrator, conservator or similar official for Holdings, any Borrower or any of the Borrowers’ respective Restricted Subsidiaries (other than an Immaterial Subsidiary) or for a substantial part of the property or assets of Holdings, any Borrower or any of the Borrowers’ respective Restricted Subsidiaries or (iii) the winding-up or liquidation of Holdings, any Borrower or any of the Borrowers’ respective Restricted Subsidiaries (other than an Immaterial Subsidiary); and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

 

(h)           Holdings, any Borrowers or any of the Borrowers’ respective Restricted Subsidiaries (other than an Immaterial Subsidiary) shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Debtor Relief Laws law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, monitor, custodian, sequestrator, conservator or similar official for Holdings, any Borrower or any of the Borrowers’ respective Restricted Subsidiaries (other than an Immaterial Subsidiary) or for a substantial part of the property or assets of Holdings, any Borrower or any of the Borrowers’ respective Restricted Subsidiaries (other than an Immaterial Subsidiary), (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take any corporate action for the purpose of effecting any of the foregoing;

 

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(i)            one or more judgments shall be rendered against Holdings, any Borrower, any of the Borrowers’ respective Restricted Subsidiaries or any combination thereof and the same shall remain undischarged for a period of 45 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of Holdings, any Borrower or any of the Borrowers’ respective Restricted Subsidiaries to enforce any such judgment and such judgment either (i) is for the payment of money in an aggregate amount in excess of $7,500,000 (to the extent not covered by insurance) or (ii) is for injunctive relief and could reasonably be expected to result in a Material Adverse Effect; provided that if Holdings, the applicable Borrower or the relevant Restricted Subsidiary shall not have received notice or been served in connection with the legal proceeding or proceedings resulting in any such judgment, such 45-consecutive-day period shall be measured from the date on which Holdings, the applicable Borrower or the relevant Restricted Subsidiary has knowledge of such judgment;

 

(j)            an ERISA Event shall have occurred that when taken together with all other such ERISA Events, could reasonably be expected to result in a Material Adverse Effect or, with respect to a Foreign Pension Plan, a Foreign Benefit Event shall have occurred that would reasonably be expected to result in a Material Adverse Effect;

 

(k)           any Guarantee under the Guaranty for any reason shall cease to be in full force and effect (other than in accordance with its terms), or any Guarantor shall deny in writing that it has any further liability under the Guaranty, as the case may be (other than as a result of the discharge of such Guarantor in accordance with the terms of the Loan Documents);

 

(l)            any security interest purported to be created by any Security Document shall cease to be, or shall be asserted by the Borrowers or any other Loan Party not to be, a valid, perfected, first priority (except as otherwise expressly provided in this Agreement, any Intercreditor Agreement or such Security Document) security interest in the securities, assets or properties covered thereby;

 

(m)          the Indebtedness under any Subordinated Indebtedness of Holdings and its Restricted Subsidiaries constituting Material Indebtedness shall cease (or any Loan Party or an Affiliate of any Loan Party shall so assert), for any reason, to be validly subordinated to the Obligations as provided in the agreements evidencing such other Subordinated Indebtedness; or

 

(n)           there shall have occurred a Change in Control; and

 

(o)           the loss of the ability to broadcast under an FCC (or foreign equivalent) license or licenses due to the revocation or termination of such FCC (or foreign equivalent) license or licenses, in each case in a manner which would reasonably be expected to have a Material Adverse Effect;

 

then, and in every such event (other than an event with respect to Holdings or any Borrower described in paragraph (g) or (h) above), and at any time thereafter during the continuance of 

 

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such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Lead Borrower, exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable law, including either or both of the following actions, at the same or different times:  (i) terminate forthwith the Commitments and (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding; and in the case of any event with respect to Holdings or any Borrower described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding.

 

Section 7.02          Application of Proceeds.  (a) After the exercise of remedies provided for in Section 7.01 (or after the Loans have automatically become immediately due and payable as set forth in the final paragraph of Section 7.01), any amounts received on account of the Obligations (including from proceeds of any sale or other disposition of all or any part of the Collateral) shall be applied by the Administrative Agent in the following order of priorities:

 

first, to pay any amounts (including fees, charges and disbursements of counsel to the Administrative Agent) then due and payable to the Administrative Agent in its capacity as such pursuant to Sections 2.05 and 9.05;

 

second, to pay ratably all interest (including post-petition interest (as defined in the Security Agreement)) on the Obligations, until payment in full of all such interest and fees shall have been made;

 

third, to pay the unpaid principal of the Obligations ratably, until payment in full of the principal of all Obligations shall have been made;

 

fourth, to pay all other Obligations ratably, until payment in full of all such other Obligations shall have been made; and

 

finally, to pay to the applicable Borrower or the relevant Loan Party, or as a court of competent jurisdiction may direct, any surplus then remaining (including from the proceeds of the Collateral owned by it);

 

provided that notwithstanding anything to the contrary in this Agreement or any other Loan Document, in no circumstances shall proceeds of any Collateral constituting an asset of a Loan Party which is not a Qualified ECP Guarantor be applied towards the payment of any Obligations under Secured Hedging Agreements. The Administrative Agent may make such distributions hereunder in cash or in kind or, on a ratable basis, in any combination thereof.

 

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(b)           The Administrative Agent and the Collateral Agent may in their respective discretion to maximize the overall recovery to the Lenders, subject to clause (c)(ii) below, to the extent amounts to be applied pursuant to this Section 7.02 consist of amounts from a Loan Party (whether as a result of a payment under a Guarantee provided by such Loan Party, any realization on the Collateral of such Loan Party, any setoff rights in respect of such Loan Party, any distribution in connection with any proceedings or other action of such Loan Party in respect of Debtor Relief Laws or otherwise), apply such amounts in accordance with the foregoing clauses first, second, third and fourth.

 

(c)           In making the payments and allocations required by this Section 7.02, the Administrative Agent will be entitled to rely on information from (i) its own records for information as to the Administrative Agent and the Lenders (the “Lender Parties”), their Obligations and actions taken by them, (ii) any Lender Party for information as to its Obligations and actions taken by it, to the extent that the Administrative Agent has not obtained such information from its own records, and (iii) the Borrowers, to the extent that the Administrative Agent has not obtained information from the foregoing sources.  All distributions made by the Administrative Agent pursuant to this Section 7.02 shall be final (except in the event of manifest error) and the Administrative Agent shall have no duty to inquire as to the application by any Lender Party of any amount distributed to it.

 

ARTICLE VIII

 

The Administrative Agent and the Collateral Agent; etc.

