Document:

U.S. $50,000,000

364–DAY

CREDIT AGREEMENT

dated as of May 22, 2002

among

ALLIANCE DATA SYSTEMS CORPORATION

and

LOYALTY MANAGEMENT GROUP CANADA INC.,

as BORROWERS,

THE GUARANTORS PARTY HERETO,

THE BANKS PARTY HERETO,

and

HARRIS TRUST AND SAVINGS BANK,

as Administrative Agent

 

 

 

 

Table

of Contents

 

	

  Section

  	

   

  	

  Heading

  	

   

  
	

   

  	

   

  	

   

  
	

  ARTICLE I

  	

  DEFINITIONS

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 1.1

  	

  Definitions

  	

   

  
	

  Section 1.2.

  	

  Accounting

  Terms and Determinations

  	

   

  
	

  Section 1.3.

  	

  Types of

  Borrowings

  	

   

  
	

   

  	

   

  	

   

  
	

  ARTICLE 2.

  	

  THE CREDITS

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 2.1.

  	

  Commitments to

  Lend

  	

   

  
	

  Section 2.2.

  	

  Notice of

  Borrowing

  	

   

  
	

  Section 2.3.

  	

  Notice

  to Banks Funding of Loans

  	

   

  
	

  Section 2.4.

  	

  Notes

  	

   

  
	

  Section 2.5.

  	

  Maturity of Loans

  	

   

  
	

  Section 2.6.

  	

  Interest Rates

  	

   

  
	

  Section 2.7.

  	

  Fees

  	

   

  
	

  Section 2.8.

  	

  Termination

  or Reduction of Commitments

  	

   

  
	

  Section 2.9.

  	

  Method

  of Electing Interest Rates for Loans

  	

   

  
	

  Section 2.10.

  	

  Optional

  Prepayments

  	

   

  
	

  Section 2.11.

  	

  Mandatory

  Prepayments

  	

   

  
	

  Section 2.12.

  	

  General

  Provisions as to Payments

  	

   

  
	

  Section 2.13.

  	

  Funding Losses

  	

   

  
	

  Section 2.14.

  	

  Computation

  of Interest and Fees

  	

   

  
	

  Section 2.15.

  	

  Regulation

  D Compensation

  	

   

  
	

   

  	

   

  	

   

  
	

  ARTICLE 3

  	

  CONDITIONS

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 3.1.

  	

  Effectiveness

  	

   

  
	

  Section 3.2.

  	

  Each Borrowing

  	

   

  
	

   

  	

   

  	

   

  
	

  ARTICLE 4

  	

  REPRESENTATIONS

  AND WARRANTIES

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 4.1.

  	

  Corporate

  Existence and Power

  	

   

  
	

  Section 4.2.

  	

  Corporate

  and Governmental Authorization; No Contravention

  	

   

  
	

  Section 4.3.

  	

  Binding Effect

  	

   

  
	

  Section 4.4.

  	

  Financial

  Information

  	

   

  
	

  Section 4.5.

  	

  Litigation

  	

   

  
	

  Section 4.6.

  	

  Compliance with

  ERISA

  	

   

  
	

  Section 4.7.

  	

  Environmental

  Matters

  	

   

  
	

  Section 4.8.

  	

  Taxes

  	

   

  
	

  Section 4.9.

  	

  Subsidiaries

  	

   

  
	

  Section 4.10.

  	

  Regulatory

  Restrictions on Borrowing

  	

   

  
	

  Section 4.11.

  	

  Full Disclosure

  	

   

  
	

  Section 4.12.

  	

  Intellectual

  Property

  	

   

  
	

   

  	

   

  	

   

  

 

i

 

	

  ARTICLE

  5

  	

  REPRESENTATIONS

  AND WARRANTIES OF EACH GUARANTOR

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 5.1.

  	

  Corporate

  Existence and Power

  	

   

  
	

  Section 5.2.

  	

  Corporate

  and Governmental Authorization; No Contravention

  	

   

  
	

  Section 5.3.

  	

  Binding Effect

  	

   

  
	

  Section 5.4.

  	

  Financial

  Information

  	

   

  
	

  Section 5.5.

  	

  Litigation

  	

   

  
	

  Section 5.6.

  	

  Compliance with

  ERISA

  	

   

  
	

  Section 5.7.

  	

  Environmental

  Matters

  	

   

  
	

  Section 5.8.

  	

  Taxes

  	

   

  
	

  Section 5.9.

  	

  Subsidiaries

  	

   

  
	

  Section 5.10.

  	

  Regulatory

  Restrictions on Borrowing

  	

   

  
	

  Section 5.11.

  	

  Full Disclosure

  	

   

  
	

   

  	

   

  	

   

  
	

  ARTICLE 6

  	

  COVENANTS

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 6.1.

  	

  Information

  	

   

  
	

  Section 6.2.

  	

  Payment of

  Obligations

  	

   

  
	

  Section 6.3.

  	

  Maintenance

  of Property; Insurance

  	

   

  
	

  Section 6.4.

  	

  Conduct

  of Business and Maintenance of Existence

  	

   

  
	

  Section 6.5.

  	

  Compliance with

  Laws

  	

   

  
	

  Section 6.6.

  	

  Inspection

  of Property, Books and Records

  	

   

  
	

  Section 6.7.

  	

  Mergers

  and Sales of Assets

  	

   

  
	

  Section 6.8.

  	

  Use of Proceeds

  	

   

  
	

  Section 6.9.

  	

  Negative Pledge

  	

   

  
	

  Section 6.10.

  	

  End

  of Fiscal Years and Fiscal Quarters

  	

   

  
	

  Section 6.11.

  	

  Minimum

  Consolidated EBITDA

  	

   

  
	

  Section 6.12.

  	

  (a) Leverage Ratio

  	

   

  
	

  Section

  6.13.

  	

  Adjusted

  Consolidated Net Worth

  	

   

  
	

  Section

  6.14

  	

  Capitalization

  of Insured Subsidiaries

  	

   

  
	

  Section 6.15.

  	

  Delinquency Ratio

  	

   

  
	

  Section 6.16.

  	

  Debt Limitation

  	

   

  
	

  Section 6.17.

  	

  Interest Coverage

  Ratio

  	

   

  
	

  Section

  6.18.

  	

  Restricted

  Payments; Required Dividends

  	

   

  
	

  Section

  6.19.

  	

  Equity

  Ownership, Limitation On Creation Of Subsidiaries

  	

   

  
	

  Section 6.20.

  	

  Change Of Business

  	

   

  
	

  Section

  6.21.

  	

  Limitation

  On Issuance Of Capital Stock

  	

   

  
	

  Section

  6.22.

  	

  Investments;

  Restricted Acquisition

  	

   

  
	

  Section

  6.23.

  	

  Consolidated

  Capital Expenditures

  	

   

  
	

  Section

  6.24.

  	

  Limitation

  on Voluntary Payments and Modifications of Indebtedness, Modifications of

  Certain Other Agreements, etc

  	

   

  
	

   

  	

   

  	

   

  
	

  ARTICLE 7

  	

  DEFAULTS

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 7.1.

  	

  Events of Default

  	

   

  
	

  Section 7.2.

  	

  Notice of Default

  	

   

  
	

   

  	

   

  	

   

  

 

ii

 

	

  ARTICLE 8

  	

  THE AGENT

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 8.1.

  	

  Appointment

  and Authorization

  	

   

  
	

  Section

  8.2.

  	

  Administrative

  Agent and Affiliates

  	

   

  
	

  Section

  8.3.

  	

  Action By

  Administrative Agent

  	

   

  
	

  Section 8.4.

  	

  Consultation

  with Experts

  	

   

  
	

  Section

  8.5.

  	

  Liability

  of Administrative Agent

  	

   

  
	

  Section 8.6.

  	

  Indemnification

  	

   

  
	

  Section 8.7.

  	

  Credit Decision

  	

   

  
	

  Section

  8.8.

  	

  Successor

  Administrative Agent

  	

   

  
	

   

  	

   

  	

   

  
	

  ARTICLE 9

  	

  CHANGE IN

  CIRCUMSTANCES

  	

   

  
	

   

  	

   

  	

   

  
	

  Section

  9.1.

  	

  Basis

  for Determining Interest Rate Inaccurate or Unfair

  	

   

  
	

  Section 9.2.

  	

  Illegality

  	

   

  
	

  Section

  9.3.

  	

  Increased

  Cost and Reduced Return

  	

   

  
	

  Section 9.4.

  	

  Taxes

  	

   

  
	

  Section

  9.5.

  	

  Base

  Rate Loans Substituted for Affected Fixed Rate Loans

  	

   

  
	

   

  	

   

  	

   

  
	

  ARTICLE 10

  	

  PERFORMANCE

  AND PAYMENT GUARANTY

  	

   

  
	

   

  	

   

  	

   

  
	

  Section

  10.1.

  	

  Unconditional

  and Irrevocable Guaranty

  	

   

  
	

  Section 10.2.

  	

  Enforcement

  	

   

  
	

  Section 10.3.

  	

  Obligations Absolute

  	

   

  
	

  Section 10.4.

  	

  Waiver

  	

   

  
	

  Section 10.5.

  	

  Subrogation

  	

   

  
	

  Section 10.6.

  	

  Survival

  	

   

  
	

  Section

  10.7.

  	

  Guarantors’

  Consent to Assigns

  	

   

  
	

  Section 10.8.

  	

  Continuing Agreement

  	

   

  
	

   

  	

   

  	

   

  
	

  ARTICLE 11

  	

  MISCELLANEOUS

  	

   

  
	

   

  	

   

  	

   

  
	

  Section 11.1.

  	

  Notices

  	

   

  
	

  Section 11.2.

  	

  No Waivers

  	

   

  
	

  Section 11.3.

  	

  Expenses;

  Indemnification

  	

   

  
	

  Section 11.4.

  	

  Sharing of Set–Offs

  	

   

  
	

  Section 11.5.

  	

  Amendment or

  Waiver, etc

  	

   

  
	

  Section 11.6.

  	

  Successors

  and Assigns

  	

   

  
	

  Section 11.7.

  	

  Collateral

  	

   

  
	

  Section 11.8.

  	

  Governing

  Law; Submission to Jurisdiction; Judgment Currency

  	

   

  
	

  Section 11.9.

  	

  Counterparts;

  Integration; Effectiveness

  	

   

  
	

  Section 11.10.

  	

  Waiver of Jury

  Trial

  	

   

  

 

	

  Schedule I

  	

  —

  	

  Commitments

  
	

  Schedule II

  	

  —

  	

  Investment

  Plan

  
	

  Schedule III

  	

  —

  	

  Community Reinvestment Act

  Requirements

  

 

iii

 

	

  Appendix I

  	

  —

  	

  Pricing Schedule

  
	

  Exhibit A

  	

  —

  	

  Assignment

  and Assumption Agreement

  
	

  Exhibit B–1

  	

  —

  	

  US Borrower Note

  
	

  Exhibit B–2

  	

  —

  	

  Canadian Borrower Note

  

 

 

iv

 

This 364–Day Credit Agreement, dated

as of May 22, 2002, is entered into by and among Alliance Data Systems Corporation, a Delaware corporation

(the “US

Borrower”), Loyalty

Management Group Canada Inc., an Ontario corporation (the “Canadian Borrower”),

the Guarantors from time to time

party hereto, the Banks from time

to time party hereto, and Harris Trust

and Savings Bank, as Administrative Agent.

Whereas,

the US Borrower and the Canadian Borrower have requested that the Banks

provide a 364–day credit facility to the Borrowers on the terms and

conditions set forth in this Agreement;

Now, Therefore, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1            Definitions.  The

following terms, as used herein, have the following meanings:

“Adjusted Consolidated Net Worth” of any Person means, at any date, the

Consolidated Net Worth of such Person and its Consolidated Subsidiaries plus,

in the case of the US Borrower, the then outstanding principal amount of

the WCAS Subordinated Note (to the extent the WCAS Subordinated Note has a

maturity not earlier than the date which is six months after the Maturity

Date).

“Administrative Agent” means Harris Trust and Savings Bank in

its capacity as agent for the Banks hereunder, and its successors in such

capacity.

“ADSC” means ADS Commercial Services, Inc., a

Delaware corporation.

“ADSI” means ADS Alliance Data Systems, Inc., a

Delaware corporation.

“ADSMB” means ADS MB Corporation, a Delaware

corporation.

“ADSNZ” means ADSNZ Alliance Data Systems New

Zealand, a New Zealand corporation.

“ADS Reinsurance” means ADS Reinsurance Ltd., a

Bermuda corporation.

“Affected Loans” has the meaning provided in

Section 2.11(B).

“Affiliate” means (i) any Person that directly,

or indirectly through one or more intermediaries, controls the US Borrower (a “Controlling

Person”) or (ii) any Person (other than the US Borrower or a

Subsidiary thereof) which is controlled by or is under common control with a

Controlling Person.  As used herein, the

term “control” means possession, directly or 

 

 

indirectly, of the power to vote 10% or more of any

class of voting securities of a Person or to direct or cause the direction of

the management or policies of a Person, whether through the ownership of voting

securities, by contract or otherwise.

“Agreement” means this 364–Day Credit

Agreement, as modified, supplemented, amended, restated (including any

amendment and restatement hereof), extended, renewed or refinanced from time to

time.

“Applicable Commitment Fee

Percentage” shall

mean a rate per annum equal to the applicable rate specified in the pricing

schedule attached hereto as Appendix 1.

“Applicable Lending Office” means, with respect to any Bank,

(i) in the case of its Domestic Loans, its Domestic Lending Office,

(ii) in the case of its Canadian Loans, its Canadian Lending Office,

(iii) in the case of its Euro-Dollar Loans, its Euro-Dollar Lending

Office, and (iv) in the case of its Euro-Canadian Dollar Loans, its

Euro-Canadian Dollar Lending Office.

“Asset Sale” means the sale, transfer or other

disposition by the US Borrower or any Subsidiary of the US Borrower to any

Person other than the US Borrower or any Guarantor of any asset (including,

without limitation, any capital stock or other securities of, or equity interests

in, another Person) of the US Borrower or such Subsidiary (other than sales,

transfers or other dispositions of assets in the ordinary course of such

business).

“Assigned Collateral” means, collectively, the “Assigned

Collateral” as defined in the Security Agreement and the “Charged Premises” as

defined in the Canadian Security Documents.

“Assignment and Assumption

Agreement” means

an appropriately completed Assignment and Assumption Agreement in the form of

Exhibit A hereto.

“Bank” means each bank listed on the signature

pages hereof, each Assignee which becomes a Bank pursuant to

Section 11.6(c), and their respective successors.

“Base Rate” means, for any day, a rate per annum

equal to the higher of (i) the Prime Rate for such day and (ii) the

sum of 1/2 of 1% plus the Federal Funds Rate for such day.

“Base Rate Loan” means (i) a Loan which bears

interest at the Base Rate pursuant to the provisions of Articles 2 or 9

hereof or (ii) an overdue amount which was a Base Rate Loan immediately

before it became overdue.

“Base Rate Margin” means a percentage per annum equal to

the applicable percentage specified in the pricing schedule attached hereto as

Appendix 1.

“Beneficiaries” has the meaning set forth in

Section 10.1.

 

2

 

“Benefit

Arrangement”

means at any time an employee benefit plan within the meaning of

Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and

which is maintained or otherwise contributed to by any member of the ERISA

Group.

“Borrowers” means, collectively, the US Borrower and

the Canadian Borrower.

“Borrowing” has the meaning set forth in

Section 1.3.

“Business Day” means any day except a Saturday, Sunday

or other day on which commercial banks in Chicago, Illinois, and Toronto,

Ontario, are authorized by law to close and, if the applicable Business Day

relates to an advance or continuation of, or conversion into, or payment of, a

Euro-Dollar Loan or Euro-Canadian Dollar Loan, on which commercial banks are

open for international business (including dealing in U.S. Dollar or

Canadian Dollar deposits, as the case may be) in London, England.

“Canadian Base Rate” means for any day the greater of:  (i) the floating annual rate of

interest established by the Administrative Agent’s Affiliate, Bank of Montreal,

from time to time as the reference rate it will use to determine rates of

interest on Canadian dollar loans to customers in Canada and designated as its

prime rate, as in effect on such day (it being acknowledged and agreed that such

rate may not be Bank of Montreal’s best or lowest rate); and (ii) the CDOR

Rate applicable on such day plus 1.0%.

“Canadian Base Rate Loan” means (i) a Loan which bears

interest at the Canadian Base Rate pursuant to Article 2 hereof or

(ii) an overdue amount which was a Canadian Base Rate Loan immediately

before it became overdue.

“Canadian Base Rate Margin” means a percentage per annum equal to

the applicable percentage specified in the pricing schedule attached hereto as

Appendix 1.

“Canadian Borrower” has the meaning provided in the first

paragraph of this  Agreement.

“Canadian Dollars” and “Cdn$” each mean the lawful currency of

Canada.

“Canadian Lending Office” means, as to each Bank, its office

identified as such on the signature page hereof or such other office as such

Bank may hereafter designate as its Canadian Lending Office by notice to the

Borrowers and the Administrative Agent, which office shall be located in

Canada.

“Canadian Loans” means Loans denominated in Canadian

dollars.

“Canadian Scheme License” means the Amended and Restated License

to Use and Exploit the Air Miles Scheme in Canada, made as of July 24,

1998, between Air Miles International Trading B.V. and the Canadian Borrower,

as such agreement was in effect on the Original Effective Date.

 

3

 

“Canadian

Security Documents”

means the Debenture Delivery Agreement and the Demand Debenture and any

undertakings or other security granted to the Collateral Agent or the Banks as

security for the Obligations of the Canadian Borrower.

“Canadian Trademark License” means the Amended and Restated License

to Use the Air Miles Trade Marks in Canada, dated July 24, 1998, between

Air Miles International Holdings N.V. and Loyalty Management Group Canada Inc.,

as such agreement was in effect on the Original Effective Date.

“CDOR Rate”

means on any day the annual rate of interest which is the rate determined as

being the arithmetic average of the quotations of all institutions listed in

respect of the “BA 1 Month” Rate for Canadian Dollar denominated bankers’

acceptances displayed and identified as such on the “Reuters Screen CDOR Page”

(as defined in the International Swap Dealer Association, Inc. definitions, as

modified and amended from time to time) as of 10:00 a.m. Toronto, Ontario

local time on such day and, if such day is not a Business Day, then on the

immediately preceding Business Day (as adjusted by the Administrative Agent

after 10:00 a.m. Toronto, Ontario local time to reflect any error in a

posted rate of interest or in the posted average annual rate of interest); and

if such rates are not available on the Reuters Screen CDOR Page on any

particular day, then the CDOR Rate on that day shall be calculated as the

30 day rate applicable to Canadian Dollar denominated bankers’ acceptances

quoted by the Administrative Agent’s Affiliate, Bank of Montreal, as of

10:00 a.m. Toronto, Ontario local time on such day; or if such day is not

a Business Day, then as quoted by the Administrative Agent’s Affiliate, Bank of

Montreal, on the immediately preceding Business Day.

“Change of Control” means (i) the US Borrower shall

cease to own 100% of the capital stock of the Canadian Borrower or

(ii) the Welsh, Carson, Anderson & Stowe Partnerships in the

aggregate, shall fail to own a majority of the outstanding common stock of the

US Borrower; provided, that (x) common stock owned by employees

(either individually or through employee stock ownership or other stock based

benefit plans) of the US Borrower and (y) common stock of the US Borrower

issued to the public pursuant to one or more public offerings shall not be

included in the calculation of ownership interests for purposes of this

definition or any “change of control”.

“Code” shall mean the Internal Revenue Code of

1986, as amended from time to time, and the regulations promulgated and rulings

issued thereunder.  Section references

to the Code are to the Code, as in effect on the Effective Date and any

subsequent provisions of the Code, amendatory thereof, supplemental thereto or

substituted therefor.

“Collateral” means, collectively, the Assigned

Collateral and the Pledged Collateral.

“Collateral Agent” means Harris Trust and Savings Bank,

acting as Collateral Agent on behalf of the Secured Creditors, and its successors

in such capacity.

“Commitment” means, (i) with respect to each

Bank listed on the signature pages hereof, the amount set forth opposite its

name on Schedule I hereto under the heading “Commitment” and

(ii) with respect to each Assignee that becomes a Bank pursuant to

Section 11.6(c), the 

 

4

 

amount of the Commitment thereby assumed by it, in

each case as such amount may be increased or reduced from time to time pursuant

to Section 11.6(c) or reduced from time to time pursuant to

Section 2.8.

“Consolidated Capital Expenditures” of any Person means, for any period, the

additions to property, plant and equipment and other capital expenditures of

such Person and its Consolidated Subsidiaries for such period, as the same are

or would be set forth in a consolidated statement of cash flows of such Person

and its Consolidated Subsidiaries for such period.

“Consolidated Current Assets” means the current assets of the US

Borrower and its Subsidiaries determined on a consolidated basis in accordance

with generally accepted accounting principles, provided that Consolidated

Current Assets shall in any event not include cash and cash equivalents other

than Restricted Cash.

“Consolidated Current Liabilities” means the current liabilities of the US

Borrower and its Subsidiaries determined on a consolidated basis in accordance

with generally accepted accounting principles, but excluding in any event the

current portion of, and accrued but unpaid interest on, any Debt of the US

Borrower and its Subsidiaries.

“Consolidated Debt” of any Person means, at any date, the

Debt of such Person and its Consolidated Subsidiaries, determined on a

consolidated basis as of such date.

“Consolidated EBIT” of any Person means, for any period,

Consolidated Net Income of such Person for such period, before total interest

expense determined on a consolidated basis and before taxes based on income,

and giving effect to gains and losses from sales of assets sold in the ordinary

course of business all with respect to such period.

“Consolidated EBITDA” of any Person means, for any fiscal

period, Consolidated EBIT for such Person for such period, adjusted by

(i) adding thereto the amount of all depreciation and amortization

expenses that were deducted in determining Consolidated EBIT, (ii) adding

thereto the change from the prior period in the Deferred Revenue Account, and

(iii) subtracting therefrom the change from the prior period in the

Restricted Cash Account.

“Consolidated Interest Expense” of any Person means, for any period, the

Total Interest Expense of such Person and its Consolidated Subsidiaries

determined on a consolidated basis for such period.

“Consolidated Net Income” of any Person means, for any fiscal

period, the net income of such Person and its Consolidated Subsidiaries,

determined on a consolidated basis for such period, inclusive of the effect of

any extraordinary or other nonrecurring gain and loss.

“Consolidated Net Worth” of any Person means at any date the

consolidated stockholders’ equity of such Person and its Consolidated

Subsidiaries.

 

5

 

“Consolidated

Subsidiary” of

any Person means, at any date, any Subsidiary or other entity the accounts of

which would be consolidated with those of such Person in its consolidated

financial statements if such statements were prepared as of such date.

“Consolidated Total Assets” of any Person means total assets of such

Person and its Subsidiaries, determined on a consolidated basis in accordance

with generally accepted accounting principles.

“Credit Document” means this Agreement, the Notes, the

Pledge Agreement, the Security Agreement, the Canadian Security Documents, the

WFNB Note and each other document (including any additional guarantees) executed

or delivered in connection herewith or therewith.

“Credit Party” shall mean each Borrower, each

Guarantor, and with respect to its obligations under the WFNB Note only, WFNB.

“Debenture Delivery Agreement” means the Debenture Delivery Agreement,

made as of July 24, 1998, between the Canadian Borrower and the Collateral

Agent, as amended, modified or supplemented from time to time.

“Debt” of any Person means at any date, without

duplication (i) all obligations of such Person for borrowed money,

(ii) all obligations of such Person evidenced by bonds, debentures, notes

or other similar instruments, (iii) all obligations of such Person to pay

the deferred purchase price of property or services, except trade accounts

payable arising in the ordinary course of business, (iv) all obligations

of such Person as lessee which are capitalized in accordance with generally

accepted accounting principles, (v) all non–contingent obligations

(and, for purposes of Section 6.9, Section 6.16 and the definitions

of Material Debt and Material Financial Obligations, all contingent

obligations) of such Person to reimburse any bank or other Person in respect of

amounts paid under a letter of credit or similar instrument, (vi) all Debt

secured by a Lien on any asset of such Person, whether or not such Debt is

otherwise an obligation of such Person, and (vii) all Debt of others

Guaranteed by such Person.

“Default” means any condition or event which

constitutes an Event of Default or which with the giving of notice or lapse of

time or both would, unless cured or waived, become an Event of Default.

“Deferred Revenue Account” means the account on the consolidating

balance sheet of the Borrowers associated solely with the change in revenue

recognition by the Canadian Borrower as required by the Securities and Exchange

Commission of the United States of America.

“Delinquency Ratio” means, for any calendar month, the

percentage equivalent of a fraction (a) the numerator of which is the

aggregate amount of all Managed Receivables the minimum payments on which are

more than 90 days contractually overdue and (b) the denominator of which

is all Managed Receivables, in each case determined as of the last day of such

calendar month.

 

6

 

“Demand

Debenture” means

the Demand Debenture, made as of July 21, 1998, between the Canadian

Borrower and the Collateral Agent as amended, modified or supplemented from

time to time.

“Derivatives Obligations” of any Person means all obligations of

such Person in respect of any rate swap transaction, basis swap, forward rate

transaction, commodity swap, commodity option, equity or equity index swap,

equity or equity index option, bond option, interest rate option, foreign

exchange transaction, cap transaction, floor transaction, collar transaction,

currency swap transaction, cross–currency rate swap transaction, currency

option or any other similar transaction (including any option with respect to

any of the foregoing transactions), any transaction whose value is derived from

another asset or security, or any combination of the foregoing transactions.

“Domestic Lending Office” means, as to each Bank, its office

identified as such on the signature page hereto or such other office as such

Bank may hereafter designate as its Domestic Lending Office by notice to the

Borrowers and the Administrative Agent.

“Domestic Loans’ means Loans denominated in

U.S. Dollars.

“Domestic Subsidiary” means any Subsidiary of the

US Borrower incorporated or organized in the United States or any state or

territory thereof.

“ECF Prepayment Amount” has the meaning provided in

Section 2.11(A).

“ECF Prepayment Date” has the meaning provided in

Section 2.11(A).

“ECF Prepayment Period” has the meaning provided in

Section 2.11(A).

“Effective Date” means May 22, 2002.

“Eligible Transferee” shall mean and include a commercial

bank, insurance company, financial institution, fund or other Person which

regularly purchases interests in loans or extensions of credit of the types

made pursuant to this Agreement, any other Person which would constitute a

“qualified institutional buyer” within the meaning of Rule 144A under the

Securities Act as in effect on the Effective Date  or other “accredited

investor” (as defined in Regulation D of the Securities Act).

“Environmental Laws” means any and all federal, state, local

and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,

judgments, orders, decrees, plans, injunctions, permits, concessions, grants,

franchises, licenses, agreements and other governmental restrictions relating

to the environment, the effect of the environment on human health or to

emissions, discharges or releases of pollutants, contaminants, Hazardous

Substances or wastes into the environment including, without limitation, ambient

air, surface water, ground water, or land, or otherwise relating to the

manufacture, processing, distribution, use, treatment, storage, disposal,

transport or handling of pollutants, contaminants, Hazardous Substances or

wastes or the cleanup or other remediation thereof.

 

7

 

“ERISA” means the Employee Retirement Income

Security Act of 1974, as amended, or any successor statute.

“ERISA Group” of any Person means such Person, any

Subsidiary and all members of a controlled group of corporations and all trades

or businesses (whether or not incorporated) under common control which,

together with the US Borrower or any Subsidiary, are treated as a single

employer under Section 414 of the Code.

“Euro-Canadian Dollar Lending

Office” means, as

to each Bank, its office, branch or affiliate identified as such on the

signature pages hereto or such other office, branch or affiliate of such Bank

as it may hereafter designate as its Euro-Canadian Dollar Lending Office by

notice to the Borrowers and the Administrative Agent, which office shall be

located in Canada.

“Euro-Canadian Dollar Loan” means (i) a Loan which bears

interest at a Euro-Canadian Dollar Rate or (ii) an overdue amount which

was a Euro-Canadian Dollar Loan immediately before it became overdue.

“Euro-Canadian Dollar Margin” means a percentage per annum equal to

the applicable percentage specified in the pricing schedule attached hereto as

Appendix 1.

“Euro-Canadian Dollar Rate” means a rate of interest determined

pursuant to Section 2.6 on the basis of the London Interbank Offered Rate.

“Euro-Dollar Lending Office” means, as to each Bank, its office,

branch or affiliate identified as such on the signature pages hereto or such

other office, branch or affiliate of such Bank as it may hereafter designate as

its Euro-Dollar Lending Office by notice to the Borrowers and the

Administrative Agent.

“Euro-Dollar Loan” means (i) a Loan which bears

interest at a Euro-Dollar Rate or (ii) an overdue amount which was a Euro-Dollar

Loan immediately before it became overdue.

“Euro-Dollar Margin” means a percentage per annum equal to

the applicable percentage specified in the pricing schedule attached hereto as

Appendix 1.

“Euro-Dollar Rate” means a rate of interest determined

pursuant to Section 2.6 on the basis of the London Interbank Offered Rate.

“Event of Default” has the meaning set forth in

Section 7.1.

