SECURITIES AND EXCHANGE COMMISSION
Form 10-Q
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended June 30, 2003 |
or
| [ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
| For the transition period from to |
Commission file number: 000-50250
(914) 249-2000
Delaware
(State or other jurisdiction of
Incorporation or organization)
13-4172551
(IRS Employer
Identification Number)
2000 Purchase Street
Purchase, NY
(Address of principal executive offices)
10577
(Zip Code)
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer’s classes
of common stock, as of the latest practicable date.
Class
Outstanding at July 30, 2003
84,000,000
16,000,000
MASTERCARD INCORPORATED
FORM 10-Q
TABLE OF CONTENTS
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PART I — FINANCIAL INFORMATION
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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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Consolidated Statements of Operations —
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Three and Six Months Ended June 30, 2003 and 2002
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Consolidated Balance Sheets —
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June 30, 2003 and December 31, 2002
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Consolidated Statements of Cash Flows —
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Six Months Ended June 30, 2003 and 2002
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Consolidated Statement of Changes in Stockholders’ Equity —
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Six Months Ended June 30, 2003
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Consolidated Condensed Statements of Comprehensive Income (Loss) —
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Three and Six Months Ended June 30, 2003 and 2002
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Notes to Consolidated Financial Statements
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
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ITEM 4. CONTROLS AND PROCEDURES
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Report of Independent Accountants
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PART II — OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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SIGNATURES
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2
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
The accompanying notes are an integral part of these consolidated financial statements.
3
MASTERCARD INCORPORATED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
The accompanying notes are an integral part of these consolidated financial statements.
4
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
The accompanying notes are an integral part of these consolidated financial statements.
5
MASTERCARD INCORPORATED
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
MASTERCARD INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
The accompanying notes are an integral part of these consolidated financial statements.
6
MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Organization
MasterCard Incorporated is incorporated under the laws of the State of
Delaware, United States of America. MasterCard Incorporated and its
consolidated subsidiaries, including MasterCard International Incorporated
(“MasterCard International”) and MasterCard Europe sprl (together, “MasterCard”
or the “Company”), provide transaction processing, branding and related
services to customers principally in support of their credit, deposit access,
electronic cash and Automated Teller Machine (“ATM”) payment card programs, and
travelers cheque programs. MasterCard operates a system for authorizing,
clearing and settling payment transactions among its customers, which are
members of MasterCard International. The Company’s stockholders are all
principal members of MasterCard International.
MasterCard converted from a membership to a stock company on June 28, 2002
through the creation of MasterCard Incorporated, a holding company. Also on
June 28, 2002, MasterCard Incorporated directly and indirectly acquired all of
the outstanding stock, not previously owned by MasterCard International, of
Europay International S.A. (“EPI”), a company incorporated under the laws of
Belgium. On July 16, 2002, EPI was renamed MasterCard Europe S.A. On September
30, 2002, MasterCard Europe S.A. was reorganized in Belgium as MasterCard
Europe sprl (“MasterCard Europe”).
Note 2. Basis of Presentation
The consolidated financial statements for the three-month and six-month
periods ended June 30, 2003 and 2002 and as of June 30, 2003 are unaudited, and
in the opinion of management include all adjustments (consisting only of normal
recurring adjustments) that are necessary for a fair statement of the Company’s
financial position, results of operations and cash flows. The Company follows
accounting principles generally accepted in the United States of America. Due
to seasonal fluctuations and other factors, the results of operations for the
three-month and six-month periods ended June 30, 2003 are not necessarily
indicative of the results to be expected for the full year. Certain prior
period amounts have been reclassified to conform to 2003 classifications. The
results of MasterCard Europe have been consolidated as of June 28, 2002 and did
not have a material impact on the Company’s net income for the three-month or
six-month periods ended June 30, 2002.
The accompanying unaudited consolidated financial statements are presented
in accordance with the requirements of Quarterly Reports on Form 10-Q and,
consequently, do not include all of the disclosures required by generally
accepted accounting principles in the United States of America. Reference
should be made to the Company’s 2002 Annual Report on Form 10-K for additional
disclosures, including a summary of the Company’s significant accounting
policies.
Note 3. U.S. Merchant Lawsuit
On April 30, 2003, MasterCard International signed a Memorandum of
Understanding (“MOU”) with plaintiffs in a class action suit brought by U.S.
merchants against MasterCard International and Visa, U.S.A. Inc. (“Visa”) in
the U.S. District Court for the Eastern District of New York. In this lawsuit,
plaintiffs challenged MasterCard’s “Honor All Cards” rule (and a similar Visa
rule) and claimed that MasterCard and Visa had unlawfully tied acceptance of
debit cards to acceptance of credit cards. Plaintiffs also alleged that
MasterCard and Visa had conspired to monopolize what they characterized as the
point-of-sale debit card market.
On June 4, 2003, MasterCard and plaintiffs signed a settlement agreement
(the “Settlement Agreement”) embodying the terms originally set forth in the
MOU. The Settlement Agreement requires the Company to pay $125,000 in 2003 and
$100,000 annually from 2004 through 2012. In addition, the Company is required
to adopt rules which will permit merchants to elect not to accept MasterCard
branded debit cards, implement programs to allow merchants to identify debit
cards, provide signage to merchants, and establish a separate debit interchange
rate.
7
MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED) – (Continued)
MasterCard denies all claims in the lawsuit and nothing in the MOU or
Settlement Agreement constitutes an admission of wrongdoing or liability by
MasterCard. The Settlement Agreement is subject to the final approval of the
District Court.
In connection with signing the MOU, MasterCard recorded a pre-tax charge
of $721,000 ($469,000 after-tax) in the three month period ended March 31,
2003, consisting of (i) the monetary amount of the settlement (discounted at 8%
over the payment term), (ii) certain additional costs in connection with, and
in order to comply with, other requirements of the settlement, and (iii) costs
to address certain merchants who opted not to participate in the class action
lawsuit. Amounts recorded are estimates and are subject to change in the
future.
There are consumer class actions pending in three state courts related to
the merchant antitrust lawsuit that have been stayed pending developments in
this litigation. In addition, several lawsuits have been commenced by
merchants who have opted not to participate in the plaintiff class, including
Best Buy Stores, CVS, Giant Eagle, Home Depot, Meijer Stores and Toys “R” Us.
MasterCard is generally seeking to have these cases transferred to the U.S.
District Court for the Eastern District of New York to the extent they are not
already pending in that court. Neither the consumer class actions nor the “opt
out” merchant litigations are covered by the terms of the Settlement Agreement.
Note 4. Change in Accounting Principle
Effective January 1, 2003, the Company changed its method of calculating
the market-related value of plan assets used in determining the expected
return-on-asset component of its annual pension cost. Under the previous
method, 80 percent of the gains and losses on plan assets were deferred and
recognized in the calculated market-related value over a period of five years.
Under the new method, the market-related value equals the current fair value of
the plan assets. The new method is considered preferable because annual pension
expense will reflect changes in the market performance of plan assets on a
timelier basis.
The cumulative effect of this change in accounting principle related to
periods prior to 2003 is a benefit to earnings for the six months ended June
30, 2003 of $4,949, net of income taxes of $2,819. Applying the new methodology
retroactively to January 1, 2002 would have had a de minimis impact on net
income and net income per share for the three and six months ended June 30,
2002.
Note 5. Net Income (Loss) Per Share
The following table sets forth the computation of basic and diluted net
income (loss) per share:
8
MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
Note 6. Acquisition of EPI (“Integration”)
On June 28, 2002, MasterCard Incorporated issued 23,760 shares to the
shareholders of EPI and MasterCard Europay U.K. Limited (“MEPUK”), in return
for directly and indirectly acquiring 100% of the shares of EPI not previously
owned by MasterCard International. However, of the 23,760 shares issued, only
17,610 were considered to be issued unconditionally. The purchase price for EPI
was based on the estimated value of the unconditional shares only, and this
estimated value was determined on the basis of an independent valuation.
Considering this valuation and the 17,610 unconditional shares issued, the
purchase price of EPI was $267,856, excluding estimated acquisition costs of
$10,486 that were incurred by the Company.
In calculating the purchase price of EPI, the Company considered only the
unconditional shares issued to the former shareholders of EPI and MEPUK because
the agreement between MasterCard Incorporated, MasterCard International and EPI
relating to the Integration provides that the number of shares allocated to
these shareholders will potentially increase or decrease at the end of a
three-year transition period as a result of the application of a global proxy
formula for the third year of the transition period. Of the 23,760 shares
attributable to the exchange of EPI and MEPUK shares, 6,150 shares are
conditional shares subject to reallocation at the end of the transition period.
EPI and MEPUK shareholders therefore received 17,610 unconditional shares at
closing.
Since former EPI and MEPUK shareholders would retain or receive additional
shares of MasterCard Incorporated at the end of the transition period without
remitting any additional consideration, any shares retained or received by them
that are above their minimum allocation at that time would constitute a part of
the purchase price. Any such additional shares would be valued at that time
based upon the fair value of the stock of MasterCard Incorporated. Any such
reallocation of shares to former EPI and MEPUK shareholders will increase the
purchase price for EPI and, accordingly, the amount of goodwill and additional
paid-in capital recorded.
A summary of accrued exit costs relating to the Integration is as follows:
During the six-month period ended June 30, 2003, the Company adjusted its
preliminary estimate of exit costs related to the Integration. Most
significantly, the estimate of exit costs was increased by $6,199 due to the
identification of an additional redundant system and incremental costs which
were not included in the preliminary estimate. A corresponding increase was
made to goodwill, net of taxes.
9
MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
Note 7. Property, Plant and Equipment
Property, plant and equipment consist of the following:
Depreciation and amortization expense for the property, plant and
equipment described in the table above was $13,706 and $8,649 for the three
months ended June 30, 2003 and 2002, and was $26,647 and $17,143 for the six
months ended June 30, 2003 and 2002, respectively.
In January 2003, MasterCard purchased a building in Kansas City, Missouri
for approximately $23,572. The building is a back-up data center which
replaced the back-up data center in Lake Success, New York. In April 2003,
MasterCard entered into agreements with the City of Kansas City for (i) the
sale-leaseback of the building and related equipment which totaled $32,627 and
(ii) the purchase of municipal bonds for the same amount which have been
classified as municipal bonds held-to-maturity. The agreements enabled
MasterCard to secure state and local financial benefits. The leaseback has
been accounted for as a capital lease.
Note 8. Goodwill
The changes in the carrying amount of goodwill for the year ended December
31, 2002 and for the six months ended June 30, 2003 are as follows:
10
MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
Note 9. Other Intangible Assets
The following table sets forth net intangible assets, other than goodwill:
Amortization and impairment expense on the assets above amounted to the
following:
As of June 30, 2003, the Company capitalized $4,120 of software not yet
put into production for which license fees are unconditionally due in future
periods.
The following table sets forth the estimated future amortization expense
on amortizable intangible assets:
Note 10. Consolidation of Special Purpose Entity
On August 31, 1999, MasterCard International entered into a ten-year
synthetic lease agreement for a global technology and operations center located
in O’Fallon, Missouri, called Winghaven. The lessor under the lease agreement
is MasterCard International O’Fallon 1999 Trust (the “Trust”). The Trust
financed the operations center through a combination of a third party equity
investment and the issuance of 7.36 percent Series A Senior Secured Notes (the
“Secured Notes”) in the amount of $149,380.
Rent is payable by MasterCard International in amounts equal to interest
payments on the Secured Notes and a return to equity-holders. In conjunction
with the lease agreement, MasterCard International executed a guarantee of
85.15 percent of the Secured Notes outstanding totaling $127,197 at June 30,
2003. Additionally, upon the occurrence of specific events of default,
MasterCard International guarantees repayment of the total outstanding
principal and interest on the Secured Notes and would take ownership of the
facility.
The lease agreement permits MasterCard International to purchase the
facility upon 180 days notice at a purchase price equal to the aggregate
outstanding principal amount of the Secured Notes, including any accrued and
unpaid interest and investor equity, along with any accrued and unpaid amounts
due to the investor under the lease agreement after August 31, 2006.
11
MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED) – (Continued)
On January 1, 2003, the Company adopted the provisions of Financial
Accounting Standards Board (“FASB”) Interpretation No. 46, “Consolidation of
Variable Interest Entities” and consolidated the Trust on the Company’s
consolidated balance sheet, which resulted in recording $154,000 in
municipal bonds held by the Trust, $149,380 in long-term debt and $4,620 of
minority interest relating to the equity in the Trust held by a third party.
For the three and six months ended June 30, 2003, the consolidation had no
impact on net income (loss). However, interest income and interest expense were
each increased by $2,852 for the three months ended June 30, 2003 and $5,704
for the six months ended June 30, 2003.
Note 11. Debt
On June 20, 2003, the Company entered into a committed $1,200,000
revolving credit facility (the “Credit Facility”) with certain financial
institutions which expires on June 18, 2004. The purpose of the Credit
Facility is to provide liquidity in the event of one or more settlement
failures by MasterCard members. The Credit Facility replaces MasterCard
Incorporated’s prior $1,200,000 credit facility, which expired on June 3, 2003.
The lenders under the prior facility agreed to extend its term through July 3,
2003. Interest on borrowings under the Credit Facility is charged at the London Interbank Offered Rate
(“LIBOR”) plus 28 basis points. An additional 10 basis points would be applied
if the aggregate borrowings exceed 33% of the commitments. MasterCard agreed
to pay a facility fee equal to 7 basis points on the total commitment.
MasterCard was in compliance with the Credit Facility covenants as of June 30,
2003. There were no borrowings under the Credit Facility at June 30, 2003.
The lenders under the Credit Facility are affiliates of members of MasterCard
International.
Note 12. Commitments and Contingent Liabilities
The future minimum payments under non-cancelable leases for office
buildings and equipment, sponsorships, licensing and other agreements at June
30, 2003 are as follows:
Included in the table above are capital leases with imputed interest
expense of $16,945 and a net present value of minimum lease payments of
$39,310. In addition, at June 30, 2003, $20,301 of the future minimum payments
in the table above for operating leases, sponsorship, licensing and other
agreements was accrued. Consolidated rental expense for the company’s office
space was $7,157 and $5,907 for the three months ended June 30, 2003 and 2002,
and was $14,321 and $11,242 for the six months ended June 30, 2003 and 2002,
respectively. Consolidated lease expense for automobiles, computer equipment
and office equipment was $1,853 and $193 for the three months ended June 30,
2003 and 2002, and was $3,698 and $390 for the six months ended June 30, 2003
and 2002, respectively.
MasterCard licenses certain software to its customers. The license
agreements contain guarantees, under which the Company indemnifies licensees
from any adverse judgments arising from claims of intellectual property
infringement by third parties. The terms of the guarantees are equal to the
term of the license to which they relate. The amount of the guarantees are
limited to damages, losses, costs, expenses or other liabilities incurred by
the licensee as a result of any intellectual property rights claims. The
Company does not generate significant revenues from software licensing. The
fair value of the guarantees is estimated to be de minimis.
12
MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED) – (Continued)
Note 13. Settlement and Travelers Cheque Risk Management
The Company has global risk management policies and procedures, which
include risk standards to provide a framework for managing the Company’s
settlement exposure. Generally, settlement risk is the legal exposure due to
the difference in timing between the payment transaction date and subsequent
settlement. MasterCard International’s rules generally guarantee the payment of
MasterCard transactions and certain Cirrus and Maestro transactions between
principal members. The term and amount of the guarantee are unlimited. In the
event that MasterCard International effects a payment on behalf of a failed
member, MasterCard International may seek an assignment of the underlying
receivables. Subject to approval by the Board of Directors, members may be
assessed for the amount of any settlement loss.
Settlement risk is estimated using the average daily card charges during
the quarter multiplied by the estimated number of days to settle.
Member-reported transaction data and the transaction clearing data underlying
these estimations may be revised in subsequent reporting periods. MasterCard’s
estimated settlement exposure for MasterCard-branded transactions utilizing the
aforementioned methodology for the quarters ended June 30, 2003 and December
31, 2002, after consideration of the collateral amounts set forth below,
amounted to $9,985,670 and $9,793,848, respectively. A portion of the Company’s
uncollateralized estimated settlement exposure for MasterCard-branded
transactions (estimated at $681,248 and $1,053,091 for the quarters ended June
30, 2003 and December 31, 2002, respectively) relates to members that are
deemed not to be in compliance with, or that are under review in connection
with, the Company’s risk management standards. A significant portion of this
amount ($369,866 and $437,325 for the quarters ended June 30, 2003 and December
31, 2002, respectively) is concentrated in three members. The decrease in
uncollateralized exposure for non-compliant members is mainly attributable to
certain members becoming compliant with MasterCard’s member risk standards in
the first six months of 2003. From time to time, the Company reviews its risk
management methodology and standards. As such, the amounts of uncollateralized
estimated settlement exposure relating to non-compliant members are revised as
necessary. In the event of uncollateralized member risk losses, the Company
also considers the appropriateness of establishing reserves for non-payment.
MasterCard International has established such a reserve in the amount of $575,
which is an estimate of future losses.
To minimize its exposure to settlement risk, MasterCard International
members that are not in compliance with the Company’s risk standards in effect
at the time of determination may be required, after management review of the
individual risk circumstances, to provide collateral, typically in the form of
letters of credit and bank guarantees. MasterCard held collateral for estimated
legal settlement risk of MasterCard-branded transactions in the amount of
$1,605,225 and $1,394,644 at June 30, 2003 and December 31, 2002, respectively.
In addition to these amounts, MasterCard held collateral to cover: variability
and future growth in member programs; the possibility that it may choose to pay
merchants to protect brand integrity in the event of merchant bank (acquirer)
failure, although it is not contractually obligated to do so; and Cirrus and
Maestro related risk as described below. MasterCard monitors its credit risk
portfolio on a regular basis to estimate potential concentration risks and the
adequacy of collateral on hand.
MasterCard’s estimated settlement exposure under the MasterCard brand, net
of collateral, had concentrations of 59% and 62% in North America and 23% and
21% in Europe for the quarters ended June 30, 2003 and December 31, 2002,
respectively.
In addition to the settlement risk identified above, the Company provides
settlement guarantees with respect to certain Cirrus and Maestro transactions
that the Company processes. The Company’s estimated Cirrus and Maestro
settlement exposures, utilizing the aforementioned methodology, were $566,952
and $467,560 for the quarters ended June 30, 2003 and December 31, 2002,
respectively. The Company holds collateral for a portion of these exposures. In
addition, the Company guarantees certain Cirrus- and Maestro-branded
transactions in Europe that are processed outside of the Cirrus and Maestro
settlement systems. The Company is currently not able to quantify these
exposures. Collateral is also held for a portion of these exposures. At
December 31, 2002, the Company also guaranteed certain Maestro-branded
transactions in Latin America. However, this guarantee was revoked in June
2003.
13
MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED) – (Continued)
MasterCard has also guaranteed the payment of MasterCard-branded travelers
cheques in the event of issuer default. The term and amount of the guarantee
are unlimited. MasterCard guaranteed MasterCard-branded travelers cheques of
$1,303,907 and $1,218,429 at June 30, 2003 and December 31, 2002, respectively.
These estimates are based on all outstanding MasterCard-branded travelers
cheques, reduced by an actuarial determination of cheques that are not
anticipated to be presented for payment. The December 31, 2002 amount
previously reported as $1,377,933 has been revised to reflect this actuarial
determination. MasterCard holds approximately $2,144 in cash in order to meet
travelers cheques obligations of certain issuers who have discontinued their
MasterCard travelers cheques programs. A significant portion of the Company’s
credit risk is concentrated in one MasterCard travelers cheque issuer.
MasterCard has obtained an unlimited guarantee estimated at $1,105,652 and
$1,019,739 at June 30, 2003 and December 31, 2002, respectively, from a
financial institution that is a member, to cover all of the exposure of
outstanding travelers cheques with respect to that issuer. In addition,
MasterCard has obtained guarantees estimated at $31,489 and $31,594 at June 30,
2003 and December 31, 2002, respectively, from financial institutions that are
members in order to cover the exposure of outstanding travelers cheques with
respect to another issuer.
Effective January 1, 2003, the Company adopted the accounting recognition
and measurement provisions of FASB Interpretation No. 45 “Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others” (“FIN 45”). FIN 45 requires that upon issuance of a
guarantee, the entity (guarantor) must recognize a liability for the fair value
of the obligation it assumes. The accounting recognition and measurement
provisions of this pronouncement are effective for guarantees that are issued
or modified after December 31, 2002.
Based on the Company’s ability to assess its members for settlement and
travelers cheque losses, the effectiveness of the Company’s global risk
management policies and procedures, and the historically low level of losses
that the Company has experienced, management believes the probability of future
payments for settlement and travelers cheque losses in excess of existing
reserves is de minimis. Accordingly, adoption of the accounting recognition and
measurement provisions of FIN 45 did not have an impact on the financial
position and results of operations of MasterCard for the three and six months
ended June 30, 2003. However, circumstances in the future may change, which
would require the Company to record an obligation for the fair value of some or
all of its settlement and travelers cheque guarantees.
Note 14. Foreign Exchange Risk Management
The Company enters into foreign exchange contracts to minimize the risk
associated with anticipated revenues and expenses denominated in foreign
currencies and the possible changes in value due to foreign exchange
fluctuations of assets and liabilities denominated in foreign currencies.
MasterCard’s forward contracts are listed below, classified by functional
currency.
U.S. Dollar Functional Currency
Euro Functional Currency
14
MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED) – (Continued)
The currencies underlying the foreign currency forward contracts consist
primarily of euro, U.K. pounds sterling, Swiss francs, Japanese yen, Korean
won, and Canadian dollars. The fair value of the foreign currency forward
contracts generally reflects the estimated amounts that the Company would
receive or (pay) to terminate the contracts at the reporting date based on
broker quotes for the same or similar instruments. The terms of the foreign
currency forward contracts are generally less than 18 months. The Company has
deferred $7,867 and $2,498 of net losses in accumulated other comprehensive
income as of June 30, 2003 and December 31, 2002, respectively, all of which is
expected to be reclassified to earnings within the next twelve months to
provide an economic offset to the earnings impact of the anticipated cash flows
hedged.
The Company’s derivative financial instruments are subject to both credit
and market risk. Credit risk is the risk of loss due to failure of a
counterparty to perform its obligations in accordance with contractual terms.
Market risk is the potential change in an investment’s value caused by
fluctuations in interest and currency exchange rates, credit spreads or other
variables. Credit and market risk related to derivative instruments were not
material at June 30, 2003 and December 31, 2002.
Generally, the Company does not obtain collateral related to forward
contracts because of the high credit ratings of the counterparties that are
members. The amount of accounting loss the Company would incur if the
counterparties failed to perform according to the terms of the contracts is not
considered material.
Note 15.
Legal Proceedings
MasterCard is a party to legal proceedings with respect to a variety of
matters in the ordinary course of business. Except as described below,
MasterCard does not believe that any legal proceedings to which it is a party
would have a material impact on its results of operations, financial position,
or cash flows. With respect to the matters below, MasterCard believes that an
unfavorable outcome is not probable or that it is not currently possible to
estimate the impact of an unfavorable outcome. Accordingly, consistent with
Statement of Financial Accounting Standards No. 5, “Accounting for
Contingencies”, no provision for losses has been made.
Department of Justice Antitrust Litigation
In October 1998, the United States Department of Justice (“DOJ”) filed
suit against MasterCard International, Visa U.S.A., Inc. and Visa International
Corp. in the U.S. District Court for the Southern District of New York alleging
that both MasterCard’s and Visa’s governance structure and policies violated
U.S. federal antitrust laws. First, the DOJ claimed that “dual governance” —
the situation where a financial institution has a representative on the board
of directors of MasterCard or Visa while a portion of its card portfolio is
issued under the brand of the other association — was anti-competitive and
acted to limit innovation within the payment card industry. At the same time,
the DOJ conceded that “dual issuance” — a term describing the structure of the
bank card industry in the United States in which a single financial institution
can issue both MasterCard and Visa-branded cards — was pro-competitive.
Second, the DOJ challenged MasterCard’s Competitive Programs Policy (“CPP”) and
a Visa bylaw provision that prohibit financial institutions participating in
the respective associations from issuing competing proprietary payment cards
(such as American Express or Discover). The DOJ alleged that MasterCard’s CPP
and Visa’s bylaw provision acted to restrain competition.
MasterCard denied the DOJ’s allegations. MasterCard believes that both
“dual governance” and the CPP are pro-competitive and fully consistent with
U.S. federal antitrust law.
A bench trial concerning the DOJ’s allegations was concluded on August 22,
2000. On October 9, 2001, the district court judge issued an opinion upholding
the legality and pro-competitive nature of dual governance. In so doing, the
judge specifically found that MasterCard and Visa have competed vigorously over
the years, that prices to consumers have dropped dramatically, and that
MasterCard has fostered rapid innovations in systems, product offerings and
services.
However, the judge also held that MasterCard’s CPP and the Visa bylaw
constitute unlawful restraints of trade under the federal antitrust laws. The
judge found that the CPP and Visa bylaw weakened competition and harmed
15
MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED) – (Continued)
consumers by preventing competing proprietary payment card networks such
as American Express and Discover from entering into agreements with banks to
issue cards on their networks. In reaching this decision, the judge found that
two distinct markets — a credit and charge card issuing market and a network
services market — existed in the United States, and that both MasterCard and
Visa had market power in the network market. MasterCard strongly disputes these
findings and believes that the DOJ failed, among other things, to demonstrate
that U.S. consumers have been harmed by the CPP.
On November 26, 2001, the judge issued a final judgment that orders
MasterCard to repeal the CPP insofar as it applies to issuers and enjoins
MasterCard from enacting or enforcing any bylaw, rule, policy or practice that
prohibits its issuers from issuing general purpose credit or debit cards in the
United States on any other general purpose card network. The judge also
concluded that during the period in which the CPP was in effect, MasterCard was
able to “lock up” certain members by entering into long-term agreements with
them pursuant to which the members committed to maintain a certain percentage
of their general purpose card volume, new card issuance or total number of
cards in force in the United States on MasterCard’s network. Accordingly, the
final judgment provides that there will be a period (commencing on the
effective date of the judgment and ending on the later of two years from that
date or two years from the resolution of any final appeal) during which
MasterCard will be required to permit any issuer with which it entered into
such an agreement prior to the effective date of the final judgment to
terminate that agreement without penalty, provided that the reason for the
termination is to permit the issuer to enter into an agreement with American
Express or Discover. MasterCard would be free to apply to the district court to
recover funds paid but not yet earned under any terminated agreement. The final
judgment imposes parallel requirements on Visa. The judge explicitly provided
that MasterCard and Visa would be free to enter into new partnership or member
business agreements in the future.
MasterCard believes that it has a strong legal basis to challenge the
judge’s ruling with respect to the CPP, and has appealed the decision on that
count. On February 6, 2002, the judge issued an order granting MasterCard’s and
Visa’s motion to stay the final judgment pending appeal. MasterCard, the DOJ
and other parties to the DOJ antitrust litigation completed their submission of
appellate briefs to the Second Circuit Court of Appeals in late August 2002.
Oral argument on the appeal of the District Court’s decision in this case was
held on May 8, 2003. The three-judge panel of the Second Circuit has not yet
issued a decision on the appeal.
Currency Conversion Litigations
MasterCard International, together with Visa U.S.A., Inc. and Visa
International Corp., are defendants in a state court lawsuit pending in
California. The lawsuit alleges that MasterCard and Visa wrongfully imposed an
asserted one percent currency conversion “fee” on every credit card transaction
by U.S. MasterCard and Visa cardholders involving the purchase of goods or
services in a foreign country, and that such alleged “fee” is unlawful. This
action, titled Schwartz v. Visa Int’l Corp., et al., was brought in the
Superior Court of California in February 2000, purportedly on behalf of the
general public. Trial of the Schwartz matter commenced on May 20, 2002 and
concluded on November 27, 2002. The Schwartz action claims that the alleged
“fee” grossly exceeds any costs the defendants might incur in connection with
currency conversions relating to credit card purchase transactions made in
foreign countries and is not properly disclosed to cardholders. Plaintiffs seek
to prevent defendants from continuing to engage in, use or employ the alleged
practice of charging and collecting the asserted one percent currency
conversion “fee” and from charging any type of purported currency conversion
“fee” without providing a clear, obvious and comprehensive notice that a fee
will be charged. Plaintiffs also request an order (1) requiring defendants to
fund a corrective advertising campaign; and (2) awarding restitution of the
monies allegedly wrongfully acquired by imposing the purported currency
conversion “fee”. The complaint asserts that, during the four-year period that
preceded the respective lawsuits, MasterCard collected approximately $200
million as a result of allegedly imposing the claimed one percent currency
conversion “fee”. MasterCard denies these allegations.
On February 5, 2003, the trial court judge issued a preliminary decision
in the Schwartz matter. In his decision, the trial judge found that
MasterCard’s currency conversion process does not violate the Truth In Lending
Act or regulations, nor is it unconscionably priced under California law.
However, the judge found that the practice is deceptive under California state
law, and ordered that MasterCard mandate that members disclose the currency
conversion process to cardholders in cardholder agreements, applications,
solicitations and monthly billing
16
MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED) – (Continued)
statements. As to MasterCard, the judge also ordered unspecified
restitution to California cardholders. On April 8, 2003, the trial court judge
issued a final decision containing substantially the same terms as the
preliminary decision. The final decision does not specify a monetary amount of
restitution required to be paid to plaintiffs. Instead, the trial court judge
indicated that the procedure for determining restitution will be established
after further briefing and argument by the parties, following which a final
judgment will be entered. A hearing on the restitution procedure is scheduled
for September 11, 2003. MasterCard presently intends to appeal the decision on a
number of grounds once a final judgment is entered.
In addition, MasterCard has been served with complaints in state courts in
New York, Arizona, Texas, Florida, Arkansas, Kentucky, Illinois and Tennessee
seeking to, in effect, extend the judge’s decision in the Schwartz matter to
MasterCard cardholders outside of California.
MasterCard International, Visa U.S.A., Inc., Visa International Corp.,
several member banks including Citibank (South Dakota), N.A., Citibank
(Nevada), N.A., Chase Manhattan Bank USA, N.A., Bank of America, N.A. (USA),
MBNA, and Diners Club are defendants in a number of federal putative class
actions that allege, among other things, violations of federal antitrust laws
based on the asserted one percent currency conversion “fee”.
Pursuant to an order of the Judicial Panel on Multidistrict Litigation,
the federal complaints have been consolidated in MDL No. 1409 before Judge
William H. Pauley III in the U.S. District Court for the Southern District of
New York. In January 2002, the federal plaintiffs filed a Consolidated Amended
Complaint (“MDL Complaint”) adding MBNA Corporation and MBNA America Bank, N.A.
as defendants. This pleading asserts two theories of antitrust conspiracy under
Section 1 of the Sherman Act, 15 U.S.C. §1: (i) an alleged “inter-association”
conspiracy among MasterCard (together with its members), Visa (together with
its members) and Diners Club to fix currency conversion “fees” allegedly
charged to cardholders of “no less than 1% of the transaction amount and
frequently more;” and (ii) two alleged “intra-association” conspiracies,
whereby each of Visa and MasterCard is claimed separately to have conspired
with its members to fix currency conversion “fees” allegedly charged to
cardholders of “no less than 1% of the transaction amount” and “to facilitate
and encourage institution — and collection — of second tier currency
conversion surcharges.” The MDL Complaint also asserts that the alleged
currency conversion “fees” have not been disclosed as required by the Truth In
Lending Act and Regulation Z.
Defendants have moved to dismiss the MDL Complaint. Oral argument on that
motion was held on June 21, 2002. On July 3, 2003, Judge Pauley issued a
decision granting MasterCard’s motion to dismiss in part. Judge Pauley
dismissed the Truth in Lending claims in their entirety as against MasterCard,
Visa and several of the member bank defendants. Judge Pauley did not dismiss
the antitrust claims. Discovery in this matter is expected to continue. No
trial date has been set.
Remote Merchant Litigations
On May 20, 2003, a purported class action complaint was filed by a group
of remote (or non-face-to-face) merchants in the U.S. District Court for the
Eastern District of North Carolina against MasterCard, Visa U.S.A., Inc.,
American Express Company and Discover Financial Services, Inc. With respect to
MasterCard, the complaint alleges that MasterCard’s interchange fees for remote
merchants, such as those conducting business over the internet, together with
MasterCard’s rules allocating fraud losses to such merchants, violate state and
federal antitrust laws. For a description of interchange fees, see “Global
Interchange Proceedings” below. The complaint makes a variety of other
allegations including breach of fiduciary duty, fraud, civil conspiracy, and
unfair and deceptive trade practices. The complaint also alleges that the
defendants have violated the Racketeer Influenced Corrupt Organizations (RICO)
Act. The plaintiffs claim that defendants’ alleged monopolistic conduct has
forced them to bear the risks and costs of fraud in the form of chargebacks
(returned transactions), and to pay excessive interchange, chargeback and
credit penalty fees. Other antitrust claims include group boycott and a
conspiracy to profit from fraud when transactions are processed in a
card-not-present environment. The plaintiffs seek injunctive and declaratory
relief, disgorgement and damages. MasterCard’s response to this complaint is
presently due on September 27, 2003, although this date may be
extended.
17
MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED) – (Continued)
In addition, on May 12, 2003, a complaint alleging violations of federal
and state antitrust laws, breach of contract, fraud and other theories was
filed in the U.S. District Court for the Central District of California (Los
Angeles) against MasterCard by a merchant aggregator whose customers include
businesses selling adult entertainment content over the internet. MasterCard
has assessed the plaintiff’s merchant bank (acquirer) for exceeding excessive
chargeback standards in connection with the plaintiff’s transaction activity.
The plaintiff is seeking damages and declaratory and injunctive relief.
MasterCard has until September 18, 2003 to file a response to this complaint.
At this time it is not possible to determine the outcome of the remote
merchant litigations.
Global Interchange Proceedings
Interchange fees represent a sharing of payment system costs among the
financial institutions participating in a four-party payment card system such
as MasterCard’s. Generally, interchange fees are paid by the merchant bank (the
“acquirer”) to the cardholder bank (the “issuer”) in connection with
transactions initiated with the payment system’s cards. These fees reimburse
the issuer for a portion of the costs incurred by it in providing services
which are of benefit to all participants in the system, including acquirers and
merchants. MasterCard establishes a multilateral interchange fee (“MIF”) in
certain circumstances as a default fee that applies when there is no other
interchange fee arrangement between the issuer and the acquirer. MasterCard
establishes a variety of MIF rates depending on such considerations as the
location and the type of transaction, and collects the MIF on behalf of the
institutions entitled to receive it, but does not itself receive the MIF or
record it as revenue. As described more fully below, MIFs are subject to
regulatory or legal review and/or challenges in a number of jurisdictions.
European Union.
In September 2000, the European Commission issued a
“Statement of Objections” challenging Visa International’s cross-border MIF
under European Community competition rules. On July 24, 2002, the European
Commission announced its decision to exempt the Visa MIF from these rules based
on certain changes proposed by Visa to its MIF. Among other things, in
connection with the exemption order, Visa agreed to adopt a cost-based
methodology for calculating its MIF similar to the methodology employed by
MasterCard, which considers the costs of certain specified services provided by
issuers, and to reduce its MIF rates for debit and credit transactions to
amounts at or below certain specified levels.
Although MasterCard Europe is not an addressee of the Statement of
Objections, its rules also contain a cross-border MIF. MasterCard Europe is
engaged in discussions with the European Commission in order to determine under
what conditions, if any, the European Commission would grant a formal exemption
or comfort letter for MasterCard Europe’s MIF. Because the cross-border MIF
constitutes an essential element of MasterCard Europe’s operations, changes to
it could significantly impact MasterCard International’s European members and
the MasterCard business in Europe. At this time, it is not possible to
determine what action the European Commission will take with respect to
MasterCard Europe’s MIF.
United Kingdom Office of Fair Trading.
On September 25, 2001, the Office
of Fair Trading of the United Kingdom (“OFT”) issued a Statement of Objections
(“SOO”) under the U.K. Competition Act 1998 challenging the MasterCard MIF, the
fee paid by acquirers to issuers in connection with point of sale transactions,
and multilateral service fee (“MSF”), the fee paid by issuers to acquirers when
a customer uses a MasterCard-branded card in the United Kingdom either at an
ATM or over the counter to obtain a cash advance, established by MasterCard
U.K. Members Forum Limited (formerly MEPUK) (“MMF”) for domestic credit card
transactions in the United Kingdom. The SOO contained preliminary conclusions
to the effect that the MasterCard U.K. MIF and MSF may infringe U.K.
competition law and do not qualify for an exemption in their present forms. In
January 2002, MasterCard, MEPUK and several MasterCard U.K. members responded
to the SOO, and an oral hearing concerning the matter was held on February 5,
2002. On February 11, 2003, the OFT issued a supplemental SOO, which also
contains preliminary conclusions that challenge MasterCard’s U.K. MIF under the
Competition Act. On May 2, 2003, MasterCard and MMF responded to the
supplemental SOO, and a hearing was held on May 21, 2003.
Because the MIF and MSF constitute essential elements of MasterCard’s U.K.
operations, a negative decision by the OFT could have a significant adverse
impact on MasterCard’s U.K. members and on MasterCard’s competitive
18
MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED) – (Continued)
position and overall business in the U.K. In the event of a negative
decision by the OFT, MasterCard intends to appeal to the relevant competition
tribunal in the U.K. and to seek interim relief if the negative decision
adversely impacts MasterCard’s U.K. business. At this time, it is not possible
to determine the ultimate resolution of this matter.
Australia.
On August 27, 2002, the Reserve Bank of Australia (“RBA”)
announced regulations under the Payments Systems (Regulation) Act 1998 (the
“Act”) applicable to four-party credit card payment systems in Australia,
including MasterCard’s. The RBA regulations would impose a number of changes on
the operation of four-party credit card systems that could significantly impact
MasterCard International’s Australian members and the MasterCard business in
Australia. Among other things, the RBA regulations permit non-deposit-taking
institutions to issue credit cards and acquire credit card transactions in
Australia, mandate a formula for calculating interchange fees that fails to
account for certain costs incurred by issuers (such as credit losses) and
effectively requires a reduction in domestic interchange fees, and prohibit
MasterCard and other four-party credit card systems from enforcing their
respective “no surcharge” and “net issuer” rules. The no surcharge rule
generally prevents merchants from charging supplemental fees for the use of
payment cards at the point of sale, and the net issuer rule requires
institutions participating in the relevant system to issue payment cards in
addition to conducting merchant acquiring activities.
On September 20, 2002, MasterCard filed an application with the Federal
Court of Australia seeking to overturn the RBA regulations. MasterCard believes
that in implementing the regulations the RBA has failed to comply with the
obligations imposed upon it by the Act. Among other things, MasterCard believes
that the RBA regulations fail to satisfy the public interest test mandated by
the Act because they can be expected to impose additional costs on Australian
consumers, place small businesses at a competitive disadvantage to larger
retailers, and encourage small or regional banks to exit the credit card
business in Australia. Visa International Corp. filed a similar application
with the Federal Court of Australia on September 19, 2002. A hearing on the
matter concluded on June 20, 2003, and MasterCard is presently awaiting the
court’s decision. At this time, it is not possible to determine the outcome of
MasterCard’s legal challenge to the RBA regulations.
United States.
In July 2002, a purported class action lawsuit was filed
by a group of merchants in the U.S. District Court for the Northern District of
California against MasterCard International, Visa U.S.A., Inc., Visa
International Corp. and several member banks in California, alleging, among
other things, that MasterCard’s and Visa’s interchange fees contravene the
Sherman Act. The suit seeks treble damages in an unspecified amount, attorney’s
fees and injunctive relief, including the divestiture of bank ownership of
MasterCard and Visa, and the elimination of MasterCard and Visa marketing
activities. Defendants filed a motion to dismiss the complaint on September 10,
2002. An oral argument date on the motion was held on April 18, 2003. On April
21, 2003, the judge issued a decision that dismissed several of plaintiffs’
claims and significantly narrowed the scope of the remaining claims in the
case. Plaintiffs filed an amended complaint shortly thereafter. On June 16,
2003, MasterCard filed a combined motion to dismiss and an expedited motion for
summary judgment on the issue of whether member banks have the ability to opt
out of MasterCard’s interchange structure and enter into bilateral or other
interchange arrangements. A hearing on that motion is scheduled for October 3,
2003. No trial date has been set in this matter. At this time it is not
possible to determine the outcome of these proceedings.
Other Jurisdictions.
MasterCard is aware that regulatory authorities in
certain other jurisdictions, including Poland, New Zealand and Switzerland, are
reviewing MasterCard’s and/or its members interchange fee practices and may
seek to regulate the establishment of such fees. At this time it is not
possible to determine the outcome of these proceedings.
19
Item 2.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the
consolidated financial statements and the notes thereto of MasterCard
Incorporated and its consolidated subsidiaries, including MasterCard
International Incorporated (“MasterCard International”) and MasterCard Europe
sprl (“MasterCard Europe”) (together, “MasterCard” or the “Company”), included
elsewhere in this Report. References to “we”, “our” and similar terms in the
following discussion are references to the Company.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. When used in this Report, the words “believe,” “expect,”
“could,” “may,” “will” and similar words are intended to identify
forward-looking statements. These statements relate to our future prospects,
developments and business strategies. Many factors and uncertainties relating
to our operations and business environment, all of which are difficult to
predict and many of which are outside of our control, influence whether any
forward-looking statements can or will be achieved. Any one of those factors
could cause our actual results to differ materially from those expressed or
implied in writing in any forward-looking statements made by MasterCard or on
its behalf.
Below are the principal factors that we believe are important to our
business, and that could cause actual results to differ from expectations:
20
For a more complete discussion of these risk factors, see the discussion
under the caption “Risk Factors” in Item 1 — Business, in the Annual Report on
Form 10-K of MasterCard for the year ended December 31, 2002.
Results of Operations
On June 28, 2002, MasterCard Incorporated acquired all of the outstanding
stock of Europay International S.A. (“EPI”) not previously owned by MasterCard
International. On July 16, 2002, EPI was renamed MasterCard Europe S.A. On
September 30, 2002, MasterCard Europe S.A. was reorganized in Belgium as
MasterCard Europe. The results of MasterCard Europe have been consolidated as
of June 28, 2002 but did not have a material impact on the Company’s net income
for the three or six months ended June 30, 2002.
Three Months Ended June 30, 2003 Compared to Three Months Ended June 30, 2002
Our revenue is comprised of operations fees and assessments. Revenue was
$557 million for the three months ended June 30, 2003 compared to $450 million
for the three months ended June 30, 2002, an increase of $107 million or 24%,
of which $79 million was due to the acquisition of MasterCard Europe. Due to
the strengthening of the euro during the three month period ended June 30,
2003, our revenue benefited from the conversion of MasterCard Europe’s euro
denominated revenue to the U.S. dollar. In addition, since assessments are
based on local currency volume translated into U.S. dollars, assessments during
the period benefited from the weakening of the U.S. dollar in relation to
certain currencies.
As described more fully in Note 15 to the Consolidated Financial
Statements included herein, MasterCard establishes multilateral interchange
fees on behalf of certain member institutions, but does not receive or record
interchange fees as revenue. However, the impact of the global interchange
proceedings described in Note 15 to the Consolidated Financial Statements
included herein could impact our customers’ use of card programs carrying our
brands, thereby negatively impacting our future revenues.
We enter into agreements with certain customers to provide volume-based
and support incentives that are recorded as a reduction of revenue in
accordance with Emerging Issues Task Force (“EITF”) Issue No. 01-9, “Accounting
for Consideration Given by a Vendor to a Customer (Including a Reseller of the
Vendor’s Products)” (EITF 01-9). We anticipate that future revenue growth could
be moderated by an increase in these incentives.
Operations fees represent user fees for authorization, clearing,
settlement and other products and services that facilitate transaction and
information management among our customers on a global basis. Operations fees
are generally driven by the number of transactions. The number of transactions
processed increased to approximately 2.435 billion for the three months ended
June 30, 2003, compared to approximately 2.194 billion for the three months
ended June 30, 2002, an increase of approximately 11%. MasterCard Europe’s
transactions are included in both periods. Operations fees were $353 million
for the three months ended June 30, 2003 compared to $289 million for the three
months ended June 30, 2002, an increase of $64 million or 22%. Approximately
$35 million of the increase in operations fees was due to the acquisition of
MasterCard Europe. Operations revenue growth was moderated by (i) a reduction
in cross border transactions, which have higher transaction fees compared to
domestic transactions, resulting from decreased travel in 2003 associated with
the impact of the Iraq war and SARS in Asia; (ii) incentives and rebates; and
(iii) our pricing structure, which rewards customers with lower prices for
incremental volume.
Assessments principally represent payments made by customers based on the
dollar volume of their card programs carrying the marks of one or more of the
brands within the MasterCard family of brands, principally the MasterCard,
Maestro and Cirrus brands. Assessments were approximately $204 million for the
three months ended June 30, 2003 compared to $161 million for the three months
ended June 30, 2002, an increase of approximately $43 million or 27%.
Approximately $45 million of the increase in our assessments was due to the
acquisition of MasterCard Europe. Gross dollar volume (“GDV”) represents gross
usage (purchase and cash disbursements) on MasterCard cards for goods and
services including balance transfers and convenience checks. GDV was $308
billion for the three months ended June 30, 2003 compared to $281 billion for
the three months ended June 30, 2002 or an increase of approximately 10%. GDV
growth was approximately 5% when measured in local currency terms.
21
GDV includes MasterCard Europe activity in both periods presented.
Exclusive of MasterCard Europe, notwithstanding continued GDV growth,
assessments declined slightly as a result of an increase in rebates and
incentives. Rebates and incentives provided to customers, increased by $27
million, or 51%, in the three months ended June 30, 2003 over the same period
in 2002.
Our operating expenses are comprised of general and administrative,
advertising and market development, depreciation and amortization expenses.
Operating expenses were $507 million for the three months ended June 30, 2003
compared to $397 million for the three months ended June 30, 2002, an increase
of $110 million or 28%. We are continuing a significant expansion of our
advertising and marketing support initiatives to accelerate our profitable
growth and to enhance the global position of MasterCard and its customers. The
primary focus of these initiatives is to build brand recognition, promote brand
acceptance, and enhance the development of our programs and services. These
initiatives could result in reduced revenue and additional operating expenses
over the next several years. We will continue to evaluate the extent of these
initiatives in light of changing market conditions.
General and administrative expenses consist primarily of personnel,
telecommunications, data processing, travel and professional fees. General and
administrative expenses were $281 million for the three months ended June 30,
2003 compared to $218 million for the three months ended June 30, 2002, an
increase of $63 million or 29%. Approximately $39 million of general and
administrative expenses in 2003 was due to the acquisition of MasterCard
Europe. Exclusive of MasterCard Europe, personnel expenses increased $22
million due to additional headcount, salary increases and severance
obligations.
Advertising and market development expenses were $195 million for the
three months ended June 30, 2003 compared to $160 million for the three months
ended June 30, 2002, an increase of $35 million or 22%. Approximately $34
million of advertising and market development expenses for the three months
ended June 30, 2003 was due to the acquisition of MasterCard Europe. We
increased our investment in advertising and market support initiatives in 2003.
However, these initiatives were partially offset by decreased costs compared
to the prior year, in which we incurred significant costs for sponsorship and
promotion of the 2002 World Cup.
Depreciation expense was $13 million for the three months ended June 30,
2003 compared to $8 million for the three months ended June 30, 2002, an
increase of $5 million. This increase was due principally to the acquisition of
MasterCard Europe.
Amortization expense was $18 million for the three months ended June 30,
2003 compared to $11 million for the three months ended June 30, 2002, an
increase of $7 million. This increase was primarily driven by additional
amortization of capitalized software, including $5 million related to the
acquisition of MasterCard Europe.
Other income (expense) consists primarily of investment income and
interest expense. Investment income increased $13 million for the three months
ended June 30, 2003 compared to the same period in 2002, primarily as a result
of appreciation in the market value of our trading securities portfolio, the
consolidation of the MasterCard International O’Fallon 1999 Trust (“Trust”)
(see the discussion in Note 10 to the Consolidated Financial Statements
included herein), and realized gains on our sale of available-for-sale
securities. Interest expense increased $17 million for the three months ended
June 30, 2003 compared to the same period in 2002, primarily due to imputed
interest on the U.S. merchant lawsuit settlement obligation, and consolidation
of the Trust.
The effective tax rates for the three months ended June 30, 2003 and June
30, 2002 are essentially the same.
As a result of the foregoing, our net income was $32 million for the three
months ended June 30, 2003 compared to $36 million for the three months ended
June 30, 2002.
22
Six Months Ended June 30,
2003 Compared to Six Months Ended June 30, 2002
Revenue was $1.069 billion for the six months ended June 30, 2003 compared
to $843 million for the six months ended June 30, 2002, an increase of $226
million or 27%, of which $149 million was due to the acquisition of MasterCard
Europe. Due to the strengthening of the euro during the six month period ended
June 30, 2003, our revenue benefited from the conversion of MasterCard Europe’s
euro denominated revenue to the U.S. dollar. In addition, since assessments
are based on local currency volume translated into U.S. dollars, assessments
during the period benefited from the weakening of the U.S. dollar in relation
to certain currencies.
The number of transactions processed increased to approximately 4.641
billion for the six months ended June 30, 2003, compared to approximately 4.140
billion for the six months ended June 30, 2002, an increase of approximately
12%. MasterCard Europe transactions are included in both periods. Operations
fees, which are generally driven by the number of transactions, were $668
million for the six months ended June 30, 2003 compared to $545 million for the
six months ended June 30, 2002, an increase of $123 million or 23%.
Approximately $67 million of the increase in operations fees in the first six
months of 2003 was due to the acquisition of MasterCard Europe. Operations
revenue growth was moderated by (i) a reduction in cross border transactions,
which have higher transaction fees compared to domestic transactions, resulting
from decreased travel in 2003 associated with the impact of the Iraq war and
SARS in Asia; (ii) incentives and rebates; and (iii) our pricing structure,
which rewards customers with lower prices for incremental volume.
Assessments were approximately $401 million for the six months ended June
30, 2003 compared to $298 million for the six months ended June 30, 2002, an
increase of approximately $103 million or 35%. Approximately $82 million of the
increase in our assessments was due to the acquisition of MasterCard Europe. In
addition, the increase in assessments was attributable to an increase in GDV
between the periods. GDV was $595 billion for the six months ended June 30,
2003 compared to $536 billion for the six months ended June 30, 2002. GDV
growth was approximately 6% when measured in local currency terms and
approximately 11% when measured on a U.S. dollar converted basis due to the
weakening of the U.S. dollar against most major currencies worldwide. GDV
includes MasterCard Europe activity in both periods presented. Moderating the
increase in assessments were rebates and incentives provided to customers,
which increased by $33 million or 33% in the six months ended June 30, 2003
over the same period in 2002, primarily related to new agreements and the
acquisition of MasterCard Europe.
Operating expenses were $1.687 billion for the six months ended June 30,
2003 compared to $712 million for the six months ended June 30, 2002, an
increase of $975 million or 137%. Our operating expenses are comprised of
general and administrative, advertising and market development, the U.S.
merchant lawsuit settlement, depreciation and amortization expenses. Operating
expenses increased $721 million due to the U.S. merchant lawsuit settlement and
$167 million due to our acquisition of MasterCard Europe. In addition, we
incurred additional costs in connection with the planned advertising and
marketing support initiatives.
General and administrative expenses consist primarily of personnel,
telecommunications, data processing, travel and professional fees. General and
administrative expenses were $558 million for the six months ended June 30,
2003 compared to $415 million for the six months ended June 30, 2002, an
increase of $143 million or 34%. Approximately $85 million of general and
administrative expenses in 2003 was due to the acquisition of MasterCard
Europe. Exclusive of MasterCard Europe, personnel expense and professional
fees increased $37 million and $16 million, respectively. Personnel increased
due to additional headcount, salary increases and severance obligations.
Professional fees increased primarily due to higher legal costs associated with
the U.S. merchant lawsuit and other ongoing litigation.
Advertising and market development expenses were $348 million for the six
months ended June 30, 2003 compared to $262 million for the six months ended
June 30, 2002, an increase of $86 million or 33%. Approximately $65 million of
advertising and market development expenses in the first six months of 2003 was
due to the acquisition of MasterCard Europe. We increased our investment in
advertising and market support initiatives in 2003. These initiatives were
partially offset by decreased costs compared to the prior year, in which we
incurred significant costs for sponsorship and promotion of the 2002 World Cup.
We will continue to evaluate the extent of these initiatives in light of
changing market conditions.
23
Costs associated with the U.S. merchant lawsuit settlement, as embodied in
the Settlement Agreement dated June 4, 2003 (the “Settlement Agreement”),
totaled $721 million for the six months ended June 30, 2003. The costs consist
of (i) the monetary amount of the settlement (discounted at 8% over the payment
term), (ii) certain additional costs in connection with and in order to comply
with other requirements of the settlement and (iii) costs to address certain
merchants who opted not to participate in the class action lawsuit. Amounts
recorded are estimates and are subject to change in the future. For a
description of the Settlement Agreement see Part II, Item 1 included herein.
Depreciation expense was $25 million for the six months ended June 30,
2003 compared to $16 million for the six months ended June 30, 2002, an
increase of $9 million. This increase was due principally to the acquisition of
MasterCard Europe.
Amortization expense was $35 million for the six months ended June 30,
2003 compared to $19 million for the six months ended June 30, 2002, an
increase of $16 million. This increase was primarily driven by $10 million of
amortization of capitalized software and tradenames due to the acquisition of
MasterCard Europe as well as additional amortization of capitalized computer
software.
Other income (expense) consists principally of investment income and
interest expense. Investment income increased $13 million for the six months
ended June 30, 2003 compared to the same period in 2002, primarily due to the
consolidation of the Trust (see the discussion in Note 10 to the Consolidated
Financial Statements included herein) and appreciation of the market value of
our trading securities portfolio. Interest expense increased $20 million for
the six months ended June 30, 2003 compared to the same period in 2002,
primarily due to imputed interest on the U.S. merchant lawsuit settlement
obligation and the consolidation of the Trust.
The effective tax rate for the six months ended June 30, 2003 was 35.3%
versus 35.9% for the six months ended June 30, 2002. Exclusive of the effects
of the charge for the Settlement Agreement described above, which was treated
as a discrete item in the determination of the tax provision, the effective tax
rate was 33% versus 36% for the six months ended June 30, 2003 and 2002,
respectively. The decrease, exclusive of the effect of the Settlement Agreement
charge, was primarily attributable to a change in the geographic distribution
of pre-tax income from jurisdictions with higher state tax rates to those with
lower tax rates, the settlement of certain tax examinations on a favorable
basis and higher tax-exempt income as a percentage of pre-tax income. In
addition, the effective tax rate in 2002 was increased by a one-time increase
in state income tax expense attributable to lower deferred state tax assets as
a result of lower state tax rates, which was partially offset by the
realization of foreign tax credits.
Effective January 1, 2003, we changed our method of calculating the
market-related value of plan assets used in determining the expected
return-on-asset component of pension cost. Under the previous accounting
method, 80 percent of the gains and losses on plan assets were deferred and
recognized in the calculated market-related value over a period of five years.
Under the new method, the market-related value equals the current fair value of
the plan assets. The new method is considered preferable because annual pension
expense will reflect changes in the market performance of plan assets on a
timelier basis. The cumulative effect of this change in accounting principle
related to periods prior to 2003 is a benefit to earnings for the six months
ended June 30, 2003 of $5 million, net of income taxes of $3 million.
As a result of the foregoing, our net loss was $393 million for the six
months ended June 30, 2003 compared to net income of $90 million for the six
months ended June 30, 2002.
24
Liquidity and Capital Resources
We need liquidity and capital resources to fund our global development, to
cover any settlement risk, to finance our capital expenditures and any future
acquisitions and to service the payments of principal and interest on our
outstanding debt, legal obligations and other contractual commitments. At June
30, 2003, we had $802 million of liquid investments (cash, cash equivalents and
investment securities available-for-sale) with which to manage operations. We
expect that the cash generated from our operations and our borrowing capacity
will be sufficient to meet our operating, working capital and capital needs in
2003 and beyond.
For the six months ended June 30, 2003, net cash provided by operating
activities was $47 million compared to $131 million for the six months ended
June 30, 2002. Cash provided by operating activities was generated principally
by current period earnings exclusive of non-cash charges for depreciation,
amortization and the $469 million after-tax charge for settlement of the U.S.
merchant lawsuit, which will be paid in future periods.
Net cash used in investing activities was $82 million and $25 million for
the six months ended June 30, 2003 and 2002, respectively. The utilization of
cash in the first six months of 2003 was primarily due to capital expenditures
and expenditures for capitalized software. The primary capital expenditure was
the purchase of a building in Kansas City, Missouri for a back-up data center.
See the discussion in Note 7 to the Consolidated Financial Statements included
herein.
No cash was used in financing activities for the six months ended June 30,
2003. Net cash used in financing activities for the six months ended June 30,
2002 was $10 million related to repayments of net settlement overdraft
positions.
As discussed in Note 3 to the Consolidated Financial Statements included
herein, we recorded a liability in connection with the settlement of the U.S.
merchant lawsuit. We believe that we will be able to fund amounts payable in
connection with this legal proceeding through existing cash and cash
equivalents, investments, cash generated from operations and our borrowing
capacity.
Due to Standard & Poor’s assessment of MasterCard’s vulnerability to legal
risk, on May 16, 2003, Standard & Poor’s lowered MasterCard’s counterparty
credit rating to A-/A-2, subordinated debt rating to BBB+ and placed MasterCard
on negative outlook. We do not believe this rating action will impact our
liquidity.
In the normal course of business, MasterCard operates systems for clearing
and settling payment transactions among its members. Net settlements are
generally cleared daily among members by wire transfer or other bank clearing
means, through settlement cash accounts. However, some transactions may not
settle until subsequent business days due to varying local currency settlement
value date intervals and other timing differences. These timing differences
result in amounts due from members or amounts due to members for a duration
normally ranging from one to four calendar days and are included in the balance
sheet of MasterCard as settlement due to/due from members.
Our financial position continues to reflect strong liquidity. Working
capital, consisting of current assets less current liabilities, was $449
million at June 30, 2003 and $526 million at December 31, 2002, representing a
working capital ratio of 1.4 and 1.6 in 2003 and 2002, respectively.
On June 20, 2003, the Company entered into a committed $1.2 billion
revolving credit facility (the “Credit Facility”) with certain financial
institutions which expires on June 18, 2004. The purpose of the Credit
Facility is to provide liquidity in the event of one or more settlement
failures by MasterCard members. The Credit Facility replaces MasterCard
Incorporated’s prior $1.2 billion credit facility, which expired on June 3,
2003. The lenders under the prior facility agreed to extend its term through
July 3, 2003. Interest on borrowings under the Credit Facility is charged at the London Interbank
Offered Rate (“LIBOR”) plus 28 basis points. An additional 10 basis points
would be applied if the aggregate borrowings exceed 33% of the commitments.
MasterCard agreed to pay a facility fee equal to 7 basis points on the total
commitment. MasterCard was in compliance with the Credit Facility covenants as
of June 30, 2003. There were no borrowings under the Credit Facility at June
30, 2003. The lenders under the Credit Facility are affiliates of members of
MasterCard International.
25
We have entered into contractual commitments associated with operating
lease agreements for office space and equipment as well as for sponsorship,
licensing and other agreements. Obligations relating to these contractual
commitments are estimated to be payable in the following periods (in
thousands):
At June 30, 2003, $20.3 million of the future minimum payments in the
table above for operating leases, sponsorship, licensing and other agreements
were accrued.
An adverse outcome of certain of the legal proceedings described in Note
15 to the Consolidated Financial Statements included herein could have a
detrimental impact on liquidity and capital resources if the proceedings result
in adverse awards of damages to the relevant plaintiffs or equitable relief in
the form of return of funds.
We believe that our cash provided by operating activities, our liquid
investments and our borrowing capacity provide sufficient liquidity to meet our
ongoing business requirements.
Critical Accounting Policies & Estimates
Our accounting policies are integral to understanding the results of
operations and financial condition. We are required to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities, at the date of the financial
statements, and the reported amounts of revenue and expenses during the
reporting periods. We have established detailed policies and control procedures
to ensure the methods used to make estimates and assumptions are well
controlled and applied consistently from period to period. The following is a
brief description of our current accounting policies involving significant
management judgments.
Revenue Recognition
Certain revenues are estimated based upon transactional information
accumulated from our systems or reported by our customers. This information is
reviewed against historical and projected customer performance.
We have business agreements with certain customers that provide for fee
rebates when the customers meet certain hurdles. Such rebates are generally
calculated on a monthly basis based upon the estimated customers’ performance
and the contracted discount rates for the services provided, and are recorded
as a reduction of revenue in the same period as the revenue is earned.
In addition, we enter into agreements with certain customers to provide
volume-based and support incentives that are recorded as a reduction of revenue
in accordance with EITF 01-9. Incentives are based on management’s estimate of
the customers’ performance in a given period.
Our estimate of customers’ performance is a critical component in the
calculation of rebates and incentives. Rebates and incentives are calculated
based upon estimates of future customer performance and the terms in the
related customer agreements. Customers’ performance is estimated by using
historical performance, member reported information, discussions with our
customers, and transactional information accumulated from our systems. Actual
results may differ from these estimates.
26
Capitalized Software
Our capitalized software, which includes internal and external costs
incurred in developing or obtaining computer software for internal use, is
included in other intangible assets in the consolidated balance sheets in
accordance with Statement of Position 98-1, “Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use” and related guidance.
Development costs are expensed during the preliminary project management phase
until it is probable that the project will be completed and the software will
be used to perform the function intended. Thereafter, all qualifying direct
internal and external costs related to the design, development and testing
phase are capitalized, and upon the project being substantially complete and
ready for its intended use, are amortized using the straight-line method over
the estimated useful life of the software, not to exceed three years. Costs
related to post-implementation activities for software that is developed or
obtained for internal use are expensed as incurred.
We are required to make judgments to determine if each project will
satisfy its intended use and the phase of each project. In addition, we
estimate the internal costs based on hours spent on the design, development and
testing phases of the project. These judgments and estimates impact the
accounting for capitalized software in our financial statements.
Impairment
We test goodwill and intangible assets for impairment in accordance with
Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and
Other Intangible Assets” and test property, plant and equipment for impairment
in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of
Long-Lived Assets”. Goodwill and intangible assets with indefinite lives are
tested at least annually. We test investments in affiliates for a loss in
value, which is other than temporary, in accordance with Accounting Principles
Board No. 18, “The Equity Method of Accounting for Investments in Common
Stock”. Whenever indicators of impairment exist, these investments are tested.
Our tests for impairment require management to make assumptions regarding
the expected net future cash flows of each asset. These assumptions are based
on our internal forecasts. If the sum of expected net future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the asset, an impairment loss is recognized. The loss is measured as the amount
by which the carrying amount of the asset exceeds its fair value calculated
using the present value of estimated net future cash flows or other
methodologies.
Goodwill and intangible assets represent a significant portion of our
balance sheet. Therefore, impairment could result in a material reduction of
our assets, as well as a charge to our operations.
Pensions
Certain assumptions are used in the determination of our annual pension
costs and the disclosure of the funded position of our pension plans. Key
assumptions include the discount rate used to measure the plan’s projected
benefit obligation and the expected rate of return on plan assets. We utilize a
discount rate of 6.75% and an expected return on plan assets of 8.5%. A quarter
of a percentage point decrease in our discount rate would increase our
projected benefit obligation by $2 million, and would increase our annual
pension expense by $.3 million. An equal but opposite effect would be
experienced for a quarter of a percentage point increase in the discount rate.
A quarter of a percentage point increase or decrease in the expected rate of
return on plan assets would decrease or increase the annual pension costs by
$.3 million.
27
Discount Rate for U.S. Merchant Settlement
We estimated the discount rate we used to calculate the present value of
our obligations under the Settlement Agreement to be 8%. The discount rate used
was a matter of management judgment at the time of the settlement, which
considered our expected post-settlement credit rating and rates for sources of
credit that could be used to finance the payment of such obligations with
similar terms.
A 1% increase in the discount rate would decrease the amount we recorded
as an after-tax charge for the six months ended June 30, 2003 by approximately
$20 million, and increase annual interest expense by approximately $3.4
million, $4.2 million, and $4.0 million in 2003, 2004, and 2005, respectively,
and declining amounts thereafter. The reverse impact would be experienced for a
1% decrease in the discount rate.
Recent Accounting Pronouncements
In November 2002, the EITF reached a consensus on Issue No. 00-21,
“Revenue Arrangements with Multiple Deliverables”, (“EITF 00-21”). EITF 00-21
addresses how to determine when a revenue arrangement for multiple deliverables
should be divided into separate units of accounting and, if separation is
appropriate, how the arrangement consideration should be allocated to the
identified accounting units. The provisions of EITF 00-21 are effective for
revenue arrangements entered into in fiscal periods beginning after June 15,
2003. The Company may enter into contracts with its customers that provide for
discounted services that are required to be separately identified under EITF
00-21. The discount from the fair value of the services will be recorded as a
reduction of revenue related to other elements of the contract. However, the
impact of EITF 00-21 is not expected to be material to our financial condition
or results of operations.
In April 2003, the Financial Accounting Standards Board (“FASB”) issued
SFAS 149, “Amendment of Statement 133 on Derivative Instruments and Hedging
Activities”. SFAS 149 improves financial reporting by requiring that contracts
with comparable characteristics be accounted for similarly. The provisions of
SFAS 149 are effective for contracts entered into or modified after June 30,
2003. MasterCard has determined the impact, if any, of adopting this
accounting pronouncement to be de minimis.
In May 2003, the FASB issued SFAS 150, “Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity”. SFAS 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity.
SFAS 150 is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. MasterCard did not enter into or modify
any financial instruments that would be included in the scope of SFAS 150
during June 2003 and determined there is no impact of adopting this accounting
pronouncement.
In May 2003, the EITF reached a consensus on Issue No. 01-8, “Determining
Whether an Arrangement Contains a Lease”, (“EITF 01-08”). EITF 01-8 addresses
how to determine whether an arrangement contains a lease that is within the
scope of FASB Statement No. 13, “Accounting for Leases”. The provisions of
EITF 01-08 are effective for the next reporting period beginning after May 28,
2003. MasterCard expects the impact of adopting this accounting pronouncement
to be de minimis.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Market risk is the potential for economic losses to be incurred on market
risk sensitive instruments arising from adverse changes in market indices such
as interest rates and foreign currency exchange rates. We have limited exposure
to market risk from changes in both interest rates and foreign exchange rates.
Management established and oversees the implementation of policies, which have
been approved by the Board of Directors, governing our funding, investments,
and use of derivative financial instruments. We monitor aggregate risk
exposures on an ongoing basis. There have been no material changes in our
market risk exposures at June 30, 2003 as compared to December 31, 2002.
28
We enter into forward currency contracts to minimize risk associated with
anticipated revenues and expenses and assets and liabilities denominated in
foreign currencies. The objective of this activity is to reduce our exposure to
transaction gains and losses resulting from fluctuations of foreign currencies
against the U.S. dollar and euro.
At June 30, 2003 and December 31, 2002, forward currency contracts against
the U.S. dollar were both purchased (with notional amounts of $55 million and
$39 million, respectively) and sold (with notional amounts of $55 million and
$25 million, respectively).
At June 30, 2003 and December 31, 2002, forward currency contracts against
the euro were both purchased (with notional amounts of $213 million and $199
million, respectively) and sold (with notional amounts of $2 million and $8
million, respectively).
Item 4.
Controls and Procedures
MasterCard Incorporated’s management, including the Chief Executive
Officer and Principal Accounting Officer, carried out an evaluation of the
Company’s disclosure controls and procedures (as defined in Rule 15d-15(e)
under the Securities Exchange Act of 1934, as amended) as of the end of the
period covered by this Report. Based on that evaluation, the Company’s Chief
Executive Officer and Principal Accounting Officer concluded that MasterCard
Incorporated had sufficient procedures for recording, processing, summarizing
and reporting financial information that is required to be disclosed in its
reports under the Securities Exchange Act of 1934, as amended. MasterCard
Incorporated’s disclosure controls and procedures were designed by the
Company’s management.
There has not been any change in MasterCard Incorporated’s internal
control over financial reporting that occurred during the last fiscal quarter
that has materially affected, or is reasonably likely to materially affect,
MasterCard Incorporated’s internal control over financial reporting.
29
[PRICEWATERHOUSECOOPERS LETTERHEAD]
Report of Independent Accountants
To the Board of Directors and Shareholders
We have reviewed the accompanying consolidated balance sheet of MasterCard
Incorporated and its subsidiaries as of June 30, 2003, and the related
consolidated statements of operations and the consolidated condensed statements
of comprehensive income (loss) for each of the three-month and six-month
periods ended June 30, 2003 and June 30, 2002 and the consolidated statements
of cash flows for the six-month periods ended June 30, 2003 and June 30, 2002
and the consolidated statement of changes in stockholders’ equity for the
six-month period ended June 30, 2003. These interim financial statements are
the responsibility of the Company’s management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated interim financial statements for them
to be in conformity with accounting principles generally accepted in the United
States of America.
We previously audited in accordance with auditing standards generally accepted
in the United States of America, the consolidated balance sheet as of December
31, 2002, and the related consolidated statements of income, comprehensive
income, cash flows, and changes in stockholders’/members’ equity for the year
then ended (not presented herein), and in our report dated March 5, 2003 we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying consolidated
balance sheet information as of December 31, 2002, is fairly stated in all
material respects in relation to the consolidated balance sheet from which it
has been derived.
As discussed in Note 4 to the financial statements, the Company changed its
method for calculating the market-related value of plan assets used in
determining the expected return on the assets component of annual pension cost.
New York, New York
30
MASTERCARD INCORPORATED
FORM 10-Q
Three Months Ended
Six Months Ended
June 30,
June 30,
2003
2002
2003
2002
(In thousands, except per share data)
$
556,893
$
450,189
$
1,069,108
$
843,141
280,955
217,887
557,847
415,061
195,400
160,624
347,694
261,660
—
—
721,000
—
12,950
8,163
25,143
16,257
17,643
10,766
35,239
19,090
506,948
397,440
1,686,923
712,068
49,945
52,749
(617,815
)
131,073
18,366
5,486
26,878
14,030
(18,748
)
(2,087
)
(24,092
)
(4,537
)
419
164
(257
)
(163
)
37
3,563
2,529
9,330
49,982
56,312
(615,286
)
140,403
17,655
19,923
(217,273
)
50,418
32,327
36,389
(398,013
)
89,985
—
—
4,949
—
$
32,327
$
36,389
$
(393,064
)
$
89,985
$
.32
$
.50
$
(3.98
)
$
1.25
—
—
.05
—
$
.32
$
.50
$
(3.93
)
$
1.25
Table of Contents
Table of Contents
Six Months Ended
June 30,
2003
2002
(In thousands)
$
(393,064
)
$
89,985
25,143
16,257
35,239
19,090
(212,012
)
9,822
150
882
(4,657
)
7,363
(7,460
)
19,748
(3,073
)
123,216
(19,598
)
2,348
(28,657
)
(21,446
)
4,555
(92,358
)
735,079
—
(76,556
)
(27,344
)
(7,819
)
(16,446
)
47,270
131,117
(50,531
)
(17,397
)
(37,166
)
(21,154
)
(109,795
)
(125,816
)
115,755
102,651
—
31,243
(472
)
5,640
(82,209
)
(24,833
)
—
(9,530
)
—
(9,530
)
3,476
—
(31,463
)
96,754
336,474
176,143
$
305,011
$
272,897
$
991
$
49,745
8,363
2,668
—
275,744
(154,000
)
—
149,380
—
4,620
—
32,627
—
(32,627
)
—
4,120
—
Table of Contents
Accumulated
Retained
Other
Earnings
Comprehensive
Common Shares
Additional
(Accumulated
Income,
Paid-in
Total
Deficit)
Net of Tax
Class A
Class B
Capital
(In thousands)
$
1,023,406
$
26,529
$
28,509
$
840
$
160
$
967,368
(393,064
)
(393,064
)
—
—
—
—
20,489
—
20,489
—
—
—
$
650,831
$
(366,535
)
$
48,998
$
840
$
160
$
967,368
Three Months Ended
Six Months Ended
June 30,
June 30,
2003
2002
2003
2002
(In thousands)
$
32,327
$
36,389
$
(393,064
)
$
89,985
20,761
7
27,292
18
243
7,149
(1,434
)
4,455
(1,529
)
—
(5,369
)
—
19,475
7,156
20,489
4,473
$
51,802
$
43,545
$
(372,575
)
$
94,458
Table of Contents
Table of Contents
Three Months Ended
Six Months Ended
June 30,
June 30,
2003
2002
2003
2002
(Unaudited)
$
32,327
$
36,389
$
(398,013
)
$
89,895
—
—
4,949
—
$
32,327
$
36,389
$
(393,064
)
$
89,895
100,000
72,643
100,000
72,129
$
.32
$
.50
$
(3.98
)
$
1.25
—
—
.05
—
$
.32
$
.50
$
(3.93
)
$
1.25
Table of Contents
(In Thousands, Except Per Share Data)
Redundant
Computer
EPI’s
Systems/
Brand/Logos
Technology
Workforce
Elimination
Elimination
Reduction
Total
$
11,881
$
8,111
$
2,120
$
22,112
(142
)
(2,455
)
—
(2,597
)
—
6,199
(69
)
6,130
1,144
825
194
2,163
$
12,883
$
12,680
$
2,245
$
27,808
Table of Contents
(In Thousands, Except Per Share Data)
June 30, 2003
December 31, 2002
$
312,965
$
294,541
162,566
130,028
36,152
34,486
27,109
25,781
538,792
484,836
(283,154
)
(258,116
)
$
255,638
$
226,720
$
7,141
134,661
1,221
190
2,890
6,838
152,941
3,792
15,598
$
172,331
Table of Contents
(In Thousands, Except Per Share Data)
June 30, 2003
December 31, 2002
Gross
Net
Gross
Net
Carrying
Accumulated
Carrying
Carrying
Accumulated
Carrying
Amount
Amortization
Amount
Amount
Amortization
Amount
$
252,349
$
(119,708
)
$
132,641
$
211,250
$
(93,184
)
$
118,066
20,879
(20,879
)
—
20,879
(20,879
)
—
19,025
(5,915
)
13,110
17,926
(2,557
)
15,369
728
(637
)
91
728
(546
)
182
292,981
(147,139
)
145,842
250,783
(117,166
)
133,617
166,725
—
166,725
152,086
—
152,086
$
459,706
$
(147,139
)
$
312,567
$
402,869
$
(117,166
)
$
285,703
For the Three Months
For the Six Months
Ended June 30,
Ended June 30,
2003
2002
2003
2002
$
16,887
$
10,280
$
33,735
$
18,204
1,492
182
1,500
182
$
35,495
58,474
34,229
13,560
3,389
695
Table of Contents
(In Thousands, Except Per Share Data)
Sponsorship,
Licensing &
Leases
Other
Total
$
20,374
$
90,935
$
111,309
31,345
177,141
208,486
25,995
140,755
166,750
19,675
93,433
113,108
17,423
37,771
55,194
61,959
23,057
85,016
$
176,771
$
563,092
$
739,863
Table of Contents
(In Thousands, Except Per Share Data)
Table of Contents
(In Thousands, Except Per Share Data)
June 30, 2003
December 31, 2002
Estimated
Estimated
Forward Contracts
Notional
Fair Value
Notional
Fair Value
$
54,557
$
1,935
$
38,824
$
(52
)
54,584
(756
)
24,689
(99
)
June 30, 2003
December 31, 2002
Estimated
Estimated
Forward Contracts
Notional
Fair Value
Notional
Fair Value
$
213,383
$
(8,437
)
$
199,238
$
(2,431
)
1,625
(20
)
7,870
(12
)
Table of Contents
(In Thousands, Except Per Share Data)
Table of Contents
(In Thousands, Except Per Share Data)
Table of Contents
(In Thousands, Except Per Share Data)
Table of Contents
(In Thousands, Except Per Share Data)
Table of Contents
(In Thousands, Except Per Share Data)
Table of Contents
•
the sustainability of our relationships with our customers and of our
customers’ relationships with their cardholders and merchants;
•
substantial and increasingly intense competition worldwide in the
global payments industry and consolidation in the payments industry;
•
the threat of disintermediation from our customers as a result of the actions of certain competitors;
•
global economic and political conditions;
•
technological developments in the global payments industry;
•
potential disruptions of our transaction processing systems by natural disaster or otherwise;
•
potential breach of the security of our systems;
•
risk of our customers’ settlement default and/or non-payment to
merchants and of a reduction in the credit quality of our customers;
•
the outcome or impact of antitrust claims by the U.S. Department of Justice;
•
the outcome or impact of litigation relating to our currency conversion practices;
•
the outcome or impact of the remote merchant litigations;
•
the outcome or impact of legal and regulatory proceedings in various
jurisdictions relating to interchange fees;
•
the outcome or impact of other regulatory initiatives, including those conducted by tax authorities;
•
the outcome or impact of European Union regulations on cross-border payments;
•
risks associated with international operations; and
Table of Contents
•
currency fluctuations and foreign exchange risks.
Table of Contents
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Table of Contents
Sponsorship,
Licensing &
Leases
Other
Total
$
20,374
$
90,935
$
111,309
31,345
177,141
208,486
25,995
140,755
166,750
19,675
93,433
113,108
17,423
37,771
55,194
61,959
23,057
85,016
$
176,771
$
563,092
$
739,863
Table of Contents
Table of Contents
Table of Contents
Table of Contents
of MasterCard Incorporated:
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
July 30, 2003
Table of Contents
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
Refer to Notes 3 and 15 to the Consolidated Financial Statements included herein.
In addition, commencing in October 1996, several class action suits were brought by a number of U.S. merchants — including Wal-Mart Stores, Inc., Sears Roebuck & Co., Inc., The Limited Inc. and Safeway, Inc. — against MasterCard International and Visa U.S.A., Inc. (“Visa”) challenging certain aspects of the payment card industry under U.S. federal antitrust law. Those suits were later consolidated in the U.S. District Court for the Eastern District of New York. The plaintiffs challenged MasterCard’s “Honor All Cards” rule (and a similar Visa rule), which requires merchants who accept MasterCard cards to accept for payment every validly presented MasterCard card. Plaintiffs claimed that MasterCard and Visa unlawfully tied acceptance of debit cards to acceptance of credit cards. In essence, the merchants desired the ability to reject off-line, signature-based debit transactions (for example, MasterCard card transactions) in favor of other payment forms, including on-line, PIN-based debit transactions (for example, Maestro or regional ATM network transactions) which generally impose lower transaction costs for merchants. The plaintiffs also claimed that MasterCard and Visa conspired to monopolize what they characterized as the point-of-sale debit card market, thereby suppressing the growth of regional networks such as ATM payment systems. Plaintiffs alleged that the plaintiff class had been forced to pay unlawfully high prices for debit and credit card transactions as a result of the alleged tying arrangement and monopolization practices.