 

Each Lender (including in its capacities as a potential Cash Management Bank in respect of Cash Management Obligations and/or a potential Hedging Bank party to a Secured Hedging Agreement) hereby irrevocably appoints the Administrative Agent and the Collateral Agent (for purposes of this Article VIII, the Administrative Agent and the Collateral Agent are referred to collectively as the “Agents”) its agent and authorizes the Agents to take such actions on its behalf and to exercise such powers as are delegated to such Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.  Without limiting the generality of the foregoing, the Agents are hereby expressly authorized to (i) execute any and all documents (including releases) with respect to the Collateral and the rights of the Secured Parties with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the Security Documents and (ii) negotiate, enforce or the settle any claim, action or proceeding affecting the Lenders in their capacity as such, at the direction of the Required Lenders, which negotiation, enforcement or settlement will be binding upon each Lender.

 

In the event of a foreclosure by the Collateral Agent or the Administrative Agent on any of the Collateral pursuant to a public or private sale, the Administrative Agent, the Collateral Agent or any Lender (or any person nominated by them) may be the purchaser of any or all of such Collateral at any such sale and the Administrative Agent, as agent for and representative of the Lenders (but not any Lender or Lenders in its or their respective individual capacities unless the Required Lenders shall otherwise agree in writing), shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion 

 

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of the Collateral sold in any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any Collateral payable by the Collateral Agent or the Administrative Agent at such sale. This provision is for the sole benefit of the Lenders and shall not afford any right to, or constitute a defense available to, any Loan Party

 

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrowers) shall be entitled and empowered, by intervention in such proceeding or otherwise:

 

(a)           to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due to the Lenders and the Administrative Agent under Sections 2.05 and 9.05) allowed in such judicial proceeding; and

 

(b)           to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same.

 

Any custodian, receiver, assignee, trustee, monitor, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Agents and their respective agents and counsel, and any other amounts due the Administrative Agent under Sections 2.05 and 9.05.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

 

The Administrative Agent may execute any of its duties and exercise its rights and powers under this Agreement or any other Loan Document (including for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents or of exercising any rights and remedies thereunder) by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties.  The Administrative Agent and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct by the Administrative Agent, as determined by a final non-

 

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appealable judgment by a court of competent jurisdiction.  The exculpatory provisions of this Article VIII shall apply to any such sub agent and to the Related Parties of the Administrative Agent and any such sub agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

 

The institution serving as the Administrative Agent hereunder and/or as the Collateral Agent shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, investment banking, trust or other business with, or provide debt financing, equity capital or other services (including financial advisory services) to Holdings, the Borrowers or any Subsidiary or any Affiliate of any of the foregoing as if it were not an Agent hereunder, and may accept fees and other consideration from Holdings, the Borrowers or any Subsidiary or any Affiliate of any of the foregoing for services in connection with this Agreement and otherwise without having to account for the same to the Lenders. The term “Lenders,” “Required Lenders” or any similar terms shall, unless the context clearly indicates otherwise, include each Agent in its respective individual capacities.

 

Neither Agent shall have any duties or obligations except those expressly set forth in the Loan Documents. The duties of the Agents shall be mechanical and administrative in nature.  Without limiting the generality of the foregoing, (a) neither Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) neither Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that such Agent is instructed in writing to exercise by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08), and (c) except as expressly set forth in the Loan Documents, neither Agent shall have any duty to disclose, nor shall it be liable for the failure to disclose, any information relating to Holdings, the Borrower or any of the Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent and/or Collateral Agent or any of its Affiliates in any capacity.  If the Agents request instructions from the Required Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Loan Document, the Agents shall be entitled to refrain from such act or taking such action unless and until the Administrative Agent shall have received instructions from the Required Lenders; and neither Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08) or in the absence of its own gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).  Any assignor of a Loan or seller of a participation hereunder shall be entitled to rely conclusively on a representation of the assignee Lender or participant in the relevant Assignment and Acceptance or participation agreement, as applicable, that such assignee or purchaser is not a Disqualified Institution.  No Agent shall have any responsibility or liability for monitoring the list or identities of, or enforcing provisions relating to, Disqualified Institutions. Without limiting the foregoing, no Lender shall have any right of action whatsoever against either Agent as a result of either Agent acting or refraining from acting hereunder or 

 

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under any other Loan Document in accordance with the instructions of the Required Lenders.  Neither Agent shall be deemed to have knowledge of any Default unless and until written notice thereof is given to such Agent by Holdings, the Lead Borrower or a Lender, and neither Agent shall be responsible for or have any duty to ascertain or inquire into (i) any recital, statement, information, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness, genuineness, perfection, collectability, priority or sufficiency of any Loan Document or any other agreement, instrument, document or other writing, (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to such Agent or (vi) the financial condition of Holdings, the Borrowers or any of the Borrowers’ respective subsidiaries or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Loan Document, or the financial condition of Holdings, the Borrowers or any of the Borrowers’ subsidiaries or the existence or possible existence of any Default or Event of Default.

 

Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any resolution, notice, request, certificate, consent, statement, instrument, document, telecopier message, electronic mail message, Internet or intranet website posting, order or other writing believed by it to be genuine and to have been signed or sent by the proper Person.  Each Agent may also rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  Each Agent may consult with legal counsel (who may be counsel for the Borrowers), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

Each Agent may perform any and all its duties and exercise its rights and powers by or through its officers, directors, employees, affiliates or  any one or more sub-agents appointed by it.  Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Term Loan Facility as well as activities as Agent.

 

The Administrative Agent may resign at any time by notifying the Lenders and the Lead Borrower.  Upon any such resignation, the Required Lenders shall have the right, with the consent of the Lead Borrower (not to be unreasonably withheld or delayed, provided that the Lead Borrower’s consent shall not be required if an Event of Default then exists), to appoint a successor.  If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent which shall be (x) a bank with an office in New York, New York, or an Affiliate of any such bank or (y) a nationally recognized financial institution that is 

 

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organized under the laws of the United States or any state or district thereof.  If no successor shall have been so appointed by either the Required Lenders or the retiring Administrative Agent within 30 days after the retiring Administrative Agent gives notice of its resignation then (x) the Required Lenders shall perform all the duties of the Administrative Agent hereunder and/or under any other Loan Document until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above and (y) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents.  Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder.  The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Lead Borrower and such successor.  After the Administrative Agent’s resignation hereunder, the provisions of this Article VIII and Section 9.05 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while acting as Administrative Agent.

 

Each Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any other Loan Document, any related agreement or any document furnished hereunder or thereunder, and, except as expressly provided in this Agreement, the Agents shall not have any duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter.  Each Lender acknowledges that neither any Agent nor any Related Party has made any representation or warranty to it, and that no act by any Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Loan Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent or any Related Party to any Lender as to any matter, including whether any Agent or any Related Party has disclosed material information in their possession. Except for notices, reports and other documents expressly required to be furnished to the Lenders by any Agent herein, such Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their respective Affiliates which may come into its (or a Related Party’s) possession.