“Excess Cash Flow” means, for any fiscal year of the US

Borrower, (i) Consolidated Net Income for such period plus (minus) (ii) the

amount of depreciation, depletion, amortization of intangibles, deferred taxes

and other non–cash expenses (revenues) which, pursuant to generally

accepted accounting principles, were deducted (added) in determining

Consolidated Net Income for such period minus (plus) (iii) additions

(reductions, other than reductions attributable solely to Asset Sales) to

Working Capital for such period minus (iv) the amount of Consolidated

Capital Expenditures made during such period (except to the extent financed

through the 

 

8

 

incurrence of Debt (other than through the incurrence

of Loans hereunder or loans under the Related Credit Agreement) or with equity

proceeds) minus

(v) the amount of Scheduled Repayments of Term Loans (as defined in the

Related Credit Agreement), and the amount of voluntary payments of principal of

outstanding Term Loans (as defined in the Related Credit Agreement), in each

case, actually made during such period minus (vi) regularly scheduled

payments of principal or “rent” (other than capitalized interest) due in

accordance with the terms of capital leases and not otherwise deducted in

arriving at Consolidated Net Income to the extent actually made during such

period minus

(vii) the amount of mandatory payments of principal of outstanding Term

Loans (as defined in the Related Credit Agreement) pursuant to

Sections 2.11(A)(e) and (h) of the Related Credit Agreement actually made,

but only to the extent that the net proceeds from the transactions described in

such clauses (e) and (h) were added to Consolidated Net Income during such

period.

“Federal Funds Rate” means, for any day, the rate per annum

(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the

weighted average of the rates on overnight Federal funds transactions with

members of the Federal Reserve System arranged by Federal funds brokers on such

day, as published by the Federal Reserve Bank of New York on the Business Day

next succeeding such day; provided, that (i) if such day is not

a Business Day, the Federal Funds Rate for such day shall be such rate on such

transactions on the next preceding Business Day as so published on the next

succeeding Business Day, and (ii) if no such rate is so published on such

next succeeding Business Day, the Federal Funds Rate for such day shall be the

average rate quoted to the Administrative Agent on such day on such

transactions as determined by the Administrative Agent.

“Foreign Pension Plan” means any plan, fund (including, without

limitation, any superannuation fund) or other similar program established or

maintained outside the United States of America by the US Borrower or any one

or more of its Subsidiaries primarily for the benefit of employees of the US

Borrower or such Subsidiaries residing outside the United States of America,

which plan, fund or other similar program provides, or results in, retirement

income, a deferral of income in contemplation of retirement or payments to be

made upon termination of employment, and which plan is not subject to ERISA or

the Code.

“Foreign Subsidiary” means each Subsidiary of the US Borrower

other than a Domestic Subsidiary.

“Guaranteed Obligations” has the meaning provided in

Section 10.1.

“Guarantor” means, (a) with respect to the

Obligations of the US Borrower, (i) ADSC, ADSI, and ADSMB and

(ii) each other direct and indirect Domestic Subsidiary of the US Borrower

that becomes a Guarantor from time to time, after the Effective Date, pursuant

to Section 6.19 and (b) with respect to Obligations of the Canadian

Borrower, (i) LMG, the US Borrower, ADSC, ADSI, and ADSMB and

(ii) each other direct and indirect Domestic Subsidiary of the US Borrower

or Subsidiary of the Canadian Borrower that becomes a Guarantor from time to time,

after the Effective Date, pursuant to Section 6.19; provided that (x) WFNB

and ADS Reinsurance and their Subsidiaries shall not be required to be

Guarantors and (y) one or more indirect Subsidiaries of the US Borrower

need not be Guarantors hereunder 

 

9

 

to the extent the Consolidated Total Assets of all

such indirect Subsidiaries not becoming a Guarantor hereunder do not exceed 5%

of the Consolidated Total Assets of the US Borrower and its Subsidiaries

taken as a whole.

“Guaranty” by any Person means any obligation,

contingent or otherwise, of such Person directly or indirectly guaranteeing any

Debt of any other Person and, without limiting the generality of the foregoing,

any obligation, direct or indirect, contingent or otherwise, of such Person

(i) to purchase or pay (or advance or supply funds for the purchase or

payment of) such Debt (whether arising by virtue of partnership arrangements,

by agreement to keep–well, to purchase assets, goods, securities or services,

to take–or–pay, or to maintain financial statement conditions or

otherwise) or (ii) entered into for the purpose of assuring in any other

manner the holder of such Debt of the payment therefore to protect such holder

against loss in respect thereof (in whole or in part), provided, that the term

Guaranty shall not include endorsements for collection or deposit in the

ordinary course of business.  The term

“Guaranty” used as a verb has a corresponding meaning.

“Hazardous Substances” means any toxic, radioactive, caustic or

otherwise hazardous substance, including petroleum, its derivatives, by–products

and other hydrocarbons, or any substance having any constituent elements

displaying any of the foregoing characteristics.

“Indemnitee” has the meaning set forth in

Section 11.3(b).

“Insured Subsidiary” means a Subsidiary of the US Borrower

which is an “insured depository institution” under and as defined in the

Federal Deposit Insurance Act (12 U.S.C. 1813(c)(3)) or any successor

statute.

“Intellectual Property” has the meaning provided in

Section 4.12.

“Intercreditor Agreement” means the Second Amendment to Security

Documents and Intercreditor Agreement dated as of May 22, 2002, among the

Collateral Agent, the financial institutions party to the Related Credit

Agreement, and the Banks party hereto.

“Interest Coverage Ratio” of any Person means, for any period, the

ratio of Consolidated EBITDA of such Person for such period to Consolidated

Interest Expense of such Person for such period.

“Interest Period” means with respect to each Euro-Dollar

Loan or Euro-Canadian Dollar Loan, the period commencing on the date of

borrowing specified in the applicable Notice of Borrowing or on the date

specified in the applicable Notice of Interest Period Election and ending one,

two, three or six months thereafter, as the respective Borrower may elect in

the applicable notice; provided that:

                    (i)        any Interest Period which would otherwise end on a day which

is not a Business Day shall be extended to the next succeeding Business Day

unless such Business Day falls in another calendar month, in which case such

Interest Period shall end on the next preceding Business Day;

 

10

 

                   (ii)        any Interest Period which begins on the

last Business Day of a calendar month (or on a day for which there is no

numerically corresponding day in the calendar month at the end of such Interest

Period) shall, subject to clause (c) below, end on the last Business Day

of a calendar month; and

                  (iii)        any Interest Period which would otherwise end after the

Maturity Date shall end on the Maturity Date (unless such date is not a

Business Day, in which case such Interest Period shall end on the latest

Business Day to occur prior to the Maturity Date).

“Investment” means any investment in any Person,

whether by means of share purchase, capital contribution, loan, Guaranty, time

deposit or otherwise (but not including any demand deposit).

“Leverage Ratio” of any Person means, at any time, the

ratio of (x) Consolidated Debt of such person at such time to

(y) Consolidated EBITDA of such person for the four fiscal quarters then

most recently ended.

“License Agreements” means the Canadian Trademark License,

the US Trademark License, the Canadian Scheme License, and the US Scheme

License.

“Lien” means, with respect to any asset, any

mortgage, lien, pledge, charge, security interest or encumbrance of any kind,

or any other type of preferential arrangement that has the practical effect of

creating a security interest, in respect of such asset.  For the purposes of this Agreement, the US

Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset

which it has acquired or holds subject to the interest of a vendor or lessor under

any conditional sale agreement, capital lease or other title retention

agreement relating to such asset.

“LMG” means LMG Travel Services Limited, an Ontario

corporation, 100% of the capital stock of which is owned by the Canadian

Borrower.

“Loan” means a loan made by a Bank pursuant to

Section 2.1; provided, that if any such loan or loans (or portions

thereof) are combined or subdivided pursuant to a Notice of Interest Rate

Election, the term “Loan” shall refer to the combined

principal amount resulting from such combination or to each of the separate

principal amounts resulting from such subdivision, as the case may be.

“London Interbank Offered Rate” means, for any Interest Period,

(a) with respect to any Euro-Dollar Loan, the rate per annum (rounded

upward, if necessary, to the next higher 1/16 of it) at which deposits in

dollars are offered to the Administrative Agent in the London interbank market

at approximately 11:00 a.m. (London, England time) two Business Days

before the first day of such Interest Period in an amount approximately equal

to the principal amount of the Euro-Dollar Loans of the Administrative Agent to

which such Interest Period is to apply and for a period of time comparable to

such Interest Period and (b) with respect to any Euro-Canadian Dollar

Loan, either (i) the rate per annum shown on “LIBOR 02 Page” (or any

substitute therefor) of Reuters Monitor Money Rates Service or, if such LIBOR

02 Page is not available, at 

 

11

 

the rate per annum shown on page 3740 of the Telerate

screen (or any successor page) as the composite offered rate for deposits in

Canadian Dollars in the interbank Euro-Canadian Dollar market with a period

comparable to the Interest Period for such Euro-Canadian Dollar Loan as at

11:00 a.m. (London, England time) two Business Days prior to the first day

of such Interest Period or (ii) if the rate in clause (i) of this

definition is not shown for any particular day, the average interest rate per

annum (rounded upwards if necessary to the next 1/16th of 1%)

offered to the Administrative Agent in the interbank Euro-Canadian Dollar

market for Canadian Dollar deposits, for delivery in immediately available

funds on the first day of such Interest Period, of amounts comparable to the

principal amount of the Euro-Canadian Dollar Loan to which such rate is to

apply with maturities comparable to the Interest Period for which such rate

will apply as of approximately 11:00 a.m. (London, England time) two

Business Days prior to the first day of such Interest Period.

“Managed Receivables” of any Person means for any date all

credit card receivables of such Person as of such date regardless of whether

such credit card receivables are determined, with respect to such Person’s

financial statements, to be “on–balance sheet” or “off–balance

sheet.”

“Material Debt” means Debt (other than the Loans

hereunder) (i) of a Person and/or one or more of its Subsidiaries, arising

in one or more related or unrelated transactions, in an aggregate principal or

face amount exceeding U.S. $25,000,000 and (ii) under the Related

Credit Agreement.

“Material Financial Obligations” of any Person means a principal or face

amount of Debt and/or payment or collateralization obligations in respect of

Derivatives Obligations of such Person and/or one or more of its Subsidiaries,

arising in one or more related or unrelated transactions, exceeding in the

aggregate U.S. $25,000,000.

“Material Plan” means at any time a Plan or Plans having

aggregate Unfunded Liabilities in excess of U.S. $10,000,000.

“Maturity Date” means May 21, 2003.

“Multiemployer Plan” means at any time an employee pension

benefit plan within the meaning of Section 4001(a)(3) of ERISA to which

any member of the ERISA Group is then making or accruing an obligation to make

contributions or has within the preceding five plan years made contributions,

including for these purposes any Person which ceased to be a member of the

ERISA Group during such five year period.

“Net Cash Proceeds” means, with respect to any Asset Sale,

the Cash Proceeds resulting therefrom net of expenses of sale (including

payment of principal, premium and interest of other Debt secured by the assets

the subject of the Asset Sale and required to be, and which is, repaid under

the terms thereof as a result of such Asset Sale), and incremental taxes paid

or payable as a result thereof, provided that Net Cash Proceeds shall not

include cash deposited with the Administrative Agent pursuant to a cash

collateral arrangement pursuant to this Agreement.

 

12

 

 “Note” has the meaning provided in Section 2.4.

“Notice of Borrowing” has the meaning set forth in

Section 2.2.

“Notice of Interest Period Election” has the meaning set forth in

Section 2.9.

“Obligations” means (i) all amounts owing to the

Administrative Agent, the Collateral Agent or any Bank pursuant to the terms of

this Agreement or any other Credit Document and (ii) Derivative

Obligations of each “Assignor” (as such term is defined in the

Security Agreement) from time to time owed to a Bank or an Affiliate of a Bank.

“Original Effective Date” shall mean July 24, 1998.

“Parent” means, with respect to any Bank, any

Person controlling such Bank.

“Participant” has the meaning set forth in

Section 11.6(b).

“PBGC” means the Pension Benefit Guaranty

Corporation or any entity succeeding to any or all of its functions under

ERISA.

“Percentage” shall mean at any time for each Bank

with a Commitment, the percentage obtained by dividing such Bank’s Commitment

by the Total Commitment, provided that if the Total Commitment has

been terminated, the Percentage of each Bank shall be determined by dividing

such Bank’s Commitment immediately prior to such termination by the Total

Commitment immediately prior to such termination.

“Permitted Subordinated Debt” means subordinated Debt of the US

Borrower, provided that

(i) the US Borrower shall be in pro forma compliance with the Financial

Covenants contained in Sections 6.12 and 6.17 after giving effect to such

issuance of Debt, (ii) such Debt shall be expressly subordinated to the

Obligations, (iii) such Debt shall be unsecured and unguaranteed,

(iv) such Debt shall have a maturity not earlier than the date which is

six months after the later of the Maturity Date hereunder or the final maturity

of the loans outstanding under the Related Credit Agreement and no amortization

or sinking fund payments shall be required in respect of such Debt prior to

such date and (v) no covenant or default applicable to such debt shall be

more restrictive than those contained in this Agreement and the subordination

provisions, covenants and defaults pertaining to such Debt, taken as a whole,

shall be no more restrictive, and no less favorable to the Banks, as those

customarily applicable to publicly issued subordinated indebtedness.

“Person” means an individual, a corporation, a

limited liability company, a partnership, an association, a trust or any other

entity or organization, including a government or political subdivision or an

agency or instrumentality thereof.

“Plan” means at any time an employee pension

benefit plan (other than a Multiemployer Plan) which is covered by

Title IV of ERISA or subject to the minimum funding standards under

Section 412 of the Code and either (i) is maintained, or contributed

to, by any member of the 

 

13

 

ERISA Group for employees of any member of the ERISA

Group or (ii) has at any time within the preceding five years been

maintained, or contributed to, by any Person which was at such time a member of

the ERISA Group for employees of any Person which was at such time a member of

the ERISA Group.

“Pledge Agreement” means the Pledge Agreement, dated as of

July 24, 1998, by and between the Borrowers, the Guarantors, and the

Collateral Agent, as such agreement may be amended, modified or supplemented

from time to time.

“Pledge Agreements” means the Pledge Agreement and the

Supplemental Pledge Agreement.

“Pledged Collateral” means the “Collateral,” as defined in

the Pledge Agreement.

“Prime Rate” means the rate of interest announced or

otherwise established by the Administrative Agent from time to time as its

Prime Rate.

“Recovery Event” means the receipt by the US Borrower or

any of its Subsidiaries of any cash insurance proceeds or condemnation award

payable (i) by reason of theft, loss, physical destruction or damage or

any other similar event with respect to any property or asset of the US

Borrower or any of its Subsidiaries, or (ii) by reason of any

condemnation, taking, seizing or similar event with respect to any property or

asset of the US Borrower or any of its Subsidiaries.

“Regulation U” means Regulation U of the Board of

Governors of the Federal Reserve System, as in effect from time to time.

“Reinvestment Assets” means any assets to be employed in the

business of the US Borrower and its Subsidiaries.

“Reinvestment Election” has the meaning provided in

Section 2.8(B).

“Reinvestment Notice” means a written notice signed by an

executive officer of the US Borrower stating that the US Borrower, in good

faith, intends and expects to use all or a specified portion of the Net Cash

Proceeds of an Asset Sale to purchase, construct or otherwise acquire

Reinvestment Assets.

“Reinvestment Prepayment Amount” means, with respect to any Reinvestment

Election, the amount, if any, on the Reinvestment Prepayment Date relating

thereto by which (a) the anticipated reinvestment amount in respect of

such Reinvestment Election exceeds (b) the aggregate amount thereof

expended by the US Borrower and its Subsidiaries to acquire Reinvestment

Assets.

“Reinvestment Prepayment Date” means, with respect to any Reinvestment

Election, the earliest of (i) the date, if any, upon which the

Administrative Agent, on behalf of the Required Banks, shall have delivered a

written termination notice to the US Borrower, provided that such notice

may only be given while an Event of Default exists, (ii) the date

occurring 180 days after 

 

14

 

such Reinvestment Election and (iii) the date on

which the US Borrower shall have determined not to, or shall have otherwise

ceased to, proceed with the purchase, construction or other acquisition of

Reinvestment Assets with the related anticipated reinvestment amount.

“Related Credit Agreement” that certain Amended and Restated Credit

Agreement dated as of July 24, 1998, as amended and restated as of

October 22, 1998, by and among the Borrowers, the Guarantors party

thereto, the financial institutions party thereto, and Harris Trust and Savings

Bank, as Administrative Agent for such financial institutions, as the same may

be amended, modified, and supplemented from time to time.

“Required Banks” means Banks the sum of whose outstanding

Commitments (or after the termination thereof, outstanding Loans) represent an

amount greater than 50% of the sum of the Total Commitment (or after the

termination thereof, the sum of the total outstanding Loans at such time).

“Reserve Percentage” means for any day that percentage

(expressed as a decimal) which is in effect on such day, as prescribed by the

Board of Governors of the Federal Reserve System (or any successor) for

determining the maximum reserve requirement for a member bank of the Federal

Reserve System in New York City with deposits exceeding five billion dollars in

respect of “Eurocurrency Liabilities” (or in respect of any other category of

liabilities which includes deposits by reference to which the interest rate on

Euro-Dollar Loans or Euro-Canadian Dollar Loans, as the case may be, is

determined or any category of extensions of credit or other assets which

includes loans by a non–United States office of any Bank to United States

residents).

“Restatement Effective Date” means October 22, 1998.

“Restricted Acquisition” means any acquisition, whether in a single

transaction or series of related transactions, by the US Borrower or any one or

more of its Subsidiaries, or any combination thereof, of (i) all or a

substantial part of the assets, or all or any substantial part of a going

business or division, of any Person, whether through purchase of assets or

securities, by merger or otherwise, (ii) control of securities of an

existing corporation or other Person having ordinary voting power (apart from

rights accruing under special circumstances) to elect a majority of the board

of directors of such corporation or other Person or (iii) control of a

greater than 50% ownership interest in any existing partnership, joint venture

or other Person.

“Restricted Cash” means cash required by the US Borrower

and its Subsidiaries to fund securitization spread accounts, cash collateral

accounts relating to securitization of credit card receivables, excess funding

accounts relating to securitization of credit card receivables and cash

restricted to fund future Air Miles redemptions.

“Restricted Cash Account” means the account on the consolidating

balance sheet of the Borrower related solely to redemption settlement assets of

the Canadian Borrower’s “Air Miles Program.”

“Restricted Payment” means (i) any dividend or other

distribution on any shares of a Person’s capital stock (except dividends

payable solely in shares of its capital stock) or (ii) any 

 

15

 

payment on account of the purchase, redemption,

retirement or acquisition of (a) any shares of a Person’s capital stock or

(b) any option, warrant or other right to acquire shares of a Person’s

capital stock (but not including payments of principal, premium (if any) or

interest made pursuant to the terms of convertible debt securities prior to

conversion).

“Secured Creditors” has the meaning provided in the Security

Documents.

“Security Agreement” means the Security Agreement, dated as

of July 24, 1998, by and between the US Borrower, the other Guarantors

which are Domestic Subsidiaries of the US Borrower and the Collateral Agent, as

amended, modified or supplemented from time to time.

“Security Documents” shall mean the Pledge Agreements, the

Security Agreement and the Canadian Security Documents.

“Senior Secured Leverage Ratio” of any Person means, at any time, the

ratio of (x) all amounts  owing by such

Person to the Administrative Agent, the Collateral Agent or any Bank pursuant

to the terms of this Agreement or any other Credit Document and to the holders

of the loans and issuers of letters of credit under the Related Credit

Agreement to (y) Consolidated EBITDA of such Person for the four fiscal

quarters then most recently ended.

“Subsidiary” means, as to any Person, any corporation

or other entity of which securities or other ownership interests having

ordinary voting power to elect a majority of the board of directors or other

persons performing similar functions are at the time directly or indirectly

owned by such Person; unless otherwise specified, “Subsidiary” means a Subsidiary

of the US Borrower.  Notwithstanding the

foregoing, Subsidiaries of WFNB whose primary business purpose is to facilitate

the sale and securitization of WFNB’s credit card receivables shall not

constitute a Subsidiary for purposes of Sections 6.9 (Negative Pledge),

6.16 (Debt Limitation), 6.19 (Equity Ownership, Limitation on Creation of

Subsidiaries), and 6.24 (Limitation on Voluntary Prepayments and Modifications

of Indebtedness, Modifications of Certain Agreements, etc.) of this Agreement.

“Supplemental Pledge Agreement” shall mean the Residual Pledge

Agreement, dated as of July 24, 1998, between the US Borrower and the

Administrative Agent, as amended, modified, or supplemented from time to time.

“The Community Reinvestment Act” means The Community Reinvestment Act of

1977 (12 U.S.C. 2901 et seq.) as amended.

“The Limited” means The Limited Commerce Corporation,

a Delaware corporation.

“Total Commitment” means the aggregate amount of the

Commitments of each of the Banks.

“Total Interest Expense” means, for any Person, interest paid on

a consolidated basis with respect to all outstanding indebtedness including,

without limitation, capital leases (in accordance with GAAP), all commissions,

discounts and other fees and charges owed in 

 

16

 

connection with letters of credit or lines of credit,

net costs or benefits under interest rate protection agreements, amortization

of deferred financing costs, original issue discounts and any interest expense

relating to deferred compensation arrangements.

“Type” means the type of Loan determined

according to the interest option applicable thereto and the currency in which

such Loan is denominated; i.e., whether a Base Rate Loan, a

Canadian Base Rate Loan, a Euro-Dollar Loan, or a Euro-Canadian Dollar Loan and

whether advanced in U.S. Dollars or Canadian Dollars.

“Unfunded Liabilities” means, with respect to any Plan at any

time, the amount (if any) by which (i) the value of all benefit

liabilities under such Plan, determined on a plan termination basis using the

assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA,

exceeds (ii) the fair market value of all Plan assets allocable to such

liabilities under Title IV of ERISA (excluding any accrued but unpaid

contributions), all determined as of the then most recent valuation date for

such Plan, but only to the extent that such excess represents a potential

liability of a member of the ERISA Group to the PBGC or any other Person under

Title IV of ERISA.

“United States” means the United States of America,

including the States and the District of Columbia, but excluding its

territories and possessions.

“US Borrower” has the meaning provided in the first

paragraph of this Agreement.

“U.S. Dollar Equivalent” means, at any time, (a) with

respect to any amount denominated in U.S. Dollars, such amount and

(b) with respect to any amount denominated in Canadian Dollars, the amount

of U.S. Dollars which would be realized by converting Canadian Dollars into

U.S. Dollars at the exchange rate quoted to the Administrative Agent at

approximately 11:00 a.m. (London, England time) two Business Days prior to

the date on which a computation thereof is required to be made, by major banks

in the interbank foreign exchange market for the purchase of U.S. Dollars for

Canadian Dollars.

“U.S. Dollars” and “U.S. $” shall mean freely

transferable lawful money of the United States of America.

“US Scheme License” means the Amended and Restated License

to Use and Exploit the Air Miles Scheme in the United States, dated

July 24, 1998, between Air Miles International Trading B.V. and the US

Borrower, as such agreement is in effect on the Original Effective Date.

“US Trademark License” means the Amended and Restated License

to Use the Air Miles Trade Marks in the United States, dated July 24, 1998,

between Air Miles International Holdings B.V. and the US Borrower, as such

agreement is in effect on the Original Effective Date.

“WCAS Subordinated Note” means the 10% Subordinated Note due

September 15, 2008, dated September 15, 1998, issued by the US

Borrower to WCAS Capital Partners III, L.P. in the principal amount of

U.S. $52,000,000.

 

17

 

“Welsh,

Carson, Anderson & Stowe Partnerships” means each Welsh, Carson, Anderson & Stowe

limited partnership, as constituted on the Restatement Effective Date, as may

be constituted in the future and any partner, partnership or affiliate of any

of them.

“WFNB” means World Financial Network National

Bank, a national banking association wholly owned by the US Borrower.

“WFNB Note” has the meaning provided in

Section 3.2(h).

“Wholly–Owned Subsidiary” means, as to any Person, any corporation

100% of whose capital stock (other than director’s qualifying shares) is at the

time owned by such Person and/or one or more Wholly–Owned Subsidiaries of

such Person.

“Working Capital” means the excess of Consolidated Current

Assets minus Consolidated Current Liabilities.

Section 1.2.           Accounting Terms and Determinations.  Unless otherwise

specified herein, all accounting terms used herein shall be interpreted, all

accounting determinations hereunder shall be made, and all financial statements

required to be delivered hereunder shall be prepared in accordance with

generally accepted accounting principles in the United States as in effect from

time to time, applied on a basis consistent (except for changes concurred in by

the US Borrower’s independent public accountants) with the most recent audited

consolidated financial statements of the US Borrower and its Consolidated

Subsidiaries delivered to the Banks; provided that, (i) all calculations

of financial covenants and corresponding accounting terms shall include for all

periods covered thereby pro forma adjustments for the (x) actual historical

financial performance of and (y) identifiable cost savings associated with

providing data processing services to any entities acquired as permitted under

Section 6.22(b) and (ii) if a Borrower notifies the Administrative

Agent that such Borrower wishes to amend any covenant in Article 6 to eliminate

the effect of any change in generally accepted accounting principles on the

operation of such covenant (or if the Administrative Agent notifies either

Borrower that the Required Banks wish to amend Article 6 for such

purpose), then the Borrowers’ compliance with such covenant shall be determined

on the basis of generally accepted accounting principles in effect immediately

before the relevant change in generally accepted accounting principles became

effective, until either such notice is withdrawn or such covenant is amended in

a manner satisfactory to the Borrowers and the Required Banks.

Section 1.3.           Types of Borrowings.  The term “Borrowing”

denotes the aggregation of Loans of one or more Banks to be made to a Borrower

pursuant to Article 2 on the same date and in the same currency, all of

which Loans are of the same Type (subject to Article 9) and, except in the

case of Base Rate Loans, have the same initial Interest Period.

 

18

 

ARTICLE

2

THE CREDITS

Section 2.1.           Commitments to Lend.  At any time

on or after the Effective Date and prior to the Maturity Date, each Bank with a

Commitment severally agrees, on the terms and conditions set forth in this Agreement,

to make loans (each a “Loan” and, collectively, the “Loans”)

to the Borrowers pursuant to this Section from time to time in U.S. Dollars and

in Canadian Dollars in amounts such that the U.S. Dollar Equivalent amount

of all Loans made by such Bank to all of the Borrowers at any one time

outstanding shall not exceed the amount of its Commitment.  Each Borrowing under this Section shall be

in the U.S. Dollar Equivalent amount of U.S. $5,000,000 or any larger

multiple of U.S. $1,000,000 (except that any such Borrowing may be in the

aggregate amount of the then unutilized Commitment) and shall be made from the

several Banks ratably in proportion to their respective Commitments.  U.S. Dollar Loans shall either be Base

Rate Loans or Euro-Dollar Loans, and Canadian Dollar Loans shall either be

Canadian Base Rate Loans or Euro-Canadian Dollar Loans.  Within the foregoing limits, each Borrower

may borrow under this Section, prepay Loans to the extent permitted by Section 2.11,

and reborrow at any time prior to the Maturity Date.

Section 2.2.           Notice of Borrowing.  The

respective Borrower shall give the Administrative Agent notice (a “Notice of

Borrowing”) in respect of the Borrowing of Loans not later than

10:00 a.m. (Chicago, Illinois, time) with respect to Borrowings in

Canadian Dollars and 11:00 a.m. (Chicago, Illinois, time) with respect to

Borrowings in U.S. Dollars on (x) the Business Day of the Borrowing

if such Borrowing is to be a Base Rate Borrowing or a Canadian Base Rate

Borrowing and (y) the third Business Day immediately preceding the date of

the Borrowing if such Borrowing is to be a Euro-Dollar Borrowing or

Euro-Canadian Dollar Borrowing, specifying:

                    (i)        the date of such Borrowing, which shall be a Business Day;

                   (ii)        what Type of Loans are to be borrowed and whether the Loans

comprising such Borrowing are to (i) be denominated in U.S. Dollars or

Canadian Dollars, and (ii) bear interest initially at the Base Rate or a

Euro-Dollar Rate in the case of a U.S. Dollar Borrowing or the Canadian Base

Rate or a Euro-Canadian Dollar Rate in the case of a Canadian Dollar Borrowing;

                  (iii)        in the case of a Euro-Dollar Borrowing or a Euro-Canadian

Dollar Borrowing, the duration of the initial Interest Period applicable

thereto, subject to the provisions of the definition of Interest Period and

(x) in the case of a Base Rate Borrowing, the date, if any, on which such

loan will be converted to a Euro-Dollar Loan and (y) in the case of a

Canadian Base Rate Borrowing, the date, if any, on which such loan will be converted

to a Euro-Canadian Dollar Loan; and

                  (iv)        the aggregate amount of such Borrowing.

 

19

 

Section 2.3.           Notice to Banks Funding of Loans.  (a) Upon receipt of a Notice of

Borrowing, the Administrative Agent shall promptly notify each Bank of the

contents thereof and of such Bank’s share of such Borrowing and such Notice of

Borrowing shall not thereafter be revocable by the respective Borrower.