On February 22, 2000, the District Court granted the plaintiffs’ motion for class certification, as a result of which the case proceeded against MasterCard and Visa as a nationwide class action by all U.S. merchants who accepted MasterCard- and Visa-branded cards during the period from October 1992 to the date of settlement (as described below). On April 1, 2003, the District Court denied MasterCard’s motion for summary judgment. A trial date of April 28, 2003 was set for the start of trial in this litigation.
On April 30, 2003, in lieu of proceeding with trial, MasterCard International signed a Memorandum of Understanding (“MOU”) with plaintiffs establishing an agreement in principle, subject to execution of a settlement agreement and approval by the District Court, to settle all claims resulting from the litigation in return for certain payments and injunctive relief. On June 4, 2003, MasterCard and plaintiffs signed a settlement agreement (the “Settlement Agreement”) that embodies the terms originally set forth in the MOU.
Under the Settlement Agreement, MasterCard has agreed to take the following actions in exchange for a full release of claims against it and its affiliates, officers, employees, stockholders and members:
| • | MasterCard will pay into a settlement fund a total amount of $1,025,000,000 over ten years in accordance with the following schedule: |
| - | $10,000,000 on or before July 4, 2003; | ||
| - | $115,000,000 on or before December 22, 2003; | ||
| - | $100,000,000 per year from and including 2004 through and including 2012, due on or before December 22 of each year. | ||
| MasterCard may request that plaintiffs work with it under certain circumstances to establish a mutually agreeable discount rate in the event that MasterCard desires to make one or more payments on an accelerated basis. In addition, MasterCard has agreed to provide reasonable assistance to the plaintiffs in the event they seek to sell, assign, securitize or obtain financing using the settlement fund. |
31
| • | MasterCard will adopt rules effective January 1, 2004 that will permit merchants to elect not to accept MasterCard-branded debit cards issued in the United States, while still accepting other MasterCard-branded cards (including credit and charge cards), and vice versa. The rules will provide, among other things, that merchants will have the right to make this election under existing acceptance agreements upon thirty days notice to their merchant banks (“acquirers”), and that all acceptance agreements entered into after January 1, 2004 will provide the clear option for unbundled acceptance of MasterCard-branded debit cards. The rules will also require acquirers to provide merchants with clear and conspicuous notice of their rights to unbundled acceptance of MasterCard-branded debit cards. In addition, MasterCard agrees to refrain from bundling acceptance of MasterCard-branded debit cards and other MasterCard-branded cards in the future. These and other provisions of the Settlement Agreement apply to MasterCard-branded debit cards issued in the United States by U.S. member institutions, except cards issued under certain brokerage account deferred debit programs and cards that access funds from a user’s account fourteen days or more after the date of purchase. In addition, the Settlement Agreement provides that if MasterCard offers in the United States a payment program that combines debit functionality with other forms of payment functionality (e.g., credit functionality), merchants will be free to accept the debit functionality only, the other functionality only, or both, in each case consistent with the terms of the Settlement Agreement. | ||
| • | Notwithstanding the foregoing, MasterCard may adopt and enforce an “honor all cards rule” that requires merchants who choose to accept MasterCard-branded debit cards to accept all, or any subset of, MasterCard-branded debit cards, provided that nothing in the Settlement Agreement will require merchants to install a PIN pad in order to continue to accept MasterCard-branded, signature-based debit cards. In addition, MasterCard may enforce an “honor all cards” rule with respect to all, or any subset of, MasterCard-branded cards not coming within the definition of MasterCard-branded debit cards under the Settlement Agreement, including credit and charge cards. | ||
| • | On or before January 1, 2004, MasterCard will implement rules requiring U.S. issuers of MasterCard-branded debit cards to place in a clear and conspicuous manner on the face of those cards the word “Debit” or a similar term, provided it is used consistently and uniformly for all MasterCard-branded debit cards. The rules must require issuers to make the changes within the normal reissuance cycles for existing cards, provided that MasterCard must pass rules requiring that 80 percent of all outstanding MasterCard-branded debit cards be compliant with these requirements by July 1, 2005 and the remainder be compliant by January 1, 2007. MasterCard remains free to adopt a new brand or program name for MasterCard-branded debit cards, provided that this is done in a manner consistent with the terms of the Settlement Agreement. Until MasterCard reasonably believes that it is in full compliance with these identification requirements, neither MasterCard nor acquirers may impose charges on merchants who elect not to accept MasterCard-branded debit cards when transactions with these cards are declined or rejected at the merchant. | ||
| • | MasterCard will adopt rules effective January 1, 2004 requiring MasterCard-branded debit cards issued in the United States to be encoded with unique Bank Identification Numbers (“BINs”) that each merchant and acquirer can use to identify such cards electronically. These rules will apply to all MasterCard-branded debit cards issued after January 1, 2004 and to existing cards within the normal reissuance cycles for such cards, provided that MasterCard must pass rules requiring that 80 percent of all outstanding MasterCard-branded debit cards be compliant with these requirements by July 1, 2005 and the remainder be compliant by January 1, 2007. The rules will also require acquirers to supply merchants with a complete list of BINs upon request. In addition, during the three years following January 1, 2004, MasterCard will use reasonable efforts to attempt to offer an electronic service to enable merchants or acquirers to identify MasterCard-branded debit cards in the event that, in its reasonable business judgment, MasterCard concludes that there is a reasonable business case that justifies this service. |
32
| • | On or before January 1, 2004, MasterCard will provide acquirers, upon request, signage for merchant use in the United States at the point of sale and at the entrance to stores communicating the fact that a given merchant accepts MasterCard-branded debit cards. Any merchants who request such signage agree to use it for a minimum of three months. | ||
| • | On or before August 1, 2003, MasterCard will set a separate interchange rate for MasterCard-branded debit card transactions at members of the plaintiff class that reduces the aggregate effective rate by at least one-third from the aggregate effective rate for these transactions in effect on April 30, 2003. The requirement to impose reduced interchange rates expires on January 1, 2004, following which MasterCard will be free to set interchange rates without restriction as permitted by law. Nothing in the Settlement Agreement prohibits MasterCard from providing negotiated interchange rates to merchants to incent acceptance or promotion of any MasterCard cards or prohibits issuers and acquirers from setting individual interchange rates. To compensate merchants for the time it will take MasterCard to implement the new interchange rates, MasterCard has agreed to pay $25 million into the settlement account in 2003, which amount is included in the payment schedule set forth above. | ||
| • | MasterCard will not enact rules in the United States that prohibit merchants from encouraging or steering MasterCard-branded debit cardholders to use other forms of payment or that prohibit merchants from providing a discount to consumers who pay by any other form of payment. Presently MasterCard does not have any such rules in force. |
The Settlement Agreement also contains certain provisions relating to the administration of the settlement, subject to the orders of the District Court. The settlement fund will be used to pay the costs and expenses of administration of the settlement, including legal fees, taxes, and costs associated with notice and claims administration; MasterCard will not be separately liable for such costs. MasterCard will use reasonable efforts to provide plaintiffs with existing merchant-specific and aggregate transaction data from MasterCard’s databases to be used in connection with class notice and the allocation of the settlement fund. In addition, the Settlement Agreement provides that members of the plaintiff class in existence on June 21, 2002 who did not opt out of the class pursuant to the order of the District Court of that date will not be provided with another opportunity to opt-out of the class. The Settlement Agreement also contains a “most favored nations” clause with respect to the settlement agreement entered into between the plaintiffs and Visa.
MasterCard denies all claims in this litigation and nothing in the MOU or the Settlement Agreement constitutes an admission of wrongdoing or liability by MasterCard. For additional information on the Settlement Agreement, reference is made to the full text of the Settlement Agreement included in this Quarterly Report on Form 10-Q as Exhibit 10.1 hereto.
On June 13, 2003, the District Court granted preliminary approval of the Settlement Agreement. On or about June 26, 2003, plaintiffs’ counsel began to distribute notice to class members giving them the opportunity to object to the settlement. In addition, new merchants who were not previously sent a copy of class notice in 2002 will be given the opportunity to opt-out of the plaintiff class. A hearing on the fairness of the proposed settlement has been set for September 25, 2003. Following any final approval of the settlement by the District Court, there will be a period within which appeals can be taken.
There are consumer class actions pending in three state courts related to the merchant antitrust lawsuit that have been stayed pending developments in this litigation. In addition, several lawsuits have been commenced by merchants who have opted not to participate in the plaintiff class, including Best Buy Stores, CVS, Giant Eagle, Home Depot, Meijer Stores and Toys “R” Us. MasterCard is generally seeking to have these cases transferred to the U.S. District Court for the Eastern District of New York to the extent they are not already pending in that court. Neither the consumer class actions nor the “opt out” merchant litigations are covered by the terms of the Settlement Agreement.
33
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders of MasterCard Incorporated was held on April 23, 2003. The sole item on the agenda for the annual meeting was the election of the following slate of directors:
William F. Aldinger
Hiroshi Arai
Silvio Barzi
Donald L. Boudreau, a non-voting director
William R.P. Dalton
Augusto M. Escalante Juanes
Richard D. Fairbank
Baldomero Falcones Jaquotot
Jan A.M. Hendrikx
Peter Hoch, a non-voting director
Donald H. Layton
Jean-Pierre Ledru
Norman C. McLuskie
Robert W. Pearce
Michael T. Pratt
Robert W. Selander
J.J. (Jac) Verhaegen
Lance L. Weaver
Robert B. Willumstad
Mark H. Wright
At the annual meeting, 70,718,873 votes were cast for the election of this slate of directors and 94,983 votes were cast as “withhold” votes. A total of 29,186,144 votes were not cast in connection with the election of this slate of directors.
The solicitation of proxies for the annual meeting was not required to be conducted in compliance with the requirements of Schedule 14A. Accordingly, stockholders voted in connection with the entire slate of directors noted above and votes were not eligible to be cast for individual directors.
Item 5. Other Information
Stockholder Proposals for 2004 Annual Meeting
Stockholders who intend to present proposals for inclusion in the proxy materials to be distributed by MasterCard in connection with the 2004 annual meeting of stockholders (the “Annual Meeting”) must submit their proposals to the Secretary on or before November 15, 2003. To be considered for presentation at the annual meeting, although not included in the proxy statement, proposals must be received no later than February 1, 2004. All stockholder proposals should be marked for the attention of the Secretary, MasterCard Incorporated, 2000 Purchase Street, Purchase, New York 10577.
34
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Refer to the Exhibit Index herein.
(b) Reports on Form 8-K
On May 7, 2003, the Company filed a Current Report on Form 8-K announcing the performance results for the Company’s MasterCard-branded payment programs for the three months ended March 31, 2003.
On August 1, 2003, the Company filed a Current Report on Form 8-K announcing the performance results for the Company’s MasterCard-branded payment programs for the three and six months ended June 30, 2003.
35
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: August 8, 2003 | MASTERCARD INCORPORATED | |
|
|
||
| (Registrant) | ||
| Date: August 8, 2003 | /s/ ROBERT W. SELANDER | |
|
|
||
|
Robert W. Selander
President and Chief Executive Officer (Principal Executive Officer) |
||
| Date: August 8, 2003 | /s/ CHRIS A. MCWILTON | |
|
|
||
|
Chris A. McWilton
Senior Vice President, Controller and Acting Chief Financial Officer (Principal Financial and Accounting Officer) |
36
EXHIBIT INDEX
The following exhibits are filed as part of this Quarterly Report on Form 10-Q:
| Item | Description | |
|
|
|
|
| 3.1(a) | Amended and Restated Certificate of Incorporation of MasterCard Incorporated (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated June 28, 2002 and filed July 12, 2002 (No. 333-67544)). | |
| 3.1(b) | Amended and Restated Bylaws of MasterCard Incorporated (incorporated by reference to Exhibit 3.1(b) to the Company’s Annual Report on Form 10-K filed March 7, 2003 (No. 333-67544)). | |
| 3.2(a) | Amended and Restated Certificate of Incorporation of MasterCard International Incorporated (incorporated by reference to Exhibit 3.2(a) to the Company’s Quarterly Report on Form 10-Q filed August 14, 2002 (No. 333-67544)). | |
| 3.2(b) | Amended and Restated Bylaws of MasterCard International Incorporated (incorporated by reference to Exhibit 3.2(b) to the Company’s Quarterly Report on Form 10-Q filed August 14, 2002 (No. 333-67544)). | |
| 10.1 | Settlement Agreement, dated as of June 4, 2003, between MasterCard International Incorporated and Plaintiffs in the class action litigation entitled In Re Visa Check/MasterMoney Antitrust Litigation. | |
| 10.2 | $1,200,000,000 Credit Agreement, dated as of June 20, 2003, among MasterCard Incorporated, MasterCard International Incorporated, the several lenders, Citigroup Global Markets Inc., as sole lead arranger, Citibank, N.A., as co-administrative agent, JPMorgan Chase Bank, as co-administrative agent, and J.P. Morgan Securities, Inc., as co-arranger. | |
| 10.3 | Indenture, dated as of August 31, 1999 from MCI O’Fallon 1999 Trust to State Street Bank and Trust Company of Missouri, N.A., relating to the MasterCard Winghaven facility. | |
| 10.4 | Lease, dated as of April 1, 2003, between MasterCard International, LLC, and City of Kansas City, Missouri relating to the Kansas City facility. | |
| 18.1 | Letter re change in accounting principles by PricewaterhouseCoopers LLP dated May 8, 2003 (incorporated by reference to Exhibit 18.1 to the Company’s Quarterly Report on Form 10-Q filed May 14, 2003 (No. 000-50250)). | |
| 31.1 | Certification of Robert W. Selander, President and Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | Certification of Chris A. McWilton, Senior Vice President, Controller and Acting Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
37
Item
Description
32.1
Certification of Robert W. Selander, President and Chief
Executive Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
32.2
Certification of Chris A. McWilton, Senior Vice President,
Controller and Acting Chief Financial Officer, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
38
Exhibit 10.1
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - - - x
MASTER FILE NO. CV-96-5238 IN RE VISA CHECK/MASTERMONEY (Gleeson, J.) (Mann, M.J.) ANTITRUST LITIGATION
- - - - - - - - - - - - - - - - - - - x
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (the "Settlement Agreement" or "Agreement") is made as of the 4th day of June 2003, by Defendant MasterCard International, Incorporated ("MasterCard") and Plaintiffs in In Re Visa Check/MasterMoney Antitrust Litigation, No. 96-CV-5238 (JG), a Class Action (the "Class Action" or "Action"), on behalf of each and every member of the Class defined herein (collectively, the "Plaintiffs" or "Class Members").
WHEREAS the first of the complaints comprising this Action was filed on October 25, 1996;
WHEREAS, by Order dated December 27, 1996, the Court (i) consolidated the original complaint with numerous additional complaints filed subsequent to the filing of the original complaint alleging similar or identical claims against MasterCard and Visa U.S.A. Inc. ("Visa"), and (ii) designated the law firms of Constantine & Partners ("C&P") and Hagens Berman ("HB") as Plaintiffs' Co-Lead Counsel.
WHEREAS the operative complaint in this Action, the Second Amended Consolidated Class Action Complaint and Jury Demand (the "Complaint"), was filed on May 26, 1999;
WHEREAS, the Complaint alleges, among other things, that MasterCard has violated the Sherman Act (15 U.S.C. Sections. 1 and 2) based on the following claims, among others: (i) MasterCard has illegally tied merchant acceptance of its debit card services to merchant
acceptance of its credit card services under MasterCard's so-called "Honor All Cards" rule, (ii) MasterCard, together with Visa, have used their respective tying arrangements, and other anticompetitive conduct, in an attempt to monopolize the market consisting of debit card services to merchants; (iii) MasterCard, together with Visa, have conspired to monopolize the debit card services market; and (iv) MasterCard's anticompetitive conduct has resulted in merchants paying higher interchange fees for accepting MasterCard card transactions;
WHEREAS, this Action involved the production of more than five (5) million pages of document discovery and approximately four-hundred (400) depositions taken over five-hundred (500) days;
WHEREAS, by Order dated February 22, 2000, the Court certified this Action as a class action under Rules 23(b)(2) and 23(b)(3) of the Federal Rules of Civil Procedure;
WHEREAS, by decision dated October 17, 2001, the United States Court of Appeals for the Second Circuit affirmed the Court's Order certifying this Action as a class action;
WHEREAS, on June 10, 2002, the United States Supreme Court denied Visa and MasterCard's petition for a writ of certiorari of the Second Circuit's decision affirming the Court's Order certifying this Action as a class action;
WHEREAS, by Order dated April 1, 2003, the Court denied in their entirety Visa and MasterCard's motions for summary judgment, and granted in part and denied in part Plaintiffs' motion for summary judgment.
WHEREAS, by Order dated April 1, 2003, the Court denied MasterCard's motion for severance or a separate trial;
WHEREAS, on April 30, 2003, Plaintiffs and MasterCard entered into a Memorandum of Understanding regarding the proposed settlement of this Action as against MasterCard;
WHEREAS, MasterCard denies each and every one of Plaintiffs' allegations of unlawful conduct and damages and has asserted a number of defenses to Plaintiffs' claims;
WHEREAS, Plaintiffs and MasterCard agree that this Settlement Agreement shall not be deemed or construed to be an admission or evidence of any violation of any statute or law or of any liability or wrongdoing by MasterCard or of the truth or merit, or lack of truth or merit, of any of the claims or allegations alleged in the Class Action;
WHEREAS, arm's length settlement negotiations have taken place between counsel for Plaintiffs and MasterCard, and this Settlement Agreement, including its exhibits, which embodies all of the terms and conditions of the Settlement between MasterCard and the Plaintiffs, has been reached, subject to the final approval of the Court;
WHEREAS, Plaintiffs' Counsel have concluded, after extensive discovery and investigation of the facts and after carefully considering the circumstances of the Class Action and the applicable law, that the terms and conditions of this Settlement Agreement are fair, reasonable, and adequate to Plaintiffs, and in their best interests, and have agreed to settle the claims raised in the Action after considering (i) the substantial benefits that Plaintiffs will receive under the Settlement Agreement, and (ii) the burden, expense and uncertainties of litigation, and particularly complex litigation such as this Action;
WHEREAS, MasterCard has concluded, despite its belief that it is not liable for the claims asserted and has good defenses thereto, that it will enter into this Settlement Agreement to avoid the further expense, inconvenience and burden of this protracted litigation, and the
distraction and diversion of its personnel and resources, and thereby to put to rest this controversy with valued business customers, and to avoid the risks inherent in uncertain complex litigation;
NOW THEREFORE, without any admission or concession on the part of Plaintiffs of any lack of merit of the Action whatsoever, and without any admission or concession of any liability or wrongdoing or lack of merit in the defenses whatsoever by MasterCard, it is hereby AGREED by the undersigned, on behalf of MasterCard and Plaintiffs, that the Class Action and all claims of the Plaintiffs be settled, compromised and dismissed on the merits and with prejudice as to MasterCard, and, except as hereinafter provided, without costs as to Plaintiffs or MasterCard, subject to the approval of the Court, on the following terms and conditions:
ADDITIONAL DEFINITIONS
1. As used herein, and for the purposes of the Settlement Agreement only, the following additional terms shall be defined as set forth below:
a. "Authorized Claimant" means a Class Member who is entitled to receive a distribution from the Net Settlement Fund as provided for in the Plan of Allocation of Settlement Funds.
b. "Claims Administrator" means the firm of Garden City Group, Inc., which shall administer the Settlement and the provision of Notice under Plaintiffs' Co-Lead Counsel's supervision.
c. "Class," as defined in the Court's class certification Order dated February 22, 2000, means all persons and business entities who have accepted MasterCard and/or Visa credit cards and therefore have been required to accept MasterCard branded and/or Visa branded
debit cards under the challenged tying arrangements at any point during the Class Period within the continental United States (and Alaska and Hawaii). Excluded from the Class are any putative class members who previously excluded themselves from this Action by filing a request for exclusion in accordance with the requirements set forth in the Consent Order Concerning Notice of Pendency of Class Action dated June 21, 2002, and the Notice of Pendency previously provided to Class Members.
d. "Class Member" means any member of the Class.
e. "Class Period" means the period of time from October 25, 1992 through the date of the first publication of Notice, expected to be on or around June 21, 2003.
f. "Effective Date" means the date of Final Settlement Approval as specified in paragraph 26 below.
g. "Fee and Expense Application" means the application submitted by Plaintiffs' Co-Lead Counsel seeking Plaintiffs' attorneys' fees, expenses and costs.
h. "Fee Award" means Plaintiffs' attorneys' fees, expenses and costs as may be awarded by the Court to Plaintiffs and their counsel.
i. "Final Settlement Approval" means final approval of the Settlement as specified in paragraph 26 below.
j. "Gross Settlement Fund" means the Settlement Fund, and any interest earned thereon.
k. "MasterCard Branded Product" means any MasterCard POS Debit Device or Other MasterCard Product.
l. "MasterCard POS Debit Device" means any MasterCard
branded consumer product, device, program, or service issued within the
continental United States (and Hawaii and Alaska) by United States member
financial institutions, that, when presented for payment in the United States,
accesses, debits, holds or settles funds from the consumer's demand deposit or
asset account. Attached hereto as Exhibit A is a list of all current MasterCard
products, devices, programs, or services that, as determined by MasterCard
through its reasonable efforts, qualify as a MasterCard POS Debit Device.
Notwithstanding the foregoing, the term MasterCard POS Debit Device shall not
include (i) any product, device, program, or service that accesses, debits,
holds or settles funds from the user's demand deposit or asset account fourteen
(14) days or more after the date of the purchase, (ii) any cards issued under
the specific brokerage account deferred debit programs listed on Exhibit B, or
(iii) any cards issued under the specific brokerage account deferred debit
programs listed on Exhibit H to the Visa Settlement Agreement to the extent that
MasterCard and any of its issuers convert the cards in such programs to
MasterCard branded cards, and so long as those cards are issued under the same
brokerage account deferred debit card program.
m. "Net Settlement Fund" means the Gross Settlement Fund, less the amount of the Fee Award and Court-approved expenses, taxes, and costs of Notice and administration.
n. "Notice" means the notice of this Settlement, attached hereto as Exhibits C and D, that will be sent by First Class Mail to all Class Members and published in various periodicals, respectively, in the manner provided for in the Notice Plan.
o. "Notice Plan" means the method by which Notice will be sent to all Class Members as detailed in the Stipulation and Order for Providing Notice of Settlement, attached hereto as Exhibit E.
p. "Order and Final Judgment" means the proposed Order and Final Judgment to be entered by the Court approving the Settlement, attached hereto as Exhibit F.
q. "Other MasterCard Product" means any MasterCard branded product, device, program, or service that does not fall within the definition of MasterCard POS Debit Device. Attached as Exhibit G hereto is a list of all current MasterCard products, devices, programs, or services that, as determined by MasterCard through its reasonable efforts, qualify as an Other MasterCard Product.
r. "Plaintiffs' Co-Lead Counsel Signatories" means the individual attorneys from C&P and HB who are the signatories to this Agreement.
s. "Plaintiffs' Counsel" means Plaintiffs' Co-Lead Counsel and other counsel representing any of the named Plaintiffs in this Action.
t. "Plan of Allocation of Settlement Funds" means the terms and procedures for allocating the Net Settlement Fund among, and distributing the Net Settlement Fund to, Authorized Claimants as set forth in the Notice, or such other plan of allocation as the Court shall approve.
u. "Preliminary Approval Order" means the proposed order preliminarily approving the Settlement and directing Notice to the Class, attached hereto as Exhibit H.
v. "Released Parties" means MasterCard and any past, present or future officers, directors, stockholders, member financial institutions, agents, employees, legal
representatives, trustees, parents, associates, affiliates, subsidiaries, divisions, partners, heirs, executors, administrators, purchasers, predecessors, successors, assigns, and any of their legal representatives.
w. "Released Claims" means only the claims of the Releasing Parties from which the Released Parties will be released and discharged upon Final Settlement Approval as specified in paragraphs 26 and 30 below.
x. "Releasing Parties" means the named Plaintiffs and any Class Members who have not timely excluded themselves from the Class Action -- including any of their past, present or future officers, directors, stockholders, agents, employees, legal representatives, trustees, parents, associates, affiliates, subsidiaries, divisions, partners, heirs, executors, administrators, purchasers, predecessors, successors and assigns -- whether or not they object to the Settlement and whether or not they make a claim upon or participate in the Settlement Fund, whether directly, representatively, derivatively or in any other capacity.
y. "Settlement" means the settlement contemplated by this Agreement.
z. "Settlement Fund" means the amounts to be paid into the Settlement Fund Account by MasterCard as specified in paragraph 3 below.
aa. "Settlement Fund Account" means (i) prior to the Effective Date, a joint interest-bearing account at such financial institution as the Settling Parties may agree into which MasterCard will make the Settlement Fund payments, and (ii) after the Effective Date, an account at such financial institution as Plaintiffs' Co-Lead Counsel designate into which MasterCard will make the Settlement Fund payments, including without limitation, a trust account.
bb. "Settling Parties" means Plaintiffs and MasterCard.
TERMS AND CONDITIONS
2. The Settling Parties agree to the following terms and conditions in full and final disposition of the Action as against MasterCard, and any and all Released Claims as against all Released Parties.
PAYMENT OF SETTLEMENT FUNDS
3. (a) MasterCard shall pay the Settlement Fund Account, in settlement of the claims against it, a total of one billion and twenty five million dollars ($1,025,000,000), which includes the payment referenced in paragraph 8(b) below, to be made by wire transfer under the following schedule:
Payment One: ten million dollars ($10,000,000) on or before July 4, 2003;
Payment Two: one-hundred fifteen million dollars ($115,000,000) on or before December 22, 2003;
Payment Three: one-hundred million dollars ($100,000,000) on or before December 22, 2004;
Payment Four: one-hundred million dollars ($100,000,000) on or before December 22, 2005;
Payment Five: one-hundred million dollars ($100,000,000) on or before December 22, 2006;
Payment Six: one-hundred million dollars ($100,000,000) on or before December 22, 2007;
Payment Seven: one-hundred million dollars ($100,000,000) on or before December 22, 2008;
Payment Eight: one-hundred million dollars ($100,000,000) on or before December 22, 2009;
Payment Nine: one-hundred million dollars ($100,000,000) on or before December 22, 2010;
Payment Ten: one-hundred million dollars ($100,000,000) on or before December 22, 2011; and
Payment Eleven: one-hundred million dollars ($100,000,000) on or before December 22, 2012.
Nothing in this Agreement will require the Settlement Fund Account to be funded or established before the Agreement is submitted to the Court for preliminary approval.
(b) Notwithstanding the payment schedule set forth in subparagraph (a), MasterCard may request that Plaintiffs work with MasterCard, to the extent it does not interfere with Plaintiffs' efforts to sell, assign, securitize, or obtain financing using the Settlement Fund as set forth in subparagraph (f) below, to establish a mutually agreeable discount rate to apply to any prepayment(s) in the event that MasterCard desires to make one or more payments on an accelerated basis.
(c) Disbursements of funds from the Settlement Fund Account shall require a signature from each of the Plaintiffs' Co-Lead Counsel Signatories, and a signature from a partner of Simpson Thacher & Bartlett ("ST&B"). Any requests for disbursements of funds shall be accompanied by appropriate documentation supporting the expenditures. Plaintiffs' Co-Lead Counsel and ST&B agree to hold the funds in the Settlement Fund Account for the purposes set forth herein. Upon the Effective Date of the Settlement, ST&B will resign as a co-signatory on the Settlement Fund Account. Thereafter, Plaintiffs' Co-Lead Counsel Signatories shall be the sole signatories on the Settlement Fund Account.
(d) The Gross Settlement Fund shall be used to pay (i) the Notice and administration costs specified in paragraph 11 below, (ii) the Fee Award specified in paragraph 14 below, (iii) any additional Plaintiffs' attorneys' fees, costs and expenses incurred for the benefit of the Class and approved by the Court including, without limitation, any fees, costs, and expenses incurred in obtaining Final Settlement Approval or administering the Settlement, and (iv) any taxes owed on any income from the funds held in the Settlement Fund Account as well as expenses and costs incurred in connection with the payment of such taxes. The balance of the funds of the Settlement Fund Account shall be the Net Settlement Fund which shall be distributed to the Authorized Claimants.
(e) The Settling Parties agree that the Settlement Fund Account is intended to be a Qualified Settlement Fund within the meaning of Treasury Regulation Section 1.468B-1. All taxes with respect to the earnings on the funds in the Settlement Fund Account shall be the responsibility of the Settlement Fund Account. Plaintiffs' Co-Lead Counsel shall administer the Settlement Fund Account. Plaintiffs' Co-Lead Counsel may designate the Claims Administrator to administer the Settlement, subject to Court approval. It shall be the responsibility of the Plaintiffs' Co-Lead Counsel, with the cooperation of MasterCard as set forth in paragraphs 46 and 47 below, to establish and maintain the Settlement Fund Account as a Qualified Settlement Fund within the meaning of Treasury Regulation Section 1.468B-1.
(f) Nothing in this Agreement shall prevent Plaintiffs from selling, assigning, or securitizing the Settlement Fund, or using the Settlement Fund to obtain financing. In the event Plaintiffs seek to sell, assign, securitize, or in any way obtain
financing using the Settlement Fund, they must apply to the Court for approval,
upon notice to MasterCard. MasterCard will not oppose any such application and
will provide reasonable assistance to Plaintiffs in the event Plaintiffs seek to
sell, assign, securitize, or obtain financing using the Settlement Fund.
Plaintiffs shall reimburse MasterCard from the Settlement Fund for MasterCard's
reasonable costs in connection with such assistance. Such assistance shall be
limited to reasonably cooperating in providing information necessary for credit
rating purposes. MasterCard agrees to deliver Settlement Fund payments to either
(i) the Settlement Fund Account, or (ii) an account of any trustee, paying agent
or other entity designated by Plaintiffs' Co-Lead Counsel in order to effect the
sale, assignment, securitization or the use for financing of the Settlement
Fund, provided, however, that any such account referenced in (ii) above shall
also qualify as, and shall not disqualify the Settlement Fund Account as, a
Qualified Settlement Fund within the meaning of Treasury Regulation Section
1.468B-1. Such payment instructions may be modified by Plaintiffs' Co-Lead
Counsel from time to time as may be required and upon reasonable notice to
MasterCard (provided that any new account designated shall also qualify as, and
shall not disqualify the Settlement Fund Account as, a Qualified Settlement Fund
within the meaning of Treasury Regulation Section 1.468B-1).
MASTERCARD'S COMMITMENTS
Unbundling of Debit and Credit
4. (a) MasterCard shall adopt rules in the continental United States (and Alaska and Hawaii) that will, effective January 1, 2004, unbundle, and MasterCard agrees not to bundle in the future, merchant acceptance of MasterCard POS Debit Devices and merchant acceptance of any Other MasterCard Products. "Unbundle" as
used herein means that MasterCard shall not require that as a condition of accepting Other MasterCard Products, merchants must accept MasterCard POS Debit Devices, and vice versa.
(b) These rules shall provide that, commencing January 1, 2004, with respect to any contract existing on that date under which a merchant accepts MasterCard Branded Products: (i) merchants may choose to stop accepting MasterCard POS Debit Devices by providing no less than thirty (30) days advance written notice to their acquirers (which may be given prior to January 1, 2004); and (ii) merchants may choose to stop accepting Other MasterCard Products by providing no less than thirty (30) days advance written notice to their acquirers (which may be given prior to January 1, 2004). The rules shall further provide that merchants who want to begin accepting MasterCard Branded Products after January 1, 2004 will be free to accept MasterCard POS Debit Devices only, Other MasterCard Products only, or both MasterCard POS Debit Devices and Other MasterCard Products.
(c) These rules shall also require that any contract used by an acquirer with any merchant shall provide the clear option (including a statement of applicable merchant discount rates by product) for the merchant to elect to accept MasterCard POS Debit Devices, Other MasterCard Products, or both.
(d) MasterCard shall require that, from August 1, 2003
through January 1, 2004, acquirers provide, in any regular communications with
merchants, but no more often than monthly, clear and conspicuous notice to
merchants that as of January 1, 2004 they will have the right to (i) accept
MasterCard POS Debit Devices without accepting Other MasterCard Products, and
(ii) accept Other MasterCard Products without
accepting MasterCard POS Debit Devices. On or before July 1, 2003, MasterCard will provide Plaintiffs' Co-Lead Counsel an exemplar of its communication to its acquirers requiring compliance with this provision.
(e) Nothing herein shall prevent MasterCard from adopting and enforcing an Honor All Cards rule that requires merchants who choose to accept any MasterCard POS Debit Device to accept all, or any subset of, MasterCard POS Debit Devices. However, nothing in this Agreement requires any merchant to purchase or install a PIN pad in order to continue to accept MasterCard POS Debit Devices which are authorized by signature. The parties agree that nothing in this Agreement or otherwise, including the Honor All Cards rule for MasterCard POS Debit Devices contemplated in this paragraph, permits MasterCard to apply any honor all cards rule to require merchants to install a PIN pad in order to continue accepting MasterCard POS Debit Devices which are authorized by signature.
(f) Nothing herein shall prevent MasterCard from adopting and enforcing an Honor All Cards rule that requires merchants who choose to accept any Other MasterCard Product to accept all, or any subset of, Other MasterCard Products.
(g) On or about June 30, 2003, December 31, 2003, June 30, 2004, and December 31, 2004, MasterCard shall provide Plaintiffs' Co-Lead Counsel with written notice of any MasterCard products, devices, programs, or services that MasterCard is then offering or has announced it will offer to issuers that would qualify as either a MasterCard POS Debit Device or an Other MasterCard Product (or a multi-function MasterCard Branded Product as described below) that are not identified on Exhibits A and G as either a MasterCard POS Debit Device or an Other MasterCard Product.
(h) If MasterCard offers in the United States a MasterCard Branded Product that incorporates the payment functions of both a MasterCard POS Debit Device and an Other MasterCard Product, a merchant will be free to accept the MasterCard POS Debit Device payment function only, the Other MasterCard Product payment function only, or both the MasterCard POS Debit Device and Other MasterCard Product payment functions, consistent with the provisions of this Agreement. Any such multi-function MasterCard Branded Product will satisfy, so far as practicable, the requirements for the clear and conspicuous identifier and unique electronic identity, consistent with the terms set forth in paragraphs 5 and 7 below, that would enable merchants to identify any such MasterCard Branded Product and its different payment functions. MasterCard shall provide Plaintiffs' Co-Lead Counsel within sixty (60) days before it is implemented written notice of the unique identifier (e.g., "Relationship Card") that would be used to denote the multi-function nature of such a product.
Clear and Conspicuous Debit Identifier
5. (a) On or before January 1, 2004, MasterCard shall implement rules requiring issuers in the United States to place on the face of a MasterCard POS Debit Device the word "Debit" in clear and conspicuous letters, or another term, name or mark, so long as the word, term, name or mark is used consistently and uniformly for all MasterCard POS Debit Devices. MasterCard shall provide Plaintiffs' Co-Lead Counsel within 30 days before they become effective, and in no event later than December 1, 2003 (i) a copy of the rules adopted by MasterCard that implement the design requirements of this paragraph, and (ii) an exemplar of a MasterCard POS Debit Device that complies with the rules.
(b) The rules specified in subparagraph 5(a) shall require that such design changes occur upon issuance of new MasterCard POS Debit Devices, and within the normal reissuance cycles of existing cards, provided however that MasterCard will cause to have 80 percent of outstanding MasterCard POS Debit Devices in compliance herewith by July 1, 2005, and 100 percent in compliance by January 1, 2007. MasterCard shall provide Plaintiffs' Co-Lead Counsel written certification that upon its reasonable belief the 80 percent and 100 percent compliance requirements have been reached and the basis thereof.
(c) In lieu of using the debit identifier on MasterCard POS Debit Devices as described in paragraph (a) above, MasterCard retains the right at any time to adopt a new debit identifier for all devices herein defined as MasterCard POS Debit Devices, so long as these devices comply with the design requirements of subparagraph (a) above, and all other terms of this Agreement, and MasterCard provides Plaintiffs' Co-Lead Counsel within sixty (60) days before it is implemented both (i) written notice of any such debit identifier, and (ii) an exemplar of a MasterCard POS Debit Device that carries the new debit identifier.
(d) In lieu of using the MasterCard brand on MasterCard POS Debit Devices, MasterCard retains the right to adopt a new brand for all or any devices herein defined as MasterCard POS Debit Devices, so long as these devices comply with the design requirements of subparagraphs (a) and (b) above, and all other terms of this Agreement, and MasterCard provides Plaintiffs' Co-Lead Counsel within sixty (60) days before it is implemented both (i) written notice of any such brand, and (ii) an exemplar of a MasterCard POS Debit Device that carries the new brand.
Signage
6. On or before January 1, 2004, MasterCard shall deliver signage to acquirers, upon request, for merchant usage in the continental United States (and Alaska and Hawaii) at the point of sale and at the entrance to the store, communicating the fact that a given merchant accepts MasterCard POS Debit Devices. Any merchant who requests such signage agrees to use it for such purposes for a minimum of three (3) months. MasterCard shall provide Plaintiffs' Co-Lead Counsel an exemplar of such signage by November 1, 2003.
Electronic Identification
7. (a) MasterCard shall adopt rules, effective January 1, 2004, requiring that MasterCard POS Debit Devices issued in the continental United States (and Alaska and Hawaii) not already having one be given unique Bank Identification Numbers ("BINs"), which each merchant and acquirer can utilize, with currently available technology, to distinguish MasterCard POS Debit Devices from Other MasterCard Products. This BIN shall be encoded in the magnetic stripe and any other electronic component of the card used for authorization and/or settlement (e.g., a chip) in such a way that all electronic point-of-sale terminals are, or can reasonably be made, capable of reading the electronic information. MasterCard shall provide a copy of these rules to Plaintiffs' Co-Lead Counsel no later than November 15, 2003.
(b) These rules shall apply to any MasterCard POS Debit Devices issued after January 1, 2004, and to MasterCard POS Debit Devices issued before January 1, 2004 upon their reissuance in accordance with normal reissuance cycles, provided however that MasterCard will require issuers to have 80 percent of outstanding
MasterCard POS Debit Devices in compliance herewith by July 1, 2005, and 100 percent in compliance by January 1, 2007. MasterCard shall provide Plaintiffs' Co-Lead Counsel written certification that upon its reasonable belief the 80 percent and 100 percent compliance requirements have been reached and the basis thereof.
(c) These rules shall also provide that MasterCard shall require its acquirers to make available to merchants, upon merchants' request and in any form they reasonably request, a complete list of the BIN numbers that apply to all MasterCard POS Debit Devices, updated consistent with the current practice of MasterCard's acquirers.
(d) Commencing July 1, 2004, for the period ending January 1, 2007, MasterCard shall use reasonable efforts to attempt to offer an electronic service to enable merchants or acquirers to identify MasterCard POS Debit Devices in the event that, exercising its reasonable business judgment, MasterCard concludes that there is a reasonable business case that justifies such service. In the event of a dispute as to whether MasterCard has exercised its reasonable business judgment, the question shall be determined by the Court or by such arbitrator as the Court may designate.
(e) Until the time that MasterCard has, based on its reasonable belief, reached 100 percent compliance with the design requirements provided in paragraph 5 above, merchants that choose not to accept MasterCard POS Debit Devices and that use any of the above methods for electronically identifying MasterCard POS Debit Devices shall not incur any charges by either MasterCard or its acquirers for a MasterCard POS Debit Device transaction that is declined or rejected because the merchant does not accept MasterCard POS Debit transactions.
Interchange Rate Reductions
8. (a) By August 1, 2003, MasterCard shall set one or more
off-cycle, separate interchange rates for all MasterCard POS Debit Device
transactions at Class Members that reduce the aggregate effective rate by at
least one-third from the aggregate effective rate for these transactions in
effect on April 30, 2003. On January 1, 2004 the requirement in the preceding
sentence shall terminate, and MasterCard shall be free to set interchange rates
without restriction after that date, as otherwise permitted by law. On or before
July 1, 2003, MasterCard will provide Plaintiffs' Co-Lead Counsel with a
schedule that contains the actual interchange rates that will take effect by
August 1, 2003 for each type and category of MasterCard POS Debit Device
transaction at Class Members and the rates for these transactions in effect on
April 30, 2003. MasterCard will provide notice to acquirers forty-five (45) days
in advance of the first change in interchange rates for MasterCard POS Debit
Device transactions occurring on or after January 1, 2004, and MasterCard will
require its acquirers to provide written notice of such changes to merchants in
the acquirers' next regular communication with their merchants. In the
alternative, MasterCard will provide Plaintiffs' Co-Lead Counsel with thirty
(30) days advance written notice of such interchange rate changes. Nothing
contained in this Agreement shall be deemed to prohibit MasterCard from
providing negotiated interchange rates to merchants to incent acceptance or
promotion of any MasterCard Branded Products or prevent issuers and acquirers
from setting individual rates.
(b) In addition, as provided for in the payment schedule set forth in paragraph 3 above, in recognition of the interim period between the execution of the
Memorandum of Understanding on April 30, 2003, and August 1, 2003, on or before December 22, 2003, MasterCard shall pay the Settlement Fund Account the sum of twenty-five million dollars ($25,000,000).
Steering
9. MasterCard will not enact any rules in the continental United States (and Alaska and Hawaii) that prohibit merchants from encouraging or steering MasterCard POS Debit Device cardholders to use other forms of payment or that prohibit merchants from providing a discount to consumers who pay by any other form of payment.
Null and Void If No Final Settlement Approval
10. In the event there is no Final Settlement Approval, then the foregoing provisions of paragraphs 4 through 9 relating to MasterCard's commitments will become null and void pursuant to the terms of paragraph 28 below.
NOTICE AND ADMINISTRATION COSTS
11. The Gross Settlement Fund shall be used to pay the costs and expenses associated with the administration of the Settlement, including without limitation, the costs of identifying Class Members and effecting the mailing and publishing of Notice, the administrative expenses incurred and fees charged by the Claims Administrator in connection with providing Notice and administering the distribution of the Net Settlement Fund, the payment of any taxes on the earnings of the Gross Settlement Fund, and the provision of any educational materials to merchants and consumers explaining the terms and conditions of this Agreement. If Plaintiffs' Co-Lead Counsel determine that such payments are necessary prior to the Effective Date, ST&B will not unreasonably withhold its signature on such expenditures from the Settlement Fund
Account, and Plaintiffs' Co-Lead Counsel, or at their direction, the Claims Administrator, may make such expenditures without Court approval. In the event that ST&B is requested by Plaintiffs' Co-Lead Counsel, under this paragraph or paragraph 3(c), to provide its signature to authorize payment for notice or administration expenses or for any other expenditure, and ST&B so provides its signature, then Plaintiffs (solely through the Settlement Fund) will indemnify and hold harmless MasterCard and ST&B from and against any and all claims asserted by any person arising out of such payment. In the event that ST&B unreasonably withholds its signature, then MasterCard will indemnify and hold harmless Plaintiffs and Plaintiffs' Co-Lead Counsel from and against any and all claims asserted by any person arising out of the failure to provide such payment.
PLAN OF ALLOCATION OF SETTLEMENT FUNDS
12. (a) On or before August 18, 2003, Plaintiffs' Co-Lead Counsel shall file a motion for approval of a Plan of Allocation of Settlement Funds that in their opinion will fairly and adequately address the questions of settlement administration, any claims requirements, and allocation of the Net Settlement Fund among the Class Members. MasterCard shall not directly or indirectly take any position with respect to any plan of allocation or amount of distribution to any Class Member, counsel, expert or consultant, or any other person in connection with this Class Action.
(b) Except as otherwise expressly provided in this Settlement Agreement, in no event shall any portion of the Gross Settlement Fund be distributed or revert to MasterCard, under any circumstances.
(c) After Final Settlement Approval, the amounts remaining in the Gross Settlement Fund shall be distributed as ordered by the Court.
13. In no event shall MasterCard have any liability or responsibility with respect to the distribution and administration of the Gross Settlement Fund, including, but not limited to, the costs and expenses of such distribution and administration, and the costs and expenses of Notice. The Plan of Allocation of Settlement Funds is a matter separate and apart from this Settlement Agreement, and any decision by the Court concerning the plan of distribution shall not effect the validity or finality of the Settlement as to MasterCard.
ATTORNEYS' FEES AND EXPENSES
14. On or before August 18, 2003, Plaintiffs' Co-Lead Counsel shall file a Fee and Expense Application for distribution from the Gross Settlement Fund of a Fee Award consisting of an award of Plaintiffs' attorneys' fees and reimbursement of expenses. Plaintiffs' Co-Lead Counsel reserves the right to make additional applications for fees and expenses incurred in obtaining Final Settlement Approval and administering the Settlement. C&P shall allocate the Fee Award among Plaintiffs and their counsel, and with respect to Plaintiffs' attorneys' fees, in a manner in which they in good faith believe reflects the contributions of Plaintiffs' Counsel to the prosecution and settlement of the Action. MasterCard agrees that it shall not directly or indirectly take any position on Plaintiffs' Fee and Expense Application.
15. MasterCard shall not be liable for any costs, fees or expenses of any of Plaintiffs' respective attorneys, experts, advisors, agents and representatives. All such costs, fees and expenses, including the costs and expenses of the class representatives, as approved by the Court, shall be paid out of the Gross Settlement Fund. Except as provided in paragraphs 3 and 11 relating to MasterCard's obligation to reasonably
consent to the distribution of settlement funds for the payment of Notice and administration costs prior to the Effective Date, MasterCard shall not have any liability with respect to the distribution and administration of the Gross Settlement Fund, including, but not limited to, the costs and expenses of such distribution and administration or to the giving of Notice, including, but not limited to, the costs and expenses associated with identifying Class Members.
16. Upon the Court's entry of the Order and Final Judgment, Plaintiffs' Co-Lead Counsel may make an application to the Court for immediate payment of the Fee Award. MasterCard will take no position on such an application, subject to Plaintiffs' counsel's obligation to pay back any such amount if, or to the extent that, the Fee Award is amended, reversed on appeal, or does not become final.
17. The procedure for the allowance or disallowance by the Court of any applications for Plaintiffs' attorneys' fees, costs and expenses to be paid out of the Gross Settlement Fund, are distinct from the Settlement set forth in the Settlement Agreement, and are to be considered by the Court separately from the Court's consideration of the fairness, reasonableness and adequacy of the Settlement. Any order or proceedings relating to any fee and expense application, or any appeal from any order relating thereto or reversal or modification thereof, shall not operate to terminate or cancel the Settlement Agreement, or affect or delay the finality of the Order and Final Judgment approving the Settlement Agreement.
BEST EFFORTS TO EFFECTUATE THIS SETTLEMENT
18. The Settling Parties and their counsel agree to recommend approval of this Settlement Agreement by the Court and to undertake their best efforts, including all steps
and efforts contemplated by this Settlement Agreement and any other steps and efforts that may be necessary or appropriate, by order of the Court or otherwise, to secure Final Settlement Approval and otherwise carry out the terms of this Settlement Agreement.
19. MasterCard will cooperate with Plaintiffs by using reasonable efforts to provide Plaintiffs existing merchant specific and aggregate transaction data from MasterCard's databases to be used in connection with the allocation of the Net Settlement Fund (with all reasonable costs incurred under this paragraph and paragraph 23 to be paid out of the Settlement Fund Account and capped at $35,000).
MOTION FOR PRELIMINARY APPROVAL
20. By June 9, 2003, Plaintiffs shall submit to the Court a motion for preliminary approval of the Settlement, and for a stay of all proceedings in the Class Action against MasterCard until the Court has approved the Settlement and entered the Order and Final Judgment. MasterCard will not oppose this motion. This motion shall include (i) the proposed form of Order and Final Judgment, attached hereto as Exhibit F, and (ii) the proposed form of Preliminary Approval Order preliminarily approving this Settlement Agreement, attached hereto as Exhibit G. By June 9, 2003, Plaintiffs shall also submit to the Court for approval a Stipulation and Order for Providing Notice of Settlement, attached hereto as Exhibit E, which contains the Notice Plan and the forms of mail and publication Notice, approved by MasterCard (which approval shall not be unreasonably withheld).
NOTICE TO CLASS
21. In the event that the Court preliminarily approves the Settlement on or before June 16, 2003, and as more fully set forth in the Notice Plan, Plaintiffs shall
pursuant to Rule 23 of the Federal Rules of Civil Procedure (i) on or before July 5, 2003, provide Class Members who have been identified by reasonable means, notice of the Settlement by first class mail, unless circumstances beyond the control of Plaintiffs prevent Plaintiffs from providing such mail notice, in which case Plaintiffs shall take all necessary and appropriate steps to insure that such notice is provided as soon as possible pursuant to an order of the Court approving Notice, and (ii) on or before August 4, 2003, provide Class Members notice by publication in a Notice Plan designed to have at least the same reach as that approved by the parties and the Court and implemented in the Fall of 2002 for the purposes of providing Class Members with Notice of Pendency.
22. The Settling Parties shall cooperate in effecting Notice to the Class that satisfies the requirements of due process and Rule 23 of the Federal Rules of Civil Procedure.
23. MasterCard will cooperate with Plaintiffs by using reasonable efforts to provide Plaintiffs existing merchant specific and aggregate data from MasterCard's databases to be used in connection with providing Notice to the Class (with all reasonable costs incurred under this paragraph and paragraph 19 to be paid out of the Settlement Fund Account and capped at $35,000).
NO OPT-OUT RIGHTS
24. Class Members who were in existence as of June 21, 2002 and did not exclude themselves from the Class pursuant to the Consent Order Concerning Notice of Pendency of Class Action dated June 21, 2002 will not be provided another opportunity to opt-out. This provision shall not be amended in whole or in part without the consent of both Plaintiffs and MasterCard.
MOTION FOR ENTRY OF FINAL JUDGMENT
25. If, after Notice to the Class, the Court approves this Settlement Agreement, then Plaintiffs shall seek, and MasterCard will not oppose, entry of an Order and Final Judgment, in the form attached hereto as Exhibit F, which among other things:
a. Approves finally this Settlement and its terms as being a fair, reasonable and adequate settlement as to Plaintiffs within the meaning of Rule 23 of the Federal Rules of Civil Procedure and directing its consummation pursuant to its terms;
b. Approves finally the Plan of Allocation of Settlement Funds, Notice, and the Notice Plan, as being fair and reasonable within the meaning of, and satisfying the requirements of, Rule 23 of the Federal Rules of Civil Procedure and due process;
c. Directs that, as to MasterCard, the Class Action be dismissed with prejudice and, except as provided for herein, without costs;
d. Directs that MasterCard comply with its payment obligations and other commitments set forth in the Agreement;
e. Reserves to this Court exclusive jurisdiction over the Settlement and this Settlement Agreement, including the administration and consummation of this Settlement;
f. Determines pursuant to Rule 54(b) of the Federal Rules of Civil Procedure that there is no just reason for delay and directing that the judgment of dismissal shall be final and appealable; and
g. Directs that, for a period of five years, the Clerk of the Court shall maintain the record of those members of the Class who have timely excluded themselves
from the Class and that a certified copy of such records shall be provided to MasterCard, at its expense.
FINAL SETTLEMENT APPROVAL
26. This Settlement Agreement shall become final upon the occurrence of all of the following three events:
a. Approval of the Settlement Agreement in all material respects by the Court as required by Rule 23(e) of the Federal Rules of Civil Procedure;
b. Entry by the Court, as provided for in paragraph 25, of an Order and Final Judgment of dismissal with prejudice as to MasterCard against all Plaintiffs and members of the Class who have not timely excluded themselves from the Class Action and the Order and Final Judgment is not vacated or modified in any material way affecting any party's rights or obligations under the Settlement Agreement, upon appeal or otherwise; and
c. Expiration of the time for appeal, or the time to seek permission to appeal, from the Court's approval of this Settlement Agreement and entry of an Order and Final Judgment (as described in paragraph 25) or, if appealed, approval of this Settlement Agreement and the Order and Final Judgment have been affirmed in their entirety by the court of last resort to which such appeal has been taken and such affirmance has become no longer subject to further appeal or review. However, the Settlement shall become final with respect to MasterCard notwithstanding the actual or potential filing of any appeal that concerns only (i) an award of attorneys' fees, costs, or expenses; or (ii) the plan of allocation of the Settlement Fund (as distinct from the amount of the Settlement Fund).
27. A modification or reversal on appeal of any award of attorneys' fees, costs, or expenses, or of the Plan of Allocation of Settlement Fund (as distinct from the amount of the Settlement Fund) shall not be deemed a modification of all or a part of the terms of this Settlement Agreement or the Order and Final Judgment.
NO FINAL SETTLEMENT APPROVAL
28. In the event there is no Final Settlement Approval, then:
a. The Gross Settlement Fund, less (i) only the costs incurred up to $6 million in connection with Notice and administration, and (ii) an amount sufficient for the Settlement Fund to pay taxes for which it is or will be liable on interest earned by it, as reasonably determined by the fund administrator as defined in paragraph 46 below, shall revert to MasterCard; and
b. This Settlement Agreement shall be canceled and terminated, and shall become null and void. In such event, the Settlement shall be without prejudice; the Settling Parties shall revert to their litigation positions immediately prior to the execution of the Memorandum of Understanding executed on April 30, 2003; and the fact and terms of this Settlement shall not be admissible in any hearing or trial of this Action or any other civil action.
SATISFACTION OF CLAIMS
29. Plaintiffs shall look solely to the Settlement Agreement for settlement and satisfaction against MasterCard of all claims that are released hereunder. Except as provided by order of the Court, no Class Member shall have any interest in the Settlement Fund or any portion thereof.
RELEASE
30. In addition to the effect of any Order and Final Judgment entered in accordance with this Settlement Agreement, upon this Settlement Agreement becoming final as to MasterCard, the Released Parties shall be released and forever discharged from all manner of claims, demands, actions, suits, causes of action against the Released Parties, whether class, individual, or otherwise in nature, damages whenever incurred, liabilities of any nature whatsoever, including costs, expenses, penalties and attorneys' fees, known or unknown, suspected or unsuspected, in law or equity, that any Releasing Party ever had, now has or hereafter can, shall or may have, relating in any way to any conduct prior to January 1, 2004 concerning any claims alleged in the Complaint or any of the complaints consolidated therein, including, without limitation, claims which have been asserted or could have been asserted in this litigation which arise under or relate to any federal or state antitrust, unfair competition, unfair practices, or other law or regulation, or common law, including, without limitation, the Sherman Act, 15 U.S.C Section 1 et seq. Each Class Member hereby covenants and agrees that it shall not, hereafter, seek to establish liability against any Released Party based, in whole or in part, upon any of the Released Claims.
WAIVER OF BREACH
31. The waiver by any party of any breach of this Agreement shall not be deemed or construed as a waiver of any other breach of this Agreement, whether prior, subsequent or contemporaneous.
MOST FAVORED NATIONS CLAUSE
32. Plaintiffs agree that, effective upon the date hereof, in the event that Plaintiffs' settlement in this Action with Visa provides for a more favorable term or terms than the term or terms set forth herein, then MasterCard shall be entitled to the more favorable term or terms and this Settlement Agreement shall be amended to incorporate the more favorable term or terms.
THIS SETTLEMENT IS NOT AN ADMISSION
33. In the event that the Settlement does not become final as to MasterCard in accordance with the terms hereof, then this Settlement Agreement (including its exhibits) shall be of no force or effect and, in any event, the Settling Parties agree that this Settlement Agreement, including its exhibits, whether or not it shall become final as to MasterCard, and any and all negotiations, documents and discussions associated with it shall be without prejudice to the rights of any party, shall not be deemed or construed to be an admission or evidence of any violation of any statute or law or of any liability or wrongdoing by MasterCard or of the truth of any of the claims or allegations contained in the Complaint or any other pleading, and evidence thereof shall not be discoverable or used directly or indirectly, in anyway, whether in the Class Action or in any other action or proceeding. The Settling Parties expressly reserve all of their rights if the Settlement does not become final as to MasterCard in accordance with the terms of this Settlement Agreement.
PROTECTION OF CONFIDENTIAL INFORMATION AND DISCOVERY MATERIALS
34. The Settling Parties and their respective counsel acknowledge and agree that discovery in this action has involved disclosure of trade secrets and other
confidential and proprietary business, technical and financial information. The Settling Parties and their respective counsel agree that, except as otherwise required by law, within sixty (60) days after MasterCard has complied with all of its obligations under the Settlement Agreement, all materials produced by, or information discovered of, or records of information discovered of, the Settling Parties (including their past, present and former parents, subsidiaries, divisions, affiliates, associates, successors, predecessors, trustees, member financial institutions, attorneys, advisors, investment advisors, insurers, co-insurers, reinsurers, foundations, stockholders, officers, directors, employees, agents and any of their legal representatives (and the predecessors, heirs, executors, administrators, successors and assigns of each of the foregoing)) that contain Confidential Information or Outside Counsel Eyes Only Information (as defined in the Protective Order governing this Action) including, without limitation, information or data stored or recorded in the form of electronic or magnetic media, that are in the possession of counsel for the Settling Parties or their experts, shall be destroyed or returned to the producing party. Upon request, counsel for each party shall provide the producing party with a written declaration under penalties of perjury certifying that all documents required to be returned or destroyed have been returned or destroyed. Notwithstanding the foregoing, and pursuant to the terms of the Protective Order and the limitations set forth therein on how Confidential and Outside Counsel Eyes Only Information can be used, this provision does not apply to (i) outside counsel's copies of documents filed with the Court, and (ii) outside counsel's file copies of papers prepared in connection with this Action. This provision also does not apply to materials that have been unsealed by the Court.
BINDING EFFECT
35. This Settlement Agreement shall be binding upon, and inure to the benefit of, the Settling Parties and their respective past, present or future officers, directors, stockholders, member financial institutions, agents, employees, legal representatives, trustees, parents, associates, affiliates, subsidiaries, divisions, partners, heirs, executors, administrators, purchasers, predecessors, successors and assigns.
REPRESENTATION AND WARRANTY
36. MasterCard represents and warrants that it has the authority to require its member financial institutions to comply with the rules adopted by MasterCard in compliance with the terms and conditions set forth in the Settlement Agreement. MasterCard further represents and warrants that it will take all reasonably necessary steps to ensure compliance by its member financial institutions with the rules so adopted by MasterCard using no less stringent measures of enforcement as are applied to the enforcement of other MasterCard rules, which may include at MasterCard's option, but not be limited to, rescinding all membership rights of any member financial institution that fails to comply with the aformentioned rules set forth in the Settlement Agreement.
INTEGRATED AGREEMENT
37. This Settlement Agreement contains an entire, complete, and integrated statement of each and every term and provision agreed to by and among the Settling Parties; it is not subject to any condition not provided for herein. This Settlement Agreement shall not be modified in any respect except by a writing executed by all the parties hereto. All of the exhibits attached hereto are hereby incorporated by reference as though fully set forth herein.
NO CONFLICT INTENDED
38. Any inconsistency between this Settlement Agreement and the exhibits attached hereto shall be resolved in favor of this Settlement Agreement. The headings used in this Settlement Agreement are for the convenience of the reader only and shall not affect the meaning or interpretation of this Settlement Agreement.
NO PARTY IS THE DRAFTER
39. None of the Settling Parties shall be considered to be the drafter of this Settlement Agreement or any provision hereof for the purpose of any statute, case law or rule of interpretation or construction that would or might cause any provision to be construed against the drafter hereof.
CHOICE OF LAW
40. All terms of this Settlement Agreement and the exhibits hereto shall be governed by and interpreted according to the substantive laws of the State of New York without regard to its choice of law or conflict of laws principles.
CONTINUING JURISDICTION OF THIS COURT
41. (a) The Settling Parties hereby irrevocably submit to the exclusive jurisdiction of the United States District Court for the Eastern District of New York for any suit, action, proceeding or dispute arising out of or relating to this Settlement Agreement or the applicability of this Settlement Agreement and exhibits hereto. All applications to the Court with respect to any aspect of the Settlement shall be presented to and determined by United States District Judge John Gleeson, or, if he is not available, any other Judge designated by the Court. Without limiting the generality of the foregoing, it is hereby agreed that any dispute, including but not limited to any suit,
action or proceeding by a Plaintiff in which the provisions of this Settlement Agreement are asserted as a defense in whole or in part to any claim or cause of action or otherwise raised as an objection, constitutes a suit, action or proceeding arising out of or relating to this Settlement Agreement and exhibits hereto.
(b) In the event that the provisions of this Settlement Agreement are asserted by MasterCard as a defense in whole or in part to any claim or cause of action or otherwise raised as an objection in any other suit, action or proceeding by a Plaintiff, it is hereby agreed that MasterCard shall be entitled to a stay of that suit, action or proceeding until the United States District Court for the Eastern District of New York has entered a final judgment determining any issues relating to the defense or objection based on such provisions. Solely for purposes of such suit, action or proceeding, to the fullest extent they may effectively do so under applicable law, the Settling Parties irrevocably waive and agree not to assert, by way of motion, as a defense or otherwise, any claim or objection that they are not subject to the jurisdiction of such court, or that such court is, in any way, an improper venue or an inconvenient forum.
42. In the event that any party does not fulfill any of its obligations under the Settlement Agreement, Plaintiffs' Co-Lead Counsel or MasterCard may seek from the Court any and all relief they believe appropriate.
43. In the event that MasterCard does not fulfill its obligations relating to payments to the Settlement Fund Account as specified in paragraph 3, both Plaintiffs' Co-Lead Counsel or any purchaser, assignee, or entity involved with securitization or financing of the Settlement Fund as provided for in paragraph 3(f), may seek from the Court any and all relief they believe appropriate.
44. MasterCard's obligations under paragraphs 4 through 7, and 9 above, are subject to modification by the Court, upon the motion of either MasterCard or Plaintiffs, pursuant to the processes and standards for modification of consent decrees.
RESERVATION OF RIGHTS AND PRIVILEGES
45. Nothing in this Settlement Agreement is intended to waive the Settling Parties' right to assert that any information or material is protected from discovery by reason of any individual or joint defense privilege or work product protection or other privilege, protection or immunity, or is intended to waive the Settling Parties' right to contest any such claim of privilege, protection or immunity.
TAX TREATMENT
46. The Settling Parties agree to treat the Settlement Fund Account as being at all times a qualified settlement fund within the meaning of Treasury Regulation Section 1.468B-1 for the taxable years of the Settlement Fund Account, beginning with the date it is created. In addition, the fund "administrator," as defined below, and, as required, MasterCard, shall jointly and timely make such elections as are necessary or advisable to carry out the provisions of this paragraph, including the "relation-back election" (as defined in Treas. Reg. Section 1.468B-1(j)(2)) back to the earliest permitted date. Provided the Court issues an Order and Final Judgment approving the Settlement in 2003, the relation-back election must be made by no later than December 31, 2003. Such elections shall be made in compliance with the procedures and requirements contained in such regulations. It shall be the responsibility of Plaintiffs' Co-Lead Counsel to timely and properly prepare, and deliver the necessary documentation for signature by all necessary parties, and thereafter to cause the appropriate filing to occur.
47. For purposes of Section 468B of the Internal Revenue Code, as amended, and the regulations promulgated thereunder, the fund administrator shall be Plaintiffs' Co-Lead Counsel, or any person or entity that Plaintiffs' Co-Lead Counsel may designate. Plaintiffs' Co-Lead Counsel shall timely and properly file or cause to be filed all tax returns necessary or advisable with respect to the Settlement Fund Account, and make or cause to be made all required tax payments, including deposits of estimated tax payments in accordance with Treas. Reg. Section 1.468B-2(k). Such returns (as well as the election described in paragraph 46 hereof) shall be consistent with this paragraph and reflect that all taxes (including any interest or penalties) on the income earned by the Settlement Fund Account shall be paid out of the Settlement Fund Account. MasterCard further agrees to file and furnish all statements and take all actions required of a transferor by section 1.468B-3(e) of the Treasury Regulations as reasonably requested by Plaintiffs' Co-Lead Counsel.
48. All (i) taxes (including any interest or penalties) arising with respect to the income earned by the Gross Settlement Fund, including any taxes or tax detriments that may be imposed upon MasterCard with respect to any income earned by the Gross Settlement Fund for any period during which the Gross Settlement Fund does not qualify as a qualified settlement fund for Federal or state income tax purposes ("Taxes"); and (ii) expenses and costs incurred in connection with the operation and implementation of this paragraph (including without limitation, expenses of tax attorneys and/or accountants and mailing and distribution costs and expenses relating to filing (or failing to file) the returns described in this paragraph) ("Tax Expenses"), shall be paid out of the Gross Settlement Fund; in all events the Released Parties shall have no liability for Taxes or the Tax
Expenses. Further, Taxes and Tax Expenses shall be treated as, and considered to be, a cost of administration of the Settlement and shall be timely paid by out of the Gross Settlement Fund without prior order from the Court. The fund administrator shall be obligated (notwithstanding anything herein to the contrary) to withhold from distribution to Class members any funds necessary to pay such amounts including the establishment of adequate reserves for any Taxes and Tax Expenses (as well as any amounts that may be required to be withheld under Treas. Reg. Section 1.468B-2(l)(2)). The Released Parties are not responsible and shall have no liability therefor. The Settling Parties agree to cooperate with the fund administrator, each other, and their tax attorneys and accountants to the extent reasonably necessary to carry out the provisions of this paragraph.
49. Notwithstanding anything herein to the contrary, any party to this Agreement (and any employee, representative, or other agent of any party to this Agreement) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure. However, any such information relating to the tax treatment or tax structure is required to be kept confidential to the extent necessary to comply with any applicable federal or state securities laws, or as required by any party to facilitate compliance with such laws.
EXECUTION IN COUNTERPARTS
50. This Settlement Agreement may be executed in counterparts, including signatures transmitted by facsimile. Each counterpart when so executed shall be deemed to be an original, and all such counterparts together shall constitute the same instrument.
PROVISION OF NOTICE TO COUNSEL
51. All notices or materials that must be provided under this Agreement shall be sent by (i) hand delivery, (ii) registered or certified mail, return receipt requested, postage pre-paid, or (iii) Federal Express or similar overnight courier, and directed as follows:
a. If to Plaintiffs' Co-Lead Counsel, then to:
Constantine & Partners, P.C.
Lloyd Constantine
477 Madison Avenue
New York, NY 10022
and
Hagens Berman LLP
George Sampson
1301 Fifth Avenue, Suite 2900
Seattle, Washington 98101
b. If to MasterCard's Counsel, then to:
Simpson Thacher & Bartlett Kevin J. Arquit 425 Lexington Avenue New York, NY 10017
or such other address or person as Plaintiffs' Co-Lead Counsel or MasterCard may designate by giving notice to the Settling Parties in the manner described in this paragraph.
IN WITNESS WHEREOF, the signatories have read and understood this Settlement Agreement, have executed it, represent that the undersigned are authorized to execute this Settlement Agreement on behalf of the represented parties, have agreed to be bound by its terms, and have entered into this Settlement Agreement as of June 4, 2003.
CONSTANTINE & PARTNERS, P.C.
By: /s/ LLOYD CONSTANTINE
---------------------------
Lloyd Constantine (LC-8465)
Robert L. Begleiter (RB-7052)
Matthew L. Cantor (MC-8183)
Stacey Anne Mahoney (SM-5425)
Amy N. Roth (AR-4534)
Gordon Schnell (GS-2567)
Jonathan D. Shaman (JS-8481)
Mitchell C. Shapiro (MS-1019)
Jeffrey I. Shinder (JS-5719)
Michael Spyropoulos (MS-9873)
477 Madison Avenue, 11th Floor
New York, New York 10022
(212) 350-2700 (telephone)
(212) 350-2701 (facsimile)
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Counsel for Wal-Mart, Limited Brands,
Sears, Safeway, Circuit City, National Retail
Federation, Food Marketing Institute, and
International Retail Association, and
Lead Counsel for the Certified Class
HAGENS BERMAN LLP
By: /s/ GEORGE W. SAMPSON
---------------------------
George W. Sampson (GS-8973)
1301 Fifth Avenue, Suite 2900
Seattle, Washington 98101
(206) 623-7292 (telephone)
(206) 623-0594 (facsimile)
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Counsel for Bernie's Army-Navy Store and Co-Lead Counsel for the Certified Class
SIMPSON THACHER & BARTLETT
By: /s/ KEVIN J. ARQUIT
---------------------------
Kevin J. Arquit (KA-2139)
Joseph F. Tringali (JT 9575)
Aimee H. Goldstein (AG-7539)
425 Lexington Avenue
New York, NY 10017
(212) 455-2000 (telephone)
(212) 455-2502 (facsimile)
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CLIFFORD CHANCE US LLP
Kenneth A. Gallo (KG-5664)
The William P. Rogers Building
2001 K Street, NW
Washington, DC 20006-1001
(202) 912-5000 (telephone)
(202) 912-6000 (facsimile)
Keila D. Ravelo (KR-8164)
200 Park Avenue
New York, NY 10166
(212) 878-8000 (telephone)
(212) 878-8375 (facsimile)
Counsel for MasterCard International, Inc.
EXHIBIT 10.2
EXECUTION COUNTERPART
$1,200,000,000
CREDIT AGREEMENT
AMONG
MASTERCARD INCORPORATED
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO
CITIGROUP GLOBAL MARKETS INC.,
AS SOLE LEAD ARRANGER AND
SOLE BOOK MANAGER
AND
CITIBANK, N.A.,
AS CO-ADMINISTRATIVE AGENT
JPMORGAN CHASE BANK,
AS CO-ADMINISTRATIVE AGENT
J.P. MORGAN SECURITIES, INC.,
AS CO-ARRANGER
DATED AS OF JUNE 20, 2003
TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS......................................................................... 1
1.1 Defined Terms...................................................................... 1
1.2 Other Definitional Provisions...................................................... 14
SECTION 2. AMOUNT AND TERMS OF LOANS........................................................... 14
2.1 Revolving Credit Commitments....................................................... 14
2.2 Procedure for Revolving Credit Borrowing........................................... 14
2.3 Term Loans......................................................................... 15
2.4 Procedure for Term Loan Borrowing.................................................. 15
2.5 Facility Fee....................................................................... 15
2.6 Termination or Reduction of Commitments............................................ 15
2.7 Repayment of Revolving Credit Loans and Term Loans; Evidence of Debt............... 16
2.8 Optional Prepayments............................................................... 17
2.9 Conversion and Continuation Options................................................ 17
2.10 CAF Advances....................................................................... 17
2.11 Procedure for CAF Advance Borrowing................................................ 18
2.12 CAF Advance Payments............................................................... 20
2.13 Evidence of Debt................................................................... 21
2.14 Certain Restrictions............................................................... 21
2.15 Minimum Amounts of Tranches........................................................ 21
2.16 Interest Rates and Payment Dates................................................... 21
2.17 Computation of Interest and Fees................................................... 22
2.18 Inability to Determine Interest Rate............................................... 22
2.19 Pro Rata Treatment and Payments.................................................... 23
2.20 Swing Line Commitment.............................................................. 23
2.21 Illegality......................................................................... 25
2.22 Requirements of Law................................................................ 26
2.23 Taxes.............................................................................. 27
2.24 Indemnity.......................................................................... 28
2.25 Commitment Increases............................................................... 28
2.26 Commitment Extensions.............................................................. 29
SECTION 3. REPRESENTATIONS AND WARRANTIES...................................................... 30
3.1 Financial Condition................................................................ 31
3.2 No Change.......................................................................... 31
3.3 Corporate Existence; Compliance with Law........................................... 31
3.4 Corporate Power; Authorization; Enforceable Obligations............................ 32
3.5 No Legal Bar....................................................................... 32
3.6 No Material Litigation............................................................. 32
3.7 No Default......................................................................... 32
3.8 Ownership of Property; Liens....................................................... 32
3.9 Intellectual Property.............................................................. 33
3.10 No Burdensome Restrictions......................................................... 33
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PAGE
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3.11 Taxes.............................................................................. 33
3.12 Federal Regulations................................................................ 33
3.13 ERISA.............................................................................. 33
3.14 Investment Company Act; Other Regulations.......................................... 34
3.15 Subsidiaries....................................................................... 34
3.16 Purpose of Loans................................................................... 34
3.17 Environmental Matters.............................................................. 34
3.18 Solvency........................................................................... 35
SECTION 4. CONDITIONS PRECEDENT................................................................ 35
4.1 Conditions to Initial Loan......................................................... 35
4.2 Conditions to Each Loan............................................................ 36
SECTION 5. AFFIRMATIVE COVENANTS............................................................... 37
5.1 Financial Statements............................................................... 37
5.2 Certificates; Other Information.................................................... 38
5.3 Payment of Obligations............................................................. 38
5.4 Conduct of Business and Maintenance of Existence................................... 38
5.5 Maintenance of Property; Insurance................................................. 39
5.6 Inspection of Property; Books and Records; Discussions............................. 39
5.7 Notices............................................................................ 39
5.8 Environment Laws................................................................... 40
SECTION 6. NEGATIVE COVENANTS.................................................................. 40
6.1 Maintenance of Net Worth........................................................... 40
6.2 Limitation on Liens................................................................ 40
6.3 Limitation on Fundamental Changes.................................................. 42
6.4 Limitation on Sale of Assets....................................................... 42
6.5 Limitation on Dividends............................................................ 43
6.6 Limitation on Investments, Loans and Advances...................................... 43
6.7 Limitation on Transactions with Affiliates......................................... 43
6.8 Limitation on Changes in Fiscal Year............................................... 43
6.9 Limitation on Lines of Business.................................................... 43
6.10 Upstreaming........................................................................ 43
SECTION 7. EVENTS OF DEFAULT................................................................... 44
SECTION 8. THE ADMINISTRATIVE AGENT............................................................ 46
8.1 Appointment........................................................................ 46
8.2 Delegation of Duties............................................................... 46
8.3 Exculpatory Provisions............................................................. 46
8.4 Reliance by Administrative Agent................................................... 47
8.5 Notice of Default.................................................................. 47
8.6 Non-Reliance on Administrative Agent and Other Lenders............................. 47
8.7 Indemnification.................................................................... 48
8.8 Administrative Agent in Its Individual Capacity.................................... 48
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PAGE
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8.9 Successor Administrative Agent..................................................... 48
8.10 Substitute Administrative Agent.................................................... 49
SECTION 9. GUARANTEE........................................................................... 49
SECTION 10. MISCELLANEOUS....................................................................... 53
10.1 Amendments and Waivers............................................................. 53
10.2 Notices............................................................................ 54
10.3 No Waiver; Cumulative Remedies..................................................... 55
10.4 Survival of Representations and Warranties......................................... 55
10.5 Payment of Expenses and Taxes...................................................... 55
10.6 Successors and Assigns; Participations and Assignments............................. 56
10.7 Adjustments; Set-off............................................................... 59
10.8 Counterparts....................................................................... 60
10.9 Severability....................................................................... 60
10.10 Integration........................................................................ 60
10.11 Termination of Commitments and Swing Line Commitments.............................. 60
10.12 GOVERNING LAW...................................................................... 60
10.13 Submission To Jurisdiction; Waivers................................................ 60
10.14 Acknowledgements................................................................... 61
10.15 WAIVERS OF JURY TRIAL.............................................................. 61
10.16 Confidentiality.................................................................... 61
SCHEDULES
1.1(a) - Cash Equivalents
1.1(b) - Permitted Investments
1.2 - Commitments
3.1 - Interest Rate and Currency Protection
3.6 - Material Litigation
3.15 - Subsidiaries
6.2(f) - Liens
6.10 - Dividend Blocks
10.7(b) - Fiduciary Accounts
EXHIBITS
A Form of Revolving Credit Note
B Form of Term Note
C Form of Swing Line Note
D-1 Form of CAF Advance Request
D-2 Form of CAF Advance Offer
D-3 Form of CAF Advance Confirmation
D-4 Form of CAF Advance Assignment
E Form of Swing Line Loan Participation Certificate
F Form of Opinion of General Counsel of Borrower and International
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PAGE
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G Form of Borrowing Notice
H Form of Assignment and Acceptance
I Form of Closing Certificate
J Form of Compliance Certificate
K-1 Form of New Lender Supplement
K-2 Form of Commitment Increase Supplement
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CREDIT AGREEMENT, dated as of June 20, 2003 among MASTERCARD INCORPORATED, a Delaware corporation (the "Borrower"), MASTERCARD INTERNATIONAL INCORPORATED, a Delaware corporation ("International" or the "Guarantor"), the several banks and other financial institutions from time to time parties to this Agreement (the "Lenders"), and CITIBANK, N.A. ("Citibank"), as administrative agent for the Lenders hereunder (in such capacity, the "Administrative Agent"), and JPMORGAN CHASE BANK, as back-up administrative agent for the Lenders hereunder (in such capacity, the "Backup Agent").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:
"ABR": a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of:
(i) the rate of interest announced publicly by Citibank in New York City from time to time as Citibank's base rate; and
(ii) 1.00% per annum above the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average being determined weekly on each Monday (or, if any such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday by Citibank on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publications shall be suspended or terminated, on the basis of quotations for such rates received by Citibank from three New York certificate of deposit dealers of recognized standing selected by Citibank, in either case adjusted to the nearest 0.25%, or if there is no nearest 0.25%, to the next higher 0.25%; and
(iii) for any day, 0.50% per annum above the Federal Funds Rate in effect on such day;
plus for each Term Loan, 0.25% per annum.
Each change in any interest rate provided for herein based upon the ABR resulting from a change in the ABR shall take effect at the time of such change in the ABR.
"ABR Loans": Revolving Credit Loans and Term Loans hereunder the rate of interest applicable to which is based upon the ABR.
"Administrative Agent": as defined in the preamble hereof.
CREDIT AGREEMENT
"Administrative Questionnaire": an Administrative Questionnaire in a form supplied by the Administrative Agent.
"Affiliate": as to any Person, any other Person (other than a Subsidiary) which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (a) vote 25% or more of the securities having ordinary voting power for the election of directors of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.
"Agreement": this Credit Agreement, as amended, supplemented or otherwise modified from time to time.
"Applicable Margin": for each LIBOR Loan, 0.28% per annum, plus (i) on each day on which the drawn portion of the aggregate amount of the Commitments (including Swing Line Loans, CAF Advances and Term Loans) exceeds 33% of the aggregate amount of the Commitments as in effect on the Closing Date, 0.10% per annum, plus (ii) for each Term Loan, 0.25% per annum.
"Assignee": as defined in subsection 10.6(c).
"Available Commitment": as to any Lender on any day, an amount equal to the excess, if any, of (a) the amount of such Lender's Commitment over (b) the aggregate of (i) the aggregate principal amount of all Revolving Credit Loans and Term Loans made by such Lender then outstanding and (ii) an amount equal to such Lender's Commitment Percentage of the aggregate principal amount of all Swing Line Loans then outstanding (after giving effect to any repayment of Swing Line Loans on such day).
"Backup Agent": as defined in the preamble hereof.
"Board": the Board of Governors of the Federal Reserve System of the United States (or any successor).
"Borrower": as defined in the preamble hereof.