 

Notwithstanding any other provision of this Agreement or any provision of any other Loan Document, each of the Joint Lead Arrangers, the Lead Bookrunner and the Syndication Agent are named as such for recognition purposes only, and in their respective capacities as such shall have no duties, responsibilities or liabilities with respect to this Agreement or any other Loan Document; it being understood and agreed that each of the Joint 

 

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Lead Arrangers, the Lead Bookrunner and the Syndication Agent shall be entitled to all indemnification and reimbursement rights in favor of the Agents provided herein and in the other Loan Documents. Without limitation of the foregoing, none of the Joint Lead Arrangers, the Lead Bookrunner and the Syndication Agent in their respective capacities as such shall, by reason of this Agreement or any other Loan Document, have any fiduciary relationship in respect of any Lender, any Loan Party or any other Person.

 

Each Lender authorizes and directs the Collateral Agent to enter into and perform its obligations under the Security Documents for the benefit of the Lenders and the other Secured Parties.  Each Lender hereby agrees, that, except as otherwise set forth herein, any action taken by the Required Lenders in accordance with the provisions of this Agreement or the Security Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders.  The Collateral Agent is hereby authorized on behalf of all of the Lenders, without the necessity of any notice to or further consent from any Lender, from time to time prior to an Event of Default, to take any action with respect to any Collateral or Security Documents which may be necessary to perfect and maintain perfected the security interest in and liens upon the Collateral granted pursuant to the Security Documents.

 

The Lenders hereby authorize the Collateral Agent to release any Lien granted to or held by the Collateral Agent upon the Collateral as follows: (i) on all the Collateral upon termination of the Commitments and payment and satisfaction of all of the Obligations (other than inchoate indemnification obligations) at any time arising under or in respect of this Agreement or the Loan Documents or the transactions contemplated hereby or thereby, (ii) on any Collateral constituting property being sold or otherwise disposed of (to Persons other than Holdings, the Borrowers and the Subsidiaries) upon the sale or other disposition thereof in compliance with Section 6.05 or (iii) on any Collateral if approved, authorized or ratified in writing by the Required Lenders (or all of the Lenders hereunder, to the extent required by Section 9.08).  Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Collateral Agent’s authority to release particular types or items of Collateral pursuant to this Article VIII.

 

The Collateral Agent shall have no obligation whatsoever to the Lenders or to any other Person to assure that the Collateral exists or is owned by any Loan Party or is cared for, protected or insured or that the Liens granted to the Collateral Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to the Collateral Agent in this Article VIII or in any of the Security Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion, given the Collateral Agent’s own interest in the Collateral as one of the Lenders and that the Collateral Agent shall have no duty or liability whatsoever to the Lenders, except for its gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).

 

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No Cash Management Bank or Hedging Bank that obtains the benefits of Section 7.02, any Guaranty or any Collateral by virtue of the provisions hereof or of any Guaranty or Security Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents.  Notwithstanding any other provision of this Article VIII to the contrary, the Collateral Agent and the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Cash Management Obligations or Obligations arising under Secured Hedging Agreements unless the Collateral Agent and the Administrative Agent has received written notice of such Obligations, together with such supporting documentation as the Collateral Agent and the Administrative Agent may request, from the applicable Cash Management Bank or Hedging Bank, as the case may be.

 

The Administrative Agent and the Collateral Agent are authorized to enter into any Intercreditor Agreement (and any amendments, amendments and restatements, restatements or waivers of or supplements to or other modifications to, such agreements in connection with the incurrence by any Loan Party of any Indebtedness of such Loan Party that is permitted to be secured pursuant to Sections 6.01 and 6.02 of this Agreement, in order to permit such Indebtedness to be secured by a valid, perfected lien (with such priority as may be designated by such Loan Party, to the extent such priority is permitted by the Loan Documents)), and the parties hereto acknowledge that any Intercreditor Agreement (if entered into) will be binding upon them. Each Lender (a) hereby agrees that it will be bound by and will take no actions contrary to the provisions of any Intercreditor Agreement (if entered into) and (b) hereby authorizes and instructs the Administrative Agent and the Collateral Agent to enter into any Intercreditor Agreement (and any amendments, amendments and restatements, restatements or waivers of or supplements to or other modifications to, such agreements in connection with the incurrence by any Loan Party of any Indebtedness of such Loan Party that is permitted to be secured pursuant to Sections 6.01 and 6.02 of this Agreement, in order to permit such Indebtedness to be secured by a valid, perfected lien (with such priority as may be designated by such Loan Party, to the extent such priority is permitted by the Loan Documents)), and to subject the Liens on the Collateral securing the Obligations to the provisions thereof.

 

ARTICLE IX

 

Miscellaneous

 

Section 9.01          Notices; Electronic Communications.  Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by fax, as follows:

 

(a)           if to the Borrowers or Holdings, to it at c/o Hemisphere Media Group, Inc., 405 Lexington Avenue, 48th Floor, New York, NY 10174, Attention of Craig Fischer, Fax No. 212-503-2879, with a copy to Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, New York 10019, Attention:  Eric Goodison Esq., Fax No. 212-757-3990;

 

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(b)           if to the Administrative Agent, to Deutsche Bank AG New York Branch, 60 Wall Street, New York, NY 10005, Attention of Anca Trifan, Fax No. 212-797-5695, Email: anca.trifan@db.com; and

 

(c)           if to a Lender, to it at its address (or fax number) set forth on Schedule 2.01 or in the Assignment and Acceptance, Incremental Term Loan Assumption Agreement, New Term Loan Commitment Agreement or Refinancing Amendment pursuant to which such Lender shall have become a party hereto.

 

All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by fax or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01.  As agreed to among Holdings, the Borrowers, the Administrative Agent and the applicable Lenders from time to time, notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable Person provided from time to time by such Person.

 

The Borrowers hereby agree, unless directed otherwise by the Administrative Agent or unless the electronic mail address referred to below has not been provided by the Administrative Agent to the Borrowers, that it will, or will cause their Restricted Subsidiaries to, provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Loan Documents or to the Lenders under Article V, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) is or relates to a Borrowing Request or a notice pursuant to Section 2.10, (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides notice of any Default or Event of Default under this Agreement or any other Loan Document or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any Borrowing or other extension of credit hereunder (all such non-excluded communications being referred to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft medium that is properly identified in a format acceptable to the Administrative Agent to an electronic mail address as directed by the Administrative Agent.  In addition, the Borrowers agree, and agree to cause their Restricted Subsidiaries, to continue to provide the Communications to the Administrative Agent or the Lenders, as the case may be, in the manner specified in the Loan Documents but only to the extent requested by the Administrative Agent.

 

The Borrowers hereby acknowledge that (a) the Administrative Agent will make available to the Lenders materials and/or information provided by or on behalf of the Borrowers hereunder (collectively, the “Borrower Materials”) by posting the Borrower Materials on the Platform and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Borrowers or their securities) (each, a “Public Lender”).  The Borrowers hereby agree that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” 

 

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which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrowers shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrowers or their securities for purposes of United States federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.16); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Investor;” and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not marked as “Public Investor”.  Notwithstanding the foregoing, the following Borrower Materials shall be marked “PUBLIC”, unless the Borrowers notify the Administrative Agent promptly that any such document contains material non-public information:  the Loan Documents. The Borrowers acknowledge and agree that the list of Disqualified Institutions shall be deemed to be suitable for posting on a portion of the Platform designated “Public Side Information” and shall be posted on the Closing Date to all Lenders by the Administrative Agent, and thereafter all written supplements updating the list of Disqualified Institutions shall be posted all Lenders by the Administrative Agent as soon as practicable after receipt thereof from the Lead Borrower.