(b)           Not

later than 1:30 p.m. (Chicago, Illinois time) on the date of each

Borrowing, each Bank shall make available its share of such Borrowing, in

Federal or other funds immediately available in Chicago, Illinois, to the

Administrative Agent at its address referred to in Section 11.1 (or, in

the case of any Canadian Dollar Borrowing, at the offices of the Administrative

Agent’s Affiliate, Bank of Montreal, designated in writing to the Banks as set

forth below).  Unless the Administrative

Agent determines that any applicable condition specified in Article 3 has

not been satisfied, the Administrative Agent will make the funds so received

from the Banks available to the respective Borrower at the Administrative

Agent’s aforesaid address, except that in the case of a Canadian Dollar

Borrowing each Bank shall, subject to Article 3 hereof, make available its

Loan comprising part of such Borrowing at the office of the Administrative

Agent’s Canadian Affiliate previously specified in a notice to each Bank, in

Canadian Dollars no later than 2:30 p.m. (Toronto, Ontario, time)

(c)           Unless

the Administrative Agent shall have received notice from a Bank prior to the

date of any Borrowing that such Bank will not make available to the

Administrative Agent such Bank’s share of such Borrowing, the Administrative

Agent may assume that such Bank has made such share available to the

Administrative Agent on the date of such Borrowing in accordance with

subsection (b) of this Section and the Administrative Agent may, in

reliance upon such assumption, make available to the respective Borrower on such

date a corresponding amount.  If and to

the extent that such Bank shall not have so made such share available to the

Administrative Agent, such Bank and the respective 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 such Borrower until the date such amount is repaid to the

Administrative Agent, at (i) in the case of such Borrower, a rate per annum

equal to the higher of the Federal Funds Rate and the interest rate applicable

thereto pursuant to Section 2.6, and (ii) in the case of such Bank,

the Federal Funds Rate, or, in the case of a Loan denominated in Canadian

Dollars, the cost to the Administrative Agent of funding the amount it advanced

to fund such Bank’s Loan, as determined by the Administrative Agent.  If such Bank shall repay to the

Administrative Agent such corresponding amount, such amount so repaid shall

constitute such Bank’s Loan included in such Borrowing for purposes of this

Agreement.

Section 2.4.           Notes.  (a) The

Borrowers’ respective obligations to pay the principal of, and interest on, the

Loans made by each Bank shall be evidenced by promissory notes duly executed

and delivered by the US Borrower substantially in the form of

Exhibit B–1 and by the Canadian Borrower substantially in the form

of Exhibit B–2, with blanks appropriately completed (each a “Note” and,

collectively, the “Notes”).

(b)           Upon

receipt of each Bank’s Notes pursuant to Section 3.1(a), the

Administrative Agent shall forward such Notes to the appropriate Bank.  Each Bank shall record the date and amount

of the respective Loans made by it and the date and amount of each payment of

principal 

 

20

 

made by the respective

Borrower with respect thereto, and may, if such Bank so elects in connection

with any transfer or enforcement of any of its Notes, endorse on the schedule

forming a part thereof appropriate notations to evidence the foregoing

information with respect to such Loans then outstanding under such Note; provided,

that the failure of any Bank to make any such recordation or endorsement shall

not affect the obligations of the respective Borrower hereunder or under the Notes.  Each Bank is hereby irrevocably authorized

by the Borrowers so to endorse its Notes and to attach to and make a part of

its Notes a continuation of any such schedule as and when required.

Section 2.5.           Maturity

of Loans. 

Subject to the provisions of Section 2.8, the Commitment shall

terminate and the principal amount of all then outstanding Loans, together with

accrued interest thereon, shall be due and payable in full on the Maturity

Date.

Section 2.6.           Interest

Rates. 

(a) Each Base Rate Loan shall bear interest on the outstanding

principal amount thereof, for each day from the date such Loan is made (or

converted pursuant to Article 9) until it becomes due, at a rate per annum

equal to the Base Rate plus the Base Rate Margin for such day.  Such interest shall be payable quarterly in

arrears on the last day of each March, June, September, and December in each

year and, with respect to the principal amount of any Base Rate Loan converted

to a Euro-Dollar Loan, on each date a Base Rate Loan is so converted.  Any overdue principal of or interest on any

Base Rate Loan shall bear interest, payable on demand, for each day until paid

at a rate per annum equal to the sum of 2% plus the rate otherwise applicable to Base

Rate Loans for such day.

(b)           Each

Euro-Dollar Loan shall bear interest on the outstanding principal amount

thereof, for each day during each Interest Period applicable thereto, at a rate

per annum equal to the sum of the Euro–Dollar Margin for such day plus

the London Interbank Offered Rate applicable to such Interest Period.  Such interest shall be payable for each

Interest Period on the last day thereof or, in the case of an Interest Period

of six months, the date occurring three months after the first day of such

Interest Period.

(c)           Each

Canadian Base Rate Loan shall bear interest on the outstanding principal amount

thereof, for each day from the date such Loan is made (or converted pursuant to

Article 9) until it becomes due, at a rate per annum equal to the Canadian

Base Rate plus the Canadian Base Rate Margin for such day.  Such interest shall be payable quarterly in

arrears on the last day of each March, June, September, and December in each

year and, with respect to the principal amount of any Canadian Base Rate Loan

converted to a Euro-Canadian Dollar Loan, on each date a Canadian Base Rate

Loan is so converted.  Any overdue

principal of or interest on any Canadian Base Rate Loan shall bear interest,

payable on demand, for each day until paid at a rate per annum equal to the sum

of 2% plus

the rate otherwise applicable to Canadian Base Rate Loans for such day.

(d)           Each

Euro-Canadian Dollar Loan shall bear interest on the outstanding principal

amount thereof, for each day during each Interest Period applicable thereto, at

a rate per annum equal to the sum of the Euro-Canadian Dollar Margin for such

day plus

the London Interbank Offered Rate applicable to such Interest Period.  Such interest shall be payable for each

Interest 

 

21

 

Period on the last day

thereof or, in the case of an Interest Period of six months, the date occurring

three months after the first day of such Interest Period.

(e)           Any

overdue principal of, or interest on, any Euro-Dollar Loan shall bear interest,

payable on demand, for each day until paid at a rate per annum equal to the

higher of (i) the sum of 2% plus the Euro-Dollar Margin for such day plus

the quotient obtained (rounded upward, if necessary, to the next higher 1/100

of it) by dividing (x) the average rate per annum (rounded upward, if

necessary, to the next higher 1/16 of 1%) of the respective rates per annum at

which one day (or, if such amount due remains unpaid more than three Business

Days, then for such other period of time not longer than three months as the Administrative

Agent may select) deposits in Dollars in an amount approximately equal to such

overdue payment due to the Administrative Agent is offered to the

Administrative Agent in the London interbank market for the applicable period

determined as provided above by (y) one minus the Reserve Percentage

(or, if the circumstances described in clause (a) or (b) of Section 9.1

shall exist, at a rate per annum equal to the sum of 2% plus the rate applicable to

Base Rate Loans for such day) and (ii) the sum of 2% plus the Euro-Dollar Margin

for such day plus the London Interbank Offered Rate applicable to such Loan at

the date such payment was due.

(f)            Any

overdue principal of, or interest on, any Euro-Canadian Dollar Loan shall bear

interest, payable on demand, for each day until paid at a rate per annum equal

to the higher of (i) the sum of 2% plus the Euro-Canadian Dollar Margin for

such day plus

the quotient obtained (rounded upward, if necessary, to the next higher 1/100

of it) by dividing (x) the average rate per annum (rounded upward, if

necessary, to the next higher 1/16 of 1%) of the respective rates per annum at

which one day (or, if such amount due remains unpaid more than three Business

Days, then for such other period of time not longer than three months as the

Administrative Agent may select) deposits in Canadian Dollars in an amount

approximately equal to such overdue payment due to the Administrative Agent is

offered to the Administrative Agent in the London interbank market for the

applicable period determined as provided above by (y) one minus

the Reserve Percentage (or, if the circumstances described in clause (a) or (b)

of Section 9.1 shall exist, at a rate per annum equal to the sum of 2% plus

the rate applicable to Canadian Base Rate Loans for such day) and (ii) the

sum of 2% plus

the Euro-Canadian Dollar Margin for such day plus the London Interbank Offered

Rate applicable to such Loan at the date such payment was due.

(g)           The

Administrative Agent shall determine each interest rate applicable to the Loans

hereunder.  The Administrative Agent

shall give prompt notice to the respective Borrower and the participating Banks

of each rate of interest so determined, and its determination thereof shall be

conclusive in the absence of manifest error.

(h)           The

Administrative Agent agrees to use its best efforts to furnish quotations as

contemplated by this Section.  If the

Administrative Agent is unable to provide a quotation, the provisions of

Section 9.1 shall apply.

Section 2.7.           Fees. 

(a) During the period from and including the Effective Date to and

including the date upon which the Total Commitment is terminated, the US

Borrower shall pay to the Administrative Agent for the account of the Banks

with Commitments, ratably in proportion to their respective Commitments, a

commitment fee at the rate per annum equal to the 

 

22

 

Applicable Commitment Fee

Percentage on the daily amount by which the Total Commitment exceeds the

aggregate principal amount of Loans to all Borrowers outstanding on such

date.  Such commitment fee shall accrue

from and including the Effective Date to, but excluding the date of termination

of, the Commitments in their entirety. 

Accrued commitment fees shall be payable quarterly in arrears on the

last day of each March, June, September, and December in each year and on the

date of termination of the Commitments in their entirety.

(b)           On

or before the Effective Date, the US Borrower shall pay to the Administrative

Agent for the benefit of the Banks in proportion to their Commitments a closing

fee of $125,000 in the aggregate.

(c)           The

Borrowers shall pay to the Administrative Agent such amounts as are agreed to

from time to time.

Section 2.8.           Termination or Reduction of Commitments.

(A)          Optional

Reduction of Commitments. 

The Borrowers may, upon at least three Business Days’ notice to the

Administrative Agent, (i) terminate the Total Commitment at any time, if

no Loans are outstanding at such time or (ii) ratably reduce from time to

time by an aggregate amount of the U.S. Dollar Equivalent of $5,000,000 or

a larger multiple of the U.S. Dollar Equivalent of $1,000,000 the

aggregate amount of the Total Commitment in excess of the aggregate outstanding

principal amount of the Loans.  Upon

receipt of a notice pursuant to this Section, the Administrative Agent shall

promptly notify each Bank of the contents thereof.

(B)           Mandatory

Reduction of Commitments.

                   (a)        In addition to any other mandatory commitment reductions

pursuant to this Section 2.8(B), the Total Commitment (and the respective

Commitment of each Bank) shall terminate on the earlier to occur of

(x) the Maturity Date and (y) unless the Required Banks otherwise

agree in writing, the date on which any Change of Control occurs.

                   (b)        In addition to any other mandatory commitment reductions

pursuant to this Section 2.8(B), after the Term Loans (as defined in the

Related Credit Agreement) have been paid in full, the Total Commitment (and the

respective Commitment of each Bank) shall be reduced as described in

clauses (i)—(vi) below:

                    (i)        On the date of the receipt thereof by the US Borrower and/or

any of its Subsidiaries, the Total Commitment and the revolving loan commitment

outstanding under the Related Credit Agreement shall be reduced in an aggregate

amount equal to 100% of the proceeds (net of underwriting discounts,

commissions and other reasonable costs associated therewith) of the incurrence

of Debt for borrowed money by the US Borrower and/or any of its Subsidiaries

(other than Debt permitted by Section 6.16), with such commitments to be

reduced pro rata based on the amounts thereof.

 

23

 

                   (ii)        On the date of the receipt thereof by

the US Borrower, the Total Commitment and the revolving loan commitment

outstanding under the Related Credit Agreement shall be reduced in an aggregate

amount equal to 100% of the cash proceeds (net of underwriting discounts,

commissions and other reasonable costs associated therewith) of any sale or

issuance of its equity and 100% of any amount of cash received by the US

Borrower in connection with any contribution to its capital, with such

commitments to be reduced pro rata based on the amounts thereof; provided,

however, that cash proceeds not exceeding U.S. $52,000,000 from

the US Borrower’s follow–on offering of its equity securities

applied to repay the WCAS Subordinated Note on or before December 31,

2002, shall not be required to be applied as a mandatory reduction of the Total

Commitments hereunder.

                  (iii)        Within 30 days following each date on which the US

Borrower or any of its Subsidiaries receives any proceeds from any Recovery

Event, the Total Commitment and the revolving loan commitment outstanding under

the Related Credit Agreement shall be reduced in an aggregate amount equal to

100% of the cash proceeds of such Recovery Event (net of reasonable costs,

expenses, taxes incurred in connection with such Recovery Event and amounts

required to be paid to third parties), with such commitments to be reduced pro

rata based on the amounts thereof, provided that so long as no Default then

exists and such proceeds do not exceed U.S. $2,500,000 in any fiscal year,

such commitments shall not be required to be so reduced hereunder to the extent

that the US Borrower has delivered a certificate to the Administrative Agent on

or prior to such date stating that the proceeds from such Recovery Event shall

be used or committed to be used to replace or restore any properties or assets

in respect of which such proceeds were paid or otherwise acquire productive

assets usable in the business of the US Borrower and its Subsidiaries within a

period specified in such certificate not to exceed 180 days after the date of

receipt of such proceeds with respect to such Recovery Event (which certificate

shall set forth the estimates of the proceeds to be so expended); and provided

further, that if all or any portion of such proceeds are not so used

within the period specified in the relevant certificate furnished pursuant to

the immediately preceding proviso, the Total Commitment and the revolving loan

commitments outstanding under the Related Credit Agreement shall be reduced in

an aggregate amount equal to such remaining portion of such proceeds, with such

commitments to be reduced pro rata based on the amounts thereof.

                  (iv)        On each date which is 90 days after the last day of each

fiscal year of the US Borrower (such date, the “ECF Prepayment Date”),

beginning with the fiscal year of the US Borrower ending on December 31,

2002, the Total Commitment and the revolving loan commitment outstanding under

the Related  Credit Agreement shall be

reduced in an aggregate amount equal to 50% of Excess Cash Flow (such amount,

the “ECF

Prepayment Amount”) of the US Borrower and its Subsidiaries for the

fiscal year of the US Borrower then last 

 

24

 

ended (such fiscal year, the “ECF Prepayment Period”), with such

commitments to be reduced pro rata based on the amounts thereof.

                   (v)        On the date of receipt thereof by the US Borrower and/or any

of its Subsidiaries of Cash Proceeds from any Asset Sale, the Total Commitment

and the revolving loan commitment outstanding under the Related Credit

Agreement shall be reduced in an aggregate amount equal to 100% of the Net Cash

Proceeds from such Asset Sale, with such commitments to be reduced pro rata

based on the amounts thereof; provided that up to an aggregate of

U.S. $2,500,000 of the Total Commitment and the revolving loan commitment

under the Related Credit Agreement during any fiscal year of the Borrower need

not be reduced under this subsection (B)(v) to the extent the US Borrower

elects, as hereinafter provided, to cause the Net Cash Proceeds from Asset

Sales during such fiscal year to be reinvested in Reinvestment Assets (a “Reinvestment

Election”).  The US Borrower

may exercise its Reinvestment Election (within the parameters specified in the

preceding sentence) with respect to an Asset Sale if (x) no Default exists

and (y) the US Borrower delivers a Reinvestment Notice to the

Administrative Agent within three Business Days following the date of the

consummation of the respective Asset Sale, with such Reinvestment Election

being effective with respect to the Net Cash Proceeds of such Asset Sale equal

to the anticipated reinvestment amount specified in such Reinvestment Notice, provided

further, that the Total Commitment and the revolving loan commitment

under the Related Credit Agreement need not be reduced under this

subsection (B)(v) to the extent the assets sold pursuant to such Asset

Sale, at the time of such Asset Sale, secured Debt permitted pursuant to

Section 6.16 (other than Debt outstanding under this Agreement and the

Related Credit Agreement) and the Net Cash Proceeds from such Asset Sale do not

exceed the amount of Debt so secured.

                  (vi)        On the Reinvestment Prepayment Date with respect to a

Reinvestment Election, the Total Commitment and the revolving loan commitment

outstanding under the Revolving Credit Agreement shall be reduced in an

aggregate amount equal to the Reinvestment Prepayment Amount, if any, for such

Reinvestment Election, with such commitments to be reduced pro rata based on

the amounts thereof.

                   (c)        Each reduction to the Total Commitment pursuant to this

Section 2.8(B) shall be applied proportionately to reduce the Commitment

of each Bank with such a Commitment.

(C)           Notwithstanding

anything to the contrary contained herein, any reduction of the Total

Commitment made under Section 2.8(A) or Section 2.8(B) above, other

than Section 2.8(B)(a) above, shall be made on a pro rata basis

between this Agreement and the revolving loan commitments outstanding under the

Related Credit Agreement based on the principal amounts of such commitments.

 

25

 

Section 2.9.           Method of Electing Interest Rates for

Loans. 

(a) The Loans included in a Borrowing shall be the Type of Loan

specified by the respective Borrower in the applicable Notice of Borrowing

given pursuant to Section 2.2. 

Thereafter, the respective Borrower shall deliver a notice (a “Notice of

Interest Period Election”) to the Administrative Agent not later

than 10:00 a.m. (Chicago, Illinois, time) with respect to Borrowings in

Canadian Dollars and 11:00 a.m. (Chicago, Illinois, time) with respect to

Borrowings in U.S. Dollars, in each case on the third Business Day prior

to (i) if such Borrowing was initially a Base Rate Borrowing, the

commencement of the first Interest Period with respect to the conversion of

such Base Rate Loan into a Euro-Dollar Loan specifying the duration of such

Interest Period, (ii) if such Borrowing was initially a Canadian Base Rate

Borrowing, the commencement of the first Interest Period with respect to the

conversion of such Canadian Base Rate Loan into a Euro-Canadian Dollar Loan

specifying the duration of such Interest Period, or (iii) at any other

time, the last day of the current Interest Period specifying the duration of

the additional Interest Period which is to commence.  Each Interest Period specified in a Notice of Interest Period

Election shall comply with the provisions of the definition of “Interest

Period.”  Notwithstanding the foregoing,

the respective Borrower may not elect to convert any Loan into, or continue any

Loan as, a Euro-Dollar Loan or a Euro-Canadian Dollar Loan pursuant to any

Notice of Interest Rate Election if at the time such notice is delivered an

Event of Default shall have occurred and be continuing.

(b)           Each

Notice of Interest Rate Election shall specify:

                    (i)        the Borrowing of Loans (or portion thereof) to which such

notice applies;

                   (ii)        the date on which the conversion or continuation selected in

such notice is to be effective, which shall comply with the applicable clause

of subsection (a) above;

                  (iii)        if the Loans comprising such Borrowing are to be converted,

the new Type of Loans and, if the Loans being converted are to be Euro-Dollar

Loans or Euro-Canadian Dollar Loans, the duration of the next succeeding

Interest Period applicable thereto; and

                  (iv)        if such Loans are to be continued as Euro-Dollar Loans or

Euro-Canadian Dollar Loans for an additional Interest Period, the duration of

such additional Interest Period.

(c)           Upon

receipt of a Notice of Interest Period Election from a Borrower pursuant to

subsection (a) above, the Administrative Agent shall promptly notify each Bank

of the contents thereof and such notice shall not thereafter be revocable by

such Borrower.  If no Notice of Interest

Period Election is timely received prior to the end of an Interest Period, the

respective Borrower shall be deemed to have elected that such Loan be continued

as a Base Rate Loan or Canadian Base Rate Loan, as applicable.

(d)           An

election by the Borrower to change or continue the rate of interest applicable

to any Borrowing of Loans pursuant to this Section shall not constitute a

“Borrowing” subject to the provisions of Section 3.2.

 

26

 

Section 2.10.        Optional Prepayments. 

(a) Subject, in the case of Euro-Dollar Loans and Euro-Canadian

Dollar Loans, to Section 2.13, the Borrowers may, upon at least one

Business Day’s notice to the Administrative Agent, prepay any Base Rate Loans

or Canadian Base Rate Loans or, upon at least three Business Days’ notice to

the Administrative Agent, prepay any Euro-Dollar Loans or Euro-Canadian Dollar

Loans, in each case in whole at any time, or from time to time in part in

amounts aggregating U.S. $5,000,000 (or if such Loan is denominated in

Canadian Dollars, an amount for which the U.S. Dollar Equivalent is not less

than U.S. $5,000,000) or any larger multiple of U.S. $1,000,000 (or,

if such Loan is denominated in Canadian Dollars, an amount for which the U.S.

Dollar Equivalent is not less than U.S. $1,000,000), by paying the

principal amount to be prepaid together with accrued interest thereon to the

date of prepayment.  Each such optional

prepayment shall be applied to prepay ratably the Loans of the several Banks.

(b)           Upon

receipt of a notice of prepayment pursuant to this Section, the Administrative

Agent shall promptly notify each Bank with Loans outstanding of the contents

thereof and of such Bank’s ratable share (if any) of such prepayment and such

notice shall not thereafter be revocable by the respective Borrower.

Section 2.11.        Mandatory Prepayments.

(A)          Requirements:

                   (a)        If on any date the sum of the aggregate outstanding

U.S. Dollar Equivalent amount of Loans exceeds the Total Commitment as

then in effect, the Borrowers shall repay on such date the principal of Loans

in an aggregate amount equal to such excess; provided that, if such

excess arises as a result of fluctuations in the value of the Canadian Dollar,

the Borrower shall repay such excess on the date any Borrowing is advanced,

continued, or converted into another Type of Loan hereunder, and in any event

not less often than monthly within fifteen days of receipt by the Borrower of

written notice from the Administrative Agent of such excess.

                   (b)        Notwithstanding anything to the contrary contained elsewhere

in this Agreement, all then outstanding Loans shall be repaid in full on the

Maturity Date.

(B)           Application.

With respect to each prepayment of Loans required by Section 2.11(A), the

Borrowers may designate the Types of Loans which are to be prepaid and the

specific Borrowing or Borrowings pursuant to which made, provided that (i) in

the case of U.S. Dollar Borrowings, Euro-Dollar Loans may be so designated

for prepayment pursuant to this Section 2.11 only on the last day of an

Interest Period applicable thereto unless all Euro-Dollar Loans with Interest Periods

ending on such date of required prepayment and all Base Rate Loans have been

paid in full and, in the case of Canadian Dollar Borrowings, Euro-Canadian

Dollar Loans may be so designated for prepayment pursuant to this

Section 2.11 only on the last day of an Interest Period applicable thereto

unless all Euro-Canadian Dollar Loans with Interest Periods ending on such date

of required prepayment and all Canadian Base Rate Loans have been paid in full;

(ii) if any prepayment of Euro-Dollar Loans or Euro-Canadian Dollar Loans

made pursuant to a single Borrowing shall reduce the outstanding Loans made

pursuant to such Borrowing to an 

 

27

 

amount less than the

Minimum Borrowing Amount for such Borrowing, such Borrowing shall be

immediately converted into Base Rate Loans or Canadian Base Rate Loans, as

applicable; and (iii) each prepayment of Loans pursuant to a Borrowing

shall be applied pro rata among such Loans. 

In the absence of a designation by the Borrowers as described in the

preceding sentence, the Administrative Agent shall, subject to the above, make

such designation in its sole discretion with a view, but no obligation, to

minimize breakage costs.  Notwithstanding

the foregoing provisions of this Section 2.11(B), if at any time a

mandatory or voluntary prepayment of Loans pursuant to Sections 2.10 or

2.11(A) above would result, after giving effect to the procedures set forth

above, in a Borrower incurring breakage costs as a result of Euro-Dollar Loans

or Euro-Canadian Dollar Loans being prepaid other than on the last day of an

Interest Period applicable thereto (the ”Affected Loans”), then such

Borrower may in its sole discretion initially deposit a portion (up to 100%) of

the amounts that otherwise would have been paid in respect of the Affected

Loans with the Administrative Agent (which deposit must be equal in amount to

the amount of the Affected Loans not immediately prepaid) to be held as

security for the obligations of such Borrower hereunder pursuant to a cash

collateral arrangement satisfactory to the Administrative Agent and shall

provide for investments satisfactory to the Administrative Agent, with such

cash collateral to be directly applied upon the first occurrence (or

occurrences) thereafter of the last day of an Interest Period applicable to the

relevant Loans (or such earlier date or dates as shall be requested by such

Borrower), to repay an aggregate principal amount of such Loans equal to the

Affected Loans not initially prepaid pursuant to this sentence.  Notwithstanding anything to the contrary

contained in the immediately preceding sentence, all amounts deposited as cash

collateral pursuant to the immediately preceding sentence shall be held for the

sole benefit of the Banks whose Loans would otherwise have been immediately

prepaid with the amounts deposited and upon the taking of any action by the

Administrative Agent or the Banks pursuant to the remedial provisions of

Article 7, any amounts held as cash collateral pursuant to this Section 2.11(B)

shall, subject to the requirements of applicable law, be immediately applied to

repay Loans.

Section 2.12.        General Provisions as to Payments.  (a) The

Borrowers shall make each payment of principal of, and interest on, the Loans

and of fees hereunder (i) not later than 12:00 Noon (Chicago,

Illinois time) on the date when due, in Federal or other funds immediately

available in Chicago, Illinois, to the Administrative Agent at its address

referred to in Section 11.1, or, if such payment is to be made in Canadian

Dollars, no later than 12:00 Noon (Toronto, Ontario, time) to such office as

the Administrative Agent has previously specified in a notice to the Borrowers

for the benefit of the Bank or Banks entitled thereto and (ii) without any

right to set–off, deduction or counterclaim by any Borrower.  All payments made hereunder shall be made

(i) in the case of Obligations denominated in U.S. Dollars, in U.S.

Dollars in immediately available funds at the place of payment, or (ii) in

the case of Obligations denominated in Canadian Dollars, in Canadian Dollars in

immediately available funds at the place of payment.  The Administrative Agent will promptly distribute to each Bank

its ratable share of each such payment received by the Administrative Agent for

the account of the Banks.  Whenever any

payment of principal of, or interest on, the Base Rate Loans or the Canadian

Base Rate Loans or of fees shall be due on a day which is not a Business Day,

the date for payment thereof shall be extended to the next succeeding Business

Day.  Whenever any payment of principal

of, or interest on, the Euro-Dollar Loans or Euro-Canadian Dollar Loans, as the

case may be, shall be due on a day which is not a Business Day, the date for

payment thereof shall be 

 

28

 

extended to the next

succeeding Business Day unless such Business Day falls in another calendar

month, in which case the date for payment thereof shall be the next preceding

Business Day.  If the date for any

payment of principal is extended by operation of law or otherwise, interest

thereon shall be payable for such extended time.

(b)           Unless

the Administrative Agent shall have received notice from any Borrower prior to

the date on which any payment is due to the Banks hereunder that such Borrower

will not make such payment in full, the Administrative Agent may assume that

such Borrower has made such payment in full to the Administrative Agent on such

date and the Administrative Agent may, in reliance upon such assumption, cause

to be distributed to each Bank on such due date an amount equal to the amount

then due such Bank.  If and to the

extent that such Borrower shall not have so made such payment, each Bank shall

repay to the Administrative Agent forthwith on demand such amount distributed

to such Bank together with interest thereon, for each day from the date such

amount is distributed to such Bank until the date such Bank repays such amount

to the Administrative Agent, at the Federal Funds Rate in the case of U.S. Dollar

Loans or the CDOR Rate in the case of Canadian Dollar Loans.

Section 2.13.        Funding

Losses. 

If a Borrower makes any payment of principal with respect to any

Euro-Dollar Loan or Euro-Canadian Dollar Loan or any Euro-Dollar Loan or

Euro-Canadian Dollar Loan is prepaid, converted or becomes due (pursuant to

Article 2, 7, or 9 or otherwise) on any day other than the last day of an

Interest Period applicable thereto, or if a Borrower fails to borrow, prepay or

continue any Euro-Dollar Loans or Euro-Canadian Dollar Loans after notice has

been given to any Bank in accordance with Section 2.2, 2.9, or 2.10 such

Borrower shall reimburse each Bank within 15 days after demand for any

resulting loss or expense incurred by it (or by an existing or prospective Participant

in the related Loan), including, without limitation, any loss incurred in

obtaining, liquidating or employing deposits from third parties, but excluding

loss of margin for the period after any such payment or conversion or failure

to borrow, prepay, convert or continue, provided that such Bank shall have

delivered to such Borrower a certificate as to the amount of such loss or

expense, which certificate shall be conclusive in the absence of manifest

error.

Section 2.14.        Computation of Interest and Fees. 

(a) Interest based on the Prime Rate or the Canadian Base Rate

hereunder shall be computed on the basis of a year of 365 days (or

366 days in a leap year) and paid for the actual number of days elapsed (including

the first day but excluding the last day). 

All other interest and fees shall be computed on the basis of a year of

360 days and paid for the actual number of days elapsed (including the

first day but excluding the last day if and only if such payment is made in

accordance with the provisions of the first sentence of Section 2.12(a)).

(b)           For

purposes of the Interest Act (Canada), (i) whenever any interest or fee

under this Agreement is calculated using a rate based on a year of

360 days or 365 days, as the case may be, the rate determined pursuant

to such calculation, when expressed as an annual rate, is equivalent to (x) the

applicable rate based on a year of 360 or 365 days, as the case may be,

(y) multiplied by the actual number of days in the relevant year of

calculation and (z) divided by 360 or 365, as the case may be,

(ii) the principle of deemed reinvestment of interest does not 

 

29

 

apply to any interest

calculation under this Agreement, and (iii) the rates of interest

stipulated in this Agreement are intended to be nominal rates and not effective

rates or yields.

Section 2.15.        Regulation D Compensation.  Each Bank

may require a Borrower to pay, contemporaneously with each payment of interest

on the Euro-Dollar Loans or the Euro-Canadian Dollar Loans, additional interest

on the related Euro-Dollar Loan or Euro-Canadian Dollar Loan of such Bank at a

rate per annum determined by such Bank up to but not exceeding the excess of

(i) (A) the London Interbank Offered Rate then in effect for such

Loan divided by (B) one minus the Reserve Percentage over (ii) such

London Interbank Offered Rate.  Any Bank

wishing to require payment of such additional interest (x) shall so notify

such Borrower and the Administrative Agent, in which case such additional

interest on the Euro-Dollar Loan or Euro-Canadian Dollar Loan of such Bank

shall be payable to such Bank at the place indicated in such notice with

respect to each Interest Period commencing at least three Business Days after

the giving of such notice and (y) shall notify such Borrower at least five

Business Days prior to each date on which interest is payable on the

Euro-Dollar Loans or the Euro-Canadian Dollar Loans of the amount then due it

under this Section.