"Borrowing Date": any Business Day specified in a notice pursuant to subsections 2.2, 2.4, 2.11 or 2.20 as a date on which the Borrower requests the Lenders or the Swing Line Lender, as the case may be, to make Loans hereunder.
"Business": as defined in subsection 3.17.
"Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close; provided that when such term is used to describe a day on which a borrowing, payment or interest rate determination is to be made in respect of a LIBOR Loan or a LIBOR CAF Advance, such day shall also be a day on which dealings in foreign currencies and exchange between banks may be carried on in London, England.
CREDIT AGREEMENT
"CAF Advance": each CAF Advance made pursuant to subsection 2.10.
"CAF Advance Availability Period": the period from and including the Closing Date to and including the date which is 7 days prior to the Revolving Credit Termination Date.
"CAF Advance Confirmation": each confirmation by the Borrower of its acceptance of CAF Advance Offers, which confirmation shall be substantially in the form of Exhibit D-3 and shall be delivered to the Administrative Agent by facsimile transmission.
"CAF Advance Interest Payment Date": as to each CAF Advance, each interest payment date specified by the Borrower for such CAF Advance in the related CAF Advance Request.
"CAF Advance Maturity Date": as to any CAF Advance, the date specified by the Borrower pursuant to subsection 2.11(a) in its acceptance of the related CAF Advance Offer.
"CAF Advance Offer": each offer by a Lender to make CAF Advances pursuant to a CAF Advance Request, which offer shall contain the information specified in Exhibit D-2 and shall be delivered to the Administrative Agent by telephone, immediately confirmed by facsimile transmission.
"CAF Advance Request": each request by the Borrower for Lenders to submit bids to make CAF Advances, which request shall contain the information in respect of such requested CAF Advances specified in Exhibit D-1 and shall be delivered to the Administrative Agent in writing, by facsimile transmission, or by telephone, immediately confirmed by facsimile transmission.
"Capital Lease": as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee which, in conformity with GAAP, is, or is required to be, accounted for as a capital lease on the balance sheet of that Person.
"Capitalized Lease Obligations": all obligations under Capital Leases of any Person, in each case taken at the amount thereof accounted for as liabilities in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing.
"Cash Equivalents": (i) cash equivalents in existence on March 31, 2003 as set forth on Schedule 1.1(a) (and, in the case of any such cash equivalents described on Schedule 1.1(a), any replacement of any such cash equivalents with substantially the same investment), (ii) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more
CREDIT AGREEMENT
than one year from the date of acquisition, (iii) Dollar denominated time deposits, certificates of deposit and bankers acceptances of any Lender or any bank whose short-term commercial paper rating from Standard & Poor's Corporation ("S&P") is at least A-1 or the equivalent thereof or from Moody's Investors Service, Inc. ("Moody's") is at least P-1 or the equivalent thereof (any such bank, an "Approved Bank"), with maturities of not more than one year from the date of acquisition, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the type described in clause (ii) entered into with an Approved Bank, (v) commercial paper issued by, or guaranteed by, any Approved Bank or by the parent company of any Approved Bank or commercial paper issued by, or guaranteed by, any industrial or financial company with a short-term commercial paper rating of at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's, or issued by, or guaranteed by, any industrial or financial company with a long term unsecured debt rating of at least A or A2, or the equivalent of each thereof, from S&P or Moody's, respectively, and in each case maturing within one year after the date of acquisition and (vi) any fund or funds making substantially all of their investments in investments of the type described in clauses (i) through (v) above.
"C/D Assessment Rate": for any day as applied to any loan the interest rate applicable to which is based upon the ABR, the annual assessment rate in effect on such day which is payable by a member of the Bank Insurance Fund maintained by the Federal Deposit Insurance Corporation (the "FDIC") classified as well-capitalized and within supervisory subgroup "B" (or a comparable successor assessment risk classification) within the meaning of 12 C.F.R. Section 327.4 (or any successor provision) to the FDIC (or any successor) for the FDIC's (or such successor's) insuring time deposits at offices of such institution in the United States.
"C/D Reserve Percentage": for any day as applied to any loan the interest rate applicable to which is based upon the ABR, that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board, for determining the maximum reserve requirement for a Depositary Institution (as defined in Regulation D of the Board) in respect of new non-personal time deposits in Dollars having a maturity of 30 days or more.
"Citibank": as defined in the preamble hereof.
"Closing Date": the date on which the conditions precedent set forth in subsection 4.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Commitment": as to any Lender, the obligation of such Lender to make Revolving Credit Loans and Term Loans to the Borrower hereunder in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lenders name on Schedule 1.2, as such amount may be reduced or increased from time to time in accordance with the provisions of this Agreement.
"Commitment Increase Offer": as defined in subsection 2.25(a).
CREDIT AGREEMENT
"Commitment Increase Supplement": as defined in subsection 2.25(c).
"Commitment Percentage": as to any Lender at any time, the percentage which such Lender's Commitment then constitutes of the aggregate Commitments (or, at any time after the Commitments shall have expired or terminated, the percentage which the aggregate principal amount of such Lender's Revolving Credit Loans and Term Loans then outstanding constitutes of the aggregate principal amount of the Revolving Credit Loans and Term Loans then outstanding).
"Commitment Period": the period from and including the date hereof to but not including the Revolving Credit Termination Date or such earlier date on which the Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Confidential Information": non-public information that the Borrower or any of its Subsidiaries (or any of their representatives) furnishes to the Administrative Agent or any Lender, but does not include any such information that is or becomes generally available to the public (other than as a result of a result of breach of this Agreement).
"Consolidated Net Income": as at date for determination thereof, consolidated net income of the Borrower and its Subsidiaries, determined in accordance with GAAP.
"Consolidated Net Worth": for any Person and as at any date of determination, the members' or stockholders' equity of such Person, as the case may be, as determined in accordance with GAAP and as would be reflected on a consolidated balance sheet of such Person prepared as of such date.
"Contractual Obligation": as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is legally bound.
"Declined Amount": as defined in subsection 2.25(a).
"Declining Lender": as defined in subsection 2.25(a).
"Default": any of the events specified in Section 7, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States.
"Domestic Subsidiary": any Subsidiary organized under the laws of any jurisdiction within the United States of America.
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"Environmental Laws": any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a LIBOR Loan or a LIBOR CAF Advance, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board) maintained by a member bank of such system.
"Event of Default": any of the events specified in Section 7, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.
"Executive Incentive Compensation Plan": as described in the annual report of the Borrower.
"Federal Funds Rate": for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (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 of the quotations received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent.
"Fixed Rate CAF Advance Request": any CAF Advance made pursuant to a Fixed Rate CAF Advance Request.
"Fixed Rate CAF Advance": any CAF Advance Request requesting the Lenders to offer to make CAF Advances at a fixed rate of interest (as opposed to a rate composed of the London Interbank Offered Rate plus (or minus) a margin).
"Foreign Subsidiary": as to any Person, any Subsidiary of such Person organized under the laws of any jurisdiction outside the United States.
"GAAP": generally accepted accounting principles in the United States in effect from time to time.
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"Governmental Authority": any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee": as to any Person (the "guaranteeing person"), any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee shall not include endorsements of instruments for deposit or collection in the ordinary course of business or obligations of any Obligor or its Subsidiaries in respect of settlement failures by one or more of its members. The amount of any Guarantee of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.
"Guaranteed Obligations": as defined in Section 9.
"Guarantor": as defined in the preamble hereof.
"Indebtedness": as to any Person, (a) all indebtedness of such Person for borrowed money, (b) the deferred purchase price of assets or services which in accordance with GAAP would be shown on the liability side of the balance sheet of such Person, (c) the face amount of all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder, (d) all Indebtedness of a second Person secured by any Lien on any property owned by such first Person, whether or not such Indebtedness has been assumed, (e) all Capitalized Lease Obligations of such Person, (f) all obligations of such Person to pay a specified purchase price for goods or services whether or not delivered or accepted, e.g., take-or-pay and similar obligations, (g) all obligations of such Person under Interest Rate Agreements, and (h) without duplication, all Guarantees of such Person of Indebtedness of others, provided that
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Indebtedness shall not include trade payables and accrued expenses relating to employees, in each case arising in the ordinary course of business.
"Insolvency": with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any Loan the rate of interest applicable to which is based upon the ABR, the last day of each March, June, September and December, on the Revolving Credit Termination Date and on the Termination Date, (b) as to any LIBOR Loan or LIBOR CAF Advance having an Interest Period of three months or less, or any Fixed Rate CAF Advance having an Interest Period of 90 days or less, the last day of such Interest Period and (c) as to any LIBOR Loan or any Fixed Rate CAF Advance having an Interest Period longer than three months or 90 days, respectively, each day which is three months or 90 days, respectively, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period.
"Interest Period": (a) with respect to any LIBOR Loan:
(i) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such LIBOR Loan and ending one, two, three or six months thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such LIBOR Loan and ending one, two, three or six months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto;
(b) with respect to any CAF Advance, the period specified in the CAF Advance Confirmation with respect to such CAF Advance;
provided that all of the foregoing provisions relating to Interest Periods are subject to the following:
(A) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of LIBOR Loans or LIBOR CAF Advances, the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;
(B) any Interest Period that would otherwise extend beyond the Revolving Credit Termination Date or beyond the date final payment is due on the Term Loans shall end on the Revolving Credit Termination Date or such date of final payment, as the case may be; and
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(C) any Interest Period pertaining to a LIBOR Loan or a LIBOR CAF Advance that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month.
"Interest Rate Agreement": any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate futures contract, interest rate option contract or other similar agreement or arrangement designed to protect any Person against fluctuations in interest rates.
"International": as defined in the preamble hereof.
"LIBOR CAF Advance": any CAF Advance made pursuant to a LIBOR CAF Advance Request.
"LIBOR CAF Advance Request": any CAF Advance Request requesting the Lenders to offer to make CAF Advances at an interest rate equal to the London Interbank Offered Rate plus (or minus) a margin.
"LIBOR Loans": Revolving Credit Loans and Term Loans hereunder the rate of interest applicable to which is based upon the London Interbank Offered Rate.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Capital Lease having substantially the same economic effect as any of the foregoing).
"Loan": any Revolving Credit Loan, Term Loan, CAF Advance or Swing Line Loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement and any Notes issued hereunder.
"London Interbank Offered Base Rate": with respect to each day during each Interest Period pertaining to a LIBOR Loan or a LIBOR CAF Advance, the rate appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 A.M., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the "London Interbank Offered Base Rate" with respect to such LIBOR Loan or LIBOR CAF Advance for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of Citibank in immediately available funds in the London
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interbank market at approximately 11:00 A.M., London time, two Business Days prior to the commencement of such Interest Period.
"London Interbank Offered Rate": with respect to each day during each Interest Period pertaining to a LIBOR Loan or a LIBOR CAF Advance, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):
"Margin Stock": margin stock within the meaning of Regulation U.
"Material Adverse Effect": a material adverse effect on (a) the business, assets, operations, property or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole (it being understood that neither (i) a settlement failure by one or more members of International nor (ii) the settlement of the merchant antitrust litigation described on Schedule 3.6 on terms substantially as heretofore disclosed to the Lenders, in and of itself, shall constitute an event, development or circumstance that has a "Material Adverse Effect") or (b) the validity or enforceability of this or any of the other Loan Documents or the material rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.
"Material Foreign Subsidiary" means, at any time, any Foreign Subsidiary (i) accounting, during the immediately preceding fiscal quarter of the Borrower, for more than 5% of the total sales or EBITDA of the Borrower and its Subsidiaries or (ii) having, as at the last day of such fiscal quarter, more than 1% of the total assets of the Borrower and its Subsidiaries on a consolidated basis, all determined in accordance with GAAP.
"Materials of Environmental Concern": any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including, without limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined in Section 4001 (a)(3) of ERISA.
"New Lender": as defined in subsection 2.25(b).
"New Lender Supplement": as defined in subsection 2.25(b).
"Non-Excluded Taxes": as defined in subsection 2.23.
"Notes": the collective reference to the Revolving Credit Notes, the Term Notes and the Swing Line Note.
"Obligors": the collective reference to the Borrower and the Guarantor.
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"Participant": as defined in subsection 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA.
"Permitted Investments": (a) investments in Cash Equivalents;
(b) investments in existence on the date of this Agreement and
disclosed in the financial statements previously delivered to the
Administrative Agent and the Lenders and as set forth on Schedule 1.1
(b) (and, in the case of any investments described on Schedule 1.1 (b),
any replacement of any such investment with substantially the same
investment in no greater amounts); (c) investments in, or extensions of
credit to, any Subsidiary by the Borrower or by any Subsidiary, subject
to the limitations set forth in the proviso to this definition,
including any investment made to acquire such Subsidiary; (d)
investments in, or extensions of credit to, the Borrower by any
existing or future Subsidiary of the Borrower; (e) sales of goods or
services on trade credit terms in the ordinary course of business; (f)
loans and advances to employees in the ordinary course of business; (g)
loans or advances to vendors or contractors of the Borrower in the
ordinary course of business; (h) lease, utility and other similar
deposits in the ordinary course of business; (i) stock, obligations or
securities received in the ordinary course of business in settlement of
debts owing to the Borrower or a Subsidiary as a result of foreclosure,
perfection or enforcement of any Lien, or in connection with good faith
settlement of delinquent obligations owing to the Borrower or a
Subsidiary; (j) investments in partnerships or joint ventures engaged
in a business related to that engaged in by the Borrower on the date of
this Agreement and investments in other entities engaged in the
development or production of new technologies directly related to the
businesses engaged in by the Borrower and its Subsidiaries on the date
of this Agreement, which investments do not exceed an aggregate amount
at any time outstanding of 25% of the total assets of the Borrower and
its consolidated Subsidiaries; (k) investments in securities of member
banks by the Borrower pursuant to the Executive Incentive Compensation
Plan in an aggregate amount not to exceed at any time outstanding not
more than 15% of the total assets of the Borrower and its consolidated
Subsidiaries; (l) investments or assumed Indebtedness under Interest
Rate Agreements and currency exchange and protection agreements entered
into in the ordinary course of business; and (m) in addition to
Permitted Investments described in the foregoing clauses (a) through
(l), investments in an aggregate amount not to exceed an amount equal
to 20% of the total assets of the Borrower and its consolidated
Subsidiaries at any one time outstanding; provided that the aggregate
amount of investments by International and its Subsidiaries in
Subsidiaries of the Borrower that are not also Subsidiaries of
International shall not exceed an amount equal to 30% of the total
assets of International and its consolidated Subsidiaries at any one
time outstanding.
"Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if
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such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Properties": as defined in subsection 3.17.
"Register": as defined in subsection 10.6(e).
"Regulation U": Regulation U of the Board as in effect from time to time.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under PBGC Reg. Section 4043.
"Required Lenders": at any time, Lenders the Commitment Percentages of which aggregate more than 50%.
"Requirement of Law": as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer and president or the executive vice president, global resources of the Borrower or, with respect to financial matters, the chief financial officer or the treasurer of the Borrower.
"Revolving Credit Loans": as defined in subsection 2.1.
"Revolving Credit Note": as defined in subsection 2.7(e).
"Revolving Credit Termination Date": June 18, 2004 or such earlier date as the Commitments shall terminate pursuant to the terms hereof; provided that if said date is not a Business Day, the Revolving Credit Termination Date shall be the immediately preceding Business Day.
"Single Employer Plan": any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent": with respect to any Person on a particular date, means that (i) the fair value of the property of such Person is greater than the total amount of the liabilities, including, without limitation, contingent liabilities, of such Person, (ii) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay such debts and liabilities as they
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mature, and (iv) such Person is not engaged in business, and is not about to engage in business, for which such Person's property would constitute unreasonably small capital.
"Subsidiary": as to any Person, a corporation, partnership or other entity of which a majority of the Voting Shares are at the time owned, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Swing Line Commitment": the Swing Line Lender's obligation to make Swing Line Loans pursuant to subsection 2.20.
"Swing Line Lender": Citibank in its capacity as provider of the Swing Line Loans.
"Swing Line Loan Participation Certificate": a certificate in substantially the form of Exhibit E.
"Swing Line Loans": as defined in subsection 2.20(a).
"Swing Line Note": as defined in subsection 2.20(b).
"Term Loans": as defined in subsection 2.3.
"Term Note": as defined in subsection 2.7(e).
"Termination Date": the date that is the first anniversary of the Revolving Credit Termination Date (or, if such day is not a Business Day, the immediately preceding Business Day).
"Tranche": the collective reference to LIBOR Loans the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such loans shall originally have been made on the same day); Tranches may be identified as "LIBOR Tranches".
"Transferee": as defined in subsection 10.6(g).
"Type": as to any Revolving Credit Loan or Term Loan, its nature as an ABR Loan or a LIBOR Loan.
"United States": the United States of America.
"Voting Shares": as to any Person, shares of stock of or other ownership interests in such Person having ordinary voting power (other than such stock or other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors (or similar managers) of such Person.
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1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in any Notes or any certificate or other document made or delivered pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other document made or delivered pursuant hereto, accounting terms relating to the Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms partly defined in subsection 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.
(e) The words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
SECTION 2. AMOUNT AND TERMS OF LOANS
2.1 Revolving Credit Commitments. (a) Subject to the terms and conditions hereof, each Lender severally agrees to make revolving credit loans ("Revolving Credit Loans") to the Borrower from time to time during the Commitment Period in an aggregate principal amount at any one time outstanding, when added to such Lender's Commitment Percentage of all outstanding Swing Line Loans, not to exceed the amount of such Lender's Commitment, provided that the aggregate principal amount of all Loans outstanding at any time shall not exceed the aggregate amount of the Commitments at such time. During the Commitment Period the Borrower may use the Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be LIBOR Loans, ABR Loans, or a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with subsections 2.2 and 2.9.
2.2 Procedure for Revolving Credit Borrowing. The
Borrower may borrow under the Commitments during the Commitment Period on any
Business Day, provided that the Borrower shall give the Administrative Agent
irrevocable notice (which notice must be received by the Administrative Agent
prior to 12:00 Noon, New York City time, (a) three Business Days prior to the
requested Borrowing Date, if all or any part of the requested Revolving Credit
Loans are to be initially LIBOR Loans, or (b) on the same Business Day of the
requested Borrowing Date, otherwise), specifying (i) the amount to be borrowed,
(ii) the requested Borrowing Date, (iii) whether the borrowing is to be of LIBOR
Loans, ABR Loans, or a combination thereof and (iv) if the borrowing is to be
entirely or partly of LIBOR Loans, the respective amounts of each such Type of
Revolving Credit Loan and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Commitments shall be in an amount equal to at
least
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$10,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then aggregate Available Commitments are less than $10,000,000, such lesser amount). Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Lender thereof. Except as contemplated by subsection 2.20(c), each Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent specified in subsection 10.2 prior to 2:00 P.M., New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Lenders and in like funds as received by the Administrative Agent.
2.3 Term Loans. The Revolving Credit Loans outstanding at the close of business New York City time on the Revolving Credit Termination Date shall, at the option of the Borrower, subject to Section 4.2, be converted on such date into term loans (the "Term Loans") to the Borrower. The Term Loans may from time to time be (a) LIBOR Loans, (b) ABR Loans or (c) a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with subsections 2.4 and 2.9.
2.4 Procedure for Term Loan Borrowing. The Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 10:00 A.M., New York City time, (a) three Business Days prior to the Revolving Credit Termination Date, if all or any part of the Term Loans are to be initially LIBOR Loans or (b) on the Revolving Credit Termination Date, otherwise) if the Borrower intends to convert Revolving Credit Loans to Term Loans pursuant to Section 2.3 and specifying (i) whether the resulting Term Loans are to be initially LIBOR Loans, ABR Loans or a combination thereof, and (ii) if the Term Loans are to be entirely or partly LIBOR Loans the respective lengths of the initial Interest Periods therefor. Upon receipt of such notice the Administrative Agent shall promptly notify each Lender thereof. The aggregate principal amount of the Term Loans shall be equal to the aggregate principal amount of the Revolving Credit Loans outstanding at the close of business New York City time on the Revolving Credit Termination Date and the Term Loans shall be deemed to have been made at such time without any payments being made by the Lenders. Promptly after the making of its Term Loan each Lender shall mark any Revolving Credit Note held by it "cancelled" and deliver the same to the Borrower.
2.5 Facility Fee. The Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee for the period from and including the first day of the Commitment Period to the Termination Date, computed at the rate of .07% per annum on (i) the average daily Commitment of such Lender, whether or not utilized, from and including the first day of the Commitment Period until the Revolving Credit Termination Date, and on (ii) the outstanding principal amount of the Term Loans of such Lender, if any, thereafter. Such facility fee shall be payable quarterly in arrears on the last day of each March, June, September and December, on the Revolving Credit Termination Date or the Termination Date, as applicable, or such earlier date as the Commitments shall terminate as provided herein, commencing on the first of such dates to occur after the date hereof.
2.6 Termination or Reduction of Commitments. The Borrower shall have the right, upon not less than one Business Days' notice to the Administrative Agent, to terminate the
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Commitments or, from time to time, to reduce the amount of the Commitments, provided that after giving effect to such termination or reduction, the aggregate outstanding principal amount of the Loans shall not exceed the aggregate Commitments. Any such reduction shall be in an amount equal to $10,000,000 or a whole multiple of $1,000,000 in excess thereof and shall reduce permanently the Commitments then in effect. Termination of the Commitments shall also terminate the obligation of the Lenders to make the Term Loans.
2.7 Repayment of Revolving Credit Loans and Term Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender (i) subject to Section 2.3, the then unpaid principal amount of each Revolving Credit Loan of such Lender on the Revolving Credit Termination Date (or such earlier date on which the Revolving Credit Loans become due and payable pursuant to Section 7), and (ii) the principal amount of the Term Loan of such Lender on the Termination Date (or the then unpaid principal amount of such Term Loan, on the date that the Term Loans become due and payable pursuant to Section 7). The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Revolving Credit Loans and Term Loans from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in subsection 2.16.
(b) Each Lender shall maintain in accordance with its usual practice appropriate records evidencing indebtedness of the Borrower to such Lender resulting from each Revolving Credit Loan and Term Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.
(c) The Administrative Agent shall maintain the Register
pursuant to subsection 10.6(e), and a record therein for each Lender, in which
shall be recorded (i) the amount of each Revolving Credit Loan and Term Loan
made hereunder, the Type thereof and each Interest Period applicable thereto,
(ii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each Lender hereunder and (iii) both the amount
of any sum received by the Administrative Agent hereunder from the Borrower and
each Lender's share thereof.
(d) The entries made in the Register and the records of each Lender maintained pursuant to subsection 2.7(b) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain the Register or any such record, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Revolving Credit Loans and Term Loans made to such Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Administrative Agent by any Lender, the Borrower will execute and deliver to such Lender (i) a promissory note of the Borrower evidencing the Revolving Credit Loans of such Lender, substantially in the form of Exhibit A attached hereto with appropriate insertions as to date and principal amount (a "Revolving Credit Note"), and/or (ii) a promissory note of the Borrower evidencing the Term Loan of such Lender, substantially in the form of Exhibit B with appropriate insertions as to date and principal amount (a "Term Note").
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2.8 Optional Prepayments. The Borrower may at any time and from time to time prepay the Revolving Credit Loans or the Term Loans, in whole or in part, without premium or penalty (subject to Section 2.24), upon at least two Business Days' irrevocable notice to the Administrative Agent, if such prepayment is to be applied in whole or in part to LIBOR Loans, and upon same day notice otherwise (which notices shall be made on the relevant day not later than 10:00 A.M., New York City time), specifying the date and amount of prepayment and whether the prepayment is of LIBOR Loans, or a combination of LIBOR and ABR Loans, and, if of a combination thereof, the amount allocable to each; in the case of ABR Loans, notice shall be same day. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with any accrued interest to such date on the amount prepaid and any other amounts payable pursuant to subsection 2.24. Amounts prepaid on account of the Term Loans may not be reborrowed. Partial prepayments shall be in an aggregate principal amount of $10,000,000 or a whole multiple of $1,000,000 in excess thereof. The Borrower shall not have the right to prepay any principal amount of any CAF Advance except as provided in subsection 2.12(a). Prepayments of any Swing Line Loan shall be as provided in subsection 2.20(a).
2.9 Conversion and Continuation Options. (a) The Borrower may elect from time to time to convert LIBOR Loans to ABR Loans, by giving the Administrative Agent at least three Business Days' prior irrevocable notice of such election, provided that any such conversion of LIBOR Loans may only be made on the last day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert ABR Loans to LIBOR Loans by giving the Administrative Agent at least three Business Days' prior irrevocable notice of such election. Any such notice of conversion to LIBOR Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. All or any part of outstanding LIBOR Loans and ABR Loans may be converted as provided herein, provided that (i) no Revolving Credit Loan or Term Loan may be converted into a LIBOR Loan when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined that such a conversion is not appropriate, and (ii) no Swing Line Loan may be converted into a loan that bears interest at any rate other than the ABR.
(b) Any LIBOR Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving notice to the Administrative Agent, in accordance with the applicable provisions of the term "Interest Period" set forth in subsection 1.1, of the length of the next Interest Period to be applicable to such Revolving Credit Loans, provided that no LIBOR Loan may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined that such a continuation is not appropriate; and provided, further, that if the Borrower shall fail to give such notice or if such continuation is not permitted such Revolving Credit Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period.
2.10 CAF Advances. Subject to the terms and conditions of this Agreement, the Borrower may borrow CAF Advances from time to time on any Business Day during the CAF Advance Availability Period. CAF Advances may be borrowed in amounts such that the aggregate principal amount of all Loans outstanding at any time shall not exceed the aggregate
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amount of the Commitments at such time. Within the limits and on the conditions hereinafter set forth with respect to CAF Advances, the Borrower from time to time may borrow, repay and reborrow CAF Advances.
2.11 Procedure for CAF Advance Borrowing. (a) The Borrower shall request CAF Advances by delivering a CAF Advance Request to the Administrative Agent, not later than 12:00 Noon (New York City time) four Business Days prior to the proposed Borrowing Date (in the case of a LIBOR CAF Advance Request), and not later than 10:00 A.M., New York City time, one Business Day prior to the proposed Borrowing Date (in the case of a Fixed Rate CAF Advance Request). Each CAF Advance Request in respect of any Borrowing Date may solicit bids for CAF Advances on such Borrowing Date in an aggregate principal amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and having not more than three alternative CAF Advance Maturity Dates. The CAF Advance Maturity Date for each CAF Advance shall be the date set forth therefor in the relevant CAF Advance Request, which date shall be (i) not less than 7 days nor more than 60 days after the Borrowing Date therefor, in the case of a Fixed Rate CAF Advance, (ii) one or two months after the Borrowing Date therefor, in the case of a LIBOR CAF Advance and (iii) not later than the Revolving Credit Termination Date, in the case of any CAF Advance. The Administrative Agent shall notify each Lender promptly by facsimile transmission of the contents of each CAF Advance Request received by the Administrative Agent.
(b) In the case of a LIBOR CAF Advance Request, upon receipt of notice from the Administrative Agent of the contents of such CAF Advance Request, each Lender may elect, in its sole discretion, to offer irrevocably to make one or more CAF Advances at the applicable London Interbank Offered Rate plus (or minus) a margin determined by such Lender in its sole discretion for each such CAF Advance. Any such irrevocable offer shall be made by delivering a CAF Advance Offer to the Administrative Agent, before 10:30 A.M., New York City time, on the day that is three Business Days before the proposed Borrowing Date, setting forth:
(i) the maximum amount of CAF Advances for each CAF Advance Maturity Date and the aggregate maximum amount of CAF Advances for all CAF Advance Maturity Dates which such Lender would be willing to make (which amounts may, subject to subsection 2.10, exceed such Lender's Commitment); and
(ii) the margin above or below the applicable London Interbank Offered Rate at which such Lender is willing to make each such CAF Advance.
The Administrative Agent shall advise the Borrower before 11:00 A.M., New York City time, on the date which is three Business Days before the proposed Borrowing Date of the contents of each such CAF Advance Offer received by it. If the Administrative Agent, in its capacity as a Lender, shall elect, in its sole discretion, to make any such CAF Advance Offer, it shall advise the Borrower of the contents of its CAF Advance Offer before 10:15 A.M., New York City time, on the date which is three Business Days before the proposed Borrowing Date.
(c) In the case of a Fixed Rate CAF Advance Request, upon receipt of notice from the Administrative Agent of the contents of such CAF Advance Request, each Lender may elect, in its sole discretion, to offer irrevocably to make one or more CAF Advances at a rate of interest determined by such Lender in its sole discretion for each such CAF Advance. Any such
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irrevocable offer shall be made by delivering a CAF Advance Offer to the Administrative Agent before 9:30 A.M., New York City time, on the proposed Borrowing Date, setting forth:
(i) the maximum amount of CAF Advances for each CAF Advance Maturity Date, and the aggregate maximum amount for all CAF Advance Maturity Dates, which such Lender would be willing to make (which amounts may, subject to subsection 2.10, exceed such Lender's Commitment); and
(ii) the rate of interest at which such Leader is willing to make each such CAF Advance.
The Administrative Agent shall advise the Borrower before 10:00 A.M., New York City time, on the proposed Borrowing Date of the contents of each such CAF Advance Offer received by it. If the Administrative Agent, in its capacity as a Lender, shall elect, in its sole discretion, to make any such CAF Advance Offer, it shall advise the Borrower of the contents of its CAF Advance Offer before 9:15 A.M., New York City time, on the proposed Borrowing Date.
(d) Before 11:30 A.M., New York City time, three Business Days before the proposed Borrowing Date (in the case of CAF Advances requested by a LIBOR CAF Advance Request) and before 10:30 A.M., New York City time, on the proposed Borrowing Date (in the case of CAF Advances requested by a Fixed Rate CAF Advance Request), the Borrower, in its absolute discretion, shall:
(i) cancel such CAF Advance Request by giving the Administrative Agent telephone notice to that effect, or
(ii) by giving telephone notice to the Administrative Agent (immediately confirmed by delivery to the Administrative Agent of a CAF Advance Confirmation by facsimile transmission) (A) subject to the provisions of subsection 2.11(e), accept one or more of the offers made by any Lender or Lenders pursuant to subsection 2.11(b) or subsection 2.11(c), as the case may be, and (B) reject any remaining offers made by Lenders pursuant to subsection 2.11(b) or subsection 2.11(c), as the case may be.
(e) The Borrower's acceptance of CAF Advances in response to any CAF Advance Offers shall be subject to the following limitations:
(i) the amount of CAF Advances accepted for each CAF Advance Maturity Date specified by any Lender in its CAF Advance Offer shall not exceed the maximum amount for such CAF Advance Maturity Date specified in such CAF Advance Offer;
(ii) the aggregate amount of CAF Advances accepted for all CAF Advance Maturity Dates specified by any Lender in its CAF Advance Offer shall not exceed the aggregate maximum amount specified in such CAF Advance Offer for all such CAF Advance Maturity Dates;
(iii) the Borrower may not accept offers for CAF Advances for any CAF Advance Maturity Date in an aggregate principal amount in excess of the maximum principal amount requested in the related CAF Advance Request; and
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(iv) if the Borrower accepts any of such offers, it must accept offers based solely upon pricing for each relevant CAF Advance Maturity Date and upon no other criteria whatsoever, and if two or more Lenders submit offers for any CAF Advance Maturity Date at identical pricing and the Borrower accepts any of such offers but does not wish to (or, by reason of the limitations set forth in subsection 2.10, cannot) borrow the total amount offered by such Lenders with such identical pricing, the Borrower shall accept offers from all of such Lenders in amounts allocated among them pro rata according to the amounts offered by such Lenders (with appropriate rounding, in the sole discretion of the Borrower, to assure that each accepted CAF Advance is an integral multiple of $1,000,000); provided that if the number of Lenders that submit offers for any CAF Advance Maturity Date at identical pricing is such that, after the Borrower accepts such offers pro rata in accordance with the foregoing provisions of this paragraph, the CAF Advance to be made by any such Lender would be less than $5,000,000 principal amount, the number of such Lenders shall be reduced by the Administrative Agent by lot until the CAF Advances to be made by each such remaining Lender would be in a principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof.
(f) If the Borrower notifies the Administrative Agent that a CAF Advance Request is cancelled pursuant to subsection 2.11(d)(i), the Administrative Agent shall give prompt telephone notice thereof to the Lenders.
(g) If the Borrower accepts pursuant to subsection 2.11(d)(ii) one or more of the offers made by any Lender or Lenders, the Administrative Agent promptly shall notify each Lender which has made such an offer of (i) the aggregate amount of such CAF Advances to be made on such Borrowing Date for each CAF Advance Maturity Date and (ii) the acceptance or rejection of any offers to make such CAF Advances made by such Lender. Before 12:00 Noon (New York City time) on the Borrowing Date specified in the applicable CAF Advance Request, each Lender whose CAF Advance Offer has been accepted shall make available to the Administrative Agent at its office set forth in subsection 10.2 the amount of CAF Advances to be made by such Lender, in immediately available funds. The Administrative Agent will make such funds available to the Borrower as soon as practicable on such date at such office of the Administrative Agent. As soon as practicable after each Borrowing Date, the Administrative Agent shall notify each Lender of the aggregate amount of CAF Advances advanced on such Borrowing Date and the respective CAF Advance Maturity Dates thereof.
2.12 CAF Advance Payments. (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent, for the account of each Lender which has made a CAF Advance, on the applicable CAF Advance Maturity Date, the then unpaid principal amount of such CAF Advance. The Borrower shall not have the right to prepay any principal amount of any CAF Advance without the consent of the Lender to which such CAF Advance is owed.
(b) The Borrower hereby further agrees to pay interest on the unpaid principal amount of each CAF Advance from the Borrowing Date of such CAF Advance to the applicable CAF Advance Maturity Date at the rate of interest specified in the CAF Advance Offer accepted by the Borrower in connection with such CAF Advance (calculated on the basis of a 360-day year for actual days elapsed), payable on each applicable CAF Advance Interest Payment Date.
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(c) If any principal of, or interest on, any CAF Advance shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such CAF Advance shall, without limiting any rights of any Lender under this Agreement, bear interest from the date on which such payment was due at a rate per annum which is 2% per annum above the rate which would otherwise be applicable to such CAF Advance until the stated CAF Advance Maturity Date of such CAF Advance, and for each day thereafter at a rate per annum which is 2% per annum above the ABR, in each case until paid in full (as well after as before judgment). Interest accruing pursuant to this paragraph (c) shall be payable from time to time on demand.
2.13 Evidence of Debt. Each Lender shall maintain in accordance with its usual practice appropriate records evidencing indebtedness of the Borrower to such Lender resulting from each CAF Advance of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time in respect of such CAF Advance. The Administrative Agent shall maintain the Register pursuant to subsection 10.6(e), and a record therein for each Lender, in which shall be recorded (i) the amount of each CAF Advance made by such Lender, the CAF Advance Maturity Date thereof, the interest rate applicable thereto and each CAF Advance Interest Payment Date applicable thereto, and (ii) the amount of any sum received by the Administrative Agent hereunder from the Borrower on account of such CAF Advance. The entries made in the Register and the records of each Lender maintained pursuant to this subsection shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain the Register or any such record, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the CAF Advances made by such Lender in accordance with the terms of this Agreement.
2.14 Certain Restrictions. A CAF Advance Request may request offers for CAF Advances to be made on not more than one Borrowing Date and to mature on not more than three CAF Advance Maturity Dates. No CAF Advance Request may be submitted earlier than five Business Days after submission of any other CAF Advance Request.
2.15 Minimum Amounts of Tranches. All borrowings, conversions and continuations of Revolving Credit Loans and Term Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Revolving Credit Loans and Term Loans comprising each LIBOR Tranche shall be equal to $10,000,000 or a whole multiple of $1,000,000 in excess thereof. In no event shall there be more than five LIBOR Tranches outstanding at any time.
2.16 Interest Rates and Payment Dates. (a) Each LIBOR Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the London Interbank Offered Rate determined for such day plus the Applicable Margin.
(b) Each ABR Loan and Swing Line Loan shall bear interest at a rate per annum equal to the ABR. Each CAF Advance shall bear interest as provided in subsection 2.10.
(c) If all or a portion of (i) any principal of any Revolving
Credit Loan, Term Loan or Swing Line Loan, (ii) any interest payable thereon,
(iii) any facility fee or (iv) any other
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amount payable hereunder (other than overdue CAF payments provided for in subsection 2.12(c)) shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), the principal of the Revolving Credit Loans, Term-Loans and the Swing Line Loans and any such overdue interest, facility fee or other amount shall bear interest at a rate per annum which is (x) in the case of principal, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this subsection plus 2% per annum or (y) in the case of any such overdue interest, facility fee or other amount, the rate applicable to ABR Loans pursuant to subsection 2.16(b) plus 2% per annum, in each case from the date of such non-payment until such overdue principal, interest, facility fee or other amount is paid in full (as well after as before judgment).
(d) Interest on Revolving Credit Loans, Term Loans and Swing Line Loans shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this subsection shall be payable from time to time on demand.
2.17 Computation of Interest and Fees. (a) Whenever it is calculated on the basis of the ABR, interest shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed; and, otherwise, interest and the facility fee shall be calculated on the basis of a 360-day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of each determination of a London Interbank Offered Rate. Any change in the interest rate on a Loan resulting from a change in the ABR, the Eurocurrency Reserve Requirements, the C/D Assessment Rate or the C/D Reserve Percentage shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of the effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to subsection 2.16(a) or 2.9(b).
2.18 Inability to Determine Interest Rate. If prior to the first day of any Interest Period:
(a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the London Interbank Offered Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the Required Lenders that the London Interbank Offered Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as practicable thereafter. If such notice is given (x) any LIBOR Loans requested
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to be made on the first day of such Interest Period shall be made as ABR Loans,
(y) any Loans that were to have been converted on the first day of such Interest
Period to LIBOR Loans, shall be converted to or continued as ABR Loans and (z)
any outstanding LIBOR Loans shall be converted, on the first day of such
Interest Period, to ABR Loans. Until such notice has been withdrawn by the
Administrative Agent, no further LIBOR Loans shall be made or continued as such,
nor shall the Borrower have the right to convert Loans to LIBOR Loans, as the
case may be.
2.19 Pro Rata Treatment and Payments. (a) Each borrowing of Revolving Credit Loans and Term Loans by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any facility fee hereunder and any reduction of the Commitments of the Lenders shall be made pro rata according to the respective Commitment Percentages of the Lenders. Each payment (including each prepayment) by the Borrower on account of principal of and interest on any Loans shall be made pro rata according to the respective outstanding principal amounts of such Loans then held by the Lenders. All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without set-off or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Administrative Agent's office specified in subsection 10.2, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.
(b) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its allocable share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Rate for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. If such Lender's Commitment Percentage of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans hereunder, on demand, from the Borrower.
2.20 Swing Line Commitment. (a) Subject to the terms and conditions hereof, the Swing Line Lender agrees to make swing line loans ("Swing Line Loans") to the Borrower from time to time during the Commitment Period in an aggregate principal amount at any one time outstanding not to exceed $200,000,000, provided that the aggregate principal amount of all Loans outstanding at any one time shall not exceed the aggregate amount of the Commitments at such time. During the Commitment Period, the Borrower may use the Swing Line Commitment
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by borrowing, prepaying the Swing Line Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. All Swing Line Loans shall bear interest based upon the ABR and shall not be entitled to be converted into loans that bear interest at any other rate. The Borrower shall give the Swing Line Lender irrevocable notice (which notice must be received by the Swing Line Lender prior to 11:00 A.M., New York City time, on the requested Borrowing Date specifying the amount of the requested Swing Line Loan which shall be in a minimum amount of $100,000 or a whole multiple of $50,000 in excess thereof). The proceeds of the Swing Line Loan will be made available by the Swing Line Lender to the Borrower at the office of the Swing Line Lender by 3:00 P.M., New York City time, on the Borrowing Date by crediting the account of the Borrower at such office with such proceeds. The Borrower may, at any time and from time to time, prepay the Swing Line Loans, in whole or in part, without premium or penalty, by notifying the Swing Line Lender prior to 11:00 A.M., New York City time, on any Business Day of the date and amount of prepayment. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein. Partial prepayments shall be in an aggregate principal amount of $100,000 or a whole multiple of $50,000 in excess thereof.
(b) The Swing Line Loans shall be evidenced by a promissory note of the Borrower substantially in the form of Exhibit C to this Agreement, with appropriate insertions (the "Swing Line Note"), payable to the order of the Swing Line Lender and representing the obligation of the Borrower to pay the amount of the Swing Line Commitment or, if less, the unpaid principal amount of the Swing Line Loans, with interest thereon as prescribed in subsection 2.16. The Swing Line Lender is hereby authorized to record the Borrowing Date, the amount of each Swing Line Loan and the date and amount of each payment or prepayment of principal thereof, on the schedule annexed to and constituting a part of the Swing Line Note and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure by the Swing Line Lender to make any such recordation shall not affect any of the obligations of the Borrower under such Swing Line Note or this Agreement. The Swing Line Note shall (a) be dated the Closing Date, (b) be stated to mature on the Revolving Credit Termination Date and (c) bear interest for the period from the date thereof until paid in full on the unpaid principal amount thereof from time to time outstanding at the applicable interest rate per annum determined as provided in, and payable as specified in, subsection 2.16.
(c) The Swing Line Lender, at any time in its sole and absolute discretion may, on behalf of the Borrower (which hereby irrevocably directs the Swing Line Lender to act on its behalf) request each Lender including the Swing Line Lender, to make a Revolving Credit Loan in an amount equal to such Lender's Commitment Percentage of the amount of the Swing Line Loans outstanding on the date such notice is given (the "Outstanding Swing Line Loans"). Unless any of the events described in paragraph (f) of Section 7 shall have occurred with respect to the Borrower (in which event the procedures of paragraph (e) of this subsection shall apply) each Lender shall make the proceeds of its Revolving Credit Loan available to the Administrative Agent for the account of the Swing Line Lender at the office of the Administrative Agent specified in subsection 10.2 prior to 12:00 Noon (New York City time) in funds immediately available on the Business Day next succeeding the date such notice is given. The proceeds of such Revolving Credit Loans shall be immediately applied to repay the Outstanding Swing Line Loans. Effective on the day such Revolving Credit Loans are made, the portion of the Swing Line Loans so paid shall no longer be outstanding as Swing Line Loans,
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shall no longer be due under the Swing Line Note and shall be evidenced as provided in subsection 2.7(b). The Borrower authorizes the Swing Line Lender to charge the Borrower's accounts with the Administrative Agent (up to the amount available in each such account) in order to immediately pay the amount of such Outstanding Swing Line Loans to the extent amounts received from the Lenders are not sufficient to repay in full such Outstanding Swing Line Loans.
(d) Notwithstanding anything herein to the contrary, the Swing Line Lender shall not be obligated to make any Swing Line Loans if the conditions set forth in subsection 4.2 have not been satisfied.
(e) If prior to the making of a Revolving Credit Loan pursuant
to paragraph (c) of subsection 2.20 one of the events described in paragraph (f)
of Section 7 shall have occurred and be continuing with respect to the Borrower,
each Lender will, on the date such Revolving Credit Loan was to have been made
pursuant to the notice in subsection 2.20(c), purchase an undivided
participating interest in the Outstanding Swing Line Loan in an amount equal to
(i) its Commitment Percentage times (ii) the aggregate principal amount of Swing
Line Loans then outstanding. Each Lender will immediately transfer to the Swing
Line Lender, in immediately available funds, the amount of its participation,
and upon receipt thereof the Swing Line Lender will deliver to such Lender a
Swing Line Loan Participation Certificate dated the date of receipt of such
funds and in such amount.
(f) Whenever, at any time after any Lender has purchased a participating interest in a Swing Line Loan, the Swing Line Lender receives any payment on account thereof, the Swing Line Lender will distribute to such Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded); provided, however, that in the event that such payment received by the Swing Line Lender is required to be returned, such Lender will return to the Swing Line Lender any portion thereof previously distributed by the Swing Line Lender to it.
(g) Each Lender's obligation to make the Revolving Credit
Loans referred to in subsection 2.20(c) and to purchase participating interests
pursuant to subsection 2.20(e) shall be absolute and unconditional and shall not
be affected by any circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Lender or the
Borrower may have against the Swing Line Lender, the Borrower or any other
Person for any reason whatsoever, (ii) the occurrence or continuance of a
Default or an Event of Default; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any Subsidiary or any other Lender; or
(v) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
2.21 Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain LIBOR Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make LIBOR Loans, continue LIBOR Loans as such and convert ABR Loans to LIBOR Loans shall forthwith be cancelled and (b) such Lender's Loans then outstanding as LIBOR Loans, if any, shall be converted
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automatically to ABR Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a LIBOR Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to subsection 2.22.
2.22 Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Note or any LIBOR Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes covered by subsection 2.23 and changes in the rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the London Interbank Offered Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining LIBOR Loans or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender's or such corporation's capital as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, the Borrower shall promptly pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts pursuant to paragraphs (a) or (b) of this Section 2.22, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled and of the basis for the calculation of such additional amounts; provided that the Borrower shall not be required to compensate a Lender pursuant to such paragraph for any increased costs incurred
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more than 180 days prior to the date that such Lender notifies the Borrower of the change giving rise to such increased costs and of such Lender's intention to claim compensation therefor; provided, further that, if the change giving rise to such increased costs is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. A certificate as to any additional amounts payable pursuant to this Section submitted by such Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
2.23 Taxes. (a) All payments made by the Borrower under this Agreement and any Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent or any Lender as a result of a present or former connection between the Administrative Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any Note). If any such non-excluded taxes, levies, imposts, duties, charges, fees deductions or withholdings ("Non-Excluded Taxes" ) are required to be withheld from any amounts payable to the Administrative Agent or any Lender hereunder or under any Note, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement, provided, however, that the Borrower shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the United States or a state thereof if such Lender fails to comply with the requirements of paragraph (b) of this subsection. Whenever any Non-Excluded Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Administrative Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United States or a state thereof shall:
(i) deliver to the Borrower and the Administrative Agent two duly completed copies of United States Internal Revenue Service Form W-8 BEN or W-8 ECI, or successor applicable form, as the case may be;
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(ii) deliver to the Borrower and the Administrative Agent two further copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Borrower or the Administrative Agent;
unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender so advises the Borrower and the Administrative Agent. Such Lender shall certify that it is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes. Each Person that shall become a Lender or a Participant pursuant to subsection 10.6 shall, upon the effectiveness of the related transfer, be required to provide all of the forms and statements required pursuant to this subsection, provided that in the case of a Participant such Participant shall furnish all such required forms and statements to the Lender from which the related participation shall have been purchased.
2.24 Indemnity. The Borrower agrees to indemnify each
Lender and to hold each Lender harmless from any loss or expense which such
Lender may sustain or incur as a consequence of (a) default by the Borrower in
making either (i) a borrowing of LIBOR Loans (including without limitation Term
Loans) or LIBOR CAF Advances or (ii) a conversion into or continuation of LIBOR
Loans, in each case after the Borrower has given a notice requesting the same in
accordance with the provisions of this Agreement (in the case of a borrowing of
LIBOR CAF Advances, so long as the Borrower shall have accepted a CAF Advance
offered in connection with any such notice), (b) default by the Borrower in
making any prepayment after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of either (i)
a prepayment of LIBOR Loans, LIBOR CAF Advances or Fixed Rate CAF Advances or
(ii) a conversion of LIBOR Loans, in each case on a day which is not the last
day of an Interest Period with respect thereto. Such indemnification may include
an amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. This covenant shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
2.25 Commitment Increases. (a) In the event that Borrower wishes to increase the aggregate Commitments, it shall notify the Lenders (through the Administrative Agent) of the amount of such proposed increase (such notice, a "Commitment Increase Offer"). Each
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Commitment Increase Offer shall offer the Lenders the opportunity to participate in the increased Commitments ratably in accordance with their respective Commitment Percentages. In the event that any Lender (each, a "Declining Lender") shall fail to accept in writing a Commitment Increase Offer within 10 Business Days after receiving notice thereof, all or any portion of the proposed increase in the Commitments offered to the Declining Lenders (the aggregate of such offered amounts, the "Declined Amount") may instead be allocated to any one or more additional banks, financial institutions or other entities pursuant to paragraph (b) below and/or to any one or more existing Lenders pursuant to paragraph (c)(ii) below.
(b) Any additional bank, financial institution or other entity (herein called a "New Lender") which, with the consent of the Borrower and the Administrative Agent, elects to become a party to this Agreement and obtain a Commitment in an amount equal to all or any portion of a Declined Amount shall execute a New Lender Supplement (each, a "New Lender Supplement") with the Borrower and the Administrative Agent, substantially in the form of Exhibit K-1, whereupon such New Lender shall become a Lender for all purposes and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement, and Schedule 1.2 shall be deemed to be amended to add the name and Commitment of such New Lender.
(c) Any Lender which (i) accepts a Commitment Increase Offer pursuant to subsection 2.25(a) or (ii) with the consent of the Borrower, elects to increase its Commitment by an amount equal to all or any portion of a Declined Amount shall, in each case, execute a Commitment Increase Supplement (each, a "Commitment Increase Supplement") with the Borrower and the Administrative Agent, substantially in the form of Exhibit K-2, whereupon such Lender shall be bound by and entitled to the benefits of this Agreement with respect to the full amount of its Commitment as so increased, and Schedule 1.2 shall be deemed to be amended to so increase the Commitment of such Lender.
(d) If on the date upon which a bank, financial institution or other entity becomes a New Lender pursuant to subsection 2.25(b) or upon which a Lender's Commitment is increased pursuant to subsection 2.25(a) or (c) there is an unpaid principal amount of Revolving Credit Loans, the Borrower shall borrow Revolving Credit Loans from the Lenders and/or (subject to compliance by the Borrower with subsection 2.24) prepay Revolving Credit Loans of the Lenders such that, after giving effect thereto, the Revolving Credit Loans (including, without limitation, the Types thereof and Interest Periods with respect thereto) shall be held by the Lenders (including for such purposes the New Lenders) pro rata according to their respective Commitment Percentages.
(e) Notwithstanding anything to the contrary in this
subsection, (i) in no event shall any transaction effected pursuant to this
subsection cause (x) the aggregate Commitments to exceed $1,700,000,000 or (y)
an increase in the aggregate Commitments of an amount less than $100,000,000,
(ii) the aggregate amount of any increase in Commitments pursuant to subsection
2.25(b) or (c)(ii) shall be limited to the relevant Declined Amount and (iii) no
Lender shall have any obligation to increase its Commitment unless it agrees to
do so in its sole discretion.
2.26 Commitment Extensions. (a) The Borrower may, not earlier than 60 days and not later than 45 days before the Revolving Credit Termination Date, by notice to the
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Administrative Agent request that the Revolving Credit Termination Date then in effect (the "Existing Revolving Credit Termination Date") be extended to the date 364 days after the Existing Commitment Termination Date. The Administrative Agent shall promptly notify the Lenders of such request.
(b) Each Lender, in its sole discretion, shall advise the Administrative Agent whether or not such Lender agrees to such extension. If a Lender agrees to renew its Commitment (an "Extending Lender"), it shall notify the Administrative Agent, in writing, of its decision to do so not earlier than 45 days and not later than 30 days prior to the Existing Revolving Credit Termination Date. A Lender that determines not to so extend its Commitment shall so notify the Administrative Agent promptly after making such determination and is herein called a "Non-Extending Lender". If a Lender does not give timely notice to the Administrative Agent of whether or not such Lender agrees to such extension, it shall be deemed to be a Non-Extending Lender.
(c) The Administrative Agent shall notify the Borrower of each Lender's determination not earlier than 30 days and not later than 20 days prior to the Existing Revolving Credit Termination Date.
(d) The Borrower shall have the right to accept Commitments from New Lenders, each of which shall be acceptable to the Administrative Agent, in an aggregate amount equal to the amount of the Commitments of any Non-Extending Lender, provided that the Extending Lenders shall have the right to increase their Commitments up to the aggregate amount of the Non-Extending Lenders' Commitments before the Borrower shall be permitted to substitute any New Lenders for Non-Extending Lenders.
(e) If and only if (i) more than 50% of the total of the Commitments is extended or otherwise committed to by Extending Lenders and any New Lenders, and (ii) immediately prior to the Existing Revolving Credit Termination Date no Default has occurred and is continuing and the representations and warranties of the Borrower set forth in Section 3 shall be true and correct in all material respects on and as of the Existing Revolving Credit Termination Date as though made on and as of such date, and subject to each New Lender having executed a New Lender Supplement (on the effective date of which such New Lender shall become a Lender for all purposes and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement), then effective on the Existing Revolving Credit Termination Date the Revolving Credit Termination Date shall be extended to the date 364 days after the Existing Revolving Credit Termination Date (or, if such day is not a Business Day, the immediately preceding Business Day) which date shall thereafter be the Revolving Credit Termination Date, provided that the Commitment of each Non-Extending Lender shall in any event terminate on the Existing Revolving Credit Termination Date and the Borrower shall pay in full on the Existing Revolving Credit Termination Date all amounts payable to each Non-Extending Lender hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans, the Borrower and, in the case of Sections 3.3, 3.4, 3.5 and 3.14, each
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Obligor with respect to itself, hereby represents and warrants to the Administrative Agent and each Lender that:
3.1 Financial Condition. The consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at December 31, 2002 and the related consolidated statements of income and of cash flows for the fiscal year ended on such date, reported on by PricewaterhouseCoopers LLP, copies of which have heretofore been furnished to each Lender, are complete and correct in all material respects and present fairly the consolidated financial condition of the Borrower and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the fiscal year then ended. The unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at March 31, 2003 and the related unaudited consolidated statements of income and of cash flows for the three-month period ended on such date, certified by a Responsible Officer, copies of which have heretofore been furnished to each Lender, are complete and correct in all material respects and present fairly the consolidated financial condition of the Borrower and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the three-month period then ended (subject to normal year-end audit adjustments). All such financial statements have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants or Responsible Officer, as the case may be, and as disclosed therein). Neither the Borrower nor any of its consolidated Subsidiaries had, at the date of the most recent balance sheet referred to above, any material Guarantee outside the ordinary course of business, contingent liability or liability for taxes, or any long-term lease or unusual forward or long-term commitment which in the aggregate may reasonably be expected to have a Material Adverse Effect, including, without limitation, any interest rate or foreign currency swap or exchange transaction (except as listed on Schedule 3.1 attached hereto), which is not reflected in the foregoing statements or in the notes thereto. Except as heretofore disclosed to the Lenders, during the period from December 31, 2002 to and including the date hereof there has been no sale, transfer or other disposition by the Borrower or any of its consolidated Subsidiaries of any material part of its business or property and no purchase or other acquisition of any business or property (including any capital stock of any other Person) material in relation to the consolidated financial condition of the Borrower and its consolidated Subsidiaries at December 31, 2002.
3.2 No Change. Since December 31, 2002 there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect.
3.3 Existence; Compliance with Law. Each Obligor and its
Subsidiaries (a) is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization (provided, that
no representation is made under this clause (a) with respect to any Foreign
Subsidiary that is not a Material Foreign Subsidiary of an Obligor if the
failure of such Foreign Subsidiary to be duly organized, validly existing or in
good standing as aforesaid could not reasonably be expected to have a Material
Adverse Effect), (b) has the power and authority, and the legal right, to own
and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign entity and in good standing under the laws of each jurisdiction (other
than that of its organization) where its ownership, lease or operation of
property or the conduct of its business requires such qualification and (d) is
in compliance with all Requirements of Law, except in the case of clause (c) or
(d) above, to the extent that the failure to qualify as a foreign entity or to
be
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in good standing or to comply with any Requirement of Law could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations. Each Obligor has the corporate power and authority, and the legal right, to make, deliver, and perform the Loan Documents to which it is a party and to borrow hereunder and has taken all necessary corporate action to authorize the borrowings on the terms and conditions of this Agreement and any Notes and to authorize the execution, delivery and performance of the Loan Documents to which it is a party. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of the Loan Documents to which either Obligor is a party. This Agreement has been, and each other Loan Document to which it is a party will be, duly executed and delivered on behalf of each Obligor. This Agreement constitutes, and each other Loan Document to which it is a party when executed and delivered will constitute, a legal, valid and binding obligation of each Obligor enforceable against such Obligor in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.
3.5 No Legal Bar. The execution, delivery and performance of the Loan Documents to which each Obligor is a party, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or Contractual Obligation of such Obligor and will not result in, or require, the creation or imposition of any Lien on any of its or their respective properties or revenues pursuant to any such Requirement of Law or Contractual Obligation.
3.6 No Material Litigation. Except as listed on Schedule
3.6 or as previously disclosed to the Lenders in connection with the information
provided pursuant to Section 3.1 no litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any of its
Subsidiaries or against any of its or their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) which could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
3.7 No Default. Neither the Borrower nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.
3.8 Ownership of Property; Liens. Each of the Borrower and its Subsidiaries has good record and marketable title in fee simple to, or a valid leasehold interest in, all its material real property, and good title to, or a valid leasehold interest in, all its other material property, and none of such property is subject to any Lien except as permitted by subsection 6.2.
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3.9 Intellectual Property. The Borrower and each of its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, technology, know-how and processes necessary for the conduct of its business as currently conducted except for those the failure to own or license which could not reasonably be expected to have a Material Adverse Effect (the "Intellectual Property"). No claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does International know of any valid basis for any such claim, except for such claims that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. The use of such Intellectual Property by the Borrower and its Subsidiaries does not infringe on the rights of any Person, except for such claims and infringements that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
3.10 No Burdensome Restrictions. No Requirement of Law or Contractual Obligation of the Borrower or any of its Subsidiaries could reasonably be expected to have a Material Adverse Effect.
3.11 Taxes. Each of the Borrower and its Subsidiaries has filed or caused to be filed all tax returns which, to the knowledge of the Borrower, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority, except (a) any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower or its Subsidiaries, as the case may be or (b) to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect); no tax Lien has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge.
3.12 Federal Regulations. Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose (whether immediate, incidental or ultimate) of buying or carrying Margin Stock. No part of the proceeds of any Loans will be used directly or indirectly for the purpose (whether immediate, incidental or ultimate) of buying or carrying Margin Stock or for any purpose that violates the provisions of the regulations of the Board. If requested by any Lender or the Administrative Agent, the Borrower will furnish to each Lender and the Administrative Agent a statement in conformity with the requirements of Federal Reserve Form FR U-1 or FR G-3, as appropriate, referred to in Regulation U, to demonstrate the compliance of any borrowing hereunder with Regulation U.
3.13 ERISA. Neither a Reportable Event nor an "accumulated funding deficiency" (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Single Employer Plan that could reasonably be expected to have a Material Adverse Effect, and each Plan has complied with the applicable provisions of ERISA and the Code to the extent that the failure to comply could not reasonably be expected to have a Material Adverse Effect. No termination of a Single Employer Plan has occurred (other than via a "standard termination" as defined in Section 4041(b) of ERISA), and no Lien in favor of the PBGC or a Single Employer Plan has arisen, during such five-year period that could
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reasonably be expected to have a Material Adverse Effect. The excess, if any, of the present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans), as of the last annual valuation date prior to the date on which this representation is made or deemed made, over the value of the assets of such Plan allocable to such accrued benefits could not reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan that could reasonably be expected to have a Material Adverse Effect, and neither the Borrower nor any Commonly Controlled Entity would become subject to any liability under ERISA that could reasonably be expected to have a Material Adverse Effect if the Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made. To the best knowledge of the Borrower, no such Multiemployer Plan is in Reorganization or Insolvent. The excess, if any, of the present value (determined using actuarial and other assumptions which are reasonable in respect of the benefits provided and the employees participating) of the liability of the Borrower for post retirement benefits to be provided to their current and former employees under Plans which are welfare benefit plans (as defined in Section 3(l) of ERISA) over the assets under all such Plans allocable to such benefits could not reasonably be expected to have a Material Adverse Effect.
3.14 Investment Company Act; Other Regulations. Neither of the Obligors is an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. Neither of the Obligors is subject to regulation under any Federal or State statute or regulation (other than Regulation X of the Board) which limits its ability to incur Indebtedness.
3.15 Subsidiaries. Schedule 3.15 lists each Subsidiary of the Borrower (and the direct and indirect ownership interest of the Borrower therein), in each case existing on March 31, 2003. The Borrower will at all times own directly or indirectly at least the same percentage of the outstanding capital stock or other ownership interests, if any, of said Subsidiaries indicated on Schedule 3.15 as is owned by the Borrower as of the date hereof except to the extent the disposition thereof would not violate Section 6.4.
3.16 Purpose of Loans. The proceeds of the Loans shall be used by the Borrower and its Subsidiaries solely to ensure the integrity of the MasterCard payment system in the event of settlement failure by one or more of its members, including failure by one or more of its members to meet merchant payment obligations, and to refinance outstanding loans, if any, under the agreement referred to in Section 4.1(i).
3.17 Environmental Matters. (a) To the best knowledge of the Borrower, the facilities and properties owned, leased or operated by the Borrower or any of its Subsidiaries (the "Properties") do not contain, and have not previously contained, any Materials of Environmental Concern in amounts or concentrations which (i) constitute or constituted a violation of, or (ii) could reasonably be expected to give rise to liability under, any Environmental Law.
(b) The Properties and all operations at the Properties are in compliance in all material respects with all applicable Environmental Laws, and there is no contamination at, under or about the Properties or violation of any Environmental Law with respect to the Properties or the business operated by the Borrower or any of its Subsidiaries (the "Business")
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which could materially interfere with the continued operation of the Properties or materially impair the fair saleable value thereof.
(c) Neither the Borrower nor any of its Subsidiaries has received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the Business, nor does the Borrower have knowledge or reason to believe that any such notice will be received or is being threatened.
(d) No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Borrower, threatened, under any Environmental Law to which the Borrower or any Subsidiary is or will be named as a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business.
3.18 Solvency. The Borrower is, and after giving effect to each borrowing hereunder will be, Solvent.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loan. The agreement of each Lender to make the initial Loan requested to be made by it is subject to the satisfaction of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i) this Agreement, executed and delivered by a duly authorized officer of each Obligor, with a counterpart for each Lender, and (ii) for the account of the Swing Line Lender, the Swing Line Note conforming to the requirements hereof and executed by a duly authorized officer of the Borrower.
(b) Related Agreements. The Administrative Agent shall have received, with a copy for each Lender, true and correct copies, certified as to authenticity by the Borrower, of such other documents or instruments as may be reasonably requested by the Administrative Agent on or prior to the Closing Date, including, without limitation, a copy of any debt instrument, security agreement or other material contract to which the Borrower or its Subsidiaries may be a party.
(c) Closing Certificate. The Administrative Agent shall have received, with a copy for each Lender, a closing certificate of each Obligor, dated the Closing Date, substantially in the form of Exhibit I, with appropriate insertions and attachments, satisfactory in form and substance to the Administrative Agent, executed by the President or any Vice President and the Secretary or any Assistant Secretary of each Obligor.
(d) Corporate Proceedings. The Administrative Agent shall have received, with a copy for each Lender, a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of each Obligor authorizing (i) the execution, delivery and performance by such Obligor of this Agreement and the other
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Loan Documents to which it is a party and (ii) in the case of the Borrower, the making of the borrowings contemplated hereunder and, in the case of International, the guarantee thereof as provided herein, certified by its Secretary or an Assistant Secretary as of the Closing Date, which certificate shall be in form and substance satisfactory to the Administrative Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded.
(e) Incumbency Certificate. The Administrative Agent shall have received, with a copy for each Lender, a certificate of each Obligor, dated the Closing Date, as to the incumbency and signature of its officers executing any Loan Document, satisfactory in form and substance to the Administrative Agent, executed by its President or any Vice President and its Secretary or any Assistant Secretary.
(f) Corporate Documents. The Administrative Agent shall have received, with a copy for each Lender, true and complete copies of the certificate of incorporation and by-laws of each Obligor, certified as of the Closing Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of such Obligor.
(g) Fees. The Administrative Agent shall have received the fees to be received on the Closing Date.
(h) Legal Opinions. The Administrative Agent shall have received, with a counterpart for each Lender, the executed legal opinion of Noah J. Hanft, General Counsel and Secretary of the Borrower and International substantially in the form of Exhibit F. Such legal opinion shall be dated as of the Closing Date and cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require.
(i) Existing Agreement. The Administrative Agent shall have received evidence satisfactory to it that the commitments under the existing $1,200,000,000 Credit Agreement, dated as of June 4, 2002 among the Borrower, International, certain financial institutions, Citibank, N.A. as Administrative Agent and JPMorgan Chase Bank, as Backup Agent (the "Existing Credit Agreement"), shall have been canceled and all amounts outstanding thereunder shall have been repaid as of the Closing Date (and each Lender which is a party to the Existing Credit Agreement hereby waives compliance with the requirement under Section 2.6 of the Existing Credit Agreement for the giving of five Business Days' prior written notice for termination of the commitments thereunder).
4.2 Conditions to Each Loan. The agreement of each Lender to make any Loan requested to be made by it on any date (including, without limitation, its initial Loan and its Term Loan) is subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and warranties made by the Obligors in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date, except for representations and warranties expressly stated to relate to a specific earlier date, in which case such representations and warranties were true and correct as of such earlier date.
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(b) No Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Loans requested to be made on such date.
Each borrowing by the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date thereof that the conditions contained in this subsection have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in effect or any amount is owing to any Lender or the Administrative Agent hereunder or under any other Loan Document, the Borrower shall and (except in the case of delivery of financial information, reports and notices) shall cause each of its Subsidiaries to:
5.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 120 days after the end of each fiscal year of the Borrower, a copy of the consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of income and retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by PricewaterhouseCoopers LLP or other independent certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 60 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and retained earnings of such quarter and of cash flows of the Borrower and its consolidated Subsidiaries for the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year or, in the case of such consolidated balance sheet, for the last day of the prior fiscal year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein). Information required to be delivered pursuant to this
Section 5.1 shall be deemed to have been delivered to the Lenders on the date on
which the Borrower provides written notice to the Lenders that such information
has been posted on the Borrower's website on the Internet at
http://www.mastercardintl.com or is available on the website of the Securities
and Exchange Commission or any successor at http://www.sec.gov (to the extent
such information has been posted or is available as described in such notice).
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5.2 Certificates; Other Information. Furnish to the Administrative Agent:
(a) concurrently with the delivery of the financial statements referred to in subsection 5.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any failure by the Borrower to comply with subsections 6.1, 6.4 or 6.5, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements referred to in subsections 5.1(a) and (b), a certificate of a Responsible Officer, substantially in the form of Exhibit J, stating that, to the best of such Officer's knowledge, during such period the Borrower has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and the other Loan Documents to be observed, performed or satisfied by it, and that such Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate;
(c) within five days after the same are sent, copies of all financial statements and reports which the Borrower sends to shareholders generally, and within five days after the same are filed, copies of all financial statements and reports which the Borrower may make to, or file with, the Securities and Exchange Commission or any successor or analogous Governmental Authority; provided, that any such financial statement or report shall be deemed to have been delivered on the date that the Borrower notifies the Administrative Agent that such financial statement or report is available on "EDGAR", the Electronic Data Gathering, Analysis and Retrieval system of the Securities and Exchange Commission, or "http://www.sec.gov/edgar.shtml"); and
(d) promptly, such additional financial and other information (other than any non-public information or materials pertaining to the Borrower's proprietary new products, systems or services, proprietary marketing programs, strategies or plans, or any member specific billing, contractual or other arrangements) as the Administrative Agent or any Lender through the Administrative Agent may from time to time reasonably request.
5.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever nature, except (i) where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or its Subsidiaries, as the case may be or
(ii) to the extent that failure to comply therewith could not, in the aggregate,
be reasonably expected to have a Material Adverse Effect.
5.4 Conduct of Business and Maintenance of Existence. Continue to engage in business of the same general type as now conducted by it and preserve, renew and keep in full force and effect its existence and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business except as otherwise permitted pursuant to Section 6.3 or 6.9 unless the failure to do so could not reasonably be expected to have a Material Adverse Effect; and comply with all Contractual Obligations and
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Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, be reasonably expected to have a Material Adverse Effect.
5.5 Maintenance of Property; Insurance. Keep all property material to the business of the Borrower and its Subsidiaries taken as a whole in good working order and condition ordinary wear and tear excepted; maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies engaged in the same or a similar business; and furnish to each Lender, upon written request, full information as to the insurance carried.
5.6 Inspection of Property; Books and Records; Discussions. Keep proper books of records and account in which full, true and correct entries in conformity with GAAP (or such other commonly accepted accounting practice which has been previously disclosed to the Administrative Agent) and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of any Lender (coordinated through the Administrative Agent) to, upon reasonable notice, visit and inspect any of its properties (not more than one time in any fiscal year) and examine and make abstracts from any of its books and records (other than any non-public information or materials pertaining to (i) its proprietary new products, systems or services, (ii) its proprietary marketing programs, strategies or plans, or (iii) any member specific billing, contractual or other arrangements) at any reasonable time and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Borrower and its Subsidiaries with officers and employees of the Borrower and its Subsidiaries and with its independent certified public accountants; provided that if a Default or Event of Default shall have occurred and be continuing, such visits and inspections (coordinated through the Administrative Agent) may be conducted at any time upon reasonable notice.
5.7 Notices. Promptly give notice to the Administrative Agent for distribution to the Lenders of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries or (ii) litigation, investigation or proceeding which may exist at any time between the Borrower or any of its Subsidiaries and any Governmental Authority, which in either case, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its Subsidiaries in which the amount involved is $50,000,000 or more and not covered by insurance or in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required contribution to any
"pension plan" (as defined in Section 3(2) of ERISA), the creation of
any Lien in favor of the PBGC or a Plan that could reasonably be
expected to
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result in a liability or Lien in excess of $10,000,000 or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Multiemployer Plan, except where the termination, Reorganization or Insolvency of any Multiemployer Plan could not reasonably be expected to result in a liability in excess of $10,000,000; and
(e) any material adverse change in the business, operations, property or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
Notices and other communications to the Lenders required pursuant to paragraphs
(b), (c), (d) and (e) of this Section 5.7 may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative
Agent.
5.8 Environment Laws. (a) Comply with, and ensure compliance by all tenants and subtenants, if any, with, all applicable Environmental Laws and obtain and comply in all material respects with and maintain, and ensure that all tenants and subtenants obtain and comply in all material respects with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws except to the extent that failure to do so could not be reasonably expected to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws except to the extent that the same are being contested in good faith by appropriate proceedings and the pendency of such proceedings could not be reasonably expected to have a Material Adverse Effect.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in effect or any amount is owing to any Lender or the Administrative Agent hereunder or under any other Loan Document, the Borrower shall not and shall not permit any of its Subsidiaries to, directly or indirectly:
6.1 Maintenance of Net Worth. Permit Consolidated Net Worth of the Borrower at any time to be less than the sum of (i) $475,000,000 plus (ii) an amount equal to 50% of the sum of Consolidated Net Income (if positive) of the Borrower for each fiscal quarter ending after March 31, 2003.
6.2 Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for:
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(a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Borrower or its Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation and deposits securing liability to insurance carriers under insurance or self-insurance arrangements;
(d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar encumbrances which, in the aggregate, do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries taken as a whole;
(f) Liens in existence on the date hereof listed on Schedule 6.2(f), provided that no such Lien is spread to cover any additional property after the Closing Date and that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower and its
Subsidiaries incurred to finance the acquisition of fixed or capital
assets, provided that (i) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital assets and
(ii) such Liens do not at any time encumber any property other than the
property financed by such Indebtedness;
(h) bankers' liens arising by operation of law;
(i) Liens on the property or assets of a corporation which becomes a Subsidiary on or after the date hereof securing Indebtedness of such corporation, provided that (i) such Liens existed at the time such corporation became a Subsidiary and were not created in anticipation thereof and (ii) any such Lien is not spread to cover any property or assets of such corporation after the time such corporation becomes a Subsidiary;
(j) Liens arising out of judgments or awards (x) which are bonded or (y) with respect to which an appeal or a proceeding for review is being prosecuted in good faith and adequate reserves have been provided for the payment of such judgment or award;
(k) Liens in favor of the Borrower which secure the obligation of any Subsidiary to the Borrower; and
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(l) Liens (not otherwise permitted hereunder) which secure obligations not exceeding (as to the Borrower and all Subsidiaries) $20,000,000 in aggregate amount at any time outstanding.
6.3 Limitation on Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or substantially all of its property, business or assets, or make any material change in its present method of conducting business (taking the Borrower and its Subsidiaries as a whole), except:
(a) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower or International (provided that the Borrower or International, as the case may be, shall be the continuing or surviving corporation) or with or into any one or more wholly owned Subsidiaries of the Borrower (provided that the wholly owned Subsidiary or Subsidiaries shall be the continuing or surviving corporation);
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or International or any other wholly owned Subsidiary of the Borrower, subject, however, to the limitations set forth in Sections 6.4 and 6.6 below; and
(c) as permitted by subsection 6.4.
6.4 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, receivables and leasehold interests), whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any Person other than the Borrower or any wholly owned Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out property in the ordinary course of business;
(b) the sale or other disposition of any property; provided that (i) the aggregate book value of all assets so sold or disposed of pursuant to this clause (b) in any period of twelve consecutive months shall not exceed an amount equal to 20% of consolidated total assets of the Borrower and its Subsidiaries as at the beginning of such twelve-month period; and (ii) the aggregate book value of all assets so sold or disposed of pursuant to this clause (b) to Subsidiaries of the Borrower that are not also Subsidiaries of International by the Borrower and its Subsidiaries (other than by Subsidiaries of Inc. that are not also Subsidiaries of International) during any period of twelve consecutive calendar months commencing with and including May, 2003 shall not exceed an amount equal to 30% of consolidated total assets of International and its Subsidiaries as at the beginning of such twelve-month period;
(c) the sale or disposition of the headquarters of the Borrower located at 2000 Purchase Street, Purchase, New York 10577-2509;
(d) the sale of inventory in the ordinary course of business;
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(e) the sale or discount without recourse of accounts receivable arising in the ordinary course of business in connection with the compromise or collection thereof; and
(f) as permitted by subsection 6.3(b).
6.5 Limitation on Dividends. Declare or pay any dividend exceeding 40% of Consolidated Net Income in any fiscal year (other than dividends payable solely in common stock of the Borrower) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any shares of any class of Capital Stock of the Borrower or any warrants or options to purchase any such Stock, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Borrower or any Subsidiary. The provisions hereunder shall in no way limit the ability of any Subsidiary to make dividend payments to the Borrower or any other shareholder of such Subsidiary.
6.6 Limitation on Investments, Loans and Advances. Make any advance, loan, extension of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person, except Permitted Investments.
6.7 Limitation on Transactions with Affiliates. Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate (other than any transaction permitted by the terms of this Agreement and any transaction between the Borrower and its consolidated Subsidiaries) unless such transaction is upon fair and reasonable terms.
6.8 Limitation on Changes in Fiscal Year. Permit the fiscal year of the Borrower to end on a day other than December 31; provided that, the Borrower may change its fiscal year with the consent of the Administrative Agent, which consent shall not unreasonably be withheld.
6.9 Limitation on Lines of Business. Enter into any business, either directly or through any Subsidiary, except for businesses (a) in which the Borrower and its Subsidiaries are engaged on the date of this Agreement or (b) which, after giving effect to such new business, would not result in a change in the primary business of the Borrower and its Subsidiaries, taken as a whole, on the date hereof.
6.10 Upstreaming. Permit any of its Domestic Subsidiaries to enter into, create or assume or suffer to exist any indenture, agreement or other contractual arrangement that prohibits any such Subsidiary from declaring or paying dividends or other distributions on any class of stock or membership interest of such Subsidiary other than restrictions existing on the date of this Agreement contained in agreements or arrangements listed on Schedule 6.10 or otherwise disclosed to the Lenders prior to such date (including restrictions in any amendment or replacement of any such agreements or arrangements), and restrictions in future agreements or arrangements substantially similar to such restrictions, it being agreed that customary financial covenants and other agreements affecting maintenance or retention of assets or capital by a Subsidiary shall not be deemed to be restrictions limited by this Section 6.10.
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SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due in accordance with the terms thereof or hereof; or the Borrower shall fail to pay any interest on any Loan, or any other amount payable hereunder, within five days after any such interest or other amount becomes due in accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by either Obligor herein or in any other Loan Document or which is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or
(c) The Borrower shall default in the observance or performance of any agreement contained in Section 6; or
(d) Either Obligor shall default in the observance or performance of any other term, covenant or agreement contained in this Agreement (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days after notice to the Borrower by the Administrative Agent or the Required Lenders; or
(e) The Borrower or any of its Subsidiaries shall (i) default in any payment of principal of or interest of any Indebtedness (other than the Loans) in excess of $10,000,000 individually or $25,000,000 in the aggregate, beyond the period of grace (not to exceed 30 days), if any, provided in the instrument or agreement under which such Indebtedness was created, or (ii) fail to observe or perform any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which failure or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity (provided that failure to observe or perform any such agreement or condition referred to in this clause (ii) shall not be deemed to be an Event of Default until the grace period provided for in such instrument or agreement with respect to such agreement or condition has elapsed or, if no grace period is specified, such failure has continued for five Business Days); or
(f) (i) The Borrower or any of its Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any
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of its Subsidiaries shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against the Borrower or
any of its Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 90 days;
or (iii) there shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against
all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) the Borrower or any of its Subsidiaries shall
take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) the Borrower or any of its
Subsidiaries shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Single Employer Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor of
the PBGC or a Plan shall arise on the assets of any Obligor, (iii) a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed,
to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a
trustee is likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) any Obligor or any
Commonly Controlled Entity shall incur any liability in connection with
a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the Borrower or any of its Subsidiaries involving a liability (to the extent not paid or fully covered by insurance) of $10,000,000 or more in the case of any one such judgment or $25,000,000 or more in the aggregate for all such judgments and decrees, and all such judgments or decrees shall not have been vacated, discharged, satisfied, stayed or bonded pending appeal within 90 days from the entry thereof; or
(i) Any Person or "group" (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) (i) shall have acquired beneficial ownership of 20% or more of any outstanding class of Capital Stock having ordinary voting power in the election of directors of the Borrower or (ii) shall obtain the power (whether or not exercised) to elect a majority of the Borrower's directors; or the Borrower shall cease to own, beneficially and of record, the sole Class B membership interest in International or shall cease to have power to elect a majority of International's directors;
then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) of this Section with respect to the Borrower, automatically the Commitments
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shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement to be due and payable forthwith, whereupon the same shall immediately become due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 8. THE ADMINISTRATIVE AGENT
8.1 Appointment. Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.
8.2 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
8.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except for its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by either Obligor or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of either Obligor to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions
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of, this Agreement or any other Loan Document, or to inspect the properties, books or records of either Obligor or any of its Subsidiaries.
8.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to either Obligor), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.
8.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.
8.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Borrower or any of its Subsidiaries, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Obligors and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this
CREDIT AGREEMENT
Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Obligors or any of their Subsidiaries. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of either Obligor or any of their Subsidiaries which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
8.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective Commitment Percentages in effect on the
date on which indemnification is sought, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of, the Commitments, this Agreement, (including,
without limitation, enforcement of the Administrative Agent's rights under this
subsection) any of the other Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; provided that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Administrative Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the payment of the
Loans and all other amounts payable hereunder.