 

Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including United States federal and state securities laws, to make reference to Communications that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrowers or their securities for purposes of United States federal or state securities laws.

 

THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”.  NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS RELATED PARTIES WARRANTS THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM.  IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS 

 

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FOUND IN A FINAL RULING BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Loan Documents.  Each Lender agrees that receipt of notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents.  Each Lender agrees to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such e-mail address.

 

It is understood and agreed that the Administrative Agent may, in its discretion, elect to not deliver to any Lender that is a Permitted Investor, and limit the access of any such Lender to, any Communications or other information that do not consist of Borrower Materials.

 

Section 9.02          Survival of Agreement.  Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.  All covenants, agreements, representations and warranties made by the Borrowers or Holdings herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Loans, regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid and so long as the Commitments have not been terminated.  The provisions of Sections 2.14, 2.16, 2.20 and 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Lender.

 

Section 9.03          Binding Effect.  This Agreement shall become effective when it shall have been executed by the Borrowers, Holdings and the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto.

 

Section 9.04          Successors and Assigns.  (a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrowers, Holdings, the Administrative Agent, the Collateral Agent or the Lenders that 

 

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are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

 

(b)           (ii) Subject to the conditions set forth in clause (b)(ii)(A)(iii) below, any Lender may assign to one or more Eligible Assignees (other than to any Disqualified Institution or any natural person) all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it), (provided, however, that each assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any applicable Loan) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

 

(A)          the Lead Borrower; provided that no consent of the Lead Borrower shall be required (i) if an Event of Default under Section 7.01(b) or (c), or (with respect to any Borrower only) Section 7.01(g) or (h), has occurred and is continuing or (ii) if such assignment is to a Lender, an Affiliate of a Lender or a Related Fund in respect of a Lender (for purposes of clarity, it is understood that no assignment may be made to a Disqualified Institution); provided further that the Lead Borrower shall be deemed to have consented to any assignment unless it objects thereto by written notice to the Administrative Agent within ten Business Days after having received notice thereof; and

 

(B)          the Administrative Agent.

 

(iii)          Assignments shall be subject to the following additional conditions:

 

(A)          except in the case of an assignment to a Lender, an affiliate of a Lender or Related Fund or an assignment of the entire remaining amount of the assigning Lender’s Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall be in an integral multiple of, and not less than, $1,000,000 unless each of the Lead Borrower and the Administrative Agent otherwise consent; provided that simultaneous assignments by two or more Related Funds shall be combined for purposes of determining whether the minimum assignment requirement is met;

 

(B)          the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance and shall pay to the Administrative Agent a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent); and

 

(C)          the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire (in which the assignee shall designate one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Loan Parties and their Related Parties or their respective securities) will be 

 

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made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including federal and state securities laws) and all applicable tax forms required under Section 2.20.

 

(iv)          Subject to acceptance and recording pursuant to clause (iv) of this Section 9.04, from and after the effective date specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16, 2.20 and 9.05).  Any assignment or transfer by a Lender of rights or obligations under this Agreement (other than any purported assignment or transfer to a Disqualified Institution) that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (g) of this Section 9.04.

 

(v)           The Administrative Agent, acting for this purpose as an agent of the Borrowers, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans (and stated interest) owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive and the Borrowers, the Administrative Agent, the Collateral Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrowers, the Collateral Agent and any Lender, at any reasonable time and from time to time upon reasonable prior notice. This Section 9.04(b)(iv) and Section 2.04 shall be construed so that all Loans are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related Treasury regulations (or any other relevant or successor provisions of the Code or of such Treasury regulations).

 

(vi)          Upon its receipt of, and consent to, a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) above, if applicable, and the written consent of the Administrative Agent to such assignment and any applicable tax forms pursuant to Section 2.20, the Administrative Agent shall promptly (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register.  No assignment shall be effective unless it has been recorded in the Register as provided in this clause (v).

 

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(vii)         By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and that its Commitment and the outstanding balances of its Loans without giving effect to assignments thereof which have not become effective, are as set forth in such Assignment and Acceptance, (ii) except as set forth in (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto, or the financial condition of the Borrowers or any their respective Restricted Subsidiaries or the performance or observance by the Borrowers or any of their respective Restricted Subsidiaries of any of their obligations under this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is an Eligible Assignee legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in Section 3.05(a) or delivered pursuant to Section 5.04 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, the Collateral Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

 

(c)           Each Lender may without the consent of the Lead Borrower or the Administrative Agent sell participations to one or more banks or other Persons (other than to any Disqualified Institution or Holdings, the Borrowers or their respective Subsidiaries) in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); 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 participating banks or other Persons shall be entitled to the benefit of the cost protection provisions contained in Sections 2.14 and 2.16 to the same extent as if they were Lenders (but, with respect to any particular participant, to no greater extent than the Lender that sold the participation to such participant) and (iv) the Borrowers, the Administrative Agent and the Lenders 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 Borrowers relating to the Loans and to approve any amendment, modification or waiver of any 

 

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provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable to such participating bank or Person hereunder or the amount of principal of or the rate at which interest is payable on the Loans in which such participating bank or Person has an interest, extending any scheduled principal payment date or date fixed for the payment of interest on the Loans in which such participating bank or Person has an interest, increasing or extending the Commitments in which such participating bank or Person has an interest or releasing any Guarantor (other than in connection with the sale of such Guarantor in a transaction permitted by Section 6.05) or all or substantially all of the Collateral).  Each Person holding a participation pursuant to this Section 9.04(c) shall be entitled to the benefits of Section 2.20 with respect to its interest in the Commitments and the Loans outstanding from time to time as if such participant were a Lender; provided that (i) such Person shall have complied with the requirements of Section 2.20 including, without limitation, Section 2.20(f) and (g) (it being understood that the documentation required under Section 2.20(f) and (g) shall be delivered to the participating Lender) and (ii) no participant shall be entitled to receive any greater payment under Section 2.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to such participant had no such participation occurred except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation.  To the extent permitted by law, each participating bank or other Person also shall be entitled to the benefits of Section 9.06 as though it were a Lender, provided that such participating bank or other Person agrees to be subject to Section 2.18 as though it were a Lender.  Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrowers, maintain a register on which it enters the name and address of each of the participating banks or other Persons and the principal amounts (and stated interest) of each such participating bank’s or other Person’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any such participating banks or other Persons or any information relating to a participating bank’s or other Person’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

 

(d)           Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.04, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrowers furnished to such Lender by or on behalf of the Borrowers; provided that, prior to any such disclosure of information designated by the Borrowers as confidential, each such assignee or participant or proposed assignee or participant shall execute an agreement whereby such assignee or participant shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to Section 9.16.