ARTICLE

3

CONDITIONS

Section 3.1.           Effectiveness.  The

Effective Date shall occur upon receipt by the Administrative Agent of the

following documents:

                   (a)        opinions of counsel for the Credit Parties, including

Canadian counsel to the Credit Parties, each in a form reasonably acceptable to

the Administrative Agent and covering such matters relating to the transactions

contemplated hereby as the Administrative Agent or the Required Banks may

reasonably request;

                   (b)        all documents the Administrative Agent may reasonably request

relating to the corporate authority of each Credit Party which is a party

hereto and the validity of this Agreement, all in form and substance

satisfactory to the Administrative Agent;

                   (c)        copies of this Agreement executed by each of the Borrowers,

each Guarantor and each of the Banks, and copies of the Notes executed by each

of the Borrowers in favor of each of the Banks;

                   (d)        the Security Documents shall have been amended in a manner

reasonably satisfactory to the Administrative Agent and the Banks providing for

the Obligations to be secured by the Collateral provided for therein on a pari passu basis

with the holders of the loans and letters of credit outstanding under the

Related Credit Agreement; all filings (including, without limitation, pursuant

to the Uniform Commercial Code) and recordings shall have been accomplished

with respect to the Security Documents in such jurisdictions as may be required

by law to establish, perfect, protect and preserve the rights, titles,

interests, remedies, powers, privileges, liens and security interests of the

Collateral Agent in the Collateral covered by the Security Documents and any

giving of 

 

30

 

notice or the taking of any other action to such end (whether similar

or dissimilar) required by law shall have been given or taken.  On or prior to the Effective Date, the

Collateral Agent shall have received satisfactory evidence as to any such

filing, recording, registration, giving of notice or other action so taken or

made (except, in respect of the Canadian Security Documents, such filings with

(w) Quebec filing offices to the extent the value of Collateral located

therein at any one time does not exceed U.S. $2,000,000 in the aggregate,

(x) the Ontario PPSA filing office to the extent the Ontario Public

Service Employees’ Union strike prevents the filing thereof, (y) Canadian

trademark authorities to the extent the filing thereof is separately

contemplated by the undertaking dated the Effective Date, and (z) land registry

offices in connection with leased premises with respect to which landlord

consent has not been obtained); and the Banks and the holders of the loans and

letters of credit outstanding under the Related Credit Agreement shall have

entered into the Intercreditor Agreement, which shall be acknowledged and

consented to by each of the Credit Parties party to the Security Documents;

                   (e)        the Administrative Agent shall have received the full amount

of the fees due from the Borrowers pursuant to Section 2.7;

                    (f)        the Administrative Agent shall have received fully executed

copies of the License Agreements;

                   (g)        the Administrative Agent shall have received fully executed

copies of the WCAS Subordinated Note;

                   (h)        the Administrative Agent shall have received insurance

certificates complying with the requirements of Section 6.3 for the

business and properties of the Borrowers and their Subsidiaries naming the

Collateral Agent as an additional insured and loss payee (except that, in the

case of insurance policies covering property of the Canadian Borrower and LMG,

the Collateral Agent shall not be named as an additional insured or loss payee)

and stating that such insurance shall not be canceled without 30 days

prior written notice to the Collateral Agent.

The Administrative

Agent shall promptly notify the Borrowers and the Banks of the Effective Date,

and such notice shall be conclusive and binding on all parties hereto.

Section 3.2.           Each

Borrowing. 

The obligation of the Banks to make each Loan hereunder is subject at

the time of such Loan to the satisfaction of the following conditions:

                   (a)        the fact that the Effective Date shall have occurred;

                   (b)        receipt by the Administrative Agent of a Notice of Borrowing

as required by Section 2.2;

 

31

 

                   (c)        the fact that, immediately after any

Borrowing of Loans, the aggregate U.S. Dollar Equivalent amount of all

Loans made hereunder will not exceed the aggregate amount of the Commitments in

effect;

                   (d)        the fact that, immediately before and after such Borrowing,

no Default shall have occurred and be continuing;

                   (e)        the fact that the representations and warranties of the

Credit Parties contained in this Agreement shall be true and correct in all

material respects on and as of the date of such Borrowing;

                    (f)        with respect to the transactions contemplated by the Credit

Agreement, the Pledge Agreements, the Security Agreement and the Canadian

Security Documents, each Credit Party shall have obtained any necessary

consents, waivers, approvals, authorizations, registrations, filings, licenses

and notifications (including, if necessary, qualifying to do business in, and

qualifying under the applicable consumer laws of, each jurisdiction where the

applicable party is then doing business, or is in the process of obtaining such

qualification in each jurisdiction where the applicable party is expected to be

doing business utilizing the proceeds of such Loan) and the same shall be in

full force and effect;

                   (g)        the Security Documents shall be in full force and effect, the

Collateral Agent shall have a first priority perfected security interest in all

assets of the Borrowers and their respective Subsidiaries purported to be

covered thereby (subject to the exceptions set forth therein and in

Sections 6.19 and 10.1(a) hereof), and all filings (including, without

limitation, pursuant to the Uniform Commercial Code or foreign equivalent) and

recordings shall have been accomplished with respect to the Security Agreement

and the Canadian Security Documents in such jurisdictions as may be required by

law to establish, perfect, protect and preserve the rights, titles, interests,

remedies, powers, privileges, liens and security interests of the Collateral

Agent in the Assigned Collateral covered by the Security Agreement and the Canadian

Security Documents (except, in respect of the Canadian Security Documents, such

filings with (w) Quebec filing offices to the extent the value of

Collateral located therein at any one time does not exceed U.S. $2,000,000

in the aggregate, (x) the Ontario PPSA filing office to the extent the

Ontario Public Service Employees’ Union strike prevents the filing thereof,

(y) Canadian trademark authorities to the extent the filing thereof is

separately contemplated by the undertaking dated the Effective Date, and (z)

land registry offices in connection with leased premises with respect to which

landlord consent has not been obtained) and any giving of notice or the taking

of any other action to such end (whether similar or dissimilar) required by law

shall have been given or taken.  The

Administrative Agent and the Collateral Agent shall have received satisfactory

evidence as to any such filing, recording, registration, giving of notice or

other action so taken or made; and

                   (h)        in the case of a Borrowing in U.S. Dollars, the

revolving loan commitments outstanding under the Related Credit Agreement shall

be fully drawn and there shall be no unused revolving loan commitments

outstanding thereunder.

 

32

 

Each Borrowing hereunder shall be deemed to be a representation and

warranty by the respective Borrowers on the date of such Borrowing as to the

facts specified in clauses (c), (d), (e), (f), (g), and (h) of this Section.

ARTICLE

4

REPRESENTATIONS AND

WARRANTIES

The Borrowers

represent and warrant that:

Section 4.1.           Corporate

Existence and Power. 

Each Credit Party is a corporation, duly organized and validly existing

and, where applicable, in good standing under the laws of the jurisdiction of

its incorporation, and has all corporate powers and all material governmental

licenses, authorizations, consents and approvals required to carry on its

business as now conducted.

Section 4.2.           Corporate

and Governmental Authorization; No Contravention.  The

execution, delivery and performance by each Credit Party of the Credit

Documents to which it is a party are within the corporate powers of such Credit

Party, have been duly authorized by all necessary corporate action, require no

action by or in respect of, or filing with, any governmental body, agency or

official (other than a filing with the Canadian Federal Government in

connection with the change of control of LMG, which filing has been made) and

do not contravene, or constitute a default under, any provision of applicable

law or regulation or of the articles of association, the organizational

certificate or bylaws of such Credit Party or of any agreement, judgment,

injunction, order, decree or other instrument binding upon the Borrowers or any

of their Subsidiaries or result in the creation or imposition of any Lien on

any asset of either Borrower or any of their Subsidiaries (other than Liens

granted pursuant hereto).

Section 4.3.           Binding Effect.  This

Agreement and the other Credit Documents constitute valid and binding agreements

of the Borrowers and each other Credit Party which is a party thereto, and each

Note, when executed and delivered in accordance with this Agreement, will

constitute a valid and binding obligation of the respective Borrower, in each

case enforceable in accordance with its terms.

Section 4.4.           Financial

Information. 

(a) The consolidated balance sheet of the US Borrower and its

Consolidated Subsidiaries as of December 31, 2001, and the related

consolidated statements of income, retained earnings and cash flows for the

fiscal year then ended, reported on by Deloitte & Touche LLP, a copy

of which has been delivered to each of the Banks, fairly present the

consolidated financial position of the US Borrower and its Consolidated

Subsidiaries as of such date and their consolidated results of operations and

cash flows for such fiscal year.

(b)           Since December 31, 2001, there

has been no material adverse change in the business, financial position,

results of operations or prospects of the US Borrower and its Consolidated

Subsidiaries, considered as a whole.

 

33

 

(c)           On and as of the Effective Date,

(a) the sum of the assets, at a fair valuation, of each of the Borrowers

on a stand alone basis and of the US Borrower and its Subsidiaries taken as a

whole will exceed its debts; (b) each of the Borrowers on a stand alone

basis and the US Borrower and its Subsidiaries taken as a whole has not

incurred and does not intend to incur debts beyond their ability to pay such debts

as such debts mature; and (c) each of the Borrowers on a stand alone basis

and the US Borrower and its Subsidiaries taken as a whole will have sufficient

capital with which to conduct its business. 

For purposes of this Section 4.4(c), “debt” means any liability on

a claim, and “claim” means (i) right to payment, whether or not such a

right is reduced to judgment, liquidated, unliquidated, fixed, contingent,

matured, unmatured, disputed, undisputed, legal, equitable, secured, or

unsecured or (ii) right to an equitable remedy for breach of performance

if such breach gives rise to a payment, whether or not such right to an

equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,

disputed, undisputed, secured or unsecured.

(d)           Except as fully disclosed in the

financial statements delivered pursuant to Section 4.4(a) there were as of

the Effective Date no liabilities or obligations with respect to the US

Borrower or any of its Subsidiaries of any nature whatsoever (whether absolute,

accrued, contingent or otherwise and whether or not due) which, either

individually or in aggregate, could reasonably be expected to have a material

and adverse effect on either Borrower or the US Borrower and its Subsidiaries

taken as a whole.  As of the Effective

Date, neither Borrower knows of any basis for the assertion against it or any

of its Subsidiaries of any liability or obligation of any nature whatsoever

that is not fully disclosed in the financial statements delivered pursuant to

Section 4.4(a) which, either individually or in the aggregate, could  reasonably

be expected to be material to either Borrower or the U.S. Borrower and its

Subsidiaries taken as a whole.

Section 4.5.           Litigation.  There is no

action, suit or proceeding pending against, or to the knowledge of either

Borrower threatened against or affecting, either Borrower or any of their

respective Subsidiaries before any court or arbitrator or any governmental

body, agency or official in which there is a reasonable possibility of an adverse

decision which could materially adversely affect the business, consolidated

financial position or consolidated results of operations of either Borrower and

its Consolidated Subsidiaries, considered as a whole, or which in any manner

draws into question the validity or enforceability of any Credit Document.

Section 4.6.           Compliance with ERISA.  (a) To

the best of the Borrowers’ knowledge, after reasonable investigation, each

member of the ERISA Group has fulfilled its obligations under the minimum

funding standards of ERISA and the Code with respect to each Plan and is in

compliance in all material respects with the presently applicable provisions of

ERISA and the Code with respect to each Plan. 

No member of the ERISA Group has (i) sought a waiver of the minimum

funding standard under Section 412 of the Code in respect of any Plan,

(ii) failed to make any contribution or payment to any Plan or

Multiemployer Plan or in respect of any Benefit Arrangement, or made any

amendment to any Plan or Benefit Arrangement, which has resulted or could

result in the imposition of a Lien or the posting of a bond or other security

under ERISA or the Code or (iii) incurred any liability under Title IV of

ERISA other than a liability to the PBGC for premiums under Section 4007 of

ERISA.

 

34

 

(b)           To

the best of the Borrowers’ knowledge, each Foreign Pension Plan has been

maintained in substantial compliance with its terms and with the requirements

of any and all applicable laws, statutes, rules, regulations and orders and has

been maintained, where required, in good standing with applicable regulatory

authorities.  All material contributions

required to be made with respect to a Foreign Pension Plan have been timely

made.  Neither the Borrowers nor any of

their Subsidiaries has incurred any material obligation in connection with the

termination of or withdrawal from any Foreign Pension Plan.  The Borrowers and their Subsidiaries do not

maintain or contribute to any Foreign Pension Plan the obligations with respect

to which could reasonably be expected to have a material adverse effect on the

ability of either Borrower or either Borrower and its Subsidiaries taken as a

whole to perform their obligations under the Credit Documents.

Section 4.7.           Environmental

Matters.  To the best

of the Borrowers’ knowledge, after reasonable investigation, each of the

Borrowers and their Subsidiaries has obtained all environmental, health and

safety permits, licenses and other authorizations required under all

Environmental Laws to carry on its business as now being or as proposed to be

conducted.  Each of such permits,

licenses and authorizations is in full force and effect and each of the

Borrowers and their Subsidiaries is in material compliance with the terms and

conditions thereof, and is also in material compliance with all other

limitations, restrictions, conditions, standards, prohibitions, requirements,

obligations, schedules and timetables contained in any applicable Environmental

Law or in any regulation, code, plan, order, decree, judgment, injunction,

notice or demand letter issued, entered, promulgated or approved

thereunder.  In addition, no notice,

notification, demand, request for information, citations, summons or order has

been issued, no complaint has been filed, no penalty has been assessed and no

investigation or review is pending or threatened by any governmental or other

entity with respect to any alleged failure by either Borrower or any of their

Subsidiaries to have any environmental, health or safety permit, license or

other authorization required under any Environmental Law in connection with the

conduct of the business of either Borrower or any of their Subsidiaries or with

respect to any generation, treatment, storage, recycling, transportation,

discharge or disposal, or any release of any Hazardous Substance generated or

handled by either Borrower or any of their Subsidiaries.  There have been no environmental

investigations, studies, audits, tests, reviews or other analyses conducted by

or that are in the possession of either Borrower or any of their Subsidiaries

in relation to any site or facility now or previously owned, operated or leased

by either Borrower or any of their Subsidiaries which have not been made

available to the Administrative Agent and the Banks.

Section 4.8.           Taxes.  Each

Borrower and its Subsidiaries have filed all United States Federal and Canadian

income tax returns and all other material tax returns which are required to be

filed by them and have paid all taxes due pursuant to such returns or pursuant

to any assessment received by such Borrower or any Subsidiary.  The charges, accruals and reserves on the

books of the Borrowers and their Subsidiaries in respect of taxes or other

governmental charges are, in the opinion of the respective Borrowers, adequate.

Section 4.9.           Subsidiaries.  Each of the

Borrowers’ corporate Subsidiaries, if any, is a corporation duly incorporated,

validly existing and, where applicable, and in good standing under the laws of

its jurisdiction of incorporation, and has all corporate powers and all

material 

 

35

 

governmental licenses, authorizations, consents and

approvals required to carry on its business as now conducted.

Section 4.10.        Regulatory  Restrictions on Borrowing.  Neither

Borrower is an “investment company” within the meaning of the Investment

Company Act of 1940, as amended, a “holding company” within the meaning of the

Public Utility Holding Company Act of 1935, as amended, or otherwise subject to

any regulatory scheme which restricts its ability to incur debt.

Section 4.11.        Full Disclosure.  All

information heretofore furnished by either Borrower to the Administrative Agent

or any Bank for purposes of or in connection with this Agreement or any

transaction contemplated hereby is, and all such information hereafter

furnished by either Borrower to the Administrative Agent or any Bank will be,

true and accurate in all material respects on the date as of which such

information is stated or certified. 

Each Borrower has disclosed to the Banks in writing any and all facts

which materially and adversely affect or may affect (to the extent such

Borrower can now reasonably foresee), the business, operations or financial

condition of such Borrower and its Consolidated Subsidiaries, taken as a whole,

or the ability of such Borrower to perform its obligations under this Agreement

or the other Credit  Documents.

Section 4.12.        Intellectual

Property. 

The US Borrower and its Subsidiaries own or have the exclusive right in

the United States and Canada to use and to license the patents, trade names,

registered or unregistered trademarks, registered or unregistered service

marks, and registered copyrights, all pending applications therefor and all

know–how required to operate their  respective businesses (collectively, the “Intellectual

Property”), and each item constituting part of the Intellectual

Property has been duly registered with, filed with or issued by, as the case

may be, the appropriate authorities in the United States and Canada and, to the

knowledge of the Credit Parties, such registrations, filings and issuances

remain in full force and effect.  To the

knowledge of the Credit Parties, there are no infringements of any proprietary

rights (including, without limitation, the Intellectual Property, the License

Agreements and any inventions and know–how owned or licensed by the US

Borrower or its Subsidiaries) owned or licensed by the US Borrower or its

Subsidiaries which could reasonably be expected to have a material adverse

effect on the business, property, assets, liabilities, condition (financial or

otherwise) or prospects of either Borrower taken individually or the US

Borrower and its Subsidiaries taken as a whole.  To the knowledge of the Credit Parties, the trademarks, service

marks and trade names owned or licensed by the US Borrower or its Subsidiaries

are enforceable by such entities and all patents (if any) comprising the

Intellectual Property are believed valid and enforceable by the Credit

Parties.  No consent of third parties

will be required for the use of any Intellectual Property as a consequence of

the consummation of the transactions contemplated hereby.  To the knowledge of any Credit Party, no

claims are currently being asserted by any Person to the use of any of the

Intellectual Property or challenging or questioning the validity or

effectiveness of any License Agreement, and the use of the Intellectual

Property by the US Borrower or any of its Subsidiaries does not infringe on the

rights of any Person and no suits or proceedings are pending or threatened

against the Seller, the US Borrower or any of their respective Subsidiaries

with respect to the foregoing; and (ii) no claims are currently being

asserted, and no conditions exist upon which such claims could be based, that

the US Borrower or any of its Subsidiaries is in default or is not in full

compliance with any License Agreement.

 

36

 

ARTICLE 5

REPRESENTATIONS AND

WARRANTIES OF EACH GUARANTOR

Each Guarantor

represents and warrants for itself that:

Section 5.1.           Corporate

Existence and Power. 

The applicable Guarantor is a corporation duly incorporated, validly

existing and in good standing under the laws of the jurisdiction of its

incorporation, and has all corporate powers and all material governmental

licenses, authorizations, consents and approvals required to carry on its

business as now conducted.

Section 5.2.           Corporate

and Governmental Authorization; No Contravention.  The

execution, delivery and performance by the applicable Guarantor of this

Agreement and each other Credit Document to which it is a party is within the

corporate powers of the applicable Guarantor, have been duly authorized by all

necessary corporate action, require no action by or in respect of, or filing

with, any governmental body, agency or official and do not contravene, or

constitute a default under, any provision of applicable law or regulation or of

the certificate of incorporation or by–laws of the Guarantor or of any

agreement, judgment, injunction, order, decree or other instrument binding upon

the applicable Guarantor or any of its Subsidiaries or result in the creation

or imposition of any Lien on any asset of the applicable Guarantor or any of

its Subsidiaries (other than Liens granted pursuant hereto).

Section 5.3.           Binding Effect.  This

Agreement and each other Credit Document to which it is a party constitutes a

valid and binding agreement of the applicable Guarantor enforceable in accordance

with its terms.

Section 5.4.          

Financial Information. (a) The consolidated balance

sheets of the applicable Guarantor and its Consolidated Subsidiaries as of

December 31, 2001, and the related unaudited consolidated statements of

income, changes in common stockholders’ equity and cash flows for the fiscal

year then ended, a copy of which has been delivered to each of the Banks,

fairly present the consolidated financial position of the applicable Guarantor

and its Consolidated Subsidiaries as of such date and their consolidated

results of operations and cash flows for such fiscal year.

(b)           Since December 31, 2001, there

has been no material adverse change in the business, financial position,

results of operations or prospects of the applicable Guarantor and its

Consolidated Subsidiaries, considered as a whole.

Section 5.5.           Litigation.  There is no

action, suit or proceeding pending against, or to the knowledge of the

applicable Guarantor threatened against or affecting, the applicable Guarantor

or any of its Subsidiaries before any court or arbitrator or any governmental

body, agency or official in which there is a reasonable possibility of an

adverse decision which could materially adversely affect the business,

consolidated financial position or consolidated results of operations of the

applicable Guarantor and its Consolidated Subsidiaries, considered as a whole,

or which in any manner draws into question the validity or enforceability of

this Agreement or the Notes.

 

37

 

Section 5.6.           Compliance with ERISA.  To the best

of the applicable Guarantor’s knowledge, after reasonable investigation, each

member of the ERISA Group has fulfilled its obligations under the minimum

funding standards of ERISA and the Code with respect to each Plan and is in

compliance in all material respects with the presently applicable provisions of

ERISA and the Code with respect to each Plan. 

No member of the ERISA Group has (i) sought a waiver of the minimum

funding standard under Section 412 of the Code in respect of any Plan,

(ii) failed to make any contribution or payment to any Plan or

Multiemployer Plan or in respect of any Benefit Arrangement, or made any

amendment to any Plan or Benefit Arrangement, which has resulted or could

result in the imposition of a Lien or the posting of a bond or other security

under ERISA or the Code or (iii) incurred any liability under

Title IV of ERISA other than a liability to the PBGC for premiums under

Section 4007 of ERISA.

Section 5.7.           Environmental

Matters. 

Each of the applicable Guarantor and its Subsidiaries has obtained all

environmental, health and safety permits, licenses and other authorizations

required under all Environmental Laws to carry on its business as now being or

as proposed to be conducted.  Each of

such permits, licenses and authorizations is in full force and effect and each

of the applicable Guarantor and its Subsidiaries is in material compliance with

the terms and conditions thereof, and is also in material compliance with all

other limitations, restrictions, conditions, standards, prohibitions,

requirements, obligations, schedules and timetables contained in any applicable

Environmental Law or in any regulation, code, plan, order, decree, judgment,

injunction, notice or demand letter issued, entered, promulgated or approved

thereunder.  In addition, no notice,

notification, demand, request for information, citations, summons or order has

been issued, no complaint has been filed, no penalty has been assessed and no

investigation or review is pending or threatened by any governmental or other

entity with respect to any alleged failure by the applicable Guarantor or any

of its Subsidiaries to have any environmental, health or safety permit, license

or other authorization required under any Environmental Law in connection with

the conduct of the business of the applicable Guarantor or any of its

Subsidiaries or with respect to any generation, treatment, storage, recycling,

transportation, discharge or disposal, or any release of any Hazardous

Substance generated or handled by the applicable Guarantor or any of its

Subsidiaries.  There have been no

environmental investigations, studies, audits, tests, reviews or other analyses

conducted by or that are in the possession of the applicable Guarantor or any

of its Subsidiaries in relation to any site or facility now or previously

owned, operated or leased by the applicable Guarantor or any of its

Subsidiaries which have not been made available to the Administrative Agent and

the Banks.

Section 5.8.           Taxes.  The

applicable Guarantor and its Subsidiaries have filed all United States Federal

income tax returns and all other material tax returns which are required to be

filed by them and have paid all taxes due pursuant to such returns or pursuant

to any assessment received by the applicable Guarantor or any Subsidiary.  The charges, accruals and reserves on the

books of the applicable Guarantor and its Subsidiaries in respect of taxes or

other governmental charges are, in the opinion of the applicable Guarantor,

adequate.

Section 5.9.           Subsidiaries.  Each of the

applicable Guarantor’s corporate Subsidiaries is a corporation duly

incorporated, validly existing and in good standing under the laws of its

jurisdiction of incorporation, and has all corporate powers and all material

governmental 

 

38

 

licenses, authorizations, consents and approvals

required to carry on its business as now conducted.

Section 5.10.        Regulatory

Restrictions on Borrowing. 

The applicable Guarantor is not an “investment company” within the

meaning of the Investment Company Act of 1940, as amended, a “holding company”

within the meaning of the Public Utility Holding Company Act of 1935, as

amended, or otherwise subject to any regulatory scheme which restricts its

ability to incur debt.

Section 5.11.        Full Disclosure.  All

information heretofore furnished by the applicable Guarantor to the

Administrative Agent or any Bank for purposes of or in connection with this

Agreement or any transaction contemplated hereby is, and all such information

hereafter furnished by the applicable Guarantor to the Administrative Agent or

any Bank will be, true and accurate in all material respects on the date as of

which such information is stated or certified. 

The applicable Guarantor has disclosed to the Banks in writing any and

all facts which materially and adversely affect or may affect (to the extent

the applicable Guarantor can now reasonably foresee), the business, operations

or financial condition of the applicable Guarantor and its Consolidated

Subsidiaries, taken as a whole, or the ability of the applicable Guarantor to

perform its obligations under this Agreement.

ARTICLE

6

COVENANTS

The Borrowers and

each Guarantor, as the case may be, agree that, so long as any Bank has any

Commitment hereunder or any amount payable hereunder or under any Note remains

unpaid:

Section 6.1.           Information.  The US

Borrower will deliver to each of the Banks:

                   (a)        as soon as available and in any event within 90 days after

the end of each fiscal year of the US Borrower, consolidated and consolidating

balance sheets of the US Borrower and its Consolidated Subsidiaries as of the

end of such fiscal year and the related consolidating statements of income cash

flows, changes in common stockholders’ equity and retained earnings, each for

such fiscal year, setting forth in each case in comparative form the figures

for the previous fiscal year and certified by Deloitte & Touche

LLP or another independent public accounting firm of nationally recognized

standing;

                   (b)        as soon as available and in any event within 45 days after

the end of each of the first three fiscal quarters of the US Borrower,

consolidated and consolidating balance sheets of the US Borrower and its Consolidated

Subsidiaries as of the end of such quarter and the related consolidated and

consolidating statements of income, changes in common stockholders’ equity and

cash flows for such quarter and for the portion of the US Borrower’s fiscal

year ended at the end of such quarter, setting forth in each case, in

comparative form the figures for the corresponding quarter and the

corresponding portion 

 

39

 

of the US Borrower’s previous fiscal year, all certified (subject to

normal year–end adjustments) as to fairness of presentation, generally

accepted accounting principles and consistency by the treasurer or chief

financial officer of the US Borrower;

                   (c)        simultaneously with the delivery of each set of financial statements

referred to in clauses (a) and (b) above, (x) a certificate of the treasurer or

chief financial officer of the US Borrower, (i) setting forth in reasonable

detail the calculations required to establish whether the US Borrower was in

compliance with the requirements of Sections 6.11, 6.12, 6.13, 6.14, 6.15

and 6.17 on the date of such financial statements, (ii) comparing such

results to the comparable period of the prior fiscal year and the budgeted

figures previously delivered for such period and (iii) stating whether any

Default exists on the date of such certificate and, if any Default then exists,

setting forth the details thereof and the action which the US Borrower is

taking or proposes to take with respect thereto and (y) management’s discussion

and analysis of the important operational and financial developments during

such quarterly and year–to–date periods;

                   (d)        simultaneously with the delivery of each set of financial

statements referred to in clause (a) above, a statement of the accounting firm

which reported on such statements (i) as to whether anything has come to their

attention to cause them to believe that any Default existed on the date of such

statements and (ii) confirming the calculations set forth in the officer’s

certificate delivered simultaneously therewith pursuant to clause (c) above;

                   (e)        within 45 days of the end of each fiscal year of the US

Borrower, a budget in form reasonably satisfactory to the Administrative Agent

(including budgeted statements of income and balance sheets) prepared by the US

Borrower for each of the four quarters of such fiscal year, accompanied by a

statement of the treasurer or chief financial officer of the US Borrower to the

effect that, to the best of such officer’s knowledge, the budget is a reasonable

estimate for the period covered thereby;

                    (f)        within five days after any officer of any Credit Party

obtains knowledge of any Default, if such Default is then continuing, a

certificate of the treasurer or chief financial officer of the US Borrower setting

forth the details thereof and the action which the US Borrower or such Credit

Party is taking or proposes to take with respect thereto;

                   (g)        promptly after the mailing thereof to the public shareholders

of the US Borrower, copies of all financial statements, reports and proxy

statements so mailed;

                   (h)        promptly upon the filing thereof, copies of all registration

statements (other than the exhibits thereto and any registration statements on

Form S–8 or its equivalent) and reports on Forms 10–K, 10–Q and

8–K (or their equivalents) which the US Borrower or any other Credit

Party shall have filed with the Securities and Exchange Commission;

                    (i)        immediately upon discovery of the fact that any member of the

ERISA Group (i) gives or is required to give notice to the PBGC of any

“reportable event” (as 

 

40

 

defined in Section 4043 of ERISA) with respect to any Plan which

might constitute grounds for a termination of such Plan under Title IV of

ERISA, or knows that the plan administrator of any Plan has given or is

required to give notice of any such reportable event, a copy of the notice of

such reportable event given or required to be given to the PBGC;

(ii) receives notice of complete or partial withdrawal liability under

Title IV of ERISA or notice that any Multiemployer Plan is in reorganization,

is insolvent or has been terminated, a copy of such notice; (iii) receives

notice from the PBGC under Title IV of ERISA of an intent to terminate,

impose liability (other than for premiums under Section 4007 of ERISA) in

respect of, or appoint a trustee to administer any Plan, a copy of such notice;

(iv) applies for a waiver of the minimum funding standard under

Section 412 of the Code, a copy of such application; (v) gives notice

of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of

such notice and other information filed with the PBGC; (vi) gives notice

of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such

notice; or (vii) fails to make any payment or contribution to any Plan,

Foreign Pension Plan or Multiemployer Plan or in respect of any Benefit

Arrangement or makes any amendment to any Plan, Foreign Pension Plan or Benefit

Arrangement which has resulted or could result in the imposition of a Lien or

the posting of a bond or other security, a certificate of the treasurer of the

US Borrower setting forth details as to such occurrence and action, if any,

which the US Borrower, the applicable Credit Party or the applicable member of

the ERISA Group is required or proposes to take; and

                    (j)        from time to time such additional information regarding the

financial position or business of the Credit Parties and their Subsidiaries as

the Administrative Agent, at the request of any Bank, may reasonably request.