8.8 Administrative Agent in Its Individual Capacity. The Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Obligors as though the Administrative Agent were not the Administrative Agent hereunder and under the other Loan Documents. With respect to the Loans made by it, the Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity.
8.9 Successor Administrative Agent. The Administrative
Agent may resign as Administrative Agent upon 10 days' notice to the Lenders,
and the Administrative Agent may be removed at any time with or without cause by
the Required Lenders. Upon any such resignation or removal, the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent (provided that it shall have been approved by the Borrower (such
approval not to be unreasonably withheld)), shall succeed to the rights, powers
and duties of the Administrative Agent hereunder. Effective upon such
appointment and approval, the term "Administrative Agent" shall mean such
successor agent, and the former Administrative Agent's rights, powers and duties
as Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans. After any retiring Administrative
Agent's resignation or removal as Administrative Agent, the provisions of this
Section 8 shall inure to its benefit as to
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any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.
8.10 Substitute Administrative Agent. If at any time Citibank or the Borrower reasonably determines that Citibank is prevented from carrying out its functions as Administrative Agent hereunder as contemplated hereby, Citibank or the Borrower, as the case may be, shall forthwith so notify the Borrower or Citibank, as the case may be, and the Backup Agent (and Citibank shall promptly so notify the Lenders), and the Backup Agent shall thereupon automatically assume and perform all of the functions of the Administrative Agent and shall be entitled to all of the rights and benefits of the Administrative Agent hereunder, until and only until such time as Citibank and the Borrower determine, and notify the Backup Agent (which shall promptly notify the Lenders) that Citibank is no longer prevented from carrying out its functions as Administrative Agent hereunder as contemplated hereby, whereupon Citibank shall automatically resume and perform all of the functions of the Administrative Agent hereunder. Each Lender agrees to the foregoing and authorizes the Backup Agent to assume and perform the functions of the Administrative Agent under the circumstances set forth above.
SECTION 9. GUARANTEE
The Guarantor agrees, to induce the other parties to enter into this Agreement and for other valuable consideration, receipt of which is hereby acknowledged as follows:
(a) Guarantee. The Guarantor hereby guarantees to the Lenders and the Administrative Agent the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the principal of and interest on the Loans and the Notes and all other amounts whatsoever now or hereafter payable or becoming payable by the Borrower under the Loan Documents, in each case strictly in accordance with the terms thereof (collectively, the "Guaranteed Obligations"). The Guarantor hereby further agrees that if the Borrower shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantor will promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal. This Section 9(a) is a continuing guaranty and is a guaranty of payment and is not merely a guaranty of collection and shall apply to all Guaranteed Obligations whenever arising.
(b) Acknowledgments, Waivers and Consents. The Guarantor agrees that its obligations under clause (a) above shall, to the fullest extent permitted by applicable law, be primary, absolute, irrevocable and unconditional under any and all circumstances and that the guaranty therein is made with respect to any Guaranteed Obligations now existing or in the future arising. Without limiting the foregoing, the Guarantor agrees that:
(i) The occurrence of any one or more of the following shall not affect the enforceability or effectiveness of this Section 9 in accordance with its terms or
CREDIT AGREEMENT
affect, limit, reduce, discharge or terminate the liability of the Guarantor, or the rights, remedies, powers and privileges of the Administrative Agent or any Lender, under this Section 9.1:
(A) any modification or amendment (including without limitation by way of amendment, extension, renewal or waiver), or any acceleration or other change in the time for payment or performance of the terms of all or any part of the Guaranteed Obligations or any Loan Document, or any other agreement or instrument whatsoever relating thereto, or any modification of the Commitments;
(B) any release, termination, waiver, abandonment, lapse or expiration, subordination or enforcement of the liability of any other guarantee of all or any part of the Guaranteed Obligations;
(C) any application of the proceeds of any other guarantee (including without limitation the obligations of any other guarantor of all or any part of the Guaranteed Obligations) to all or any part of the Guaranteed Obligations in any such manner and to such extent as the Administrative Agent may determine;
(D) any release of any other Person (including without limitation any other guarantor with respect to all or any part of the Guaranteed Obligations) from any personal liability with respect to all or any part of the Guaranteed Obligations;
(E) any settlement, compromise, release, liquidation or enforcement, upon such terms and in such manner as the Administrative Agent may determine or as applicable law may dictate, of all or any part of the Guaranteed Obligations or any other guarantee of (including without limitation any letter of credit issued with respect to) all or any part of the Guaranteed Obligations;
(F) the giving of any consent to the merger or consolidation of, the sale of substantial assets by, or other restructuring or termination of the corporate existence of the Borrower or any other Person or any disposition of any shares of the Guarantor;
(G) any proceeding against the Borrower or any other guarantor of all or any part of the Guaranteed Obligations or any collateral provided by any other Person or the exercise of any rights, remedies, powers and privileges of the Administrative Agent and the Lenders under the Loan Documents or otherwise in such order and such manner as the Administrative Agent may determine, regardless of whether the Administrative Agent or the Lenders shall have proceeded against or exhausted any collateral, right, remedy, power or privilege before proceeding to call upon or otherwise enforce this Section 9;
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(H) the entering into such other transactions or business dealings with the Borrower, any Subsidiary or Affiliate of the Borrower or any other guarantor of all or any part of the Guaranteed Obligations as the Administrative Agent or any Lender may desire; or
(I) all or any combination of any of the actions set forth in this Section 9(b)(i).
(ii) The enforceability and effectiveness of this
Section 9 and the liability of the Guarantor, and the rights,
remedies, powers and privileges of the Administrative Agent
and the Lenders under this Section 9 shall not be affected,
limited, reduced, discharged or terminated, and the Guarantor
hereby expressly waives to the fullest extent permitted by law
any defense now or in the future arising, by reason of:
(A) the illegality, invalidity or unenforceability of all or any part of the Guaranteed Obligations, any Loan Document or any other agreement or instrument whatsoever relating to all or any part of the Guaranteed Obligations;
(B) any disability or other defense with respect to all or any part of the Guaranteed Obligations, including the effect of any statute of limitations that may bar the enforcement of all or any part of the Guaranteed Obligations or the obligations of any such other guarantor;
(C) the illegality, invalidity or unenforceability of any security for or other guarantee (including without limitation any letter of credit) of all or any part of the Guaranteed Obligations or the lack of perfection or continuing perfection or failure of the priority of any Lien on any collateral for all or any part of the Guaranteed Obligations;
(D) the cessation, for any cause whatsoever,
of the liability of the Borrower or any other
guarantor with respect to all or any part of the
Guaranteed Obligations (other than, subject to
Section 9.1(d), by reason of the full payment of all
Guaranteed Obligations);
(E) any failure of the Administrative Agent or any Lender to marshal assets in favor of the Borrower or any other Person (including any other guarantor of all or any part of the Guaranteed Obligations), to exhaust any collateral for all or any part of the Guaranteed Obligations, to pursue or exhaust any right, remedy, power or privilege it may have against the Borrower or any other guarantor of all or any part of the Guaranteed Obligations or any other Person or to take any action whatsoever to mitigate or reduce such or any other Person's liability, the Administrative Agent and the Lenders being under no obligation to take any such action notwithstanding the fact that all or any part of the Guaranteed Obligations may be due and payable and that the Borrower may be in default of its obligations under any Loan Document;
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(F) any counterclaim, set-off or other claim which the Borrower or any other guarantor of all or any part of the Guaranteed Obligations has or claims with respect to all or any part of the Guaranteed Obligations;
(G) any failure of the Administrative Agent or any Lender or any other Person to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person;
(H) any bankruptcy, insolvency, reorganization, winding-up or adjustment of debts, or appointment of a custodian, liquidator or the like of it, or similar proceedings commenced by or against any Person, including any discharge of, or bar or stay against collecting, all or any part of the Guaranteed Obligations (or any interest on all or any part of the Guaranteed Obligations) in or as a result of any such proceeding;
(I) any action taken by the Administrative
Agent or any Lender that is authorized by this
Section 9(b) or otherwise in this Section 9 or by any
other provision of any Loan Document or any omission
to take any such action; or
(J) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.
(iii) To the fullest extent permitted by law, the Guarantor expressly waives, for the benefit of the Administrative Agent and the Lenders, all diligence, presentment, demand for payment or performance, notices of nonpayment or nonperformance, protest, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever, and any requirement that the Administrative Agent or any Lender exhaust any right, power or remedy or proceed against the Borrower under any Loan Document or other agreement or instrument referred to herein or therein, or against any other Person under any other guarantee of, or security for, any of the Guaranteed Obligations, and all notices of acceptance of this Section 9 or of the existence, creation, incurring or assumption of new or additional Guaranteed Obligations.
(c) Reinstatement. The obligations of the Guarantor under this
Section 9 shall be automatically reinstated if and to the extent that
for any reason any payment by or on behalf of the Borrower in respect
of the Guaranteed Obligations is rescinded or must otherwise be
restored by any holder of any of the Guaranteed Obligations, whether as
a result of any proceedings in bankruptcy or reorganization or
otherwise.
(d) Subrogation. The Guarantor hereby agrees that, until the final payment in full of all Guaranteed Obligations and the expiration or termination of the Commitments under this Agreement, it shall not exercise any right or remedy arising by reason of any performance by it of its guarantee in Section 9(a), whether by subrogation, reimbursement, contribution or otherwise, against the Borrower or any other guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed Obligations.
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(e) Remedies. The Guarantor agrees that, as between the Guarantor and the Administrative Agent and the Lenders, the obligations of the Borrower under this Agreement, the Notes or any other Loan Documents may be declared to be forthwith due and payable as provided in Section 7 (and shall be deemed to have become automatically due and payable in the circumstances provided in said Section 7) for purposes of Section 9(a), notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Borrower) shall forthwith become due and payable by such Guarantor for purposes of said Section 9(a).
(f) Payments. All payments by the Guarantor under this Section 9 shall be made in Dollars, without deduction, set-off or counterclaim at the place specified in Section 2.19 and free and clear of any and all present and future Non-Excluded Taxes.
(g) Solvency. The Guarantor represents and warrants to the Administrative Agent and the Lenders that after giving effect to each borrowing hereunder it will be Solvent.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor
any other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Required Lenders may, or, with the written consent of the
Required Lenders, the Administrative Agent may, from time to time, (a) enter
into with the Borrower and the Guarantor written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Borrower or the Guarantor hereunder
or thereunder or (b) waive, on such terms and conditions as the Required Lenders
or the Administrative Agent, as the case may be, may specify in such instrument,
any of the requirements of this Agreement or the other Loan Documents or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall (i) reduce
the amount or extend the scheduled date of maturity of any Loan (provided, that
for the purposes of this clause (i) the making of the Term Loans shall not be
considered an extension of the scheduled date of maturity), or reduce the stated
rate of any interest or fee payable hereunder or extend the scheduled date of
any payment thereof or increase the amount or extend the expiration date of any
Lender's Commitment, in each case without the written consent of each Lender
affected thereby, or (ii) amend, modify or waive any provision of this
subsection or subsection 10.6(a) or reduce the percentage specified in the
definition of Required Lenders, or consent to the assignment or transfer by any
Obligor of any of its rights and obligations under this Agreement and the other
Loan Documents, in each case without the written consent of all the Lenders, or
(iii) release the obligations of the Guarantor under Section 9(a) without the
written consent of all the Lenders, or (iv) amend, modify or waive any provision
of Section 8 without the written consent of the then Administrative Agent. Any
such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon
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the Borrower, the Guarantor, the Lenders, the Administrative Agent and all future holders of the Loans. In the case of any waiver, the Borrower, the Guarantor, the Lenders and the Administrative Agent shall be restored to their former positions and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made (a) in the case of delivery by hand, when delivered, (b) in the case of delivery by mail, three Business Days after being deposited in the mails, certified or registered postage prepaid, or (c) in the case of delivery by facsimile transmission, when sent and receipt has been confirmed, addressed as follows in the case of the Borrower and the Administrative Agent, and as set forth in an Administrative Questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto:
Borrower: MasterCard Incorporated
2000 Purchase Street
Purchase, New York 10577-2509
Attention: Chris A. McWilton,
Senior Vice President,
Controller and Acting CFO
Fax: 914-249-6230
Telephone: 914-249-6220
Guarantor: MasterCard International Incorporated
2000 Purchase Street
Purchase, New York 10577-2509
Attention: Chris A. McWilton,
Senior Vice President,
Controller and Acting CFO
Fax: 914-249-6230
Telephone: 914-249-6220
The Administrative
Agent or the
Swing Line Lender: Citibank, N.A.
2 Penns Way, Suite 200
New Castle, Delaware 19720
Attention: ______________
Fax: 302-894-6120
Telephone: 302-894-6017
|
provided that any notice, request or demand to or upon the Administrative Agent or the Lenders pursuant to subsection 2.2, 2.4, 2.6, 2.8, 2.9, 2.11, 2.19 or 2.20 shall not be effective until received.
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10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees
(a) to pay or reimburse the Administrative Agent for all reasonable fees,
charges and disbursements of counsel incurred in connection with this Agreement
and the other Loan Documents or the amendment, modification or waiver thereof
and all reasonable and documented out-of-pocket expenses of the Administrative
Agent incurred in connection with any amendment, modification or waiver with
respect to this Agreement and the other Loan Documents, (b) to pay or reimburse
each Lender and the Administrative Agent for all its costs and expenses incurred
in connection with the enforcement or preservation of any rights under this
Agreement (including, without limitation, this subsection), the other Loan
Documents and any such other documents, including, without limitation, the
reasonable fees and disbursements of counsel (including, without limitation, the
non-duplicative documented allocated cost of in-house counsel) to each Lender
and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold
harmless each Lender, the Administrative Agent, their respective affiliates and
their respective officers, directors, employees, agents and advisors (each, an
"Indemnitee") from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold harmless each Indemnitee from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including, without limitation, reasonable legal fees) with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement (including, without limitation, this subsection), the other Loan
Documents and any such other documents, including, without limitation, any
investigative, administrative or judicial proceeding relating to the foregoing
or any of the foregoing relating to any actual or proposed use of proceeds of
the Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of either Obligor, any of their
Subsidiaries or any of the Properties or arising out of the Commitments (all the
foregoing in this clause (d), collectively, the "indemnified liabilities"),
provided that the Borrower shall have no obligation hereunder to any Indemnitee
with respect to indemnified liabilities arising from the gross negligence or
willful misconduct of such Indemnitee. The Borrower waives, to the maximum
extent not prohibited by law, any right it may have to claim or recover in any
legal action or proceeding referred to in this Section any special, exemplary,
punitive or consequential
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damages. The agreements in this subsection shall survive repayment of the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that neither Obligor may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Loan owing to such Lender, any Commitment or Swing Line Commitment of such Lender or any other interest of such Lender hereunder and under the other Loan Documents. In the event of any such sale by a Lender of a participating interest to a Participant, such Lender's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Loan for all purposes under this Agreement and the other Loan Documents, and the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Loan Documents. No Lender shall be entitled to create in favor of any Participant, in the participation agreement pursuant to which such Participants participating interest shall be created or otherwise, any right to vote on, consent to or approve any matter relating to this Agreement or any other Loan Document except for those specified in clauses (i), (ii) and (iii) of the proviso to subsection 10.1. The Borrower agrees that if amounts outstanding under this Agreement are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall, to the maximum extent permitted by applicable law, be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement, provided that, in purchasing such participating interest, such Participant shall be deemed to have agreed to share with the Lenders the proceeds thereof as provided in subsection 10.7(a) as fully as if it were a Lender hereunder. The Borrower also agrees that each Participant shall be entitled to the benefits of subsections 2.19, 2.20, 2.22 and 2.23 with respect to its participation in the Commitments, Swing Line Commitments and the Loans outstanding from time to time as if it was a Lender; provided that, in the case of subsection 2.23, such Participant shall have complied with the requirements of said subsection and provided, further, that no Participant shall be entitled to receive any greater amount pursuant to any such subsection than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred.
(c) Subject to the provisions of subsection 10.6(d) relating to the assignment of CAF Advances, any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time and from time to time assign to one or more banks or other financial institutions (an "Assignee") all or any part of its rights and obligations under this Agreement and the other Loan Documents; provided, however, that
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(i) except in the case of an assignment (A) to a Lender or subject to giving prior written notice thereof to the Borrower and the Administrative Agent, an Affiliate of a Lender which is a bank or financial institution or (B) of CAF Advances, each of the Administrative Agent and (except when a Default or Event of Default shall have occurred and be continuing) the Borrower must give its consent to such assignment (which in each case shall not be unreasonably withheld or delayed);
(ii) the Swing Line Lender may not transfer any portion of the Swing Line Commitment without the consent of the Borrower (such consent not to be unreasonably withheld or delayed);
(iii) in the case of any assignment to an additional bank or financial institution that is not a Lender or an Affiliate thereof, the sum of the aggregate principal amount of the Loans and the aggregate amount of the Commitments and Swing Line Commitments being assigned and, if such assignment is of less than all of the rights and obligations of the assigning Lender, the sum of the aggregate principal amount of the Loans and the aggregate amount of the Commitments and Swing Line Commitments remaining with the assigning Lender are each not less than $5,000,000 (or such lesser amount as may be agreed to by the Borrower and the Administrative Agent); and
(iv) such assignment shall be evidenced by an Assignment and Acceptance, substantially in the form of Exhibit H, executed by such Assignee, such assigning Lender (and, in the case of an Assignee that is not then a Lender or an Affiliate thereof, by the Borrower and the Administrative Agent) and delivered to the Administrative Agent for its acceptance and recording in the Register.
Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with a Commitment or Swing Line Commitment as set forth therein, and (y) the assigning Lender thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement such assigning Lender shall cease to be a party hereto). Notwithstanding any provision of this paragraph (c) and paragraph (f) of this subsection, the consent of the Borrower shall not be required, and, unless requested by the Assignee and/or the assigning Lender, new Notes shall not be required to be executed and delivered by the Borrower, for any assignment which occurs at any time when any of the events described in Section 7(f) shall have occurred and be continuing.
(d) Any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time and from time to time assign to one or more banks or other entities ("CAF Advance Assignees") any CAF Advance owing to such Lender, pursuant to a CAF Advance Assignment, substantially in the form of Exhibit D-4 attached hereto, executed by the assignor Lender and the CAF Advance Assignee. Upon such execution, from and after the date of such CAF Advance Assignment, the CAF Advance Assignee shall, to the extent of the assignment provided for in such CAF Advance Assignment, be deemed to have the same rights and benefits of payment and enforcement with respect to such CAF Advance and
CREDIT AGREEMENT
the same rights of set-off and obligation to share pursuant to subsection 10.7
as it would have had if it were a Lender hereunder; provided that unless such
CAF Advance Assignment shall otherwise specify and a copy of such CAF Advance
Assignment shall have been delivered to the Administrative Agent for its
acceptance and recording in the Register in accordance with subsection 10.6(e),
the assignor thereunder shall act as collection agent for the CAF Advance
Assignee thereunder, and the Administrative Agent shall pay all amounts received
from the Borrower which are allocable to the assigned CAF Advance directly to
such assignor without any further liability to such CAF Advance Assignee. A CAF
Advance Assignee under a CAF Advance Assignment shall not, by virtue of such CAF
Advance Assignment, become a party to this Agreement or have any rights to
consent to or refrain from consenting to any amendment, waiver or other
modification of any provision of this Agreement or any related document;
provided that (x) the assignor under such CAF Advance Assignment and such CAF
Advance Assignee may, in their discretion, agree between themselves upon the
manner in which such assignor will exercise its rights under this Agreement and
any related document except no Lender shall sell any CAF Advance pursuant to
which the CAF Advance Assignee shall have rights to approve any amendment or
waiver to this Agreement except to the extent such amendment or waiver would (i)
reduce the principal amount of any CAF Advance which has been assigned to such
CAF Advance Assignee, (ii) reduce the rate of interest on any such CAF Advance
or any fees payable in connection with such CAF Advance or (iii) extend the time
of payment of principal or, or interest on, any such CAF Advance or any other
amount owing under this Agreement and in connection with such CAF Advance, and
(y) if a copy of such CAF Advance Assignment shall have been delivered to the
Administrative Agent for its acceptance and recording in the Register in
accordance with subsection 10.6(e), neither the principal amount of, the
interest rate on, nor the maturity date of, any CAF Advance assigned to such CAF
Advance Assignee thereunder will be modified without the written consent of such
CAF Advance Assignee. If a CAF Advance Assignee has caused a CAF Advance
Assignment to be recorded in the Register in accordance with subsection 10.6(e),
such CAF Advance Assignee may thereafter, in the ordinary course of its business
and in accordance with applicable law, assign the CAF Advance assigned to it to
any Lender, to any affiliate or subsidiary of such CAF Advance Assignee or to
any other financial institution with the consent of the Borrower (which shall
not be unreasonably withheld), and the foregoing provisions of this paragraph
(c) shall apply, mutatis mutandis, to any such assignment by a CAF Advance
Assignee. Except in accordance with the preceding sentence, CAF Advances may not
be further assigned by a CAF Advance Assignee, subject to any legal or
regulatory requirement that the CAF Advance Assignee's assets must remain under
its control.
(e) The Administrative Agent, on behalf of the Borrower, shall maintain at the address of the Administrative Agent referred to in subsection 10.2 a copy of each Assignment and Acceptance delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders may (and, in the case of any Loan or other obligation hereunder not evidenced by a Note, shall) treat each Person whose name is recorded in the Register as the owner of a Loan or other obligation hereunder as the owner thereof for all purposes of this Agreement and the other Loan Documents, notwithstanding any notice to the contrary. Any assignment of any Loan or other obligation hereunder not evidenced by a Note shall be effective only upon appropriate entries with respect thereto being made in the Register. The Register shall be available for inspection by the
CREDIT AGREEMENT
Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an Assignee (and, in the case of an Assignee that is not then a Lender or an affiliate thereof, by the Borrower and the Administrative Agent) together with payment to the Administrative Agent of a registration and processing fee of $3,000 and (if the Assignee is not a Lender) delivery to the Administrative Agent of such Assignee's Administrative Questionnaire, the Administrative Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Lenders and the Borrower.
(g) The Borrower authorizes each Lender to disclose to any Participant or Assignee (each, a "Transferee") and any prospective Transferee any and all financial information in such Lender's possession concerning the Borrower and its Subsidiaries and Affiliates which has been delivered to such Lender by or on behalf of the Borrower or any of its Subsidiaries pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Borrower or any of its Subsidiaries in connection with such Lender's credit evaluation of the Borrower and its Subsidiaries and Affiliates prior to becoming a party to this Agreement.
(h) For avoidance of doubt, the parties to this Agreement acknowledge that the provisions of this subsection concerning assignments of Loans and Notes relate only to absolute assignments and that such provisions do not prohibit assignments creating security interests, including, without limitation, any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank in accordance with applicable law.
10.7 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender") shall at any time receive any payment of all or part of its Loans, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 7(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Loans, or interest thereon, such benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Loan, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to either Obligor, any such notice being expressly waived by each of them to the extent permitted by applicable law, upon any amount becoming due and payable by either Obligor hereunder (whether at stated maturity, by acceleration or otherwise) to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or
CREDIT AGREEMENT
agency thereof to or for the credit or the account of such Obligor; provided that no such set-off and application may be made against deposits in the accounts listed on Schedule 10.7(b) attached hereto. Each Lender agrees promptly to notify such Obligor and the Administrative Agent after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application.
10.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with International and the Administrative Agent.
10.9 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents represent the entire agreement of the Obligors, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.
10.11 Termination of Commitments and Swing Line Commitments. The Commitments and Swing Line Commitments shall terminate if the conditions to closing set forth in subsection 4.1 shall not be satisfied on or before June 30, 2003.
10.12 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.13 Submission To Jurisdiction; Waivers. Each Obligor hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States for the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar
CREDIT AGREEMENT
form of mail), postage prepaid, to it at its address set forth in subsection 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary, punitive or consequential damages.
10.14 Acknowledgements. Each Obligor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to it arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Administrative Agent and Lenders, on one hand, and the Obligors, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Obligors and the Lenders.
10.15 WAIVERS OF JURY TRIAL. EACH OBLIGOR, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.16 Confidentiality. Neither the Administrative Agent nor any Lender shall disclose any Confidential Information to any Person without the consent of the Borrower, other than (a) to the Administrative Agent's or such Lender's Affiliates and their respective officers, directors, employees, agents and advisors and, subject to the execution of an agreement for the benefit of the Borrower to comply with the provisions of this Section, to actual or prospective assignees and participants, (b) to the extent required by any applicable law, rule or regulation or judicial process, (c) to any rating agency when required by it, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder and (f) as requested or required by any state, federal or foreign authority or examiner regulating banks or banking. Notwithstanding the foregoing and any other provision herein, the party subject to confidentiality obligations hereunder or under any other related documents and each employee, representative or other agent of such party may disclose to any and all Persons, without limitation of any kind, such party's U.S. federal income tax treatment and the U.S. federal income tax structure of the transactions contemplated by this Agreement relating to such party and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure. However, no such party shall disclose any information relating to such tax treatment or tax structure to the extent nondisclosure is reasonably necessary in order to comply with applicable securities laws.
CREDIT AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.
MASTERCARD INCORPORATED
By: /s/ STEVEN SKLAR
--------------------------------------
Name: Steven Sklar
Title: Senior Vice President
|
MASTERCARD INTERNATIONAL INCORPORATED
By: /s/ STEVEN SKLAR
--------------------------------------
Name: Steven Sklar
Title: Senior Vice President
|
CITIBANK, N.A.
as Administrative Agent and as Lender
By: /s/ CHRISTINE ALCRUZ
--------------------------------------
Name: Christine Alcruz
Title: Vice President
|
JPMORGAN CHASE BANK,
as Backup Agent and as Lender
By: /s/ ROGER PARKER
--------------------------------------
Name: Roger Parker
Title: Vice President
|
CREDIT AGREEMENT
LENDERS
FLEET NATIONAL BANK
By: /s/ TODD MESIUK
---------------------------------
Name: Todd Mesiuk
Title: Vice President
|
CREDIT AGREEMENT
HSBC BANK USA
By: /s/ JOHAN SORENSSON
-----------------------------
Name: Johan Sorensson
Title: First Vice President
|
CREDIT AGREEMENT
ROYAL BANK OF SCOTLAND PLC, New York Branch
By: /s/ DIANE FERGUSON
------------------------------
Name: Diane Ferguson
Title: Senior Vice President
|
CREDIT AGREEMENT
BMO NESBITT BURNS FINANCING, INC.
By: /s/ AMY K. DUMSER
--------------------------
Name: Amy K. Dumser
Title: Vice President
|
CREDIT AGREEMENT
COMMONWEALTH BANK OF AUSTRALIA--GRAND
CAYMAN BRANCH
By: /s/ PHILIP PELBRIDGE
----------------------------
Name: Philip Pelbridge
Title: Risk Manager
|
CREDIT AGREEMENT
LLOYDS TSB BANK PLC
By: /s/ MICHAEL J. GILLIGAN
---------------------------
Name: Michael J. Gilligan
Title: Director
By: /s/ MATTHEW S.R. TUCK
---------------------------
Name: Matthew S.R. Tuck
Title: Vice President
|
CREDIT AGREEMENT
BAYERISCHE HYPO - UND VEREINSBANK AG,
NEW YORK BRANCH
By: /s/ SESSA VON RICHTHOFEN
-------------------------------
Name: Sessa von Richthofen
Title: Relationship Manager,
Financial Institutions
By: /s/ PAUL DOLAN
-------------------------------
Name: Paul Dolan
Title: Director, Credit
|
CREDIT AGREEMENT
BANK ONE, NA
By: /s/ GARY HEUR
-----------------------
Name: Gary Heur
Title:
|
CREDIT AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
By: /s/ DONALD V. DAVIS
-----------------------------
Name: Donald V. Davis
Title: Vice President
|
CREDIT AGREEMENT
WELLS FARGO BANK
By: /s/ ROY H. ROBERTS
-------------------------
Name: Roy H. Roberts
Title: Vice President
|
CREDIT AGREEMENT
FIFTH THIRD BANK
By: /s/ ANN PIERSON
--------------------------------
Name: Ann Pierson
Title: Corporate Banking Officer
|
CREDIT AGREEMENT
WESTPAC BANKING CORPORATION
By: /s/ RICHARD BATTEN
-------------------------------
Name: Richard Batten
Title: Assistant Vice President
|
CREDIT AGREEMENT
SCHEDULE 1.1(a)
MASTERCARD
PERMITTED INVESTMENTS
CASH EQUIVALENTS @ 3/31/03
[TO BE SUPPLIED BY THE BORROWER]
SCHEDULE 1.1(b)
MASTERCARD
PERMITTED INVESTMENTS
MUNICIPAL BONDS AND EQUITY INVESTMENTS @ 3/31/03
[TO BE SUPPLIED BY THE BORROWER]
SCHEDULE 1.2
COMMITMENTS
LENDER COMMITMENT Citibank, N.A. $ JPMorgan Chase Bank $ |
SCHEDULE 3.1
MASTERCARD
INTEREST RATE PROTECTION
INTEREST RATE SWAP @ 3/31/02
[TO BE SUPPLIED BY THE BORROWER]
CURRENCY PROTECTION
UNHEDGED POSITIONS @ 3/31/02
[TO BE SUPPLIED BY THE BORROWER]
SCHEDULE 3.6
MATERIAL LITIGATION
MasterCard Incorporated is a party to litigation with respect to a variety of matters in the ordinary course of business. Except as described below, MasterCard does not believe that any litigation to which it is a party may have a material adverse impact on its business or prospects.
1. Department of Justice Antitrust Litigation.
In October 1998, the United States Department of Justice ("DOJ") filed suit against MasterCard International, Visa U.S.A., Inc. and Visa International Corp ("Visa") in the U.S. District Court for the Southern District of New York alleging that both MasterCard's and Visa's governance structure and policies violated U.S. federal antitrust laws. First, the DOJ claimed that "dual governance" -- the situation where a financial institution has a representative on the board of directors of MasterCard or Visa while a portion of its card portfolio is issued under the brand of the other association-- was anti-competitive and acted to limit innovation within the payment card industry. At the same time, the DOJ conceded that "dual issuance"-- a term describing the structure of the bank card industry in the United States in which a single financial institution can issue both MasterCard and Visa branded cards-- was pro-competitive. Second, the DOJ challenged MasterCard's Competitive Programs Policy ("CPP") and a Visa bylaw provision that prohibit financial institutions participating in the respective associations from issuing competing proprietary payment cards (such as American Express or Discover). The DOJ alleged that MasterCard's CPP and Visa's bylaw provision acted to restrain competition.
MasterCard denied the DOJ's allegations. MasterCard believes that both "dual governance" and the CPP are pro-competitive and fully consistent with U.S. federal antitrust law.
A bench trial concerning the DOJ's allegations was concluded on August 22, 2000. On October 9, 2001, the district court judge issued an opinion upholding the legality and pro-competitive nature of dual governance. In so doing, the judge specifically found that MasterCard and Visa have competed vigorously over the years, that prices to consumers have dropped dramatically, and that MasterCard has fostered rapid innovations in systems, product offerings and services.
However, the judge also held that MasterCard's CPP and the Visa bylaw constitute unlawful restraints of trade under the federal antitrust laws. The judge found that the CPP and Visa bylaw weakened competition and harmed consumers by preventing competing proprietary payment card networks such as American Express and Discover from entering into agreements with banks to issue cards on their networks. In reaching this decision, the judge found that two distinct markets-- a credit and charge card issuing market and a network services market-- existed in the United States, and that both MasterCard and Visa had market power in the network market. MasterCard strongly disputes these findings and believes that the DOJ failed, among other things, to demonstrate that U.S. consumers have been harmed by the CPP.
On November 26, 2001, the judge issued a final judgment that orders MasterCard to repeal the CPP insofar as it applies to issuers and enjoins MasterCard from enacting or enforcing
any bylaw, rule, policy or practice that prohibits its issuers from issuing general purpose credit or debit cards in the United States on any other general purpose card network. The judge also concluded that during the period in which the CPP was in effect, MasterCard was able to "lock up" certain members by entering into long-term agreements with them pursuant to which the members committed to maintain a certain percentage of their general purpose card volume, new card issuance or total number of cards in force in the United States on MasterCard's network. Accordingly, the final judgment provides that there will be a period (commencing on the effective date of the judgment and ending on the later of two years from that date or two years from the resolution of any final appeal) during which MasterCard will be required to permit any issuer with which it entered into such an agreement prior to the effective date of the final judgment to terminate that agreement without penalty, provided that the reason for the termination is to permit the issuer to enter into an agreement with American Express or Discover. MasterCard would be free to apply to the district court to recover funds paid but not yet earned under any terminated agreement. The final judgment imposes parallel requirements on Visa. The judge explicitly provided that MasterCard and Visa would be free to enter into new partnership or member business agreements in the future.
MasterCard believes that is has a strong legal basis to challenge the judge's ruling with respect to the CPP, and has appealed the decision on that count. On February 6, 2002, the judge issued an order granting MasterCard's and Visa's motion to stay the final judgment pending appeal. MasterCard, the DOJ and other parties to the DOJ antitrust litigation completed their submission of appellate briefs to the Second Circuit Court of Appeals in late August 2002. Oral argument on the appeal of the U.S. District Court's decision in this case was held on May 8, 2003. The three-judge panel of the Second Circuit reserved decision.
2. Merchant Antitrust Litigation.
Commencing in October 1996, several putative class action suits were brought by a number of U.S. merchants-- including Wal-Mart Stores, Inc., Sears Roebuck & Co., Inc., The Limited Inc. and Safeway, Inc.--against MasterCard International and Visa U.S.A., Inc. challenging certain aspects of the payment card industry under U.S. federal antitrust law. Those suits were later consolidated in the U.S. District Court for the Eastern District of New York. The plaintiffs challenged MasterCard's "Honor All Cards" rule (and a similar Visa rule), which ensures universal acceptance for consumers by requiring merchants who accept MasterCard cards to accept for payment every validly presented MasterCard card. Plaintiffs claimed that MasterCard and Visa unlawfully tied acceptance of debit cards to acceptance of credit cards. In essence, the merchants desired the ability to reject off-line, signature-based debit transactions (for example, MasterCard card transactions) in favor of other payment forms, including on-line, PIN-based debit transactions (for example, Maestro or regional ATM network transactions) which generally impose lower transaction costs for merchants. The plaintiffs also claimed that MasterCard and Visa conspired to monopolize what they characterized as the point-of-sale debit card market, thereby suppressing the growth of regional networks such as ATM payment systems. Plaintiffs alleged that the plaintiff class had been forced to pay unlawfully high prices for debit and credit card transactions as a result of the alleged tying arrangement and monopolization practices.
MasterCard denies the merchant allegations. MasterCard believes that the "Honor All Cards" rule and MasterCard practices with respect to debit card programs in the United States are pro-competitive and fully consistent with U.S. federal antitrust law.
On February 22, 2000, the district court granted the plaintiffs' motion for class certification. MasterCard and Visa subsequently appealed the decision to the Second Circuit Court of Appeals. On October 17, 2001, a three-judge panel affirmed the lower court decision by a two-to-one majority. MasterCard filed a petition for a writ of certiorari to the U.S. Supreme Court on April 3, 2002., which was denied on June 6, 2002. A trial date of April 28, 2003 was set for the commencement of this litigation.
Based upon publicly available information, the plaintiffs previously
have asserted damage claims in this litigation of approximately $8 billion,
before any trebling under U.S. federal antitrust law. Other public estimates
(including estimates set forth in the dissenting opinion of the Second Circuit)
place the plaintiffs' estimated damage claims at approximately $50 billion to
$100 billion, depending on the source. In addition, the plaintiffs' damage
claims could have been materially higher than these amounts as a result of the
passage of time and substantive changes in the theory of damages presented by
the plaintiffs.
On April 30, 2003, in lieu of proceeding with trial, MasterCard signed a Memorandum of Understanding ("MOU") with plaintiffs in this litigation. In the MOU, MasterCard and plaintiffs reached an agreement in principle, subject to execution of a final settlement agreement and approval by the Court, to settle all claims against MasterCard and its affiliates and members resulting from this lawsuit. As part of the settlement, MasterCard agreed to take the following actions:
- MasterCard will pay into a settlement fund $100 million per year over the next ten years. These payments are due by December 22 of each year, except for the first year in which $10 million is due within thirty days of execution of the final settlement agreement and the balance is due by December 22, 2003.
- MasterCard will permit merchants to elect not to accept MasterCard-branded, signature-based debit cards issued in the United States, while still accepting MasterCard-branded credit and charge cards. Notwithstanding the foregoing, MasterCard may adopt and enforce an "honor all cards rule" that requires merchants who choose to accept MasterCard-branded debit cards to accept all MasterCard-branded debit cards. In addition, MasterCard may implement an "honor all cards" rule with respect to all MasterCard-branded cards not coming within the definition of debit cards, including credit and charge cards. MasterCard must adopt rules implementing these requirements as of forty-five days after the effective date of the Court order approving the settlement or January 1, 2004, whichever is earlier.
- MasterCard will require issuers of MasterCard-branded debit cards to place the word "Debit" or a similar term on the face of those cards and to allow those cards to be identified through electronic terminals. MasterCard must adopt rules implementing these requirements as of forty-five days after the effective date of the Court order approving the settlement or January 1, 2004, whichever is earlier. The rules must require issuers to make the changes within the normal reissuance cycles for existing cards, provided that MasterCard must cause 80 percent of all outstanding MasterCard-branded debit cards to be compliant with these requirements within 18 months of the earlier of the effective date of the Court order approving the settlement or January 1, 2004, and the remainder to be compliant within 36 months of
such time. MasterCard remains free to adopt a new brand or program name for MasterCard-branded debit cards, provided that this is done in a uniform and consistent manner.
- MasterCard will provide acquiring banks, upon request, signage for merchant use at the point of sale and at the entrance to stores communicating the fact that a given merchant accepts MasterCard-branded debit cards. The signage must be provided as of ninety days after the effective date of the Court order approving the settlement or January 1, 2004, whichever is earlier.
- On or before August 1, 2003, MasterCard will set a separate interchange rate for MasterCard-branded debit cards that reduces current interchange rates by at least one-third. MasterCard expects to adopt a new interchange rate by this deadline that will incent both issuance and acceptance of MasterCard- branded debit cards. To compensate merchants for the time it will take MasterCard to implement the new interchange rates, MasterCard will pay $25 million into the settlement account in 2003, in addition to the payment amounts described above.
- MasterCard will not enact rules that prohibit merchants from encouraging or steering MasterCard-branded debit cardholders to use other forms of payment or that prohibit merchants from providing a discount to consumers who pay by any other form of payment. Presently MasterCard does not have such rules in force.
MasterCard denies all claims in the lawsuit and nothing in the MOU constitutes an admission of wrongdoing or liability by MasterCard.
MasterCard entered into a final settlement agreement with plaintiffs in this litigation on June 4, 2003 on substantially the same terms as described above. On or about June 9, 2003, plaintiffs filed a motion seeking preliminary approval of the settlement by the judge. Provided preliminary approval is granted, notice will then be sent to class members, giving them the opportunity to object to the settlement. New merchants who were not previously sent a copy of class notice in 2002 will be given the opportunity to opt out of the class. A hearing on the fairness of the proposed settlement has been set for September 25, 2003.
There are consumer class actions pending in three state courts related to the merchant antitrust lawsuit that have been stayed pending developments in this litigation. In addition, several lawsuits have been commenced by merchants who have opted not to participate in the merchant antitrust lawsuit, including CVS, Meijer Stores, Toys "R" Us, Giant Eagle and Home Depot. MasterCard is seeking to have all of these cases transferred to the U.S. District Court for the Eastern District of New York. Neither the consumer class actions nor the "opt out" merchant litigations are covered by the terms of the final settlement agreement.
3. Currency Conversion Litigation.
MasterCard International, together with Visa U.S.A., Inc. and Visa International Corp., are defendants in a state court lawsuit pending in California. The lawsuit alleges that MasterCard and Visa wrongfully imposed an asserted one percent currency conversion "fee" on every credit card transaction by U.S. MasterCard and Visa cardholders involving the purchase of goods or
services in a foreign country, and that such alleged "fee" is unlawful. This action, titled Schwartz v. Visa Int'l Corp., et al., was brought in the Superior Court of California in February 2000, purportedly on behalf of the general public. Trial of the Schwartz matter commenced on May 20, 2002 and concluded on November 27, 2002. The Schwartz action claims that the alleged "fee" grossly exceeds any costs the defendants might incur in connection with currency conversions relating to credit card purchase transactions made in foreign countries and is not properly disclosed to cardholders. Plaintiffs seek to prevent defendants from continuing to engage in, use or employ the alleged practice of charging and collecting the asserted one percent currency conversion "fee" and from charging any type of purported currency conversion "fee" without providing a clear, obvious and comprehensive notice that a fee will be charged. Plaintiffs also request an order (1) requiring defendants to fund a corrective advertising campaign; and (2) awarding restitution of the monies allegedly wrongfully acquired by imposing the purported currency conversion "fee". The complaints assert that, during the four-year period that preceded the respective lawsuits, MasterCard collected approximately $200 million as a result of allegedly imposing the claimed one percent currency conversion "fee". MasterCard denies these allegations.
On February 5, 2003, the trial court judge issued a preliminary decision in the Schwartz matter. In his decision, the trial judge found that MasterCard's currency conversion process does not violate the Truth In Lending Act or regulations, nor is it unconscionably priced under California law. However, the judge found that the practice is deceptive under California state law, and ordered that MasterCard mandate that members disclose the currency conversion process to cardholders in cardholder agreements, applications, solicitations and monthly billing statements. The judge also ordered unspecified restitution to California cardholders. Following objections and a hearing, on April 8, 2003 the trial court judge issued a final decision containing substantially the same terms as the preliminary decision. The final decision does not specify a monetary amount of restitution to be paid to plaintiffs. On May 13, 2003, MasterCard submitted its proposed plan for restitution, advocating a "claims made" approach whereby cardholders would be required to come forward and demonstrate that they believe they are entitled to restitution. Plaintiffs are permitted to take up to five additional depositions of MasterCard witnesses on topics related to the restitution plan, and must file their responsive papers in July 2003. A hearing will be held on the restitution process in August 2003. MasterCard presently intends to appeal the decision on a number of grounds once a final judgment is entered.
In addition, MasterCard has been served with complaints in state courts in New York, Arizona, Texas, Florida, Arkansas, Kentucky, Tennessee and Illinois seeking to, in effect, extend the judge's decision in the Schwartz matter to MasterCard cardholders outside of California.
MasterCard International, Visa U.S.A., Inc., Visa International Corp., several member banks including Citibank (South Dakota), N.A., Citibank (Nevada), N.A., Chase Manhattan Bank USA, N.A., Bank of America, N.A. (USA), MBNA, and Diners Club are defendants in a number of federal putative class actions that allege, among other things, violations of federal antitrust laws based on the asserted one percent currency conversion "fee".
Pursuant to an order of the Judicial Panel on Multidistrict Litigation, the federal complaints have been consolidated in MDL No. 1409 before Judge William H. Pauley III in the U.S. District Court for the Southern District of New York. In January 2002, the federal plaintiffs filed a Consolidated Amended Complaint ("MDL Complaint") adding MBNA Corporation and MBNA America Bank, N.A. as defendants. This pleading asserts two theories of antitrust
conspiracy under Section 1 of the Sherman Act, 15 U.S.C. Section 1: (i) an alleged "inter-association" conspiracy among MasterCard (together with its members), Visa (together with its members) and Diners Club to fix currency conversion "fees" allegedly charged to cardholders of "no less than 1% of the transaction amount and frequently more;" and (ii) two alleged "intra-association" conspiracies, whereby each of Visa and MasterCard is claimed separately to have conspired with its members to fix currency conversion "fees" allegedly charged to cardholders of "no less than 1% of the transaction amount" and "to facilitate and encourage institution -- and collection -- of second tier currency conversion surcharges." The MDL Complaint also asserts that the alleged currency conversion "fees" have not been disclosed as required by the Truth In Lending Act and Regulation Z.
Defendants have moved to dismiss the MDL Complaint. Oral argument on that motion was held on June 21, 2002 and Judge Pauley reserved decision. Pending determination of defendants' motion to dismiss, the parties may engage in discovery except for non-custodial depositions. No trial date has been set.
4. Global Interchange Proceedings.
Interchange fees represent a sharing of payment system costs among the financial institutions participating in a four-party payment card system such as MasterCard's. Generally, interchange fees are paid by the merchant bank (the "acquirer") to the cardholder bank (the "issuer") in connection with transactions initiated with the payment system's cards. These fees reimburse the issuer for a portion of the costs incurred by it in providing services which are of benefit to all participants in the system, including acquirers and merchants. MasterCard establishes a multilateral interchange fee ("MIF") in certain circumstances as a default fee that applies when there is no other interchange fee arrangement between the issuer and the acquirer. MasterCard establishes a variety of MIF rates depending on such considerations as the location and the type of transaction, and collects the MIF on behalf of the institutions entitled to receive it, but does not itself receive the MIF. As described more fully below, MIFs are subject to regulatory or legal review and/or challenges in a number of jurisdictions.
European Union. In September 2000, the European Commission issued a "Statement of Objections" challenging Visa International's cross-border MIF under European Community competition rules. On July 24, 2002, the European Commission announced its decision to exempt the Visa MIF from these rules based on certain changes proposed by Visa to its MIF. Among other things, in connection with the exemption order, Visa agreed to adopt a cost-based methodology for calculating its MIF similar to the methodology employed by MasterCard, which considers the costs of certain specified services provided by issuers, and to reduce its MIF rates for debit and credit transactions to amounts at or below certain specified levels.
Although MasterCard Europe is not an addressee of the Statement of Objections, its rules also contain a cross-border MIF. MasterCard Europe intends to engage in discussions with the European Commission in order to determine under what conditions the European Commission would grant a formal exemption or comfort letter for MasterCard Europe's MIF. Because the cross-border MIF constitutes an essential element of MasterCard Europe's operations, changes to it could significantly impact MasterCard International's European members and the MasterCard business in Europe. At this time, it is not possible to determine what action the European Commission will take with respect to MasterCard Europe's MIF.
United Kingdom Office of Fair Trading. On September 25, 2001, the Office of Fair Trading of the United Kingdom ("OFT") issued a Statement of Objections ("SOO") under the U.K. Competition Act 1998 challenging the MasterCard MIF, the fee paid by the acquiring bank to the issuing bank in connection with point of sale transactions and multilateral service fee ("MSF"), the fee paid by issuing banks to acquiring banks when a customer uses a MasterCard-branded card in the United Kingdom either at an ATM or over the counter to obtain a cash advance, established by MasterCard U.K. Members Forum Limited (formerly MEPUK) for domestic credit card transactions in the United Kingdom. The SOO contained preliminary conclusions to the effect that the MasterCard U.K. MIF and MSF may infringe U.K. competition law and do not qualify for an exemption in their present forms. In January, 2002, MasterCard, MEPUK and several MasterCard U.K. members responded to the SOO, and an oral hearing concerning the matter was held on February 5, 2002. On February 11, 2003, the OFT issued an amended SOO, which also contains preliminary conclusions that challenge MasterCard's U.K. MIF under the Competition Act. On May 2, 2003, MasterCard and MMF responded to the supplemental SOO.
Because the MIF and MSF constitute essential elements of MasterCard's U.K. operations, changes to these fees could significantly impact MasterCard's U.K. members and the MasterCard business in the U.K. At this time, it is not possible to determine what action the OFT will take with respect to the MasterCard MIF and MSF.
Australia. On August 27, 2002, the Reserve Bank of Australia ("RBA") announced regulations under the Payments Systems (Regulation) Act 1998 (the "Act") applicable to four-party credit card payment systems in Australia, including MasterCard's. The RBA regulations would impose a number of changes on the operation of four-party credit card systems that could significantly impact MasterCard International's Australian members and the MasterCard business in Australia. Among other things, the RBA regulations permit non-deposit-taking institutions to issue credit cards and acquire credit card transactions in Australia, mandate a formula for calculating interchange fees that fails to account for certain costs incurred by issuers (such as credit losses) and effectively requires a reduction in domestic interchange fees, and prohibit MasterCard and other four-party credit card systems from enforcing their respective "no surcharge" and "net issuer" rules. The no surcharge rule generally prevents merchants from charging supplemental fees for the use of payment cards at the point of sale, and the net issuer rule requires institutions participating in the relevant system to issue payment cards in addition to conducting merchant acquiring activities.
On September 20, 2002, MasterCard filed an application with the Federal Court of Australia seeking to overturn the RBA regulations. MasterCard believes that in implementing the regulations the RBA has failed to comply with the obligations imposed upon it by the Act. Among other things, MasterCard believes that the RBA regulations fail to satisfy the public interest test mandated by the Act because they can be expected to impose additional costs on Australian consumers, place small businesses at a competitive disadvantage to larger retailers, and encourage small or regional banks to exit the credit card business in Australia. Visa International Corp. filed a similar application with the Federal Court of Australia on September 19, 2002. A hearing on the matter commenced on May 19, 2003. At this time, it is not possible to determine the outcome of MasterCard's legal challenge to the RBA regulations.
United States. In July 2002, a putative class action lawsuit was filed by a group of merchants in the U.S. District Court for the Northern District of California against MasterCard
International, Visa U.S.A., Inc., Visa International Corp. and several member banks in California, alleging, among other things, that MasterCard's and Visa's interchange fees contravene the Sherman Act. The suit seeks treble damages in an unspecified amount, attorney's fees and injunctive relief, including the divestiture of bank ownership of MasterCard and Visa, and the elimination of MasterCard and Visa marketing activities. Defendants filed a motion to dismiss the complaint on September 10, 2002. The motion has been fully briefed. The case was recently reassigned to a new judge in federal district court in San Francisco. An oral argument date on the motion was held on April 18, 2003. On April 21, 2003, the judge issued a decision that dismissed several of plaintiffs' claims and significantly narrowed the scope of the remaining claims in the case. No trial date has been set in this matter.
Other Jurisdictions. MasterCard is aware that regulatory authorities in certain other jurisdictions, including Poland, Hong Kong and Switzerland, are reviewing MasterCard's and/or its members interchange fee practices and may seek to regulate the establishment of such fees.
5. Other Challenges
The following matters are in their early procedural stages and are presented for completeness only. MasterCard has not yet determined whether these matters may have a material adverse impact on its business or prospects.
Paycom. In May 2003, a complaint was filed against MasterCard in the U.S. District Court for the Central District of California (Los Angeles) by a merchant aggregator who sells adult entertainment website content and who has been assessed for exceeding excessive chargeback program standards. The complaint alleges antitrust, breach of contract, fraud and other theories of damages against MasterCard. No trial date has been set in this matter.
North Carolina Action. In May 2003, a purported class action complaint was filed by a group of non-face-to-face merchants in federal court in North Carolina against MasterCard, Visa, American Express and Discover. The claims involve theories under RICO, federal antitrust law, state antitrust law, fraud, civil conspiracy, unfair/deceptive trade practices and related claims, including claims for breach of fiduciary duty. The federal antitrust claims include the claim that MasterCard's purported monopoly power forces plaintiffs to bear risks and costs of fraud and forces plaintiffs to pay excessive interchange. Plaintiffs claim defendants have earned monopolistic and unjust profits from chargeback fees/penalties and credit penalty fees. Other antitrust claims include group boycott and a conspiracy to profit from fraud in the card-not-present industry. No trial date has been set in this matter.
Schedule 3.15
MASTERCARD INCORPORATED AND SUBSIDIARIES
Name PERCENT OWNED** ---- ------------- MasterCard Incorporated NA Cirrus Systems, LLC 100% MasterCard Europe S.A. (formerly Europay International S.A.) 100% European Payment System Services S.A. 100% Euro Travellers Cheque International S.A. 100% Europay U.S. Inc 100% Eurocard Limited 100% Eurocard U.S.A., Inc. 100% MasterCard/Europay U.K. Limited 100% Maestro International Incorporated 100% Maestro Asia/Pacific Ltd. 100% Maestro Canada, Inc. 100% Maestro Latin America, Inc. 100% Maestro Middle East/Africa, Inc. 100% Maestro U.S.A., Inc. 100% MasterCard International Incorporated 100% MasterCard (India) Private Limited 100% MasterCard A/P Payment Services Inc. 100% MasterCard Asia/Pacific Pte Ltd. 100% MasterCard Australia Ltd. 100% MasterCard Brasil S/C Ltda. 100% |
MasterCard Brasil Solucoes de Pagamento Ltda. 100% MasterCard Canada, Inc. 100% MasterCard Cardholder Solutions, Inc. 100% MasterCard Chip Standards Holdings, Inc. 100% MasterCard Colombia, Inc. 100% MasterCard EMEA, Inc. 100% MasterCard Foreign Sales Corporation 100% MasterCard Global Holding LLC 100% MasterCard Global Key Centre Limited 100% MasterCard Global Promotions & Sponsorships Annex, Inc. 100% MasterCard Holding Incorporated 100% MasterCard Hong Kong Ltd. 100% MasterCard International Far East Ltd. 100% MasterCard International Holding LLC 100% MasterCard International Japan Inc. 100% MasterCard International Korea Ltd. 100% MasterCard International Philippines, Inc. 100% MasterCard International Services, Inc. 100% MasterCard International, LLC 100% MasterCard Korea Ltd. 100% MasterCard Mercosur, Inc. 100% MasterCard Middle East, Inc 100% MasterCard Originator SPC, Inc. 100% MasterCard Peru, Inc. 100% MasterCard Services SPC, Inc. 100% MasterCard Singapore Ltd. 100% MasterCard Southern Africa, Inc. 100% MasterCard Taiwan Ltd. 100% MasterCard Travelers Cheque, Inc. 100% MasterCard UK, Inc. 100% MasterCard Uruguay Limitada 100% MasterCard Venezuela, Inc. 100% MC Indonesia, Inc. 100% |
Mondex International Limited 100%
MAOSCO, Ltd. 100%
Mondex International Americas, Inc. 100%
Mondex Asia Pte. Ltd. 51%
Mondex China Pte. Ltd. 51%
Mondex India Pte. Ltd. 51%
Mondex International (Australia) Pty Ltd. 100%
MXI Management Limited 100%
Bright Skies LLC 100%
Clear Skies LLC 100%
CSI Holdings Inc. 100%
EMVCo, LLC 66.6%
GVP Risk Management Insurance Incorporated 100%
GVP Holding Incorporated 100%
Japan Network Services Co., Ltd. 100%
JNS Corporation Yugen Kaisha 100%
Mascon-MasterCard GTS Holdings Private Ltd. 49%
Mastermanager LLC 100%
MasterCard Beneficiary Trust 100%
MTS Holdings, Inc. 100%
SET Secure Electronic Transaction LLC 50%
Transactional Data Solutions LLC 70%
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** Percentages reflect direct ownership and indirect ownership through intermediate companies.
SCHEDULE 6.2(f)
LIENS
None.
SCHEDULE 6.10
DIVIDEND BLOCKS
MasterCard International Incorporated is subject to minimum net worth covenants pursuant to the following agreements, which are filed as exhibits to the Borrower's filings with the U.S. Securities and Exchange Commission identified in parentheses below:
- Form of MasterCard International Incorporated Note Purchase Agreement, dated as of June 30, 1998, regarding $80,000,000 of 6.67% Subordinated Notes due June 30, 2008 (see Exhibit 4 to Pre-Effective Amendment No. 2 to the Borrower's Registration Statement on Form S-4 filed November 9, 2001 (No. 333-67544)).
- Guarantee, dated as of August 31, 1999, made by MasterCard International Incorporated in favor of State Street Bank and Trust Company of Missouri, N.A., as Indenture Trustee for the Noteholders under the Indenture, dated as of August 31, 1999 between MasterCard International O'Fallon 1999 Trust and the Indenture Trustee (see Exhibit 10.4 to Pre-Effective Amendment No. 2 to the Borrower's Registration Statement on Form S-4 filed November 9, 2001 (No. 333-67544)).
SCHEDULE 10.7(b)
MASTERCARD
FIDUCIARY ACCOUNTS WITH BANKS PARTICIPATING IN THIS SYNDICATION
@ 3/31/03
BANK NAME ACCOUNT NUMBER CURRENCY
EXHIBIT A
[FORM OF REVOLVING CREDIT NOTE]
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
REVOLVING CREDIT NOTE
$____________ New York, New York
June __, 2003
FOR VALUE RECEIVED, the undersigned, MASTERCARD INCORPORATED,
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a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to the order of _________ (the "Lender") at the office of Citibank, N.A., located at 2 Penns Way, Suite 200, New Castle, Delaware, 19720, in lawful money of the United States and in immediately available funds, on the Revolving Credit Termination Date the principal amount of _________ DOLLARS ($__________), or, if less, the aggregate unpaid principal amount of all Revolving Credit Loans made by the Lender to the Borrower pursuant to subsection 2.1 of the Credit Agreement (as defined below). The Borrower further agrees to pay interest in like money at such office on the unpaid principal amount of Revolving Credit Loans made by the Lender from time to time outstanding at the rates and on the dates specified in the Credit Agreement.
The holder of this Note is authorized to record on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, Type and amount of each Revolving Credit Loan made by the Lender and the date and amount of each payment or prepayment of principal thereof, each conversion of all or a portion thereof to another Type, each continuation of all or a portion thereof as the same Type and, in the case of LIBOR Loans, the length of each Interest Period and the London Interbank Offered Rate with respect thereto. Each such recordation shall, to the extent permitted by applicable law, constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure to make any such recordation shall not affect the obligation of the Borrower to repay (with applicable interest) Revolving Credit Loans made by the Lender pursuant to the Credit Agreement.
This Note (a) is one of the Revolving Credit Notes referred to in the Credit Agreement, dated as of the date hereof (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MasterCard Incorporated, a Delaware corporation, MasterCard International Incorporated, a Delaware corporation, the Borrower, the Lender, the other banks and financial institutions from time to time parties thereto, JPMorgan Chase Bank, as back-up administrative agent and Citibank, N.A., as administrative agent, (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement.
Upon the occurrence of any one or more of the Events of Default, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
MASTERCARD INCORPORATED
By: __________________________________
Name: ________________________________
Title: _______________________________
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF LIBOR LOANS
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Amount
Converted to or Interest Period and
Amount of LIBOR Continued as London Interbank Offered Amount of Principal of
Date Loans LIBOR Loans Rate with Respect Thereto LIBOR Loans Repaid
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Amount of LIBOR
Loans Converted to Unpaid Principal
Date ABR Loans Balance of LIBOR Loans Notation Made By
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EXHIBIT B
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
TERM LOAN NOTE
$___________ New York, New York
____________, 200__
FOR VALUE RECEIVED, the undersigned, MASTERCARD INCORPORATED,
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a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to the order of ________________ (the "Lender") at the office of Citibank, N.A., located at 2 Penns Way, Suite 200, New Castle, Delaware, 19720, in lawful money of the States of America and in immediately available funds, on the Termination Date the principal amount of _______________ DOLLARS ($________), or, if less, the aggregate unpaid principal amount of the Lender's interest in the Term Loan made to the Borrower pursuant to subsection 2.5 of the Credit Agreement (as defined below). The Borrower further agrees to pay interest in like money at such office on the unpaid principal amount of the Term Loan made by the Lender from time to time outstanding at the rates and on the dates specified in the Credit Agreement.
The holder of this Note is authorized to record on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, Type and amount of the Term Loan made by the Lender and the date and amount of each payment or prepayment of principal thereof, each conversion of all or a portion thereof, each continuation thereof each conversion of all or a portion thereof to another Type and, in the case of LIBOR Loans, the length of each Interest Period and the London Interbank Offered Rate with respect thereto. Each such recordation shall, to the extent permitted by applicable law, constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure to make any such recordation shall not affect the obligation of the Borrower to repay (with applicable interest) the Term Loan made by the Lender pursuant to the Credit Agreement.
This Note (a) is one of the Term Loan Notes referred to in the Credit Agreement, dated as of June 20, 2003 (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MasterCard Incorporated, a Delaware corporation, MasterCard International Incorporated, a Delaware corporation, the Lender, the other banks and financial institutions from time to time parties thereto, JPMorgan Chase Bank, as back-up administrative agent and Citibank, N.A., as administrative agent, (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement.
Upon the occurrence of any one or more of the Events of Default, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment demand, protest and all other notices of any kind.
Unless otherwise defined herein terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
MASTERCARD INCORPORATED
By: __________________________________
Name: ________________________________
Title: _______________________________
SCHEDULE A
TO TERM LOAN
CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF TERM LOAN
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Interest Period and
London Interbank
Amount of the Term Amount Continued Offered Rate with Amount of Principal of
Date Loan as Term Loan Respect Thereto Term Loan Repaid
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Unpaid Principal
Amount of the Term Balance of the Notation
Date Loan Converted Term Loan Made By
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EXHIBIT C
[FORM OF SWING LINE NOTE]
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
SWING LINE NOTE
$_____________ New York, New York
June 20, 2003
FOR VALUE RECEIVED, the undersigned, MASTERCARD INCORPORATED,
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a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to the order of CITIBANK, N.A. (the "Swing Line Lender"), at its office located at 2 Penns Way, Suite 200, New Castle, Delaware, 19720, in lawful money of the United States and in immediately available funds, on the Revolving Credit Termination Date, the principal amount of _________ DOLLARS ($____) or, if less, the aggregate unpaid principal amount of the Swing Line Loans made by the Swing Line Lender to the Borrower pursuant to subsection 2.20 of the Credit Agreement (as defined below). The Borrower further agrees to pay interest in like money at said office on the unpaid principal amount of Swing Line Loans from time to time outstanding at the rates and on the dates specified in the Credit Agreement.
The Swing Line Lender is authorized to record the date and the amount of each Swing Line Loan made by the Swing Line Lender to the Borrower pursuant to subsection 2.20 of the Credit Agreement and the date and amount of each payment or prepayment of principal thereof on Schedule A annexed hereto and made a part hereof and any such recordation shall, to the extent permitted by applicable law, constitute prima facie evidence of the accuracy of the information so recorded, provided that any failure by the Swing Line Lender to make such recordation shall not affect the obligation of the Borrower to repay (with applicable interest) the Swing Line Loans made by the Swing Line Lender pursuant to the Credit Agreement.
This Note (a) is the Swing Line Note referred to in the Credit Agreement, dated as of the date hereof (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MasterCard Incorporated, a Delaware corporation, MasterCard International Incorporated, a Delaware corporation, the Swing Line Lender, the other banks and financial institutions from time to time parties thereto, JPMorgan Chase Bank, as back-up administrative agent and Citibank, N.A., as administrative agent, (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement.
Upon the occurrence of any one or more of the Events of Default, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
MASTERCARD INCORPORATED
By: ________________________________
Name:
Title:
SCHEDULE A TO
SWING LINE NOTE
LOANS AND REPAYMENTS
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Unpaid
Amount of Principal
Amount of Swing Line Balance of
Swing Line Loans Swing Line Notation Made
Date Loans Made Repaid Loans By
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EXHIBIT D-1
FORM OF
CAF ADVANCE REQUEST
_____________, 200__
Citibank, N.A., as Administrative Agent
2 Penns Way, Suite 200
New Castle, Delaware 19720
JPMorgan Chase Bank, as Backup Agent
[ ]
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of June 20, 2003, among the MasterCard Incorporated, a Delaware corporation, MasterCard International Incorporated, a Delaware corporation, the Lenders named therein, JPMorgan Chase Bank, as Backup Agent, and Citibank, N.A., as Administrative Agent (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
This is a [Fixed Rate] [LIBOR] CAF Advance Request pursuant to subsection 2.11 of the Credit Agreement requesting offers for the following CAF Advances:
[NOTE: Pursuant to the Credit Agreement, a CAF Advance Request may be transmitted in writing, by facsimile transmission, or by telephone, immediately confirmed by facsimile transmission. In any case, a CAF Advance Request shall contain the information specified in the second paragraph of this form.]
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Loan 1 Loan 2 Loan 3
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Aggregate Principal Amount $ $ $
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Borrowing Date
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CAF Advance Maturity Date
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CAF Advance Interest Payment
Dates
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Very truly yours,
MASTERCARD INCORPORATED
By _______________________
Name:
Title:
EXHIBIT D-2
FORM OF
CAF ADVANCE OFFER
_____, 200__
Citibank, N.A., as Administrative Agent
2 Penns Way, Suite 200
New Castle, Delaware 19720
JPMorgan Chase Bank, as Backup Agent
[ ]
Dear Sirs:
Reference is made to the Credit Agreement, dated as of June 20, 2003, among MasterCard Incorporated, a Delaware corporation (the "Borrower"), MasterCard International Incorporated, a Delaware corporation, the Lenders named therein, JPMorgan Chase Bank, as Backup Agent for such Lenders, and Citibank, N.A., as Administrative Agent for such Lenders (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein as therein defined.
In accordance with subsection 2.10 of the Credit Agreement, the undersigned Lender offers to make CAF Advances thereunder to the Borrower in the following amounts with the following maturity dates:
====================================================================================================
Borrowing Date: ________, 200__ Aggregate Maximum Amount: $_________
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Maturity Date 1: Maximum Amount: $_______
____________, 200__ $_______ offered at ________*
$_______ offered at ________*
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Maturity Date 2: Maximum Amount: $_______
____________, 200__ $_______ offered at ________*
$_______ offered at ________*
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Maturity Date 3: Maximum Amount: $_______
____________, 200__ $_______ offered at ________*
$_______ offered at ________*
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[NOTE: Insert the interest rate offered for the specified CAF Advance where indicated by an asterisk (*). In the case of LIBOR CAF Advances, insert a margin bid. In the case of Fixed Rate CAF Advances, insert a fixed rate bid.]
Very truly yours,
[NAME OF LENDER]
By__________________
Title:
Telephone No.:
Telecopy No.:
EXHIBIT D-3
FORM OF
CAF ADVANCE CONFIRMATION
________ __, 200__
Citibank, N.A.,
as Administrative Agent
2 Penns Way, Suite 200
New Castle, Delaware 19720
JPMorgan Chase Bank,
as Backup Agent
[ ]
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of June 20, 2003, among the undersigned, MasterCard International Incorporated, the Lenders named therein, JPMorgan Chase Bank, as Backup Agent, and Citibank, N.A., as Administrative Agent (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
In accordance with subsection 2.11 of the Credit Agreement, the undersigned accepts and confirms the offers by the CAF Advance Lender(s) to make CAF Advances to the undersigned on _____, 200__ under subsection 2.11 in the (respective) amount(s) set forth on the attached list of CAF Advances offered.
Very truly yours,
MASTERCARD INCORPORATED
By__________________
Name:
Title:
[Borrower to attach CAF Advance offer list prepared by the Administrative Agent with accepted amount entered by the Borrower to the right of each CAF Advance Offer].
EXHIBIT D-4
FORM OF
CAF ADVANCE ASSIGNMENT
CAF Advance ASSIGNMENT, dated as of the date set forth in Item 1 of Schedule I hereto, among the Assignor Lender set forth in Item 2 of Schedule I hereto (the "Assignor Lender"), the CAF Advance Assignee set forth in Item 3 of Schedule I hereto (the "CAF Advance Assignee"), and CITIBANK, N.A., as Administrative Agent for the Lenders under the Credit Agreement described below (in such capacity, the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, this CAF Advance Assignment is being executed and delivered in accordance with subsection 10.6(c) of the Credit Agreement, dated as of June 20, 2003, among MasterCard Incorporated, a Delaware corporation (the "Borrower"), MasterCard International Incorporated, a Delaware corporation, the Assignor Lender and the other Lenders parties thereto, JPMorgan Chase Bank, as Backup Agent for the Lenders, and the Administrative Agent (as from time to time amended, supplemented or otherwise modified in accordance with the terms thereof, the "Credit Agreement"; terms defined therein being used herein as therein defined); and
WHEREAS, the Assignor Lender has advanced to the Borrower the CAF Advance described in Item 5 of Schedule I hereto (the "CAF Advance"), and the Assignor Lender is assigning the CAF Advance to the CAF Advance Assignee pursuant to this CAF Advance Assignment;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Assignor Lender acknowledges receipt from the CAF Advance Assignee of an amount equal to the purchase price, as agreed between the Assignor Lender and the CAF Advance Assignee, of the outstanding principal amount of, and accrued interest on, the CAF Advance. The Assignor Lender hereby irrevocably sells, assigns and transfers to the CAF Advance Assignee without recourse, representation or warranty, except as set forth in subsection 4(i) hereof and the CAF Advance Assignee hereby irrevocably purchases, takes and acquires from the Assignor Lender, the CAF Advance, together with all instruments and documents pertaining thereto.
2. (a) From and after the date set forth in Item 4 of Schedule I hereto (the "Transfer Effective Date"), principal and interest that would otherwise be payable to or for the account of the Assignor Lender pursuant to the CAF Advance shall, instead, be payable to or for the account of the CAF Advance Assignee, whether such amounts have accrued prior to the Transfer Effective Date or accrue subsequent to the Transfer Effective Date.
(b) If Item 6 of Schedule I hereto contains payment instructions for the CAF Advance Assignee and if the CAF Advance Assignee delivers a copy of this CAF Advance Assignment to the Administrative Agent in accordance with subsection 10.6(f) of the Credit Agreement at least 5 Business Days prior to the due date of any payment to the CAF Advance Assignee, the CAF Advance Assignee hereby instructs the Administrative Agent to pay all such amounts payable to it pursuant to the provision of subparagraph (a) of this paragraph 2, in accordance with such payment instructions. If Item 6 of Schedule I hereto does not contain
payment instructions for the CAF Advance Assignee (or a copy hereof is not
delivered to the Administrative Agent as aforesaid), the Assignor Lender and the
CAF Advance Assignee agree that, notwithstanding the provisions of subparagraph
(a) of this paragraph 2, the Assignor Lender is hereby appointed by the CAF
Advance Assignee as its collection agent to receive from the Administrative
Agent, for and on behalf of and for the account of the CAF Advance Assignee, all
amounts payable to or for the account of the CAF Advance Assignee under the CAF
Advance; the Assignor Lender will immediately pay over to the CAF Advance
Assignee any such amounts received by it, in like funds as received.
3. Each of the parties to this CAF Advance Assignment agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this CAF Advance Assignment.
4. By executing and delivering this CAF Advance
Assignment, the Assignor Lender and the CAF Advance Assignee confirm to and
agree with each other and the Administrative Agent and the Lenders as follows:
(i) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned hereby free and clear of any
adverse claim and has the corporate power and authority, and the legal right to
sell, assign and transfer the CAF Advance to the CAF Advance Assignee, the
Assignor Lender 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 any other instrument or
document furnished pursuant thereto or with respect to the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or such other instrument or document furnished pursuant thereto; (ii)
the Assignor Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto;
(iii) the CAF Advance Assignee confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in subsection 3.1, the financial statements delivered pursuant to subsection
5.1, if any, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this CAF
Advance Assignment; (iv) the CAF Advance Assignee will, independently and
without reliance upon the Administrative Agent the Assignor Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in respect of the Credit
Agreement; and (v) the CAF Advance Assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto, all in accordance with Section 8 of the Credit Agreement.
5. Each party hereto represents and warrants to and agrees with the Administrative Agent that it is aware of and will comply with the provisions of subsection 10.6(h) of the Credit Agreement.
6. THIS CAF ADVANCE ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this CAF Advance Assignment to be executed by their respective duly authorized officers on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto.
Schedule to CAF
Advance Assignment
Item 1 (Date of CAF Advance [Insert date of CAF Advance
Assignment): Assignment]
Item 2 (Assignor Lender): [Insert name of Assignor Lender]
Item 3 (CAF Advance Assignee): [Insert name, address and telephone
numbers and name of contact party of
CAF Advance Assignee]
Item 4 (Transfer Effective Date): [Insert Transfer Effective Date]
[To be a date not less than five
business days after date of CAF
Advance Assignment]
|
Item 5 (Description of CAF Advance):
a. Date:
b. Principal Amount:
Item 6 (Payment Instructions): [Complete only if payments are to be
made by Administrative Agent to CAF
Advance Assignee rather than to
Assignor Lender as collection agent for
CAF Advance Assignee; leave blank if
Assignor Lender is to act as such
collection agent]
Item 7 (Signatures):
______________________________, as
Assignor Lender
By:_____________________________
Name:
Title:
___________________________, as Bid
Loan Assignee
By:_____________________________
Name:
Title:
ACCEPTED FOR RECORDATION
IN REGISTER:
CITIBANK, N.A.,
as Administrative Agent
By:________________________
Name:
Title:
EXHIBIT E
SWING LINE LOAN PARTICIPATION CERTIFICATE
___________ __, 200__
Ladies and Gentlemen:
Pursuant to subsection 2.13(e) of the Credit Agreement, dated as of June 20, 2003 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined), among MasterCard Incorporated, MasterCard International Incorporated, the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank, as back-up administrative agent for the Lenders thereunder (in such capacity, the "Backup Agent") and Citibank, N.A., as administrative agent for the Lenders thereunder (in such capacity, the "Agent"), the undersigned, as Swing Line Lender under the Credit Agreement, hereby acknowledges receipt from you on the date hereof of ___________ DOLLARS ($____) as payment for a participating interest in the following Swing Line Loan:
Date of Swing Line Loan: ______________
Principal Amount of Swing Line Loan
Participating Interest: $_____________
Very truly yours,
CITIBANK, N.A.
By:__________________________________
Name:
Title:
|
EXHIBIT F
[FORM OF OPINION OF GENERAL COUNSEL TO THE BORROWER AND
INTERNATIONAL]
_________, 2003
To (a) the several banks and other financial institutions parties on the date hereof to the Agreement referred to below, (b) JPMorgan Chase Bank, as Backup Agent under said Agreement and (c) Citibank, N.A., as Administrative Agent under said Agreement.
Dear Sirs:
I am General Counsel of MasterCard Incorporated, a Delaware corporation (the "Borrower") and MasterCard International Incorporated, a Delaware corporation ("International" and together with the Borrower, the "Obligors"), and am familiar with the Credit Agreement, dated as of June 20, 2003 (the "Agreement"), among the Borrower, MasterCard International the banks and other financial institutions parties thereto (the "Lenders"), JPMorgan Chase Bank, as Backup Agent for the Lenders (in such capacity, the "Backup Agent"), and Citibank, N.A., as Administrative Agent for the Lenders (in such capacity, the "Administrative Agent"). This opinion is delivered to you pursuant to subsection 4.1(h) of the Agreement. Terms used herein which are defined in the Agreement shall have the respective meanings set forth in the Agreement, unless otherwise defined herein.
In connection with this opinion, I have examined an executed copy of the Agreement, and such corporate documents and records of each Obligor and its Subsidiaries and certificates of public officials and officers of each Obligor and its Subsidiaries, and such other documents, as I have deemed necessary or appropriate for the purposes of this opinion. For the purposes of this opinion, I have assumed (i) the genuineness of all signatures of, and the authority of, Persons signing the Agreement on behalf of parties thereto other than the Obligors, (ii) the authenticity of all documents submitted to me as originals and (iii) the conformity to authentic original documents of all documents submitted to me as certified, conformed or photostatic copies.
Based upon the foregoing, I am of the opinion that:
i. Each Obligor and its Subsidiaries (a) is an entity duly organized, validly existing and in good standing (to the extent applicable) under the laws of the jurisdiction of its incorporation, (b) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged and (c) is duly qualified as a foreign entity and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except where the failure to be so qualified and in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
ii. The execution, delivery and performance by each Obligor of the Agreement are within the corporate powers of such Obligor, have been duly authorized by all necessary corporate action (including any necessary shareholder approval), require no governmental approval, and do not contravene any law or regulation applicable to, including, without limitation, Regulation T, U or X of the Board, or any contractual restriction binding on, each Obligor.
iii. The Agreement has been duly executed and delivered by each Obligor and constitutes a legal, valid and binding obligation of each Obligor enforceable against in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). No consent or authorization of, filing with, notice to or other act by or in respect of any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery, performance or validity of the Agreement other than those expressly required by the terms of the Agreement.
iv. To the best of my knowledge after due inquiry, except to the extent set forth in Schedule 3.6 attached to the Agreement, there are no pending or threatened actions or proceedings affecting either Obligor or any of its Subsidiaries which, if determined adversely to either Obligor or such Subsidiary, would have a Material Adverse Effect.
v. Neither Obligor is an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. Neither Obligor is a "Holding Company" or a "Subsidiary Company" of a "Holding Company" or an "Affiliate" of a "Holding Company", as such terms are defined in the Public Utility Holding Company Act of 1935, as amended.
I am a member of the Bar of the State of New York and express no opinion on any laws other than the laws of the State of New York and the federal laws of the United States.
Very truly yours,
EXHIBIT G
FORM OF
BORROWING NOTICE
Citibank, N.A.,
as Administrative Agent
2 Penns Way, Suite 200
New Castle, Delaware 19720
Attention: Agency Department
JPMorgan Chase Bank,
as Backup Agent
[ ]
Dear Sirs:
This Borrowing Notice is delivered to you by the undersigned (the "Borrower") in connection with subsection 2.2 of the Credit Agreement, dated as of June 20, 2003 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, MasterCard International Incorporated, the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank, as Backup Agent for the Lenders, and Citibank, N.A., as Administrative Agent for the Lenders. Unless otherwise defined herein, capitalized terms used herein have the meanings provided in the Credit Agreement.
The Borrower hereby requests that Loans be made in the
aggregate principal amount of $_________ on __________, 200__ (the "Borrowing
Date"). The Borrower requests that such Loans be made as1 [LIBOR Loans in a
principal amount of $______ having an initial Interest Period of _____ months]
[ABR Loans in a principal amount of $____________]. The Borrower requests that
the Loans requested be paid into account at [bank].
The Borrower hereby certifies that the representations and warranties contained in Section 3 [(other than subsections 3.5 and 3.6)]2 of the Credit Agreement will be true as of the Borrowing Date with the same effect as if made on and as of such date both before and after giving effect to the Loans to be made on the Borrowing Date and that no event has occurred, or will result from the making of the Loans to be made on the Borrowing Date, which constitutes a Default or an Event of Default.
(1) Insert appropriate interest rate option, and, if applicable, number of months. If Loans are to be a combination of LIBOR and ABR Loans, specify the respective amounts of each type.
(2) Insert only for borrowings other than the initial borrowing.
IN WITNESS WHEREOF, the Borrower has caused this request and certificate to be executed and delivered by its duly authorized officer this ________ day of _________, 200__.