 

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(e)           Any Lender may at any time assign all or any portion of its rights under this Agreement to secure extensions of credit to such Lender or in support of obligations owed by such Lender; provided that no such assignment shall release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto.

 

(f)            Notwithstanding anything to the contrary contained herein, (x) Holdings, the Borrowers and any of their respective Subsidiaries may, from time to time, purchase or prepay Term Loans, on a non-pro rata basis through Dutch auction procedures open to all applicable Lenders on a pro rata basis in accordance with customary procedures to be agreed between the Lead Borrower and the Administrative Agent and (y) any Lender may, at any time, assign all or a portion of its rights and obligations under this Agreement in respect of its Term Loans to an Affiliated Lender and, in each case, with respect to clauses (x) and (y) of this Section 9.04(f), without the consent of the Administrative Agent; provided that:

 

(ii)           any Term Loans acquired by Holdings, the Borrowers or any of their respective Subsidiaries shall be retired and cancelled immediately upon the acquisition thereof; provided that upon cancellation of such Term Loans the aggregate outstanding principal amount of the Term Loans shall be deemed reduced by the full par value of the aggregate principal amount of the Term Loans so cancelled, and each principal repayment installment with respect to the Term Loans pursuant to Section 2.11(a) shall be reduced pro rata by the full par value of the aggregate principal amount of Term Loans so cancelled;

 

(iii)          any Term Loans acquired by any Affiliated Lender may (but shall not be required to) be contributed to Holdings or any of its Subsidiaries for purposes of cancellation of such Indebtedness (it being understood that such Term Loans shall be retired and cancelled promptly upon such contribution); provided that upon cancellation of such Term Loans, the aggregate outstanding principal amount of the Term Loans shall be deemed reduced, as of the date of such contribution by the full par value of the aggregate principal amount of the Term Loans so contributed and cancelled, and each principal repayment installment with respect to the Term Loans pursuant to Section 2.11(a) shall be reduced pro rata by the full par value of the aggregate principal amount of Term Loans so contributed and cancelled;

 

(iv)          in connection with any Dutch auction, the Lead Borrower shall provide, as of the date of the effectiveness of such purchase, a customary representation and warranty that there is no material non-public information with respect to Holdings, the Borrowers, their respective Subsidiaries or their respective securities at such time that (A) has not been disclosed to the assigning Lender prior to such date or (B) could reasonably be expected to have a material effect upon, or otherwise be material to, a Lender’s decision to assign Term Loans to Holdings, a Borrower or one of their respective Subsidiaries (in each case other than because such assigning Lender does not wish to receive material non-public information with respect to Holdings, the Borrowers, their respective Subsidiaries or their respective securities);

 

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(v)           each Affiliated Lender or Holdings, the applicable Borrower or the applicable Subsidiary shall identify itself as such in the applicable Assignment and Acceptance;

 

(vi)          (I) after giving effect to any assignment to an Affiliated Lender, and to all other assignments with all Affiliated Lenders, the aggregate principal amount of all Term Loans then held by all Affiliated Lenders shall not exceed 25% of the aggregate unpaid principal amount of the Term Loans then outstanding (after giving effect to any substantially simultaneous cancellations thereof) and (II) each Affiliated Lender shall either (x) provide, as of the date of the effectiveness of such purchase, a customary representation and warranty that there is no material non-public information with respect to Holdings, the Borrowers, their respective Subsidiaries or their respective securities at such time that (A) has not been disclosed to the assigning Lender prior to such date or (B) could reasonably be expected to have a material effect upon, or otherwise be material to, a Lender’s decision to assign Term Loans to Holdings, a Borrower or one of their respective Subsidiaries (in each case other than because such assigning Lender does not wish to receive material non-public information with respect to Holdings, the Borrowers, their respective Subsidiaries or their respective securities) or (y) confirm that such representation cannot be made as of such date;

 

(vii)         in connection with any assignment effected pursuant to a Dutch auction conducted by Holdings, the Borrowers or any of their respective Subsidiaries, no Default or Event of Default shall have occurred and be continuing at the time of acceptance of bids for the Dutch auction;

 

(viii)        by its acquisition of Term Loans, an Affiliated Lender shall be deemed to have acknowledged and agreed that:

 

(A)          the Term Loans held by such Affiliated Lender shall be disregarded in both the numerator and denominator in the calculation of any Lender vote, except that such Affiliated Lender shall have the right to vote (and the loans held by such Affiliated Lender shall not be so disregarded) with respect to any amendment, modification, waiver, consent or other action that requires the vote of all Lenders or all affected Lenders, as the case may be; provided that no amendment, modification, waiver, consent or other action shall (1) disproportionately affect such Affiliated Lender in its capacity as a Lender as compared to other Lenders that are not Affiliated Lenders or (2) deprive any Affiliated Lender of its share of any payments which the Lenders are entitled to share on a pro rata basis hereunder, in each case without consent of such Affiliated Lender;

 

(B)          the Administrative Agent shall vote on behalf of such Affiliated Lender in the event that any proceeding under Sections 1126 or 1129 of the Bankruptcy Code shall be instituted by or against the Borrowers or any of their respective Restricted Subsidiaries, or alternatively, to the extent that the foregoing is deemed unenforceable for any reason, such Affiliated Lender shall 

 

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vote in such proceedings in the same proportion as the allocation of voting with respect to such matter by those Lenders who are not Affiliated Lenders, in each case except to the extent that any plan of reorganization proposes to treat the obligations held by such Affiliated Lender in its capacity as a Lender in a disproportionate adverse manner to such Affiliated Lender than the proposed treatment of similar obligations held by Lenders that are not Affiliated Lenders;

 

(C)          Affiliated Lenders, solely in their capacity as an Affiliated Lender, will not be entitled to (i) attend (including by telephone) any meeting or discussions (or portion thereof) among the Administrative Agent or any Lender or among Lenders to which the Loan Parties or their representatives are not invited, (ii) receive any information or material prepared by the Administrative Agent or any Lender or any communication by or among Administrative Agent and one (1) or more Lenders, except to the extent such information or materials have been made available to any Loan Party or its representatives (and in any case, other than the right to receive notices of Borrowings, prepayments and other administrative notices in respect of its Term Loans required to be delivered to Lenders pursuant to Article II) or (iii) make or bring (or participate in, other than as a passive participant in or recipient of its pro rata benefits of) any claim, in its capacity as a Lender, against the Administrative Agent, the Collateral Agent or any other Agent hereunder with respect to any duties or obligations or alleged duties or obligations of such Agent under the Loan Documents (except with respect to rights expressly retained under this Section 9.04(f) which are not so waived); and

 

(D)          it shall not have any right to receive advice of counsel to the Administrative Agent or to Lenders other than Affiliated Lenders or to challenge the Lenders’ attorney-client privilege.