Section 6.2.           Payment

of Obligations. 

Each Credit Party will pay and discharge, and will cause each Subsidiary

to pay and discharge, at or before maturity, all their respective material

obligations and liabilities (including, without limitation, tax liabilities and

claims of materialmen, warehousemen and the like which if unpaid might by law

give rise to a Lien), except where the same may be contested in good faith by

appropriate proceedings, and will maintain, and will cause each Subsidiary to

maintain, in accordance with generally accepted accounting principles,

appropriate reserves for the accrual of any of the same.

Section 6.3.           Maintenance

of Property; Insurance. 

(a) Each Credit Party will keep, and will cause each Subsidiary to

keep, all property useful and necessary in its business in good working order

and condition, ordinary wear and tear excepted.

(b)           Each Credit Party will, and will

cause each Subsidiary to, maintain (either in the name of the US Borrower or in

its own name) with financially sound and responsible insurance companies,

insurance on all their respective properties in at least such amounts, against

at least such risks and with such risk retention as are usually maintained,

insured against or retained, as the case may be, in the same general area by

companies of established repute engaged in the same or a similar business and

will furnish to the Banks, upon request from the Administrative Agent,

information presented in reasonable detail as to the insurance so carried.

 

41

 

(c)           Each

Credit Party will at all times keep its property insured, with the Collateral

Agent named as additional insured and loss payee (except that in the case of

insurance policies covering property of the Canadian Borrower or LMG, the

Collateral Agent shall not be named as an additional insured or loss payee) and

all policies or certificates shall name the Collateral Agent as such (except

that in the case of insurance policies covering property of the Canadian

Borrower or LMG, the Collateral Agent shall not be named as an additional

insured or loss payee) and state that such insurance policy may not be canceled

without at least 30 days’ prior written notice to the Collateral Agent (or such

shorter period as a particular insurance company policy generally provides).

Section 6.4.           Conduct

of Business and Maintenance of Existence.  Each Credit

Party will continue, and will cause each Subsidiary to continue, to engage in

business of the same general type as now conducted by such Credit Party, and

will preserve, renew and keep in full force and effect, and will cause each

Subsidiary to preserve, renew and keep in full force and effect their

respective corporate existence and their respective rights, privileges and

franchises necessary or desirable in the normal conduct of business; provided,  that nothing in this

Section 6.4 shall prohibit (i) a merger or consolidation which is

otherwise permitted by Section 6.7 or (ii) the termination of the

corporate existence of any Subsidiary if the US Borrower in good faith

determines that such termination is in the best interest of the Borrowers and

is not materially disadvantageous to the Banks.

Section 6.5.           Compliance with Laws.  Each Credit

Party will comply, and cause each Subsidiary to comply, in all respects with

all applicable laws, ordinances, rules, regulations, and requirements of

governmental authorities (including, without limitation, Environmental Laws and

ERISA and the rules and regulations thereunder) except (i) where the

necessity of compliance therewith is contested in good faith by appropriate

proceedings or (ii) to the extent that failure to comply therewith would

not have a material adverse effect on (a) the property, business, operations,

financial condition, prospects, liabilities or capitalization of any Credit

Party and its Subsidiaries taken as a whole, (b) the ability of any Credit

Party to perform its obligations under any of the Credit Documents to which it

is a party, (c) the validity or enforceability of any of the Credit

Documents, (d) the rights and remedies of the Banks and the Administrative

Agent under any of the Credit Documents or (e) the timely payment of the

principal of or interest on the Loans or the payment obligations of the Credit

Parties under the Credit Documents.

Section 6.6.           Inspection

of Property, Books and Records.  The Credit

Parties will keep, and will cause each Subsidiary to keep, proper books of

record and account in which full, true and correct entries shall be made of all

dealings and transactions in relation to its business and activities; and will

permit, and will cause each Subsidiary to permit, representatives of any Bank,

at such Bank’s expense, to visit and inspect any of their respective

properties, to examine and make abstracts from any of their respective books

and records and to discuss their respective affairs, finances and accounts with

their respective officers, employees and independent public accountants, all at

such reasonable times and as often as may reasonably be desired.

Section 6.7.           Mergers

and Sales of Assets. 

The Credit Parties will not (x) consolidate or merge with or into

any other Person or (y) sell, lease or otherwise transfer, directly or

indirectly, 

 

42

 

any substantial part of the assets of any Credit Party

and its Subsidiaries, taken as a whole, to any other Person; except that the

following shall be permitted: 

(a) (i) any Credit Party other than the Canadian Borrower may

merge with the US Borrower or another Guarantor if after giving effect to such

merger, no Default shall have occurred and be continuing and (ii) any

Person may be merged with or into any Credit Party pursuant to an acquisition

permitted by Section 6.22(b), provided that such Credit Party is the

surviving corporation of such merger, (b) the sale of credit card

receivables pursuant to securitizations of such credit card receivables, and

(c) assets sold and leased back in the normal course of the Borrowers’

business.

Section 6.8.           Use of Proceeds.  The proceeds

of the Loans made under this Agreement will be used by the US Borrower to

finance the general corporate and working capital needs of the US Borrower and

its Subsidiaries.  None of the proceeds

of any Loan made hereunder will be used, directly or indirectly, for the

purpose, whether immediate, incidental or ultimate, of buying or carrying any

“margin stock” within the meaning of Regulation U.

Section 6.9.           Negative Pledge.  Neither a

Credit Party nor any Subsidiary will create, assume or suffer to exist any Lien

on any asset now owned or hereafter acquired by it, except:

                   (a)        Liens pursuant to the Security Documents;

                   (b)        Liens existing on the Original Effective Date securing Debt

outstanding on the Original Effective Date in an aggregate principal or face

amount not exceeding U.S. $5,000,000;

                   (c)        any Lien existing on any asset of any person at the time such

person becomes a Subsidiary and not created in contemplation of such event;

                   (d)        any Lien on any asset securing Debt incurred or assumed for

the purpose of financing all or any part of the cost of acquiring such asset, provided

that such Lien attaches only to such asset acquired and attaches concurrently

with or within 90 days after the acquisition thereof;

                   (e)        any Lien on any asset of any Person existing at the time such

Person is merged or consolidated with or into a Credit Party or its Subsidiary

and not created in contemplation of such event, so long as such Lien does not

attach to any other asset of such Credit Party or its Subsidiaries;

                    (f)        any Lien existing on any asset prior to the acquisition

thereof by a Credit Party or a Subsidiary and not created in contemplation of

such acquisition;

                   (g)        any Lien arising out of the refinancing, extension, renewal

or refunding of any Debt secured by any Lien permitted by any of the foregoing

clauses of this Section, provided that the amount of such Debt is

not increased and is not secured by any additional assets;

 

43

 

                   (h)        Liens arising in the ordinary course of

its business which (i) do not secure Debt or Derivatives obligations, (ii) do

not secure any obligation in an amount exceeding U.S. $5,000,000 or (iii)

do not in the aggregate materially detract from the value of the assets secured

or materially impair the use thereof in the operation of such Credit Party or

Subsidiary’s business;

                    (i)        any Lien on any credit card receivable subject to a sale of

credit card receivables pursuant to securitizations of such credit card receivables;

                    (j)        Liens not otherwise permitted by the foregoing clauses of

this Section securing Debt in an aggregate principal or face amount at any date

not to exceed 2% of Consolidated Net Worth of the US Borrower;

                   (k)        Liens securing the Related Credit Agreement ranking pari passu

with the Obligations hereunder; and

                    (l)        Liens securing Indebtedness permitted under

Section 6.16(vi) hereof.

              Section 6.10.       End of Fiscal Years and Fiscal Quarters.  The US Borrower shall cause its

fiscal year, and shall cause each of its Subsidiaries’ fiscal years, to end on

December 31 and shall cause its and each of its Subsidiaries’ fiscal quarters

to coincide with calendar quarters.

Section 6.11.        Minimum

Consolidated EBITDA. 

The US Borrower will not permit its Consolidated EBITDA for any period

of four consecutive fiscal quarters of the US Borrower, as determined for such

four–quarter period ending on the last day of any fiscal quarter, to be

less than U.S. $125,000,000.

Section

6.12.        (a) Leverage Ratio.  The US Borrower shall not permit its

Leverage Ratio at any time during any fiscal quarter of the US Borrower to

exceed 3.0 to 1.0.

(b)           Senior Secured Leverage Ratio.  The US Borrower shall not permit its Senior

Secured Leverage Ratio at any time to exceed the ratio set forth below opposite

such fiscal quarter below:

 

	

  Fiscal Quarter Ended

  	

   

  	

  Maximum

  Senior Secured

  Leverage Ratio

  	

   

  
	

  March 31, 2002

  	

   

  	

  1.75 to 1.0

  	

   

  
	

  June 30, 2002

  	

   

  	

  1.75 to 1.0

  	

   

  
	

  Each fiscal

  quarter ended thereafter

  	

   

  	

  1.50 to 1.0.

  	

   

  

Section 6.13.        Adjusted

Consolidated Net Worth.  The US Borrower will not

permit its Adjusted Consolidated Net Worth at any time to be less than the sum

of (i) U.S. $500,000,000, plus (ii) an amount equal to 50% of

the amount by which the US Borrower’s quarterly Consolidated Net Income (determined

at the end of each fiscal quarter, commencing March 31, 

 

44

 

2002) exceeds zero, plus (iii) 100% of any

proceeds from equity issuances of capital stock of the US Borrower (other than

(A) in connection with exercises of stock options of the officers,

directors and employees of the US Borrower in the ordinary course of business

and (B) proceeds of equity issuances of capital stock used to pay the WCAS

Subordinated Note pursuant to Section 6.24 hereof).

Section 6.14         Capitalization

of Insured Subsidiaries. 

The US Borrower shall, at all times, cause all Insured Subsidiaries to

be “well capitalized” within the meaning of 12 C.F.R. 208.33(b)(1) or any

successor regulation and such Insured Subsidiaries at no time be reclassified

by any relevant agency as anything other than “well capitalized.”

Section

6.15.        Delinquency Ratio.  The US Borrower shall not permit the average

of the Delinquency Ratios for WFNB for the most recently ended three

consecutive calendar months to exceed 4.5%.

Section

6.16.        Debt Limitation.  The US

Borrower shall not, and shall not permit any of its Subsidiaries, whether now

existing or created in the future, to create or retain any Debt other than

(i) any Debt created or retained by the US Borrower or such Subsidiary on

or before May 2, 1998, (ii) any Debt created or retained by the US

Borrower or such Subsidiary in connection with the funds made available to the

Borrowers pursuant to this Agreement or the Related Credit Agreement (including

any intercompany loans of such funds), provided that such loans made by the US

Borrower and its Subsidiaries to (x) the Canadian Borrower shall not

exceed U.S. $20,000,000 and (y) ADSNZ shall not exceed

U.S. $1,500,000 in aggregate principal amount outstanding at any time, and

all such loans from the US Borrower to WFNB shall be made pursuant to and

evidenced by the WFNB Note, (iii) issuances by WFNB of certificates of

deposit to the extent no Default results therefrom pursuant to the other

covenants contained in this Article 6, (iv) intercompany loans not

otherwise permitted by clause (ii) of this Section 6.16 made by the US

Borrower to ADSI and WFNB, provided that any such intercompany loans

to WFNB shall be made pursuant to and evidenced by the WFNB Note, (v) Debt

of the US Borrower outstanding pursuant to the WCAS Subordinated Note in an

aggregate principal amount not to exceed U.S. $52,000,000, less all

repayments of principal thereof, (vi) obligations of the US Borrower or

its Subsidiaries as lessee in respect of leases of property which are

capitalized in accordance with generally accepted accounting principles and

shown on the balance sheet of the US Borrower and its Subsidiaries and which in

the aggregate do not at any one time exceed 10% of the Adjusted Consolidated

Net Worth of the US Borrower at such time, (vii) the loans and letters of

credit outstanding from time to time under the Related Credit Agreement in a

principal amount not to exceed U.S. $187,625,000 at any one time

outstanding, less repayments of the term loans thereunder, and

(viii) other unsecured Debt of the US Borrower and/or its Subsidiaries not

to exceed U.S. $10,000,000 in the aggregate outstanding at any time.  Notwithstanding anything to the contrary

above in this Section 6.16, the US Borrower may, subject to the

applicability of the other covenants contained in this Agreement, issue

Permitted Subordinated Debt.

Section 6.17.        Interest

Coverage Ratio. 

The US Borrower will not permit its Interest Coverage Ratio for any

period of four consecutive fiscal quarters, as determined for such four–quarter

period ending on the last day of any fiscal quarter, to be less than 3.5:1.0.

 

45

 

Section 6.18.        Restricted Payments; Required Dividends.  (a) Other than payments made in

accordance with the terms of subsection (b) below, neither the US Borrower

nor any of its Subsidiaries will declare or make any Restricted Payment unless,

after giving effect thereto, the aggregate of all Restricted Payments declared

or made does not exceed the sum of (i) U.S. $20,000,000 plus

(ii) 25% of the amount by which the Consolidated Net Income of the US

Borrower exceeds zero (or minus 100% of the amount by which the Consolidated

Net Income of the US Borrower is less than zero) for the period from

January 30, 1999 through the end of the US Borrowers then most recent

fiscal quarter (treated for this purpose as a single accounting period).

(b)           The US Borrower shall cause each

Domestic Subsidiary (to the extent permitted under any applicable law, rule or

regulation, judgment, injunction, order or decree of any governmental

authority) to take all such necessary corporate actions to declare cash

dividends, payable to the shareholder of such Subsidiary, in an aggregate amount,

if any, equal to all amounts that are then due and owing and remain outstanding

after the date of payment therefor pursuant to the terms of this Agreement.

Section 6.19.        Equity

Ownership, Limitation on Creation of Subsidiaries.  Notwithstanding anything to the contrary

contained in this Agreement, the US Borrower will not, and will not permit any

of its Subsidiaries to, establish, create or acquire after the Effective Date

any Subsidiary; provided that (A) the US Borrower and its Wholly–Owned

Subsidiaries shall be permitted to establish or create Wholly–Owned

Subsidiaries so long as, in each case, (i) at least 30 days’ prior

written notice thereof is given to the Administrative Agent (or such shorter

period of time as is acceptable to the Administrative Agent), (ii) all of

the capital stock of such new Subsidiary (or 65% of the outstanding capital

stock of a Foreign Subsidiary) is promptly pledged pursuant to, and to the

extent required by, this Agreement and the Pledge Agreement and the

certificates, if any, representing such stock, together with stock powers duly

executed in blank, are delivered to the Collateral Agent and (iii) except

as otherwise provided in the definition of Guarantor hereunder, such new

Subsidiary (except, with respect to the Obligations of the US Borrower, a

Foreign Subsidiary) promptly executes a supplement to this Agreement in form

and substance reasonably acceptable to the Administrative Agent to become a

Guarantor pursuant to Article 10, and becomes a party to the Pledge Agreement

and the Security Agreement (or similar documents satisfactory to the

Administrative Agent) and (B) Subsidiaries may be acquired to the extent

such acquisition does not give rise to a Default hereunder so long as

(x) in each such case involving the acquisition of a Wholly–Owned

Subsidiary, the actions specified in preceding clause (A) shall be taken

and (y) in each such case involving the acquisition of a non–Wholly–Owned

Subsidiary, the stock of such Subsidiary held by the Credit Parties shall be

pledged to the extent required by the Pledge Agreement subject to the 65%

limitation contained in clause (A) above for Foreign Subsidiaries.  In addition, each  new Subsidiary that is

required to execute any Credit Document shall execute and deliver, or cause to

be executed and delivered, all other relevant documentation of the type

described in Section 3.1 as such new Subsidiary would have had to deliver

if such new Subsidiary were a Credit Party on the Effective Date.

Section

6.20.         Change of Business.  The US Borrower will not, and will not  permit

any of its Subsidiaries to, materially alter the character of the business of

the US Borrower and its Subsidiaries from that conducted on the Effective Date.

 

46

 

Section 6.21.        Limitation on Issuance of Capital Stock.  (a) The US Borrower will not, and will

not permit any of its Subsidiaries to, issue (i) any preferred stock or

(ii) any common stock redeemable at the option of the holder thereof.

(b)           The US Borrower will not permit any

of its Subsidiaries to issue any capital stock (including by way of sales of

treasury stock) or any options or warrants to purchase, or securities

convertible into, capital stock, except (i) for transfers and replacements

of then outstanding shares of capital stock, (ii) for stock splits, stock

dividends and issuances which do not decrease the percentage ownership of the

US Borrower or any of its Subsidiaries in any class of the capital stock of

such Subsidiary, (iii) to qualify directors to the extent required by

applicable law and (iv) for issuances by newly created or acquired

Subsidiaries in accordance with the terms of this Agreement.

Section 6.22.        Investments;

Restricted Acquisition. 

(a) The US Borrower shall not, and shall not permit any Subsidiary

to hold, make or acquire any Investment in any Person other than:

                    (i)         Investments by the US Borrower or its Subsidiaries in

Persons which are Subsidiaries on the Effective Date, provided that (x) in

the case of any Investment in Foreign Subsidiaries of the US Borrower, such

Investment shall not exceed 5% of Adjusted Consolidated Net Worth plus the

amount invested on the Effective Date and (y) any Investments by the US

Borrower in WFNB which are in the form of intercompany loans shall be made pursuant

to and evidenced by the WFNB Note;

                   (ii)        Investments consistent with the investment policy attached

hereto as Schedule II;

                  (iii)        Investments currently held by WFNB to comply with the

provisions of the Community Reinvestment Act as such Investments are set forth

on Schedule III attached hereto;

                  (iv)        Investments consisting of credit card loans made by WFNB

pursuant to the terms of any applicable credit card accounts owned by WFNB; and

                   (v)        any Investment not otherwise permitted by the foregoing

clauses of this Section if, immediately after such Investment is made or

acquired, the aggregate net book value of all Investments permitted by this

clause (v) does not exceed 5% of Adjusted Consolidated Net Worth of the US

Borrower.

(b)           The US Borrower and its Subsidiaries

may make Restricted Acquisitions so long as:

                    (i)        the US Borrower and its Subsidiaries shall be in compliance

with all provisions of this Agreement, including all financial covenants, both

before and after giving effect thereto, with such financial covenants to be

calculated on a pro forma basis as if such Restricted Acquisition had been

consummated on the first day of the then most recently ended period of four

consecutive fiscal quarters and giving effect to (x) the 

 

47

 

actual historical financial performance (including EBITDA) of such

acquired entity (y) identifiable cost savings associated with providing

data processing services to such acquired entities; and

                   (ii)        the total consideration paid (including equity issued and

Debt assumed) in connection with any Restricted Acquisition of a Person which

as a result thereof does not become a Wholly–Owned Subsidiary shall not

exceed 10% of Adjusted Consolidated Net Worth.

Section 6.23.        Consolidated

Capital Expenditures. 

The US Borrower shall not, and shall not permit its Subsidiaries to make

Consolidated Capital Expenditures in any fiscal year exceeding 50% of the US

Borrower’s previous fiscal year’s Consolidated EBITDA.

Section 6.24.        Limitation

on Voluntary Payments and Modifications of Indebtedness, Modifications of

Certain Other Agreements, etc.  The US

Borrower will not, and will not permit any of its Subsidiaries to,

(i) make (or give any notice in respect of) any voluntary or optional

payment or prepayment on or redemption or acquisition for value of, or make any

pre–payment or redemption as a result of any asset sale, change of

control or similar event of (including, in each case, without limitation, by

way of depositing with the trustee with respect thereto or any other Person,

money or securities before due for the purpose of paying when due) the WCAS

Subordinated Note or any Permitted Subordinated Debt or (ii) amend or

modify, or permit the amendment or modification of, any provision of the WCAS

Subordinated Note, the License Agreements or the WFNB Note; provided,

however, the US Borrower may prepay the WCAS Subordinated Note in

the aggregate principal amount not to exceed U.S. $52,000,000, on or

before December 31, 2002, if, and only if, the prepayment of the WCAS

Subordinated Note is made directly or indirectly from the proceeds of the US

Borrower’s follow–on equity offering.

ARTICLE

7

DEFAULTS

Section

7.1.           Events of Default.  If one or more of the following events (“Events of

Default”) shall have occurred and be continuing:

                   (a)        either Borrower shall fail to pay when due any principal of

any Loan or shall fail to pay within 3 Business Days from the date due any

interest, any fees or any other amount payable hereunder;

                   (b)        any Credit Party shall fail to observe or perform any

covenant contained in Article 6 (other than those contained in Sections 6.1

through 6.3 inclusive, Section 6.5 or Section 6.6) or contained in subsection

3.02(d)(i) or (ii) of the Security Agreement (to the extent such provisions

contain ongoing obligations of the Credit Parties) or Section 12.01 of the

Security Agreement;

                   (c)        any Credit Party shall fail to observe or perform any

covenant or agreement contained in this Agreement, the Pledge Agreements, the

Security Agreement 

 

48

 

and the Canadian Security Documents (other than those covered by clause

(a) or (b) above) for 30 days after notice thereof has been given to the

applicable Credit Party by the Administrative Agent at the request of the

Required Banks;

                   (d)        any representation, warranty, certification or statement made

by any Credit Party in any Credit Document or in any certificate, financial

statement or other document delivered pursuant to this Agreement shall prove to

have been incorrect in any material respect when made (or deemed made);

                   (e)        any Credit Party or any Subsidiary of any of them shall fail

to make any payment in respect of any Material Financial Obligations when due

or within any applicable grace period;

                    (f)        any event or condition shall occur which results in the

acceleration of the maturity of any Material Debt of any Credit Party or any

Subsidiary of a Credit Party or enables (or, with the giving of notice or lapse

of time or both, would enable) the holder of such Debt or any Person acting on

such holder’s behalf to accelerate the maturity thereof;

                   (g)        any Credit Party or any Subsidiary of any of them shall

commence a voluntary case or other proceeding seeking liquidation,

reorganization or other relief with respect to itself or its debts under any

bankruptcy, insolvency or other similar law now or hereafter in effect or

seeking the appointment of a trustee, receiver, liquidator, custodian or other

similar official of it or any substantial part of its property, or shall

consent to any such relief or to the appointment of, or taking possession by

any such official in an involuntary case or other proceeding commenced against

it, or shall make a general assignment for the benefit of creditors, or shall fail

generally to pay its debts as they become due, or shall take any corporate

action to authorize any of the foregoing;

                   (h)        an involuntary case or other proceeding shall be commenced

against any Credit Party or any Subsidiary of any of them seeking liquidation,

reorganization or other relief with respect to it or its debts under any

bankruptcy, insolvency or other similar law now or hereafter in effect or

seeking the appointment of a trustee, receiver, liquidator, custodian or other

similar official of it or any substantial part of its property, and such

involuntary case or other proceeding shall remain undismissed and unstayed for

a period of 60 days; or an order for relief shall be entered against any Credit

Party or any Subsidiary of either of them under the federal bankruptcy laws as

now or hereafter in effect;

                    (i)        any member of the ERISA Group shall fail to pay when due an

amount or amounts aggregating in excess of U.S. $5,000,000 which it shall

have become liable to pay under Title IV of ERISA; or notice of intent to

terminate a Material Plan shall be filed under Title IV of ERISA by any member

of the ERISA Group, any plan administrator or any combination of the foregoing;

or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to

impose liability (other than for premiums under Section 4007 of ERISA) in

respect of, or to cause a trustee to be appointed to administer any Material

Plan; or a condition shall exist by reason of which 

 

49

 

the PBGC would be entitled to obtain a decree adjudicating that any

Material Plan must be terminated; or there shall occur a complete or partial

withdrawal from, or a default, within the meaning of Section 4219(c)(5) of

ERISA, with respect to, one or more Multiemployer Plans which could cause one

or more members of the ERISA Group to incur a current payment obligation in

excess of U.S. $5,000,000;

                    (j)        judgments or orders for the payment of money aggregating in

excess of U.S. $5,000,000 shall be rendered against the US Borrower or any

of its Subsidiaries and such judgments or orders shall continue unsatisfied and

unstayed for a period of 30 days;

                   (k)        a Change of Control shall occur;

                   (1)        any Credit Party shall assert any claim that the security

interest in the Collateral granted by such Credit Party to the Collateral Agent

pursuant to the Security Agreement, the Canadian Security Documents or the

Pledge Agreements is unenforceable, is other than first–priority or is

otherwise invalid;

                  (m)        any Guarantor shall revoke its guaranty provided for in

Article 10 of this Agreement or assert that its guaranty provided for in

Article 10 of this Agreement is unenforceable or otherwise invalid;

                   (n)        at any time, the Collateral is transferred by either Borrower

in violation of the terms of the Pledge Agreements, Security Agreement or the

Canadian Security Documents; and

                   (o)        any License Agreement shall terminate or any arbitration or

litigation shall be commenced in respect thereof (except that any litigation or

arbitration commenced by a Person who is not a party to such License Agreement

shall not result in an Event of Default hereunder unless such action is not

stayed or dismissed within 60 days of the commencement thereof), or any party

shall assert that any termination thereof, or any party to any License

Agreement shall default in any of its obligations thereunder beyond the period

of grace (if any) therein provided;

then, and in every

such event, the Administrative Agent shall (i) if requested by Banks

having more than 50% in aggregate amount of the Commitments, by notice to the

Borrowers terminate the Commitments and they shall thereupon terminate,

(ii) if requested by Banks holding more than 50% of the aggregate

principal amount of the Loans, by notice to the Borrowers declare the Loans

(together with accrued interest thereon and any commitment fee) to be, and the

Loans shall thereupon become, immediately due and payable without presentment,

demand, protest or other notice of any kind, all of which are hereby waived by

the Borrowers; provided, that in the case of any of the Events of Default

specified in clause 7.1(g) or 7.1(h) above with respect to the Borrowers,

without any notice to the Borrowers or any other act by the Administrative

Agent or the Banks, the Commitments shall thereupon terminate and the Loans

(together with accrued interest thereon and any commitment fee) shall become

immediately due and payable without presentment, demand, protest or other

notice of any kind, all of which are hereby waived by the Borrowers and

(iii) if requested by the Required Banks enforce, as Collateral Agent, any

or all of 

 

50

 

the Liens and security interests created pursuant to the Security

Documents and apply any cash collateral held pursuant to this Agreement to

repay the Obligations.

Section

7.2.           Notice of Default.  (a) Promptly upon becoming aware that

any Default exists, the Borrowers shall provide notice thereof to the

Administrative Agent and each of the Banks stating the nature of the Default,

setting forth the details thereof and the action which the respective Borrower

is taking or proposes to take with respect thereto.

(b)           The Administrative Agent shall give

notice to the Borrowers under Section 7.1(c) promptly upon being requested

to do so by the Banks and shall thereupon notify all the Banks thereof.

ARTICLE

8

THE AGENT

Section 8.1.           Appointment

and Authorization. 

(a) Each Bank irrevocably appoints and authorizes the

Administrative Agent to take such action as agent on its behalf and to exercise

such powers under this Agreement and the Notes as are delegated to the

Administrative Agent by the terms hereof or thereof, together with all such

powers as are reasonably incidental thereto. 

For greater certainty, and without limiting the powers of the

Administrative Agent hereunder or under any of the Security Documents, the

Borrowers hereby acknowledge that the Administrative Agent shall be, for

purposes of holding any security granted by the Borrowers on the Borrowers’ property

pursuant to the laws of the Province of Quebec, the holder of an irrevocable

power of attorney (within the meaning of the Civil Code of Quebec) for all

present and future Banks.  Each of the

Banks hereby irrevocably constitutes, to the extent necessary, the

Administrative Agent, in its capacity as Collateral Agent, as the holder of an

irrevocable power of attorney (within the meaning of Article 2692 of the Civil

Code of Quebec) in order to hold security granted by the Borrowers in the

Province of Quebec.  Any assignee shall

be deemed to have confirmed and ratified the constitution of the Administrative

Agent as the holder of such irrevocable power of attorney by execution of the

relevant assignment and assumption agreement substantially in the form of

Exhibit A.  Notwithstanding the

provisions of Section 32 of the Special Corporate Powers Act (Quebec), the

Administrative Agent may acquire and be the holder of any debenture issued by a

Borrower as contemplated under any of the Security Documents at any time and

from time to time.  The Borrowers hereby

acknowledge that any such debenture constitutes a title of indebtedness, as

such term is used in Article 2692 of the Civil Code of Quebec.

Section 8.2.           Administrative

Agent and Affiliates. 

The Administrative Agent shall have the same rights and powers under

this Agreement as any other Bank and may exercise or refrain from exercising

the same as though it were not the Administrative Agent, and the Administrative

Agent and its affiliates may accept deposits from, lend money to, and generally

engage in any kind of business with the Borrowers or any Subsidiary or

affiliate of the respective Borrower as if it were not the Administrative

Agent.

 

51

 

Section 8.3.           Action by Administrative Agent.  The obligations of the Administrative Agent

hereunder are only those expressly set forth herein.  Without limiting the generality of the foregoing, the

Administrative Agent shall not be required to take any action with respect to

any Default, except as expressly provided in Article 7.

Section 8.4.           Consultation

with Experts. 