MasterCard Incorporated
By:___________________________
Name:
Title:
EXHIBIT H
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of June 20, 2003 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MasterCard Incorporated, a Delaware corporation (the "Borrower"), MasterCard International Incorporated, a Delaware corporation, the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank, as back-up administrative agent for the Lenders (in such capacity, the "Backup Agent"), and Citibank, N.A., as administrative agent for the Lenders (in such capacity, the "Administrative Agent"). Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
__________ (the "Assignor") and _______ (the "Assignee") agree as follows:
i. The Assignor hereby irrevocably sells and assigns to the Assignee without recourse to the Assignor, and the Assignee hereby irrevocably purchases and assumes from the Assignor without recourse to the Assignor, as of the Effective Date (as defined below) (but not prior to the registration of the information contained herein in the Register pursuant to subsection 10.6(e) of the Credit Agreement), an interest (the "Assigned Interest") in and to the Assignor's rights and obligations under the Credit Agreement with respect to those credit facilities contained in the Credit Agreement as are set forth on Schedule 1 (individually, an "Assigned Facility"; collectively, the "Assigned Facilities"), in a principal amount for each Assigned Facility as set forth on Schedule 1.
ii. The Assignor (a) 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, any other
Loan Document or any other instrument or document furnished pursuant thereto, or
with respect to the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, any other Loan Document or any
other instrument or document furnished pursuant thereto, other than that the
Assignor has not created any adverse claim upon the interest being assigned by
it hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower, any of its Subsidiaries or
any other obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Credit Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) (i) requests that the
Administrative Agent, upon request by the Assignee, (a) exchange any attached
Notes for a new Note or Notes payable to the Assignee or, (b) if the Assignor
does not hold any Notes, issue a new Note or Notes payable to the Assignee and
(ii) if (A) the Assignor has retained any interest in the Assigned Facility and
(B) the Assignor holds any Notes, requests that the Administrative Agent
exchange the attached Notes for a new Note or Notes payable to the Assignor, in
each case in amounts which reflect the assignment being made hereby (and after
giving effect to any other assignments which have become effective on the
Effective Date).
iii. The Assignee (a) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance; (b) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in or
delivered pursuant to subsections 3.1 and 5.1 thereof 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 Acceptance; (c) agrees that it will,
independently and without reliance upon the Assignor, the Administrative Agent
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement, the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; (d) appoints
and authorizes the Administrative Agent to take such action as administrative
agent on its behalf and to exercise such powers and discretion under the Credit
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are incidental thereto;
and (e) agrees that it will be a party to and bound by the provisions of the
Credit Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender including, if it is organized under the laws of a
jurisdiction outside the United States, its obligations pursuant to subsection
2.21 (b) of the Credit Agreement.
iv. The effective date of this Assignment and Acceptance shall be ____, 200_ (the "Effective Date"). Following the execution of this Assignment and Acceptance and the consent hereto by the Borrower to the extend required under the Credit Agreement, it will be delivered to the Administrative Agent for acceptance by it and recording by the Administrative Agent pursuant to the Credit Agreement, effective as of the Effective Date (which shall not, unless otherwise agreed to by the Administrative Agent, be earlier than five Business Days after the date of such acceptance and recording by the Administrative Agent).
v. Upon such acceptance and recording, from and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor and Assignee. The Assignor and the Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.
vi. From and after the Effective Date, (a) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the other Loan Documents and shall be bound by the provisions thereof and (b) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights (except pursuant to subsections 2.20, 2.21 and 10.5 of the Credit Agreement) and be released from its obligations under the Credit Agreement.
vii. This Assignment and Acceptance shall be governed by and construed in accordance with the law of the State of New York.
viii. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed as of the date first above written by their respective duly authorized officers on Schedule 1 hereto.
Schedule 1 to Assignment and Acceptance
Re: Assignment and Acceptance relating to the Credit Agreement, dated as of June 20, 2003 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MasterCard Incorporated, a Delaware corporation (the "Borrower"), MasterCard International Incorporated, a Delaware corporation, the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank, as back-up administrative agent for the Lenders (in such capacity, the "Backup Agent"), and Citibank, N.A., as administrative agent for the Lenders (in such capacity, the "Administrative Agent" ).
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Credit Principal
Facility Assigned Amount Assigned
----------------- ---------------
Revolving Credit $_________
|
The terms set forth above are hereby agreed to by:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR] By___________________________ By____________________ Name: Name: Title: Title: Accepted: Consented To: CITIBANK, N.A., as MASTERCARD INCORPORATED Administrative Agent By___________________________ By____________________ Name: Name: Title: Title: |
EXHIBIT I
[FORM OF CLOSING CERTIFICATE]
CLOSING CERTIFICATE
Pursuant to subsections 4.1 (c), 4.1(d), 4.1(e), 4.1(f) and 4.1(g) of the Credit Agreement, dated as of June 20, 2003 (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MasterCard Incorporated, a Delaware corporation ("the "Borrower"), MasterCard International Incorporated, a Delaware corporation ("International"), the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank, as back-up administrative agent for the Lenders, and Citibank, N.A., as administrative agent for the Lenders, the undersigned, ________ of [Borrower] [International] ______________, hereby certifies as follows:
1. The representations and warranties of [Borrower]
[International] set forth in the Credit Agreement and each of the other
Loan Documents to which it is a party are true and correct on and as of
the date hereof as if made on and as of the date hereof;
2. No Default or Event of Default has occurred and is continuing as of the date hereof or will occur after giving effect to the making of the Loans on the date hereof or the consummation of each of the transactions contemplated by the Loan Documents; and
3. ____________ is and at all times since _______ __,
_____, has been the duly elected and qualified [Assistant] Secretary of
[Borrower] [International] and the signature set forth on the signature
line for such officer below is such officer's true and genuine
signature;
and the undersigned [Assistant] Secretary of [Borrower]
[International] hereby certifies as follows:
4. There are no liquidation or dissolution proceedings
pending or to my knowledge threatened against [Borrower]
[International] or any of its Subsidiaries, nor has any other event
occurred affecting or threatening the corporate existence of [Borrower]
[International] or any of its Subsidiaries;
5. [Borrower] [International] is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware;
6. (i) Attached hereto as Exhibit A is a true and
complete copy of resolutions duly adopted by the Board of Directors of
[Borrower] [International] on __________ __, _____; such resolutions
have not in any way been amended, modified, revoked or rescinded and
have been in full force and effect since their adoption to and
including the date hereof and are now in full force and effect; such
resolutions are the only corporate proceedings of [Borrower]
[International] now in force relating to or affecting the matters
referred to therein;
(ii) attached hereto as Exhibit B is a true and complete copy of the by-laws of [Borrower] [International] as in effect at all times since ______ __, _____, to and including the date hereof, and
(iii) attached hereto as Exhibit C is a true and
complete copy of the certificate of incorporation of [Borrower]
[International], as amended or restated on or prior to the date hereof
and as in effect at all times since _______ __, _____, to and including
the date hereof; and
7. The following persons are now duly elected and
qualified officers of [Borrower] [International], holding the offices
indicated next to their respective names below, and such officers have
held such offices with [Borrower] [International] at all times since
_______ __, _____, to and including the date hereof, and the signatures
appearing opposite their respective names below are the true and
genuine signatures of such officers, and each of such officers is duly
authorized to execute and deliver on behalf of [Borrower]
[International], the Credit Agreement and the other Loan Documents to
which it is a party and any certificate or other document to be
delivered by [Borrower] [International] pursuant to the Credit
Agreement or any such Loan Document:
Name Office Signature [ ] [ ] --------------- [ ] [ ] --------------- |
Unless otherwise defined herein, capitalized terms which are defined in the Credit Agreement and used herein are so used as so defined.
IN WITNESS WHEREOF, the undersigned have hereunto set our names and affixed the corporate seal.
MASTERCARD INCORPORATED MASTERCARD INTERNATIONAL
INCORPORATED
By:___________________________ By:___________________________
Name: Name:
Title: [Vice] President Title: [Assistant] Secretary
Date: __________, 2003
|
EXHIBIT J
[FORM OF COMPLIANCE CERTIFICATE]
Pursuant to subsection 5.2(b) of the Credit Agreement, dated as of June 20, 2003 (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MasterCard Incorporated, a Delaware corporation (the "Borrower"), MasterCard International Incorporated, a Delaware corporation, the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank, as back-up administrative agent for the Lenders, and Citibank, N.A., as administrative agent for the Lenders, the undersigned, ______________ of the Borrower, hereby certifies that during the period [_______] to [_________], except as set forth on Schedule I hereto:
1. The representations and warranties of the Borrower set forth in the Credit Agreement and each of the other Loan Documents or which are contained in any certificate, document or financial or other statement furnished pursuant to or in connection with the Credit Agreement were true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, except for representations and warranties expressly stated to relate to a specific earlier date, in which case such representations and warranties were true and correct as of such earlier date;
2. The negative covenant set forth in subsection 6.1 of the Credit Agreement regarding the Maintenance of Net Worth has been calculated as follows:
$475,000,000
+ 50% of [$________] Consolidated Net Income (if positive)] of the Borrower for each quarter ending after March 31, 2003
= TOTAL [$_____]
[$__________] [Consolidated Net Worth] must be greater than or equal to
TOTAL [$_____]
3. No Default or Event of Default has occurred and is continuing as of the date hereof;
4. There have been no liquidation or dissolution proceedings pending or to my knowledge threatened against the Borrower, any of its Subsidiaries, nor to my knowledge has there been any other event occurred affecting or threatening the existence of the Borrower or any Subsidiary, except as permitted by the Credit Agreement;
5. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to my knowledge, threatened by or against the Borrower any of its Subsidiaries or against any of its or their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;
Unless otherwise defined herein, capitalized terms which are defined in the Credit Agreement and used herein are so used as so defined.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her name and affixed the corporate seal.
MASTERCARD INCORPORATED
By:________________________________
Name:______________________________
Title:_____________________________
Date: __________ __, 200__
Schedule I to Compliance Certificate
[DISCLOSURE]
EXHIBIT K-1
[FORM OF NEW LENDER SUPPLEMENT]
SUPPLEMENT, dated ___________, to the Credit Agreement dated as of June 20, 2003 (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MASTERCARD INCORPORATED, a Delaware corporation (the "Borrower"), MASTERCARD INTERNATIONAL INCORPORATED, a Delaware corporation, the several banks and other financial institutions parties thereto (the "Lenders"), JPMORGAN CHASE BANK, as back-up administrative agent (in such capacity, the "Backup Agent") and CITIBANK, N.A., as administrative agent (in such capacity, the "Administrative Agent") for the Lenders.
W I T N E S S E T H :
WHEREAS, the Credit Agreement provides in subsection 2.25(b) thereof that any bank, financial institution or other entity, although not originally a party thereto, may become a party to the Credit Agreement with the consent of the Borrower and the Administrative Agent by executing and delivering to the Borrower and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and
WHEREAS, the undersigned was not an original party to the Credit Agreement but now desires to become a party thereto;
NOW, THEREFORE, the undersigned hereby agrees as follows:
1. The undersigned agrees to be bound by the provisions of the Credit Agreement, and agrees that it shall, on the date this Supplement is accepted by the Borrower and the Administrative Agent, become a Lender for all purposes of the Credit Agreement to the same extent as if originally a party thereto, with a Commitment of $____.
2. The undersigned (a) represents and warrants that it is legally authorized to enter into this Supplement; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements delivered pursuant to subsection 3.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Supplement; (c) agrees that it has made and will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender including, without limitation, if it is organized under
the laws of a jurisdiction outside the United States, its obligation pursuant to subsection 2.23(b) of the Credit Agreement.
3. The undersigned's address for notices for the purposes of the Credit Agreement is as follows:
4. Terms defined in the Credit Agreement shall have their defined meanings when used herein.
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.
[INSERT NAME OF LENDER]
By_________________________
Name:
Title:
Accepted this ___ day of
____________, ___.
MASTERCARD INCORPORATED
By_______________________
Name:
Title:
Accepted this _____ day of
____________, ____.
CITIBANK, N.A., as Administrative Agent
By_____________________
Name:
Title:
EXHIBIT K-2
[FORM OF COMMITMENT INCREASE SUPPLEMENT]
SUPPLEMENT, dated ____________, to the Credit Agreement dated as of June 20, 2003 (as the same may be amended, supplemented otherwise modified from time to time, the "Credit Agreement"), among MASTERCARD INCORPORATED, a Delaware corporation (the "Borrower"), MASTERCARD INTERNATIONAL INCORPORATED, a Delaware corporation, the several banks and other financial institutions parties thereto (the "Lenders"), JPMORGAN CHASE BANK, as back-up agent (in such capacity, the "Backup Agent") and CITIBANK, N.A., as administrative administrative agent (in such capacity, the "Administrative Agent") for the Lenders.
W I T N E S S E T H :
WHEREAS, the Credit Agreement provides in subsection 2.25(c) thereof that any Lender with (when applicable) the consent of the Borrower may increase the amount of its Commitment by executing and delivering to the Borrower and the Administrative Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and
WHEREAS, the undersigned now desires to increase the amount of its Commitment under the Credit Agreement;
NOW THEREFORE, the undersigned hereby agrees as follows:
1. The undersigned agrees, subject to the terms and conditions of the Credit Agreement, that on the date this Supplement is accepted by the Borrower and the Administrative Agent it shall have its Commitment increased by $ ________, thereby making the amount of its Commitment $________.
2. Terms defined in the Credit Agreement shall have their defined meanings when used herein.
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be executed and delivered by a duly authorized officer on the date first above written.
[INSERT NAME OF LENDER]
By_________________________
Name:
Title:
Accepted this ________ day of
________________, ____.
MASTERCARD INCORPORATED
By____________________
Name:
Title:
Accepted this ________ day of
_____________, ____.
CITIBANK, N.A., as Administrative Agent
By_____________________
Name:
Title:
INDENTURE
dated as of August 31, 1999
from
MCI O'FALLON 1999 TRUST
to
STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A.,
not in its individual capacity except as expressly provided herein, but solely as Indenture Trustee
SYNTHETIC LEASE FINANCING
OF MASTERCARD WINGHAVEN FACILITY
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS ......................................................................... 3
ARTICLE 2 THE NOTES ........................................................................... 3
Section 2.1. Issuance, Terms and Forms of Notes ........................................ 3
Section 2.2. Interest; Payment of Senior Secured Notes; Security ....................... 6
Section 2.3. The Register .............................................................. 7
Section 2.4. Registration of Senior Secured Notes; Execution of Senior Secured Notes ... 7
Section 2.5. Certificate of Authentication ............................................. 7
Section 2.6. Transfers and Exchanges ................................................... 8
Section 2.7. Indenture Trustee as Agent ................................................ 9
Section 2.8. Registered Owner .......................................................... 9
Section 2.9. Cancellation or Assignment of Senior Secured Notes ........................ 9
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
BORROWER ...................................................................................... 10
Section 3.1. Performance by Indenture Trustee ........................................... 10
Section 3.2. Subrogation ................................................................ 11
Section 3.3. Financial Statements; Books and Records; Inspections ....................... 11
Section 3.4. Further Assurances; Recording .............................................. 12
Section 3.5. Payment of Obligations; Rent ............................................... 13
Section 3.6. Transfer Taxes; Filings; Lien Taxes ........................................ 13
Section 3.7. Existence; Governmental Requirements ....................................... 14
Section 3.8. Security Interest in the Bonds ............................................. 14
Section 3.9. Representations, Warranties and Covenants in the Operative Agreements ...... 14
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
INDENTURE TRUSTEE ............................................................................. 15
Section 4.1. Representations and Warranties of the Indenture Trustee .................... 15
Section 4.2. Covenants of the Indenture Trustee ......................................... 16
ARTICLE 5 POSSESSION, USE AND RELEASE OF THE COLLATERAL ....................................... 17
Section 5.1. Condemnation and Casualty .................................................. 17
Section 5.2. Moneys Received by the Indenture Trustee ................................... 17
Section 5.3. Indenture Trustee's Rights to Act .......................................... 17
Section 5.4. Release; No Partial Releases ............................................... 18
ARTICLE 6 RECEIPT AND APPLICATION OF MONEYS ................................................... 18
Section 6.1. Receipt of Moneys........................................................... 18
Section 6.2. Moneys Attributable to the Lease ........................................... 18
Section 6.3. Moneys Held in Collateral; Investments ..................................... 22
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Section 6.4. Other Payments ............................................................. 23
Section 6.5. Release of Lien ............................................................ 23
ARTICLE 7 PREPAYMENT........................................................................... 23
Section 7.1. Generally .................................................................. 23
Section 7.2. Mandatory Prepayment ....................................................... 23
Section 7.3. Notice of Prepayment; Deposit of Moneys .................................... 24
ARTICLE 8 INDENTURE EVENTS OF DEFAULT; REMEDIES ............................................... 24
Section 8.1. Indenture Events of Default ................................................ 24
Section 8.2. Remedies ................................................................... 26
Section 8.3. Voluntary Appearance ....................................................... 32
Section 8.4. Suits by the Indenture Trustee ............................................. 32
Section 8.5. General Provisions Concerning Remedies ..................................... 32
Section 8.6. Remedies Cumulative ........................................................ 34
Section 8.7. The Borrower's Waivers ..................................................... 34
Section 8.8. Direction of Remedies ...................................................... 35
Section 8.9. Suit by Noteholders ........................................................ 35
Section 8.10. Certain Rights of the Borrower ............................................ 35
Section 8.11. No Action Contrary to the Lessee's Rights under the Lease ................. 37
Section 8.12. Nonrecourse Liability ..................................................... 37
ARTICLE 9 TRUSTEES ............................................................................ 39
Section 9.1. Individual and Co-Trustees ................................................. 39
Section 9.2. Rights and Obligations of Indenture Trustee ................................ 40
Section 9.3. Resignation of the Indenture Trustee ....................................... 44
Section 9.4. Successor Trustee .......................................................... 44
Section 9.5. Reliance by the Borrower ................................................... 45
ARTICLE 10 SUPPLEMENTAL INDENTURES ............................................................ 46
Section 10.1. General ................................................................... 46
Section 10.2. Without Consent of Noteholders ............................................ 46
Section 10.3. Consent of All Noteholders ................................................ 46
Section 10.4. Consent of Less Than All Noteholders ...................................... 47
Section 10.5. Exchange; Legend or Notation; Effect ...................................... 47
Section 10.6. Consents in Writing ....................................................... 47
ARTICLE 11 MISCELLANEOUS ...................................................................... 47
Section 11.1. Amendments, etc., of Certain Documents .................................... 47
Section 11.2. Execution of Instruments by Noteholders ................................... 48
Section 11.3. Limitation of Rights of Others ............................................ 48
Section 11.4. Severability .............................................................. 48
Section 11.5. Notices ................................................................... 48
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Section 11.6. Maximum Interest Payable ........................................................ 49 Section 11.7. Action by the Required Holders .................................................. 50 Section 11.8. Counterparts .................................................................... 50 Section 11.9. Successors and Assigns .......................................................... 50 Section 11.10. Table of Contents, Headings .................................................... 50 Section 11.11. GOVERNING LAW .................................................................. 50 Section 11.12. Incorporated Schedules and Exhibits ............................................ 50 Section 11.13. Section References ............................................................. 50 |
EXHIBIT A-1 Form of Series A Note EXHIBIT A-2 Form of Series B Note EXHIBIT B Form of Certificate of Authentication ANNEX A Certain Definitions SCHEDULE A Land SCHEDULE B Payment Instructions |
INDENTURE dated as of August 31, 1999 (herein, together with all amendments and supplements hereto, this "INDENTURE"), from MCI O'FALLON 1999 TRUST, a business trust organized under the laws of the State of Delaware (the "BORROWER"); to STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A., a national banking association, not in its individual capacity except as expressly provided herein, but solely as Indenture Trustee (together with its successors, substitutes and assigns in such capacity, the "INDENTURE TRUSTEE") for the benefit of the Noteholders (as defined below).
W I T N E S S E T H :
WHEREAS, MasterCard International Incorporated, a non-stock membership corporation organized under the laws of the State of Delaware (the "LESSEE"), the Borrower, the Trust Company, the Indenture Trustee and certain financial institutions (the "PURCHASERS") listed on Schedule A to the Note Purchase Agreement (referred to below) have entered into a Participation Agreement, dated as of August 31, 1999 (as amended or supplemented from time to time, the "PARTICIPATION AGREEMENT"), which provides for a synthetic lease financing of acquiring, constructing and equipping of an approximately 414,000 square foot office space, an approximately 114,000 square foot data and energy center providing and utilizing reliable, redundant energy and communications sources and parking for approximately 1,751 cars, constituting, together with the Land and the other Improvements, the Facility (as defined below), substantially in accordance with the Facility Requirements (as defined below) to be used by the Lessee as its Global Technology and Operations Center;
WHEREAS, in connection with such financing, the Borrower has agreed to issue and sell, and the Purchasers have agreed to purchase, pursuant to the Series A Note Purchase Agreement, dated as of August 31, 1999, between the Borrower and the Purchasers (as amended or supplemented from time to time, the "SERIES A NOTE PURCHASE AGREEMENT"), from the Borrower $149,380,000 in aggregate principal amount of its 7.36% Series A Senior Secured Notes due September 1, 2009 (the "SERIES A NOTES", such term to include any such Notes issued in substitution or replacement therefor pursuant to this Indenture), subject to the terms and conditions of the Series A Note Purchase Agreement;
WHEREAS, the proceeds of the Series A Notes and the Investor Contribution (as defined below) will be used by the Borrower to acquire $154,000,000 in aggregate principal amount of Industrial Development Revenue Bonds (Winghaven/MasterCard Project) Series 1999A, due September 1, 2009 (the "SERIES A BONDS") issued by the Missouri Development Finance Board, a body corporate and politic, organized and existing under the laws of the State of Missouri (the "BOARD") and a fee owner of that certain parcel of land in the City of O'Fallon, Missouri, together with all Appurtenant Rights attached thereto, as more particularly described on Schedule A hereto (the "LAND");
WHEREAS, the proceeds from the sale of the Series A Bonds, together with approximately $3,700,000 deposited by the Bond Sublessor (as defined below) to fund capitalized interest on the Series A Bonds during the Construction Period (as defined below), will be (a) deposited in the Escrow Account (as defined below) with the Indenture Trustee, in its capacity as
the Escrow Agent, pursuant to the Escrow Agreement, dated as of the date hereof (as amended or supplemented from time to time, the "ESCROW AGREEMENT"), among the Escrow Agent, the Indenture Trustee and the Borrower, and (b) used to develop and construct the Facility and to pay the Facility Costs (as defined below);
WHEREAS, as of the Closing Date, (a) the Board will lease the Facility to the O'Fallon Public Facilities Authority, a non-profit corporation organized under the laws of the State of Missouri (the "BOND SUBLESSOR"), pursuant to a Bond Lease, dated as of the date hereof (as amended or supplemented from time to time, the "BOND LEASE"), (b) the Bond Sublessor will sublease the Facility to the Borrower pursuant to a Bond Sublease, dated as of the date hereof (as amended or supplemented from time to time, the "BOND SUBLEASE"), and (c) the Borrower will sublease the Facility to the Lessee pursuant to a Lease, dated as of the date hereof (as amended or supplemented from time to time, the "LEASE");
WHEREAS, in the event that additional financing is needed to complete the Facility, the Borrower may, upon request of the Lessee and subject to certain conditions, issue its Series B Senior Secured Notes due September 1, 2009 (the "SERIES B NOTES", such term to include any such Notes issued in substitution or replacement therefor pursuant to this Indenture, and together with the Series A Notes, the "ORIGINAL NOTES") in an aggregate principal amount not to exceed $5,000,000 to be purchased (if and when issued) pursuant to a separate note purchase agreement (as amended or supplemented from time to time, the "SERIES B NOTE PURCHASE AGREEMENT," and collectively with the Series A Note Purchase Agreement, the "NOTE PURCHASE AGREEMENTS") on the terms substantially the same as the terms set forth in the Series A Note Purchase Agreement and the conditions set forth in Section 5 of the Participation Agreement (and the purchasers of such Series B Notes pursuant to the Series B Note Purchase Agreement shall be deemed to be Purchasers under the Participation Agreement);
WHEREAS, (a) the proceeds of the Series B Notes (if any) and the additional Investor Contribution (as described in Section 2.1 of the Participation Agreement) will be used by the Borrower to acquire Industrial Development Revenue Bonds (Winghaven/MasterCard Project) Series 1999B, due September 1, 2009 (the "SERIES B BONDS", and together with Series A Bonds, the "BONDS") in aggregate principal amount equal to the aggregate principal amount of the Series B Notes and such additional Investor Contribution then issued by the Board and (b) the proceeds from the sale of the Series B Bonds will be deposited in the Escrow Account pursuant to the Escrow Agreement and used to develop and construct the Facility and to pay the Facility Costs;
WHEREAS, the Borrower (a) has authorized the creation of the Original Notes and, subject to the terms and conditions of this Indenture and the other Operative Agreements, may authorize in the future its Senior Secured Notes that may be issued under Section 2.l(d) of this Indenture (the "EXPANSION NOTES," such term to include any such Notes issued in substitution or replacement therefor pursuant to this Indenture, and together with the Original Notes, the "SENIOR SECURED NOTES") and (b) has also authorized the execution and delivery of this Indenture, pursuant to which the Indenture Trustee will authenticate and deliver the Series A Notes to the Purchasers;
NOW, THEREFORE, in consideration of the premises, the acceptance by the Indenture Trustee of the trusts hereby created and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, in order to DECLARE THE TERMS AND CONDITIONS UPON AND SUBJECT TO WHICH the Senior Secured Notes are to be issued, authenticated and delivered:
ARTICLE 1
DEFINITIONS
For purposes of this Indenture, capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in Annex A attached to the Participation Agreement and incorporated herein by reference. The rules of usage set forth in such Annex A shall apply hereto.
ARTICLE 2
THE NOTES
SECTION 2.1. ISSUANCE, TERMS AND FORMS OF NOTES. (a) On the Closing Date, the Borrower shall execute and deliver the Series A Notes to the Indenture Trustee for authentication and the Indenture Trustee shall authenticate and deliver the Series A Notes to the Purchasers. On a closing date with respect to the Series B Notes, the Borrower shall execute and deliver the Series B Notes to the Indenture Trustee for authentication and the Indenture Trustee shall authenticate and deliver the Series B Notes to the purchasers thereof. On any closing date with respect to any Expansion Notes, the Borrower shall execute and deliver such Expansion Notes to the Indenture Trustee for authentication and the Indenture Trustee shall authenticate and deliver such Expansion Notes to the purchasers thereof; provided that the Indenture Trustee shall not authenticate any Expansion Notes that are issued not in compliance with Section 2.1(d).
(b) SERIES A NOTES. The Series A Notes shall be issued pursuant to the terms of the Series A Note Purchase Agreement and this Indenture and shall be substantially in the form set forth in Exhibit A-l, with such changes as may be agreed to by the Borrower and the Purchasers.
(c) SERIES B NOTES. The Series B Notes shall be issued pursuant to the terms of the Series B Note Purchase Agreement and this Indenture and shall be substantially in the form set forth in Exhibit A-2, with such changes as may be agreed to by the Borrower and the Purchasers.
(d) EXPANSION NOTES. The Borrower may, from time to time after the Completion Date, upon the Lessee's request made pursuant to Section 7.6 of the Lease (under such circumstances and subject to such consents as therein provided), issue under this Indenture Expansion Notes of one or more Series (such series, together with the Series A Notes and the
Series B Notes, are sometimes each referred to herein as a "SERIES"), in an
original principal amount for each such Series of not less than $10,000,000, for
the purpose of enabling the Lessee to expand the Facility. The Expansion Notes
of each Series shall be originally issued only to one or more Institutional
Investors, and each Expansion Note of such Series shall mature on any Payment
Date not earlier than the stated maturity of the Series A Notes and the Series B
Notes and shall be payable in the following manner: interest accrued and unpaid
on the unpaid principal amount of such Expansion Note from the date of issuance
thereof shall be payable on each Payment Date in each year commencing with the
first Payment Date after the date thereof; and the principal of such Expansion
Note shall be payable on the stated maturity thereof, as provided in the
Supplemental Indenture establishing such Series. Expansion Notes of each Series
shall (A) be established and designated by a Supplemental Indenture, (B) be in
such form (including the form of the Trustee's certificate of authentication
thereon), bear interest (computed as shall be provided in such Supplemental
Indenture) on the unpaid principal amount thereof from the date of issuance
thereof to maturity, whether by acceleration or otherwise, and unless prohibited
by law, on any overdue principal, premium and interest until paid, at such rate
or rates, as shall be provided in such Supplemental Indenture, and (C) be
limited in aggregate principal amount to 97% the amount of the additional
Facility Costs for which the proceeds thereof will be used. The Expansion Notes
of each Series shall be, insofar as commercially reasonable, subject to the same
terms and conditions as the Original Notes. The Indebtedness evidenced by all
Expansion Notes of any Series shall be secured by the Security Documents on a
parity with the Indebtedness evidenced by the Original Notes and the Expansion
Notes of every other Series, without preference, priority or distinction as to
Lien or otherwise; provided, however, that, notwithstanding anything herein or
in any other Operative Agreement to the contrary, no Series of Expansion Notes
may be issued or sold unless (i) the Basic Rent shall be increased by the amount
of interest payable with respect to such Expansion Notes (and by the amount of
any additional yield on any additional investor contribution associated with
such Expansion Notes), (ii) the Termination Value and the amount of Guaranteed
Obligations (as defined in the Guarantee) shall be increased by the amount of
principal of, interest on, any applicable Make Whole Premium on, and any other
costs and expenses (including, without limitation, any indemnification payments
made in respect thereof pursuant to Article 11 of the Participation Agreement)
in respect of, such Series of the Expansion Notes (and, in the case of
Termination Value, by the amount of any additional investor contribution
associated with such Expansion Notes), (iii) the Maximum Residual Guarantee
Amount shall be increased by the product of (x) the increase of the Termination
Value attributable to such Expansion Notes referred to in clause (ii) above
multiplied by (y) a fraction, the numerator of which is equal to the Maximum
Residual Guarantee Amount immediately prior to the adjustment thereof pursuant
to the foregoing clause (iii), and the denominator of which is equal to the
Termination Value immediately prior to the adjustment thereof pursuant to clause
(ii) above, (iv) the Lease, the Bond Lease and the Bond Sublease shall be
amended, in form and substance reasonably satisfactory to the Required Holders,
to reflect such increases, (v) the amount payable under the Residual Value
Policy shall be increased by the excess of (x) the Termination Value increased
pursuant to clause (ii) above over (y) the Maximum Residual Guarantee Amount as
increased pursuant to clause (iii) above, (vi) the amounts under the title
insurance policies shall be increased to cover the amount of such Series of
Expansion Notes, (vii) the Guarantee shall be amended, in form and substance
reasonably satisfactory to the Required Holders, to reflect the increases in the
Termination Value and the Maximum Residual
Guarantee Amount, (viii) the Security Documents and the other Operative Agreements shall be amended to reflect the foregoing amendment to the Lease, the Bond Lease and the Bond Sublease and the granting of additional collateral and security interests for the benefit of the holders of the Original Notes and such Series of Expansion Notes, in the form and substance reasonably satisfactory to the Required Holders, (ix) the Board shall issue and sell to the Lessor a new series of Industrial Development Revenue Bonds (Winghaven/MasterCard Project) in aggregate principal amount equal to the additional Facility Costs for which the proceeds thereof will be used, and (x) an additional Investor Contribution shall be made in the amount equal to 3% of the additional Facility Costs for which the proceeds thereof will be used; and provided, further, that:
(i) no Indenture Default or Indenture Event of Default shall have occurred and be then continuing, and all payments theretofore required to be made on the Senior Secured Notes then outstanding shall have been made,
(ii) such Expansion Notes shall first be offered to the Offerees in accordance with Article 11 of the Series A Note Purchase Agreement (and any comparable provision of the Series B Note Purchase Agreement or any note purchase agreement with respect to any Series of the Expansion Notes then Outstanding), and if the Offerees do not desire to purchase such Expansion Notes, only to other Institutional Investors,
(iii) each such Institutional Investor then purchasing any such Expansion Notes shall have made representations substantially in the form set forth in Article 7 of the Series A Note Purchase Agreement,
(iv) the issuance and sale of such Expansion Notes could not, after giving effect to such issuance and sale, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect, and
(v) the Indenture Trustee and each of the Noteholders shall have received (A) a resolution of the board of directors of the Lessee, certified by the Secretary or the Assistant Secretary of the Lessee, authorizing the Lessee's request to issue such Expansion Notes, (B) a resolution of the governing body of the Borrower, certified by the Secretary or the Assistant Secretary of the Borrower, authorizing the issuance of the Expansion Notes proposed to be issued, (C) resolutions of the Board and the Bond Sublessor, certified by the Secretary or the Assistant Secretary of the Board or the Bond Sublessor, as the case may be, authorizing the issuance of an appropriate series of Industrial Development Revenue Bonds (Winghaven/MasterCard Project) in aggregate principal amount equal to the additional Facility Costs for which the proceeds thereof will be used and authorizing the amendments to the Bond Lease and the Bond Sublease, as the case may be, (D) an application of the Borrower requesting the Trustee to authenticate and deliver such Expansion Notes and (E) an opinion of counsel reasonably satisfactory to the Indenture Trustee and the Required Holders stating that all conditions precedent, under this Indenture and the other Operative Agreements, to the issuance of such Expansion Notes have been fulfilled. The Indenture Trustee may consult with counsel, and the advice of such counsel shall be full and complete authorization and protection with
respect to any action taken by the Indenture Trustee in connection with the issuance of any Expansion Notes.
SECTION 2.2. INTEREST; PAYMENT OF SENIOR SECURED NOTES; SECURITY. (a) Each Senior Secured Note shall be dated and accrue interest from the date the purchase price for such Senior Secured Note is paid (whether to the Borrower or to its order) and shall bear interest on the unpaid principal amount thereof at the Interest Rate; provided, however, that if an Indenture Event of Default has occurred and is continuing, the unpaid principal amount of, and due and unpaid interest on, such Senior Secured Note shall bear interest at the Overdue Rate, until such Indenture Event of Default is cured.
(b) The interest on each Senior Secured Note shall be payable on the Payment Dates and in the amounts of interest specified in such Senior Secured Note, and the principal amount then owing on such Senior Secured Note shall be due and payable on the Maturity Date specified in such Senior Secured Note. The Senior Secured Notes are subject to prepayment as provided in Article 7 hereof.
(c) The Borrower shall make all payments with respect to the Senior Secured Notes to the Indenture Trustee as provided in Schedule B hereto. The principal of, premium, if any, and interest on each Senior Secured Note shall be payable by the Indenture Trustee to the holder of such Senior Secured Note at the Indenture Trustee's Office in lawful money of the United States of America, against presentation of such Senior Secured Note for notation of the payment or prepayment made thereon or, in the case of a payment or prepayment which shall discharge all Indebtedness of the Borrower evidenced thereby, against surrender or assignment thereof.
(d) Notwithstanding the provision of Section 2.2(c) or
any provision in the Senior Secured Notes to the contrary, the Indenture Trustee
shall, if so requested by a Noteholder by written notice, pay all amounts
payable by the Borrower hereunder to such Noteholder or a nominee therefor (i)
by crediting, in immediately available funds, the amount to be distributed to
such Noteholder to an account maintained by such Noteholder with the Indenture
Trustee, (ii) by mailing a check payable in immediately available funds to such
Noteholder at such address as Noteholder shall have specified in such notice, or
(iii) by wire transfer or other transfer in immediately available funds to such
bank (for the account of Noteholder) as may be specified in such notice (which
shall include the name of the bank, which shall be in the continental United
States of America, such bank's address, ABA routing number and the name and
telephone number of a contact person at such bank and shall acknowledge that a
transfer fee is payable), in any case without any presentment or surrender of
any Senior Secured Note; provided, however, that each Noteholder, by its
acceptance of the Senior Secured Notes, agrees that (A) any Senior Secured Note
paid or prepaid in full, upon the written request of the Borrower, shall be
surrendered within thirty days after the receipt of such request to the
Indenture Trustee (provided that the Indenture Trustee shall give each
Noteholder a 30-day advance notice with respect to such surrender) for
cancellation or assigned to such Person as the Borrower shall designate (without
recourse to the assignor) concurrent with the making of the final payment of all
amounts owing in respect of such Senior Secured Note on account of such Senior
Secured Note, and
(B) such Noteholder shall not sell, transfer or otherwise dispose of such Senior Secured Note other than as provided in Section 2.6 hereof. Until the Indenture Trustee has been notified of a different payee or payment instructions with respect to any Purchaser, all payments to such Purchaser with respect to its Senior Secured Notes shall be made by the Indenture Trustee in the manner provided in Schedule A to the Note Purchase Agreements.
(e) If the scheduled date for any payment of interest on or principal of any Senior Secured Note shall not be a Business Day, then such payment need not be made on such scheduled date but may be made on the next following Business Day with the same force and effect as if made on such scheduled date.
(f) Subject to the release provisions contained in
Section 5.4, all Outstanding Original Notes (and to the extent provided in
Section 2.l(d), Expansion Notes) shall be equally and ratably secured by a
first priority Lien on the Collateral, without preference, priority or
distinction on account of the date or dates or the actual time or times of the
issue of such Original Notes (and to the extent provided in Section 2.1(d),
Expansion Notes), so that all Outstanding Original Notes (and to the extent
provided in Section 2.l(d), Expansion Notes) shall have the same right, Lien
and preference under and by virtue of the Security Documents and in respect of
the Collateral.
(g) All Outstanding Original Notes (and to the extent provided in Section 2.l(d), Expansion Notes) shall also have the benefit, equally and ratably, of guarantees by and undertakings of (i) the Guarantor to the extent provided in the Guarantee, (ii) the Construction Agent, to the extent provided in Article VIII of the Facility Agency Agreement and (iii) the Insurer to the extent provided in (x) the Residual Value Policy and (y) the Construction Termination Policy.
SECTION 2.3. THE REGISTER. The Indenture Trustee shall cause to be kept at the Indenture Trustee's Office (i) one or more books (the "REGISTER") for the registration of the Senior Secured Notes (including all transfers) and the name and address of the holders of the Senior Secured Notes.
SECTION 2.4. REGISTRATION OF SENIOR SECURED NOTES; EXECUTION OF SENIOR SECURED NOTES. All Senior Secured Notes shall be registered as to principal amount and interest and may be issued in denominations of $100,000 or any multiple in excess thereof (except one Senior Secured Note of each Series may be issued to a Noteholder in a lesser denomination). The Senior Secured Notes shall be signed on behalf of the Borrower by one of its Responsible Officers.
SECTION 2.5. CERTIFICATE OF AUTHENTICATION. No Senior Secured Note shall be valid or become obligatory for any purpose or be binding upon the Borrower, or be entitled to the benefits of this Indenture and the benefits and security of the Security Documents, unless and until it has been authenticated by the Indenture Trustee's execution of the certificate of authentication thereon in the form set forth as Exhibit B. The authentication and delivery by the Indenture Trustee of any Senior Secured Note shall be conclusive evidence that such Senior Secured Note
has been duly issued and is entitled to the benefits of this Indenture and the benefits and security of the Security Documents, as herein provided.
SECTION 2.6. TRANSFERS AND EXCHANGES. (a) The Senior Secured Notes shall be transferred or exchanged only on the Register. Any Senior Secured Note of any Series may, upon surrender to the Indenture Trustee at the Indenture Trustee's Office, be transferred or exchanged for one or more new Senior Secured Notes of the same Series in proper denominations as requested by a Noteholder, which new Senior Secured Notes of such Series shall be in an aggregate principal amount the same as the original principal amount of the Senior Secured Note of such Series so surrendered; provided, however, that in the case of a transfer to a third party, the Senior Secured Note to be transferred shall be accompanied by an instrument of transfer satisfactory to the Borrower and the Indenture Trustee; and provided, further, that in the case of a requested exchange or transfer of a lost, destroyed or stolen Senior Secured Note, a Noteholder shall not be required to surrender such Senior Secured Note, but shall furnish to the Borrower and the Indenture Trustee such security (which, if the Noteholder shall be an Institutional Investor, shall consist only of an agreement to indemnify the Borrower and the Indenture Trustee against loss or liability in connection with the issuance of Senior Secured Notes) and such evidence of loss, destruction, theft and ownership as they may reasonably require. The Borrower shall thereupon execute, and the Indenture Trustee shall authenticate and deliver, within five Business Days, a new Senior Secured Note or Senior Secured Notes in the requested denomination or denominations, for the same aggregate original principal amount of the same Series as the surrendered, lost, stolen or destroyed Senior Secured Note or Senior Secured Notes, and registered in the requested names. The Indenture Trustee shall not be required to transfer any Senior Secured Note on the Register within fifteen (15) days immediately preceding any Payment Date or the giving of any notice of prepayment.
(b) The Indenture Trustee shall mark on each new Senior Secured Note (i) the principal amount of such new Senior Secured Note, (ii) the date to which interest has been paid on the Senior Secured Note or Senior Secured Notes so surrendered, lost, stolen or destroyed and (iii) the amount of all payments and prepayments of principal previously made on the Senior Secured Note or Senior Secured Notes so surrendered, lost, stolen or destroyed that are allocable to such new Senior Secured Note. Each payment of interest and principal and any other amounts payable on such new Senior Secured Note shall bear the same proportion to the corresponding payment of interest and principal and any other amounts on the Senior Secured Note or Senior Secured Notes so surrendered, lost, stolen or destroyed as the principal amount of such new Senior Secured Note bears to the principal amount of the Senior Secured Note or Senior Secured Notes so surrendered, lost, stolen or destroyed. Interest shall be deemed to have been paid or accrued, as the case may be, on such new Senior Secured Note to the date to which interest shall have been paid or shall have accrued, as the case may be, on the Senior Secured Note or Senior Secured Notes so surrendered, lost, stolen or destroyed, and all payments and prepayments of principal marked on such new Senior Secured Note shall be deemed to have been made thereon. Such new Senior Secured Note shall be dated the date of the Senior Secured Note or Senior Secured Notes so surrendered, lost, stolen or destroyed. No service charge shall be made for any exchange or transfer of Senior Secured Notes, but the Indenture Trustee may require payment by the Noteholder requesting such exchange or transfer of a sum to cover any Tax or governmental
charge that may be imposed with respect thereto and the Indenture Trustee's reasonable fees with respect to issuing a replacement Senior Secured Note for any lost, stolen or destroyed Senior Secured Note. All Senior Secured Notes issued in exchange or substitution or replacement for Senior Secured Notes so surrendered, lost, stolen or destroyed shall be valid obligations of the Borrower, evidencing the same Indebtedness (and of the same Series) as the Senior Secured Notes surrendered, lost, stolen or destroyed and shall be entitled to the benefits of this Indenture and the benefits and security of the Security Documents, as the Senior Secured Notes surrendered, lost, stolen or destroyed.
(c) The Borrower agrees to furnish with reasonable promptness, upon the request of any Noteholder which is an Institutional Investor, such information as is specified in paragraph (d)(4) of Rule 144A under the Securities Act (or any successor provision) to such Institutional Investor or to a prospective transferee of Senior Secured Notes, provided that such Institutional Investor informs the Borrower that it reasonably believes such transferee is a qualified institutional buyer within the meaning of Rule 144A, in order to permit compliance by such Institutional Investor with Rule 144A in connection with the transfer of such Senior Secured Note.
(d) In the event that any Noteholder fails to provide a correct tax identification number to the Indenture Trustee, the Indenture Trustee may make a charge against such Noteholder sufficient to pay any governmental charges as the result of such failure. In compliance with Section 3406 of the Code, this amount may be deducted by the Indenture Trustee from amounts payable to such Noteholder under this Indenture or the Senior Secured Notes.
SECTION 2.7. INDENTURE TRUSTEE AS AGENT. The Indenture Trustee is hereby appointed the agent of the Borrower for the payment of the Senior Secured Notes, and for registration, transfer and exchange of the Senior Secured Notes. Subject to the provisions of Section 2.2(d), Senior Secured Notes may be presented for payment at or sent to the Indenture Trustee's Office.
SECTION 2.8. REGISTERED OWNER. The Borrower and the Indenture Trustee shall deem and treat the Person in whose name any Senior Secured Note shall be registered as the absolute owner thereof (whether or not such Senior Secured Note shall be overdue) for the purpose of receiving payments of principal, premium, if any, and interest on such Senior Secured Note and for all other purposes, and neither the Borrower nor the Indenture Trustee shall be affected by any notice to the contrary. All such payments made to or upon the order of such Person, including all payments made on the Senior Secured Notes to the Indenture Trustee as agent for the Noteholders, shall be valid and effective to satisfy and discharge the liability upon such Senior Secured Notes to the extent of the sums so paid.
SECTION 2.9. CANCELLATION OR ASSIGNMENT OF SENIOR SECURED NOTES. All Senior Secured Notes surrendered for the purpose of payment, prepayment, transfer or exchange shall, if surrendered to any Person other than the Indenture Trustee, be promptly delivered to the Indenture Trustee for cancellation or assignment (without recourse). The Borrower shall promptly deliver to the Indenture Trustee for cancellation or assignment (without recourse), any Senior Secured Notes previously authenticated and delivered hereunder which the Borrower may have acquired in any manner whatsoever. All Senior Secured Notes surrendered to the Indenture
Trustee pursuant to this Section 2.9 shall be canceled or assigned (without recourse) by Indenture Trustee, and no Senior Secured Notes shall be issued in lieu thereof except as expressly required or permitted by this Indenture. The Indenture Trustee shall hold all such Senior Secured Notes until the Indebtedness under the Senior Secured Notes shall have been paid or purchased in full, at which time the Indenture Trustee shall either deliver such canceled or assigned Senior Secured Notes in the manner necessary to effect the discharge and release of this Indenture or, if no such delivery is necessary, shall deliver such canceled or assigned Senior Secured Notes to the Borrower or its assignee, as appropriate.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER
The Borrower hereby represents and warrants to, and covenants with, the Indenture Trustee, for the benefit of the Noteholders, as follows:
SECTION 3.1. PERFORMANCE BY INDENTURE TRUSTEE. If an Indenture Event of
Default has occurred and is continuing, the Indenture Trustee, without notice to
the Borrower, may (but shall not be obligated to) make any payment or perform
(or cause to be performed) any obligation of the Borrower hereunder or under the
other Operative Agreements, in any form and manner deemed expedient by the
Indenture Trustee, and any amount so paid or incurred (plus reasonable
compensation to the Indenture Trustee for its out-of-pocket and other expenses
for each matter for which it acts under the Indenture or under the Security
Documents), with interest thereon at the Overdue Rate, will be added to the
Indebtedness under the Senior Secured Notes and will be paid to the Indenture
Trustee upon demand. Before taking such action the Indenture Trustee will first
give at least ten (10) Business Days' prior written notice to the Borrower,
unless (a) such obligation involves a failure to maintain required insurance or
(b) in the good faith judgment of the Indenture Trustee, immediate action is
required in order to protect the Facility or the Collateral from loss or damage,
or to remedy any imminent danger to the health, safety or property of any
Person, or to avoid any imminent risk of criminal or material civil liability,
in which cases no prior notice will be required. By way of illustration and not
in limitation of the foregoing, the Indenture Trustee may, upon the occurrence
and during the continuation of an Indenture Event of Default, do all or any of
the following: (i) make payments of principal or interest or other amounts on
any Lien, encumbrance or charge on the Facility or any of the Collateral; (ii)
make repairs; (iii) collect rents and give acquittances; (iv) prosecute
collection of the Collateral or proceeds thereof; (v) purchase, discharge,
compromise or settle any tax Lien or any other lien, encumbrance, suit,
proceeding, title or claim thereof; (vi) contest or settle any tax or
assessment; (vii) redeem from any tax sale or forfeiture affecting the Facility;
and (viii) perform any obligation under the Bond Lease, the Bond Sublease, the
Lease the Bond Indenture or any other Operative Agreement. In making any payment
or securing any performance relating to any obligation of the Borrower hereunder
or under the Security Documents, the Indenture Trustee will be the sole judge of
the legality, validity and amount of any Lien or encumbrance and of all other
matters necessary to be determined in satisfaction thereof. No such action of
the Indenture Trustee may be considered as a waiver of any right upon an
Indenture Event of Default.
SECTION 3.2. SUBROGATION. To the extent that the Indenture Trustee pays any sum under any provision of law or any instrument or document creating any Lien or other interest prior or superior to the Lien of any of the Security Documents and has the right to do so hereunder or under the Security Documents, or the Borrower or any other Person pays any such sum with the proceeds of the Senior Secured Notes secured thereby, then, to the extent permitted by law, the Indenture Trustee will have and be entitled to a Lien or other interest on the Collateral equal in priority to the Lien or other interest discharged and the Indenture Trustee will be subrogated to, and receive and enjoy all rights and Liens possessed, held or enjoyed by, the holder of such Lien, which will remain in existence and benefit the Indenture Trustee, with priority over the Senior Secured Notes.
SECTION 3.3. FINANCIAL STATEMENTS; BOOKS AND RECORDS; INSPECTIONS. (a) The Borrower shall deliver to each Noteholder:
(i) Notice of Event of Default -- promptly, and in any event within five days after the Borrower becomes aware of the existence of any Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder, a written notice specifying the nature and period of existence thereof and what action the Borrower is taking or proposes to take with respect thereto;
(ii) Litigation -- promptly, and in any event within five days after the Borrower becomes aware of any litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or threatened by or against the Borrower, a written notice setting forth the nature thereof and the action, if any, that the Borrower proposes to take with respect thereto;
(iii) Notices from Governmental Authority -- promptly, and in any event within five days of receipt thereof, copies of any notice to the Borrower from any federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation which, individually or in the aggregate, could reasonably be expected to (x) have a material adverse effect on the assets, liabilities, operations, business, prospects or financial condition of the Borrower or on the Facility, (y) a material impairment of the ability of the Borrower to perform its obligations under this Indenture or any other Operative Agreement or (z) a material impairment of the rights of or benefits available to the Noteholders under this Indenture or any other Operative Agreement;
(iv) Material Adverse Effect - promptly, and in any event within five days after the Borrower receives written notice of any event or condition which, individually or in the aggregate, could reasonably be expected to (x) have a material adverse effect on the assets, liabilities, operations, business, prospects or financial condition of the Borrower or on the Facility, (y) a material impairment of the ability of the Borrower to perform its obligations under this Indenture or any other Operative Agreement or (z) a material impairment of the rights of or benefits available to the Noteholders under this Indenture or any other Operative Agreement, a written notice
setting forth the nature thereof and the action, if any, that the Borrower proposes to take with respect thereto; and
(v) Requested Information -- with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Borrower or relating to the ability of the Borrower to perform its obligations hereunder and under the Senior Secured Notes as from time to time may be reasonably requested by any such Noteholder.
(b) The Borrower will keep adequate records and books of account reflecting all its financial transactions.
(c) During business hours and as often as the Indenture Trustee or any Noteholder may reasonably request upon at least three (3) Business Days' notice (except that in the case of an Indenture Event of Default, no prior notice need be given), the Borrower shall allow the Indenture Trustee or such Noteholder (or such Persons as the Indenture Trustee or such Noteholder may designate), at the Indenture Trustee's or such Noteholder's expense, as the case may be (except that in the case of an Indenture Event Default, any such inspection shall be made at the expense of the Borrower), to visit and inspect the Facility (subject to the provisions of the Lease) and to examine the records and books of account of the Borrower, wherever such records and books of account are located, and to discuss the affairs, finances and accounts of the Borrower with its officers and accountants (and by this provision, the Borrower authorizes such accountants to discuss the affairs, finances and accounts of the Borrower). Neither the Indenture Trustee nor any of the Noteholders will have any duty to make any such inspection, and the Borrower agrees that whether or not the Indenture Trustee or any Noteholder makes any such inspection will not limit any of the Indenture Trustee's or such Noteholder's rights or remedies, or the Borrower's obligations, hereunder or under the Security Documents.
SECTION 3.4. FURTHER ASSURANCES; RECORDING. (a) The Borrower will, at its expense, do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, instruments and assurances reasonably required by the Indenture Trustee for the better granting to the Indenture Trustee of the Borrower's interest in the Collateral granted or intended to be granted by the Security Documents or for carrying out the intention of, or facilitating the performance of, this Indenture.
(b) The Borrower will upon the execution and delivery hereof and thereafter from time to time, cause the Security Documents to be duly filed, registered and recorded, and will comply with all applicable statutes and regulations, as may be required by law to establish and maintain the Lien of the Security Documents as a valid first Lien of record on and a valid first perfected security interest in the Collateral, subject to Permitted Liens, and to establish, perfect, preserve and protect the rights of the parties thereto and their respective successors and assigns. The Borrower will, from time to time, perform or cause to be performed any other act as required by law, and will execute or cause to be executed any and all further instruments (including financing statements, continuation statements and similar statements with respect to any of said documents) reasonably requested by the Indenture Trustee or any Noteholder, for such purposes. If the
Borrower shall fail to comply with this Section 3.4, the Indenture Trustee will be and is hereby irrevocably appointed the agent and attorney-in-fact of the Borrower, with full power of substitution in the Borrower's name and on its behalf, to comply therewith (including the execution, delivery and filing of such financing statements, continuation statements and other instruments), but the Indenture Trustee's actions as such will not be deemed to prevent, or to have cured, any default under this Section 3.4. The Borrower will pay, or will cause the Lessee to pay, all recording taxes and fees incident to or in connection with the preparation, execution, delivery or acknowledgment of the Security Documents, any instruments of further assurance and the Senior Secured Notes.
SECTION 3.5 PAYMENT OF OBLIGATIONS; RENT. (a) The Borrower will pay and perform, timely and in the manner required in the appropriate documents or instruments, all obligations in respect of the Senior Secured Notes. The Borrower will not claim any credit on, or make any deduction from interest, principal or Make Whole Premium, if any, payable on the Senior Secured Notes by reason of payment of any Rent or other amount payable with respect to, or levied or assessed or to be levied or assessed on, the Collateral or any part thereof or the Borrower's interest therein. The Borrower's payment obligations under this Indenture are independent of any obligations under any of the other Operative Agreements and may be satisfied only upon payment in full of all amounts due and payable under the Senior Secured Notes and this Indenture.
(b) Without limiting the generality of the foregoing and subject to Section 3.5(c), the Borrower will pay (i) all taxes, levies, impositions and other charges imposed on, assessed, or levied upon the Borrower, and (ii) all income, excess profits, sales, gross receipts and other taxes, duties or imposts, whether similar or not in nature, assessed, levied or imposed by any Governmental Authority on the Borrower. Nothing in this Section 3.5 will require the payment by the Borrower of any net income or franchise or similar tax of the Noteholders or the Lessee.
(c) The Borrower may, at its own expense, contest or cause to be
contested (in the case of any item involving more than $100,000, after prior
written notice to the Indenture Trustee and the Noteholders) by appropriate
legal proceedings conducted in good faith and with due diligence, the existence,
amount or validity or application, in whole or in part, of any item specified in
Section 3.5(b) or Lien therefor; provided that such contest will not (i) operate
to suspend during the pendency thereof the collection of, or other realization
upon, any Rent or other amount derived from, or payable with respect to, (A) the
Facility or (B) any interest in the Facility and the other properties and rights
included in the Collateral, or (ii) (v) subject the Rent under the Lease or any
other part of the Collateral to loss, forfeiture or sale, (w) adversely affect
the Lien of the Security Documents or any part of the Collateral, (x) interfere
with the possession, use or occupancy of the Facility, (y) interfere with the
due payment of any amount payable hereunder or under the Senior Secured Notes,
or (z) subject the Indenture Trustee or the Noteholders to the risk of any civil
or criminal liability.
SECTION 3.6. TRANSFER TAXES; FILINGS; LIEN TAXES. (a) To the extent the laws of any state within which any portion of the Collateral is located require a transferee of real property or an interest therein to withhold from the transferor and remit to the taxing authorities of such state
any portion of the consideration paid therefor, or to demonstrate entitlement to any exemption from such withholding, the Borrower has complied fully with such requirements.
(b) If any Legal Requirement at any time provides for any deduction from the value of the Collateral in connection with any impositions on the Lien of the Security Documents or changes in any way the laws for taxation of any Indebtedness secured thereby or the manner of collection of any such impositions so as to impose any Impositions upon or otherwise affecting this Indenture, and if such impositions are payable by the Indenture Trustee or any Noteholder, the Borrower shall pay or cause to be paid to the Indenture Trustee or such Noteholder, as the case may be, the amount of all such impositions before such impositions are due.
SECTION 3.7. EXISTENCE; GOVERNMENTAL REQUIREMENTS. The Borrower will at
all times maintain its existence. The Borrower will at all times keep in full
force and effect all of its franchises, rights, permits, licenses and consents
as may be required by any Governmental Authority for the conduct of its business
and the ownership, leasing, mortgaging and encumbering of the Collateral. Unless
required by the Legal Requirements or permitted to be made by the Lessee without
the Borrower's consent under the Lease, or unless the Required Holders will have
otherwise first agreed in writing, the Borrower will not make or allow any
changes to be made in the nature of the currently contemplated occupancy or use
of the Facility or any portion thereof. The Borrower will not initiate or
acquiesce in any change in any zoning or other land use classification now or
hereafter in effect and affecting the Facility or any part thereof without in
each case obtaining the prior written consent of the Required Holders. The
Borrower will comply with or cause to be complied with in all material respects
(a) every Legal Requirement applicable to the Collateral or to the Borrower and
(b) every material contract, agreement or other instrument applicable to the
Collateral or the ownership, occupancy or use of the Facility or to the
Borrower. Notwithstanding the foregoing, the Borrower will have the right to
diligently contest any Legal Requirement so long as such contest will not (i)
operate to suspend during the pendency thereof the collection of, or other
realization upon, any Rent or other amount derived from, or payable with respect
to, (A) the Facility or (B) any interest in the Facility and the other
properties and rights included in the Collateral, or (ii) (v) subject the Rent
under the Lease or any other part of the Collateral to loss, forfeiture or sale,
(w) adversely affect the Lien of the Security Documents or any part of the
Collateral, (x) interfere with the possession, use or occupancy of the Facility,
(y) interfere with the due payment of any amount payable hereunder or under the
Senior Secured Notes, or (z) subject the Indenture Trustee or the Noteholders to
the risk of any civil or criminal liability.
SECTION 3.8. SECURITY INTEREST IN THE BONDS. The Indenture Trustee is and at all times will be a registered pledgee of the Bonds and of the Bond Documents. The Indenture Trustee has and at all times will have a first priority Lien on the Bonds, subject to no other Liens.
SECTION 3.9. REPRESENTATIONS, WARRANTIES AND COVENANTS IN THE OPERATIVE AGREEMENTS. All of the representations, warranties and covenants made by the Borrower in each of the other Operative Agreements are hereby incorporated herein by reference thereto and affirmed by the Borrower.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INDENTURE TRUSTEE
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE INDENTURE TRUSTEE. State Street Bank and Trust Company of Missouri, N.A., in its individual capacity and as the Indenture Trustee, represents and warrants, as of the date hereof, to each of the other parties as follows:
(a) State Street Bank and Trust Company of Missouri, N.A. is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America, and has the corporate power and authority to enter into and perform its obligations under the Operative Agreements to which it is a party.
(b) This Indenture and each of the Operative Agreements to which State Street Bank and Trust Company of Missouri, N.A. is a party (as the Indenture Trustee and, to the extent expressly so provided therein, in its individual capacity) have been duly authorized by all necessary corporate action on the part of State Street Bank and Trust Company of Missouri, N.A. and have been duly executed and delivered by State Street Bank and Trust Company of Missouri, N.A. (as the Indenture Trustee or in its individual capacity, as the case may be), and the execution, delivery and performance hereof and thereof do not (i) require any approval of the stockholders of State Street Bank and Trust Company of Missouri, N.A. or any approval or consent of any trustee or holders of any Indebtedness or obligations of State Street Bank and Trust Company of Missouri, N.A.; (ii) require any Governmental Action to be taken by State Street Bank and Trust Company of Missouri, N.A. (as the Indenture Trustee or in its individual capacity, as the case may be) with respect to any Governmental Authority of the United States of America governing the banking, trust or fiduciary powers of State Street Bank and Trust Company of Missouri, N.A. or by any such Governmental Authority; (iii) contravene any Legal Requirement of the United States of America, or any rule or regulation thereunder, governing the banking, trust or fiduciary powers of State Street Bank and Trust Company of Missouri, N.A. or any order or judgment applicable to or binding on it; or (iv) contravene or result in any breach of or constitute any default under the charter or by-laws of State Street Bank and Trust Company of Missouri, N.A. or any indenture, mortgage, loan agreement, lease or other agreement or instrument to which State Street Bank and Trust Company of Missouri, N.A. is a party or by which any of its properties is bound.
(c) This Indenture and, to the extent that State Street Bank and Trust Company of Missouri, N.A. is a party thereto in its individual capacity, the Operative Agreements constitute the legal, valid and binding obligations of State Street Bank and Trust Company of Missouri, N.A. enforceable against it in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of the rights of creditors, mortgagees or lessors in general and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
(d) There is no action, suit or proceeding pending or, to the best knowledge of State Street Bank and Trust Company of Missouri, N.A., threatened against State Street Bank and Trust Company of Missouri, N.A. (as the Indenture Trustee or in its individual capacity) before or by any Governmental Authority that questions the validity or enforceability of this Indenture or any other Operative Agreement to which State Street Bank and Trust Company of Missouri, N.A. (either in its individual capacity or as the Indenture Trustee) is a party or that could reasonably be expected to materially adversely affect the ability of State Street Bank and Trust Company of Missouri, N.A. (either in its individual capacity or as the Indenture Trustee) to perform its obligations under the Operative Agreements to which State Street Bank and Trust Company of Missouri, N.A. (as the Indenture Trustee or in its individual capacity) is a party.
(e) The execution, delivery and performance by State Street Bank and Trust Company of Missouri, N.A. (as the Indenture Trustee or in its individual capacity) of the Operative Agreements to which it is a party will not subject the Collateral, or any portion thereof, to any Indenture Trustee's Lien.
(f) State Street Bank and Trust Company of Missouri, N.A. has not (either in its individual capacity or as Indenture Trustee), nor has reason to believe that any Person authorized to act on its behalf (in either such capacity) has, directly or indirectly offered any interest in any of the Collateral or the Senior Secured Notes or any similar security for sale to, nor solicited offers to buy any of the same from, or otherwise approached or negotiated with respect to any of the same with, any Person, nor has taken, nor will take, any action that would subject the issuance or sale of the Senior Secured Notes to the registration requirements of Section 5 of the Securities Act.
SECTION 4.2. COVENANTS OF THE INDENTURE TRUSTEE. State Street Bank and Trust Company of Missouri, N.A., as the Indenture Trustee and in its individual capacity, covenants and agrees with each of the other parties as follows:
(a) State Street Bank and Trust Company of Missouri, N.A. shall not, directly or indirectly, create, incur, assume or suffer to exist, and at its own cost and expense (without any right of indemnity under this Indenture or any other Operative Agreement) shall promptly take such action as may be necessary duly to discharge, any Indenture Trustee's Lien. State Street Bank and Trust Company of Missouri, N.A. (in its individual capacity) shall indemnify on an After Tax Basis and hold harmless the Borrower and the Noteholders and their respective successors, assigns, servants and agents against any and all damages, losses, costs, expenses and liabilities (including attorneys' fees and expenses), of any kind whatsoever, and any reduction in the amount payable out of the Collateral or in respect of any Senior Secured Notes, imposed on, incurred by or asserted against any of the foregoing in respect of the imposition, enforcement or removal of any Indenture Trustee's Lien.
ARTICLE 5
POSSESSION, USE AND RELEASE OF THE COLLATERAL
SECTION 5.1. CONDEMNATION AND CASUALTY. (a) Upon the occurrence and during the continuation of an Indenture Event of Default, the Indenture Trustee may participate in any proceedings relating to any Casualty or Condemnation, and the Borrower shall deliver all instruments reasonably requested by the Indenture Trustee to permit such participation. In any such proceeding, the Indenture Trustee may be represented by its own counsel.
(b) Any insurance proceeds, awards or compensation (other than in respect of Excepted Payments) with respect to the Collateral and payable or assigned to the Borrower by any Person are hereby assigned to and shall be paid to the Indenture Trustee, subject to the rights thereto of the Lessee pursuant to the Lease and the rights thereto of the Borrower hereunder and under the Security Documents. Any proceeds, awards or compensation so assigned to and received by the Indenture Trustee shall be held as part of the Collateral and be invested and applied as provided in Article 6.
SECTION 5.2. MONEYS RECEIVED BY THE INDENTURE TRUSTEE. All payments and deposits received by the Indenture Trustee pursuant to this Indenture shall become part of the Collateral and shall be applied pursuant to Article 6.
SECTION 5.3. INDENTURE TRUSTEE'S RIGHTS TO ACT. (a) Upon the occurrence and during the continuation of an Indenture Event of Default, the Indenture Trustee shall have the right and power (which right and power are coupled with an interest), and is hereby irrevocably appointed the agent and attorney-in-fact of the Borrower and of any and every future assignee or owner of the Facility or any portion thereof, to take all actions necessary or appropriate to comply with the applicable provisions of the Lease, including the execution and delivery, in the name and on behalf of the Borrower or other assignee or owner of the Facility or any portion thereof, of a deed or other instrument of conveyance or assignment, conveying and assigning the Facility to the Lessee or other Person or its designee pursuant to the Lease.
(b) Each deed or other instrument of conveyance or
assignment executed and delivered by the Indenture Trustee pursuant to this
Section 5.3 shall be binding upon the Borrower and every future owner of the
Facility with the same effect as if the Borrower and every such owner had
personally executed and delivered the same, and so long as the Security
Documents have not been released pursuant to Section 5.4, every such owner by
receipt or acquisition of any right, title or interest in the Facility hereby
irrevocably appoints the Indenture Trustee as its agent and attorney-in-fact
with the power and authority (which power and authority are coupled with an
interest) to execute and deliver such deeds or other instruments of conveyance
or assignment in its behalf and name upon the occurrence and during the
continuation of an Indenture Event of Default.
(c) The discretionary rights of the Indenture Trustee under this Indenture shall not be construed as duties and the Indenture Trustee shall not be required to take any discretionary action unless directed by the Required Holders.
SECTION 5.4. RELEASE; NO PARTIAL RELEASES. Upon the Indenture Trustee's receipt at any time of payment in full of all of the Indebtedness under the Senior Secured Notes, the Security Documents shall terminate and the Indenture Trustee, at the Borrower's expense, shall take such action and execute and deliver such documents and instruments as shall be reasonably required to release the Lien of the Security Documents with respect to all of the Collateral. Except as otherwise provided in Article 6, no Collateral shall be released for so long as any Series of Senior Secured Notes shall remain Outstanding.
ARTICLE 6
RECEIPT AND APPLICATION OF MONEYS
SECTION 6.1. RECEIPT OF MONEYS, (a) The Indenture Trustee shall receive and collect all payments under the Bonds, whether attributable to Basic Rent, Supplemental Rent or any other amount payable under the Bond Lease, the Bond Sublease or the Lease (other than the Excepted Payments and Supplemental Rent payable to Persons other than the Board, the Bond Sublessor, the Borrower or the Investor), and all other moneys paid to the Indenture Trustee with respect to the Facility or any other properties or rights included in the Collateral or under the Guarantee or the Other Operative Agreements, and the Indenture Trustee shall hold and disburse the same pursuant to this Indenture. The Indenture Trustee may demand and enforce payment thereof and may take such other action as it deems necessary or advisable in connection therewith (to the extent not inconsistent with the provisions of the Operative Agreements). The Indenture Trustee shall in no event be required to advance funds and shall only be required to make payment to the Noteholders or any other Person to the extent funds are available therefor in the account established pursuant to this Indenture for receipt and collection of such moneys.
(b) During the Construction Period, the Indenture Trustee shall receive and collect (by virtue of payments of interest on the Bonds as disbursements under the Escrow Agreement) interest on the Original Notes and the Investor Yield and shall cause the application and distribution thereof in accordance with Section 6.2(a).
SECTION 6.2. MONEYS ATTRIBUTABLE TO THE LEASE. Moneys received by the Indenture Trustee pursuant to Section 6.1 (a) shall, except as otherwise provided in this Article 6, be applied as follows:
(a) BASIC RENT AND SUPPLEMENTAL RENT
Except to the extent any moneys are attributable to Excepted Payments, the Termination Value, the Maximum Residual Guarantee Amount, the Construction Termination Amount, Net Proceeds or any similar amount, all of which shall be applied pursuant to Section 6.2(b), each payment under the Bonds attributable to Basic Rent and Supplemental Rent
received by the Indenture Trustee shall be (i) applied immediately, in the case of any payment which is overdue under the Senior Secured Notes or the Investor Contribution, and (ii) otherwise, applied on the Payment Date occurring on or immediately after the date such payment is received, first, to the payment on such date of the interest then due and payable on the Senior Secured Notes, allocated among the Senior Secured Notes in direct relation to their Outstanding principal balances, second, so long as (x) no Independent Event of Default shall have occurred and be continuing and (y) no Series of Senior Secured Notes shall have been accelerated, to the payment of the Investor Yield, and third, so long as no Indenture Event of Default or Indenture Payment Default shall have occurred and be continuing, the excess, if any, shall be paid on such date to the Lessee or upon its written order, free of the Lien of the Security Documents.
(b) TERMINATION AMOUNTS
So long as no Indenture Event of Default or Indenture Payment Default has occurred and is continuing:
(i) Moneys (other than Excepted Payments) received by the Indenture Trustee on the account of the Bonds attributable to the Termination Value pursuant to Section 10.1 or 3.6 of the Lease or Section 8.2(b)(i) of the Facility Agency Agreement shall be applied, on the date of receipt thereof, but after the payment of any interest on the Senior Secured Notes and any Investor Yield then due and payable, first, to the payment of the outstanding principal of the Senior Secured Notes, together with accrued and unpaid interest thereon to the payment date, allocated among the Senior Secured Notes in direct relation to their Outstanding principal balances, second, to the payment of all other amounts then due and owing under the Senior Secured Notes, third, to the payment of the Make Whole Premium (except in the case of prepayments made pursuant to Section 3.6 of the Lease), fourth, to the payment of the Investor Contribution, fifth, to the payment of any applicable Investor Premium, and sixth, to the Lessee or upon its written order, free of the Lien of the Security Documents.
(ii) Moneys (other than Excepted Payments) received by the Indenture Trustee on the account of the Bonds attributable to the Maximum Residual Guarantee Amount pursuant to Section 10.2 of the Lease or the Construction Termination Amount pursuant to Section 8.2(b)(ii) of the Facility Agency Agreement shall be applied, on the date of receipt thereof, but after the payment of any interest on the Senior Secured Notes and any Investor Yield then due and payable, first, to the payment of the outstanding principal of the Senior Secured Notes, together with accrued and unpaid interest thereon to the payment date (for the payment of which, during the Construction Period, the Indenture Trustee shall first draw Escrowed Funds (to the extent available) pursuant to the Escrow Agreement, including the Standing Orders), allocated among the Senior Secured Notes in direct relation to their Outstanding principal balances, second, to the payment of all other amounts then due and owing under the Senior Secured Notes allocable to the principal amount of the Senior Secured Notes then being paid pursuant to clause first and third, to the payment of the Make Whole Premium (in the case of an election under Section 8.2(b)(ii) of the Facility Agency Agreement) in the same proportions as provided in clause first.
(iii) Moneys received by the Indenture Trustee from the Insurer under the Residual Value Policy or the Construction Termination Policy shall be applied, on the date of receipt thereof, first, to the payment of the outstanding principal of the Senior Secured Notes, together with accrued and unpaid interest thereon to the payment date (for the payment of which, during the Construction Period, the Indenture Trustee shall first draw Escrowed Funds (to the extent available) pursuant to the Escrow Agreement, including the Standing Orders), allocated among the Senior Secured Notes in direct relation to their Outstanding principal balances, second, to the payment of all other amounts then due and owing under the Senior Secured Notes allocable to the principal amount of the Senior Secured Notes then being paid pursuant to clause first and third, to the payment of the Make Whole Premium (in the case of an election under Section 8.2(b)(ii) of the Facility Agency Agreement) in the same proportions as provided in clause first.
(iv) Moneys (other than Excepted Payments) received by the Indenture Trustee as the proceeds from the sale of the Facility sold pursuant to Section 10.3 of the Lease or by the Borrower or the Indenture Trustee, as the case may be, upon the Lessee's surrendering the Facility pursuant to Section 8.2(b)(ii) of the Facility Agency Agreement shall be applied, on the date of receipt thereof, but after the payment of any interest on the Senior Secured Notes and any Investor Yield then due and payable, first, to the payment of all reasonable costs and expenses incurred by the seller of the Facility in connection with such sale, second, to the payment of the Outstanding principal of the Senior Secured Notes, together with accrued and unpaid interest thereon (for the payment of which, during the Construction Period, the Indenture Trustee shall first draw Escrowed Funds (to the extent available) pursuant to the Escrow Agreement, including the Standing Orders), allocated among the Senior Secured Notes in direct relation to their Outstanding principal balances, third, to the payment of all other amounts then due and owing under the Senior Secured Notes, fourth, to the payment of the Make Whole Premium (in the case of an election under Section 8.2(b)(ii) of the Facility Agency Agreement) in the same proportions as provided in clause second, fourth, to the payment of the Investor Contribution fifth, to the payment of any applicable Investor Premium, and sixth, to the Lessee or upon its written order, free of the Lien of the applicable Security Documents.
(v) Whenever the foregoing provisions of this
Section 6.2(b) require the Indenture Trustee to apply moneys received by it to
the payment of the Outstanding principal of the Senior Secured Notes, together
with the accrued and unpaid interest thereon, such moneys shall first be applied
to the payment of such accrued and unpaid interest (for the payment of which,
during the Construction Period, the Indenture Trustee shall first draw Escrowed
Funds (to the extent available) pursuant to the Escrow Agreement, including the
Standing Orders) and then to the payment of such Outstanding principal. Whenever
the foregoing provisions of this Section 6.2(b) require the Indenture Trustee to
apply moneys received by it to the payment of the Investor Contribution,
together with the accrued and unpaid Investor Yield, such moneys shall first be
applied to the payment of such accrued and unpaid Investor Yield and then to the
payment of the Investor Contribution.
(c) DISTRIBUTION AFTER DEFAULT
If, at the time of receipt by the Indenture Trustee of any moneys (other than Excepted Payments) pursuant to Section 6.l(a), there shall have occurred and be continuing an Indenture Event of Default or Indenture Payment Default, then the Indenture Trustee shall retain such moneys (but after the application thereof to the payment of any amount then due and owing to the Indenture Trustee or otherwise secured by the Security Documents), as part of the Collateral solely for the benefit of the Noteholders and shall not distribute anything to the Borrower or the Lessee except as follows:
(i) at such time as there shall not be continuing any Independent Event of Default and all amounts then due and payable by the Borrower under the Operative Agreements shall have been indefeasibly paid in full, the moneys available to pay amounts due and payable to the Investor shall be distributed to it or upon its written notice, free of the Lien of the Security Documents;
(ii) at such time as there shall not be continuing any Indenture Event of Default or Indenture Payment Default and all amounts then due and payable by the Borrower and/or the Lessee under the Operative Agreements shall have been indefeasibly paid in full, the remainder of the moneys shall be distributed to the Lessee or upon its written notice, free of the Lien of the Security Documents, and
(iii) at such time as the Senior Secured Notes
shall have been declared, or shall have become, due and payable pursuant to
Section 8.2(b), all such moneys shall be distributed pursuant to Section 8.2(f).
(d) PROCEEDS OF INSURANCE; CONDEMNATION AWARDS
All Net Proceeds (other than the Excepted Payments) received by the Indenture Trustee under any policy of insurance and from self-insurance with respect to matters otherwise covered by property insurance and all Net Proceeds received by the Indenture Trustee as awards or compensation with respect to a Condemnation shall be held by the Indenture Trustee as part of the Collateral and be applied as follows:
(i) All such Net Proceeds received or payable pursuant to Section 8.1 or 8.2 of the Lease, together with the net amount of investment earnings on the total of such Net Proceeds, shall be applied in accordance with Section 6.2(b)(i) if the Lessee makes an offer to purchase the Facility in accordance with Section 3.6 of the Lease.
(ii) All such Net Proceeds received on account of any other Casualty or Condemnation, together with the net amount of investment earnings on such Net Proceeds, shall be applied in accordance with clauses (i) through (iv), inclusive, of Section 8.1 of the Lease and Section 8.2(b) of the Lease.
(e) CASUALTY INSURANCE PROCEEDS
Subject to Section 8. l(a) of the Lease, moneys received by the Indenture Trustee under any policy of casualty insurance and from self-insurance with respect to matters otherwise covered by casualty insurance shall be paid to the respective parties suffering the injury, loss, damage or liability with respect to which such payment is made.
(f) MONEYS UNDER THE GUARANTEE
Moneys received by the Indenture Trustee under the Guarantee with respect to any Guaranteed Obligations shall be applied in accordance with the provisions of this Section 6.2 to which such Guaranteed Obligations relate.
(g) MINOR RELEASES
(i) Upon the removal of any Modifications (or any part thereof) pursuant to Section 7.2 of the Lease and the replacement thereof in accordance with Section 7.2 of the Lease, such Modifications so removed shall be automatically (and without the necessity for any further act) released from the Lien of the Security Documents and the replacement Modifications shall automatically become part of the Collateral.
(ii) Moneys received by the Indenture Trustee, if any, representing payments under any warranty or other claims against dealers, manufacturers, vendors, contractors and subcontractors relating to the Collateral shall be delivered to the Lessee so long as no Lease Event of Default is continuing under the Lease and no Senior Secured Notes shall be due and payable under Section 7.2 or 8.2(b).
(h) REMITTANCE TO THE LESSEE
Except as otherwise provided in this Section 6.2, the Indenture Trustee hereby agrees that the Indenture Trustee shall remit to the Lessee the amount of excess, if any, of the moneys (other than the Excepted Payments) received by the Indenture Trustee on any Payment Date over the amounts due and payable to the Noteholders, the Indenture Trustee, the Trust Company or the Investor on such date; provided, however, that immediately before and after giving effect to such remittance, no Indenture Event of Default or Indenture Payment Default shall have occurred and be continuing.
SECTION 6.3. MONEYS HELD IN COLLATERAL; INVESTMENTS. Moneys from whatever source received (whether as payments or deposits) by the Indenture Trustee pursuant to any provision of this Indenture shall be held as part of the Collateral in trust, pending application thereof in accordance with the other provisions of this Article 6. Such moneys held by the Indenture Trustee (i) shall be segregated from the other assets owned or managed by the Indenture Trustee, and (ii) shall be promptly invested or reinvested in the SSgA U.S. Treasury Money Market Fund or such other Permitted Investments as the Borrower shall specify in writing from time to time; provided, however, that the Indenture Trustee shall not be responsible for any loss incurred in
connection with such investment or reinvestments, and, if an Indenture Event of Default or Indenture Payment Default has occurred and is continuing, the Indenture Trustee shall be free (without notice to or approval by the Borrower) to invest in the SSgA U.S. Treasury Money Market Fund as may be appropriate (in its absolute discretion) in connection with exercising its remedies hereunder. All such investments and the proceeds of the sale or payment thereof and all other income resulting from such investments shall be held and applied by the Indenture Trustee (except as may be otherwise expressly provided herein) for the same purposes as the funds used to make such investments. The Indenture Trustee shall sell all or any designated part of such securities if (i) so directed in writing by the Borrower (so long as no Indenture Event of Default or Indenture Payment Default has occurred and is continuing) or (ii) at any time the proceeds thereof are required for any application authorized pursuant to this Indenture. If such sale (or any payment at maturity) produces a net sum greater than the cost (including accrued interest paid as such) of the securities so sold or paid, the Indenture Trustee shall, so long as no Indenture Event of Default or Indenture Payment Default shall have occurred and be continuing, pay the excess, if any, available on the next Payment Date to the Lessee, subject to the other provisions of this Indenture. Any and all investments held by the Indenture Trustee shall, unless in bearer form, be registered and held in the name of the Indenture Trustee or its nominee.