 

(g)           Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (an “SPV”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrowers, the option to provide to the Borrowers all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrowers pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPV to make any Loan and (ii) if an SPV elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof.  The making of a Loan by an SPV hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender.  Each party hereto hereby agrees that no SPV shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender).  In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPV, it 

 

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will not institute against, or join any other Person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof.  In addition, notwithstanding anything to the contrary contained in this Section 9.04, any SPV may (i) with notice to, but without the prior written consent of, the Borrowers and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrowers and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPV to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPV.

 

(h)           Neither Holdings nor the Borrowers shall assign or delegate any of their rights or duties hereunder without the prior written consent of the Administrative Agent and each Lender, and any attempted assignment without such consent shall be null and void.

 

Section 9.05          Expenses; Indemnity.  (a) The Borrowers and Holdings agree, jointly and severally, to pay all reasonable, documented out-of-pocket expenses incurred by the Administrative Agent and the Collateral Agent in connection with the syndication of the Term Loan Facility and the preparation and administration of this Agreement and the other Loan Documents or in connection with any amendments, modifications or waivers of the provisions hereof or thereof or incurred by the Administrative Agent, the Collateral Agent or the Lenders in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents or in connection with the Loans made hereunder, including in connection with a workout or a restructuring, the fees, charges and disbursements of White & Case LLP, counsel for the Administrative Agent, counsel for the Collateral Agent, no more than one counsel in each jurisdiction where Collateral is located, and, in connection with any such enforcement or protection, the fees, charges and disbursements of any other counsel for the Administrative Agent or the Collateral Agent and no more than one counsel for all Lenders; provided that in the case of an actual or perceived conflict of interest, the Borrowers and Holdings agree to pay all reasonable, documented fees, charges and disbursements of another firm of counsel for such affected Person.

 

(b)           The Borrowers and Holdings agree, jointly and severally, to indemnify the Administrative Agent, the Collateral Agent, the Joint Lead Arrangers, the Lead Bookrunner, the other Agents, each Lender and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby (including the syndication of the Term Loan Facility), (ii) the use of the proceeds of the Loans, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto (and regardless of whether such matter is initiated by a third party or by the 

 

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Borrowers, any other Loan Party or any of their respective Affiliates), or (iv) any actual or alleged presence or Release of Hazardous Materials on any property currently or formerly owned or operated by the Borrowers or any of the Restricted Subsidiaries, or any Environmental Liability related in any way to the Borrowers or the Restricted Subsidiaries; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from (w) the gross negligence, bad faith or willful misconduct of such Indemnitee as determined, in a final and non-appealable decision, by a court of a competent jurisdiction, (x) a material breach of the Loan Documents by such Indemnitee, (y) disputes between and among Indemnitees other than any claims against an Indemnitee in its capacity or in fulfilling its role as the Administrative Agent, the Collateral Agent or a Joint Lead Arranger or Lead Bookrunner under the Term Loan Facility other than disputes involving any act or omission of the Borrowers or any of their Affiliates or (z) any settlement of an action or proceeding entered into by such Indemnitee without the Borrowers’ written consent (such consent not to be unreasonably withheld, delayed or conditioned), but, if such settlement occurs with the Lead Borrower’s written consent or if there is a final judgment for the plaintiff in any action or claim with respect to any of the foregoing, the Lead Borrower will be liable for such settlement or for such final judgment.

 

(c)           To the extent that Holdings and the Borrowers fail to pay any amount required to be paid by them to the Administrative Agent or the Collateral Agent under paragraph (a) or (b) of this Section 9.05, each Lender severally agrees to pay to the Administrative Agent or the Collateral Agent, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent or the Collateral Agent in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the sum of outstanding Loans and unused Commitments at the time.

 

(d)           To the extent permitted by applicable law, neither Holdings nor the Borrowers shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or the use of the proceeds thereof.

 

(e)           The provisions of this Section 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Lender.  All amounts due under this Section 9.05 shall be payable on written demand therefor.

 

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Section 9.06          Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, except to the extent prohibited 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 to or for the credit or the account of the Borrowers or Holdings against any of and all the obligations of the Borrowers or Holdings now or hereafter existing under this Agreement and other Loan Documents held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such other Loan Document and although such obligations may be unmatured.  The rights of each Lender under this Section 9.06 are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

 

Section 9.07          Applicable Law.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

Section 9.08          Waivers; Amendment.  (a) No failure or delay of the Administrative Agent, the Collateral Agent or any Lender in exercising any power or right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative Agent, the Collateral Agent, and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrowers or any other Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  No notice or demand on the Borrowers or Holdings in any case shall entitle the Borrowers or Holdings to any other or further notice or demand in similar or other circumstances.

 

(b)           Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrowers, Holdings and the Required Lenders; provided, however, that no such agreement shall (i) decrease the principal amount of, or extend the maturity of or any scheduled principal payment date or date for the payment of any interest on any Loan, or waive or excuse any such payment or any part thereof, or decrease the rate of interest (other than default interest) on any Loan, without the prior written consent of each Lender directly adversely affected thereby, (ii) increase or extend the Commitment of any Lender without the prior written consent of such Lender or decrease or extend the date for payment of any Fees of any Agent without the prior written consent of such Agent, (iii) amend or modify the pro rata requirements of Section 2.17 (other than in connection with loan buy-back offers that are made to all Lenders on a pro rata basis, in which case payments and Commitment reductions with respect to tendering Lenders will be permitted on terms acceptable to the Borrowers, Holdings and the Required Lenders) and Section 2.18, the provisions of Section 9.04(h) or the provisions of this Section 9.08 or release all or substantially all of the Collateral or the value of the guaranties provided by the Guarantors 

 

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taken as a whole, without the prior written consent of each Lender, (iv) change the provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of one Class differently from the rights of Lenders holding Loans of any other Class without the prior written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each adversely affected Class, (v) modify the protections afforded to an SPV pursuant to the provisions of Section 9.04(g) without the written consent of such SPV or (vi) reduce the percentage contained in the definition of the term “Required Lenders” without the prior written consent of each Lender (it being understood that with the consent of the Required Lenders, additional extensions of credit pursuant to this Agreement may be included in the determination of the Required Lenders on substantially the same basis as the Initial Term Loan Commitments on the date hereof); provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Collateral Agent hereunder or under any other Loan Document without the prior written consent of the Administrative Agent or the Collateral Agent.

 

(c)           The Administrative Agent and the Borrowers may amend any Loan Document to correct administrative errors or omissions, or to effect administrative changes that are not adverse to any Lender.  Notwithstanding anything to the contrary contained herein, such amendment shall become effective without any further consent of any other party to such Loan Document.