The Administrative Agent may consult with legal counsel (who may be

counsel for the Borrowers and/or any Guarantor), independent public accountants

and other experts selected by it and shall not be liable for any action taken

or omitted to be taken by it in good faith in accordance with the advice of

such counsel, accountants or experts.

Section 8.5.           Liability

of Administrative Agent. 

Neither the Administrative Agent nor any of its affiliates nor any of

their respective directors, officers, agents or employees shall be liable for

any action taken or not taken by it in connection herewith (i) with the

consent or at the request of the Required Banks (or, when expressly required

hereby, such different number of Banks required to consent to or request such

action or inaction) or (ii) in the absence of its own gross negligence or

willful misconduct.  Neither the Administrative

Agent nor any of its affiliates nor any of their respective directors,

officers, agents or employees shall be responsible for or have any duty to

ascertain, inquire into or verify (i) any statement, warranty or

representation made in connection with this Agreement or any Borrowing hereunder;

(ii) the performance or observance of any of the covenants or agreements

of the Borrowers or any Guarantor; (iii) the satisfaction of any condition

specified in Article 3, except receipt of items required to be delivered

to the Administrative Agent; or (iv) the validity, effectiveness or genuineness

of this Agreement, the Notes or any other instrument or writing furnished in

connection herewith.  The Administrative

Agent shall not incur any liability by acting in reliance upon any notice,

consent, certificate, statement, or other writing (which may be a bank wire,

facsimile transmission or similar writing) believed by it to be genuine or to

be signed by the proper party or parties. 

Without limiting the generality of the foregoing, the use of the term

“agent” in this Agreement with reference to the Administrative Agent is not

intended to connote any fiduciary or other implied (or express) obligations

arising under agency doctrine of any applicable law.  Instead, such term is used merely as a matter of market custom

and is intended to create or reflect only an administrative relationship

between independent contracting parties.

Section

8.6.           Indemnification.  Each Bank

shall, ratably in accordance with its Commitment, indemnify the Administrative

Agent, its affiliates and their respective directors, officers, agents and

employees (to the extent not reimbursed by the Borrowers) against any cost,

expense (including counsel fees and disbursements), claim, demand, action, loss

or liability (except such as result from such indemnities, gross negligence or

willful misconduct) that such indemnities may suffer or incur in connection

with this Agreement or any action taken or omitted by such indemnities

hereunder.

Section

8.7.           Credit Decision.  Each Bank

acknowledges that it has, independently and without reliance upon the

Administrative Agent or any other Bank, and based on such documents and

information as it has deemed appropriate, made its own credit analysis and

decision to enter into this Agreement. 

Each Bank also acknowledges that it will, independently and without

reliance upon the Administrative Agent or any other Bank, and based on such

documents and

 

52

 

information as it shall deem appropriate at the time,

continue to make its own credit decisions in taking or not taking any action

under this Agreement.

Section 8.8.           Successor

Administrative Agent. 

The Administrative Agent may resign at any time by giving notice thereof

to the Banks and the Borrower.  Upon any

such resignation, the Required Banks shall have the right to appoint a

successor Administrative Agent.  If no

successor Administrative Agent shall have been so appointed by the Required

Banks, and shall have accepted such appointment, within 30 days after the

retiring Administrative Agent gives notice of resignation, then the retiring

Administrative Agent may, on behalf of the Banks, appoint a successor

Administrative Agent, which shall be a commercial bank organized or Licensed

under the laws of the United States of America or of any State thereof and

having a combined capital and surplus of at least U.S. $100,000,000.  Upon the acceptance of its appointment as

Administrative Agent hereunder by a successor Administrative Agent, such

successor Administrative Agent shall thereupon succeed to and become vested

with all the rights and duties of the retiring Administrative Agent, and the

retiring Administrative Agent shall be discharged from its duties and

obligations hereunder.  After any

retiring Administrative Agent’s resignation hereunder as Administrative Agent,

the provisions of this Article shall inure to its benefit as to any actions

taken or omitted to be taken by it while it was Administrative Agent.

ARTICLE 9

CHANGE IN

CIRCUMSTANCES

Section 9.1.           Basis

for Determining Interest Rate Inaccurate or Unfair.  If on, or

prior to, the first day of any Interest Period for a Euro-Dollar Loan or

Euro-Canadian Dollar Loan:

                   (a)        the Administrative Agent determines that deposits in dollars

(in the applicable amounts) are not being offered to the Administrative Agent

in the Euro-Dollar or Euro-Canadian Dollar market, as the case may be, for such

Interest Period, or

                   (b)        in the case of Euro-Dollar Loans or Euro-Canadian Dollar

Loans, Banks having 50% or more of the aggregate principal amount of the

affected Loans advise the Administrative Agent that the London Interbank

Offered Rate, as determined by the Administrative Agent, will not adequately

and fairly reflect the cost to such Banks of funding their Euro-Dollar Loans or

Euro-Canadian Dollar Loans, as the case may be, for such Interest Period,

the Administrative

Agent shall forthwith give notice thereof to the Borrowers and the Banks,

whereupon until the Administrative Agent notifies the Borrower that the

circumstances giving rise to such suspension no longer exist, (i) the

obligations of the Banks to make Euro-Dollar Loans or Euro-Canadian Dollar

Loans or to continue or convert outstanding Loans as or into Euro-Dollar Loans

or Euro-Canadian Dollar Loans shall be suspended and (ii) each outstanding

Euro-Dollar Loan or Euro-Canadian Dollar Loan shall be converted into a Base

Rate Loan or Canadian Base Rate Loan, as relevant, on the last day of the then

current Interest Period applicable thereto. 

Should either of the events set forth in subclause (a) or (b) above

occur, unless the Borrowers notify the Administrative Agent at least two

Business Days before the date 

 

53

 

of any Borrowing of Euro-Dollar Loans or Euro-Canadian Dollar Loans for

which a Notice of Borrowing has previously been given that it elects not to

borrow on such date, such Borrowing shall instead be made as a Base Rate

Borrowing or Canadian Base Rate Borrowing, as relevant.

Section

9.2.           Illegality.  If, on or after

the Effective Date, the adoption of any applicable law, rule or regulation, or

any change in any applicable law, rule or regulation, or any change in the

interpretation or administration thereof by any governmental authority, central

bank or comparable agency charged with the interpretation or administration

thereof, or compliance by any Bank (or its Euro-Dollar Lending Office or

Euro-Canadian Dollar Lending Office) with any request or directive (whether or

not having the force of law) of any such authority, central Bank or comparable

agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar

Lending Office or Euro-Canadian Dollar Lending Office) to make, maintain or

fund its Euro-Dollar Loans or Euro-Canadian Dollar Loans, as the case may be,

and such Bank shall so notify the Administrative Agent, the Administrative

Agent shall forthwith give notice thereof to the other Banks and the Borrowers,

whereupon until such Bank notifies the Borrowers and the Administrative Agent

that the circumstances giving rise to such suspension no longer exist, the

obligation of such Bank to make Euro-Dollar Loans or Euro-Canadian Dollar

Loans, as the case may be, or to convert outstanding Loans into Euro-Dollar

Loans or Euro-Canadian Dollar Loans, as the case may be, shall be

suspended.  Before giving any notice to

the Administrative Agent pursuant to this Section, such Bank shall designate a

different Euro-Dollar Lending Office or Euro-Canadian Dollar Lending Office if

such designation will avoid the need for giving such notice and will not, in

the judgment of such Bank, be otherwise disadvantageous to such Bank.  If such notice is given, each Euro-Dollar

Loan or Euro-Canadian Dollar Loan, as the case may be, of such Bank then

outstanding shall be converted to a Base Rate Loan or Canadian Base Rate Loan,

as relevant, either (a) on the last day of the then current Interest

Period applicable to such Loan if such Bank may lawfully continue to maintain

and fund such Loan to such day or (b) immediately if such Bank shall

determine that it may not lawfully continue to maintain and fund such Loan to

such day.

Section 9.3.           Increased

Cost and Reduced Return. 

(a) If on or after the Effective Date, the adoption of any applicable

law, rule or regulation, or any change in any applicable law, rule or

regulation, or any change in the interpretation or administration thereof by

any governmental authority, central bank or comparable agency charged with the

interpretation or administration thereof, or compliance by any Bank (or its

Applicable Lending Office) with any request or directive (whether or not having

the force of law) of any such authority, central bank or comparable agency

shall impose, modify or deem applicable any reserve (including, without

limitation, any such requirement imposed by the Board of Governors of the

Federal Reserve System, but excluding with respect to any Euro-Dollar Loan or

Euro-Canadian Dollar Loan any such requirement with respect to which such Bank

is entitled to compensation during the relevant Interest Period under Section

2.15), special deposit, insurance assessment or similar requirement against

assets of, deposits with or for the account of, or credit extended by, any Bank

(or its Applicable Lending Office) or shall impose on any Bank (or its Applicable

Lending Office) or the London interbank market any other condition affecting

its Loans, its Note or its obligation to make Loans and the result of any of

the foregoing is to increase the cost to such Bank (or its Applicable Lending

Office) of making or maintaining any Loan, or to reduce the amount of any sum

received or receivable by such Bank (or its Applicable Lending Office) under

this 

 

54

 

Agreement or under its Note with respect thereto, by an

amount deemed by such Bank to be material, then, within 15 days after demand by

such Bank (with a copy to the Administrative Agent), the Borrowers shall pay to

such Bank such additional amount or amounts as will compensate such Bank for

such increased cost or reduction.

(b)           If any Bank shall have determined

that after the Effective Date, the adoption of any applicable law, rule or

regulation regarding capital adequacy, or any change in any such law, rule or

regulation, or any change in the interpretation or administration thereof by

any governmental authority, central bank or comparable agency charged with the

interpretation or administration thereof, or any request or directive regarding

capital adequacy (whether or not having the force of law) of any such

authority, central bank or comparable agency, has or would have the effect of

reducing the rate of return on capital of such Bank (or its Parent) as a

consequence of such Bank’s obligations hereunder to a level below that which

such Bank (or its Parent) could have achieved but for such adoption, change,

request or directive (taking into consideration its policies with respect to

capital adequacy) by an amount deemed by such Bank to be material, then from

time to time, within 15 days after demand by such Bank (with a copy to the

Administrative Agent), the Borrower shall pay to such Bank such additional

amount or amounts as will compensate such Bank (or its Parent) for such

reduction.

(c)           Each Bank will promptly notify the

Borrowers and the Administrative Agent of any event of which it has knowledge,

occurring after the Effective Date, which will entitle such Bank to

compensation pursuant to this Section and will designate a different Applicable

Lending Office if such designation will avoid the need for, or reduce the

amount of, such compensation and will not, in the judgment of such Bank, be

otherwise disadvantageous to such Bank. 

A certificate of any Bank claiming compensation under this Section and

setting forth the additional amount or amounts to be paid to it hereunder shall

be conclusive in the absence of manifest error.  In determining such amount, such Bank may use any reasonable

averaging and attribution methods.

Section

9.4.           Taxes.  (a) For the

purposes of this Section 9.4, the following terms have the following meanings:

“Taxes” means any and all present or future

taxes, duties, levies, imposts, deductions, charges or withholdings with

respect to any payment by a Borrower or the applicable Guarantor, as the case

may be, pursuant to this Agreement or under any Note, and all liabilities with

respect thereto, excluding (i) in the case of each Bank and the

Administrative Agent, taxes imposed on its income, and franchise or similar

taxes imposed on it, by a jurisdiction under the laws of which such Bank or the

Administrative Agent (as the case may be) is organized or in which its

principal executive office is located or, in the case of each Bank, in which

its Applicable Lending Office is located and (ii) in the case of each Bank, any

United States withholding tax imposed on such payments but only to the extent

that such Bank is subject to United States withholding tax at the time such

Bank first becomes a party to this Agreement.

“Other Taxes” means any present or future stamp or

documentary taxes and any other excise or property taxes, or similar charges or

levies, which arise from any payment 

 

55

 

made pursuant to this Agreement or under any Note or

from the execution or delivery of, or otherwise with respect to, this Agreement

or any Note.

(b)           Any and all payments by a Borrower or

the applicable Guarantor, as the case may be, to or for the account of any Bank

or the Administrative Agent hereunder or under any Note shall be made without

deduction for any Taxes or Other Taxes; provided, that, if a Borrower or the

applicable Guarantor, as the case may be, shall be required by law to deduct

any Taxes or Other Taxes from any such payments (i) the sum payable shall

be increased as necessary so that after making all required deductions

(including deductions applicable to additional sums payable under this Section)

such Bank or the Administrative Agent (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 the applicable Guarantor, as the case may be, shall make such

deductions, (iii) such Borrower or the applicable Guarantor, as the case may

be, shall pay the full amount deducted to the relevant taxation authority or

other authority in accordance with applicable law and (iv) such Borrower or the

applicable Guarantor, as the case may be, shall furnish to the Administrative

Agent, at its address referred to in Section 11.1, the original or a

certified copy of a receipt evidencing payment thereof

(c)           The Borrowers agree to indemnify each

Bank and the Administrative Agent for the full amount of Taxes or other Taxes

(including, without limitation, any Taxes or Other Taxes imposed or asserted by

any jurisdiction on amounts payable under this Section) paid by such Bank or

the Administrative Agent (as the case may be) and any liability (including

penalties, interest and expenses) arising therefrom or with respect

thereto.  This indemnification shall be

paid within 15 days after such Bank or the Administrative Agent (as the case

may be) makes demand therefor.

(d)           Each Bank organized under the laws of

a jurisdiction outside the United States, on or prior to the date of its

execution and delivery of this Agreement in the case of each Bank listed on the

signature pages hereof and on or prior to the date on which it becomes a Bank

in the case of each other Bank, and from time to time thereafter if requested

in writing by a Borrower (but only so long as such Bank remains lawfully able

to do so), shall provide such Borrower and the Administrative Agent with

Internal Revenue Service form W–8 BEN or W–8ECI, as

appropriate, or any successor form prescribed by the Internal Revenue Service,

certifying that such Bank is entitled to benefits under an income tax treaty to

which the United States is a party which exempts the Bank from United States

withholding tax or reduces the rate of withholding tax on payments of interest

for the account of such Bank or certifying that the income receivable pursuant

to this Agreement is effectively connected with the conduct of a trade or

business in the United States.

(e)           For any period with respect to which

a Bank has failed to provide a Borrower or the Administrative Agent with the

appropriate form pursuant to Section 9.4(d) (unless such failure is due to

a change in treaty, law or regulation occurring subsequent to the date on which

such form originally was required to be provided), such Bank shall not be

entitled to indemnification under Section 9.4(b) or (c) with respect to

Taxes imposed by the United States; provided that if a Bank, which is

otherwise exempt from or subject to a reduced rate of withholding tax, becomes

subject 

 

56

 

to Taxes because of its failure to deliver a form

required hereunder, the Borrowers shall take such steps as such Bank shall

reasonably request to assist such Bank to recover such Taxes.

(f)            If a Borrower is required to pay

additional amounts to or for the account of any Bank pursuant to this Section, then

such Bank will change the jurisdiction of its Applicable Lending office if, in

the judgment of such Bank, such change (i) will eliminate or reduce any

such additional payment which may thereafter accrue and (ii) is not

otherwise disadvantageous to such Bank.

Section 9.5.           Base

Rate Loans Substituted for Affected Fixed Rate Loans.  If

(i) the obligation of any Bank to make, or convert outstanding Loans to,

Euro-Dollar Loans or Euro-Canadian Dollar Loans has been suspended pursuant to

Section 9.2 or (ii) any Bank has demanded compensation under

Section 9.3 or 9.4 with respect to its Euro-Dollar Loans or Euro-Canadian

Dollar Loans and a Borrower shall, by at least five Business Days’ prior notice

to such Bank through the Administrative Agent, have elected that the provisions

of this Section shall apply to such Bank, then, unless and until such Bank

notifies such Borrower that the circumstances giving rise to such suspension or

demand for compensation no longer exist:

                   (a)        all Loans which would otherwise be made by such Bank as (or

continued as or converted into) Euro-Dollar Loans or Euro-Canadian Dollar Loans

shall instead be Base Rate Loans or Canadian Base Rate Loans, as relevant (on

which interest and principal shall be payable contemporaneously with the related

Euro-Dollar Loans or Euro-Canadian Dollar Loans of the other Banks); and

                   (b)        after each of its Euro-Dollar Loans or Euro-Canadian Dollar

Loans has been repaid (or converted to a Base Rate Loan or Canadian Base Rate

Loan, as relevant), all payments of principal which would otherwise be applied

to repay such Euro-Dollar Loans or Euro-Canadian Dollar Loans shall be applied

to repay its Base Rate Loans or Canadian Base Rate Loans, as relevant, instead.

If such Bank

notifies a Borrower that the circumstances giving rise to such notice no longer

apply, the principal amount of each such Base Rate Loan or Canadian Base Rate

Loan shall be converted into a Euro-Dollar Loan or Euro-Canadian Dollar Loan,

as the case may be, on the first day of the next succeeding Interest Period

applicable to the related Euro-Dollar Loans or Euro-Canadian Dollar Loans, as

the case may be, of the other Banks.

ARTICLE 10

PERFORMANCE AND

PAYMENT GUARANTY

              Section 10.1.       Unconditional and Irrevocable Guaranty.  (a) The

Guarantors hereby jointly and severally, unconditionally and irrevocably

undertake and agree with and for the benefit of the Administrative Agent and

the Banks and each of their respective permitted assignees (collectively, the “Beneficiaries”)

to cause the due payment, performance and observance by the Borrowers and their

assigns of all of the Obligations, terms, covenants, conditions, agreements and

undertakings on the part of the Borrowers, to be paid, performed or 

 

57

 

observed under any Credit Document in accordance with

the terms thereof including, without limitation, any agreement of a Borrower to

pay any amounts due with respect to the Loans, under this Agreement or any

other amounts due and owing under any Credit Document (all such Obligations,

terms, covenants, conditions, agreements and undertakings on the part of the

Borrowers to be paid, performed or observed by the Borrowers being collectively

called the “Guaranteed

Obligations” provided that with respect to any Foreign Subsidiary,

“Guaranteed Obligations” shall not be deemed to include any Obligations of the

US Borrower).  In the event that the

Borrowers shall fail in any manner whatsoever to pay, perform or observe any of

the Guaranteed Obligations when the same shall be required to be paid,

performed or observed under such Credit Document (after giving effect to any

cure period), then each of the Guarantors (provided that it is expressly understood

that no Foreign Subsidiary shall be deemed to be a Guarantor in respect of the

Obligations of the US Borrower) will itself jointly and severally duly pay,

perform or observe, or cause to be duly paid, performed or observed, such

Guaranteed Obligation, and it shall not be a condition to the accrual of the

obligation of any Guarantor hereunder to pay, perform or observe any Guaranteed

Obligation (or to cause the same to be paid, performed or observed) that the

Administrative Agent, the Banks or any of their permitted assignees shall have

first made any request of or demand upon or given any notice to any Guarantor

or to the Borrower or its successors or assigns, or have instituted any action

or proceeding against any Guarantor or the Borrower or its successors or

assigns in respect thereof. 

Notwithstanding anything to the contrary contained in this

Section 10.1 the obligations of the respective Guarantors hereunder in

respect of the Borrowers are expressly limited to the Guaranteed Obligations.

                (b)       Irrevocability.  The

Guarantors each agree that its obligations under this Agreement shall be joint

and several and irrevocable.  In the

event that under applicable law (notwithstanding the Guarantors’ agreement

regarding the joint and several and irrevocable nature of its obligations hereunder)

any Guarantor shall have the right to revoke its guaranty under this Agreement,

this Agreement shall continue in full force and effect as to such Guarantor

until a written revocation hereof specifically referring hereto, signed by such

Guarantor, is actually received by the Administrative Agent, delivered as

provided in Section 11.1 hereof. 

Any such revocation shall not affect the right of the Administrative

Agent or any other Beneficiary to enforce their respective rights under this

Agreement with respect to (i) any Guaranteed Obligation (including any

Guaranteed Obligation that is contingent or unmatured) which arose on or prior

to the date the aforementioned revocation was received by the Administrative

Agent, (ii) any Assigned Collateral in which a security interest was

acquired by the Administrative Agent or its permitted assignees on or prior to

the date the aforementioned revocation was received by the Administrative Agent

or (iii) any other Guarantor.  If

the Administrative Agent, or its permitted assignees takes any action in reliance

on this Agreement after any such revocation by a Guarantor but prior to the

receipt by the Administrative Agent of said written notice, the rights of the

Administrative Agent, any other Beneficiary or such permitted assignee with

respect thereto shall be the same as if such revocation had not occurred.

              Section

10.2.       Enforcement.  The

Administrative Agent and its permitted assignees may proceed to enforce the

obligations of the Guarantors under this Agreement without first pursuing or

exhausting any right or remedy which the Administrative Agent or its permitted

assignees may have against the respective Borrower, any other Person or the

Assigned Collateral.

 

58

 

              Section 10.3.       Obligations Absolute.  To the

extent permitted by law, the applicable Guarantor will perform its obligations

under this Agreement regardless of any law now or hereafter in effect in any

jurisdiction affecting any of the terms of this Agreement or any document

delivered in connection with this Agreement or the rights of the Administrative

Agent or its permitted assignees with respect thereto.  The obligations of each Guarantor under this

Agreement shall be absolute and unconditional irrespective of:

                   (a)        any lack of validity or enforceability or the discharge or

disaffirmance (by any Person, including a trustee in bankruptcy) of the

Guaranteed Obligations, the Loans, any Credit Document or any Assigned

Collateral or any document, or any other agreement or instrument relating

thereto;

                   (b)        any exchange, release or non–perfection of any Assigned

Collateral or any release or amendment or waiver of or consent to departure

from any other guaranty, for all or any of the Guaranteed Obligations;

                   (c)        any failure to obtain any authorization or approval from or

other action by, or to notify or file with, any governmental authority or

regulatory body required in connection with the performance of such obligations

by the Borrowers or any Guarantor; or

                   (d)        any impossibility or impracticality of performance,

illegality, force majeure, any act of any government or any other circumstance

which might constitute a legal or equitable defense available to, or a

discharge of, a Borrower or any Guarantor, or any other circumstance, event or

happening whatsoever, whether foreseen or unforeseen and whether similar or

dissimilar to anything referred to above in this Section 10.3.

Each Guarantor

further agrees that its obligations under this Agreement shall not be limited

by any valuation or estimation made in connection with any proceedings

involving a Borrower or any Guarantor filed under the Bankruptcy Code of 1978,

as amended (the “Bankruptcy Code”), whether pursuant to Section 502 of the

Bankruptcy Code or any other Section thereof. 

Each Guarantor further agrees that the Administrative Agent shall be

under no obligation to marshall any assets in favor of or against or in payment

of any or all of the Guaranteed Obligations. 

Each Guarantor further agrees that, to the extent that a payment or

payments are made by or on behalf of a Borrower to the Administrative Agent,

which payment or payments or any part thereof are subsequently invalidated,

declared to be fraudulent or preferential, set aside and/or required to be

repaid to such Borrower, the estate, trustee, receiver or any other party

relating to such Borrower, including, without limitation, any Guarantor, under

any bankruptcy law, state or federal law, common law or equitable cause then,

to the extent of such payment or repayment, the Guaranteed Obligations or part

thereof which had been paid, reduced or satisfied by such amount shall be

reinstated and continued in full force and effect as of the date such initial

payment, reduction or satisfaction occurred. 

The obligations of any Guarantor under this Agreement shall not be

discharged except by performance as provided herein.

              Section

10.4.       Waiver.  Each

Guarantor hereby waives promptness, diligence, notice of acceptance and any

other notice with respect to any of the Guaranteed Obligations and any 

 

59

 

Credit Document and any requirement that the

Administrative Agent or its permitted assignees exhaust any right or take any

action against a Borrower, any other Person or any Assigned Collateral.

              Section

10.5.       Subrogation.  No Guarantor

will exercise or assert any rights which it may acquire by way of subrogation

under this Agreement unless and until all of the Guaranteed Obligations shall

have been paid and performed in full. 

If any payment shall be made to any Guarantor on account of any

subrogation rights at any time when all of the Guaranteed Obligations shall not

have been paid and performed in full each and every amount so paid will be held

in trust for the benefit of the Beneficiaries and forthwith be paid to the

appropriate Beneficiary in accordance with this Agreement and the appropriate

Credit Document, to be credited and applied to the Guaranteed Obligations to

the extent then unsatisfied, in accordance with the terms of this Agreement or

any document delivered in connection with this Agreement, as the case may

be.  In the event (i) the Guarantors

shall have satisfied any of the Guaranteed Obligations and (ii) all of the

Guaranteed Obligations shall have been paid and performed in full, the

Administrative Agent will, at the Guarantors’ request and expense, execute and

deliver to the Guarantors appropriate documents, without recourse and without

representation or warranty of any kind, necessary to evidence or confirm the

transfer by way of subrogation to the Guarantors of the rights of the

Beneficiaries or any permitted assignee, as the case may be, with respect to

the Guaranteed Obligations to which the Guarantors shall have become entitled

by way of subrogation, and thereafter the Beneficiaries and their respective

permitted assignees shall have no responsibility to the Guarantors or any other

person with respect thereof.

              Section 10.6.       Survival.  All

covenants made by the Guarantors herein shall be considered to have been relied

upon by the Administrative Agent and the Banks and shall survive regardless of

any investigation made by the Administrative Agent or any Bank or on the

Administrative Agent’s behalf.

              Section 10.7.       Guarantors’ Consent to Assigns.  Each Bank

may assign or participate out all or any portion of its Commitment or the Loans

in accordance with Section 11.6 of this Agreement, and each Guarantor agrees to

recognize any such Assignee or participant as a successor and assignee of such

Bank hereunder, with all rights of such Bank hereunder.

              Section 10.8.       Continuing Agreement.  Article 10

under this Agreement is a continuing agreement and shall remain in full force

and effect until all of the Borrowers’ Obligations have been satisfied in full.

ARTICLE 11

MISCELLANEOUS

              Section

11.1.       Notices.  All notices,

requests and other communications to any party hereunder shall be in writing

(including bank wire, facsimile transmission or similar writing) and shall be

given to such party: (a) in the case of a Credit Party or the Administrative

Agent, at its address or facsimile number set forth on the signature pages

hereof, (b) in the case of any Bank, at its address or facsimile number set

forth on the signature pages hereof or (c) in the case of any 

 

60

 

party, such other address or facsimile number as such

party may hereafter specify for the purpose by notice to the Administrative

Agent and the Borrowers.  Each such

notice, request or other communication shall be effective (i) if given by

facsimile transmission, when transmitted to the facsimile number specified in

this Section and confirmation of receipt is received, (ii) if given by mail, 72

hours after such communication is deposited in the mails with first class

postage prepaid, addressed as aforesaid or (iii) if given by any other means,

when delivered at the address specified in this Section; provided that notices to the

Administrative Agent under Article 2 or Article 9 shall not be effective until

received.

              Section

11.2.       No Waivers.  No failure

or delay by the Administrative Agent or any Bank in exercising any right, power

or privilege hereunder or under any Note shall operate as a waiver thereof nor

shall any single or partial exercise thereof preclude any other or further

exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided

shall be cumulative and not exclusive of any rights or remedies provided by

law.

              Section 11.3.       Expenses; Indemnification.  (a) The

Borrowers shall pay (i) all out–of–pocket expenses of the

Administrative Agent, including fees and disbursements of counsel for the

Administrative Agent, in connection with the preparation and administration of

this Agreement and the other Credit Documents, any waiver or consent hereunder

or any amendment hereof or any Default or alleged Default hereunder and

(ii) if an Event of Default occurs, all out–of–pocket expenses

incurred by the Administrative Agent and each Bank, including (without

duplication) the fees and disbursements of outside counsel and the allocated

cost of inside counsel, in connection with such Event of Default and

collection, bankruptcy, insolvency and other enforcement proceedings resulting

therefrom.

                (b)       The Borrowers agree to indemnify the Administrative Agent and

each Bank, their respective affiliates and the respective directors, officers,

agents and employees of the foregoing (each an “Indemnitee”) and hold each

Indemnitee harmless from and against any and all liabilities, losses, damages,

costs and expenses of any kind, including, without limitation, the reasonable

fees and disbursements of counsel, which may be incurred by such Indemnitee in

connection with any investigative, administrative or judicial proceeding

(whether or not such Indemnitee shall be designated a party thereto) brought or

threatened relating to or arising out of this Agreement or any actual or

proposed use of proceeds of Loans hereunder; provided, that no Indemnitee

shall have the right to be indemnified hereunder for such Indemnitee’s own

gross negligence or willful misconduct as determined by a court of competent

jurisdiction.

              Section 11.4.       Sharing of Set–Offs.  Each Bank

agrees that if it shall, by exercising any right of set–off or

counterclaim or otherwise, receive payment of a proportion of the aggregate

amount of principal and interest due with respect to any Note held by it which

is greater than the proportion received by any other Bank in respect of the

aggregate amount of principal and interest due with respect to any Note held by

such other Bank, the Bank receiving such proportionately greater payment shall

purchase such participations in the Notes held by the other Banks, and such

other adjustments shall be made, as may be required so that all such payments

of principal and interest with respect to the Notes held by the Banks shall be

shared by the Banks in accordance with their Percentages; provided, that nothing in

this Section shall impair the right of any Bank to exercise any right of set–off

or counterclaim it may have and to apply the amount 

 

61

 

subject to such exercise to the payment of

indebtedness of a Borrower other than its indebtedness hereunder.  Each Borrower agrees, to the fullest extent

it may effectively do so under applicable law, that any holder of a

participation in a Note, whether or not acquired pursuant to the foregoing

arrangements, may exercise rights of set–off or counterclaim and other

rights with respect to such participation as fully as if such holder of a

participation were a direct creditor of such Borrower in the amount of such

participation.