SECTION 6.4. OTHER PAYMENTS. So long as no Indenture Default or Indenture Event of Default shall have occurred and be continuing, any amounts received by the Indenture Trustee for which the Indenture Trustee reasonably determines that no provision as to the application thereof is made in this Indenture shall be remitted promptly by the Indenture Trustee to the Lessee or upon its written order, free of the Lien of the Security Documents.
SECTION 6.5. RELEASE OF LIEN. Upon the Indenture Trustee's payment, distribution, remittance or release to the Borrower or the Lessee of any moneys received or held by the Indenture Trustee in respect of the Collateral, such moneys shall be automatically released from the Lien of the applicable Security Documents, without limiting the obligation of the Borrower and of the Lessee to pay over to the Indenture Trustee all cash and other property required pursuant to this Indenture to be part of the Collateral and subject to the Lien of the Security Documents.
ARTICLE 7
PREPAYMENT
SECTION 7.1. GENERALLY. No prepayment of any Senior Secured Note may be made except to the extent and in the manner expressly permitted or required by this Indenture.
SECTION 7.2. MANDATORY PREPAYMENT. (a) The principal of the Senior Secured Notes, together with the accrued interest and the Make Whole Premium (if any) thereon, shall be subject to mandatory prepayment as follows:
(i) In connection with the occurrence of an Event of Loss and the Lessee's purchase of the Facility in accordance with Section 3.6 of the Lease, the entire principal amount of the then Outstanding Senior Secured Notes, together with all accrued and unpaid interest thereon to the payment date, but without any Make Whole Premium, shall become due and payable on the termination date specified in the Lease.
(ii) In connection with receipt by the Indenture Trustee
of any written notice from the Lessee of its intention to purchase the Facility
or the Borrower's interest in the Facility pursuant to the Purchase Option under
Section 10.1 of the Lease, the entire principal amount of the then Outstanding
Senior Secured Notes, together with all accrued and unpaid interest thereon to
the payment date and the Make Whole Premium, shall become due and payable on the
Purchase Date.
(iii) If the Completion Date does not occur on or prior to the Outside Completion Date, the entire principal amount of the then Outstanding Senior Secured Notes, together with all accrued and unpaid interest thereon to the payment date and the Make Whole Premium, shall become due and payable on the Outside Completion Date, unless this prepayment event is waived by the Required Holders.
(b) Any payments made to the Indenture Trustee in
connection with any of the events described in this Section 7.2(a) shall be
applied to the prepayment of the Senior Secured Notes as provided in Section
6.2(b). Upon the acceleration of the maturity of any of the Senior Secured Notes
pursuant to Section 8.2(b), any moneys paid in connection therewith shall be
applied to the payment of such Senior Secured Notes as provided in Section
8.2(f).
SECTION 7.3. NOTICE OF PREPAYMENT; DEPOSIT OF MONEYS. In case of any prepayment of the Senior Secured Notes pursuant to Section 7.2(a), the Borrower shall give to the Indenture Trustee written notice not fewer than ten (10) days prior to the scheduled prepayment date. Such notice shall specify the scheduled prepayment date, the amount of accrued and unpaid interest on the Senior Secured Notes, the Investor Yield and the amount of the Make Whole Premium and the Investor Premium to be paid, if any. On or prior to 11:00 a.m., New York City time, on the scheduled prepayment date, the Borrower shall deposit immediately available funds, sufficient to make such prepayment, with the Indenture Trustee.
ARTICLE 8
INDENTURE EVENTS OF DEFAULT; REMEDIES
SECTION 8.1. INDENTURE EVENTS OF DEFAULT. The term "INDENTURE EVENT OF DEFAULT", wherever used herein, shall mean any of the following events, and any such event shall continue to be an Indenture Event of Default until remedied:
(a) any default in the payment of any principal or the Make Whole Premium, if any, on any of the Senior Secured Notes, the Investor Contribution or any Investor Premium,
when and as the same shall become due and payable, whether at maturity, by acceleration or any prepayment or otherwise, as provided in the Senior Secured Notes and this Indenture; or
(b) any default in the payment of interest on, or any other amount under, the Senior Secured Notes or this Indenture or Investor Yield or any other amount with respect to the Investor Contribution, when and as the same shall become due and payable, and such default shall have continued for three days; or
(c) any representation or warranty of the Borrower set forth in any Operative Agreement or in any certificate delivered pursuant thereto was incorrect in any material respect when made; or
(d) any default by the Borrower in the due observance or performance of any covenant, condition or agreement contained in Section 8.2 of the Participation Agreement; or
(e) any default in the due observance or performance of any other covenant, condition or agreement of the Borrower contained herein or in any other Operative Agreement and such default shall have continued for thirty (30) days after the Borrower shall have been given a notice specifying such default or should have become aware of such default; provided that such 30-day period shall be extended (up to a maximum period of 180 days) as to defaults which cannot be cured with the payment of money but are curable, though not reasonably capable of cure within such 30-day period, so long as the Borrower has commenced to cure such default prior to the end of such 30-day period and diligently prosecutes such cure to completion and such extension, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; or
(f) (i) a Lease Event of Default, (ii) an Agency Agreement Event of Default, (iii) an event of default under the Escrow Agreement or (iv) a Bond Event of Default shall have occurred and be continuing; or
(g) a custodian (or similar official) for purposes of any federal bankruptcy statute of substantially all of the property of the Borrower, the Board, the Bond Sublessor, the Lessee or any other Person then owning any interest in the Facility or any other property included in the Collateral, or of any of such Persons, is appointed or otherwise takes possession thereof or a receiver, United States Trustee, trustee or liquidator (or other similar official) of any of the property included in the Collateral or of any such Person, or of any such Person, shall be appointed in any bankruptcy or similar proceeding or by any federal or state officer or agency and shall not be discharged within sixty (60) days after such appointment or any such Person shall by any act indicate its approval of, consent to or acquiescence in such appointment or by decree of any court shall be adjudicated a bankrupt under any state or federal bankruptcy law or be declared insolvent; or
(h) the Borrower, the Board, the Bond Sublessor, the Lessee or any other Person then owning any interest in the Facility or any other property included in the Collateral shall be dissolved, or any such Person shall file a petition commencing a voluntary case under any federal bankruptcy or similar law or in bankruptcy or for reorganization or for an arrangement
pursuant to any state bankruptcy or similar law or shall make an assignment for the benefit of its creditors or shall admit in writing its inability to pay its debts generally as they become due or shall consent to the appointment of a receiver of any substantial portion of its properties; or a petition or any answer proposing or an application for the reorganization of such Person pursuant to the Bankruptcy Code or any similar law, federal or state, shall be filed in, any court and any such Person shall by any act indicate its approval thereof, consent thereto or acquiescence therein; or
(i) the Borrower, the Board, the Bond Sublessor, the Lessee or any other Person then owning any interest in the Facility or any other property included in the Collateral shall generally not pay its debts as such debts become due or if an involuntary case against any such Person, as debtor, is commenced by a petition for reorganization or liquidation under any federal bankruptcy or similar law, federal or state, and if such petition shall not be discharged, stayed or denied within sixty (60) days after the date on which such petition was filed; or
(j) a judgment, decree, writ, warrant of attachment or similar process in an amount equal to or exceeding $500,000 is entered against the Borrower or the Facility, if such judgment, decree, writ, warrant of attachment or similar process is not adequately covered by insurance or has not been satisfied, vacated, discharged, appealed from (with execution or similar process continuously stayed) within thirty (30) days of such judgment's entry;
(k) the Guarantor shall fail to perform or observe any covenant or agreement of the Guarantor set forth in the Guarantee, or the Guarantee shall not be in full force and effect or shall not be enforceable against the Guarantor in accordance with its terms, or the Guarantee shall be disaffirmed, repudiated, revoked or declared null and void; or
(1) the Insurer, the Borrower or the Lessee shall fail to perform or observe any of its covenants and agreements set forth in the Residual Value Policy or in the Construction Termination Policy, as the case may be, or the Residual Value Policy or the Construction Termination Policy, as the case may be, shall not be in full force and effect or shall not be enforceable against the Insurer in accordance with its terms, or the Residual Value Policy or the Construction Termination Policy, as the case may be, shall be disaffirmed, repudiated, revoked or declared null and void.
SECTION 8.2. REMEDIES.
(a) DEFAULT INTEREST
Interest ("OVERDUE INTEREST") shall immediately accrue at the Overdue Rate on any amount (whether principal, interest, late payment charge, Make Whole Premium, reimbursement of advances or expenses or payment into escrow or for reserve funds) not paid when due hereunder or under any other Operative Agreement, until such amount is paid.
(b) ACCELERATION OF THE MATURITY OF THE NOTES
At any time during which any Indenture Event of Default has occurred and is continuing, either (i) the Required Holders or (ii) the Indenture Trustee, upon (and only upon) the direction of the Required Holders, and written notice to the Borrower, may declare the entire unpaid principal amount of the Senior Secured Notes to be due and payable immediately, anything in the Senior Secured Notes or in this Indenture contained to the contrary notwithstanding, whereupon the same shall forthwith mature and be due and payable, together with interest accrued thereon and the Make Whole Premium, if any, with respect to the Senior Secured Notes, all without presentment, demand, protest or further notice, which are hereby waived; provided that in the event of an Indenture Event of Default described in clause (g), (h) or (i) of Section 8.1, the entire unpaid principal amount of the Senior Secured Notes and all accrued and unpaid interest thereon shall automatically (without any action, notice or demand) mature and be due and payable, together with interest accrued thereon and the Make Whole Premium, if any, with respect to the Senior Secured Notes, all without presentment, demand, protest or further notice, which are hereby waived. The occurrence of an Indenture Event of Default in connection with which there is any such acceleration of maturity shall constitute an irrevocable election by the Borrower to prepay the Senior Secured Notes, to fix the date of such acceleration (the "ACCELERATION DATE") as the Maturity Date and to pay to the Indenture Trustee on the Maturity Date the entire principal amount of the Senior Secured Notes, together with all accrued and unpaid interest thereon to the Maturity Date and the Make Whole Premium.
(c) APPOINTMENT OF RECEIVER
At any time during which any Indenture Event of Default has occurred and is continuing, the Indenture Trustee may, with or without any acceleration of the maturity of the Senior Secured Notes, without waiving or limiting any of the Borrower's obligations under the Operative Agreements, without notice (except as required by law) to or consent by the Borrower, and regardless of the adequacy of the Collateral, the solvency of the Borrower or whether the Indenture Trustee has an adequate remedy at law, apply to any court having jurisdiction to appoint a receiver to take possession of all or any portion of the Collateral and enforce the collection of all amounts payable under the Bonds and the Lease. The Borrower hereby irrevocably consents to such appointment and waives notice (except as required by law) of any application therefor. Any such receiver shall have all of the usual powers and duties of receivers in similar cases and all of the Indenture Trustee's powers and duties upon entry and possession of all or any portion of the Collateral, as provided for in clause (d) hereof, and shall continue as receiver and exercise all such powers until the confirmation of the sale of the Collateral, or such portion as applicable, or unless such receivership is sooner terminated.
(d) ENTRY AND POSSESSION
At any time during which any Indenture Event of Default has occurred and is continuing, either the Indenture Trustee personally or by its agents or attorneys or a court appointed receiver, may, with or without any acceleration of the maturity of the Senior Secured Notes, without waiving or limiting any of the Borrower's obligations under the Operative Agreements, and (except as otherwise provided by law) without notice to or consent by the
Borrower: (i) with or without bringing any action or proceeding, enter upon and take possession of all or any portion of the Collateral, in its own name, and take any necessary or appropriate actions to protect and preserve the Collateral and the Lien of the Security Documents (including the making of payments to preserve or enhance the value, marketability or rentability of the property and the leasing of the Facility); or (ii) with or without taking possession of the Facility, sue for or otherwise collect all amounts payable under the Bonds and the Lease (including those due and unpaid), and such amounts payable under the Bonds and the Lease are hereby assigned to the Indenture Trustee, its successors in trust and their assigns. After deducting the expenses of conducting the business thereof and of all maintenance, repairs, renewals, replacements, alterations, additions, betterments and improvements and Taxes, assessments, insurance and other proper charges upon the Facility, as well as reasonable compensation for the services of the Indenture Trustee and all attorneys, servants and agents by the Indenture Trustee properly engaged and employed (including compensation and expenses in connection with any appeal), the Indenture Trustee shall promptly apply the moneys arising as aforesaid as follows:
(x) if an Indenture Event of Default other than an Indenture Event of Default described in clause (a) or (b) of Section 8.1 shall have occurred, in the following order of priority: first, to the payments of the principal of the Senior Secured Notes and interest thereon (for the payment of which, during the Construction Period, the Indenture Trustee shall first draw Escrowed Funds (to the extent available) pursuant to the Escrow Agreement, including the Standing Orders), the Make Whole Premium and all other amounts under the Senior Secured Notes and this Indenture, when and as the same shall become payable, second, to the payment of any other sums required to be paid by the Borrower under this Indenture, and third, so long as no Independent Event of Default has occurred and is continuing and no Senior Secured Notes have been accelerated pursuant to Section 8.2, to the payment of the Investor Contribution, the Investor Yield and the Investor Premium; or
(y) if an Indenture Event of Default described in clause
(a) or (b) of Section 8.1 shall have happened, in the order of priorities and
amounts set forth in clauses (i) through (viii) of Section 8.2(f);
No amount the Indenture Trustee may collect or receive under this Article shall operate to cure any Indenture Event of Default or reinstate any Indebtedness under the Senior Secured Notes.
(e) SALE OF COLLATERAL
At any time during which an Indenture Event of Default has occurred and is continuing, the Indenture Trustee, with or without entry, personally or by its agents or attorneys, may and, upon the written direction of the Required Holders, shall commence an action to foreclose under the Security Documents (in its absolute discretion, by power of sale, by judicial foreclosure or otherwise), and the Indenture Trustee, its successors and their assigns are hereby granted the power of sale with respect to any and all of the Collateral; provided that the Indenture Trustee shall, if practicable, provide to the Borrower and the Lessee ten (10) days' prior written notice of any sale of the Collateral (or such longer notice as may be required pursuant to local law). In the case of an exercise of the power of sale, the following applies:
(i) The Indenture Trustee may proceed in accordance with clause (iii) below, as if all of the Collateral were real property, or may elect to treat as personal property any of the Collateral that consists of a right in action or can be severed from the Facility and, in accordance with clause (ii) below, dispose of such property separate and apart from the sale of real property.
(ii) The Indenture Trustee may cause any sale or other disposition of personal property to be conducted immediately following the expiration of any notice or grace period (if any) herein provided, or the Indenture Trustee may delay any sale or other disposition for such period of time as the Indenture Trustee deems to be appropriate. If the Indenture Trustee desires that more than one such sale or other disposition be conducted, the Indenture Trustee may cause the same to be conducted simultaneously or successively on the same day or on different days and at such times and in such order as the Indenture Trustee may deem to be appropriate.
(iii) The Indenture Trustee may sell the Collateral or any part thereof that is real property or that the Indenture Trustee has elected to treat as real property, and, upon such election, the Indenture Trustee shall give such notice of default and election to sell as may then be required by law. Thereafter, upon the expiration of such time and the giving of such notice of sale as may then be required by law and upon advertising the sale as required by law, and without any demand on the Borrower, at the time and place specified in the notice of sale, the Indenture Trustee shall sell the Collateral or any portion thereof, as specified by the Indenture Trustee, at public auction to the highest bidder for cash in lawful money of the United States. The Indenture Trustee may from time to time postpone the sale by public announcement thereof at the time and place noticed therefor. If the Collateral to be sold includes several lots or parcels, the Indenture Trustee may designate the order in which such lots or parcels shall be offered for sale or sold. Any Person, including the Indenture Trustee, may purchase at the sale. The purchaser at any private or foreclosure sale hereunder may disaffirm any easement or lease not consented to by the Indenture Trustee and with respect to which the Indenture Trustee has not granted a right of non-disturbance or which is not a Permitted Exception, and may take immediate possession of such property free therefrom, except as otherwise required under the law of the state in which such part of the Collateral is located.
(iv) Upon the completion of any sale hereunder, the Indenture Trustee or any officer of any court empowered to do so shall execute, acknowledge and deliver to the purchaser good and sufficient instruments conveying, assigning and transferring all estate, right, title and interest in and to the property rights sold. The Borrower hereby unconditionally, absolutely and irrevocable constitutes and appoints the Indenture Trustee and its successors and assigns forever the Borrower's true and lawful attorneys-in-fact, coupled with an interest, with full power of substitution, in the Borrower's name, place and stead, to make all necessary or appropriate conveyances, assignments, transfers and deliveries of the Collateral or any part thereof, and for that purpose the Indenture Trustee may execute all necessary or appropriate instruments of conveyance, assignment and transfer. The execution and delivery of any document, certificate or instrument by the Indenture Trustee, as attorney-in-fact for the Borrower pursuant to this power-of-attorney, shall constitute conclusive proof of the Indenture Trustee's power and authority, on the Borrowers' behalf, to execute and deliver such document and take
any action contemplated thereby. Nevertheless, the Borrower, if so required by the Indenture Trustee, shall ratify and confirm any such sale by executing, acknowledging and delivering to the Indenture Trustee or to such purchaser all such instruments as may be necessary or appropriate, in the judgment of the Indenture Trustee. Any sale made hereunder, whether under the power of sale or by virtue of judicial proceedings or a judgment or decree of foreclosure and sale, shall operate to divest all of the estate, right, title and interest, at law or in equity, of the Borrower (and any Person claiming by, through or under the Borrower) in and to the portion of the Collateral sold, and shall be a perpetual bar, at law and in equity, against the Borrower and all Persons claiming, or that may claim, by, through or under the Borrower.
(v) In the event of a sale or other disposition of any portion of the Collateral, the recitals in the deed of facts (such as default, the giving of notice of default and notice of sale, demand that such sale should be made, postponement of sale, terms of sale, sale, purchase, payment of purchase money and other facts to the extent such facts affect the regularity or validity of such sale or disposition) shall, upon execution of the deed, be conclusive proof of the truth of such facts against all Persons for the sole purpose of affirming the validity of such sale. The acknowledgment by the Indenture Trustee of the receipt of the purchase money stated in any such deed shall be sufficient to discharge the Indenture Trustee from all obligations to see to the proper use or application of the portion of the Collateral sold.
(vi) In the event of any sale made under or by virtue of this Article (whether made under the power of sale herein granted or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale), the entire principal of and interest on the Senior Secured Notes and all other amounts (including any Make Whole Premium) required to be paid pursuant hereto, if not previously due and payable, shall immediately become due and payable, anything in the Senior Secured Notes or in this Indenture to the contrary notwithstanding.
Notwithstanding the foregoing, so long as no Independent Event of Default has occurred and is continuing, the Indenture Trustee shall not exercise any of the remedies contained in this Section 8.2(e) unless the Indenture Trustee as assignee of the Borrower shall have exercised, or shall concurrently be exercising with reasonable diligence, its right to terminate the Lease or other remedies under the Lease for the purpose of dispossessing the Lessee from the Facility; provided that in the event the Indenture Trustee is stayed under the Bankruptcy Code or otherwise prohibited from exercising such remedies under the Lease by the operation of any law or court order, the Indenture Trustee may, at the expiration of a ninety (90) day period beginning on the first day of said stay or other prohibition, exercise any remedy hereunder even though it is not concurrently exercising any remedies under the Lease, except that as long as (a) the Lessee is paying all amounts required to be paid by it under the Lease and is performing and observing all covenants and agreements required to be performed or observed by it under the Lease and (b) no Lease Event of Default or the Agency Agreement Event of Default is then continuing, the Indenture Trustee may not exercise any of the remedies contained in this Section 8.2(e) with respect to the Collateral or any part thereof during the period that such stay or other prohibition is in effect.
(f) APPLICATION OF SALE PROCEEDS
The purchase money, proceeds or avails of any sale made under
or by virtue of this Article, together with any other funds which then may be
held by the Indenture Trustee, as part of the Collateral or the proceeds
thereof, whether under the provisions of this Article or otherwise, shall be
applied to pay, in the following order of priority: (i) all out-of-pocket
charges and expenses (including court costs, advertising expenses, auctioneer's
allowance, expenses required to correct any title irregularity, disbursements
and bond premium, auditors' fees, attorneys' fees and expenses and reasonable
compensation to the Indenture Trustee, its agents and counsel) in connection
with such sale; (ii) all amounts advanced and costs incurred by the Indenture
Trustee for any purpose permitted under the Operative Agreements, together with
interest thereon, as provided for in the Operative Agreements; (iii) all accrued
and unpaid interest on the unpaid principal and all other amounts (including any
Make Whole Premium) due and payable under the Senior Secured Notes; (iv) all
unpaid principal under the Senior Secured Notes; (v) all other amounts due and
payable to the Indenture Trustee under the Operative Agreements; (vi) to the
Investor, all accrued and unpaid Investor Yield and all other amounts (including
any Investor Premium) due and payable in respect of the Investor Contribution;
(vii) to the Investor, all unpaid Investor Contribution; and (viii) to the
Lessee or such Persons legally entitled thereto, in each case, free of the Lien
of the Security Documents.
(g) PURCHASE BY THE INDENTURE TRUSTEE
Upon any sale made under or by virtue of this Article (whether made under any power of sale herein granted or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale), to the extent permitted by Legal Requirements, the Indenture Trustee, on behalf of the Noteholders, may bid for and acquire the Collateral or any part thereof and in lieu of paying cash therefor shall, upon (and only upon) the written direction of the Required Holders, make settlement for the purchase price by crediting upon the Indebtedness under the Senior Secured Notes secured by the Security Documents the net proceeds of sale after deduction of all costs, expenses, compensation and other charges to be paid therefrom as herein provided. The Person making such sale shall accept such settlement without requiring the production of any of the Senior Secured Notes, and, without such production, there shall be deemed credited thereon the pro rata share of the net proceeds of sale ascertained and established as aforesaid. The Indenture Trustee, upon so acquiring the Collateral or any part thereof, shall be entitled to hold, deal with and sell the same in any manner permitted by any Legal Requirement.
(h) INDENTURE TRUSTEE'S CLAIM IN BANKRUPTCY
In case of proceedings against or involving the Borrower in insolvency or bankruptcy (including any proceeding under any federal or state bankruptcy or insolvency statute or similar law) or any proceedings for its respective reorganization or involving the liquidation of its assets, the Indenture Trustee shall be entitled to prove the whole amount of principal and interest due upon the Senior Secured Notes to the full amount thereof and all other payments, charges and costs due under this Indenture (including any Make Whole Premium payable by the Borrower pursuant to Section 8.2(b) or any other provision of this Indenture) and the Senior Secured Notes, without deducting therefrom any proceeds obtained from the sale of the whole or
any part of any property included in the Collateral; provided, however, that in no case shall the Indenture Trustee receive a greater amount than such principal and interest and such other payments, charges and costs from the aggregate amount of the proceeds of all sales of the Collateral and the distribution from the estate of the Borrower.
(i) OTHER SECURITY
The Indenture Trustee may exercise all of its rights and remedies under this Indenture and the other Operative Agreements, notwithstanding that some or all of the Borrower's obligations hereunder and thereunder may not or hereafter be otherwise secured, and the Indenture Trustee's acceptance and enforcement of this Indenture shall not operate as a waiver of, or to limit, the Indenture Trustee's rights and remedies with respect to any other security for the performance of any of the Borrower's obligations under the Operative Agreements. The Indenture Trustee may enforce this Indenture and any such other security in any order or manner that the Indenture Trustee determines, and the Indenture Trustee's rights hereunder and thereunder shall be cumulative.
SECTION 8.3. VOLUNTARY APPEARANCE. After an Indenture Event of Default and during its continuance, promptly upon the commencement of any action, suit or other legal proceeding by the Indenture Trustee to obtain judgment for the principal of, premium, if any, or interest on the Senior Secured Notes and other sums required to be paid by the Borrower hereunder or under the Senior Secured Notes, or of any other nature in aid of the enforcement of the Senior Secured Notes or of this Indenture, the Borrower shall, to the extent not prohibited by law, enter a voluntary appearance in such action, suit or proceeding.
SECTION 8.4. SUITS BY THE INDENTURE TRUSTEE. All rights of action under this Indenture or under any of the Senior Secured Notes may be enforced by the Indenture Trustee without the possession of any of the Senior Secured Notes and without the production thereof at any trial or other proceeding relative thereto. A copy of any Senior Secured Note, if properly certified by the Indenture Trustee to be true and correct, shall constitute conclusive evidence of all matters that could be proven by production of the original of that Senior Secured Note in any trial or proceeding relative thereto. Any such suit or proceeding instituted by the Indenture Trustee shall be brought in its name as trustee (subject to the provisions of Article 9 hereof), and, subject to the rights of the Indenture Trustee, any recovery of judgment shall be for the ratable benefit of the Noteholders.
SECTION 8.5. GENERAL PROVISIONS CONCERNING REMEDIES.
(a) SUBROGATION
If any portion of the principal under the Senior Secured Notes or any amounts advanced or expended by the Indenture Trustee is used, directly or indirectly, to pay, discharge or satisfy, in whole or in part, any prior Lien with respect to the Collateral, the Indenture Trustee shall be subrogated to such Lien and any security therefor.
(b) ACCOUNTING
Neither the Indenture Trustee nor any receiver appointed for the Indenture Trustee's benefit with respect to the Collateral shall be liable to account for any earnings, revenues, rents, issues, profits, income or other amounts, except for amounts actually received by the Indenture Trustee or such receiver (as the case may be).
(c) WAIVER OF DEFAULT
The Indenture Trustee, upon the direction of the Required Holders, shall waive any default hereunder and its consequences with respect to the Senior Secured Notes, except a default (i) in the payment or prepayment of the principal of, interest on, any Make Whole Premium or any other amounts in respect of, any Senior Secured Note when and as the same shall become due and payable, (ii) depriving the Indenture Trustee or any Noteholder of a Lien upon the Collateral, (iii) in the due performance or observance of the covenants and obligations of the Borrower contained in Section 8.2 of the Participation Agreement or (iv) described in Sections 8.1(k) and (1). In case of the waiver of any default or in case any proceeding taken on account of any such default shall have been discontinued or abandoned or determined adversely to the Indenture Trustee, then and in every such case, the Borrower, the Indenture Trustee and the Noteholders shall be restored to their former positions and rights hereunder respectively. No such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
(d) WAIVER OF ACCELERATION
At any time after the entire unpaid principal amount of the Notes and all accrued and unpaid interest thereon shall have been declared due and payable pursuant to Section 8.2(b), the Required Holders may rescind and annul any such declaration and its consequences; provided that at the time such declaration is annulled and rescinded:
(i) no judgment or decree shall have been entered for the payment of any money due pursuant to the Senior Secured Notes or any other Operative Agreements;
(ii) all Indebtedness under the Senior Secured Notes that has become due and payable solely by reason of such declaration shall have been duly paid; and
(iii) each and every other Indenture Default shall have been remedied or waived or otherwise made good or cured.
(e) LIMITATION OF REMEDIES
If an Indenture Event of Default arises solely out of the occurrence and continuance of a Lease Event of Default under Section 11.1 (d) of the Lease, the Indenture Trustee shall not exercise its rights hereunder unless it shall be concurrently exercising with reasonable diligence its right to terminate the Lease, subject to the right of a court of competent jurisdiction to limit or stay the exercise of remedies under the Lease; provided that the Indenture Trustee may exercise any of the remedies to which it is entitled as assignee of the Borrower under the Lease if the creditor (or trustee thereof) referred to in Section 11.1 (d) of the Lease shall have
exercised any remedy against the Lessee with respect to which such Lease Event of Default has occurred.
SECTION 8.6. REMEDIES CUMULATIVE. No remedy herein conferred upon or reserved to the Indenture Trustee or to the Noteholders is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity (whether or not an Indenture Event of Default has occurred and is continuing, but only to the extent not inconsistent with the terms of this Indenture and the Security Documents). No delay or omission of the Indenture Trustee or of any Noteholder in the exercise any right or power accruing upon any Indenture Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Indenture Event of Default or an acquiescence therein; and every power and remedy given by this Indenture to the Indenture Trustee or to the Noteholders may be exercised from time to time and as often as may be deemed expedient by the Indenture Trustee or by the Noteholders.
SECTION 8.7. THE BORROWER'S WAIVERS, (a) The Borrower agrees that it shall not, at any time or in any manner whatsoever, claim or take any benefit of any stay, extension or moratorium law which may affect the terms of this Indenture; nor claim or take any benefit of any law providing for the valuation or appraisal of any property included in the Collateral or any part thereof prior to any sale thereof; nor, prior to or after any such sale, claim or exercise any right to redeem the property so sold or any part thereof; and the Borrower hereby expressly waives all benefit or advantage of any such law and, after an Indenture Event of Default and during its continuance, covenants not to hinder, delay or impede the execution of any power herein granted or available at law or in equity, but to suffer and permit the execution of every power and remedy as though no such law existed. The Borrower waives all right to have the property included in the Collateral marshaled upon any foreclosure thereof.
(b) Except as otherwise provided in the last paragraph of
Section 8.2(e)(vi) and in Section 8.5(e), the Borrower hereby waives any right
to require the Indenture Trustee or the Noteholders to proceed against any
Person, firm or corporation or to proceed against or exhaust any other security
held by them at any time or to pursue any other remedy in their powers, and the
Borrower agrees that neither the Indenture Trustee nor the Noteholders shall be
obligated to resort to any other security, with any priority, in any particular
order or at all, even if such action or omission destroys, alters or otherwise
impairs subrogation rights of the Borrower against such Person, firm or
corporation or the right of the Borrower to proceed against such Person, firm or
corporation for reimbursement, or both.
(c) Subject to the applicable notice provisions contained herein, the Borrower waives demand, protest and notice of any action or non-action on the part of the Noteholders, the Indenture Trustee, any endorser, any creditor of the Borrower under any other instrument, or any other Person whosoever, in connection with any obligation or evidence of Indebtedness secured hereby.
(d) Until all Indebtedness under the Senior Secured Notes has been paid in full, the Borrower waives the right of subrogation and any benefit of, and any right to participate in, any security now or hereafter held by the Indenture Trustee or the Noteholders.
SECTION 8.8. DIRECTION OF REMEDIES. The Required Holders shall have the right by an instrument in writing delivered to the Indenture Trustee to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee with respect to this Indenture or of exercising any power of trust conferred upon the Indenture Trustee, and the Indenture Trustee, subject to the provisions of Section 9.1, shall have the right to decline to follow any such direction if the Indenture Trustee shall in good faith determine, by the Chairman of the Board of Directors, the President or a Vice President of the Indenture Trustee, that the proceeding so directed would reasonably subject it or him, as the case may be, to personal liability, including under any Environmental Law. The Indenture Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with any written instruction furnished to the Indenture Trustee by the Required Holders in response to a written application by the Indenture Trustee therefor. If no such instrument or instruction has been received from the Required Holders, the Indenture Trustee may (but shall have no duty to) take such action, if any, as the Indenture Trustee shall determine to the extent not inconsistent with the terms of this Indenture.
SECTION 8.9. SUIT BY NOTEHOLDERS. If an Indenture Event of Default described in Section 8.l(a) or (b) shall have occurred and be continuing and the Required Holders shall have directed the Indenture Trustee to act with respect thereto (and offered indemnity in accordance with Section 9.2(1)) and the Indenture Trustee shall have failed to act within ten (10) days thereof, then and only then shall any Noteholder have the right to exercise any remedy therefor available to the Indenture Trustee pursuant to Section 8.2 hereof. All rights of action under this Indenture or under any of the Senior Secured Notes may be performed by the Noteholders without the possession of any Senior Secured Notes and without the production thereof at any trial or other proceeding relative thereto. A copy of any Senior Secured Note, if properly certified by a Noteholder to be true and correct, will constitute evidence of all matters that could be proven by production of the original of that Senior Secured Note in any trial or proceeding relative thereto.
SECTION 8.10. CERTAIN RIGHTS OF THE BORROWER. Anything in this Indenture, the Notes or any other Operative Agreement to the contrary notwithstanding, as long as no Independent Event of Default has occurred and is continuing, the Borrower shall be entitled to exercise the following rights (the "EXCEPTED RIGHTS"):
(a) SHARED RIGHTS
The Borrower will at all times retain, but not to exclusion of the Indenture Trustee, the rights (the "SHARED RIGHTS") (i) to receive from the Lessee all notices, copies of documents and other information which the Lessee is permitted or required to give or furnish to the Borrower pursuant to the Operative Agreements, (ii) to inspect the Facility and the books and records of the Lessee to the extent provided in the Operative Agreements, and (iii) to provide such insurance as the Lessee will have failed to maintain and to obtain excess insurance for its own account (but only to the extent such excess does not result in the Borrower being deemed a
co-insurer with the Lessee) and to receive any notices or consents with respect to insurance contemplated by the Lease.
(b) TERMINATION, AMENDMENTS, WAIVER, ETC.
(i) Unless a Lease Event of Default has occurred and is continuing, the Indenture Trustee shall not enter into any amendment, modification or waiver of the Lease (herein, an "AMENDMENT"), which could reasonably be expected to materially adversely affect the Borrower's rights under the Lease, without the prior written consent of the Borrower (which shall not be unreasonably withheld).
(ii) Whether or not a Lease Event of Default has occurred and is continuing, (A) the Borrower shall have the exclusive right to enter into, execute and deliver Amendments relating solely to the Excepted Payments and the Excepted Rights, and (B) the Indenture Trustee shall neither enter into, execute nor deliver Amendments that impair any of the Borrower's Excepted Rights or Excepted Payments.
(iii) Except as expressly prohibited by this clause (b) or in clause (c) of this Section 8.10, if a Lease Event of Default has occurred and is continuing, the Indenture Trustee may enter into Amendments without the consent or approval of the Borrower; provided that prior to effecting any such Amendment which is adverse to the Borrower, the Indenture Trustee shall deliver to the Borrower a written counterpart of such Amendment substantially in the form proposed to be effected, and no such proposed Amendment shall be effected prior to the tenth (10th) day following such delivery.
(iv) Additionally, notwithstanding anything in this Indenture or any other Operative Agreement to the contrary, so long as no Independent Event of Default has occurred and is continuing, no changes or modifications shall be made to any Operative Agreement to which the Borrower is a party without the Borrower's prior written consent (which consent shall not be unreasonably withheld) if such change or modification: (1) increases the Term of the Lease or the maturity of the Senior Secured Notes, but no Borrower consent will be required at any time an Indenture Event of Default has occurred and is continuing; (2) reduces the Maximum Residual Guarantee Amount or the Construction Termination Amount, but no Borrower consent will be required from and after the earlier of: (x) acceleration of the Senior Secured Notes and initiation of foreclosure proceedings with respect to the Collateral and (y) filing of a bankruptcy petition by or against the Borrower or the Lessee; (3) adversely changes any indemnities payable to the Borrower or the Investor under the Operative Agreements; (4) decreases the Investor Yield; (5) adversely affects the Insurance Requirements of any insurance policy that inures to the benefit of the Borrower or the Investor; (6) adversely affects the use or maintenance provisions with respect to the Facility contained in Section 3.3 and Article V of the Lease; (7) adversely changes Article X of the Lease (including waiving any default that would otherwise prevent the Lessee from exercising the remarketing option set forth in Section 10.2 of the Lease), but no Borrower consent will be required from and after the earlier of: (x) acceleration of the Senior Secured Notes and initiation of foreclosure proceedings with respect to the Collateral and (y) filing of a bankruptcy petition by or against the Borrower or the Lessee; or (8) changes this Section 8.10.
(c) EXCEPTED PAYMENTS
The Borrower shall distribute to the Investor any Excepted Payments to which the Investor is entitled.
SECTION 8.11. NO ACTION CONTRARY TO THE LESSEE'S RIGHTS UNDER THE LEASE. Notwithstanding any other provision of any Operative Agreement, the Indenture Trustee covenants that, so long as no Lease Event of Default shall have occurred and be continuing, the Indenture Trustee shall not take any action contrary to the Lessee's rights under the Lease, including the Lessee's rights to quiet use and possession of the Facility.
SECTION 8.12. NONRECOURSE LIABILITY, (a) Notwithstanding any provision herein to the contrary (except as provided in clauses (b) and (c) of this Section), it is expressly understood and agreed that if the Indenture Trustee at any time takes action to enforce the collection of the Indebtedness under the Senior Secured Notes, the Indenture Trustee will proceed to foreclose hereunder and sell the Collateral and/or institute suit on the Guarantee, the Facility Agency Agreement or the Senior Secured Notes and take such other action as shall be necessary to enforce Noteholders' rights under the Residual Value Policy and the Construction Termination Policy. If a lesser sum is realized from such foreclosure, sale and/or suit, neither the Noteholders nor the Indenture Trustee will institute any action, suit, claim or demand in law or equity against the other assets of the Borrower or against the Borrower's managers, officers, directors, employees or the Investor, for or on account of the deficiency or for any other matter with respect to the Borrower's obligations hereunder or under any of the other Operative Agreements.
(b) Nothing contained in clause (a) above will in any way affect or impair: (i) the Lien of the Security Documents securing the entirety of all amounts due under the Bonds, the Senior Secured Notes and hereunder; (ii) the Noteholders' rights under the Guarantee (including upon acceleration to receive the entirety of all amounts due under the Senior Secured Notes and hereunder), the Facility Agency Agreement, the Residual Value Policy or the Construction Termination Policy; (iii) the Borrower's liability for its obligations as landlord under the Lease; (iv) the Borrower's liability for its obligations under Section 8.2(a), (d), (f), (i) and (l) of the Participation Agreement; or (v) the Noteholders' or the Indenture Trustee's rights pursuant to the Lease, the Assignment of Leases or any other Operative Agreement to institute actions, suits, claims or demands in law or equity against the Lessee.
(c) Further, the following, (x) in the case of clauses
(iii), (iv), (v), (vii), (ix) or (xi), if liability imposed thereby results from
any action of the Borrower directed by the Investor, and (y) in the case of all
other clauses, as provided therein, are excluded from the provisions of clause
(a), and the Noteholders may recover personally against the assets of the
Borrower (but not against any assets of any manager, officer, director or
employee of the Borrower or the Investor or their personal assets) for the
following as aforesaid:
(i) all actual losses, damages or liabilities that the Noteholders suffer arising out of any fraud or willful or intentional misrepresentation by the Borrower in connection with: (A) the Borrower's performance or fulfillment of any of the conditions to or requirements for any advance of the Indebtedness under the Senior Secured Notes; (B) the execution and
delivery by the Borrower of any of the documents evidencing or securing the Indebtedness under the Senior Secured Notes; (C) the making of any representations or warranties by the Borrower contained in the Operative Agreements; or (D) the Borrower's performance of any of its obligations under the Operative Agreements;
(ii) all rents and other revenues, payments or reimbursements of any kind whatsoever (including all payments by the Lessee) derived from the Facility and received by the Borrower at any time after the Borrower becomes aware of any Indenture Event of Default (unless waived or cured pursuant to this Indenture) or on deposit on the date the Borrower becomes so aware in one or more accounts used by the Borrower or the Borrower's agents or representatives in connection with the Facility, except to the extent permitted under this Indenture or otherwise properly applied (as documented by evidence reasonably satisfactory to the Required Holders) to the normal and customary expenses and operations of the Facility, in each case pursuant to the Lease and the Security Documents;
(iii) all security or other deposits and advance rents collected by the Borrower and not properly applied in due course (as documented by evidence reasonably satisfactory to the Required Holders);
(iv) the replacement cost of any items of personalty or any fixtures removed from the Facility by the Borrower and not replaced, unless obsolete or permitted to be removed by the terms of the Lease, at any time after the Borrower becomes aware of any Indenture Event of Default (unless waived or cured pursuant to this Indenture);
(v) all actual losses, damages and liabilities that the Noteholders suffer arising from any acts of commission or omission by the Borrower that result in waste upon the Collateral;
(vi) any Net Proceeds that are misapplied by the Borrower contrary to the terms hereof and of the Lease;
(vii) all actual losses, damages and liabilities that the Noteholders suffer arising from any of the Borrower's obligations as landlord under the Lease;
(viii) any amendment, modification, waiver or any termination of the Bond Sublease, the Lease, the Residual Value Policy, the Construction Termination Policy or the Facility Agency Agreement without the consent of the Required Holders;
(ix) any act or omission of the Borrower that
vitiates any coverage, or reduces any amount that might otherwise be payable,
under (x) any property (hazard) insurance policy required under the Operative
Agreements with respect to the Facility, (y) any provision for self-insurance or
(z) the Residual Value Policy or the Construction Termination Policy;
(x) any Lien, other than Permitted Liens, resulting from the action or inaction of the Borrower that is not required to be indemnified by the Lessee;
(xi) any environmental liability of the Borrower that is not required to be indemnified by the Lessee; and
(xii) the failure of the Borrower to conduct its business in a manner sufficient to avoid consolidation with any of its Affiliates, except with respect to the filing of consolidated Tax returns in accordance with the Code and except as imposed by law under ERISA.
ARTICLE 9
TRUSTEES
SECTION 9.1. INDIVIDUAL AND CO-TRUSTEES. (a) If required under the law of the state of Missouri with respect to the Facility or the law of any other jurisdiction in which any of the Collateral is located, or if the Indenture Trustee deems such to be otherwise necessary or prudent, the Indenture Trustee shall have the power to, and upon the written direction of the Required Holders shall appoint one or more Persons at the expense of the Borrower to act as individual trustees or co-trustees, jointly with the Indenture Trustee, of any of the property subject to the Lien of the Security Documents, and any such Person shall be such separate trustee or co-trustee, with such powers and duties as shall be specified in such instrument.
(b) Every individual trustee and co-trustee shall, to the extent not prohibited by law, be subject to the following terms and conditions:
(i) The rights, powers, duties and obligations conferred or imposed upon such individual or co-trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate or co-trustee, as shall be set forth in the instrument appointing him or it; provided, however, that such separate or co-trustee shall take no action without the consent of the Indenture Trustee (unless the requirement for such consent shall be forbidden by law as to any particular application of such requirement);
(ii) All powers, duties, obligations and rights conferred upon the Indenture Trustee, in respect of the custody of all cash deposited hereunder, shall be exercised solely by the Indenture Trustee;
(iii) The Indenture Trustee shall not be liable for the acts or omissions of any individual trustee or co-trustee; and
(iv) The Indenture Trustee may at any time by written instrument accept the resignation of or remove any such individual trustee or co-trustee, and upon the request of the Indenture Trustee, the Borrower shall join with the Indenture Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to make effective such resignation, but the Indenture Trustee shall have the power to accept such resignation or to make such removal without making such request. A successor to an individual trustee or co-trustee so resigning or removed may be appointed in the manner provided in this Section.
(c) Such individual trustee or co-trustee, upon acceptance of such trust, shall be vested with the estates or property specified in such instrument, either jointly with the Indenture Trustee, or separately, as may be provided therein, subject to all the trusts, conditions and provisions of this Indenture; and every such instrument shall be filed with the Indenture Trustee. Any individual trustee or co-trustee may, at any time, by written instrument constitute the Indenture Trustee his agent or attorney-in-fact with full power and authority, to the extent permitted by law, to do all acts and things and exercise all discretion authorized or permitted by him, for and in behalf of him and his name. If any individual trustee or co-trustee shall be dissolved, become incapable of acting, resign, be removed or die, all the estates, property, rights, powers, trusts, duties and obligations of said individual trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Indenture Trustee, without the appointment of a successor to said individual trustee or co-trustee, until the appointment of a successor to said individual trustee or co-trustee is necessary as provided in Section 9.1 (a).
(d) Any notice, request or other writing, by or on behalf of the Noteholders delivered to the Indenture Trustee shall be deemed to have been delivered to all individual and co-trustees.
SECTION 9.2. RIGHTS AND OBLIGATIONS OF INDENTURE TRUSTEE. The Indenture Trustee accepts the trusts hereby created and agrees to perform its duties herein for the benefit of the Noteholders from time to time upon the following terms and conditions:
(a) The Indenture Trustee shall have the full power and authority to do all things not inconsistent with the provisions of this Indenture and the Security Documents in order to enforce this Indenture and the Security Documents or to take any action with respect to an Indenture Event of Default, or to institute, appear in or defend any suit or other proceeding with respect thereto, or to protect the interests of the Noteholders. The Indenture Trustee shall not be answerable or accountable except for its bad faith, willful misconduct or gross negligence. The Indenture Trustee shall not be accountable for the use of any proceeds from the sale of any Senior Secured Notes. Except as provided in Section 3.4(b), the Indenture Trustee shall not be obligated to prepare any revised refilings or continuations of any financing statements with respect to the Collateral, but upon the request of the Required Holders, shall execute and deliver, at the Borrower's expense, any security documents reasonably requested to preserve the Lien created by the relevant Security Documents, but shall have no obligation to take any action to protect, preserve or enforce any rights or interests in the Collateral or towards the execution or enforcement of the trusts created hereby and by the relevant Security Documents which, in its opinion, shall be likely to involve unreimbursed expense or liability, unless, upon the Indenture Trustee's request, the Noteholders shall furnish reasonable indemnity (including the advancement of expenses reasonably anticipated by the Indenture Trustee) against such liability and expense to the Indenture Trustee. In accepting the trusts hereunder and the Collateral under the Security Documents, the Indenture Trustee is acting solely as a trustee hereunder and not in its individual capacity and all Persons, other than the Borrower and the Noteholders, having any claim against the Indenture Trustee, arising by reason hereof or in connection with any applicable Security Documents, shall look only to the Collateral for payment or satisfaction thereof. Unless and until
an Indenture Event of Default shall have occurred and be continuing, the Indenture Trustee shall not be obligated to take any action under this Indenture, the Security Documents or any document included in the Collateral except for the performance of such duties as are specifically set forth herein or therein and except as may be requested from time to time in writing by the Required Holders. If and so long as an Indenture Event of Default (of which the Indenture Trustee shall be deemed to have knowledge, as hereinafter provided in clause (j) of this Section 9.2) shall have occurred and be continuing, the Indenture Trustee shall exercise such rights, powers and remedies (whether vested in it by this Indenture, the Security Documents or by law or in equity or by statute or otherwise) for the protection and enforcement of its rights under this Indenture, the Security Documents and in respect of the Collateral as to which the Indenture Trustee is directed in written instructions from the Noteholders pursuant to Section 8.8). Without limiting the foregoing, the Indenture Trustee shall deliver to the Noteholders (i) promptly, but in no event later than ten (10) Business Days after the Maturity Date, written notice of any failure of the Lessee or the Borrower to deliver to the Indenture Trustee on the Maturity Date the unpaid outstanding principal amount of such Series, together with all interest accrued thereon to the date of payment, and (ii) promptly, but in not event later than ten (10) Business Days after receipt thereof, written notice of an order of a court of competent jurisdiction to reimburse, as a preference, any amount previously paid to Indenture Trustee under the Senior Secured Notes.
(b) The Borrower shall pay, or cause to be paid, all customary fees of the Indenture Trustee related to or arising out of this Indenture and the Security Documents. In the event that the Borrower fails to pay such compensation (which failure if not remedied within ten (10) days after notice thereof shall constitute an Indenture Event of Default of a kind described in Section 8.l(b)), the Indenture Trustee shall be entitled to seek from the Noteholders or the Collateral reasonable compensation for the Indenture Trustee's services and reimbursement for all proper disbursements incurred by it upon or after an Indenture Event of Default, or for instituting, appearing in or defending any suit or proceeding with respect thereto.
(c) The Indenture Trustee shall incur no liability in acting upon any signature, notice, request, consent, instrument, certificate, opinion, or other instrument reasonably believed by it in good faith to be genuine. In administering the trusts, the Indenture Trustee may execute any of the trusts or powers hereof directly or through its agents or attorneys and may consult with counsel, accountants and other skilled Persons to be selected and employed by it, and the reasonable expenses thereof shall, upon the occurrence and during the continuation of an Indenture Event of Default, be paid, or caused to be paid, by the Borrower, and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice of any such Person.
(d) The recitals in this Indenture, the Senior Secured Notes and the other Operative Agreements to which the Indenture Trustee is a party shall not be considered as made by, or as imposing any obligation or liability upon, the Indenture Trustee. The Indenture Trustee makes no covenant or representation as to the rights of the Noteholders, the title or interest of the Borrower in or to, or the condition of, the Collateral or the sufficiency of the security for the Senior Secured Notes or of this Indenture or the Security Documents, except that the Indenture Trustee represents and warrants that this Indenture and the Security Documents have been duly
authorized, executed and delivered by the Indenture Trustee and constitute valid and binding obligations of the Indenture Trustee enforceable against the Indenture Trustee in accordance with their respective terms.
(e) The Indenture Trustee shall have no duty to see to any recording, filing or registration of the Security Documents, any instrument of further assurance, any instrument constituting part of the Collateral, or any amendments or supplements to any of said instruments or to see to the payment of any fees, charges or Taxes in connection therewith, other than with respect to moneys the Indenture Trustee collects for such purposes (and the Indenture Trustee may act with respect to the Senior Secured Notes and pay out deposited moneys without regard thereto), or to give any notice thereof, or to see to the payment of or be under any duty in respect of any Tax, assessment or other governmental charge which may be levied or assessed on the Collateral or any part thereof or against the Borrower.
(f) Whenever in administering the trust, the Indenture Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established, subject to the first sentence of Section 9.2(c), by a certificate or other instrument purporting to be signed by a Responsible Officer of the Borrower and delivered to the Indenture Trustee, and such certificate or other instrument shall be full warrant to the Indenture Trustee and the Indenture Trust shall incur no liability to anyone for any action taken, suffered or omitted by it on the reliance thereof, but in its discretion the Indenture Trustee may in lieu thereof accept other evidence of such fact or matter or may require such further or additional evidence as may seem reasonable to it.
(g) The Indenture Trustee shall have no obligation to see to the payment or discharge of any Liens (other than the Lien hereof, and then only to the extent herein provided, and Liens, if any, arising by reason of its acts or omissions unrelated to the discharge of its duties as Indenture Trustee hereunder) upon the property included in the Collateral or to the delivery or transfer to any Person of any property released from any such Lien, or to give notice to or make demand upon any mortgagor, mortgagee or other Person for the delivery or transfer of any of such property. The Indenture Trustee shall, however, be obligated to send to the Borrower a notice of default as soon as practicable after the Borrower's failure to pay when due any principal of, Make Whole Premium or interest on any obligation secured by any of the Collateral, and to furnish the Borrower with a copy of any notice sent by it to the Lessee with respect to any default under the Lease.
(h) The Indenture Trustee shall have no duty to confirm or verify any schedules setting forth the interest and principal payments to be made on any Senior Secured Note or any financial or other statements or reports or certificates furnished pursuant to any provision hereof, and, except as otherwise provided hereby, it shall be under no other duty in respect of the same, except to retain the same in its files, and permit the inspection thereof at reasonable times by any Noteholder.
(i) The Indenture Trustee shall not be concerned with or accountable to any Person for the use or application of any deposited moneys which shall be released or withdrawn in accordance with the provisions hereof or of any property or securities or the proceeds thereof which shall be released from the Lien of any of the Security Documents in accordance with the provisions hereof or thereof.
(j) The Indenture Trustee shall not be required to ascertain or inquire as to the performance or observance of any of the covenants or agreements herein contained, or contained in any other instruments, pledged or assigned to the Indenture Trustee hereunder or under any of the Security Documents, to be performed or observed by the Borrower or any party to any such other instruments. The Indenture Trustee shall not be required to take notice or be deemed to have notice or knowledge of any Indenture Event of Default (other than a default in the payment of moneys to the Indenture Trustee which are required to be paid to the Indenture Trustee on or before a specified date or within a specified time after receipt by the Indenture Trustee of a notice or certificate which was in fact received and except default in the delivery of any certificate, opinion or other document expressly required to be delivered to the Indenture Trustee by any provision hereof), unless (i) the Indenture Trustee shall receive from the Borrower or the Noteholders a written notice stating that an Indenture Event of Default has occurred and specifying the same, or (ii) a Responsible Officer of the Indenture Trustee shall otherwise obtain actual knowledge thereof, and in the absence of such notice or such actual knowledge, the Indenture Trustee may conclusively assume that there is no such Indenture Event of Default, except as aforesaid. Promptly after receiving knowledge thereof, the Indenture Trustee shall notify the Noteholders and the Borrower of any Indenture Event of Default, and if such Indenture Event of Default is subsequently wholly cured or waived, the Indenture Trustee shall give written notice to such effect to the Noteholders and the Borrower.
(k) At the reasonable request of, and payment of copying charges by, any Noteholder, the Indenture Trustee shall forward to each Noteholder a copy of any financial report, notice, request, certificate or communication submitted to the Indenture Trustee pursuant hereto unless the Indenture Trustee has determined that any such Noteholder has actually received the same.
(l) Whenever the Indenture Trustee is required or allowed under the provisions of any Operative Agreement to take (or to refrain from taking) any action (other than any ministerial act) or to give or withhold any consent or when the Required Holders deem it necessary or desirable for the Indenture Trustee to take (or to refrain from taking) any action or to give or withhold any consent under any Operative Agreement, the Indenture Trustee shall take (or refrain from taking) such action or give or withhold such consent, only upon, and as may be specified in, any written instructions delivered by the Required Holders; provided, however, that the Indenture Trustee shall not be required to take any such action if the Indenture Trustee shall have reasonably determined, or shall have been advised by counsel, that such action (i) is contrary to the terms hereof or of any document contemplated hereby to which the Indenture Trustee is a party or is otherwise contrary to law or (ii) is likely to result in liability on the part of the Indenture Trustee, unless the Required Holders shall have provided to the Indenture Trustee
indemnification or security reasonably satisfactory to the Indenture Trustee against all costs, expenses and liabilities arising from the Indenture Trustee's taking such action.
(m) Neither the Borrower nor a Noteholder shall direct the Indenture Trustee to take or refrain from taking any action contrary to this Indenture, nor shall the Indenture Trustee be obligated to follow any such direction, if given.
(n) In the event that the Indenture Trustee is unsure as to the application of any provision of this Indenture, or such provision is ambiguous as to its application, or is, or appears to be, in conflict with any other applicable provision, or this Indenture permits any determination by the Indenture Trustee or is silent or is incomplete as to the course of action which the Indenture Trustee is required to take with respect to a particular set of facts, the Indenture Trustee shall give written notice (in such form as shall be appropriate under the circumstances) to each Noteholder, requesting instructions as to the course of action to be adopted, and to the extent the Indenture Trustee acts in good faith in accordance with written instructions received from the Required Holders, the Indenture Trustee shall not be liable on account of such action to any Person. If the Indenture Trustee shall not have received appropriate instructions within fifteen days of such notice (or within such shorter period of time as reasonably may be specified in such notice) it may, but shall be under no duty to, take or refrain from taking such action, not inconsistent with this Indenture, as it shall deem to be in the best interests of the Noteholders, and shall have no liability to any Person for such action or inaction.
SECTION 9.3. RESIGNATION OF THE INDENTURE TRUSTEE. The Indenture
Trustee may resign and be discharged from the trust by giving written notice
thereof to each Noteholder and the Borrower (or any subsequent owner of the
Borrower's interest in any property included in the Collateral), specifying the
date (not less than sixty (60) days after such notice) when such resignation
shall take effect. Notwithstanding the foregoing, no such resignation shall take
effect until the appointment and acceptance of a successor trustee pursuant to
Section 9.4.
SECTION 9.4. SUCCESSOR TRUSTEE. (a) The Indenture Trustee may be removed at any time by notice from the Required Holders. If the Indenture Trustee shall have given notice of its intention to resign, shall resign, be removed or otherwise be incapable of acting, or if the Indenture Trustee shall be taken under the control of any public officer or a receiver appointed by a court, or be adjudged a bankrupt or insolvent, then a successor shall be appointed by the Required Holders; provided, however, that the Borrower may appoint a successor Indenture Trustee to act until such successor shall be so appointed. The Borrower shall notify the Noteholders of any such appointment by the Borrower, but any successor trustee so appointed by the Borrower shall immediately and without further act be superseded by a successor trustee appointed by the Noteholders as above provided. If no successor is appointed within 60 days after notice of resignation, the Indenture Trustee may petition a court of competent jurisdiction for the appointment of a successor Indenture Trustee.
(b) Any successor to the Indenture Trustee shall execute, acknowledge and deliver to its predecessor and the Borrower (or any subsequent owner of the Borrower's interest in the property included in the Collateral) an instrument accepting such appointment, and
thereupon such successor, without any further act, deed or conveyance, shall become vested with all the estate, properties, rights, powers, duties and trusts of its predecessor in the trusts hereunder with like effect as if originally named as trustee herein; provided, however, that upon payment of all amounts owing to it such predecessor shall execute and deliver an instrument transferring to such successor, upon the trusts expressed in this Indenture and the Security Documents, such estate, properties, rights, powers, duties and trusts and shall duly assign, transfer, deliver and pay over to such successor any property and moneys subject to the Lien of the Security Documents and held by such predecessor. The successor Indenture Trustee shall deliver to each Noteholder and to the Borrower (or any subsequent owner of the Borrower's interest in the property included in the Collateral) a copy of any such instrument accepting appointment promptly after its execution thereof.
(c) Any successor to the Indenture Trustee shall always be a bank or trust company organized under the laws of the United States of America or a state thereof, having, or being wholly owned by an entity having, a combined capital, surplus and undivided profits (as shown by its most recent financial statement published to its shareholders) aggregating at least five hundred million dollars ($500,000,000).
(d) Any Person into which the Indenture Trustee may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation or conversion to which it shall be a party, or any Person to whom all or substantially all of its corporate trust business shall be sold shall be the successor to the Indenture Trustee without the execution or filing of any paper or any further act on the part of any of the parties hereto.
SECTION 9.5. RELIANCE BY THE BORROWER. (a) All payments and notices received by the Indenture Trustee in accordance with the terms of this Indenture shall be deemed received by the Noteholders for purposes of determining compliance by the Borrower with the terms hereof and of the other Operative Agreements.
(b) All consents, waivers, releases, notices or other communications to be delivered to the Borrower by the Noteholders pursuant to the Operative Agreements shall be given only by the Indenture Trustee, acting at the direction of the Required Holders, and be in accordance with the terms of this Indenture, and no such consent of the Required Holders shall be of any force or effect unless delivered by the Indenture Trustee in accordance with the terms of this Indenture; and the Borrower may rely upon any such waiver, notice, release or consent delivered by the Indenture Trustee.
(c) Any direction of the Noteholders or the Required Holders, as the case may be, provided for in this Indenture shall be in writing and shall become effective when delivered to the Indenture Trustee. Upon receipt of any such direction from the Noteholders or the Required Holders, as the case may be, the Indenture Trustee shall deliver to the Borrower promptly, in writing, the consent, waiver, releases or other communication specified therein.
ARTICLE 10
SUPPLEMENTAL INDENTURES
SECTION 10.1. GENERAL. The Borrower and the Indenture Trustee may enter into Supplemental Indentures as provided in this Article 10. The Indenture Trustee may, in its discretion, decline to enter into any Supplemental Indenture if the Indenture Trustee shall reasonably determine that the rights, duties or immunities of the Indenture Trustee would be adversely affected. Whenever the consent of any Noteholder shall be required for the execution of a Supplemental Indenture, it shall be sufficient if the substance of the Supplemental Indenture is consented to, not its particular form. The Indenture Trustee shall be entitled to receive, at the expense of the Borrower, an opinion of counsel stating that such Supplemental Indenture is authorized or permitted by the Indenture and that all conditions precedent to such amendment have been satisfied.
SECTION 10.2. WITHOUT CONSENT OF NOTEHOLDERS. Supplemental Indentures may be entered into without the consent of any Noteholder for any of the following purposes:
(a) to correct or amplify the description of any property subject or intended to be subject to the Lien of the Security Documents;
(b) to add property to the Collateral as permitted or required by the Security Documents, or to grant additional property to the Indenture Trustee; and
(c) to increase obligations or duties owing to the Indenture Trustee, or to surrender any of the Indenture Trustee's rights (in its individual capacity) hereunder.
SECTION 10.3. CONSENT OF ALL NOTEHOLDERS. Without the written consent of the Noteholders of not less than one hundred percent (100%) in aggregate Outstanding principal amount of the Senior Secured Notes of all Series, no Supplemental Indenture shall:
(a) impair the right of any Noteholder to receive the payments and prepayments of principal, premium and interest on its Senior Secured Notes as now provided, therein or herein;
(b) permit the creation of any Lien or other encumbrance on the property included in the Collateral except Permitted Liens or as otherwise permitted hereunder or under the Security Documents, or deprive any Noteholder of the benefit of the Lien hereof on the Collateral, except that any Supplemental Indenture hereto which grants additional property to the Indenture Trustee may grant such property subject to Permitted Liens; or
(c) modify any of the percentages of the principal amounts of the Senior Secured Notes the consent of the Noteholders of which are required for any consent or direction hereunder.
SECTION 10.4. CONSENT OF LESS THAN ALL NOTEHOLDERS. Except as otherwise provided in Section 10.2 and 10.3, Supplemental Indentures may be entered into for any purpose (including the issuance of any Series of the Expansion Notes) with the consent of the Required Holders.
SECTION 10.5. EXCHANGE; LEGEND OR NOTATION; EFFECT. (a) The Indenture Trustee shall, at the Borrower's expense, promptly send to each Noteholder a copy (conformed, executed or photostatic) of each Supplemental Indenture, but the failure to do so shall not impair or affect its validity.
(b) The Borrower or the Indenture Trustee may require that the Senior Secured Notes bear a legend or other notation as to any matter provided for in any Supplemental Indenture, or that new Senior Secured Notes be issued in exchange for the Senior Secured Notes, as provided in Article 2, but modified to conform to any modification effected by such Supplemental Indenture. Any such legending, notation or exchange shall, if requested by the Borrower, be at the cost and expense of the Borrower, and all legends, notations and modifications shall be in form approved by the Indenture Trustee.
(c) Upon the execution of any Supplemental Indenture, this Indenture or the Security Documents, as the case may be, shall be modified in accordance therewith, and such Supplemental Indenture shall form a part of this Indenture or the Security Documents, as the case may be, for all purposes; and every Noteholder of a Senior Secured Note theretofore or thereafter issued and delivered hereunder shall be bound thereby.
SECTION 10.6. CONSENTS IN WRITING. Any consent of the Noteholders provided for in this Article 10 shall be embodied in or evidenced by one or any number of concurrent instruments of substantially similar tenor and any such consent shall become effective when such instrument or instruments are delivered to the Indenture Trustee and the Borrower, if applicable.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. AMENDMENTS, ETC., OF CERTAIN DOCUMENTS. Whenever the agreement of the Indenture Trustee is required to any amendment, modification, cancellation or termination of any of the Security Documents, or any other document or instrument included in the Collateral, or whenever the Indenture Trustee is required to give any consent, waiver or approval under any thereof, the Indenture Trustee shall agree to such amendment, modification, cancellation or termination, or give such consent, waiver or approval, with (but only with) the prior written consent of the Required Holders; provided, however, that, without the prior written consent of the Noteholders of all of the Outstanding Senior Secured Notes of a Series affected thereby, the Indenture Trustee shall not take any action which would (a) reduce, or extend the time of payment of, the principal of or the premium, if any, or interest on any Senior Secured Note or any installment thereof, except for the waiver of any Default or Event of Default, which waiver shall require the consent of the Required Holders, or as otherwise expressly provided herein, (b) permit the creation or existence of any Lien, charge, encumbrance, pledge, conditional sale or other title
retention agreement, encroachment or other defect affecting any of the property included in the Collateral except for Permitted Liens and except as otherwise permitted hereunder, (c) have the effect of modifying the definition of the term "LEASE EVENT OF DEFAULT" contained in the Lease, or the term "AGENCY AGREEMENT EVENT OF DEFAULT" contained in the Facility Agency Agreement, (d) reduce or otherwise modify or alter in the manner adverse to the Noteholders the obligations of the Guarantor under the Guarantee, (e) reduce or otherwise modify or alter in the manner adverse to the Noteholders the obligations of the Construction Agent under Article VIII of the Facility Agency Agreement, (f) alter, modify or amend any indemnities in favor, directly or indirectly, of any Noteholder, the Collateral or the Indenture Trustee (including, without limitation, indemnities provided for by Article 11 of the Participation Agreement), (g) alter the amount or extend the time of payment by the Lessee under any Lease, (h) modify, amend or supplement the Lease, the Bond Lease or the Bond Sublease or consent to any assignment of the Lease, the Bond Lease or the Bond Sublease, in either case, releasing the Lessee, the Bond Sublessor or the Borrower, respectively, from their obligations in respect of payment of Rent or any amounts payable in respect of a Casualty or Condemnation, or change the absolute and unconditional character of such obligations as set forth in the Lease, the Bond Lease or the Bond Sublease (except, in each case, as otherwise expressly provided in the Lease, the Bond Lease or the Bond Sublease), (i) deprive any Noteholder of the benefit of the Lien of any of the Security Documents on the Collateral except as otherwise expressly provided herein, 0 reduce or otherwise modify or alter in the manner adverse to the Noteholders the obligations of the Insurer under the Residual Value Policy or the Construction Termination Policy or (k) modify or amend this Section 11.1.
SECTION 11.2. EXECUTION OF INSTRUMENTS BY NOTEHOLDERS. Any request or other instrument or action by any Noteholder of any Senior Secured Note shall bind every prior and future Noteholder of the same Senior Secured Note and the Noteholder of any Senior Secured Note issued in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Indenture Trustee or the Borrower pursuant to such request or other instrument or action.
SECTION 11.3. LIMITATION OF RIGHTS OF OTHERS. Nothing in this Indenture is intended or shall be construed to give to any Person, other than the Borrower (including its successors and assigns as owners of the Facility or any interest therein), the Indenture Trustee and the Noteholders, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision herein contained.
SECTION 11.4. SEVERABILITY. In case any one or more of the provisions contained herein or in any Senior Secured Notes shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and this Indenture shall be construed as if such provision had never been contained herein or therein.
SECTION 11.5. NOTICES. All notices, demands, declarations, designations, certificates, requests, offers, acceptances, consents, rejections, approvals, appointments, directions, and other instruments and communications given pursuant to this Indenture (collectively called "NOTICES") to any Person shall be in writing and shall be deemed to have been given when (a) delivered to
that Person's Address in person, by mail, postage prepaid, by Federal Express or other reliable 24-hour delivery service, or (b) received at that Person's fax number, when sent via facsimile. From time to time any party may designate a new Address or fax number for purposes of notice hereunder to each of the other parties hereto. Any notice to be given by the Borrower to the Noteholders shall be given to the Indenture Trustee at the address for notices specified below, with a copy to Purchasers at their respective addresses for notices specified in Schedule A to the Note Purchase Agreements. Notices to be given by the Indenture Trustee to the Noteholders shall be given to the Noteholders at their respective addresses appearing on the Register. The Indenture Trustee shall forward to each Noteholder a copy of any notice or other communications received by the Indenture Trustee. All Notices given hereunder shall be irrevocable unless expressly specified otherwise.
The term "ADDRESS" means:
(A) with respect to the Borrower, c/o Wilmington Trust Company, 1100 North Market Street Rodney Square North, Wilmington, Delaware 19890-0001; Attention: Corporate Trust Administration, with a copy to the Investor, 115 South LaSalle, 12th Floor, Chicago, Illinois 60603, Attention: Asset Portfolio Management; and
(B) with respect to the Indenture Trustee, State Street and Trust Company of Missouri, N.A., One Metropolitan Square, Suite 3900, 211 North Broadway, St. Louis, Missouri 63102; Attention: Corporate Trust Department.
Whenever in this Indenture the giving of Notice is required, the giving thereof may be waived in writing at any time by the Person or Persons entitled to receive such Notice. Except as in this Indenture otherwise expressly provides, (x) this Indenture may not be modified except by an instrument in writing executed by the Borrower and the Indenture Trustee, and (y) no requirement hereof may be waived at any time except by a writing signed by the party against whom such waiver is sought to be enforced, nor shall any waiver be deemed a waiver of any subsequent breach or default.
SECTION 11.6. MAXIMUM INTEREST PAYABLE. No provision of this Indenture or any of the Senior Secured Notes shall require the payment or permit the collection of interest in excess of the maximum permitted by law. If, upon the payment of any portion of the Indebtedness under any Series of the Senior Secured Notes, such payment would result in the payment of any interest in excess of the maximum rate permitted by law, the portion of such payment that would otherwise constitute such interest will be deemed to constitute an involuntary prepayment of principal (to be applied in inverse order of maturity and with respect to which no premium will be charged and no prepayment notice will be required) as of the date paid. Upon notice of such principal prepayment, the Indenture Trustee will reapply all subsequent payments made in respect of the Indebtedness represented by such Series to principal (to be applied in inverse order of maturity and with respect to which no premium will be charged and no prepayment notice will be required) and interest to give effect to the maximum interest rate then permitted by law. Upon each such partial prepayment of principal, all payments of principal and interest which are thereafter due and payable on such Series will be in such a manner that upon the due payment of
all remaining payments of principal and interest in respect hereof there will have been paid to the Noteholder hereof the entire unpaid principal balance of such Series, together with accrued interest thereon.
SECTION 11.7. ACTION BY THE REQUIRED HOLDERS. If the Indenture Trustee refuses to act hereunder or under any other Operative Agreement at the direction of the Required Holders, the Required Holders may take such action instead of the Indenture Trustee and any such action shall be deemed to be taken by the Indenture Trustee hereunder or under such other Operative Agreement.
SECTION 11.8. COUNTERPARTS. This Indenture may be executed in any number of counterparts and each thereof shall be deemed to be an original; and all such counterparts shall constitute but one and the same instrument.
SECTION 11.9. SUCCESSORS AND ASSIGNS. All of the provisions herein contained shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto, to the same extent as if each such successor and assign were named as a party to this Indenture. Wherever used, the singular shall include the plural, the plural shall include the singular and the use of any gender shall include all genders.
SECTION 11.10. TABLE OF CONTENTS, HEADINGS. The table of contents and the headings appearing in this Indenture have been inserted for convenient reference only and shall not modify, define, limit or expand the express provisions of this Indenture.
SECTION 11.11. GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK EXCLUDING ALL CHOICE OF LAW AND CONFLICT OF LAWS RULES THAT WOULD APPLY THE LAW OF ANY OTHER STATE.
SECTION 11.12. INCORPORATED SCHEDULES AND EXHIBITS. The following Schedules and Exhibits are hereby incorporated by reference herein.
SECTION 11.13. SECTION REFERENCES. Unless the context otherwise requires, all references to sections, articles and subdivisions shall be to the sections, articles and subdivisions of this Indenture.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, MCI O'Fallon 1999 Trust, as the Borrower, by WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity, but solely as Owner Trustee of the Borrower, has caused this Indenture to be executed and delivered, and STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A., a national banking association, not in its individual capacity except as expressly provided herein, but solely as Indenture Trustee hereunder for the benefit of the Noteholders referred to herein, in token of its acceptance of the trusts created hereunder, by its duly authorized officer, has caused this Indenture to be executed and delivered, all as of the day and year first above written.
MCI O'FALLON 1999 TRUST
By: Wilmington Trust Company, not in its
individual capacity, but solely as Owner
Trustee
By: /s/ Sheila J. Wallbridge -------------------------------------- Name: Sheila J. Wallbridge Title: Senior Financial Services Officer |
STATE STREET BANK AND TRUST
COMPANY OF MISSOURI, N.A.
not in its individual rapacity except as expressly
provided herein as Indenture Trustee
By: /s/ BRIAN P. KRIPPNER
------------------------------------------
Name: BRIAN P. KRIPPNER
Title: VICE PRESIDENT
|
STATE OF MISSOURI)
) ss.:
CITY OF ST. LOUIS)
On this 30th of August, 1999, before me the undersigned, a Notary Public in and for said County and State, personally appeared Sheila Wallbridge personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed the within instrument as Senior Financial Services Officer of Wilmington Trust Company, a Delaware banking corporation, the company that executed the within instrument, not in its individual capacity, but solely as the Owner Trustee of the Borrower under the Indenture, and acknowledged to me that such company executed it.
WITNESS my hand and official seal.
/s/ Beth Ann Thomas ----------------------------------- Notary Public |
[SEAL]
BETH ANN THOMAS
Notary Public - Notary Seal
STATE OF MISSOURI
St. Louis County
My Commission Expires: Aug. 12, 2000
STATE OF MISSOURI)
) ss.:
CITY OF ST. LOUIS)
On this 30th of August, 1999, before me the undersigned, a Notary Public in and for said County and State, personally appeared Brian Krippner personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed the within instrument as authorized officer of State Street Bank and Trust Company of Missouri, N.A., a national banking association, the association that executed the within instrument, not in its individual capacity but solely as the Indenture Trustee under this Indenture, and acknowledged to me that said association executed it.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written.
/s/ Beth Ann Thomas
-------------------------------
Notary Public
|
[SEAL]
EXHIBIT A-1
FORM OF
SERIES A SENIOR SECURED NOTE
THIS NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "1933 ACT"), AND
MAY NOT BE OFFERED FOR SALE OR SOLD
OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE 1933 ACT AND
THE RULES AND REGULATIONS THEREUNDER.
MCI O'FALLON 1999 TRUST
7.36% SERIES A SENIOR SECURED NOTE Due September 1, 2009
No. R-___ [ Date ]
$_______________________ PPN 55279 * AA 6
MCI O'FALLON 1999 TRUST, a Delaware business trust (herein, together with its successors and assigns, called "MAKER"), for value received hereby promises to pay to [______________________________], a [___________________], or registered assigns, the principal sum of [____________________________] DOLLARS ($____________________), as provided herein, together with interest (computed, in arrears, on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof, at the rate of 7.36% per annum (the "INTEREST RATE") from the date hereof to and including the date paid, and (b) on any due and unpaid payment (including any due and unpaid required or optional prepayment) of principal, and to the extent permitted by law, any due and unpaid payment of interest and any due and unpaid payment of any Make Whole Premium (as defined in the Indenture referred to below), at the rate of the greater of (x) 9.36% per annum or (y) 2% over the prime rate announced by The Chase Manhattan Bank (in either case, the "OVERDUE RATE").
This Note is one of Maker's 7.36% Series A Senior Secured Notes Due September 1, 2009 (herein called the "NOTES") issued pursuant to the Indenture, dated as of August 31, 1999 (herein called the "INDENTURE") from Maker, as the Borrower, to State Street Bank and Trust Company of Missouri, N.A., a national banking association, as Indenture Trustee for the benefit of the Noteholders, and purchased pursuant to the Note Purchase Agreement dated as of August 31, 1999 (herein called the "NOTE PURCHASE AGREEMENT"), by and among Maker and the Purchasers listed on Schedule A thereto (herein called the "PURCHASERS"). Capitalized terms used herein without definition shall have the meanings set forth in Annex A to the Participation
Agreement, dated as of August 31, 1999 (herein called the "PARTICIPATION AGREEMENT"), among MasterCard International Incorporated, a non-stock membership corporation organized under the laws of the State of Delaware (herein called the "LESSEE"), Maker, Wilmington Trust Company, BMO Global Capital Solutions, Inc. (herein called the "INVESTOR"), the Indenture Trustee and the Purchasers. The rules of usage set forth in such Annex A shall apply hereto.
As used herein, the term "HOLDER" means [____________________] and each person (if any) to which such named Holder sells or otherwise transfers this Note or any Notes issued in exchange, substitution or replacement herefor in accordance with the terms of the Indenture.
SECTION 1. SECURITY. This Note is secured by a first priority Lien on the Collateral. In addition, this Note shall also have the benefit, equally and ratably, of guarantees by and undertakings of (i) the Guarantor to the extent provided in the Guarantee, (ii) the Construction Agent, to the extent provided in Article VIII of the Facility Agency Agreement and (iii) the Insurer to the extent provided in (x) the Residual Value Policy and (y) the Construction Termination Policy. Reference is hereby made to the Security Documents, the Guarantee, the Residual Value Policy and the Construction Termination Policy for a description of the security and insurance thereby granted, the nature and extent of the security for the Notes, and the nature and extent of the assignment and the rights of Holder and Maker in respect of the security or otherwise.
SECTION 2. PAYMENTS. Maker shall make all payments with respect to the Notes to the Indenture Trustee as provided in Schedule B to the Indenture. Except as provided in Section 2.2(d) of the Indenture, the principal of, premium, if any, and interest on this Note shall be payable by the Indenture Trustee to the holder of such Note at the payment offices of the Indenture Trustee, located at State Street Bank and Trust Company, 2 Avenue de Lafayette, 5th floor, Boston, Massachusetts 02111-1724, Attention: Corporate Trust Department, in lawful money of the United States of America, against presentation of such Note for notation of the payment or prepayment made thereon or, in the case of a payment or prepayment which shall discharge all Indebtedness of the Borrower evidenced thereby, against surrender or assignment thereof. Interest on this Note will be due and payable semiannually, on the first day of September and March in each year, commencing on_________________, and ending on the Maturity Date. The entire amount of unpaid principal, accrued and unpaid interest and all other amounts payable under the Operative Agreements, if any, will be due and payable in a final payment on the Maturity Date or such earlier date as is provided for herein. The Indenture Trustee will apply each payment made in respect of this Note in the manner and for the purposes specified in the Indenture. Upon full payment of the entire Indebtedness represented by this Note, the Holder will, at the option of Maker, either (i) mark this Note "PAID IN FULL" and surrender this Note to the Indenture Trustee for cancellation, or (ii) assign this Note to Maker's designee without recourse to Holder. The outstanding principal and interest shown on the books and records of the Indenture Trustee or the Holder will constitute prima facie evidence of the principal and interest owing and unpaid under this Note. However, any failure to record on the books or records of the Indenture Trustee or Holder the date or amount of any disbursement or advance under any of the Operative Agreements will not limit or otherwise affect Maker's obligation to repay the principal
amount of such disbursements and advances, together with all interest accruing thereon, as provided for in the Operative Agreements.
SECTION 3. PREPAYMENT. This Note is subject to prepayment from time to time only under the circumstances and in compliance with the terms and conditions set forth in Article 7 of the Indenture.