 

(d)           Notwithstanding anything in this Agreement to the contrary, each Lender hereby irrevocably authorizes the Administrative Agent on its behalf, and without further consent, to enter into amendments or modifications to this Agreement (including, without limitation, amendments to this Section 9.08) or any of the other Loan Documents or to enter into additional Loan Documents as the Administrative Agent reasonably deems appropriate in order to effectuate the terms of Sections 2.22 through 2.26 (including, without limitation, as applicable, (1) to permit the New Term Loans, Extended Term Loans and Other Term Loans to share ratably in the benefits of this Agreement and the other Loan Documents and (2) to include the commitments with respect to Incremental Term Loans, New Term Loans, Other Term Loan Commitments, as applicable, or outstanding Incremental Term Loans, New Term Loans, Extended Term Loans or Other Term Loans, as applicable, in any determination of (i) Required Lenders or (ii) similar required lender terms applicable thereto); provided that no amendment or modification shall result in any increase in the amount of any Lender’s Commitment without the written consent of such affected Lender.

 

(e)           In addition, notwithstanding the foregoing, this Agreement may be amended or amended and restated with the written consent of the Administrative Agent, Holdings, the Lead Borrower and the Lenders providing the relevant Replacement Term Loans or to permit the refinancing of all or any portion of the outstanding Term Loans of a given Class (the “Refinanced Term Loans”), with a replacement Term Loan tranche denominated in Dollars (the “Replacement Term Loans”), respectively, hereunder; provided that (i) the aggregate principal amount of such Replacement Term Loans shall not exceed the aggregate principal amount of, plus accrued interest, fees, expenses and premiums with respect to, such Refinanced Term Loans, (ii) the Effective Yield with respect to such Replacement Term Loans shall not be higher than Effective Yield with respect to such Refinanced Term Loans, (iii) the Weighted 

 

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Average Life to Maturity of such Replacement Term Loans shall not be shorter than the Weighted Average Life to Maturity of such Refinanced Term Loans, at the time of such refinancing (except to the extent of nominal amortization for periods where amortization has been eliminated as a result of prepayment of the applicable Initial Term Loans), and (iv) all other terms applicable to such Replacement Term Loans shall be substantially identical to, or (taken as a whole) less favorable to the Lenders providing such Replacement Term Loans than, those applicable to such Refinanced Term Loans, except to the extent necessary to provide for covenants and other terms applicable to any period after the Latest Maturity Date then in effect immediately prior to such refinancing.

 

(f)            If, in connection with any proposed change, waiver, discharge or termination of any of the provisions of this Agreement as contemplated by clauses (i) through (vi), inclusive, of the first proviso to Section 9.08(b), the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained, then the Borrowers shall have the right, so long as all non-consenting Lenders whose individual consent is required are treated as described in either clause (A) or (B) below, to either (A) replace each such non-consenting Lender or Lenders by having its Loans assigned, at par, with one or more other institutions subject to Section 9.04 so long as at the time of such replacement, each such institution consents to the proposed change, waiver, discharge or termination or (B) with the express written consent of the Required Lenders, repay the outstanding Loans of such Lender, provided, that in the case of either preceding clause (A) or (B) above, the payment by the Lead Borrower to each non-consenting Lender of the applicable Prepayment Fee (if such assignment or repayment occurs prior to the first anniversary of the Closing Date).

 

Section 9.09          Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively, the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan or participation in accordance with applicable law, the rate of interest payable in respect of such Loan or participation hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan or participation but were not payable as a result of the operation of this Section 9.09 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or participations or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

 

Section 9.10          Entire Agreement.  This Agreement, the Fee Letter and the other Loan Documents constitute the entire contract between the parties relative to the subject matter hereof.  Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents.  Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any Person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder and, to the extent expressly contemplated hereby, the Related Parties of 

 

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each of the Administrative Agent, the Collateral Agent and the Lenders) any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

 

Section 9.11          Waiver of Jury Trial.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.

 

Section 9.12          Severability.  In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction).  The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

Section 9.13          Counterparts.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 9.03.  Delivery of an executed signature page to this Agreement by facsimile transmission or other electronic transmission (including “pdf”) shall be as effective as delivery of a manually signed counterpart of this Agreement.

 

Section 9.14          Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

 

Section 9.15          Jurisdiction; Consent to Service of Process.  (a) Each of Holdings and the Borrowers hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or federal court of the United States of America sitting in the Borough of Manhattan in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court.  Each of the parties hereto agrees that a final judgment in any such

 

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action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that the Administrative Agent, the Collateral Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against the Borrowers, Holdings or their respective properties in the courts of any jurisdiction.

 

(b)           Each of Holdings and the Borrowers hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or federal court.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(c)           Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

 

Section 9.16          Confidentiality.  Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ officers, directors, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority or quasi-regulatory authority (such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) in connection with the exercise of any remedies hereunder or under the other Loan Documents or any suit, action or proceeding relating to the enforcement of its rights hereunder or thereunder, (e) subject to an agreement containing provisions substantially the same as those of this Section 9.16, to (i) any actual or prospective assignee of or participant in any of its rights or obligations under this Agreement and the other Loan Documents or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrowers or any of their respective Restricted Subsidiaries or any of their respective obligations, (f) with the consent of the Borrowers or (g) to the extent such Information becomes publicly available other than as a result of a breach of this Section 9.16.  For the purposes of this Section, “Information” shall mean all information received from the Borrowers or Holdings and related to the Borrowers or Holdings or their business, other than any such information that was available to the Administrative Agent, the Collateral Agent or any Lender on a non-confidential basis prior to its disclosure by the Borrowers or Holdings.  Any Person required to maintain the confidentiality of Information as provided in this Section 9.16 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord its own confidential information.

 

Section 9.17          Lender Action.  Each Lender agrees that it shall not in its capacity as Lender hereunder take or institute any actions or proceedings, judicial or otherwise, for any 

 

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right or remedy against any Loan Party or any other obligor under any of the Loan Documents (including the exercise of any right of setoff, rights on account of any banker’s lien or similar claim or other rights of self-help), or institute any actions or proceedings, or otherwise commence any remedial procedures, with respect to any Collateral or any other property of any such Loan Party, unless expressly provided for herein or in any other Loan Document, without the prior written consent of the Administrative Agent or, as applicable, the Collateral Agent.  The provisions of this Section 9.17 are for the sole benefit of the Lenders and shall not afford any right to, or constitute a defense available to, any Loan Party.

 

Section 9.18          USA PATRIOT Act Notice.  Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Holdings and the Borrowers that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies Holdings and the Borrowers, which information includes the name and address of Holdings and the Borrowers and other information that will allow such Lender or the Administrative Agent, as applicable, to identify Holdings and the Borrowers in accordance with the USA PATRIOT Act.

 

Section 9.19          Judgment Currency.  If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given.  The obligation of the Borrowers in respect of any such sum due from it to the Administrative Agent or the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency.  If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent from the Borrowers in the Agreement Currency, the Borrowers agree, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or the Person to whom such obligation was owing against such loss.  If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent in such currency, the Administrative Agent agrees to return the amount of any excess to the Borrowers (or to any other Person who may be entitled thereto under Applicable Law).