              Section 11.5.       Amendment or Waiver, etc.  Neither this

Agreement nor any other Credit Document nor any terms hereof or thereof may be

changed, waived, discharged or terminated unless such change, waiver, discharge

or termination is in writing signed by the respective Credit Parties party

thereto and the Required Banks, provided that no such change, waiver,

discharge or termination shall, without the consent of each Bank (with

Obligations being directly affected in the case of following clauses (i)

and (ii)), (i) extend the final scheduled maturity of any Loan or Note, or

reduce the rate of interest or fees or extend the time of payment of interest

or fees, or reduce the principal amount thereof (except to the extent repaid in

cash) (provided

that any amendment or modification to the financial definitions in this

Agreement or to Section 2.14 shall not constitute a reduction in the rate

of interest or any fees for purposes of this clause (i)),

(ii) release all or substantially all of the Collateral,

(iii) release a Guarantor from its Guaranty of the Obligations of the

Borrowers (except in connection with the sale of a Subsidiary which is a

Guarantor in accordance with the terms of this Agreement), (iv) amend,

modify or waive any provision of this Section 11.5, (v) reduce the

percentage specified in the definition of Required Banks (it being understood

that, with the consent of the Required Banks, additional extensions of credit

pursuant to this Agreement may be included in the determination of the Required

Banks on substantially the same basis as the extensions of Commitments are

included on the Effective Date) or (vi) consent to the assignment or

transfer by a Borrower of any of its rights and obligations under this

Agreement; provided,

further, that no such change, waiver, discharge or termination shall

(x) increase the Commitments of any Bank over the amount thereof then in

effect without the consent of such Bank (it being understood that waivers or

modifications of conditions precedent, covenants, Defaults or of a mandatory

reduction in the Total Commitments shall not constitute an increase of the

Commitment of any Bank, and that an increase in the available portion of any

Commitment of any Bank shall not constitute an increase of the Commitment of

such Bank), (y) without the consent of the Administrative Agent, amend,

modify or waive any provision of Article 8 or any other provision as the

same relates to the rights or obligations of the Administrative Agent, or

(z) without the consent of the Collateral Agent, amend, modify or waive

any provision relating to the rights or obligations of the Collateral Agent.

              Section 11.6.       Successors

and Assigns. 

(a) The provisions of this Agreement shall be binding upon and

inure to the benefit of the parties hereto and their respective successors and

assigns, except that neither the Borrowers nor any Guarantor may assign or

otherwise transfer any of their respective rights under this Agreement without

the prior written consent of all Banks.

                (b)       Any Bank may at any time grant to one or more banks or other

institutions (each a “Participant”) participating interests in

its Commitment or any or all of its Loans. 

In the event of any such grant by a Bank of a participating interest to

a Participant, whether or not upon 

 

62

 

notice to the respective Borrower and the Administrative Agent, such

Bank shall remain responsible for the performance of its obligations hereunder,

and the Borrowers and the Administrative Agent shall continue to deal solely

and directly with such Bank in connection with such Bank’s rights and

obligations under this Agreement.  Any

agreement pursuant to which any Bank may grant such a participating interest

shall provide that such Bank shall retain the sole right and responsibility to

enforce the obligations of the Borrowers hereunder, including, without

limitation, the right to approve any amendment, modification or waiver of any provision

of this Agreement except to the extent such amendment or waiver would

(i) extend the final scheduled maturity of any Loan or Note in which such

participant is participating, or reduce the rate or extend the time of payment

of interest or fees thereon (except in connection with a waiver of

applicability of any post–default increase in interest rates) or reduce

the principal amount thereof, or increase the amount of the participant’s

participation over the amount thereof then in effect (it being understood that

a waiver of any Default or of a mandatory reduction in the Total Commitment

shall not constitute a change in the terms of such participation, and that an

increase in any Commitment or Loan shall be permitted without the consent of

any participant if the participant’s participation is not increased as a result

thereof), (ii) consent to the assignment or transfer by the respective

Borrower of any of its rights and obligations under this Agreement or

(iii) release all or substantially all of the Collateral under the

Security Documents (except as expressly provided in the Credit Documents).  In the case of any such participation, the

participant shall not have any rights under this Agreement or any of the other

Credit Documents (the participant’s rights against such Bank in respect of such

participation to be those set forth in the agreement executed by such Bank in

favor of the participant relating thereto) and all amounts payable by the

Borrowers hereunder shall be determined as if such Bank had not sold such

participation.  The Borrowers agree that

each Participant shall, to the extent provided in its participation agreement,

be entitled to the benefits of Article 9 with respect to its participating

interest.  An assignment or other

transfer which is not permitted by subsection (c) or (d) below shall be

given effect for purposes of this Agreement only to the extent of a

participating interest granted in accordance with this subsection (b).

                (c)       Any Bank (or any Bank together with one or more other Banks)

may (A) assign all or a portion of its Commitments and related outstanding

Obligations hereunder to (i) its parent company and/or any affiliate of

such Bank which is at least 50% owned by such Bank or its parent company,

(ii) to one or more Banks or (iii) in the case of a Bank that is a

fund that invests in bank loans, any other fund that invests in bank loans and

is managed or advised by the same investment advisor of such Bank or by an

Affiliate of such investment advisor or (B) assign all, or, if less than

all, a portion equal to at least $5,000,000 in the aggregate for the assigning

Bank or assigning Banks, of such Commitments and related outstanding

Obligations hereunder to one or more Eligible Transferees, each of which

assignees shall become a party to this Agreement as a Bank by execution of an

Assignment and Assumption Agreement, provided that, (i) at such time

Schedule I shall be deemed modified to reflect the Commitments of such new

Bank and of the existing Banks, (ii) upon the surrender of the relevant

Notes by the assigning Bank (or, upon such assigning Bank’s indemnifying the

Borrower for any lost Note pursuant to a customary indemnification agreement)

new Notes will be issued, at the respective Borrower’s expense, to such new

Bank and to the assigning Bank upon the request of such new Bank or assigning

Bank, such new Notes to be in conformity with the requirements of

Section 2.4 (with appropriate modifications) to the extent needed to

reflect the revised Commitments, (iii) the consent of the 

 

63

 

Administrative Agent shall be required in connection with any

assignment to an Eligible Transferee pursuant to clause (B) above (which

consent shall not be unreasonably withheld or delayed), (iv) so long as no

Default or Event of Default exists, the consent of the Borrowers shall be

required in connection with any assignment to an Eligible Transferee pursuant

to clause (B) above (which consent shall not be unreasonably withheld or

delayed), (v) the Administrative Agent shall receive at the time of each

such assignment, from the assigning or assignee Bank, the payment of a non–refundable

assignment fee of $3,500, which fee shall not be subject to reimbursement from

the respective Borrower and (vi) no such transfer or assignment will be

effective until recorded by the Administrative Agent.  To the extent of any assignment pursuant to this

Section 11.6(c), the assigning Bank shall be relieved of its obligations hereunder

with respect to its assigned Commitments. 

At the time of each assignment pursuant to this Section 11.6(c) to

a Person which is not already a Bank hereunder and which is not a United States

person (as such term is defined in Section 7701(a)(30) of the Code) for

Federal income tax purposes, the respective assignee Bank shall, to the extent

legally entitled to do so, provide to the respective Borrower the appropriate

Internal Revenue Service forms described in Section 9.4(b).

                (d)       Any Bank may at any time assign all or any portion of its

rights under this Agreement and its Note to a Federal Reserve Bank.  No such assignment shall release the

transferor Bank from its obligations hereunder.

                (e)       Notwithstanding anything to the contrary contained herein, any

Bank (a “Granting

Bank”) may grant to a special purpose funding vehicle (a “SPC”),

identified as such in writing from time to time by the Granting Bank to the

Administrative Agent and the Borrowers, the option to provide to the Borrowers

all or any part of any Loan that such Granting Bank would otherwise be

obligated to make to the Borrowers pursuant to this Agreement; provided

that (i) nothing herein shall constitute a commitment by any

SPC to make any Loan, (ii) if an SPC elects not to exercise such option or

otherwise fails to provide all or any part of such Loan, the Granting Bank

shall be obligated to make such Loan pursuant to the terms hereof, and

(iii) in the case of any Loan made to the Canadian Borrower, the SPC is a

resident of Canada.  The making of a

Loan by an SPC hereunder shall utilize the Commitment of the Granting Bank to

the same extent, and as if, such Loan were made by such Granting Bank.  Each party hereto hereby agrees that no SPC

shall be liable for any indemnity or similar payment obligation under this

Agreement (all liability for which shall remain with the Granting Bank).  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 SPC, it will not institute against, or join any other

person in instituting against, such SPC any bankruptcy, reorganization,

arrangement, insolvency or liquidation proceedings under the laws of the United

States or any State thereof relating to claims, if any, under this

Agreement.  In addition, notwithstanding

anything to the contrary contained in this subsection (e), any SPC may (i) with

notice to, but without the prior written consent of, the Borrower 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 Bank or to any

financial institutions (consented to by the Borrower and Administrative Agent)

providing liquidity and/or credit support to or for the account of such SPC 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 

 

64

 

any surety, guarantee or credit or liquidity enhancement to such

SPC.  This section may not be amended

without the written consent of the SPC.

                 (f)       No Assignee, Participant or other transferee of any Bank’s

rights shall be entitled to receive any greater payment under Section 9.3

or 9.4 than such Bank would have been entitled to receive with respect to the

rights transferred, unless such transfer is made (i) with the respective

Borrower’s prior written consent or (ii) by reason of the provisions of

Section 9.2, 9.3 or 9.4 requiring such Bank to designate a different

Applicable Lending Office under certain circumstances or (iii) at a time when

the circumstances giving rise to such greater payment did not exist.

              Section 11.7.       Collateral.  Each of the Banks represents to the

Administrative Agent and each of the other Banks that it in good faith is not

relying upon any “margin stock” (as defined in Regulation U) as collateral

in the extension or maintenance of the credit provided for in this Agreement.

              Section 11.8.       Governing

Law; Submission to Jurisdiction; Judgment Currency.  (a) This

Agreement and each Note shall be governed by and construed in accordance with

the laws of the State of New York. 

The Borrowers hereby submit to the nonexclusive jurisdiction of the

United States District Court for the Southern District of New York and of any

New York State court sitting in New York City for purposes of all legal

proceedings arising out of or relating to this Agreement or the transactions

contemplated hereby.  The Borrowers

irrevocably waive, to the fullest extent permitted by law, any objection which

it may now or hereafter have to the laying of the venue of any such proceeding

brought in such a court and any claim that any such proceeding brought in such

a court has been brought in an inconvenient forum.

                (b)       (i) If, for the purposes of obtaining judgment in any

court, it is necessary to convert a sum due to a Bank in any currency (the “Original

Currency”) into another currency (the “Other Currency”), the

parties agree, to the fullest extent that they may effectively do so, that the

rate of exchange used shall be that at which, in accordance with normal banking

procedures, such Bank could purchase the Original Currency with the Other

Currency on the Business Day preceding the day on which final judgment is given

or, if permitted by applicable law, on the day on which the judgment is paid or

satisfied.

                (ii)       The obligations of the Borrowers in respect of any sum due in

the Original Currency from it to the Banks under any of the Credit documents

shall, notwithstanding any judgment in any Other Currency, be discharged only

to the extent that on the Business Day following receipt by the Banks of any

sum adjudged to be so due in the Other Currency, the Banks may, in accordance

with normal banking procedures, purchase the Original Currency with such Other

Currency.  If the amount of the Original

Currency so purchased is less than the sum originally due to the Banks in the

Original Currency, the Borrowers agree, as a separate obligation and

notwithstanding the judgment, to indemnify the Banks against any loss, and, if

the amount of the Original Currency so purchased exceeds the sum originally due

to the Banks in the Original Currency, the Banks shall remit such excess to the

respective Borrower.

 

65

 

              Section 11.9.       Counterparts;

Integration; Effectiveness. 

This Agreement may be signed in any number of counterparts, each of

which shall be an original, with the same effect as if the signatures thereto

and hereto were upon the same instrument. 

This Agreement constitutes the entire agreement and understanding among

the parties hereto and supersedes any and all prior agreements and

understandings, oral or written, relating to the subject matter hereof.  This Agreement shall become effective upon

receipt by the Administrative Agent of counterparts hereof signed by each of

the parties hereto (or, in the case of any party as to which an executed

counterpart shall not have been received, receipt by the Administrative Agent

in form satisfactory to it of telegraphic, facsimile or other written

confirmation from such party of execution of a counterpart hereof by such

party) and each of the other conditions specified in Section 3.1 have been

satisfied.

            Section 11.10.       Waiver

of Jury Trial.  Each of the Borrowers, the Agent and the Banks

hereby irrevocably waives any and all right to trial by jury in any legal proceeding

arising out of or relating to this Agreement or the transactions contemplated

hereby.

[Signature Pages to Follow]

 

66

 

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.

 

	

  Alliance Data Systems

  Corporation, as a

  Borrower and Guarantor

  
	

   

  
	

  By

  	

  /s/ Robert P. Armiak

  
	

   

  	

  Name 

  	

  Robert P. Armiak

  
	

   

  	

  Title  

  	

  Sr. Vice President, Treasurer

  
	

   

  	

  Address:

  	

  800 Tech Center Drive

  
	

   

  	

   

  	

  Gahanna, OH 

  43230

  
	

   

  	

  Attention:

  	

  Treasurer

  
	

   

  	

  Telephone:

  	

  (614) 729–4900

  
	

   

  	

  Facsimile:

  	

  (614) 729–4949

  
	

   

  	

   

  	

   

  
	

  With a copy to:

  
	

   

  
	

   

  	

  Address:

  	

  17655 Waterview Parkway

  
	

   

  	

   

  	

  Dallas, TX 

  75252

  
	

   

  	

  Attention:

  	

  General Counsel

  
	

   

  	

  Telephone:

  	

  (972) 348–5135

  
	

   

  	

  Facsimile:

  	

  (972) 348–5330

  
	

   

  	

   

  	

   

  
	

  Loyalty Management Group

  Canada Inc., as a

  Borrower

  
	

   

  
	

  By 

  	

  /s/ Robert P. Armiak

  
	

   

  	

  Name  

  	

  Robert P. Armiak

  
	

   

  	

  Title  

  	

  Sr. Vice President, Treasurer

  
	

   

  	

  Address:

  	

  800 Tech Center Drive

  
	

   

  	

   

  	

  Gahanna, OH 

  43230

  
	

   

  	

  Attention:

  	

  Treasurer

  
	

   

  	

  Telephone:

  	

  (614) 729–4900

  
	

   

  	

  Facsimile:

  	

  (614) 729–4949

  
	

   

  	

   

  	

   

  
	

  With a copy to:

  
	

   

  
	

   

  	

  Address:

  	

  17655 Waterview Parkway

  
	

   

  	

   

  	

  Dallas, TX 

  75252

  
	

   

  	

  Attention:

  	

  General Counsel

  
	

   

  	

  Telephone:

  	

  (972) 348–5135

  
	

   

  	

  Facsimile:

  	

  (972) 348–5330

  

 

S-1

 

	

  ADS Alliance Data Systems,

  Inc., as a

  Guarantor

  
	

  By 

  	

  /s/ Robert P. Armiak

  
	

   

  	

  Name

  	

  Robert P. Armiak

  
	

   

  	

  Title

  	

  Sr. Vice President, Treasurer

  
	

   

  	

  Address:

  	

  800 Tech Center Drive

  
	

   

  	

   

  	

  Gahanna, OH 

  43230

  
	

   

  	

  Attention:

  	

  Treasurer

  
	

   

  	

  Telephone:

  	

  (614) 729–4900

  
	

   

  	

  Facsimile:

  	

  (614) 729–4949

  
	

   

  	

   

  	

   

  
	

  With a copy to:

  
	

   

  
	

   

  	

  Address:

  	

  17655 Waterview Parkway

  
	

   

  	

   

  	

  Dallas, TX 

  75252

  
	

   

  	

  Attention:

  	

  General Counsel

  
	

   

  	

  Telephone:

  	

  (972) 348–5135

  
	

   

  	

  Facsimile:

  	

  (972) 348–5330

  
	

   

  	

   

  	

   

  
	

  ADS Commercial Services,

  Inc., as a Guarantor

  
	

   

  
	

  By

  	

  /s/ Robert P. Armiak

  
	

   

  	

  Name

  	

  Robert P. Armiak

  
	

   

  	

  Title

  	

  Sr. Vice President, Treasurer

  
	

   

  	

  Address:

  	

  800 Tech Center Drive

  
	

   

  	

   

  	

  Gahanna, OH 

  43230

  
	

   

  	

  Attention:

  	

  Treasurer

  
	

   

  	

  Telephone:

  	

  (614) 729–4900

  
	

   

  	

  Facsimile:

  	

  (614) 729–4949

  
	

   

  	

   

  	

   

  
	

  With a copy to:

  
	

   

  
	

   

  	

  Address:

  	

  17655 Waterview Parkway

  
	

   

  	

   

  	

  Dallas, TX 

  75252

  
	

   

  	

  Attention:

  	

  General Counsel

  
	

   

  	

  Telephone:

  	

  (972) 348–5135

  
	

   

  	

  Facsimile:

  	

  (972) 348–5330

  

 

S-2

 

	

  ADS MB Corporation, as Guarantor

  
	

   

  
	

  By 

  	

  /s/  Robert

  P. Armiak

  
	

   

  	

  Name

  	

  Robert P. Armiak

  
	

   

  	

  Title  

  	

  Sr. Vice President, Treasurer

  
	

   

  	

  Address:

  	

  800 Tech Center Drive

  
	

   

  	

   

  	

  Gahanna, OH 

  43230

  
	

   

  	

  Attention:

  	

  Treasurer

  
	

   

  	

  Telephone:

  	

  (614) 729–4900

  
	

   

  	

  Facsimile:

  	

  (614) 729–4949

  
	

   

  	

   

  	

   

  
	

  With a copy to:

  
	

   

  
	

   

  	

  Address:

  	

  17655 Waterview Parkway

  
	

   

  	

   

  	

  Dallas, TX 

  75252

  
	

   

  	

  Attention:

  	

  General Counsel

  
	

   

  	

  Telephone:

  	

  (972) 348–5135

  
	

   

  	

  Facsimile:

  	

  (972) 348–5330

  
	

   

  	

   

  	

   

  
	

  LMG Travel Services

  Limited, as a

  Guarantor

  
	

   

  
	

  By

  	

  /s/  Robert

  P. Armiak

  
	

   

  	

  Name  

  	

  Robert P. Armiak

  
	

   

  	

  Title  

  	

  Sr. Vice President, Treasurer

  
	

   

  	

  Address:

  	

  800 Tech Center Drive

  
	

   

  	

   

  	

  Gahanna, OH 

  43230

  
	

   

  	

  Attention:

  	

  Treasurer

  
	

   

  	

  Telephone:

  	

  (614) 729–4900

  
	

   

  	

  Facsimile:

  	

  (614) 729–4949

  
	

   

  	

   

  	

   

  
	

  With a copy to:

  
	

   

  
	

   

  	

  Address:

  	

  17655 Waterview Parkway

  
	

   

  	

   

  	

  Dallas, TX 

  75252

  
	

   

  	

  Attention:

  	

  General Counsel

  
	

   

  	

  Telephone:

  	

  (972) 348–5135

  
	

   

  	

  Facsimile:

  	

  (972) 348–5330

  

 

S-3

 

	

  Harris Trust and Savings

  Bank, as

  Administrative Agent

  
	

   

  
	

  By 

  	

  /s/ Thad D. Raschle

  
	

   

  	

  Name  

  	

  Thad D. Raschle

  
	

   

  	

  Title  

  	

  Vice President

  
	

   

  	

  Address:

  	

  111 West Monroe Street

  
	

   

  	

   

  	

  Chicago,

  IL  60603

  
	

   

  	

  Attention:

  	

  Thad Rasche

  
	

   

  	

  Telephone:

  	

  (312) 461–5739

  
	

   

  	

  Facsimile:

  	

  (312) 461–5225

  
	

   

  	

   

  	

   

  
	

  Bank of Montreal

  
	

   

  
	

  By 

  	

  /s/ Thad D. Raschle

  
	

   

  	

  Name  

  	

  Thad D. Raschle

  
	

   

  	

  Title  

  	

  Vice President

  
	

   

  	

  Address:

  	

  115 South LaSalle

  Street

  
	

   

  	

   

  	

  Chicago,

  IL  60603

  
	

   

  	

  Attention:

  	

   

  
	

   

  	

  Telephone:

  	

  (      )

  
	

   

  	

  Facsimile:

  	

  (      )

  
	

   

  	

   

  	

   

  
	

   

  	

  Domestic

  Lending Office:

  115 South LaSalle Street

  Chicago, IL  60603 

  
	

   

  	

   

  
	

   

  	

  Euro-Dollar

  Lending Office:

  115 South LaSalle Street

  Chicago, IL  60603 

  
	

   

  	

   

  
	

   

  	

  Canadian

  Lending Office:

  1 First Canadian Place, Concourse Level

  P.O. Box 3, Transit #0002

  Toronto, Ontario M5X 1A3 

  
	

   

  	

   

  
	

   

  	

  Euro-Canadian

  Dollar Lending Office:

  1 First Canadian Place, Concourse Level

  P.O. Box 3, Transit #0002 

  Toronto, Ontario M5X 1A3 

  

 

S-4

 

	

  Bank One, NA

  
	

   

  
	

  By

  	

  /s/ Mark Wasden

  
	

   

  	

  Name

  	

  Mark Wasden

  
	

   

  	

  Title

  	

  Director

  
	

   

  	

  Address:

  	

  1 Bank One Plaza

  
	

   

  	

   

  	

  Chicago, IL  60670

  
	

   

  	

  Attention:

  	

  Mark Wasden

  
	

   

  	

  Telephone:

  	

  (312) 336–2989

  
	

   

  	

  Facsimile:

  	

  (312) 732–6222

  
	

   

  	

   

  	

   

  
	

   

  	

  Domestic

  Lending Office

  
	

   

  	

   

  
	

   

  	

  1 Bank One Plaza

  Chicago, IL  60670 

  
	

   

  	

   

  
	

   

  	

  Euro-Dollar

  Lending Office

  
	

   

  	

   

  
	

   

  	

  1 Bank One Plaza

  Chicago, IL  60670 

  
	

   

  	

   

  
	

   

  	

  Canadian

  Lending Office

  
	

   

  	

   

  
	

   

  	

  161 Bay Street,

  Suite 4240

  Toronto, Ontario  M5J 251 

  
	

   

  	

   

  
	

   

  	

  Euro-Canadian

  Dollar Lending Office

  
	

   

  	

   

  
	

   

  	

  161 Bay Street,

  Suite 4240

  Toronto, Ontario  M5J 251 

  

 

S-5

 

	

  Canadian Imperial Bank of

  Commerce

  
	

   

  
	

  By

  	

  /s/ 

  Katherine Bass

  
	

   

  	

  Name

  	

  Katherine Bass

  
	

   

  	

  Title

  	

  Executive Director

  
	

   

  	

  Address:

  	

  425 Lexington Avenue

  
	

   

  	

   

  	

  New York, NY  10017

  
	

   

  	

  Attention:

  	

  Katherine Bass

  
	

   

  	

  Telephone:

  	

  (212) 856–3916

  
	

   

  	

  Facsimile:

  	

  (212) 856–3761

  
	

   

  	

   

  	

   

  
	

  By  

  	

  /s/  Marc St.-Onge

  
	

   

  	

  Name

  	

  Marc St.-Onge

  
	

   

  	

  Title

  	

  Director

  
	

   

  	

  Address:

  	

  BCE Place 8th

  Floor

  
	

   

  	

   

  	

  161 Bay Street

  
	

   

  	

   

  	

  Toronto, Ontario  M5J 258425

  
	

   

  	

  Attention:

  	

  Marc St.-Onge

  
	

   

  	

  Telephone:

  	

  (416) 594-8173

  
	

   

  	

  Facsimile:

  	

  (416) 956–6680

  
	

   

  	

   

  	

   

  
	

   

  	

  Domestic Lending Office

  
	

   

  	

   

  
	

   

  	

  2727 Paces Ferry

  Road, Suite 1200

  2 Paces West, Building 2

  Atlanta, GA  30339 

  
	

   

  	

   

  
	

   

  	

  Euro-Dollar Lending Office

  
	

   

  	

   

  
	

   

  	

  2727 Paces Ferry

  Road, Suite 1200 2 Paces West, Building 2 Atlanta,

  GA  30339  

  
	

   

  	

   

  
	

   

  	

  Canadian Lending Office

  
	

   

  	

   

  
	

   

  	

  BCE Place 8th

  Floor

  161 Bay Street

  Toronto, Ontario  M5J 258 

  
	

   

  	

   

  
	

   

  	

  Euro Canadian Dollar

  Lending Office

  
	

   

  	

   

  
	

   

  	

  BCE Place  8th Floor

  161 Bay Street

  Toronto, Ontario  M5J 258 

  

 

S-6

 

	

  Credit Suisse First Boston

  (Toronto Branch)

  
	

  By 

  	

  /s/ Peter Chauvin

  
	

   

  	

  Name

  	

  Peter Chauvin

  
	

   

  	

  Title  

  	

  Vice President

  
	

   

  	

   

  	

   

  
	

  By

  	

  /s/ Alain Daoust

  
	

   

  	

  Name 

  	

  Alain Daoust

  
	

   

  	

  Title  

  	

  Director

  
	

   

  	

  Address:

  	

  One First Canadian Place,

  
	

   

  	

   

  	

  Suite 3000

  
	

   

  	

   

  	

  Toronto, Ontario 

  M5X 1C9

  
	

   

  	

  Attention:

  	

  Peter Chauvin

  
	

   

  	

  Telephone:

  	

  (416) 352 4529

  
	

   

  	

  Facsimile:

  	

  (416) 352 4576

  
	

   

  	

   

  	

   

  
	

   

  	

  Domestic Lending Office

  
	

   

  	

   

  
	

   

  	

  Eleven Madison

  Avenue

  New York, New York  10010-3629 

  
	

   

  	

   

  
	

   

  	

  Euro-Dollar Lending Office

  
	

   

  	

   

  
	

   

  	

  Eleven Madison

  Avenue

  New York, New York  10010-3629 

  
	

   

  	

   

  
	

   

  	

  Canadian Lending Office

  
	

   

  	

   

  
	

   

  	

  One First

  Canadian Place, Suite 3000

  Toronto, Ontario  M5X1C9 

  
	

   

  	

   

  
	

   

  	

  Euro-Canadian Dollar Lending Office

  
	

   

  	

   

  
	

   

  	

  One First

  Canadian Place, Suite 3000

  Toronto, Ontario  M5X1C9 

  

 

S-7

 

SCHEDULE

I

COMMITMENTS

	

  Bank

  	

   

  	

  Amount

  	

   

  
	

  Bank of Montreal

  	

   

  	

  U.S. $15,000,000

  	

   

  
	

  Bank One, NA

  	

   

  	

  U.S. $ 5,000,000

  	

   

  
	

  Canadian

  Imperial Bank of Commerce

  	

   

  	

  U.S. $15,000,000

  	

   

  
	

  Credit Suisse First

  Boston (Toronto Branch)

  	

   

  	

  U.S. $15,000,000

  	

   

  
	

  TOTAL

  	

   

  	

  U.S. $50,000,000

  	

   

  

 

 

 

SCHEDULE II

ALLIANCE DATA SYSTEMS CORPORATION

INVESTMENT POLICY

STATEMENT

OF PURPOSE

The purpose of

this policy is to institute proper guidelines for the ongoing management of the

cash investments of Alliance Data Systems Corp. and its subsidiaries.

INVESTMENT

OBJECTIVES

The assets are to

be invested in a manner, which preserves capital, provides adequate liquidity,

maintains appropriate diversification and generates returns relative to these

guidelines and prevailing market conditions. 

The intent is that all of the investments shall be held to maturity.

RESPONSIBILITIES

                A.       It is the responsibility of the Board of Directors of the

Company to adopt the Investment Policy.

                 B.       It is the responsibility of the Treasurer or the Chief

Financial Officer to implement the Investment Policy of the Company including

the direction of purchases and sales of securities.

                 C.       The approval of either the Treasurer or the Chief Financial

Officer shall be required to transfer Company funds to Company banks or

investment accounts.

                 D.       The Treasurer and Chief Financial Officer may employ the

services of a Bank or a Registered Investment Advisor to direct a portion or

all of the investment activities of the Company consistent with the guidelines

set forth in the Investment Policy.  The

firms selected must maintain a net worth of at least $1 billion.

                 E.       The Treasurer and Chief Financial Officer will monitor ongoing

investment activities to insure that proper liquidity is being maintained and

that the investment strategy is consistent with the Company objectives.

                 F.       The Treasurer or the Chief Financial Officer will report to

the Board of Directors quarterly concerning the investment performance during the

most recent quarter.

 

ALLIANCE DATA

SYSTEMS CORPORATION AND SUBSIDIARIES

INVESTMENT

GUIDELINES

                A.       Appropriate Investments

                     1.        Direct obligations of the U.S. or Canadian Treasury including

Treasury Bills, Notes and Bonds. 

Canadian Government Debt must be rated A or better.

                     2.        Federal Agency Securities which carry the direct or implied

guarantee of the U.S. Government including Government National Mortgage

Association, Federal Home Loan Bank, Federal Farm Credit Bank, Federal National

Mortgage Association, Student Loan Marketing Association, and World Bank.  Investments can include Notes, Discount

Notes, Medium Term Notes and Floating Rate Notes.