SECTION 4. LIMITATION ON INTEREST. If, upon the payment of any portion of the Indebtedness represented by this Note, such payment would result in the payment of any interest in excess of the maximum rate permitted by law, the portion of such payment that would otherwise constitute such interest will be deemed to constitute an involuntary prepayment of principal (to be applied in inverse order of maturity and with respect to which no premium will be charged and no prepayment notice will be required) as of the date paid. Upon notice of such principal prepayment, the Indenture Trustee will reapply all subsequent payments made in respect of the Indebtedness represented by this Note to principal (to be applied in inverse order of maturity and with respect to which no premium will be charged and no prepayment notice will be required) and interest to give effect to the maximum interest rate then permitted by law. Upon each such partial prepayment of principal, all payments of principal and interest which are thereafter due and payable on this Note will be in such a manner that upon the due payment of all remaining payments of principal and interest in respect hereof there will have been paid to the Holder hereof the entire unpaid principal balance of this Note, together with accrued interest thereon.
SECTION 5. REGISTER; TRANSFER AND EXCHANGE OF NOTES. This Note is issuable only as a fully registered Note. Maker will deem and treat the person in whose name this Note is registered on the Register as the absolute owner hereof (whether or not this Note is overdue) for the purpose of receiving payments of principal, premium and interest and for all other purposes, and Maker will not be affected by any notice to the contrary. In accordance with the provisions of the Indenture, this Note may be transferred only on the Register at the Indenture Trustee's Office, and exchanged for a note or notes of other denominations only of the same Series.
SECTION 6. DEFAULTS; REMEDIES. Upon the occurrence of an Indenture Event of Default, the Indenture Trustee, acting on behalf of Holder and the other holders of Notes as provided in the Indenture, may (but shall not be obligated to in the absence of directions from the Noteholders) exercise any and all of the rights and remedies provided for under any and all of the Operative Agreements or otherwise available at law or in equity. The Operative Agreements provide, among other things, that upon an Indenture Event of Default the Indenture Trustee may, among other things, accelerate the Maturity Date and foreclose on the Collateral and in connection therewith the entire Indebtedness represented by this Note, including, without limitation, the Make Whole Premium, will automatically become due and payable by Maker.
SECTION 7. COLLECTION COSTS. Should any Indebtedness represented by this Note be collected at law or in equity, or in bankruptcy or other proceedings, or should this Note be placed in the hands of attorneys for collection after default, the undersigned agrees to pay, in addition to the principal, Make Whole Premium, if any, and interest due and payable hereon, all costs of
collecting or attempting to collect this Note, including reasonable attorneys' fees and expenses (including those incurred in connection with any appeal), whether or not any dispute as to the validity or enforceability of any provision of the Notes or any of the Operative Agreements results in litigation and whether or not any such litigation is prosecuted to judgment, unless judgment is entered for Maker in any such enforcement or collection effort.
SECTION 8. JOINT AND SEVERAL LIABILITY; WAIVER. Except as limited by the provisions of Section 9, the undersigned and each other person that is or becomes liable (whether voluntarily or by operation of law) for any obligation of Maker under this Note hereby: (a) assumes liability for each obligation of Maker under the Operative Agreements; and (b) waives all homestead and other exemption rights, all valuation and appraisal rights, demand, presentment, notice of nonpayment or dishonor, protest and lack of diligence or delay in enforcement or collection of the Notes or any performance or payment obligation of Maker under the Operative Agreements.
SECTION 9. NONRECOURSE LIABILITY. (a) Notwithstanding any provision in
the Operative Agreements to the contrary, except as provided in clauses (b) and
(c) of this Section), it is expressly understood and agreed that if any suit is
instituted on this Note, any judgment obtained thereby shall be satisfied solely
out of the foreclosure and sale of the Collateral and/or suit on the Guarantee,
the Facility Agency Agreement, the Residual Value Policy and the Construction
Termination Policy. If a lesser sum is realized from such foreclosure, sale
and/or suit, neither Holder nor the Indenture Trustee will institute any action,
suit, claim or demand in law or equity against the other assets of Maker or
against Maker's managers, officers, directors, employees or the Investor, for or
on account of the deficiency or for any other matter with respect to Maker's
obligations hereunder or under any of the other Operative Agreements.
(b) Nothing contained in clause (a) above will in any way affect or impair: (i) the Lien of the Security Documents securing the entirety of all amounts due under the Bonds, this Note and under the Indenture; (ii) the Holder's rights under the Guarantee (including upon acceleration to receive the entirety of all amounts due under this Note and under the Indenture), the Facility Agency Agreement, the Residual Value Policy or the Construction Termination Policy; (iii) Maker's liability for its obligations as landlord under the Lease; (iv) Maker's liability for its obligations under Section 8.2(a), (d), (f), (i) and (1) of the Participation Agreement; or (v) the Holder's and the Indenture Trustee's rights pursuant to the Lease, the Assignment of Leases or any other Operative Agreement to institute actions, suits, claims or demands in law or equity against the Lessee.
(c) Further, the following, (x) in the case of clauses
(iii), (iv), (v), (vii), (ix) or (xi), if liability imposed thereby results from
any action of the Borrower directed by the Investor, and (y) in the case of all
other clauses, as provided therein, are excluded from the provisions of clause
(a), and the Indenture Trustee or Holder, as appropriate, may recover personally
against the other assets of Maker (but not against any assets of any manager,
officer, director or employee of the Borrower or the Investor or their personal
assets) for the following as aforesaid:
(i) all actual losses, damages or liabilities that the Noteholders suffer arising out of any fraud or willful or intentional misrepresentation by Maker in connection with: (A) Maker's performance or fulfillment of any of the conditions to or requirements for any advance of the Indebtedness under the Senior Secured Notes; (B) the execution and delivery by Maker of any of the documents evidencing or securing the Indebtedness under the Senior Secured Notes; (C) the making of any representations or warranties by Maker contained in the Operative Agreements; or (D) Maker's performance of any of its obligations under the Operative Agreements;
(ii) all rents and other revenues, payments or reimbursements of any kind whatsoever (including all payments by the Lessee) derived from the Facility and received by Maker at any time after Maker becomes aware of any Indenture Event of Default (unless waived or cured pursuant to the Indenture) or on deposit on the date Maker becomes so aware in one or more accounts used by Maker or Maker's agents or representatives in connection with the Facility, except to the extent permitted under the Indenture or otherwise properly applied (as documented by evidence reasonably satisfactory to the Required Holders) to the normal and customary expenses and operations of the Facility, in each case pursuant to the Lease and the Security Documents;
(iii) all security or other deposits and advance rents collected by Maker and not properly applied in due course (as documented by evidence reasonably satisfactory to the Required Holders);
(iv) the replacement cost of any items of personalty or any fixtures removed from the Facility by Maker and not replaced, unless obsolete or permitted to be removed by the terms of the Lease, at any time after Maker becomes aware of any Indenture Event of Default (unless waived or cured pursuant to the Indenture);
(v) all actual losses, damages and liabilities that the Noteholders suffer arising from any acts of commission or omission by Maker that result in waste upon the Collateral;
(vi) any Net Proceeds that are misapplied by the Borrower contrary to the terms hereof and of the Lease;
(vii) all actual losses, damages and liabilities that the Noteholders suffer arising from any of Maker's obligations as landlord under the Lease;
(viii) any amendment, modification, waiver or any termination of the Bond Sublease, the Lease, the Residual Value Policy, the Construction Termination Policy or the Facility Agency Agreement without the consent of the Required Holders;
(ix) any act or omission of Maker that vitiates any coverage, or reduces any amount that might otherwise be payable, under (x) any property (hazard) insurance policy required under the Operative Agreements with respect to the Facility, (y) any provision for self-insurance or (z) the Residual Value Policy or the Construction Termination Policy;
(x) any Lien, other than Permitted Liens, resulting from the action or inaction of Maker that is not required to be indemnified by the Lessee;
(xi) any environmental liability of Maker that is not required to be indemnified by the Lessee; and
(xii) the failure of Maker to conduct its business in a manner sufficient to avoid consolidation with any of its Affiliates, except with respect to the filing of consolidated Tax returns in accordance with the Code and except as imposed by law under ERISA.
SECTION 10. SEVERABILITY. If any provision of this Note shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.
SECTION 11. CHOICE OF LAW; PERSONAL JURISDICTION. This Note shall be governed by the laws of the State of New York excluding all choice of law and conflict of laws rules that would apply the law of any other state. Maker hereby consents and will submit to the jurisdiction and venue of New York courts and the United States District Court for the Southern District of New York in connection with any action or proceeding arising out of or relating to the Notes.
SECTION 12. AUTHENTICATION. This Note shall not be valid unless the certificate of authentication hereon shall have been signed by the Indenture Trustee.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Maker has caused this 7.36% Series A Senior Secured Note due September 1, 2009 to be duly executed and delivered.
MCI O'FALLON 1999 TRUST, a Delaware business trust
By: Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity, but solely as Owner Trustee
By: ______________________________________ Name:
Title:
EXHIBIT A-2
FORM OF
SERIES B SENIOR SECURED NOTE
THIS NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "1933 ACT"), AND
MAY NOT BE OFFERED FOR SALE OR SOLD
OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE 1933 ACT AND
THE RULES AND REGULATIONS THEREUNDER.
MCI O'FALLON 1999 TRUST
____% SERIES B SENIOR SECURED NOTE Due September 1, 2009
No.________ [ Date ]
$____________________ PPN_______
MCI O'Fallon 1999 Trust, a Delaware business trust (herein, together with its successors and assigns, called "MAKER"), for value received hereby promises to pay to [___________________________], a [______________________], or registered assigns, the principal sum of [___________________________] DOLLARS ($____________________), as provided herein, together with interest (computed, in arrears, on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof, at the rate of__% per annum (the "INTEREST RATE") from the date hereof to and including the date paid, and (b) on any due and unpaid payment (including any due and unpaid required or optional prepayment) of principal, and to the extent permitted by law, any due and unpaid payment of interest and any due and unpaid payment of any Make Whole Premium (as defined in the Indenture referred to below), at the rate of the greater of (x)_____% per annum or (y) 2% over the prime rate announced by The Chase Manhattan Bank (in either case, the "OVERDUE RATE").
This Note is one of Maker's _____% Series B Senior Secured Notes Due September 1, 2009 (herein called the "NOTES") issued pursuant to the Indenture, dated as of August 31, 1999 (herein called the "INDENTURE") from Maker, as the Borrower, to State Street Bank and Trust Company of Missouri, N.A., a national banking association, as Indenture Trustee for the benefit of the Noteholders, and purchased pursuant to the Note Purchase Agreement dated as of August 31, 1999 (herein called the "NOTE PURCHASE AGREEMENT"), by and among Maker and the Purchasers listed on Schedule A thereto (herein called the "PURCHASERS"). Capitalized terms used herein without definition shall have the meanings set forth in Annex A to the Participation
Agreement, dated as of August 31, 1999 (herein called the "PARTICIPATION AGREEMENT"), among MasterCard International Incorporated, a non-stock membership corporation organized under the laws of the State of Delaware (herein called the "LESSEE"), Maker, Wilmington Trust Company, BMO Global Capital Solutions, Inc. (herein called the "INVESTOR"), the Indenture Trustee and the Purchasers. The rules of usage set forth in such Annex A shall apply hereto.
As used herein, the term "HOLDER" means [____________________] and each person (if any) to which such named Holder sells or otherwise transfers this Note or any Notes issued in exchange, substitution or replacement herefor in accordance with the terms of the Indenture.
SECTION 1. SECURITY. This Note is secured by a first priority Lien on the Collateral. In addition, this Note shall also have the benefit, equally and ratably, of guarantees by and undertakings of (i) the Guarantor to the extent provided in the Guarantee, (ii) the Construction Agent, to the extent provided in Article VIII of the Facility Agency Agreement and (iii) the Insurer to the extent provided in (x) the Residual Value Policy and (y) the Construction Termination Policy. Reference is hereby made to the Security Documents, the Guarantee, the Residual Value Policy and the Construction Termination Policy for a description of the security and insurance thereby granted, the nature and extent of the security for the Notes, and the nature and extent of the assignment and the rights of Holder and Maker in respect of the security or otherwise.
SECTION 2. PAYMENTS. Maker shall make all payments with respect to the Notes to the Indenture Trustee as provided in Schedule B to the Indenture. Except as provided in Section 2.2(d) of the Indenture, the principal of, premium, if any, and interest on this Note shall be payable by the Indenture Trustee to the holder of such Note at the payment offices of the Indenture Trustee, located at State Street Bank and Trust Company, 2 Avenue de Lafayette, 5th floor, Boston, Massachusetts 02111-1724, Attention: Corporate Trust Department, in lawful money of the United States of America, against presentation of such Note for notation of the payment or prepayment made thereon or, in the case of a payment or prepayment which shall discharge all Indebtedness of the Borrower evidenced thereby, against surrender or assignment thereof. Interest on this Note will be due and payable semiannually, on the first day of September and March in each year, commencing on_________________, and ending on the Maturity Date. The entire amount of unpaid principal, accrued and unpaid interest and all other amounts payable under the Operative Agreements, if any, will be due and payable in a final payment on the Maturity Date or such earlier date as is provided for herein. The Indenture Trustee will apply each payment made in respect of this Note in the manner and for the purposes specified in the Indenture. Upon full payment of the entire Indebtedness represented by this Note, the Holder will, at the option of Maker, either (i) mark this Note "PAID IN FULL" and surrender this Note to the Indenture Trustee for cancellation, or (ii) assign this Note to Maker's designee without recourse to Holder. The outstanding principal and interest shown on the books and records of the Indenture Trustee or the Holder will constitute prima facie evidence of the principal and interest owing and unpaid under this Note. However, any failure to record on the books or records of the Indenture Trustee or Holder the date or amount of any disbursement or advance under any of the Operative Agreements will not limit or otherwise affect Maker's obligation to repay the principal
amount of such disbursements and advances, together with all interest accruing thereon, as provided for in the Operative Agreements.
SECTION 3. PREPAYMENT. This Note is subject to prepayment from time to time only under the circumstances and in compliance with the terms and conditions set forth in Article 7 of the Indenture.
SECTION 4. LIMITATION ON INTEREST. If, upon the payment of any portion of the Indebtedness represented by this Note, such payment would result in the payment of any interest in excess of the maximum rate permitted by law, the portion of such payment that would otherwise constitute such interest will be deemed to constitute an involuntary prepayment of principal (to be applied in inverse order of maturity and with respect to which no premium will be charged and no prepayment notice will be required) as of the date paid. Upon notice of such principal prepayment, the Indenture Trustee will reapply all subsequent payments made in respect of the Indebtedness represented by this Note to principal (to be applied in inverse order of maturity and with respect to which no premium will be charged and no prepayment notice will be required) and interest to give effect to the maximum interest rate then permitted by law. Upon each such partial prepayment of principal, all payments of principal and interest which are thereafter due and payable on this Note will be in such a manner that upon the due payment of all remaining payments of principal and interest in respect hereof there will have been paid to the Holder hereof the entire unpaid principal balance of this Note, together with accrued interest thereon.
SECTION 5. REGISTER; TRANSFER AND EXCHANGE OF NOTES. This Note is issuable only as a fully registered Note. Maker will deem and treat the person in whose name this Note is registered on the Register as the absolute owner hereof (whether or not this Note is overdue) for the purpose of receiving payments of principal, premium and interest and for all other purposes, and Maker will not be affected by any notice to the contrary. In accordance with the provisions of the Indenture, this Note may be transferred only on the Register at the Indenture Trustee's Office, and exchanged for a note or notes of other denominations only of the same Series.
SECTION 6. DEFAULTS; REMEDIES. Upon the occurrence of an Indenture Event of Default, the Indenture Trustee, acting on behalf of Holder and the other holders of Notes as provided in the Indenture, may (but shall not be obligated to in the absence of directions from the Noteholders) exercise any and all of the rights and remedies provided for under any and all of the Operative Agreements or otherwise available at law or in equity. The Operative Agreements provide, among other things, that upon an Indenture Event of Default the Indenture Trustee may, among other things, accelerate the Maturity Date and foreclose on the Collateral and in connection therewith the entire Indebtedness represented by this Note, including, without limitation, the Make Whole Premium, will automatically become due and payable by Maker.
SECTION 7. COLLECTION COSTS. Should any Indebtedness represented by this Note be collected at law or in equity, or in bankruptcy or other proceedings, or should this Note be placed in the hands of attorneys for collection after default, the undersigned agrees to pay, in addition to the principal, Make Whole Premium, if any, and interest due and payable hereon, all costs of
collecting or attempting to collect this Note, including reasonable attorneys' fees and expenses (including those incurred in connection with any appeal), whether or not any dispute as to the validity or enforceability of any provision of the Notes or any of the Operative Agreements results in litigation and whether or not any such litigation is prosecuted to judgment, unless judgment is entered for Maker in any such enforcement or collection effort.
SECTION 8. JOINT AND SEVERAL LIABILITY; WAIVER. Except as limited by the provisions of Section 9, the undersigned and each other person that is or becomes liable (whether voluntarily or by operation of law) for any obligation of Maker under this Note hereby: (a) assumes liability for each obligation of Maker under the Operative Agreements; and (b) waives all homestead and other exemption rights, all valuation and appraisal rights, demand, presentment, notice of nonpayment or dishonor, protest and lack of diligence or delay in enforcement or collection of the Notes or any performance or payment obligation of Maker under the Operative Agreements.
SECTION 9. NONRECOURSE LIABILITY. (a) Notwithstanding any provision in
the Operative Agreements to the contrary, except as provided in clauses (b) and
(c) of this Section), it is expressly understood and agreed that if any suit is
instituted on this Note, any judgment obtained thereby shall be satisfied solely
out of the foreclosure and sale of the Collateral and/or suit on the Guarantee,
the Facility Agency Agreement, the Residual Value Policy and the Construction
Termination Policy. If a lesser sum is realized from such foreclosure, sale
and/or suit, neither Holder nor the Indenture Trustee will institute any action,
suit, claim or demand in law or equity against the other assets of Maker or
against Maker's managers, officers, directors, employees or the Investor, for or
on account of the deficiency or for any other matter with respect to Maker's
obligations hereunder or under any of the other Operative Agreements.
(b) Nothing contained in clause (a) above will in any way affect or impair: (i) the Lien of the Security Documents securing the entirety of all amounts due under the Bonds, this Note and under the Indenture; (ii) the Holder's rights under the Guarantee (including upon acceleration to receive the entirety of all amounts due under this Note and under the Indenture), the Facility Agency Agreement, the Residual Value Policy or the Construction Termination Policy; (iii) Maker's liability for its obligations as landlord under the Lease; (iv) Maker's liability for its obligations under Section 8.2(a), (d), (f), (i) and (1) of the Participation Agreement; or (v) the Holder's and the Indenture Trustee's rights pursuant to the Lease, the Assignment of Leases or any other Operative Agreement to institute actions, suits, claims or demands in law or equity against the Lessee.
(c) Further, the following, (x) in the case of clauses
(iii), (iv), (v), (vii), (ix) or (xi), if liability imposed thereby results from
any action of the Borrower directed by the Investor, and (y) in the case of all
other clauses, as provided therein, are excluded from the provisions of clause
(a), and the Indenture Trustee or Holder, as appropriate, may recover personally
against the other assets of Maker (but not against any assets of any manager,
officer, director or employee of the Borrower or the Investor or their personal
assets) for the following as aforesaid:
(i) all actual losses, damages or liabilities that the Noteholders suffer arising out of any fraud or willful or intentional misrepresentation by Maker in connection with: (A) Maker's performance or fulfillment of any of the conditions to or requirements for any advance of the Indebtedness under the Senior Secured Notes; (B) the execution and delivery by Maker of any of the documents evidencing or securing the Indebtedness under the Senior Secured Notes; (C) the making of any representations or warranties by Maker contained in the Operative Agreements; or (D) Maker's performance of any of its obligations under the Operative Agreements;
(ii) all rents and other revenues, payments or reimbursements of any kind whatsoever (including all payments by the Lessee) derived from the Facility and received by Maker at any time after Maker becomes aware of any Indenture Event of Default (unless waived or cured pursuant to the Indenture) or on deposit on the date Maker becomes so aware in one or more accounts used by Maker or Maker's agents or representatives in connection with the Facility, except to the extent permitted under the Indenture or otherwise properly applied (as documented by evidence reasonably satisfactory to the Required Holders) to the normal and customary expenses and operations of the Facility, in each case pursuant to the Lease and the Security Documents;
(iii) all security or other deposits and advance rents collected by Maker and not properly applied in due course (as documented by evidence reasonably satisfactory to the Required Holders);
(iv) the replacement cost of any items of personalty or any fixtures removed from the Facility by Maker and not replaced, unless obsolete or permitted to be removed by the terms of the Lease, at any time after Maker becomes aware of any Indenture Event of Default (unless waived or cured pursuant to the Indenture);
(v) all actual losses, damages and liabilities that the Noteholders suffer arising from any acts of commission or omission by Maker that result in waste upon the Collateral;
(vi) any Net Proceeds that are misapplied by the Borrower contrary to the terms hereof and of the Lease;
(vii) all actual losses, damages and liabilities that the Noteholders suffer arising from any of Maker's obligations as landlord under the Lease;
(viii) any amendment, modification, waiver or any termination of the Bond Sublease, the Lease, the Residual Value Policy, the Construction Termination Policy or the Facility Agency Agreement without the consent of the Required Holders;
(ix) any act or omission of Maker that vitiates any coverage, or reduces any amount that might otherwise be payable, under (x) any property (hazard) insurance policy required under the Operative Agreements with respect to the Facility, (y) any provision for self-insurance or (z) the Residual Value Policy or the Construction Termination Policy;
(x) any Lien, other than Permitted Liens, resulting from the action or inaction of Maker that is not required to be indemnified by the Lessee;
(xi) any environmental liability of Maker that is not required to be indemnified by the Lessee; and
(xii) the failure of Maker to conduct its business in a manner sufficient to avoid consolidation with any of its Affiliates, except with respect to the filing of consolidated Tax returns in accordance with the Code and except as imposed by law under ERISA.
SECTION 10. SEVERABILITY. If any provision of this Note shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.
SECTION 11. CHOICE OF LAW; PERSONAL JURISDICTION. This Note shall be governed by the laws of the State of New York excluding all choice of law and conflict of laws rules that would apply the law of any other state. Maker hereby consents and will submit to the jurisdiction and venue of New York courts and the United States District Court for the Southern District of New York in connection with any action or proceeding arising out of or relating to the Notes.
SECTION 12. AUTHENTICATION. This Note shall not be valid unless the certificate of authentication hereon shall have been signed by the Indenture Trustee.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Maker has caused this ____% Series B Senior Secured Note due September 1, 2009 to be duly executed and delivered.
MCI O'FALLON 1999 TRUST, a Delaware business trust
By: Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity, but solely as Owner Trustee
By: _______________________________________
Name:
Title:
EXHIBIT B
CERTIFICATE OF AUTHENTICATION
STATE STREET BANK AND TRUST COMPANY OF MISSOURI, N.A.
This is one of the 7.36% Series A Senior Secured Notes due September 1, 2009 issued by MCI O'Fallon 1999 Trust, a Delaware business trust, described in the within-mentioned Indenture.
STATE STREET BANK AND TRUST
COMPANY OF MISSOURI, N.A.
as Indenture Trustee
By: _________________________________
Name:
Title: Authorized Signatory
ANNEX A
DEFINITIONS AND RULES OF USAGE
Annex A
RULES OF USAGE AND DEFINITIONS
Rules of Usage
The following rules of usage shall apply to this Annex A and the Operative Agreements (and each appendix, schedule, exhibit and annex to the foregoing) unless otherwise required by the context or unless otherwise defined therein:
(a) Except as otherwise expressly provided, any definitions defined herein or in any other document shall be equally applicable to the singular and plural forms of the terms defined.
(b) Except as otherwise expressly provided, references in any document to articles, sections, paragraphs, clauses, annexes, appendices, schedules or exhibits are references to articles, sections, paragraphs, clauses, annexes, appendices, schedules or exhibits in or to such document.
(c) The headings, subheadings and table of contents used in any document are solely for convenience of reference and shall not constitute a part of any such document nor shall they affect the meaning, construction or effect of any provision thereof.
(d) References to any Person shall include such Person, its successors and permitted assigns and transferees.
(e) Except as otherwise expressly provided, reference to any agreement means such agreement as amended, modified, extended or supplemented from time to time in accordance with the applicable provisions thereof.
(f) Except as otherwise expressly provided, references to any law includes any amendment or modification to such law and any rules or regulations issued thereunder or any law enacted in substitution or replacement therefor.
(g) When used in any document, words such as "hereunder", "hereto", "hereof" and "herein" and other words of like import shall, unless the context clearly indicates to the contrary, refer to the whole of the applicable document and not to any particular article, section, subsection, paragraph or clause thereof.
(h) References to "including" means including without limiting the generality of any description preceding such term and for purposes hereof the rule of ejusdem generis shall not be applicable to limit a general statement, followed by or referable to an enumeration of specific matters, to matters similar to those specifically mentioned.
(i) Each of the parties to the Operative Agreements and their counsel have reviewed and revised, or requested revisions to, the Operative Agreements, and the usual rule of construction that any ambiguities are to be resolved against the drafting party shall be inapplicable in the construction and interpretation of the Operative Agreements and any amendments or exhibits thereto.
Definitions
"Acceleration Date" shall have the meaning specified in
Section 8.2(b) of the Indenture.
"Affiliate" of any Person shall mean, (a) any Person (other
than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with such Person, or (b) any
Person who is a director or officer (i) of such Person, (ii) of any
Subsidiary of such Person, or (iii) of any Person described in clause
(a) above. For purposes of this definition, control of a Person shall
mean the power, direct or indirect, either to (A) vote 10% or more of
the securities having ordinary voting power for the election of
directors of such Person, or (B) direct or cause the direction of the
management and policies of such Person whether by contract or
otherwise; provided however, that the Trust Company shall not be deemed
to be an Affiliate of the Trust, the Indenture Trustee, the Investor or
the Lessee.
"After Tax Basis" shall mean, with respect to any payment to be received, the amount of such payment increased so that, after deduction of the amount of all Taxes required to be paid by the recipient (less any tax savings realized and the present value of any tax savings projected to be realized by the recipient as a result of the payment of the indemnified amount) with respect to the receipt by the recipient of such amounts, such increased payment (as so reduced) is equal to the payment otherwise required to be made.
"Agency Agreement Event of Default" shall have the meaning specified in Section 5.1 of the Facility Agency Agreement.
"Amendment" with respect to the Indenture, shall have the meaning specified in Section 8.10(f)(i) of the Indenture.
"Appraisal" shall mean, with respect to the Facility, an appraisal, prepared by a reputable independent appraiser reasonably acceptable to the Indenture Trustee, the Required Holders and the Investor, of the Facility as if improved in accordance with the Plans and Specifications for the Facility, which in the judgment of counsel to the Noteholders, as of the Closing Date, complies with all of the provisions of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, the rules and regulations adopted pursuant thereto, and all other applicable Legal Requirements. The appraisal shall state the amount of the Projected Completion Value of the Facility and an estimate of the value thereof at the end of the Term of the Lease.
"Appraisal Procedure" shall have the meaning set forth in
Section 10.6 of the Lease.
"Appurtenant Rights" shall mean (i) all agreements, easements, rights of way or use, rights of ingress or egress, privileges, appurtenances, tenements, hereditaments and other rights and benefits at any time belonging or pertaining to the Land or the Improvements, including, without limitation, the use of any streets, ways, alleys, vaults or strips of land adjoining, abutting, adjacent or contiguous to the Land and (ii) all permits, licenses and rights, whether or not of record, appurtenant to the Land.
"Arranger" shall mean Chase Securities Inc.
"Assignment of Bond Lease" shall mean the Assignment of Bond Lease, Rents and Profits, dated as of August 31, 1999, in the form of Exhibit B-1 to the Participation Agreement, from the Board to the Bond Trustee for the benefit of the Bondholders.
"Assignment of Bond Sublease" shall mean the Assignment of Bond Sublease, Rents and Profits, dated as of August 31, 1999, in the form of Exhibit B-1 to the Participation Agreement, from the Bond Sublessor to the Bond Trustee for the benefit of the Bondholders.
"Assignment of Lease" shall mean the Assignment of Lease, Rents and Profits, dated as of August 31, 1999, in the form of Exhibit B-1 to the Participation Agreement, from the Lessor to the Bond Trustee for the benefit of the Bondholders.
"Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978, as amended.
"Basic Rent" shall mean, the sum of (i) the Series A Basic Rent, (ii) the Series B Basic Rent, if any, and (iii) the Investor Yield, calculated as of the applicable date on which Basic Rent is due.
"Board" shall have the meaning specified in Section 1 of the Participation Agreement.
"Bond Deed of Trust" shall mean the Deed of Trust, dated August 31, 1999, in the form of Exhibit E to the Participation Agreement, made by the Board to the trustee named therein for the benefit of the Bond Trustee.
"Bond Default" shall mean any event or condition which, with the lapse of time or the giving of notice, or both, would constitute a Bond Event of Default.
"Bond Documents" shall mean the Bond Indenture, the Bonds, the Bond Lease, the Bond Sublease, the Memorandum of Bond Lease, the Memorandum of Bond Sublease, the Assignment of Bond Lease, the Assignment of Bond Sublease, the Assignment of Lease, the Bond Deed of Trust, the Leasehold Deeds of Trust, the Bond Trustee Financing Statements and all other documents, instruments and certificates
executed and delivered in connection with any of the foregoing.
"Bond Event of Default" shall mean any event or condition defined as an "Event of Default" in Section 901 of the Bond Indenture.
"Bondholder" shall mean a Person in whose name a Bond is registered in the register of Bonds maintained by the Bond Trustee pursuant to the Bond Indenture.
"Bond Indenture" shall mean the Trust Indenture, dated as of August 31, 1999, from the Board to the Bond Trustee.
"Bond Lease" shall mean the Bond Lease, dated as of August 31, 1999, between the Board and the Bond Sublessor.
"Bonds" shall have the meaning specified in Section 1 of the Participation Agreement.
"Bond Sublease" shall mean the Bond Sublease, dated as of August 31, 1999, between the Bond Sublessor and the Lessor.
"Bond Sublessor" shall mean the O'Fallon Public Facilities Authority, a non-profit corporation organized under the laws of the State of Missouri.
"Bond Trustee" shall mean State Street Bank and Trust Company of Missouri, N.A., a national banking association, as the trustee under the Bond Indenture, or any successor trustee appointed in accordance with the terms of the Bond Indenture.
"Bond Trustee Financing Statements" shall mean UCC financing statements appropriately completed and executed for filing in the appropriate state and county offices in the State of Missouri and each other jurisdiction in which any part of the collateral for the Bonds is located, in order to perfect a security interest in favor of the Bond Trustee, for the benefit of the Bondholders, in the Equipment, the Bond Documents or any other part of the collateral for the Bonds.
"Borrower" shall mean the Lessor, in its capacity of borrower under the Note Documents.
"Budget" shall mean the estimated Facility Costs to be incurred in connection with the development and construction of the Facility, attached as Schedule I to the Facility Agency Agreement, as modified from time to time in accordance with the terms of the Facility Agency Agreement.
"Business Day" shall mean any day other than a Saturday, Sunday or other day on which commercial banks in New York City, Boston, Massachusetts, Wilmington, Delaware or St. Louis, Missouri are authorized or required by law to close.
"Capital Lease" shall mean, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee which, in conformity with GAAP, is, or is required to be, accounted for as a capital lease on the balance sheet of that Person.
"Capitalized Lease Obligations" shall mean all obligations under Capital Leases of any Person, in each case taken at the amount thereof accounted for as liabilities in accordance with GAAP.
"Casualty" shall mean any damage or destruction of all or any portion of the Facility as a result of fire or other casualty.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C.Sections 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986.
"Certificate" shall mean a certificate issued pursuant to the Trust Agreement to evidence an investment in the beneficial ownership of the Trust Estate, and shall include any certificate issued in exchange therefor or replacement thereof.
"Certifying Party" shall have the meaning specified in Section 14.8 of the Lease.
"Claims" shall mean any and all actions, suits, penalties, claims, demands, liabilities, losses, costs and expenses (including reasonable attorney's fees and expenses) of any nature whatsoever.
"Closing" shall have the meaning specified in Section 4(a) of the Series A Note Purchase Agreement.
"Closing Date" shall mean August 31, 1999.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.
"Collateral" shall mean all assets of the Lessor and the respective right, title and interest of the Lessor, the Board and the Bond Sublessor in the Facility, all Appurtenant Rights, all proceeds thereof and all other amounts derived therefrom, whether now owned or hereafter acquired, and all other property upon which at any time a Lien is created or purported to be created by the Security Documents.
"Commonly Controlled Entity" an entity, whether or not incorporated, which is under common control with the Lessee within the meaning of Section 4001 of ERISA or is part of a group which includes the Lessee and which is treated as a single employer under Section 414 of the Code.
"Completion" shall mean, with respect to the Improvements to be constructed on
the Land, together with all infrastructure and appurtenances, which are to form the Facility, as contemplated by the Operative Agreements, the substantial completion of the Facility in accordance with the Plans and Specifications and in compliance with all Facility Requirements and the Facility Agency Agreement, as evidenced by the delivery of certifications to the Indenture Trustee by the Construction Agent, the Lessee and the architects and engineers for the Facility, together with such other documents as the Indenture Trustee may reasonably request.
"Completion Date" shall mean the date on which Completion has occurred.
"Condemnation" shall mean any taking or sale of the use, access, occupancy, easement rights or title to the Facility or any part thereof, wholly or partially (temporarily or permanently), by or on account of any actual eminent domain proceeding or other taking of action by any Person having the power of eminent domain, including an action by a Governmental Authority to change the grade of, or widen the streets adjacent to, the Facility, or alter the pedestrian or vehicular traffic flow to the Facility so as to result in a change in access to the Facility, or by or on account of an eviction by paramount title or any transfer made in lieu of any such proceeding or action, but excluding the creation of US40/61 Interchange and outer road access to the Facility by the Missouri Highway and Transportation Commission ("MHTC") in accordance with the Cooperation Agreement, dated August 31, 1999, by and between the Board and MHTC.
"Confidential Information" shall have the meaning specified in
Section 12.10 of the Series A Note Purchase Agreement.
"Consent to Assignment" shall mean the Lessee's Consent to Assignment, dated as of August 31, 1999, in the form of Exhibit B-1 to the Participation Agreement, from the Lessee to the Bond Trustee.
"Consent to Bond Lease Assignment" shall mean the Lessee's Consent to Bond Lease Assignment, dated as of August 31, 1999, in the form of Exhibit B-1 to the Participation Agreement, from the Bond Sublessor to the Bond Trustee.
"Consent to Bond Sublease Assignment" shall mean the Lessee's Consent to Bond Sublease Assignment, dated as of August 31, 1999, in the form of Exhibit B-1 to the Participation Agreement, from the Lessor to the Bond Trustee.
"Consent to Facility Contracts Assignment" shall mean (a) with respect to the Construction Contract, the Construction Manager's Consent to the Facility Contacts Assignment, dated as of August 31, 1999, from the Construction Manager to the Indenture Trustee, and (b) with respect to any other Facility Contract, consent of the parties thereto, dated as of the date of such Facility Contract, to the Facility Contracts Assignment.
"Consent to Leasehold Deed of Trust" shall mean (a) the Board's Consent to
Leasehold Deed of Trust with respect to the Bond Lease, dated as of August 31, 1999, from the Board to the Bond Trustee, or (b) the Bond Sublessor's Consent to Leasehold Deed of Trust with respect to the Bond Sublease, dated as of August 31, 1999, from the Bond Sublessor to the Bond Trustee, in each case in the form of Exhibit B-2 to the Participation Agreement, or both, as the context requires.
"Consolidated Net Income" shall mean, for any period, the net income or net loss of the Lessee for such period, determined in accordance with GAAP on a consolidated basis, as reflected in the financial statements furnished to the Indenture Trustee in accordance with Sections 9.1 (a) and 9.1 (b) of the Guarantee.
"Consolidated Net Worth" shall mean, with respect to any Person and as of any date of determination, all items which in conformity with GAAP would be included under shareholders' equity on a consolidated balance sheet of such Person at such date.
"Construction Agent" shall mean MasterCard International Incorporated, a non-stock membership corporation organized under the laws of the State of Delaware, as construction agent under the Facility Agency Agreement.
"Construction Commencement Date" shall mean the date on which construction of the Improvements to be built on the Land commences.
"Construction Contract" shall mean the Construction Agreement dated as of August 31, 1999 between the Construction Agent and Paric Corporation, a Missouri corporation, as Construction Manager thereunder.
"Construction Period" shall mean the period commencing on the Closing Date and ending on the earlier to occur of (i) the Completion Date and (ii) the Outside Completion Date.
"Construction Termination Amount" shall mean, as of the date on which the Construction Agent shall pay the Construction Termination Amount to the Indenture Trustee pursuant to Section 8.2(b) of the Facility Agency Agreement, 89.99% of the excess of (x) the Facility Costs over (y) Non-Capitalized Transaction Expenses, in each case, incurred through, and including, such date.
"Construction Termination Policy" shall mean a Construction Termination Policy, dated as of August 31, 1999, in the form of Exhibit F-3 to the Participation Agreement, issued by the Insurer to the Indenture Trustee for the benefit of the Noteholders.
"Contingent Obligations" shall mean, as to any Person, any obligation of such Person guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations ("primary obligations") of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not
include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent Obligation
shall be deemed to be an amount equal to the stated or determinable
amount (based on the maximum reasonably anticipated net liability in
respect thereof as determined by such Person in good faith) of the
primary obligation or portion thereof in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated net liability in respect thereof
(assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
"Contractual Obligation" shall mean, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
"Default" shall mean any event or condition which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default.
"Disbursement Request" shall have the meaning specified in
Section 5(a) of the Escrow Agreement.
"Dollars" and "$" shall mean dollars in lawful currency of the United States of America.
"Employee Benefit Plan" shall mean an employee benefit plan (within the meaning of Section 3(3) of ERISA, including any multiemployer plan (within the meaning of Section 3(37)(A) of ERISA)), or any "plan" as defined in Section 4975(e)(1) of the Code and as interpreted by the Internal Revenue Service and the Department of Labor in rules, regulations, releases or bulletins in effect on the Closing Date.
"Environmental Audit" shall mean a Phase I environmental audit of the Facility and such additional environmental studies or audits recommended by such Phase I, prepared by the Environmental Engineer.
"Environmental Engineer" shall mean Environmental Operations, Inc., a Missouri corporation.
"Environmental Law" shall mean, whenever enacted or promulgated, any federal, state, county or local law, statute, ordinance, code, rule, regulation, license, permit, authorization, approval, covenant, administrative or court order, judgment, decree,
injunction, code or requirement or any agreement with a Governmental Authority applicable to the Facility:
(x) relating to pollution (or the cleanup, removal, remediation or encapsulation thereof, or any other response thereto), or the regulation or protection of human health, safety or the environment, including air, water vapor, surface water, groundwater, drinking water, land (including surface or subsurface), plant, aquatic and animal life, or
(y) concerning exposure to, or the use, containment, storage, recycling, treatment, generation, discharge, emission, Release or threatened Release, transportation, processing, handling, labeling, containment, production, disposal or remediation of any Hazardous Substance, Hazardous Condition or Hazardous Activity,
in each case as amended and as now or hereafter in effect, and any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries (whether personal or property) or damages due to or threatened as a result of the presence of, exposure to, or ingestion of, any Hazardous Substance, whether such common law or equitable doctrine is now or hereafter recognized or developed. Applicable laws include CERCLA; the Resource Conservation and Recovery Act of 1976,42 U.S.C. Section 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Sections 7401 et seq.; the National Environmental Policy Act, 42 U.S.C. Section 4321; the Refuse Act, 33 U.S.C. Sections 401 et seq.; the Hazardous Materials Transportation Act of 1975,49 U.S.C. Section 1801-1812; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Sections 136 et seq.; the Safe Drinking Water Act, 42 U.S.C. Sections 300 f et seq.; and the Occupational Safety and Health Act of 1970, and their state and local counterparts or equivalents.
"Environmental Violation" shall mean any activity, occurrence or condition that violates or results in non-compliance with any Environmental Law or results in a written complaint or other written claim from a Governmental Authority with respect to any applicable Environmental Law.
"Equipment" shall mean equipment, apparatus, furnishings, fittings and personal property of every kind and nature whatsoever purchased, leased or otherwise acquired by using the proceeds of the Notes or the Investor Contribution and now or subsequently attached to, contained in or used or usable in any way in connection with any operation or letting of the Facility, including all screens, awnings, shades, blinds, curtains, draperies, artwork, toilets, carpets, rugs, storm doors and windows, shelving, furniture and furnishings, heating, electrical, and mechanical equipment, lighting, switchboards, plumbing, ventilation, air conditioning and air-cooling apparatus, refrigerating and incinerating equipment, escalators, elevators, loading and unloading equipment and
systems, stoves, ranges, laundry equipment, cleaning systems (including window cleaning apparatus), telephones, communication systems (including satellite dishes and antennae), televisions, computers, sprinkler systems and other fire prevention and extinguishing apparatus and materials, security systems, motors, engines, machinery, pipes, pumps, tanks, conduits, appliances, fittings and fixtures of every kind and description.
"ERISA Affiliate" shall mean, with respect to any Person, each entity required to be aggregated with such Person pursuant to the requirements of Section 414(b) or (c) of the Code.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
"Escrow Account" shall have the meaning specified in Section 2.1 of the Escrow Agreement.
"Escrow Agent" shall mean State Street Bank and Trust Company of Missouri, N.A., a national banking association, in its capacity as Escrow Agent under the Escrow Agreement.
"Escrow Agreement" shall mean the Escrow Agreement, dated as of August 31, 1999, in the form of Exhibit A-1 to the Participation Agreement, among the Escrow Agent, the Indenture Trustee and the Lessor.
"Escrowed Funds" shall have the meaning specified in Section 2.1 of the Escrow Agreement.
"Event of Default" shall mean a Lease Event of Default, an Indenture Event of Default, an Agency Agreement Event of Default, a Bond Event of Default and any default by the Guarantor under the Guarantee.
"Event of Loss" shall mean, with respect to the Facility (a) a Total Loss or (b) a Total Condemnation.
"Excepted Payments" shall mean:
(a) all indemnity payments (including indemnity payments made pursuant to Section 11 of the Participation Agreement) to which any Indemnified Person is entitled;
(b) any amounts (other than Basic Rent, Termination Value, Construction Termination Amount or Maximum Residual Guarantee Amount) payable under any Operative Agreement to reimburse the Trust Company, the Investor, or any of their respective Affiliates (including the reasonable expenses of the Trust Company and the Investor incurred in connection with any such payment) for performing or complying with any of the obligations of the Lessee under and as permitted by any Operative
Agreement;
(c) any amount payable to the Investor by any transferee of the interest of the Investor as the purchase price of the Investor's interest in the Trust Estate (or a portion thereof);
(d) any insurance proceeds (or payments with respect to risks self-insured or policy deductibles) under liability and title policies other than such proceeds or payments payable to the Lessee or the Indenture Trustee;
(e) any insurance proceeds under policies maintained by the Trust Company or the Investor;
(f) Transaction Expenses or other amounts or expenses paid or payable to or for the benefit of the Board, the Bond Sublessor, the Trust Company or the Investor;
(g) all right, title and interest of the Board, the Bond Sublessor, the Investor or the Trust Company to the Facility, any portion thereof or any other property to the extent any of the foregoing has been released pursuant to the Indenture from the Liens of the Security Documents and not otherwise purchased by the Lessee or a third party pursuant to the terms of the Lease;
(h) any payments in respect of interest to the extent attributable to payments referred to in clauses (a) through (g) above; and
(i) any rights of the Investor or the Trust Company to demand, collect, sue for or otherwise receive and enforce payment of any of the foregoing amounts.
"Excepted Rights" shall mean the rights retained by the Borrower pursuant to Section 8.10 of the Indenture.
"Expansion Notes" shall have the meaning specified in the recitals to the Indenture.
"Expiration Date" shall mean the final day of the Term.
"Facility" shall mean the Land as more particularly described on Schedule A to the Participation Agreement, together with all of the Improvements at any time located on or under such Land and all Appurtenant Rights at any time belonging or pertaining to the Land or the Improvements.
"Facility Agency Agreement" shall mean the Facility Agency Agreement, dated as of August 31, 1999, in the form of Exhibit A-3 to the Participation Agreement, between the Construction Agent and the Lessor.
"Facility Beneficiaries" shall have the meaning specified in
Section 1.1 of the Facility Agency Agreement.
"Facility Contracts Assignment" shall mean the Assignment of Facility Contracts, dated as of August 31, 1999, in the form of Exhibit C to the Participation Agreement, from the Construction Agent to the Indenture Trustee for the benefit of the Noteholders.
"Facility Contracts" shall have the meaning specified in
Section 2.2 of the Facility Agency Agreement.
"Facility Costs" shall mean all costs and expenses of any kind or character incurred by the Construction Agent or otherwise expended by the Lessor or on its behalf in connection with the acquisition and development of the Land and the design and construction of the Improvements, including all professional fees, survey and title costs, real estate taxes, insurance premiums and other soft costs incurred in connection therewith, Transaction Expenses and other pre-closing and closing costs (but excluding any upfront fees payable to the Investor) in connection with the transactions contemplated by the Operative Agreements, and capitalized interest on the Senior Secured Notes and on the Bonds and capitalized Investor Yield during the Construction Period, as the same are reflected in the Budget prepared from time to time in accordance with the Facility Agency Agreement; provided that, as of any date of determination, (i) during the Construction Period, Facility Costs will not be less than the aggregate amount of the Escrowed Funds disbursed under the Escrow Agreement on or prior to such date and (ii) during the remainder of the Term, Facility Costs will not be less than the aggregate principal amount of the Bonds then outstanding.
"Facility Requirements" shall have the meaning specified in
Section 1.1 of the Facility Agency Agreement.
"Fair Market Sales Value" shall mean the amount, which in any event shall not be less than zero, that would be paid in cash in an arms-length transaction between an informed and willing purchaser and an informed and willing seller, neither of whom is under any compulsion to purchase or sell, respectively, for the ownership of the Facility. Fair Market Sales Value shall be determined based on the assumption that, except for purposes of Section 10.6 of the Lease, the Facility is in the condition and state of repair required under Section 5.1 of the Lease, that the Lessee is in compliance with the other requirements of the Operative Agreements and that the Facility is not subject to the Lease, the Bond Lease, the Bond Sublease or Lien of the Bond Deed of Trust and the Leasehold Deeds of Trust.
"Federal Reserve Board" shall mean the Board of Governors of the Federal Reserve System of the United States.
"First Offer" shall have the meaning specified in Section 11.1
(a) of the Series A Note Purchase Agreement.
"Fixtures" shall mean all fixtures relating to the Improvements, including all components thereof, located in or on the Improvements, together with all replacements, modifications, alterations and additions thereto.
"Force Majeure Event" shall mean any event beyond the control of the Construction Agent, other than a Total Loss or Total Condemnation, including strikes, lockouts, adverse soil conditions, acts of God, adverse weather conditions, inability to obtain labor or materials, governmental activities, civil commotion and enemy action and delays in obtaining necessary permits and approvals from any Governmental Authority; but excluding any event, cause or condition that results from the Construction Agent's own actions, omissions to act, financial condition or failure to make any payment when due.
"GAAP" shall mean generally accepted accounting principles in the United States of America in effect from time to time.
"Governmental Action" shall mean all permits, authorizations, registrations, consents, approvals, waivers, exceptions, variances, orders, judgments, written interpretations, decrees, licenses, exemptions, publications, filings, notices to and declarations of or with, or required by, any Governmental Authority, or required by any Legal Requirement, and shall include all environmental and operating permits and licenses that are required for the development, construction, zoning and full use, occupancy and operation of the Facility.
"Governmental Authority" shall mean any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee" shall mean the Guarantee, dated as of the August 31, 1999, in the form of Exhibit F-1 to the Participation Agreement, from the Guarantor to the Indenture Trustee for the benefit of the Noteholders.
"Guarantor" shall mean MasterCard International Incorporated, a non-stock membership corporation organized under the laws of the State of Delaware.
"Hazardous Activity" shall mean any activity, process,
procedure or undertaking that directly or indirectly (i) produces,
generates or creates any Hazardous Substance, (ii) causes or results in
the Release of any Hazardous Substance into the environment (including
air, water vapor, surface water, groundwater, drinking water, land
(including surface or subsurface), plant, aquatic and animal life);
(iii) involves the containment or storage of any Hazardous Substance,
or (iv) would be regulated as hazardous waste treatment, storage or
disposal within the meaning of any Environmental Law.
"Hazardous Condition" shall mean any condition that violates or that results in noncompliance with any Environmental Law.
"Hazardous Substance" shall mean any of the following: (i) any petroleum or petroleum product, explosives, radioactive materials, asbestos, formaldehyde, polychlorinated biphenyls, lead and radon gas; or (ii) any substance, material, product, derivative, compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant that would support the assertion of any claim under any Environmental Law, whether or not defined as hazardous as such under any Environmental Law.
"Holder" shall have, with respect to any Note, the meaning specified in the third paragraph of such Note.
"Impositions" shall mean, except to the extent described in
the following sentence, any and all liabilities, losses, expenses and
costs of any kind whatsoever for Taxes (including (i) real and personal
property taxes, including personal property taxes on any property
covered by the Lease that is classified by Governmental Authorities as
personal property, and real estate or ad valorem taxes in the nature of
property taxes; (ii) sales taxes, use taxes and other similar taxes
(including rent taxes and intangibles taxes); (iii) any excise taxes;
(iv) real estate transfer taxes, conveyance taxes, stamp taxes and
documentary recording taxes and fees; (v) taxes that are or are in the
nature of franchise, income, value added, privilege and doing business
taxes, license and registration fees; and (vi) assessments on the
Facility, including all assessments for public improvements or benefits
(whether or not such improvements are commenced or completed within the
Term), and in each case all interest, additions to tax and penalties
thereon, which at any time prior to, during or with respect to the Term
or in respect of any period for which the Lessee shall be obligated to
pay Supplemental Rent, may be levied, assessed or imposed by any
federal, state, city, county or local authority upon or with respect to
(a) the Facility or any part thereof or interest therein; (b) the
financing, refinancing, demolition, construction, renovation,
substitution, subleasing, assignment, control, condition, occupancy,
servicing, maintenance, repair, ownership, possession, activity
conducted on, delivery, insuring, use, operation, improvement, transfer
of title, return or other disposition of the Facility or any part
thereof or interest therein; (c) the Notes, the Certificates or other
Indebtedness with respect to the Facility or any part thereof or
interest therein; (d) the rentals, receipts or earnings arising from
the Facility or any part thereof or interest therein during the Term;
(e) the Operative Agreements or any payment made or accrued pursuant
thereto; (f) the income or other proceeds received with respect to the
Facility or any part thereof or interest therein upon the sale or
disposition thereof; (g) the issuance of the Notes or the Certificates;
or (h) otherwise in connection with the transactions contemplated by
the Operative Agreements.
The term "Imposition" shall not mean or include:
(i) Taxes and impositions (other than Taxes that are, or are in the nature of, sales, use, rental (other than Taxes imposed on net rental income), value added, transfer or property taxes) that are imposed on a Tax Indemnitee by the United States federal government that are based on or measured by the gross or net income (including taxes based on capital gains and minimum taxes and withholding on payments of interest
income) or any replacement of net income tax of such Person; provided that this clause (i) shall not be interpreted to prevent a payment from being made on an After Tax Basis if such payment is otherwise required to be so made;
(ii) Taxes and impositions (other than Taxes that are, or are in the nature of, sales, use, rental, value added, transfer or property taxes) that are imposed by any state or local jurisdiction or taxing authority within any state or local jurisdiction and that are based upon or measured by the gross or net income or gross or net receipts from rental (including any minimum taxes, withholding taxes or taxes on or measured by capital, net worth, excess profits or items of tax preference or taxes that are capital stock, franchise or doing business taxes); provided that this clause (ii) shall not be interpreted to prevent a payment from being made on an After Tax Basis if such payment is otherwise required to be so made;
(iii) any Tax or imposition to the extent, but only to such extent, it relates to any act, event or omission that occurs after the termination of the Lease (but not any Tax or imposition that relates to any period prior to the termination of the Lease);
(iv) any Tax or imposition for so long as, but only for so long as, it is being contested in accordance with the provisions of the Participation Agreement;
(v) any interest or penalties imposed on a Tax Indemnitee
as a result of the failure of such Tax Indemnitee to file any return or
report timely and in the form prescribed by law or to pay any Tax or
imposition required to be indemnified by the Lessee under Section 11.2
of the Participation Agreement; provided that this clause (v) shall not
apply (x) if such interest or penalties arise as a result of a position
taken (or requested to be taken) by the Lessee in a contest controlled
by the Lessee under Section 11.2(f) of the Participation Agreement or
(y) to any such interest or penalties that result from such Tax
Indemnitee's complying with the reporting procedures set forth in
Section 11.2(d) of the Participation Agreement;
(vi) any Taxes or impositions imposed on a Tax Indemnitee that are a result of such Indemnified Person not being considered a "United States person" as defined in Section 7701(a) (30) of the Code;
(vii) any Taxes or impositions that are enacted or adopted as a substitute for any Tax that would not have been indemnified against pursuant to the terms of Section 11.1 of the Participation Agreement;
(viii) any Taxes which are imposed on a Tax Indemnitee as a result of a breach of a covenant or representation by such Tax Indemnitee in any Operative Agreement (unless caused by the Lessee's breach of its representations, warranties and covenants) or is a result of the gross negligence or willful misconduct of such Tax Indemnitee itself (as opposed to gross negligence or willful misconduct imputed to such Tax Indemnitee), but
not Taxes imposed as a result of ordinary negligence of such Tax Indemnitee;
(ix) any Taxes or impositions to the extent that such Taxes are actually reimbursed to the Lessor by another Person other than an Affiliate of the Lessor;
(x) any Taxes or impositions imposed upon the Lessor with
respect to any voluntary transfer, sale, financing or other voluntary
disposition by the Lessor (other than a transfer contemplated and
permitted by the Operative Agreements, including any transfer in
connection with (1) the exercise by the Lessee of its Purchase Option,
(2) the occurrence of a Lease Event of Default or an Indenture Event of
Default (to the extent not arising from an Independent Event of
Default), or (3) a Casualty or Condemnation affecting the Facility) of
any interest in the Facility or any interest in, or created pursuant
to, the Operative Agreements or any voluntary transfer of any interest
in the Lessor (other than in connection with the existence of a Lease
Event of Default or an Indenture Event of Default (to the extent not
arising from an Independent Event of Default)) or any involuntary
transfer of any of the foregoing interests resulting from the
bankruptcy or insolvency of the Lessor (other than in connection with
the existence of a Lease Event of Default or an Indenture Event of
Default not arising from an Independent Event of Default);
(xi) any gift, inheritance, franchise or estate Taxes;
(xii) any Taxes or impositions imposed on a Tax Indemnitee, to the extent such Tax Indemnitee actually receives a credit (or otherwise has a reduction in a liability for Taxes) in respect thereof against Taxes that are not indemnified under the Operative Agreements (but only to the extent such credit is not taken into account in calculating the indemnity payment on an After Tax Basis);
(xiii) any Tax or imposition to the extent that such Tax or imposition is imposed on a Tax Indemnitee in respect of a transaction or business in the jurisdiction imposing such Tax other than the transactions arising out of the Operative Agreements; or
(xiv) any Tax or imposition imposed on a direct or indirect transferee, successor or assign of a Tax Indemnitee to the extent of the excess of such Taxes over the amount of such Taxes that would have been imposed had there not been a transfer by the original Tax Indemnitee of an interest arising under the Operative Agreements; provided that there shall not be excluded under this clause (xiv) any such Tax or imposition if such direct or indirect transferee, successor or assign of the Tax Indemnitee acquired its interest as a result of a transfer in connection with a Lease Event of Default or an Indenture Event of Default (to the extent not arising from an Independent Event of Default); provided, further, that there shall not be excluded under this clause (xiv) any amount necessary to make any payment on an After Tax Basis; or
(xv) any Tax or imposition imposed as a result of any fees paid to the Trust
Company, the Lessor, the Indenture Trustee, the Noteholders or the Investor in connection with the transactions contemplated by the Operative Agreements.
Any Tax or imposition excluded from the defined term "Imposition" in any one of the foregoing clauses (i) through (xv) shall not be construed as constituting an Imposition by any provision of any other of the aforementioned clauses.
"Impositions Indemnitee" shall mean each Person entitled to the indemnification under Section 11.2 of the Participation Agreement.
"Improvements" shall mean a 414,000 square foot office space, an approximately 114,000 square foot data and energy center providing and utilizing reliable, redundant energy and communications sources and parking for approximately 1,751 cars and all other buildings, structures, Fixtures, Equipment, Modifications and other improvements of every kind existing at any time and from time to time on or under the Land, together with any and all appurtenances to such buildings, structures or improvements, including sidewalks, utility pipes, conduits and lines, parking areas and roadways, and including all additions to or changes in the Improvements at any time.
"Indebtedness" of any Person shall mean, at any particular date and without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than current trade payables or liabilities and deferred payment for services to employees or former employees incurred in the ordinary course of business and payable in accordance with customary practices), (b) the face amount of all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder, (c) all liabilities secured by any Lien on any property owned by such Person, to the extent attributable to such Person's interest in such property, even though such Person has not assumed or become liable for the payment thereof, (d) Capitalized Lease Obligations of such Person, (e) all indebtedness of such Person arising under acceptance facilities and (f) all Contingent Obligations of such Person; but excluding (y) customer deposits and interest payable thereon in the ordinary course of business and (z) trade and other accounts and accrued expenses payable in the ordinary course of business in accordance with customary trade terms and in the case of both clauses (y) and (z) above, which are not overdue for a period of more than 120 days or, if overdue for more than 120 days, as to which a good faith dispute exists and adequate reserves in conformity with GAAP have been established on the books of such Person.
"Indebtedness under the Notes" or "Indebtedness under the Senior Secured Notes" shall mean principal of and interest and any applicable Make Whole Premium on the Senior Secured Notes and all other amounts owing to the Indenture Trustee, the Escrow Agent and the Noteholders under the Senior Secured Notes and the other Operative Agreements.
"Indemnified Person" shall mean the Trust Company, the Indenture Trustee, the Escrow Agent, the Lessor, the Noteholders, the Board, the Bond Sublessor, the Bond Trustee and their respective successors, assigns, directors, shareholders, partners, officers, employees, agents and Affiliates.
"Indenture Default" shall mean any event or condition which, with the lapse of time or the giving of notice, or both, would constitute an Indenture Event of Default.
"Indenture Event of Default" shall mean any event or condition defined as an "Event of Default" in Section 8.1 of the Indenture.
"Indenture Payment Default" shall mean, with respect to the Indenture, a default in the payment of Rent, or other amounts payable by the Lessee to the Indenture Trustee, the Borrower, any third party on behalf of the Borrower or to any indemnitee under the Lease.
"Indenture Trustee's Liens" means, with respect to the Indenture, such Liens against the Collateral that result from (i) acts of, or any failure to act by, or as a result of claims against, the Indenture Trustee, unrelated to the transactions contemplated by the Operative Agreements or (ii) acts of the Indenture Trustee in direct violation of the express terms of the Operative Agreements.
"Indenture Trustee's Office" shall mean, the office of Indenture Trustee designated from time to time by the Indenture Trustee to the parties.
"Indenture Trustee" shall mean State Street Bank and Trust Company of Missouri, N.A., a national banking association, as the Indenture Trustee for the Noteholders under the Indenture, or any successor indenture trustee appointed in accordance with the terms of the Indenture.
"Indenture Trustee Financing Statements" shall mean UCC financing statements appropriately completed and executed for filing in the appropriate state and county offices in the State of Missouri and each other jurisdiction in which the Lessor is located or transacts business or any part of the Collateral is located, in order to perfect a security interest in favor of the Indenture Trustee, for benefit of the Noteholders, in the Equipment, the Bond Documents or any other part of the Collateral.
"Indenture" shall mean the Indenture, dated August 31, 1999, from the Borrower to the Indenture Trustee for the benefit of the Noteholders.
"Independent Default" shall mean, with respect to the Indenture, an Indenture Default not caused by or attributable to (a) a Lease Default (except for any such default caused by or attributable to the Borrower), (b) an Agency Agreement Default, (c) any default under the Guarantee, (d) any default described in Section 8.1(k) of the Indenture caused by the Lessee's vitiation of any coverage, or reduction of any amount that might otherwise be payable, under the Residual Value Policy or the Construction Termination
Policy and (e) any event of default under the Escrow Agreement (except for any such default caused by or attributable to the Borrower).
"Independent Event of Default" shall mean, with respect to the Indenture, an Indenture Event of Default not caused by or attributable to (a) a Lease Event of Default (except for any such default caused by or attributable to the Borrower), (b) an Agency Agreement Event of Default, (c) any default under the Guarantee, (d) any default described in Section 8.1(k) of the Indenture caused by the Lessee's vitiation of any coverage, or reduction of any amount that might otherwise be payable, under the Residual Value Policy or the Construction Termination Policy and (e) any event of default under the Escrow Agreement (except for any such default caused by or attributable to the Borrower).
"Insolvency" shall mean, with respect to a Multiemployer Plan, the condition that such Plan is insolvent within the meaning of such term as used in Section 4245 of ERISA.
"Institutional Investor" means (a) any Purchaser, (b) any holder of a Senior Secured Note holding more than five percent (5%) of the aggregate principal amount of the Notes then Outstanding, and (c) any bank, trust company, savings and loan association or other financial institution (or affiliate thereof), any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution regardless of legal form.
"Insurance Requirements" shall mean all terms and conditions of any insurance policy required by the Indenture to be maintained by the Lessor, by the Facility Agency Agreement to be maintained by the Construction Agent or by the Lease, the Bond Lease or the Bond Sublease to be maintained by the Lessee and, in each case, all requirements of the issuer of any such policy.
"Insurer" shall mean RVI America Insurance Company, a Connecticut insurance company.
"Interest Rate" shall have, with respect to any Senior Secured Note, the meaning specified in the first paragraph of such Senior Secured Note.
"Investment Company Act" shall mean the Investment Company Act of 1940, as amended, together with the rules and regulations promulgated thereunder.
"Investor Contribution" shall have the meaning specified in
Section 2 of the Participation Agreement.
"Investor Premium" shall mean, with respect to the Investor Contribution as at any date, (a) an amount equal to the present value of the remaining scheduled payments of capital and Investor Yield on the Investor Contribution assuming that the entire remaining outstanding capital amount of the Investor Contribution will be paid on the
Maturity Date at par and using a discount factor equal to the Treasury Rate plus 0.50%, less (b) the capital amount of the Investor Contribution outstanding as at the day of determination; provided, however, that in no case shall the Investor Premium be less than zero. For purposes of this definition, the "Treasury Rate" shall mean a rate equal to the then current yield to maturity on the most actively traded U.S. Treasury security having a maturity equal to the remaining average life of the Investor Contribution (as if the payments of Investor Yield and the capital of the Investor Contribution scheduled in respect thereof were payments of interest and principal). In the event there are not actively traded U.S. Treasury securities with a maturity equal to such remaining average life, then the yield to maturity shall be determined by linear interpolation using the closest, but shorter, maturity for actively traded U.S. Treasury securities and the closest, but longer, maturity for actively traded U.S. Treasury maturities.
"Investor Yield" shall mean a return on the unreturned balance of the Investor Contribution, accruing at the rate of 8.57% per annum and calculated on the basis of a 360-day year of twelve 30-day months.
"Investor" shall mean BMO Global Capital Solutions, Inc., a Delaware corporation.
"Land" shall mean the parcel of real property located in the City of O'Fallon, Missouri described in Schedule A to the Participation Agreement and all Appurtenant Rights attached thereto.
"Lease" shall mean the Lease, dated as of August 31, 1999, in the form of Exhibit A-4 to the Participation Agreement, between the Lessor and the Lessee.
"Lease Default" shall mean any event or condition which, with the lapse of time or the giving of notice, or both, would constitute a Lease Event of Default.
"Lease Event of Default" shall mean an event or condition defined as an "Event of Default" in Section 11.1 of the Lease.
"Lease Payment Date" shall have, with respect to the Lease, the meaning specified in Section 8.10(a) of the Indenture.
"Leasehold Deed of Trust" shall mean (a) the Leasehold Deed of Trust, dated as of August 31, 1999, made by the Bond Sublessor to the Bond Trustee for the benefit of the Bondholders with respect to the Bond Lease or (b) the Leasehold Deed of Trust, dated as of August 31, 1999, made by the Lessor to the Bond Trustee for the benefit of the Bondholders with respect to the Bond Sublease, in each case in the form of Exhibit B-2 to the Participation Agreement, or both, as the context requires.
"Legal Requirements" shall mean (a) all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Facility or any other part of the Collateral (including
The Missouri Development Finance Board Act, Sections 100.250 to 100.297, inclusive, of the Revised Statutes of Missouri, as amended) or the demolition, construction, renovation, use or alteration thereof, whether now or hereafter enacted and in force, including any that require repairs, modifications or alterations in or to the Facility or in any way limit the use and enjoyment thereof (including all building, zoning and fire codes and the Americans with Disabilities Act of 1990,42 U.S.C. Section 12101 et seq. and any other similar federal, state or local laws or ordinances and the regulations promulgated thereunder) and any that may relate to environmental requirements (including all Environmental Laws), and all permits, certificates of occupancy, licenses, authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments which are either of record or known to the Lessee affecting the Facility, the Appurtenant Rights and any easements, licenses or other agreements entered into pursuant to Section 9.4 of the Lease and (b) as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
"Lessee" shall mean MasterCard International Incorporated, a non-stock membership corporation organized under the laws of the State of Delaware, as lessee under the Lease.
"Lessee Leasehold Deed of Trust" shall mean the Leasehold Deed of Trust, dated as of August 31, 1999, in the form of Exhibit B-3 to the Participation Agreement, made by the Lessee to the Lessor.
"Lessor" shall mean the Trust.
"Lessor Deed of Trust" shall mean the Lessor Deed of Trust, dated as of August 31, 1999, in the form of Exhibit B-4 to the Participation Agreement, from the Lessor to the Indenture Trustee for the benefit of the Noteholders.
"Lessor Financing Statements" shall mean UCC financing statements appropriately completed and executed for filing in the appropriate state and county offices in the State of Missouri in order to protect the Lessor's interest under the Lease to the extent the Lease is a security agreement and under the Lessee Leasehold Deed of Trust.
"Lessor Lien" shall mean any Lien, true lease or sublease or disposition of title arising as a result of (a) any claim against the Lessor or the Trust Company, not resulting from the transactions contemplated by the Operative Agreements, (b) any act or omission of the Lessor or the Trust Company, which is not required by the Operative Agreements or is in violation of any of the terms of the Operative Agreements, (c) any claim against the Lessor or the Trust Company, with respect to Taxes or Transaction Expenses against which the Lessee is not required to indemnify the Lessor or the Trust Company pursuant
to the Participation Agreement or (d) any claim against the Lessor arising out of any transfer by the Lessor of all or any portion of the interest of the Lessor in the Facility, the Trust Estate or the Operative Agreements other than the transfer of title to or possession of the Facility by the Lessor pursuant to and in accordance with the Lease, the Indenture or the Participation Agreement or pursuant to the exercise of the remedies set forth in Article 11.3 of the Lease.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party (excluding rights of first refusal) with respect to such securities.
"Make Whole Premium" shall mean, with respect to any Senior Secured Note as at any date, (a) an amount equal to the present value of the remaining scheduled payments of principal and interest on such Senior Secured Note assuming that the entire remaining outstanding principal amount of such Senior Secured Note will be paid on the Maturity Date at par and using a discount factor equal to the Treasury Rate plus 0.50%, less (b) the principal amount of such Senior Secured Note outstanding as at the day of determination; provided, however, that in no case shall the Make Whole Premium be less than zero. For purposes of this definition, the "Treasury Rate" shall mean a rate equal to the then current yield to maturity on the most actively traded U.S. Treasury security having a maturity equal to the remaining average life of the subject note. In the event there are not actively traded U.S. Treasury securities with a maturity equal to the remaining average life of the subject note, then the yield to maturity shall be determined by linear interpolation using the closest, but shorter, maturity for actively traded U.S. Treasury securities and the closest, but longer, maturity for actively traded U.S. Treasury maturities.
"Maker" shall have, with respect to any Senior Secured Note, the meaning specified in the first paragraph of such Senior Secured Note.
"Marketing Period" shall mean, if the Lessee has not given the Maturity Date Election Notice in accordance with Section 10.2 of the Lease, the period commencing on the date twelve months prior to the Maturity Date and ending on the Maturity Date.
"Material Adverse Effect" shall (a) a material adverse effect on the business (including prospects), assets, operations, properties or condition (financial or otherwise) of the Lessee, (b) a material impairment of the ability of the Lessee, the Guarantor, the Construction Agent and the Insurer to perform their respective obligations under any of the Operative Agreements, or (c) a material impairment of the rights of or benefits available to the Bondholders or the Noteholders under any of the Operative Agreements, including with respect to the value or use of any material part of the Collateral or the priority or enforceability of any Lien under the Security Documents.
"Maturity Date Election Notice" shall have the meaning specified in Section 10.2 of the Lease.
"Maturity Date Purchase Option" shall mean the Lessee's Purchase Option to purchase the Facility on the Maturity Date in accordance with Section 10.2 of the Lease.
"Maturity Date" shall mean September 1, 2009.
"Maximum Residual Guarantee Amount" shall mean, with respect to the Senior Secured Notes, 85.15% of the Facility Costs.
"Memorandum of Bond Lease" shall have the meaning specified in
Section 15.13 of the Bond Lease.
"Memorandum of Bond Sublease" shall have the meaning specified in Section 15.12 of the Bond Sublease.
"Memorandum of Lease" shall have the meaning specified in
Section 14.9 of the Lease.
"Modifications" shall have the meaning specified in Section 7.1 of the Lease.
"Moody's" means Moody's Investors Service, Inc., or if such company shall cease to issue ratings, another nationally recognized statistical rating company selected in good faith by the agreement of the Indenture Trustee and the Guarantor.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"NAIC" shall have the meaning specified in Section 7.2(a) of the Series A Note Purchase Agreement.
"Net Proceeds" means, when used with respect to any insurance or condemnation award with respect to the Facility, the gross proceeds from the insurance or condemnation award with respect to which that term is used remaining after payment of all expenses (including attorneys' fees, trustee's fees and any extraordinary expenses of the Lessor and the Indenture Trustee) incurred in the collection of such gross proceeds.
"Net Sale Proceeds Shortfall" shall mean the amount by which the proceeds of a sale of the Facility described in Section 10.4 of the Lease (net of all expenses of sale) are less than the Non-Guaranteed Residual Amount for the Facility.
"Non-Capitalized Transaction Expenses" shall mean Transaction Expenses that may not be capitalized in accordance with GAAP; provided that Non-Capitalized Transaction Expenses shall not at any time exceed $6,000,000 in the aggregate.
"Non-Guaranteed Residual Amount" shall mean, with respect to the Senior Secured Notes, an amount equal to the Facility Costs determined as of a date on which the Construction Termination Amount or the Maximum Residual Guarantee Amount, as the case may be, is payable less, as the case may be, (a) upon the date, if any, on which the Construction Termination Amount is payable, the Construction Termination Amount or (b) upon the date, if any, on which the Maximum Residual Guarantee Amount is payable, the Maximum Residual Guarantee Amount.
"Note Documents" shall mean the Indenture, the Note Purchase Agreements, the Notes, the Guarantee, the Facility Agency Agreement, the Residual Value Policy, the Construction Termination Policy, the Lease and the Security Documents and all documents, instruments and certificates executed and delivered in connection therewith.
"Note Purchase Agreements" shall have the meaning specified in
Section 1 of the Participation Agreement.
"Noteholder" shall mean, with respect to any Senior Secured Note, at any given time, a Person in whose name such Senior Secured Note is then registered in the Register.
"Notes" shall have the meaning specified in Section 1 of the Participation Agreement.
"Notices" shall have the meaning specified in Section 11.5 of the Indenture.
"Offered Notes" shall mean (i) any Series B Notes proposed to be issued in accordance with Section 1 of the Participation Agreement and offered for purchase by the Noteholders pursuant to Article 11 of the Series A Note Purchase Agreement and (ii) any Series of Expansion Notes proposed to be issued pursuant to Section 2.1 (d) of the Indenture and offered for purchase by the Noteholders pursuant to Article 11 of the Series A Note Purchase Agreement (and any comparable provision of the Series B Note Purchase Agreement or any note purchase agreement with respect to any Series of the Expansion Notes then Outstanding).
"Offeree" shall have the meaning specified in Section 11.l(a) of the Series A Note Purchase Agreement.
"Officer's Certificate" shall mean a certificate signed by any individual holding the office of vice president or higher, which certificate shall certify as true and correct the subject matter being certified to in such certificate.
"Operative Agreements" shall mean the following:
(a) the Participation Agreement;
(b) the Senior Secured Notes;
(c) the Bond Deed of Trust;
(d) the Bond Lease and the Memorandum of Bond Lease;
(e) the Bond Sublease and the Memorandum of Bond Sublease
(f) the Lease and the Memorandum of Lease;
(g) the Assignment of Bond Lease;
(h) the Assignment of Bond Sublease;
(i) the Assignment of Lease;
(j) the Consent to Bond Lease Assignment;
(k) the Consent to Bond Sublease Assignment;
(1) the Consent to Assignment;
(m) the Leasehold Deeds of Trust;
(n) the Consents to Leasehold Deeds of Trust;
(o) the Lessor Deed of Trust;
(p) the Lessee Leasehold Deed of Trust;
(q) the Pledge Agreement;
(r) the UCC Financing Statements;
(s) the Indenture;
(t) the Note Purchase Agreements;
(u) the Bond Indenture;
(v) the Bonds;
(w) the Facility Contracts Assignment;
(x) the Facility Agency Agreement;
(y) the Consents to Facility Contracts Assignment;
(z) the Guarantee;
(aa) the Residual Value Policy;
(bb) the Construction Termination Policy;
(cc) the Escrow Agreement;
(dd) the Trust Agreement;
(ee) the Certificates;
and all documents, instruments and certificates executed in connection with each of the foregoing.
"Original Notes" shall have the meaning specified in the recitals to the Indenture.
"Outside Completion Date" with respect to the Facility shall mean the date which is thirty (30) months after the Closing Date, as such date may be extended by up to a total of six (6) months because of a delay in the Completion Date caused by one or more Force Majeure Events, in each case of which the Lessor and the Construction Agent shall have promptly given the Indenture Trustee notice, describing in reasonable detail each such Force Majeure Event and the actions being taken to mitigate its effects.
"Outstanding" means, with respect to any Senior Secured Notes, as of any particular time, all Senior Secured Notes theretofore issued pursuant the applicable Note Purchase Agreement, except (i) Senior Secured Notes theretofore canceled by the Indenture Trustee or surrendered to the Indenture Trustee for cancellation, (ii) Senior Secured Notes theretofore paid in full or Senior Secured Notes required to be prepaid in
full within thirty (30) days thereafter; provided that, in the case of Senior Secured Notes so to be prepaid, cash sufficient for such prepayment thereof shall theretofore have been deposited with, or shall then be held by, the Indenture Trustee in accordance with the provisions of the applicable Note Purchase Agreement, (iii) Senior Secured Notes in exchange or substitution for which other Senior Secured Notes shall theretofore have been issued pursuant to the applicable Note Purchase Agreement, and (iv) for the purposes of determining whether the Noteholders of the requisite principal amount of Senior Secured Notes have given any consent, waiver, direction authorization or notice, Senior Secured Notes registered in the name of or held by the Borrower, the Lessee or any nominee or Affiliate of any thereof and, with respect to the Borrower and the Lessee, any successor in interest to their respective interests in the Facility, unless in the case of this clause (iv) no other Senior Secured Notes are outstanding under the Note Purchase Agreement.
"Overdue Interest" shall have the meaning specified in Section 8.2(a) of the Indenture.
"Overdue Rate," shall mean, (a) with respect to the Series A Basic Rent, Series B Basic Rent, Supplemental Rent and any other amount owed under or with respect to the Series A Notes, the Series B Notes, the Indenture, the Lease (other than with respect to the Investor Yield and the Investor Contribution) or the Security Documents, the rate set forth in the first paragraph of the Series A Notes or Series B Notes, as applicable, and (b) with respect to the Investor Yield and the Investor Contribution, 2% in excess of the Investor Yield.
"Participation Agreement" shall mean the Participation Agreement, dated as of August 31, 1999, among the Lessee, the Lessor, the Trust Company, the Investor, the Indenture Trustee and the Purchasers.
"Payment Date" shall mean (a) each day on which a scheduled payment of interest on the Senior Secured Notes or the Investor Yield on the Certificates is due pursuant thereto or, if all amounts due under the Indenture have been paid in full and the Indenture has been terminated, each day on which a scheduled payment of Basic Rent is due pursuant to the Lease and (b) during the Construction Period, each day on which interest on the Notes or the Investor Yield is disbursed pursuant to Section 5(b) of the Escrow Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA.
"Permitted Exceptions" shall mean: (i) Liens of the types described in clauses (i), (v) and (viii) of the definition of Permitted Liens; (ii) Liens for Taxes not yet due; and (iii) all non-monetary encumbrances, exceptions, restrictions, easements, rights of way, servitudes, encroachments and irregularities in title, other than Liens that (in the assessment of the Purchasers) materially impair, or could be reasonably expected to so
impair, the use or operation of the Facility for its intended purpose.
"Permitted Insurers" shall have the meaning specified in
Section 6.1 of the Facility Agency Agreement.
"Permitted Investments" shall mean (a) with respect to
Escrowed Funds, any "Permitted Investment" under Section 2.2 of the
Escrow Agreement and (b) with respect to any other funds, (i)
obligations of the United States of America, or fully guaranteed as to
interest and principal by the United States of America, maturing not
more than six months from the date such investment is made, (ii)
certificates of deposit having a final maturity of not more than thirty
(30) days after the date of issuance thereof of any commercial bank
incorporated under the laws of the United States of America or any
state thereof or the District of Columbia, which bank (a "Qualifying
Bank") is a member of the Federal Reserve System and has a combined
capital and surplus of not less than $500,000,000 and with a senior
unsecured debt credit rating of at least A or its equivalent by S&P or
Moody's, (iii) commercial paper, rated A-l or its equivalent (or
better) by S&P or Moody's, and having a remaining term until maturity
of not more than ninety (90) days from the date such investment is made
and (iv) investments in shares of a money market fund or investment
fund the assets of which consist only of the types of investments
described in (i) above and repurchase agreements in respect thereof and
which fund is rated AAA or its equivalent by S&P or Moody's.