 

Section 9.20          Waiver of Sovereign Immunity.  Each Loan Party that is incorporated outside the United States, in respect of itself, its Subsidiaries, its process agents, and its properties and revenues, hereby irrevocably agrees that, to the extent that such Loan Party or its respective Subsidiaries or any of its or its respective Subsidiaries’ properties has or may hereafter acquire any right of immunity, whether characterized as sovereign immunity or otherwise, from any legal proceedings, whether in the United States or elsewhere, to enforce or collect upon the Loans or any Loan Document or any other liability or obligation of such Loan Party or any of their respective Subsidiaries related to or arising from the transactions 

 

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contemplated by any of the Loan Documents, including, without limitation, immunity from service of process, immunity from jurisdiction or judgment of any court or tribunal, immunity from execution of a judgment, and immunity of any of its property from attachment prior to any entry of judgment, or from attachment in aid of execution upon a judgment, such Loan Party, for itself and on behalf of its Subsidiaries, hereby expressly waives, to the fullest extent permissible under applicable law, any such immunity, and agrees not to assert any such right or claim in any such proceeding, whether in the United States or elsewhere.  Without limiting the generality of the foregoing, each Loan Party further agrees that the waivers set forth in this Section 9.20 shall have the fullest extent permitted under the Foreign Sovereign Immunities Act of 1976 of the United States and are intended to be irrevocable for purposes of such Act.

 

Section 9.21          Accounting Matters.  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Lead Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Lead Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Lead Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

 

Section 9.22          Electronic Execution of Assignments and Certain Other Documents.  The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Acceptance or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

Section 9.23          Use of Name, Logo. etc.  Each Loan Party consents to the publication in the ordinary course by the Administrative Agent or the Joint Lead Arrangers of customary advertising material relating to the financing transactions contemplated by this Agreement displaying such Loan Party’s name, product photographs, logo or trademark, each in the form provided by the Loan Parties to the Administrative Agent.  Such consent shall remain effective until revoked by such Loan Party in writing to the Administrative Agent and the Joint Lead Arrangers.

 

Section 9.24          Joint and Several Liability of the Borrowers.  (a)  Each Borrower agrees that it is jointly and severally liable for the obligations of the other Borrower hereunder, including with respect to the payment of principal of and interest on all Loans and the payment of fees and indemnities and reimbursement of costs and expenses. Each Borrower is accepting joint and several liability hereunder in consideration of the financial accommodations to be 

 

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provided by the Administrative Agent, the Collateral Agent and the Lenders under this Agreement, for the mutual benefit, directly and indirectly, of each of the Borrowers and in consideration of the undertakings of each of the Borrowers to accept joint and several liability for the obligations of each of them. Each Borrower, jointly and severally, hereby irrevocably and unconditionally accepts, as a co-debtor, joint and several liability with each other Borrower, with respect to the payment and performance of all of the Obligations, it being the intention of the parties hereto that all Obligations shall be the joint and several obligations of all of the Borrowers without preferences or distinction among them. If and to the extent that any of the Borrowers shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of such Obligations in accordance with the terms thereof, then in each such event each other Borrower will make such payment with respect to, or perform, such Obligations. A breach hereof or Default or Event of Default hereunder as to any single Borrower shall constitute a breach, Default or Event of Default as to all the Borrowers. Each Borrower hereby waives notice of acceptance of its joint and several liability, notice of the Loans made under this Agreement, notice of the occurrence of any Default or Event of Default, or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by the Administrative Agent, the Collateral Agent or the Lenders under or in respect of any of the Obligations, any requirement of diligence or to mitigate damages and, generally, all demands, notices and other formalities of every kind in connection with this Agreement, except for any demands, notices and other formalities expressly required under the terms of this Agreement.  Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by the Administrative Agent, the Collateral Agent or the Lenders at any time or times in respect of any default (including any Default or Event of Default) by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by the Administrative Agent, the Collateral Agent or the Lenders in respect of any of the obligations hereunder, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of such obligations or the addition, substitution or release, in whole or in part, of any Borrower. Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act on the part of the Administrative Agent, the Collateral Agent or the Lenders, including any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with Applicable Laws or regulations thereunder, which might, but for the provisions of this Section 9.24, afford grounds for terminating, discharging or relieving such Borrower, in whole or in part, from any of its Obligations under this Section 9.24, it being the intention of each Borrower that, so long as any of the Obligations remain unsatisfied, the Obligations of such Borrower under this Section 9.24 shall not be discharged except by performance and then only to the extent of such performance. The joint and several liability of the Borrowers hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of any Borrower.  With respect to any Borrower’s Obligations arising as a result of the joint and several liability of the Borrowers hereunder with respect to Loans or other extensions of credit made to any of the other Borrowers hereunder, such Borrower waives, until the Obligations shall have been paid in full (other than contingent indemnification obligations that are not yet due and payable or as to which no claim has been asserted) and this Agreement shall have been terminated, any right to enforce any right 

 

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of subrogation or any remedy which an Agent and/or any Lender now has or may hereafter have against any other Borrower, any endorser or any guarantor of all or any part of the Obligations, and any benefit of, and any right to participate in, any security or collateral given to an Agent and/or any Lender to secure payment of the Obligations or any other liability of any Borrower to an Agent and/or any Lender.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

	
 
    	
HEMISPHERE MEDIA HOLDINGS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Craig D. Fischer
    
	
 
    	
 
    	
Name: Craig D. Fischer
    
	
 
    	
 
    	
Title: Vice President and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
INTERMEDIA ESPAÑOL, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Craig D. Fischer
    
	
 
    	
 
    	
Name: Craig D. Fischer
    
	
 
    	
 
    	
Title: Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
HMTV, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Craig D. Fischer
    
	
 
    	
 
    	
Name: Craig D. Fischer
    
	
 
    	
 
    	
Title: Vice President and Treasurer
    

 

 

	
 
    	
DEUTSCHE BANK   AG NEW YORK BRANCH, as Administrative Agent, Collateral Agent and Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Anca Trifan
    
	
 
    	
 
    	
Name: Anca Trifan
    
	
 
    	
 
    	
Title: Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael Winters
    
	
 
    	
 
    	
Name: Michael Winters
    
	
 
    	
 
    	
Title: Vice President
    

 

 

	
 
    	
DEUTSCHE BANK   SECURITIES INC., as Joint Lead Arranger and Lead Bookrunner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Scott Sartorius
    
	
 
    	
 
    	
Name: Scott Sartorius
    
	
 
    	
 
    	
Title: Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Chris Young
    
	
 
    	
 
    	
Name: Chris Young
    
	
 
    	
 
    	
Title: Director
    

 

 

	
 
    	
GENERAL   ELECTRIC CAPITAL CORPORATION, as Lender and Syndication Agent
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Susan Bassett
    
	
 
    	
 
    	
Name: Susan Bassett
    
	
 
    	
 
    	
Title: Its Duly Authorized Signatory

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