                     3.        Certificates of Deposit, Guaranteed Investment Contracts,

Banker’s Acceptance and Time Deposits including Eurodollar denominated and

Yankee issues.  Investments will be

limited to those institutions with total assets in excess of $1 billion and

which carry a short term rating of “A2” or “P2” or “F2” or better, or a Keefe

Bruyette and Woods rating of at least “A” or better.

                     4.        Corporate Securities (including commercial paper or loan

participations) and corporate debt instruments (including medium term notes and

floating rate notes) issued by Canadian or U.S. corporations and carry a

minimum long term rating of “A” or short term rating of “A2” or “P2” or “F2” or

“R1 (L)” or better.

                     5.        Tax Exempt Securities including municipal notes, commercial

paper, auction rate floaters, and floating rate notes rated A2 or P2 or F2 or

better;  Municipal Notes rated SP–2/MIG–2/VMIG–2

or better, or a long term rating of “A” or better.

                     6.        Auction rate preferred stock or bonds issued with a rate

reset mechanism and a maximum term of 180 days.  Investment will be limited to those issuers who have a minimum

long term rating of “A” or short term rating of “A2” or “P2” or “F2” or “R1

(L)” or better.

                     7.        Money market mutual funds, which offer daily purchase and

redemption and maintain a constant share price (no equities allowed).

                     8.        Repurchase Agreements. 

The underlying collateral (of at least 102%) shall consist of US

Government obligations and/or government agency securities.  Investments in repurchase agreements may not

exceed 3 days.

                 B.       Investment

Concentration Limits

                     1.        Investments rated AAA (long term) or A1 (short term) or

equivalent — no limit.

 

2

 

                     2.        Investments rated AA or equivalent — not

to exceed 70% of total portfolio.

                      3        Investments rated A (long term) or A2 (short term) or

equivalent — not to exceed 30% of total portfolio.

                     4.        Bank or Insurance Company obligations — not to exceed 50% of

total portfolio.

                     5.        Money Market Mutual Funds — no limit.

                     6.        Repurchase Agreements — 30% of total portfolio.

                     7.        No individual investment shall be in excess of $10 million

USD (or equivalent).

MATURITY

LIMITS

                  1.       No investments may exceed 5 years to maturity.

                  2.       Commercial Paper/Loan Participations/Master Notes may not

exceed 180 days.

                  3.       A minimum of 30% of the portfolio must have a maturity of 1

year or less.

SAFEKEEPING

All securities

firms with whom the Company does business must be qualified to safekeep

securities on the Company’s behalf at no charge.  The CFO or Treasurer will authorize these firms to hold

securities.

WAIVERS

In certain

circumstances the appropriate investment criteria and portfolio concentration

limits may be temporarily waived by the Chief Financial Officer for a period

not to exceed four (4) weeks.  Any

waivers granted during a fiscal year will be reported to the ADS Board of

Directors annually.

INVESTMENT

POLICY REVIEW

This policy will be reviewed

annually by the CFO and Treasurer to ensure that it remains consistent with the

financial objectives of the Company and current market conditions.

 

3

 

SCHEDULE III

CRA INVESTMENTS

 

 

APPENDIX I

PRICING SCHEDULE

“Euro-Canadian Dollar Margin” means 1.50% per annum

“Euro-Dollar Margin” means 1.50% per annum.

“Base Rate Margin” means 0.50% per annum.

“Canadian Base Rate Margin” means 0.50% per annum.

“Applicable Commitment Fee

Percentage” means

0.30% per annum.

 

 

 

Exhibit

A

 

FORM OF ASSIGNMENT AND

ASSUMPTION AGREEMENT

Date:

                     ,            

Reference is made

to the 364–Day Credit Agreement described in Item 2 of Annex I

attached hereto (as such 364–Day Credit Agreement may hereafter be

amended, modified or supplemented from time to time, the “Credit Agreement”).  Unless defined in Annex I attached hereto,

terms defined in the Credit Agreement are used herein as therein defined.

                                        

(the “Assignor”)

and

                                  (the

“Assignee”)

hereby agree as follows:

                     1.        The Assignor hereby sells and assigns to the Assignee without

recourse and without representation or warranty (other than as expressly

provided herein), and the Assignee hereby purchases and assumes from the

Assignor, that interest in and to all of the Assignor’s rights and obligations

under the Credit Agreement as of the date hereof which represents the

percentage interest specified in Item 4 of Annex I attached hereto (the “Assigned

Share”) of all of Assignor’s outstanding rights and obligations

under the Credit Agreement indicated in Item 4 of such Annex I, including,

without limitation, in the case of any assignment of all or any portion of the

Assignor’s outstanding Commitment, all rights and obligations with respect to

the Assigned Share of such Commitment and of the Loans related thereto.

                     2.        The Assignor (i) represents and warrants that it is the legal

and beneficial owner of the interest being assigned by it hereunder and that

such interest is free and clear of any liens or security interests; (ii) makes

no representation or warranty and assumes no responsibility with respect to any

statements, warranties or representations made in or in connection with the

Credit Agreement or the other Credit Documents or the execution, legality,

validity, enforceability, genuineness, sufficiency or value of the Credit

Agreement or the other Credit Documents or any other instrument or document furnished

pursuant thereto; and (iii) makes no representation or warranty and assumes no

responsibility with respect to the financial condition of either Borrower or

any of their Subsidiaries or the performance or observance by either Borrower

or any of their Subsidiaries of any of their obligations under the Credit

Agreement or the other Credit Documents or any other instrument or document

furnished pursuant thereto.

                     3.        The Assignee (i) represents and warrants that it is duly

authorized to enter into and perform the terms of this Assignment and

Assumption Agreement; (ii) confirms that it has received a copy of the Credit

Agreement and the other Credit Documents, together with copies of the financial

statements referred to therein and such other documents and information as it

has deemed appropriate to make its own credit analysis and decision to enter

into this Assignment and Assumption Agreement; (iii) agrees that it will,

independently and without reliance upon the Administrative Agent, the Assignor

or any other Bank and based on such documents and information as it shall deem

appropriate at the time, continue to make its own credit decisions in taking or

not taking action under the Credit Agreement; (iv) 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 the Credit Agreement and the other Credit

Documents as are delegated to the Administrative Agent and the Collateral Agent

by the terms thereof, together with such powers as are reasonably incidental

thereto[;] [and] (v) agrees that it will perform in accordance with their terms

all of the obligations which by the terms of the Credit Agreement are required

to be performed by it as a Bank[; and (v) to the extent legally entitled to do

so, attaches the forms described in Section 9.4(b) of the Credit Agreement.](1)

 

(1)           If the Assignee is organized under

the laws of a jurisdiction outside the United States.

                     4.        Following the execution of this Assignment and Assumption

Agreement by the Assignor and the Assignee, an executed original hereof

(together with all attachments) will be delivered to the Administrative

Agent.  The effective date of this

Assignment and Assumption Agreement shall be the date of execution hereof by

the Assignor, the Assignee and the consent hereof by the Administrative Agent

(and if required by the terms of the Credit Agreement, the consent of the

Borrowers, which consents will not be unreasonably withheld), the recordation

by the Administrative Agent of the assignment effected hereby in the Register

and the receipt by the Administrative Agent of the applicable assignment fee

referred to in Section 11.6(c) of the Credit Agreement, unless otherwise

specified in Item 5 of Annex I attached hereto (the “Settlement Date”).

                     5.        Upon the delivery of a fully executed original hereof to the

Administrative Agent, as of the Settlement Date, (i) the Assignee shall be a

party to the Credit Agreement and, to the extent provided in this Assignment or

Assumption Agreement, have the rights and obligations of a Bank thereunder and

under the other Credit Documents and (ii) the Assignor shall, to the extent

provided in this Assignment or Assumption Agreement, relinquish its rights and

be released from its obligations under the Credit Agreement and the other

Credit Documents.

                     6.        It is agreed that upon the effectiveness hereof, the Assignee

shall be entitled to (x) all interest on the Assigned Share of the Loans at the

rates specified in Item 6 of Annex I attached hereto, and (y) all

commitment fees (if applicable) on the Assigned Share of the Commitment, at the

rates specified in Item 7 of Annex I attached hereto, which, in each case,

accrue on and after the Settlement Date, such interest and, if applicable,

commitment fees to be paid by the Administrative Agent directly to the

Assignee.  It is further agreed that all

payments of principal made by either Borrower on the Assigned Share of the

Loans which occur on and after the Settlement Date will be paid directly by the

Administrative Agent to the Assignee. 

Upon the Settlement Date, the Assignee shall pay to the Assignor an

amount specified by the Assignor in writing which represents the Assigned Share

of the principal amount of the Loans made by the Assignor pursuant to the

Credit Agreement which are outstanding on the Settlement Date, net of any

closing costs, and which are being assigned hereunder. The Assignor and the 

 

A-2

 

Assignee shall make all appropriate adjustments in payments under the

Credit Agreement for periods prior to the Settlement Date directly between

themselves.

                     7.        This Assignment Agreement shall be

governed by, and construed in accordance with, the laws of the State of New

York.

*   *  

*

 

 

A-3

 

In Witness Whereof, the parties hereto have caused this Assignment and

Assumption Agreement to be executed by their respective officers thereunto duly

authorized, as of the date first above written.

 

	

   

  	

   

  	

   

  	

  [Name of

  Assignor], as Assignor

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Title

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  [Name of

  Assignee], as Assignee

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Title

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Acknowledged and

  Agreed:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  HARRIS

  TRUST AND SAVINGS BANK

  as Administrative Agent 

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  By

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Acknowledged and

  Agreed:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Alliance Data Systems

  Corporation

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  By

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Loyalty Management Group

  Canada Inc.

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  By

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

A-4

 

ANNEX I

ANNEX

FOR ASSIGNMENT AGREEMENT

 

	

  1.

  	

   

  	

  The Borrowers:

  	

   

  	

  Alliance

  Data Systems Corporation, the U.S. Borrower, and Loyalty

  Management Group Canada Inc., the Canadian Borrower

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  2.

  	

   

  	

  Name and Date of Credit

  Agreement:

  	

   

  	

  364-Day Credit

  Agreement, dated as of May 22, 2002, among the Borrowers, the Guarantor

  parties thereto, the Banks from time to time party thereto and Harris Trust

  and Savings Bank as Administrative Agent

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  3.

  	

   

  	

  Date of Assignment

  Agreement:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  4.

  	

   

  	

  Amounts (as of date of

  item #3 above):

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  5.

  	

   

  	

  Settlement Date:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  6.

  	

   

  	

  Rate of Interest to the

  Assignee:

  	

   

  	

  As set forth in Section

  2.6 of the Credit Agreement (unless otherwise agreed to by the Assignor and

  the Assignee).(2)

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  7.

  	

   

  	

  Commitment Fees

  	

   

  	

  As set forth in Section

  2.7(a) of the Credit Agreement (unless otherwise agreed to by the Assignor

  and the Assignee).(3)

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  8.

  	

   

  	

  Notices:

  	

   

  	

  Assignor:

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Attention:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Telephone No.:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Facsimile No.:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  

(2)                                  The Borrowers and the Agent shall direct

the entire amount of the interest to the Assignee at the rate set forth in

Section 2.6 of the Credit Agreement, with the Assignor and Assignee effecting

any agreed upon sharing of interest through payments by the Assignee to the

Assignor.

 

(3)                                  The Borrowers and the Agent shall direct

the entire amount of the commitment fees to the Assignee at the rate set forth

in Section 2.7(a) of the Credit Agreement, with the Assignor and the Assignee

effecting any agreed upon sharing of ticking fees through payment by the

Assignee to the Assignor.

 

 

 

	

   

  	

   

  	

   

  	

   

  	

  AssignEE:

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Attention:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Telephone No.:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Facsimile No.:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  9.

  	

   

  	

  Payment Instructions:

  	

   

  	

  Assignor:

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  ABA No.

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Account No.:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Reference:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Attention:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  AssignEE:

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  ABA No.

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Account No.:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Reference:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Attention:

  	

   

  	

   

  

 

 

2

 

Exhibit B-1

 

NOTE

Chicago, Illinois

, 2002

For value

received, Alliance Data Systems

Corporation, a Delaware corporation (the ”Borrower”), promises to pay

to the order of [Name of Bank] (the

“Bank”),

the unpaid principal amount of each Loan made by the Bank to the Borrower

pursuant to the Credit Agreement referred to below on the maturity date

provided for in the Credit Agreement. 

The Borrower promises to pay interest on the unpaid principal amount of

each such Loan on the dates and at the rate or rates provided for in the Credit

Agreement.  All such payments of

principal and interest shall be made in lawful money of the United States (in

the case of U.S. Dollar Borrowings) or of Canada (in the case of Canadian

Dollar Borrowings) in Federal or other immediately available funds at the

office of Harris Trust and Savings Bank (the “Administrative Agent”) at

111 West Monroe Street, Chicago, Illinois (or, at such other office as the

Administrative Agent has previously notified the Borrower in accordance with

Article 2 of the Credit Agreement).

All Loans made by

the Bank, the respective types thereof and all repayments of the principal

thereof shall be recorded by the Bank and, if the Bank so elects in connection

with any transfer or enforcement hereof, appropriate notations to evidence the

foregoing information with respect to each such Loan then outstanding may be

endorsed by the Bank on the schedule attached hereto, or on a continuation of

such schedule attached to and made a part hereof; provided, that the failure

of the Bank to make any such recordation or endorsement shall not affect the

obligations of the Borrower hereunder or under the Credit Agreement.

This note is one

of the Notes referred to in the 364–Day Credit Agreement dated as of

May 22, 2002, among Alliance Data Systems Corporation, Loyalty Management

Group Canada Inc., the Banks parties thereto and Harris Trust and Savings Bank,

as Administrative Agent (as the same may be amended, restated or supplemented

from time to time, the “Credit Agreement”).  Terms defined in the Credit Agreement are

used herein with the same meanings. 

Reference is made to the Credit Agreement for provisions for the

prepayment hereof and the acceleration of the maturity hereof.

 

	

  Alliance Data Systems

  Corporation

  
	

   

  
	

   

  
	

  By

  	

   

  
	

   

  	

  Name

  	

   

  
	

   

  	

  Title

  	

   

  

 

 

Loans and

Payments of Principal

	

  Date

  	

   

  	

  Amount

  of Loan and

  Currency

  	

   

  	

  Type

  of Loan

  	

   

  	

  Amount of

  Principal

  Repaid

  	

   

  	

  Notation

  Made By

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

2

 

Exhibit B-2

 

NOTE

Chicago, Illinois

, 2002

For value

received, Loyalty Management Group

Canada Inc., an Ontario corporation (the ”Borrower”), promises to pay

to the order of [Name of Bank] (the

“Bank”),

the unpaid principal amount of each Loan made by the Bank to the Borrower

pursuant to the Credit Agreement referred to below on the maturity date

provided for in the Credit Agreement. 

The Borrower promises to pay interest on the unpaid principal amount of

each such Loan on the dates and at the rate or rates provided for in the Credit

Agreement.  All such payments of

principal and interest shall be made in lawful money of the United States (in

the case of U.S. Dollar Borrowings) or of Canada (in the case of Canadian

Dollar Borrowings) in Federal or other immediately available funds at the

office of Harris Trust and Savings Bank (the “Administrative Agent”) at

111 West Monroe Street, Chicago, Illinois (or at such other office as the

Administrative Agent has previously notified the Borrower in accordance with

Article 2 of the Credit Agreement).

All Loans made by

the Bank, the respective types thereof and all repayments of the principal

thereof shall be recorded by the Bank and, if the Bank so elects in connection

with any transfer or enforcement hereof, appropriate notations to evidence the

foregoing information with respect to each such Loan then outstanding may be

endorsed by the Bank on the schedule attached hereto, or on a continuation of

such schedule attached to and made a part hereof; provided, that the failure

of the Bank to make any such recordation or endorsement shall not affect the

obligations of the Borrower hereunder or under the Credit Agreement.

This note is one

of the Notes referred to in the 364–Day Credit Agreement dated as of

May 22, 2002, among Alliance Data Systems Corporation, Loyalty Management

Group Canada Inc., the Banks parties thereto and Harris Trust and Savings Bank,

as Administrative Agent (as the same may be amended, restated or supplemented

from time to time, the “Credit Agreement”).  Terms defined in the Credit Agreement are used

herein with the same meanings. 

Reference is made to the Credit Agreement for provisions for the

prepayment hereof and the acceleration of the maturity hereof.

 

	

  Loyalty Management Group

  Canada Inc.

  
	

   

  
	

   

  
	

  By

  	

   

  
	

   

  	

  Name

  	

   

  
	

   

  	

  Title

  	

   

  

 

LOANS AND PAYMENTS OF PRINCIPAL

 

	

  Date

  	

   

  	

  Amount

  of Loan and

  Currency

  	

   

  	

  Type

  of Loan

  	

   

  	

  Amount of

  Principal

  Repaid

  	

   

  	

  Notation

  Made By

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

2Exhibit 10.30.1

 

AMENDED

AND RESTATED AMENDMENT AGREEMENT

 

THIS AMENDED AND RESTATED AMENDMENT AGREEMENT (the

“Amendment Agreement”) amends and restates that certain Amendment Agreement

entered into as of March 4, 2002, by and among Avocent Employment Services Co. (formerly known as Polycon Investments,

Inc.), a Texas corporation (“Services”), Cybex Computer Products Corporation,

an Alabama corporation (“Cybex”), Avocent Corporation, a Delaware corporation

(“Avocent”), and Stephen F. Thornton  (“Mr. Thornton”).  Services, Cybex, and Avocent are sometimes

referred to as “Employer” in this Amendment Agreement.

 

RECITALS

 

WHEREAS, Mr. Thornton has been employed as the

President and Chief Executive Officer of Employer under the terms and

conditions of an Amended and Restated Employment and Noncompetition Agreement

dated October 31, 2000 (the “Employment Agreement”);

 

WHEREAS, effective March

4, 2002, Mr. Thornton resigned as President and Chief Executive Officer of

Employer, and remains as Chairman of the Board of Directors of Avocent; and

 

WHEREAS, Employer and Mr.

Thornton now wish to terminate the Employment Agreement and enter into the

agreements set forth in this Amendment Agreement.

 

AGREEMENT

 

NOW, THEREFORE, Mr. Thornton and Avocent hereby agree

as follows:

 

1.             DUTIES. 

Effective March 4, 2002, Mr. Thornton resigned as President and Chief

Executive Officer of Employer (and as a director, officer, and employee of

Avocent’s direct and indirect subsidiaries). 

Mr. Thornton will continue as the Chairman of the Board of Directors of

Avocent under the terms and conditions of this Amendment Agreement.  Mr. Thornton shall devote such of his

business time, energy, and skill to the affairs of Avocent as shall be

necessary to perform the duties of Chairman of the Board of Directors of

Avocent, and Mr. Thornton shall have powers and duties at least commensurate

with his position as Chairman of the Board of Directors of Avocent.

 

2.             BENEFITS. 

Avocent and Mr. Thornton agree that:

 

(a)   from March 5, 2002, through June 30, 2002,

Mr. Thornton will receive a biweekly payment of $9,615.38 (based on an

annualized salary for such period of $250,000 per year);

 

(b)   from July 1, 2002 through June 30, 2003, Mr.

Thornton will receive a biweekly payment of $1,923.07 (based on an annualized

salary for such period of $50,000  per

year);

 

(c)   for the year 2002, Mr. Thornton will be

eligible for a bonus of up to $150,000 based

on objective and subjective factors consistent with the criteria used to

evaluate the other senior executives of Avocent with the actual amount of any

such bonus to be determined in the sole discretion of the Board of Directors;

 

(d)   if Mr. Thornton remains as Chairman of the

Board of Directors of Avocent during 2002 and 2003, Mr. Thornton will receive

an annual stock option award in those years that is double the stock option

award to “outside” directors of Avocent;

 

(e)   after December 31, 2002, if Mr. Thornton is a

member of the Board of Directors of Avocent, Mr. Thornton will receive the same

compensation that is paid to “outside” directors of Avocent;

 

(f)    through June 30, 2003, Mr. Thornton will be

eligible as an employee for all employee benefits, including life insurance,

Section 401(k) Plan and cafeteria plans, and employee and dependent coverage

under Employer’s medical and dental plans, to the same extent as available to

other Employer employees;

 

(g)   through June 30, 2003, Mr. Thornton will

continue to vest in all his incentive stock options and nonqualified stock

options to purchase shares of common stock of Avocent Corporation under the

terms and conditions of the Cybex 1995 Employee Stock Option Plan, the Cybex

1998 Employee Stock Incentive Plan, and the Avocent 2000 Stock Option Plan;

thereafter, he shall continue to vest only in nonqualified stock options under

the terms and conditions of such Plans for the period during which he remains a

director of Avocent; and in recognition of Mr. Thornton’s role as a founder of

Cybex, if Mr. Thornton ceases to be a director of Avocent, he shall immediately

vest in all of his then outstanding nonqualified stock options under the terms

and conditions of such Plans;

 

(h)   on or before July 10, 2003, Avocent shall pay

Mr. Thornton Four Hundred Thousand Dollars ($400,000) as originally

contemplated by Section 5 of his Employment Agreement; provided, however,

that Mr. Thornton shall not be entitled to any payment under this Section 2(h)

if prior to December 31, 2002 he ceases to be a director of Avocent by virtue

of his death or disability; and

 

(i)    Mr. Thornton shall be able to exercise

vested stock options (including any options that become vested as a result of

any acceleration provisions described in this Section 2) under the terms

and conditions of the Cybex Employee Stock Option Plan, the Cybex 1998 Employee

Stock Incentive Plan, and the Avocent 2000 Stock Option Plan for the period

specified in such Plans (generally three (3) months) after Mr. Thornton ceases

to an employee (in the case of incentive stock options) or after Mr. Thornton

ceases to be a director of Avocent (in the case of nonqualified stock

options).  Mr. Thornton acknowledge and

agrees that (i) any exercise of his stock options is limited in all respects by

the terms and conditions of such Plans, (ii) each of the Plans limits his

ability to exercise stock options on a cashless basis (for example by requiring

shares that he has owned for at least six months and by limiting the amount so

exercised), and (iii) under policies approved by the Avocent Corporation Board

of Directors, the Administrator of each of the Plans is authorized to permit a

cashless exercise of options only in circumstances where to do complies with

applicable accounting and financial reporting standards and does not result in

a variable compensation plan or compensation expense to Avocent.

 

3.             NON-COMPETITION OBLIGATIONS.  In consideration of the payment described in Section 2(h) of

this Amendment Agreement and for other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, during the period Mr.

Thornton is a director of Avocent and for a period of thirty-six (36) months

thereafter, Mr. Thornton will not, without the prior 

 

2

 

written consent of Avocent, directly or indirectly,

alone or as a partner, joint venturer, officer, director, employee, consultant,

agent, independent contractor or stockholder of any company or business, engage

in any business activity in the United States, Canada, or Europe which is

substantially similar to or in direct competition with any of the business

activities of or services provided by Avocent or its affiliates at such

time.  Notwithstanding the foregoing,

the ownership by Mr. Thornton of not more than five percent (5%) of the shares

of stock of any corporation having a class of equity securities actively traded

on a national securities exchange or on The Nasdaq Stock Market shall not be

deemed, in and of itself, to violate the prohibitions of this Section 3.

 

4.           MISCELLANEOUS.

 

4.1   WITHHOLDINGS.  All compensation and benefits to Mr. Thornton under this

Amendment Agreement shall be reduced by all federal, state, local, and other

withholdings and similar taxes and payments required by applicable law.

 

4.2   WAIVER. 

The waiver of the breach of any provision of this Amendment Agreement

shall not operate or be construed as a waiver of any subsequent breach of the

same or other provision hereof.

 

4.3   ENTIRE AGREEMENT; MODIFICATIONS.  Except as otherwise provided herein, this

Amendment Agreement represents the entire understanding among the parties with

respect to the subject matter hereof, and this Amendment Agreement supersedes

any and all prior understandings, agreements, plans and negotiations, whether

written or oral with respect to the subject matter hereof including, without

limitation, Mr. Thornton’s Amended and Restated Employment and Noncompetition

dated October 31, 2000,  and any

understandings, agreements or obligations respecting any past or future

compensation, bonuses, reimbursements, or other payments to Mr. Thornton from

Employer or Avocent Corporation.  All

modifications to this Amendment Agreement must be in writing and signed by the

party against whom enforcement of such modification is sought.

 

4.4   NOTICES. 

All notices and other communications under this Amendment Agreement

shall be in writing and shall be given by hand delivery or first class mail,

certified or registered with return receipt requested, and shall be deemed to

have been duly given upon hand delivery to an officer of Avocent or Mr.

Thornton, as the case may be, or upon three (3) days after mailing to the

respective persons named below:

 

	

  If to the

  Employer/Avocent:

  	

   

  	

  Avocent Corporation

  
	

   

  	

   

  	

  4991 Corporate Drive

  
	

   

  	

   

  	

  Huntsville, AL 35805

  
	

   

  	

   

  	

  Attn:    Chief Executive Officer

  
	

   

  	

   

  	

   

  
	

  With a copy to

  	

   

  	

  Avocent Corporation

  
	

   

  	

   

  	

  9911 Willows Road N.E.

  
	

   

  	

   

  	

  Redmond, WA 98052

  
	

   

  	

   

  	

  Attn:    General Counsel

  

 

3

 

	

  If to Mr. Thornton:

  	

   

  	

  Stephen F. Thornton

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  

 

Any party may change such party’s address for notices

by notice duly given pursuant to this Section 4.4.

 

4.5   HEADINGS. 

The Section headings herein are intended for reference and shall not by

themselves determine the construction or interpretation of this Amendment

Agreement.

 

4.6   GOVERNING LAW; VENUE.  This Amendment Agreement shall be governed

by and construed in accordance with the laws of the State of Alabama.  Mr. Thornton and Employer each hereby

expressly consents to the exclusive venue of the state and federal courts

located in Huntsville, Madison County, Alabama, for any lawsuit arising from or

relating to this Amendment Agreement.

 

4.7   ARBITRATION. 

Any controversy or claim arising out of or relating to this Amendment

Agreement, or breach thereof, shall be settled by arbitration in Huntsville,

Alabama, in accordance with the Rules of the American Arbitration Association,

and judgment upon any proper award rendered by the arbitrators may be entered

in any court having jurisdiction thereof. 

There shall be three (3) arbitrators, one (1) to be chosen directly by

each party at will, and the third arbitrator to be selected by the two (2)

arbitrators so chosen.  To the extent

permitted by the Rules of the American Arbitration Association, the selected

arbitrators may grant equitable relief. 

Each party shall pay the fees of the arbitrator selected by him and of

his own attorneys, and the expenses of his witnesses and all other expenses

connected with the presentation of his case. 

The cost of the arbitration including the cost of the record or

transcripts thereof, if any, administrative fees, and all other fees and costs

shall be borne equally by the parties.

 

4.8   SEVERABILITY.  If a court or other body of competent jurisdiction determines

that any provision of this Amendment Agreement is excessive in scope or

otherwise invalid or unenforceable, such provision shall be adjusted rather

than voided, if possible, and all other provisions of this Amendment Agreement

shall be deemed valid and enforceable to the extent possible.

 

4.9   SURVIVAL OF OBLIGATIONS.  Avocent’s obligations under this Amendment

Agreement shall not be terminated by reason of any liquidation, dissolution,

bankruptcy, cessation of business, or similar event relating to Avocent.  This Amendment Agreement shall not be terminated

by any merger or consolidation or other reorganization of Avocent

Corporation.  In the event any such

merger, consolidation, or reorganization shall be accomplished by transfer of

stock or by transfer of assets or otherwise, the provisions of this Amendment

Agreement shall be binding upon and inure to the benefit of the surviving or

resulting corporation or person.  This

Amendment Agreement shall be binding upon and inure to the benefit of the

executors, administrators, heirs, successors and assigns of the parties;

provided, however, that except as herein expressly provided, this Amendment

Agreement shall not be assignable either by Avocent (except to an affiliate in

which Avocent shall remain liable if the affiliate fails to meet any

obligations to make payments or provide benefits or otherwise) or by Mr.

Thornton.

 

4.10  

COUNTERPARTS.  This Amendment

Agreement may be executed in one or more counterparts, all of which taken

together shall constitute one and the same Amendment Agreement.

 

4

 

4.11  

INDEMNIFICATION.  In addition to

any rights to indemnification to which Mr. Thornton is entitled to under the

Avocent’s Articles of Incorporation and Bylaws, and consistent with the

Indemnification Agreement between Mr. Thornton and Avocent, Avocent shall

indemnify Mr. Thornton at all times during his membership on the Board of

Directors and thereafter to the maximum extent permitted under the corporation

laws of the State of Delaware and any other applicable state law, and shall pay

Mr. Thornton’s expenses in defending any civil or criminal action, suit, or

proceeding in advance of the final disposition of such action, suit, or

proceeding, to the maximum extent permitted under such applicable state laws.

 

IN WITNESS WHEREOF, the parties hereto have executed

this Amendment Agreement as of the day and year first above written.

 

	

   

  	

  AVOCENT

  EMPLOYMENT SERVICES, INC.:

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ John R. Cooper

  
	

   

  	

  Its:

  	

  President

  
	

   

  	

   

  	

   

  
	

   

  	

  CYBEX

  COMPUTER PRODUCTS CORPORATION:

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ John R. Cooper

  
	

   

  	

  Its:

  	

  President

  
	

   

  	

   

  	

   

  
	

   

  	

  AVOCENT

  CORPORATION:

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ John R. Cooper

  
	

   

  	

  Its:

  	

  President

  
	

   

  	

   

  	

   

  
	

   

  	

  MR. THORNTON:

  
	

   

  	

   

  
	

   

  	

  /s/ Stephen F. Thornton

  

 

5

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