"Permitted Liens" shall mean: (i) the respective rights and interests of the parties to the Operative Agreements as provided in the Operative Agreements; (ii) the rights of any sublessee or assignee under a sublease or an assignment expressly permitted by the terms of the Lease; (iii) Liens for Taxes that either are not yet due or are being contested in accordance with the provisions of Section 11.2 of the Participation Agreement; (iv) Liens arising by operation of law, materialmen's, mechanics', workmen's, repairmen's, employees', carriers', warehousemen's and other like Liens relating to the construction of the Improvements or in connection with any Modifications or arising in the ordinary course of business for amounts that either are not more than 30 days past due or are being diligently contested in good faith by appropriate proceedings, so long as such proceedings shall not involve any material danger of the sale, forfeiture or loss, and shall not interfere with the use, of the Facility or the payment of Rent; (v) Liens of any of the types referred to in clause (iv) above that have been bonded for not less than the full amount in dispute (or as to which other security arrangements satisfactory to the Lessor have been made), which bonding (or arrangements) shall comply with applicable Legal Requirements, and shall have effectively stayed any execution or enforcement of such Liens; (vi) Liens arising out of judgments or awards with respect to which appeals or other proceedings for review are being prosecuted in good faith and for the payment of which adequate reserves have been provided as required by GAAP or other appropriate provisions have been made, so long as such proceedings have the effect of staying the execution of such judgments or awards and satisfy the conditions for the continuation of proceedings to contest Taxes set forth in Section 11.2 of the Participation Agreement; (vii) Permitted Exceptions; (viii) easements, rights of way and other encumbrances on
title to real property pursuant to Section 9.4 of the Lease; and (ix) the Tax Forbearance Agreement.
"Person" shall mean an individual, partnership, corporation, limited liability company, business trust, joint stock company, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
"Plan" shall mean an Employee Benefit Plan.
"Plans and Specifications" shall mean the plans and specifications for the Improvements to be constructed on the Land to form the Facility, as such Plans and Specifications may be amended, modified or supplemented from time to time in accordance with the terms of the Operative Agreements.
"Pledge Agreement" shall mean the Pledge and Security Agreement, dated as of August 31, 1999, in the form of Exhibit D to the Participation Agreement, from the Lessor to the Indenture Trustee for the benefit of the Noteholders.
"Projected Completion Value" shall mean the estimated value of the Facility assuming the Improvements are completed in accordance with the Plans and Specifications and the Facility Requirements, as established by an Appraisal.
"Proportionate Share," with respect to any Noteholder that is an Offeree of any Offered Notes, shall mean that principal amount of Offered Notes that bears the same relationship to the aggregate principal amount of such Offered Notes as the principal amount of the Outstanding Senior Secured Notes (to which the right of first offer set forth in Article 11 of the Series A Note Purchase Agreement (or any comparable provision of the Series B Note Purchase Agreement or any note purchase agreement with respect to any Series of the Expansion Notes then Outstanding) applies) held by such Noteholder bears to the aggregate principal amount of all Outstanding Senior Secured Notes (to which the right of first offer set forth in Article 11 of the Series A Note Purchase Agreement (or any comparable provision of the Series B Note Purchase Agreement or any note purchase agreement with respect to any Series of the Expansion Notes then Outstanding) applies) held by all Offerees.
"Purchase Notice" shall have the meaning specified in Section 10.1 of the Lease.
"Purchase Option" shall have the meaning specified in Section 10.1 of the Lease.
"Purchase Option Price" shall have the meaning specified in
Section 10.1 of the Lease.
"Purchasers" shall have the meaning specified in the preamble to the Participation Agreement.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
(issued March 13, 1984 and amended October 10, 1985).
"Qualifying Bank" shall have the meaning specified in the definition of "Permitted Investments".
"Register" shall have the meaning specified in Section 2.3 of the Indenture.
"Release" shall mean any release, pumping, pouring, emptying, injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or emission of a Hazardous Substance.
"Rent" shall mean, collectively, the Basic Rent and the Supplemental Rent, in each case payable under the Lease.
"Reorganization" shall mean with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event" shall mean any of the events specified in
Section 4043(b) of ERISA or the regulations thereunder.
"Requesting Party" shall have the meaning specified in Section 14.8 of the Lease.
"Required Holders" shall mean the holders of more than 50% in principal amount of the Senior Secured Notes at the time Outstanding.
"Residual Value Policy" shall mean the Residual Value Insurance Policy, dated as of August 31, 1999, in the form of Exhibit F-2 to the Participation Agreement, issued by the Insurer to the Indenture Trustee for the benefit of the Noteholders.
"Responsible Officer" shall mean (a) with respect to the Lessee, the chief executive officer or the chief operating officer of the Lessee or, with respect to financial matters, the chief financial officer or controller of the Lessee, (b) with respect to Indenture Trustee, any officer in the Corporate Trust Administration Department of the Indenture Trustee who is duly authorized by appropriate corporate action to execute any Operative Agreement and (c) with respect to the Borrower, any officer of the Borrower or the Trust Company who is duly authorized by appropriate action to execute any Operative Agreement.
"S&P" shall mean Standard & Poor's Ratings Services, or if such company shall cease to issue ratings, another nationally recognized statistical rating company selected in good faith by the agreement of the Indenture Trustee and the Guarantor.
"Securities Act" shall mean the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.
"Security Documents" shall mean the collective reference to the Bond Deed of Trust, the Leasehold Deeds of Trust, the Pledge Agreement, the Bond Lease, the Memorandum of Bond Lease, the Assignment of Bond Lease, the Bond Sublease, the Memorandum of Bond Sublease, the Assignment of Bond Sublease, the Lease, the Memorandum of Lease, the Assignment of Lease, the Facility Contracts Assignment, the Escrow Agreement, the Lessor Deed of Trust, the Lessee Leasehold Deed of Trust, the UCC Financing Statements and all other security documents hereafter delivered to the Bond Trustee or the Indenture Trustee, granting, or purporting to grant, a Lien on any asset of any Person to secure the obligations and liabilities of the Board under the Bonds and the Bond Indenture or of the Lessor under the Senior Secured Notes and the Indenture.
"Senior Secured Notes" shall have the meaning specified in the recitals to the Indenture.
"Series" shall have the meaning specified in Section 2.1(d) of the Indenture.
"Series A Basic Rent" shall mean the interest due on the Series A Notes on any Payment Date pursuant to the Indenture (but not including interest on overdue amounts under Section 8.2 of the Indenture).
"Series A Bonds" shall have the meaning specified in Section 1 of the Participation Agreement.
"Series A Note Purchase Agreement" shall mean the Note Purchase Agreement, dated as of August 31, 1999, between the Borrower and the purchasers of Series A Notes listed on Schedule A thereto.
"Series A Notes" shall have the meaning specified in the recitals to the Indenture.
"Series B Basic Rent" shall mean the scheduled interest due on
the Series B Notes, if and when issued, on any Payment Date pursuant to
the Indenture (but not including interest on overdue amounts under
Section 8.2 of the Indenture or otherwise).
"Series B Bonds" shall have the meaning specified in Section 1 of the Participation Agreement.
"Series B Note Purchase Agreement" shall have the meaning specified in Section 1 of the Participation Agreement.
"Series B Notes" shall have the meaning specified in the recitals to the Indenture.
"Shared Rights" shall mean the rights retained by the Lessor, but not to the exclusion of the Indenture Trustee, pursuant to Section 8.10(a) of the Indenture.
"Single Employer Plan" shall mean any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Source" shall have the meaning specified in Section 7.2 of the Series A Note Purchase Agreement.
"Specified Lease Event of Default" shall mean any Lease Event
of Default other than a Lease Event of Default arising solely out of
(a) any Independent Event of Default, wherever referenced in any
Operative Agreement, (b) a Lease Event of Default described in Section
11.1 (h) of the Lease or (c) a Lease Event of Default described in
Section 11.1(b) of the Lease but only to the extent it is attributable
to the Lessee's breach of its covenants in any Operative Agreement
other than the Lease.
"Subsidiary" as to any Person, any corporation, partnership or other entity of which shares of stock of each class or other equity interests having ordinary voting power (other than stock having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned by such Person or by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person. A Subsidiary shall be deemed wholly-owned by a Person who owns all of the voting shares of such Subsidiary except for directors' qualifying or similar shares.
"Supplemental Indenture" shall mean a supplement to the Indenture entered into pursuant to Article 10 of the Indenture.
"Supplemental Rent" shall mean all amounts, liabilities and obligations (other than Basic Rent) that the Lessee assumes or agrees to pay to the Lessor or any other Person under the Lease or under any of the other Operative Agreements (other than the Guarantee made by the Guarantor in favor of the Indenture Trustee for the benefit of Noteholders).
"Tax Forbearance Agreement" shall have the meaning specified in Section 1.1 of the Lease.
"Tax Indemnitee" shall mean the Lessor, the Investor, the Trust Company, the Board, the Bond Sublessor, the Bond Trustee, the Indenture Trustee and each Noteholder.
"Taxes" shall mean any tax, assessment, or other charge or levy and any liabilities with respect thereto, including all penalties, additions to tax, fines or interest thereon, imposed by or on behalf of any Governmental Authority or any taxing authority thereof.
"Term" shall mean the period commencing on the Closing Date and ending on September 1, 2009, or such earlier date, as provided for in the Operative Agreements.
"Termination Date" shall have the meaning specified in Section 3.6 of the Lease.
"Termination Notice" shall have the meaning specified in
Section 3.6 of the
Lease.
"Termination Value" shall mean, as of any determination date, an amount equal to the sum of (without duplication) (i) the aggregate outstanding principal amount of the Senior Secured Notes, accrued and unpaid interest on the Senior Secured Notes, any applicable Make Whole Premium and all other amounts (including fees and expenses) owing to the Indenture Trustee and/or the Noteholders or to the Lessor for the benefit of the Indenture Trustee and/or the Noteholders under the Operative Agreements, plus (ii) the aggregate outstanding principal amount of the Bonds, accrued and unpaid interest on the Bonds, any applicable premium and all other amounts (including fees and expenses) owing to the Bond Trustee and/or the Bondholders under the Bond Documents, plus (iii) the aggregate outstanding amount of the Investor Contribution, all accrued and unpaid amounts on account of the Investor Yield, any applicable Investor Premium and all other amounts owing to the Investor under the Operative Agreements.
"Title Company" shall mean Lawyers Title Insurance Company.
"Total Condemnation" shall mean a Condemnation that in the reasonable, good faith judgment of the Lessee (as evidenced by an Officer's Certificate) either (a) renders the Facility unsuitable for continued use as commercial property of the type contemplated by the Operative Agreements or (b) is such that restoration of the Facility to substantially its condition as existed immediately prior to such Condemnation would be impracticable or impossible.
"Total Loss" shall mean any loss or damage resulting from a Casualty that in the reasonable, good faith judgment of the Lessee (as evidenced by an Officer's Certificate) either (a) renders the Facility unsuitable for continued use as commercial property of the type contemplated by the Operative Agreements or (b) is so substantial in nature that restoration of the Facility to substantially its condition as existed immediately prior to such Casualty would be impracticable or impossible.
"Transaction Expenses" shall mean:
(a) the reasonable expenses, disbursements and costs (including reasonable counsel fees and expenses) of the Indenture Trustee, the Noteholders, the Bond Trustee and the Arranger incurred in connection with the consummation of the transactions contemplated by the Operative Agreements;
(b) the reasonable fees and expenses of the Trust Company in connection with the transactions contemplated by the Operative Agreements, including the initial and annual Trust Company's fee and all reasonable fees and reasonable out-of-pocket expenses of the Trust Company and any necessary co-trustees (including reasonable counsel fees and expenses) or any successor trustee, for acting as trustee under the Trust Agreement;
(c) any and all fees payable to, and reasonable out-of-pocket expenses (including reasonable counsel fees and expenses) of, the Investor, the Board and the Bond Sublessor;
(d) all Taxes (to the extent provided in Section 11.2 of the Participation Agreement) and fees incurred in recording or filing any Operative Agreement or any other transaction document or any deed, declaration, deed of trust, security agreement, notice or financing statement with any public office, registry or governmental agency in connection with the transactions contemplated by the Operative Agreements;
(e) real estate brokers' fees and all stamp, transfer and other similar taxes, fees and excises, if any, including any interest and penalties, that are payable in connection with the acquisition of the Facility;
(f) all reasonable costs and expenses incurred in connection with the enforcement or preservation of any rights under the Operative Agreements, including the fees and expenses of counsel (including the allocated fees and expenses of in-house counsel) to the Indenture Trustee, each Noteholder, the Investor, the Board, the Bond Sublessor and the Bond Trustee;
(g) all expenses relating to the Appraisal;
(h) all costs and expenses related to the issuance of the Residual Value Policy and the Construction Termination Policy;
(i) all reasonable costs and expenses incurred in connection with any amendment, supplement or modification to the Operative Agreements requested by the Lessor, the Lessee or the Guarantor and any other documents prepared in connection therewith, and the consummation and administration of the transactions contemplated thereby, including the reasonable fees and expenses of counsel to the Noteholders and the Investor; and
(j) all reasonable costs and expenses (including reasonable counsel fees and expenses) incurred by the Lessor, the Board, the Bond Sublessor, the Lessee, the Investor, the Noteholders, the Indenture Trustee or the Bond Trustee in connection with any purchase of the Facility by the Lessee pursuant to the Lease.
"Trust" shall mean MCI O'Fallon 1999 Trust, a Delaware business trust.
"Trust Agreement" shall mean the Trust Agreement, dated as of August 31, 1999, in the form of Exhibit H to the Participation Agreement, between the Investor and the Trust Company.
"Trust Company" shall mean Wilmington Trust Company, in its individual capacity and any successor or replacement trustee expressly permitted under the Trust
Agreement and the other Operative Agreements.
"Trust Estate" shall have the meaning specified in Section 2.2 of the Trust Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939 and any similar or successor Federal statute, as amended from time to time, together with the rules and regulations of the Securities and Exchange Commission thereunder.
"Trustee" shall mean Wilmington Trust Company, not in its individual capacity, but solely as trustee of the Trust.
"UCC Financing Statements" shall mean collectively the Indenture Trustee Financing Statements, the Bond Trustee Financing Statements and the Lessor Financing Statements.
"Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial Code as in effect in any applicable jurisdiction.
SCHEDULE A
DESCRIPTION OF LAND
SCHEDULE B
PAYMENT INSTRUCTIONS
State Street Bank and Trust Company of Missouri, N.A.
State Street Bank and Trust Company
Boston, MA
ABA # 011 000 028
BNF: Corp. Trust - St. Louis
A/C# 9903 9620
FFC: MasterCard International, Incorporated
EXHIBIT 10.4
CITY OF KANSAS CITY, MISSOURI,
AS LESSOR,
AND
MASTERCARD INTERNATIONAL, LLC,
AS LESSEE
LEASE AGREEMENT
DATED AS OF APRIL 1, 2003
RELATING TO:
NOT TO EXCEED $45,000,000
CITY OF KANSAS CITY, MISSOURI
TAXABLE INDUSTRIAL REVENUE BONDS
(MASTERCARD INTERNATIONAL PROJECT)
SERIES 2003D
The interest of the City of Kansas City, Missouri (the "City"), in this Lease Agreement has been pledged and assigned to UMB Bank, N.A., as Trustee under the Trust Indenture dated as of April 1, 2003, between the City and the Trustee.
LEASE AGREEMENT
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.1. Definitions of Words and Terms........................................................ 2
Section 1.2. Rules of Interpretation............................................................... 3
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the City........................................................... 4
Section 2.2. Representations by the Company........................................................ 5
ARTICLE III
GRANTING PROVISIONS
Section 3.1. Granting of Leasehold Estate.......................................................... 6
Section 3.2. Lease Term............................................................................ 6
Section 3.3. Possession and Use of the Project..................................................... 7
Section 3.4. Title to the Project.................................................................. 7
ARTICLE IV
ACQUISITION, IMPROVEMENT AND
INSTALLATION OF THE PROJECT
Section 4.1. Issuance of the Bonds................................................................. 8
Section 4.2. Acquisition, Improvement and Installation of the Project.............................. 8
Section 4.3. Project Costs......................................................................... 9
Section 4.4. Payment for Project Costs............................................................. 9
Section 4.5. Establishmentment of Completion Date.................................................. 10
Section 4.6. Surplus or Deficiency in Project Fund................................................ 11
Section 4.7. Project Property of City.............................................................. 11
Section 4.8. Machinery and Equipment Purchased by the Company...................................... 11
ARTICLE V
RENT PROVISIONS
Section 5.1. Basic Rent............................................................................ 12
Section 5.2. Additional Rent....................................................................... 12
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Section 5.3. Obligations of Company Absolute and Unconditional..................................... 13
Section 5.4. Prepayment of Basic Rent.............................................................. 14
Section 5.5. Redemption of Bonds................................................................... 14
ARTICLE VI
MAINTENANCE, TAXES AND UTILITIES
Section 6.1. Maintenance and Repairs............................................................... 14
Section 6.2. Taxes, Assessments and Other Governmental Charges..................................... 15
Section 6.3. Utilities............................................................................. 16
Section 6.4. Property Tax Exemption................................................................ 16
ARTICLE VII
INSURANCE
Section 7.1. Casualty Insurance.................................................................... 17
Section 7.2. Public Liability Insurance............................................................ 17
Section 7.3. Blanket Insurance Policies ........................................................... 18
Section 7.4. Workers Compensation Insurance........................................................ 18
Section 7.5 Failure to Provide Insurance.......................................................... 18
ARTICLE VIII
ALTERATION OF THE PROJECT
Section 8.1. Additions, Modifications and Improvements of the Project.............................. 19
Section 8.2. Permits and Authorizations............................................................ 19
Section 8.3. Mechanics' Liens...................................................................... 19
Section 8.4. Additional Improvements on Project Site............................................... 20
Section 8.5. Removal of Parts of Project........................................................... 20
ARTICLE IX
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 9.1. Damage and Destruction................................................................ 22
Section 9.2. Condemnation or Insured Deficiency of Title........................................... 23
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ARTICLE X
SPECIAL COVENANTS
Section 10.1. No Warranty of Condition or Suitability by the City; Exculpation and Indemnification.. 23
Section 10.2. Surrender of Possession............................................................... 23
Section 10.3. City's Right of Access to the Project................................................. 24
Section 10.4. Permitted Encumbrances; Leasehold Deeds of Trust...................................... 24
Section 10.5. Financing Documents................................................................... 24
Section 10.6. Indemnification of City and Trustee................................................... 27
Section 10.7. Depreciation, Investment Tax Credit and Other Tax Benefits............................ 27
Section 10.8. Company to Maintain its Corporate Existence........................................... 27
Section 10.9. Security Interests.................................................................... 28
Section 10.10. Environmental Matters................................................................. 28
Section 10.11. Obligatons under Indenture............................................................ 29
Section 10.12. Equal Opportunity in Employment....................................................... 29
Section 10.13. Sales Taxes........................................................................... 29
ARTICLE XI
OPTION AND OBLIGATION TO PURCHASE THE PROJECT
Section 11.1. Option to Purchase the Project........................................................ 29
Section 11.2. Conveyance of the Project............................................................. 30
Section 11.3. Relative Position of Option and Indenture............................................. 31
Section 11.4. Obligation to Purchase the Project.................................................... 31
ARTICLE XII
DEFAULTS AND REMEDIES
Section 12.1. Events of Default..................................................................... 31
Section 12.2. Remedies on Default................................................................... 32
Section 12.3. Survival of Obligations............................................................... 34
Section 12.4. Performance of the Company's Obligations by the City.................................. 34
Section 12.5. Rights and Remedies Cumulative........................................................ 35
Section 12.6. Waiver of Breach...................................................................... 35
Section 12.7. Notice of Defaults Under Section 12.1; Opportunity of Company to Cure Defaults........ 35
Section 12.8. Trustee's Exercise of the City's Remedies............................................. 36
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ARTICLE XIII
ASSIGNMENT AND SUBLEASE
Section 13.1. Assignment; Sublease.................................................................. 36
Section 13.2. Assignment of Revenues by City........................................................ 37
Section 13.3. Restrictions on Sale or Encumbrance of Project by City................................ 37
ARTICLE XIV
AMENDMENTS, CHANGES AND MODIFICATIONS
Section 14.1. Amendments, Changes and Modifications................................................. 37
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.1. Notices............................................................................... 37
Section 15.2. City Shall Not Unreasonably Withhold Consents and Approvals........................... 39
Section 15.3. Net Lease............................................................................. 39
Section 15.4. No Pecuniary Liability................................................................ 39
Section 15.5. Governing Law......................................................................... 39
Section 15.6. Binding Effect........................................................................ 39
Section 15.7. Severability.......................................................................... 40
Section 15.8. Execution in Counterparts............................................................. 40
Signatures..................................................................................... S-1
Acknowledgements............................................................................... S-2
EXHIBIT A - PROJECT SITE
EXHIBIT B - PROJECT IMPROVEMENTS AND EQUIPMENT
EXHIBIT C - FORM OF REQUISITION CERTIFICATE
EXHIBIT D - PILOT SCHEDULE
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LEASE AGREEMENT
THIS LEASE AGREEMENT, dated as of April 1, 2003 (the "LEASE"), between the CITY OF KANSAS CITY, MISSOURI, a constitutional charter city and municipal corporation organized and existing under the laws of the State of Missouri (the "CITY"), as lessor, and MASTERCARD INTERNATIONAL, LLC, a Delaware limited liability company (the "COMPANY"), as lessee;
WITNESSETH:
WHEREAS, the City is authorized and empowered under Article VI, Section 27 of the Missouri Constitution, as amended, and Sections 100.010 to 100.200, inclusive, of the Missouri Revised Statutes, as amended (the "ACT") to issue revenue bonds to provide funds for the carrying out of a "project" under the Act and to sell, lease or mortgage to private persons, partnerships or corporations the facilities purchased, constructed or extended by the City for manufacturing, commercial, warehousing and industrial development purposes pursuant to the Act; and
WHEREAS, pursuant to the Act, the governing body of the City adopted Resolution No. 021333 on November 7, 2002, expressing the intent of the City to issue industrial development revenue bonds in the principal amount not to exceed $45,000,000 for the purpose of acquiring, improving and equipping the data processing facility and associated real estate in the City (the "PROJECT SITE" as described on Exhibit A attached hereto), and the acquisition, construction, renovation and installation of certain real and personal property, including, without limitation, the "PROJECT IMPROVEMENT" AND "PROJECT EQUIPMENT" (as defined in the Indenture and on Exhibit B attached hereto), and together with any additions, alterations, replacements, substitutions thereto, now or hereafter acquired and installed within the facility located on the Project Site by the Company (the "PROJECT") and authorizing the City to lease the Project to the Company; and
WHEREAS, the governing body of the City has heretofore passed an ordinance (the "ORDINANCE"), authorizing the City to issue its Taxable Industrial Revenue Bonds (MasterCard International, LLC, Project) Series 2003D, in the maximum principal amount not to exceed $45,000,000 (the "BONDS"), for the purpose of financing the costs of the Project, and authorizing the City to lease the Project to the Company; and
WHEREAS, pursuant to such Ordinance, the City is authorized to enter into a Trust Indenture of even date herewith (the "INDENTURE"), with UMB Bank, N.A., as Trustee (the "TRUSTEE"), for the purpose of issuing and securing the Bonds, as therein provided, and to enter into this Lease with the Company under which the City will improve and equip the Project and will lease the Project to the Company in consideration of rental payments by the Company which will be sufficient to pay the principal of and interest on the Bonds; and
WHEREAS, pursuant to the foregoing, the City desires to lease the Project to the Company and the Company desires to lease the Project from the City, for the rentals and upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual representations, covenants and agreements herein contained, the City and the Company do hereby represent, covenant and agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS OF WORDS AND TERMS. In addition to any words
and terms defined elsewhere in this Lease and the words and terms defined in
Section 101 of the Indenture which definitions are hereby incorporated herein by
reference, and terms defined, the following words and terms as used in this
Lease shall have the following meanings:
"ADDITIONAL RENT" means the additional rental described in Sections 5.2 and 6.2 of this Lease.
"BASIC RENT" means the rental described in Section 5.1 of this Lease.
"CLOSING DATE" means April 17, 2003
"COUNTY" means Platte County, Missouri.
"EVENT OF DEFAULT" means any Event of Default as described in Section 12.1 of this Lease.
"FINANCING DOCUMENTS" means any Leasehold Deed of Trust, Assignment of Rents and Leases and Security Agreement relating to the Project and any other leasehold mortgage or deed of trust document permitted pursuant to the provisions of Sections 10.4 hereof.
"FULL INSURABLE VALUE" means the actual replacement cost of the Project less physical depreciation.
"INDENTURE" means the Trust Indenture, dated as of April 1, 2003, between the City and the Trustee, as from time to time amended and supplemented in accordance with the provisions thereof.
"LEASE" means this Lease Agreement, between the City and the Company, as from time to time amended and supplemented in accordance with the provisions of this Lease and Article XII of the Indenture.
"LEASEHOLD DEED OF TRUST" means any leasehold deed of trust relating to the Project permitted pursuant to the provisions of Section 10.4(b) hereof.
"LEASE TERM" means the period from the Closing Date until the expiration thereof pursuant to Section 3.2 of this Lease.
"NET PROCEEDS" means, when used with respect to any insurance or condemnation award with respect to the Project, the gross proceeds from the insurance or condemnation award with respect to which the term is used remaining after the payment of all expenses (including attorneys' fees, trustee's fees and any extraordinary expenses of the City and the Trustee) incurred in the collection of such gross proceeds.
"PERMITTED ENCUMBRANCES" means, as of any particular time (a) liens for
ad valorem taxes and special assessments not then delinquent, (b) the Indenture,
(c) this Lease, (d) any Leasehold Deed of Trust permitted by Section 10.4(b),
(e) such minor defects, irregularities, encumbrances, easements, mechanic's
liens, rights-of-way and clouds on title as normally exist with respect to
properties similar in character to the Project and as do not in the aggregate
materially impair the property affected thereby for the purpose for which it was
acquired or is held by the City, and (f) any other lien, encumbrance, lease,
easements, restrictions or covenants consented to in writing by the Owner of
100% of the outstanding principal amount of the Bond.
"PILOTS" means the payments in lieu of tax to be made by the Company pursuant to Section 6.4 hereof.
"PROJECT" means the Project Site, Project Equipment and Project Improvements.
"PROJECT EQUIPMENT" means all items of personal property, including, without limitation, furniture, fixtures, machinery, equipment or other personal property acquired or installed or acquired or to be acquired for installation in the Project Improvements or elsewhere on the Project Site pursuant to Article IV of this Lease and paid for in whole or in part from the proceeds of the Bonds, as described in Exhibit B attached hereto, and all replacements thereof and substitutions therefor made pursuant to this Lease.
"PROJECT IMPROVEMENTS" means all buildings, structures, improvements and fixtures located on or to be purchased, constructed and other improved on the Project Site.
"PROJECT SITE" means all of the real estate described in Exhibit A attached hereto.
SECTION 1.2. RULES OF INTERPRETATION.
(a) Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders.
(b) Unless the context shall otherwise indicate, words importing the singular number shall include the plural and vice versa, and words importing persons shall include firms, associations and corporations, including governmental entities, as well as natural persons.
(c) Wherever in this Lease it is provided that either party shall or will make any payment or perform or refrain from performing any act or obligation, each such provision shall, even though not so expressed, be construed as an express covenant to make such payment or to perform, or not to perform, as the case may be, such act or obligation.
(d) All references in this instrument to designated "Articles," "Sections" and other subdivisions are, unless otherwise specified, to the designated Articles, Sections and subdivisions of this instrument as originally executed. The words "herein," "hereof," "hereunder" and other words of similar import refer to this Lease as a whole and not to any particular Article, Section or other subdivision.
(e) The Table of Contents and the Article and Section headings of this Lease shall not be treated as a part of this Lease or as affecting the true meaning of the provisions hereof.
ARTICLE II
REPRESENTATIONS
SECTION 2.1. REPRESENTATIONS BY THE CITY. The City makes the following representations as the basis for the undertakings on its part herein contained:
(a) The City is a constitutional charter city and municipal corporation duly organized and validly existing under the laws of the State of Missouri. Under the provisions of the Act, the City has lawful power and authority to enter into the transactions contemplated by this Lease and to carry out its obligations hereunder. By proper action of its governing body, the City has been duly authorized to execute and deliver this Lease, acting by and through its duly authorized officers.
(b) The City proposes to provide, or cause to be provided, funds for the acquisition, construction renovation and installation of the Project. The City proposes to lease the Project to the Company and sell the Project to the Company if the Company exercises its option to purchase the Project, all for the purpose of furthering the public purposes of the Act, and the governing body of the City has found and determined that the acquisition, construction, renovation and installation of the Project will further the public purposes of the Act.
(c) To finance the costs of the Project, the City proposes to issue the Bonds which will be scheduled to mature as set forth in Article II of the Indenture and will be subject to redemption prior to maturity in accordance with the provisions of Article III of the Indenture.
(d) The Bonds are to be issued under and secured by the Indenture, pursuant to which the Project, including all rents, revenues and receipts to be derived by the City from the leasing or sale of the Project, will be pledged and assigned to the Trustee as security for payment of the principal of and interest on the Bonds.
(e) The City will not mortgage the Project or pledge the revenues derived therefrom for any bonds or other obligations other than the Bonds except with the written consent of the Authorized Company Representative.
(f) The City shall, during the Lease Term, have no authority to operate the Project as a business or in any other manner except as the lessor thereof.
(g) The acquisition, improvement and installation of the Project and the leasing of the Project by the City to the Company will further the public purposes of the Act.
(h) No member of the governing body of the City or any other officer of the City has any significant or conflicting interest, financial, employment or otherwise, in the Company or in the transactions contemplated hereby.
(i) The Project is located wholly within the corporate limits of the City of Kansas City, Missouri.
SECTION 2.2. REPRESENTATIONS BY THE COMPANY. The Company makes the following representations as the basis for the undertakings on its part herein contained:
(a) The Company is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware and is
qualified to do business and is in good standing under the laws of the State of Missouri.
(b) The Company has lawful power and authority to enter into this Lease and to carry out its obligations hereunder, and by proper corporate action the individual who executes and delivers this Lease on behalf of the Company is and shall be duly authorized to do so and the same shall constitute the valid, binding obligation of the Company.
(c) The execution and delivery of this Lease, the consummation of the transactions contemplated hereby, and the performance of or compliance with the terms and conditions of this Lease by the Company will not conflict with or result in a material breach of any of the terms, conditions or provisions of, or constitute a material default under, any mortgage, deed of trust, lease or any other corporate restrictions or any agreement or instrument to which the Company is a party or by which it or any of its property is bound, or the Company's Certificate of Formation or Limited Liability Company Agreement or any order, rule or regulation applicable to the Company or any of its property of any court or governmental body, or constitute a material default under any of the foregoing, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Company under the terms of any instrument or agreement to which the Company is a party.
(d) The estimated costs of acquiring, improving and installing the Project are in accordance with sound engineering, management and accounting principles.
(e) The Company's operation of the Project will comply with all presently applicable building and zoning, health, environmental and safety ordinances and laws and, to the best of its knowledge, without independent investigation, with all other applicable laws, rules and regulations.
(f) The Project shall be located wholly within the corporate limits of the City.
ARTICLE III
GRANTING PROVISIONS
SECTION 3.1. GRANTING OF LEASEHOLD ESTATE. Effective as of the Closing Date, the City hereby rents, leases and lets the Project to the Company, and the Company
hereby rents, leases and hires the Project from the City, subject to Permitted Encumbrances, for the rentals and upon and subject to the terms and conditions herein contained.
SECTION 3.2. LEASE TERM. This Lease shall have an initial term (the "LEASE TERM") commencing on the Closing Date and terminating December 31, 2013, subject to sooner termination pursuant to the provisions of this Lease.
SECTION 3.3. POSSESSION AND USE OF THE PROJECT.
(a) The City covenants and agrees that as long as neither the City
nor the Trustee has exercised any of the remedies set forth in
Section 12.2(b) or 12.2(c) following the occurrence and
continuance of an Event of Default, the Company shall have
sole and exclusive possession of the Project (subject to
Permitted Encumbrances and the City's and the Trustee's right
of access pursuant to Section 10.3 hereof) and shall and may
peaceably and quietly have, hold and enjoy the Project during
the Lease Term. The City covenants and agrees that it will not
take any action, other than expressly pursuant to Article XII
of this Lease, to prevent the Company from having quiet and
peaceable possession and enjoyment of the Project during the
Lease Term and will, at the request and expense of the
Company, cooperate with the Company in order that the Company
may have quiet and peaceable possession and enjoyment of the
Project and will defend the Company's enjoyment and possession
thereof against all parties.
(b) Subject to the provisions of this Section, the Company shall have the right to use the Project for any lawful purpose allowed by law and contemplated by the Act. The Company shall comply with all statutes, laws, ordinances, orders, judgments, decrees, regulations, directions and requirements of all federal, state, local and other governments or governmental authorities, now or hereafter applicable to the Project or to any adjoining public ways, as to the manner of use or the condition of the Project or of adjoining public ways. The Company shall also comply with the mandatory requirements, rules and regulations of all insurers under the policies carried under the provisions of Article VII hereof. The Company shall pay all costs, expenses, claims, fines, penalties and damages that may in any manner arise out of, or be imposed as a result of, the failure of the Company to comply with the provisions of this Section. Notwithstanding any provision contained in this Section, however, the Company shall have the right, at its own cost and expense, to in good faith contest or review by legal or other appropriate procedures the validity or legality of any such governmental statute, law, ordinance, order, judgment, decree, regulation, direction or requirement, or any such requirement, rule or regulation of an
insurer, and during such contest or review the Company may refrain from complying therewith.
SECTION 3.4. TITLE TO THE PROJECT. The City shall be the sole owner of the Project; provided, however, that the Company alone shall be entitled to deduct all depreciation on the Project on the Company's income tax returns, and the City agrees to provide reasonable cooperation with the Company, at the expense of the Company, in obtaining favorable federal or state income tax or sales tax treatment of the lease, sale or repurchase of the Project.
ARTICLE IV
ACQUISITION, IMPROVEMENT AND INSTALLATION OF THE PROJECT
SECTION 4.1. ISSUANCE OF THE BONDS.
In order to provide funds for the payment of the Project Costs, the City agrees that it will issue, sell and cause to be delivered to the purchaser thereof the Bonds in accordance with the provisions of the Indenture and the Bond Purchase Agreement. The proceeds of the sale of the Bonds, when received, shall be paid over to the Trustee for the account of the City. The Trustee shall promptly deposit such proceeds, when received, as provided in the Indenture, to be used and applied as hereinafter provided in this Article and in the Indenture.
SECTION 4.2. ACQUISITION, IMPROVEMENT AND INSTALLATION OF THE PROJECT. The City and the Company agree that the City will (and the Company as the agent of the City shall), but solely from the Project Fund, proceed with the acquisition, improvement and installation of the Project as follows:
(a) The City will acquire full and complete absolute title in and to the Project at the execution hereof which the Company desires to convey to the City and from time to time will acquire additional improvements and equipment to be installed at the Project. The Company will, on behalf of the City, cause the Project Improvements to be made in the Project on the Project Site.
(b) Prior to or concurrently with the execution of this Lease a bill of sale and any other necessary instruments of transfer will be delivered to the City. An additional bill of sale for Project Equipment acquired after the Closing Date will be delivered to the City from time to time along with the requisition seeking reimbursement pursuant to Section 4.4 hereof or upon completion of the acquisition of the Project on behalf of the City. The City and the Company recognize that the Project Equipment is subject to change pursuant to the provisions of this Lease, and agree that the definitive list of the Project
Equipment shall be the list maintained by the Trustee pursuant to Section 10.9 of this Lease.
(c) The Company agrees that it will use its best efforts to cause the Project to be completed as soon as practicable with all reasonable dispatch. In the event the acquisition and installation of Project commences prior to the receipt of proceeds from the sale of the Bonds, the Company agrees to advance all funds necessary for such purpose.
(d) The Project Site, all Project Improvements and all Project Equipment shall be owned by the City and the Company agrees to execute and deliver to the City all deeds, bills of sale and any other necessary instruments of transfer to vest title to the Project Site, the Project Improvements and the Project Equipment in the City.
(e) The City will (i) cooperate with the Company so that any applicable sales tax will apply to the equipment as purchased rather than through taxation of lease payments, (ii) sign exemption certificates for those portions of the Project exempt from sales tax and (iii) cooperate with the Company with respect to any audit by any taxing authority in connection with the Project but solely at the expense of the Company.
SECTION 4.3. PROJECT COSTS. The City hereby agrees to pay for, but solely from moneys available therefor in the Project Fund, and hereby authorizes and directs the Trustee to pay for, but solely from moneys available therefor in the Project Fund, all Project Costs upon receipt by the Trustee of a certificate pursuant to Section 4.4 hereof.
SECTION 4.4. PAYMENT FOR PROJECT COSTS. Subject to Section 503 of the Indenture, all Project Costs as specified in Section 4.3 hereof shall be paid by the Trustee from the Project Fund. The City hereby authorizes and directs the Trustee to make disbursements from moneys available therefor in the Project Fund, upon receipt by the Trustee of certificates in substantially the form attached hereto as Exhibit C, signed by an Authorized Company Representative:
(a) requesting payment of a specified amount of such funds and stating the name and address of the person, firm or corporation to whom such amount shall be paid or has been paid in the event the Company is requesting reimbursement;
(b) describing in reasonable detail each item of Project Costs for which payment is being requested;
(c) stating that each item for which payment is requested is or was necessary and appropriate in connection with the acquisition, improvement and installation of the Project, has been properly incurred and is a proper charge against the
Project Fund, that the amount requested either has been paid, or is justly due, and has not been the basis of any previous requisition certificate from the Project Fund;
(d) stating that, except for the amounts, if any, stated in said certificate, to the best of their knowledge there are no outstanding statements which are then due and payable for labor, wages, materials, supplies or services in connection with the acquisition and installation of the Project which, if unpaid, might become the basis of a vendors', mechanics', laborers' or materialmen's statutory or other similar lien upon the Project or any part thereof, unless such lien is being contested pursuant to Section 8.3(b) hereof; and
(e) having attached thereto for the purpose of proper direction of payment a bill of sale or other written evidence of the acquisition.
The Trustee may rely conclusively on any such certificate delivered by the Company pursuant to this Section and shall not be required to make any independent investigation in connection therewith. The Trustee may rely conclusively upon each such bill of sale or written evidence so presented and shall have no duty or responsibility to determine the accuracy, adequacy or appropriateness thereof or to identify the items of personal property to which such may apply.
The Company shall deliver to the Trustee all bills of sale or other written evidence of the acquisition of the Project on behalf of the City at the time of delivery of such requisition certificates.
Notwithstanding the foregoing, at any time the Company is the sole
Bondowner, if the Bondowner advances funds directly for the Project Costs in
connection with the Company's expenditures, the City and the Company acknowledge
that such funds shall not be required to be deposited into the Project Fund, but
shall be deemed to be nonetheless a deposit by the Bondowner into the Project
Fund and shall be an Additional Payment within the meaning of Section 5.02 of
the Indenture, and a draw equal to such sums therefrom, as provided in this
Section 4.4, upon which the Trustee may conclusively rely, based upon the
Company's delivery to the Trustee of a requisition certificate otherwise
conforming to the requirements contained in this Section 4.4 that confirms the
amount of such advances by the Bondowner.
SECTION 4.5. ESTABLISHMENT OF COMPLETION DATE. The Completion Date shall be evidenced to the Trustee by a certificate signed by the Authorized Company Representative stating (a) that the Project has been completed, $45,000,000 of Project has been acquired pursuant to this Lease, or the Lease Term has expired, (b) that all costs and expenses incurred in the Project have been paid except costs and expenses the payment of which is not yet due or is being retained or contested in good faith by the Company, (c) amounts to
be retained by Trustee with respect to item (b) above, and (d) an itemized descriptive list of all Project Costs. Notwithstanding the foregoing, such certificate shall state that it is given without prejudice to any rights against third parties which exist at the date of such certificate or which may subsequently come into being. The Company and the City agree to cooperate in causing such certificate to be furnished to the Trustee.
SECTION 4.6. SURPLUS OR DEFICIENCY IN PROJECT FUND.
(a) Upon receipt of the certificate described in Section 4.5 hereof, the Trustee shall, as provided in Section 504 of the Indenture, transfer any remaining moneys then in the Project Fund to the Bond Fund, and the Company agrees to cooperate with the Trustee and take all required action necessary to redeem a portion of the Bonds.
(b) If the Project Fund shall be insufficient to pay fully all Project Costs and to complete the acquisition and installation of the Project lien free, the Company shall pay to the Trustee for deposit in the Project Fund the full amount of such deficiency for disbursement by the Trustee pursuant to the procedures set forth in Section 4.4 hereof, and the Company shall save the City and the Trustee whole and harmless from any obligation to pay such deficiency.
SECTION 4.7. PROJECT PROPERTY OF CITY. The Project at the execution hereof and which the Company purchases hereafter, and all additions to the Project are deemed to be, or constitute part of the Project, and the Project as repaired, rebuilt, rearranged, restored or replaced by the Company under the provisions of this Lease, except as otherwise specifically provided herein, shall immediately when purchased become the absolute property of the City, subject only to this Lease and the Indenture. The Company shall deliver to the City and the Trustee by April 1 of each year, a detailed listing of all of the Project as required by Section 10.9, certified to the City and the Trustee by the Authorized Company Representative and this listing may be conclusively relied upon by the Trustee. The City shall have the right to request and review such reasonable supporting documentation from the Company with respect to such Project. The inadvertent failure by the Company to include or exclude an item in such list shall not constitute an Event of Default under this Lease.
SECTION 4.8. MACHINERY AND EQUIPMENT PURCHASED BY THE COMPANY. Except for the Project, any other personal property, including without limitation, furniture, fixtures, machinery or equipment, the entire purchase price of which is paid for by the Company with the Company's own funds, and no part of the purchase price of which is paid for from funds deposited pursuant to the terms of the Indenture or this Lease in the Project Fund, or from funds provided by the City pursuant to Section 4.3 of this Lease, shall be the property of the Company.
ARTICLE V
RENT PROVISIONS
SECTION 5.1. BASIC RENT. The Company covenants and agrees to pay to the Trustee in same day funds for the account of City during this Lease Term, for deposit in the Bond Fund on or before 10:00 A.M., Trustee's local time, on or before each February 1 during the Lease Term commencing February 1, 2004, and in the appropriate amounts, the next occurring payments of principal and the interest on the Bonds in accordance with the provisions of the Indenture, as Basic Rent for the Project, in an amount which, when added to any collected funds then on deposit in the Bond Fund and available for the payment of principal on the Bonds and the interest thereon on such payment date, shall be equal to the amount payable on such payment date as principal of the Bonds and the interest thereon as provided in the Indenture. All payments of Basic Rent provided for in this Section shall be paid directly to the Trustee, or as otherwise provided in Section 204 of the Indenture, and shall be deposited in accordance with the provisions of the Indenture into the Bond Fund and shall be used and applied by the Trustee in the manner and for the purposes set forth in this Lease and the Indenture.
Subject to the other provisions of this Agreement and the Indenture, at any time that the Company is the sole Bondowner, the Company may at its option make principal and/or interest payments of Basic Rent by tendering a portion of the principal amount of the Bonds and interest thereon equal to such principal payment and interest thereon to the Trustee for cancellation.
SECTION 5.2. ADDITIONAL RENT. The Company shall pay to the appropriate party as Additional Rent the following amounts:
(a) all reasonable fees, costs, charges and expenses, including, without limitation, agent and counsel fees, of the Trustee and the Paying Agent incurred under the Indenture, as and when the same become due after the Company's receipt of an invoice therefor;
(b) all reasonable fees, charges, expenses and costs including, without limitation agent and counsel fees, incident to the issuance of the Bonds and the payment of the principal of and interest on the Bonds as the same becomes due and payable, including all costs and expenses in connection with the call, redemption and payment of all outstanding Bonds;
(c) all reasonable fees, charges, costs and expenses (including, without limitation, attorney's fees and expenses) reasonably incurred in connection with the enforcement of any rights against the Company or the Project
under this Lease or the Indenture by the City, the Trustee or the Bondowners after the Company's receipt of an invoice therefor;
(d) An amount sufficient to reimburse the City for all expenses reasonably incurred by the City hereunder and in connection with the performance of its or the Company's obligations under this Lease or the Indenture;
(e) The PILOTs required by Section 6.4 hereof; and
(f) All other payments of whatever nature which the Company has agreed to pay or assume under the provisions of this Lease.
In each instance in which this Lease, whether in this Section 5.2 or elsewhere, provides for compensation, reimbursement or indemnification of the Trustee, such provision shall be deemed to provide for, whether or not expressly so stated, the payment of all reasonably related fees, costs, charges, advances and expenses of the Trustee (including, without limitation, attorney's fees and expenses), unless the context shall clearly indicate otherwise.
SECTION 5.3. OBLIGATIONS OF COMPANY ABSOLUTE AND UNCONDITIONAL.
(a) The obligations of the Company under this Lease to make payments of Basic Rent and Additional Rent on or before the date the same become due, and to perform all of its other obligations, covenants and agreements hereunder shall be absolute and unconditional, without notice or demand, and without abatement, deduction, set-off, counterclaim, recoupment or defense or any right of termination or cancellation arising from any circumstances whatsoever, whether now existing or hereafter arising, and irrespective of whether the Project shall have been started or completed, or whether the City's title thereto or to any part thereof is defective or nonexistent, and notwithstanding any damage to, loss, theft or destruction of, the Project or any part thereof, or any failure of consideration or frustration of commercial purpose, the taking by eminent domain of title to or of the right of temporary use of all or any part of the Project, legal curtailment of the Company's use thereof, the eviction or constructive eviction of the Company, any change in the tax or other laws of the United States of America, the State of Missouri or any political subdivision thereof, any change in the City's legal organization or status, or any default of the City hereunder, and regardless of the invalidity of any action of the City, and regardless of the invalidity of any portion of this Lease.
(b) Nothing in this Lease shall be construed to release the City from the performance of any agreement on its part herein contained or as a waiver by the Company of any rights or claims the Company may have against
City under this Lease or otherwise, but any recovery upon such rights and claims shall be had from the City separately, it being the intent of this Lease that the Company shall be unconditionally and absolutely obligated to perform fully all of its obligations, agreements and covenants under this Lease (including the obligation to pay Basic Rent and Additional Rent) for the benefit of the Bondowners. The Company may, however, at its own cost and expense and in its own name or in the name of the City, prosecute or defend any action or proceeding or take any other action involving third persons which the Company deems reasonably necessary in order to secure or protect its right of possession, occupancy and use hereunder, and in such event the City hereby agrees to cooperate fully with the Company and to take all action necessary to effect the substitution of the Company for the City in any such action or proceeding if the Company shall so request.
SECTION 5.4. PREPAYMENT OF BASIC RENT. The Company may at any time prepay all or any part of the Basic Rent provided for hereunder in accordance with Section 302(a) of the Indenture. The Company shall prepay the amount of Basic Rent provided for hereunder to cause the mandatory redemption of all or part of the Bonds in accordance with the provisions of Section 302(b) of the Indenture.
SECTION 5.5. REDEMPTION OF BONDS. If the Company is not in default in the payment of Basic Rent, the City and the Trustee, at the written direction of the Company, at any time that the aggregate moneys in the Bond Fund are sufficient for such purposes, shall (a) if the same are then redeemable under the provisions of Article III of the Indenture, take all steps that may be necessary under the applicable redemption provisions of the Indenture to effect the redemption of all or such part of the then Outstanding Bonds as may be specified by the Company, on such redemption date as may be specified by the Company, (b) cause such moneys in the Bond Fund or such part thereof as the Company shall direct, to be applied by the Trustee as is reasonably possible, pursuant to the written direction of the Company, for the purchase of Bonds in the open market for the purpose of cancellation at prices not exceeding the principal amount thereof plus accrued interest thereon to the date of delivery for cancellation, or (c) a combination of (a) and (b) as provided in such direction.
The Bonds shall be subject to mandatory redemption upon the termination or expiration of the Lease.
ARTICLE VI
MAINTENANCE, TAXES AND UTILITIES
SECTION 6.1. MAINTENANCE AND REPAIRS. Throughout the Lease Term the Company shall, at its own expense, keep the Project in as reasonably safe condition as the
operation thereof will permit, and keep the Project in good repair and in good operating condition ordinary wear and tear and damage by fire or other casualty excepted, making from time to time all necessary repairs thereto and renewals and replacements thereof.
SECTION 6.2. TAXES, ASSESSMENTS AND OTHER GOVERNMENTAL CHARGES.
(a) The Project is expected to be exempt from ad valorem taxes as more fully described in Section 6.4 hereof. The Company shall promptly pay and discharge, as the same become due, all taxes and assessments, general and special, and other governmental charges of any kind whatsoever that may be lawfully taxed, charged, levied, assessed or imposed upon or against or be payable for or in respect of the Project, or any part thereof or interest therein (including the leasehold estate of the Company therein) or the income therefrom or Basic Rent and other amounts payable under this Lease, including any new taxes and assessments not of the kind enumerated above to the extent that the same are lawfully made, levied or assessed in lieu of or in addition to taxes or assessments now customarily levied against real or personal property, and further including all utility charges, assessments and other general governmental charges and impositions whatsoever, foreseen or unforeseen, which if not paid when due would impair the security of the Bonds or encumber the City's title to the Project; provided that with respect to any special assessments or other governmental charges that are lawfully levied and assessed which may be paid in installments, the Company shall be obligated to pay only such installments thereof as become due and payable during the Lease Term.
(b) The Company shall have the right, in its own name or in the City's name, to contest the validity or amount of any tax, assessment or other governmental charge which the Company is required to bear, pay and discharge pursuant to the terms of this Article by appropriate legal proceedings instituted on the later of (1) the day that is at least 10 days before the tax, assessment or other governmental charge complained of becomes delinquent and (2) the expiration date of the applicable contest period, if and provided (i) the Company, before instituting any such contest, gives the City written notice of its intention so to do, (ii) the Company diligently prosecutes any such contest, at all times effectively stays or prevents any official or judicial sale therefor, under execution or otherwise, and (iii) the Company promptly pays any final judgment enforcing the tax, assessment or other governmental charge so contested and thereafter promptly procures record release or satisfaction thereof. The City agrees to cooperate fully with the Company in connection with any and all administrative or judicial proceedings related to any tax, assessment or other governmental charge. The Company shall hold the
City whole and harmless from any costs and expenses the City may incur related to any of the above.
SECTION 6.3. UTILITIES. All utilities and utility services used by the Company in, on or about the Project Site shall be paid for by the Company and shall be contracted for by the Company in the Company's own name, and the Company shall, at its sole cost and expense, procure any and all permits, licenses or authorizations necessary in connection therewith.
So long as the Company is not in default under this Lease, all easements, leases and license agreements that comprise a part of the Project shall insure to the benefit of and be a burden upon the Company. The Company is authorized to exercise all rights and perform all obligations under all such easements, leases and license agreements in the Company's own name at the Company's sole cost. The City shall provide the Company with such confirmation of the foregoing authority as reasonably may be required from time to time.
SECTION 6.4. PROPERTY TAX EXEMPTION.
(a) The City and the Company agree that while the Project is owned by the City and is subject to this Lease, the Project is expected to be exempt from ad valorem taxes by reason of such ownership. Notwithstanding the foregoing, the Company will annually pay to the City and the County the PILOTs with respect to the Project in accordance with the terms and provisions and in the amounts set forth on Exhibit D. Each PILOT shall be paid no later than December 31st of each year commencing December 31, 2004, in which the Company would be required to pay real and personal property taxes if the Project had not been owned by the City. The amount of PILOTS to be paid hereunder shall be reduced in any year by any amounts paid by the Company on account of ad valorem taxes on the Project and/or personal property taxes levied against the Company's interest in the Project (including its leasehold interest), except for special assessments.
(b) The City and the Company intend that at least 25 jobs shall be created by the Project. The Company shall certify to the City the number of new jobs created by the Project on the date that the PILOT is paid as provided in subsection (a) of this Section. If the number of new jobs created by the Project is less than 25 or the aggregate salary for the new jobs is less than $837,500, the Company shall pay the City an additional PILOT payment ("Additional PILOT") according to the "Clawback" schedule set forth on Exhibit D attached hereto. The Additional PILOT payment shall be made on the date that the PILOT payment is made. The Company agrees to
apply for, and submit to the City, a withholding tax identification number exclusively for the Project Site.
(c) The Company agrees to pay to the City to the City Treasurer on each January 1st after the Company's receipt of an invoice therefor, commencing on January 1, 2004, an annual administrative fee of $1,500 to reimburse the City for all expenses reasonably incurred by the City in connection with the performance of its obligations under this Lease and the Indenture.
(d) In the event the PILOTs, are not paid by the due date,
December 31 of the applicable year as provided in subsection
(a) of this Section, the PILOTS shall bear interest commencing
on their due date at 1 1/2% per month until paid.
ARTICLE VII
INSURANCE
SECTION 7.1. CASUALTY INSURANCE. The Company shall at its sole cost and expense obtain and shall maintain throughout the Lease Term, a policy or policies of insurance on an all-risk policy form to keep the Project constantly insured against loss or damage by fire, lightning and all other comparable insurable risks in an amount equal to the replacement value thereof (subject to loss deductible provisions no greater than $100,000 without the prior written consent of the Bondowner). The insurance required pursuant to this Section shall be maintained at the Company's sole cost and expense and shall be maintained with generally recognized responsible insurance company rated A or higher by AM Best and authorized to do business in the State of Missouri as may be selected by the Company. Certificates of insurance for the policies required under this Section, each bearing notations evidencing payment of the premiums or other evidence of such payment, shall be delivered by the Company to the Trustee on the date of execution of this Lease and not less than ten days prior to the expiration date of each insurance policy. All such policies of insurance pursuant to this Section, and all renewals thereof, shall name the City, the Company and the Trustee as insureds as their respective interests may appear, and shall state that the carrier will endeavor to notify the certificate holder of any cancellations by the insurer with at least thirty (30) days' prior written notice to the City, the Company and the Trustee.
SECTION 7.2. PUBLIC LIABILITY INSURANCE.
(a) The Company shall at its sole cost and expense maintain or cause to be maintained at all times during the Lease Term commercial general accident and public liability insurance (including but not limited to
coverage for all losses whatsoever arising from the ownership, maintenance, operation or use of any automobile, truck or other motor vehicle), properly protecting and indemnifying the Company, the City and the Trustee, in an amount not less than $3,000,000 combined single limit for bodily injury (including death) and property damage for each occurrence (subject to reasonable loss deductible clauses not to exceed $500,000). All such policies of insurance pursuant to this Section, an all renewals thereof, shall name the City, the Company and the Trustee as additional insured and state that the carrier will endeavor to notify the certificate holder of any cancellations by the insurer with at least thirty (30) prior written notice to the City, the Company and the Trustee. Certificates of insurance shall be furnished to the Trustee.
(b) In the event of a public liability occurrence, the Net
Proceeds of liability insurance carried pursuant to this
Section shall be applied toward the extinguishment or
satisfaction of the liability with respect to which such
proceeds have been paid.
SECTION 7.3. BLANKET INSURANCE POLICIES. The Company may satisfy any of the insurance requirements set forth in this Article by using blanket policies of insurance, provided each and all of the requirements and specifications of this Article respecting insurance are unfulfilled.
SECTION 7.4. WORKERS COMPENSATION INSURANCE. The Company will maintain workers compensation insurance in accordance with the laws of the State of Missouri at all times during the Lease Term and shall deliver certificates demonstrating such to the Trustee.
SECTION 7.5. FAILURE TO PROVIDE INSURANCE. Unless the Company provides the evidence of insurance coverage required by this Lease, the City or the Trustee may purchase insurance at the expense of the Company to protect the interests of the City, the Trustee and the Bondowners in the Project. Prior to purchasing the insurance notice shall be given to the Company of such failure to provide evidence of insurance coverage and Company shall have three business days after receipt of such notice to provide evidence of such insurance. This insurance may, but need not, protect the interests of the Company. The coverage that the City or the Trustee purchase may not pay any claim that the Company may make or that is made against the Company in connection with the Project. The Company may later cancel or cause to be cancelled any insurance purchased by the City or the Trustee, but only after providing evidence to the City and the Trustee that the Company has obtained insurance as required by this Lease. If the City or the Trustee purchase insurance relating to the insurance coverage required by this Lease, the Company will be responsible for the costs of that insurance, including the insurance premium, interest and any other charges that the City or the Trustee may impose in connection with the placement of the insurance, until the effective date of the cancellation
or expiration of the insurance. The costs of the insurance may be added to the total balance or obligation due hereunder. The costs of the insurance may be more than the cost of insurance that the Company may be able to obtain on its own.
ARTICLE VIII
ALTERATION OF THE PROJECT
SECTION 8.1. ADDITIONS, MODIFICATIONS AND IMPROVEMENTS OF THE PROJECT.
The Company shall have and is hereby given the right, at its sole cost and
expense, to make such additions, modifications and improvements in and to any
part of the Project as the Company from time to time may deem necessary or
desirable for its business purposes. All additions, modifications and
improvements made by the Company pursuant to the authority of this Section shall
(a) be made in workmanlike manner and in compliance with all laws and ordinances
applicable thereto, (b) when commenced, be prosecuted to completion with due
diligence, and (c) when completed, be deemed a part of the Project.
Notwithstanding the foregoing, all severable items of machinery and equipment
installed in the Project by the Company not purchased or acquired from funds
deposited with the Trustee (or funds deemed deposited with the Trustee if the
Company is the sole Bondowner pursuant to Section 4.4 hereof) shall remain the
property of the Company and may be removed by the Company.
SECTION 8.2. PERMITS AND AUTHORIZATIONS. The Company shall not do or permit others under its control to do any work on the Project related to any repair, rebuilding, restoration, replacement, modification or addition to the Project, or any part thereof, unless all requisite municipal and other governmental permits and authorizations shall have been first procured. All such work shall be done in a good and workmanlike manner and in compliance with all applicable building, zoning and other laws, ordinances, governmental regulations and requirements and in accordance with the requirements, rules and regulations of all insurers under the policies required to be carried under the provisions of Article VII hereof.
SECTION 8.3. MECHANICS' LIENS.
(a) Neither the City nor the Company shall do or suffer anything
to be done whereby the Project, or any part thereof, may be
encumbered by any mechanics' or other similar lien. Whenever
and as often as any mechanics' or other similar lien is filed
against the Project, or any part thereof, purporting to be for
or on account of any labor done or materials or services
furnished in connection with any work in or about the Project,
the Company shall discharge the same of record within sixty
(60) days after the date the Company receives written notice
of filing. Notice is hereby given that the City and the
Trustee shall not be liable for any labor or
materials furnished the Company or anyone claiming by, through or under the Company upon credit, and that no mechanics' or other similar lien for any such labor, services or materials shall attach to or affect the reversionary or other estate of the City in and to the Project or any part thereof.
(b) Notwithstanding paragraph (a) above, the Company shall have the right to contest any such mechanics' or other similar lien if within said 60-day period stated above it notifies the City and the Trustee in writing of its intention so to do, and provided the Company diligently prosecutes such contest, at all times effectively stays or prevents any official or judicial sale of the Project, or any part thereof or interest therein, under execution or otherwise, and pays or otherwise satisfies any final judgment enforcing such contested lien claim and thereafter promptly procures record release or satisfaction thereof. The Company shall hold the City and the Trustee whole and harmless from any loss, costs or expenses the City or the Trustee may incur related to any such contest. The City shall cooperate fully with the Company in any such contest.
SECTION 8.4. ADDITIONAL IMPROVEMENTS ON THE PROJECT SITE. The Company
shall have and is hereby given the right, at its sole cost and expense, to
construct on unimproved portions of the Project Site such additional buildings
and improvements as the Company from time to time may deem necessary or
desirable for its business purposes. All additional buildings and improvements
constructed on the Project Site by the Company pursuant to the authority of this
Section shall, during the Lease Term, remain the property of the Company and may
be added to, altered or razed and removed by the Company at any time. The
Company covenants and agrees (a) to make any repairs and restorations required
to be made to the Project because of the construction of, addition to,
alternation or removal of such additional buildings or improvements, (b) to keep
and maintain such additional buildings and improvements in good condition and
repair, ordinary wear and tear excepted, and (c) to promptly and with due
diligence either raze and remove in a good and workmanlike manner, or repair,
replace or restore any of such additional buildings and improvements as may from
time to time be damaged by fire or other casualty.
SECTION 8.5. REMOVAL OF PARTS OF PROJECT. The Company shall have the right, provided the Company is not in default in the payment of Basic Rent or Additional Payments hereunder, to remove and (on behalf of the City) sell, exchange or otherwise dispose of, without responsibility or accountability to the City or the Trustee with respect thereto, any items of Project Equipment and which have become inadequate, obsolete, worn out, unsuitable, undesirable or unnecessary or which, in the sound discretion of the Company, are otherwise no longer useful to the Company in its operations conducted on the Project Site; provided that with respect to the proposed removal of such Project Equipment that originally cost $1,000,000 or more, the Company shall either:
(a) Prior to any such removal, deliver to the Trustee a
certificate signed by the Authorized Company Representative
(i) containing a complete description of the Project Equipment
which it proposes to remove, (ii) stating the reason for such
removal, (iii) stating what disposition of the Project is to
be made by the Company after such removal and the names of the
party or parties to whom such disposition is to be made and
the consideration to be received by the Company therefor, if
any, and (iv) setting forth the proposed sale price (or
trade-in credit to be received) and the fair market value
(original cost of such machinery or equipment less
depreciation at rates calculated in accordance with generally
accepted accounting principles) of such Project Equipment; and
pay the greater of (i) the proceeds from the sale of such
Project (or trade-in credit received therefor) or (ii) the
fair market value of such Project Equipment as set forth in
said certificate to the Trustee for deposit in the Bond Fund;
and deliver to the City a bill of sale for such Project
Equipment to be executed and delivered by the City upon
deposit of such sale proceeds in the Bond Fund; or
(b) Promptly replace any such Project Equipment so removed with
Project Equipment of the same or a different kind but with a
value equal to or greater than the fair market value of the
Project Equipment so removed, and such Project Equipment shall
be deemed a part of the "Project"; and within thirty (30) days
after any such replacement, deliver to the Trustee a
certificate signed by the Authorized Company Representative
(i) setting forth a complete description, including make,
model and serial numbers, if any, of the Project Equipment
which the Company has acquired to replace the Project
Equipment so removed by the Company, (ii) stating the cost
thereof, and (iii) stating that the Project Equipment
described in said certificate are fully paid for and have been
installed as a part of the Project.
The Trustee shall amend the list of the Project maintained by it pursuant to Section 10.9 hereof upon receipt of any such certificate. All machinery and equipment which replaces machinery and equipment so removed by the Company pursuant to paragraph (b) of this Section shall become and be deemed a part of the Project.
In all cases, the Company shall pay all the costs and expenses of any such removal and shall immediately repair at its expense all damage to the Project Equipment caused thereby. The Company's rights under this Section to remove machinery and equipment constituting a part of the Project is intended only to permit the Company to maintain an efficient operation by the removal of machinery and equipment which is no longer suitable to the Company's use for any of the reasons set forth in this Section, and such right is not to be construed to permit a removal under any other circumstances and specifically is not to be construed to permit the Company to make a wholesale removal of the Project Equipment. The Company will not remove (i) all or part of the Project Equipment except as provided in
this Section 8.5 and (ii) cease or substantially reduce the level of its operations at the Project during the Lease Term.
It is understood and agreed that the Company intends to purchase additional Project Equipment and/or other components of the Project to replace Project Equipment and/or other components of the Project which have become obsolete, and to pay and retire the applicable principal amount of Bonds associated with the obsolete Project Equipment and/or other components of the Project upon its disposal.
ARTICLE IX
DAMAGE, DESTRUCTION AND CONDEMNATION
SECTION 9.1. DAMAGE AND DESTRUCTION.
(a) If during the Lease Term, the a portion of the Project is damaged or destroyed, in whole or in part, by fire or other casualty, to such extent that the claim for loss (including any deductible amount pertaining thereto) resulting from such damage or destruction is greater than $250,000, the Company shall promptly notify the City and the Trustee in writing as to the nature and extent of such damage or loss and whether it is practicable and desirable to rebuild, repair, restore or replace such damage or loss.
(b) If the Company shall determine that such rebuilding, repairing, restoring or replacing is practicable and desirable, the Company shall proceed promptly with and complete with reasonable dispatch such rebuilding, repairing, restoring or replacing of the property damaged or destroyed so as to place the Project in substantially the same condition as existed prior to the event causing such damage or destruction, with such changes, alterations and modifications (including the substitution and addition of other property) as may be desired by the Company and as will not impair the operating unity or productive capacity of the Project or the character of the Project. If the Net Proceeds of casualty insurance required by Article VII hereof are not sufficient to pay in full the costs of such replacement, repair, rebuilding or restoration, the Company shall nonetheless complete the same and shall pay the costs thereof in excess of the Net Proceeds.
(c) If the Company shall determine that rebuilding, repairing, restoring or replacing some portion of the Project is not practicable and desirable, any Net Proceeds of casualty insurance required by Article VII hereof received with respect to such damage or loss shall be paid into the Bond Fund pursuant to Section 602 of the Indenture and shall be used to redeem Bonds on the earliest practicable redemption date or to pay the principal of any Bonds as the same become due. The Company agrees to be reasonable in exercising its judgment pursuant to this subsection (c). If the Company is the Bondowner, the Bondowner may waive the payment of Net Proceeds of casualty insurance into the Bond Fund.
(d) The Company shall not, by reason of its inability to use all or any part of the Project during any period in which the Project is damaged or destroyed or is being repaired, rebuilt, restored or replaced, nor by reason of the payment of the costs of such rebuilding, repairing, restoring or replacing, be entitled to any reimbursement from the City, the Trustee or the Bondowners or to any abatement or diminution of the Basic Rent by the Company under this Lease or of any other obligations of the Company under this Lease except as expressly provided in this Section.
SECTION 9.2. CONDEMNATION OR INSURED DEFICIENCY OF TITLE.
(a) If during the Lease Term, (i) title to, or the temporary use of, all or any part of the Project shall be condemned by or sold under threat of condemnation to any authority possessing the power of eminent domain, or (ii) title to all or any part of the Project shall be found to be deficient or nonexistent, or such extent that the claim or loss resulting from such condemnation or loss of title is greater than $25,000, the Company shall, within ninety(90) days after the date of entry of a final order in any eminent domain proceedings granting condemnation, or the date of sale under threat of condemnation, proceedings determining such loss of title, notify the City and the Trustee in writing as to the nature and extent of such condemnation or loss of title and whether it is practicable and desirable to acquire or construct substitute improvements.
(b) If the Company shall determine that such substitution is practicable and desirable, the Company shall proceed promptly with and complete with reasonable dispatch the acquisition or construction of such substitute improvements, so as to place the Project in substantially the same condition as existed prior to the exercise of the power of eminent domain or loss of title, including the acquisition or construction of other improvements suitable for the Company's operations in connection with the Project and available for use and occupancy by the Company without the payment of any rent other than herein provided, to the same extent as if such other improvements were specifically described herein and demised hereby; provided, that such
improvements will be acquired by the City subject to no liens,
security interests or encumbrances prior to the lien and/or
security interest afforded by the Indenture other than
Permitted Encumbrances.
(c) If the Company shall determine that it is not practicable and
desirable to acquire or construct substitute improvements, any
Net Proceeds of condemnation awards or title insurance
received by the Company shall be paid into the Bond Fund
pursuant to Section 602 of the Indenture and shall be used to
redeem bonds on the earliest practicable redemption date or to
pay the principal of any Bonds as the same become due. The
Company agrees to be reasonable in exercising its judgment
pursuant to this subsection (c).
(d) The Company shall not, by reason of its inability to use all
or any part of the Project during any such period of
restoration or acquisition nor by reason of the payment of the
costs of such restoration or acquisition, be entitled to any
reimbursement from the City, the Trustee or the Bondowners or
to any abatement or diminution of the Basic Rent by the
Company under this Lease nor of any other obligations
hereunder except as expressly provided in this Section.
(e) The City agrees to cooperate fully with the Company in the
handling and conduct of any prospective or pending
condemnation proceedings with respect to the Project or any
part thereof, and shall, to the extent it may lawfully do so,
permit the Company to litigate in any such proceedings in the
name and on behalf of the City. In no event will the City
voluntarily settle or consent to the settlement of any
prospective or pending condemnation proceedings with respect
to the Project or any part thereof without the prior written
consent of the Company.
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ARTICLE X
SPECIAL COVENANTS
SECTION 10.1. NO WARRANTY OF CONDITION OR SUITABILITY BY THE CITY; EXCULPATION AND INDEMNIFICATION. The City and the Trustee make no warranty, either express or implied, as to the condition of the Project or that it will be suitable for the Company's purposes or needs. The Company releases the City and the Trustee from, agrees that the City shall not be liable for and agrees to hold the City and the Trustee harmless against, any loss or damage to property or any injury to or death of any person that may be occasioned by any cause whatsoever pertaining to accrual of the City's right of re-entry because of the Company's default hereunder or upon the Project or the use thereof; unless such loss is the result of the City's gross negligence or willful misconduct.
SECTION 10.2. SURRENDER OF POSSESSION. Upon the cancellation or termination of this Lease for any reason (after any applicable cure period provided in this Lease or in the Indenture) other than the Company's purchase of the Project pursuant to Article XI hereof, the Company shall peacefully surrender possession of the Project to the City in good condition and repair, ordinary wear and tear excepted; provided, however, the Company shall have the right within ninety (90) days or such later date as the City may agree to) after the termination of this Lease to remove from the Project Site any buildings, improvements, furniture, trade fixtures, machinery and equipment and restorations of the Project required to be made because of such removal shall be made by and at the sole cost and expense of the Company, and during such 90-day (or extended) period the Company shall bear the sole responsibility for and bear the sole risk of loss for such buildings, improvements, furniture, trade fixtures, machinery and equipment. All buildings, improvements, furniture, trade fixtures, machinery and equipment owned by the Company and which are not so removed from the Project prior to the expiration of such period shall be the separate and absolute property of the City.
SECTION 10.3. CITY'S RIGHT OF ACCESS TO THE PROJECT. The Company agrees that the City and the Trustee and their duly authorized agents shall have the right at reasonable times during business hours, subject to the Company's usual safety and security requirements, to enter upon the Project Site (a) to examine and inspect the Project without interference or prejudice to the Company's operations, (b) as may be reasonably necessary to cause to be completed the acquisition provided for in Section 4.2 hereof, and (c) performing such work in and about the Project made necessary by reason of the Company's default under any of the provisions of this Lease.
SECTION 10.4. SECTION 10.4. PERMITTED ENCUMBRANCES; LEASEHOLD DEEDS OF TRUST.
(a) If no Event of Default under this Lease shall have happened and be continuing, the Company may at any time or times (i) grant easements, licenses, rights-of-way (including the dedication of public highways) and other rights or privileges in the nature of easements that are for the direct use of the Project, or part thereof, by the grantee, (ii) release existing easements, licenses, rights-of-way and other rights or privileges, all with or without consideration and upon such terms and conditions as the Company shall determine, or (iii) incur Permitted Encumbrances. The City agrees that it will execute and deliver and will cause and direct the Trustee to execute and deliver any instrument necessary or appropriate to confirm and grant or release any such easement, license, right-of-way or other right or privilege or any such agreement or other arrangement, upon receipt by the City and the Trustee of: (A) a copy of the instrument of grant or release or of the agreement or other arrangement, (B) a written application signed by an Authorized Company Representative requesting such instrument, and (C) a certificate executed by an Authorized Company Representative stating that
such grant or release is not detrimental to the proper conduct of the business of the Company, will not impair the effective use or interfere with the efficient and economical operation of the Project, and will not materially adversely affect the security intended to be given by or under the Indenture. If the instrument of grant shall provide that any such easement or right and the rights of such other parties thereunder shall be superior to the rights of City and the Trustee under this Lease and the Indenture and shall not be affected by any termination of this Lease or default on the part of the Company hereunder then such easement shall not have any effect whatsoever without the written consent of the City. If no Event of Default shall have happened and be continuing beyond any applicable grace period, any payments or other consideration received by the Company for any such grant or with respect to or under any such agreement or other arrangement shall be and remain the property of the Company, but, in the event of the termination of this Lease or during the continuation of an Event of Default, all rights then existing of the Company with respect to or under such grant shall inure to the benefit of and be exercisable by the City and the Trustee.
(b) The Company may grant a Leasehold Deed of Trust on the leasehold estate created by this Lease, without the City's consent, provided and upon condition that:
(i) a duplicate original or certified copy or photostatic
copy of each such Leasehold Deed of Trust, and the
note or other obligation secured thereby, is
delivered to the City and the Trustee within thirty
(30) days after the execution thereof; and
(ii) such Leasehold Deed of Trust shall contain a covenant to the effect that the net proceeds of all insurance policies and the condemnation award shall be held, used and applied for the purposes and in the manner provided for in this Lease.
(c) Notwithstanding anything contained to the contrary in this Lease, (i) the Company shall have the right to assign its interest in this Lease and any subleases to any beneficiary of the Leasehold Deed of Trust or to the designee or nominee of such beneficiary of the Leasehold Deed of Trust, without the consent of the City, and (ii) if the beneficiary of the Leasehold Deed of Trust or its designee or nominee shall acquire ownership of the leasehold estate, either following foreclosure of such Leasehold Deed of Trust or in liquidation of the indebtedness and in lieu of foreclosure thereof, the beneficiary of the Leasehold Deed of Trust or its designee or nominee shall have the further right to further assign this Lease and any subleases, with the consent of the City and such assignee shall enjoy all
rights, powers and privileges granted herein to beneficiaries of leasehold deeds of trust.
(d) If (i) the Company shall execute and deliver a Leasehold Deed
of Trust, and (ii) the provisions and conditions of subsection
(b) above shall have been fully complied with and observed
with respect to such Leasehold Deeds of Trust, and (iii) the
Company or the beneficiary of such Leasehold Deeds of Trust
shall have notified the City and the Trustee in writing of the
making thereof and of the name and address of beneficiary of
such Leasehold Deed of Trust; then:
(i) this Lease may not be modified, amended, canceled or surrendered by agreement between the City and the Company, without the prior written consent of beneficiary of such Leasehold Deed of Trust;
(ii) there shall be no merger of this Lease or of the leasehold estate created hereby with the fee title to the Project Site, notwithstanding that this Lease or said leasehold estate and said fee title shall be owned by the same person or persons, without the prior written consent of beneficiary of such Leasehold Deed of Trust;
(iii) the City shall serve upon each beneficiary of the Leasehold Deed of Trust a copy of each notice of default and each notice of termination given to the Company under this Lease, at the same time as such notice is served upon the Company. No such notice to the Company shall be effective unless a copy thereof is thus served upon each beneficiary of the Leasehold Deed of Trust;
(iv) each beneficiary of the Leasehold Deed of Trust shall have the same period of time after the service of such notice upon it within which the Company may remedy or cause to be remedied the default which is the basis of the notice plus ninety (90) days; and the City shall accept performance by such beneficiary of the Leasehold Deed of Trust as timely performance by the Company;
(v) such beneficiary of the Leasehold Deed of Trust shall not be required to continue possession or continue foreclosure proceedings under paragraph (vii) of this subsection if the particular default has been cured;
(vi) the City may exercise any of its rights or remedies with respect to any other default by the Company occurring during the period of such forbearance provided for under paragraph (viii), subject to the
rights of the beneficiary of the Leasehold Deed of Trust under this Section as to such other defaults;
(vii) in case of default by the Company under this Lease, other than a default in the payment of money, the City shall take no action to effect a termination of this Lease by service of a notice or otherwise, without first giving to such beneficiary of the Leasehold Deed of Trust a reasonable time within which either to obtain possession of the Project and to remedy such default in the case of a default which is susceptible of being cured when such beneficiary of the Leasehold Deed of Trust has obtained possession of the Project, or to institute and with reasonable diligence to complete foreclosure proceedings or otherwise acquire the Company's leasehold estate under this Lease in the case of a default which is not so susceptible of being remedied by such beneficiary of the Leasehold Deed of Trust, provided that the Leasehold Deed of Trust shall deliver to the City within thirty (30) days after the expiration of the grace period applicable to the particular default, an instrument unconditionally agreeing to remedy such default other than a default not susceptible of being remedied by the beneficiary of such Leasehold Deed of Trust. The City's right to terminate this Lease by reason of a default which is not susceptible of being remedied by such beneficiary of the Leasehold Deed of Trust shall end with respect to such default when the beneficiary of the Leasehold Deed of Trust obtains possession of the Project as aforesaid, which possession shall be deemed to include possession by a receiver;
(viii) if this Lease shall terminate prior to the expiration of the Lease Term, the City shall enter into a new lease for the Project (which shall be deemed to have continued or been reinstated as if this Lease had never been terminated), with any such beneficiary of the Leasehold Deed of Trust or its designee or nominee, for the remainder of the term, effective as of the date of such termination, at the same rent and upon the same terms, covenants and conditions contained herein, except that such new lease shall not guarantee possession of the Project to the new tenant as against the Company and/or anyone claiming under the Company, and the City, simultaneously with the execution and delivery of such new lease, shall turn over to the new tenant all monies, if any, then held by the City under this Lease on behalf of the Company, on condition that:
(A) such beneficiary of the Leasehold Deed of Trust shall make written request for such new lease within thirty (30) days after the date of such termination, and
(B) on the commencement date of the term of the new lease, such beneficiary of the Leasehold Deed of Trust shall cure all defaults of the Company under this Lease (susceptible of being cured by such beneficiary of the Leasehold Deed of Trust) which remain uncured on that date, and shall pay or cause to be paid all unpaid sums which at such time would have been payable under this Lease but for such termination, and shall pay or cause to be paid to the City on that date all expenses, including reasonable counsel fees, court costs and disbursements, incurred by the City in connection with any such default and termination as well as in connection with the execution and delivery of such new lease;
(ix) if such beneficiary of the Leasehold Deed of Trust or its designee or nominee shall become the owner of this Lease either following foreclosure of such Leasehold Deed of Trust or in liquidation of the indebtedness and in lieu of foreclosure thereof and such Leasehold Deed of Trust or its designee or nominee shall have assigned this Lease, such beneficiary of the Leasehold Deed of Trust or its designee or nominee so assigning shall be released from all liability accruing from and after the date of such assignment.
If more than one beneficiary of the Leasehold Deed of Trust shall request such new lease, such new lease shall be made with and delivered to the beneficiary of the Leasehold Deed of Trust (or its nominee or designee) whose deed of trust is prior in lien to those of any others. The opinion of a reputable title insurance company, licensed to insure title to real property in the State of Missouri, setting forth the order of priority of such mortgage liens, may be relied on by the City as conclusive evidence of such priority.
SECTION 10.5. FINANCING DOCUMENTS. The Company, from time to time, may request the City to (i) pledge, assign or otherwise hypothecate all or a portion of its interest in and to the Project in connection with any financings which the Company may undertake with respect to the Project ("Project Financing"), and/or (ii) acknowledge any Project Financing and the rights and remedies of any Project Equipment Lender, as hereinafter in this Section defined, thereunder. Subject to the terms and conditions of this Section 10.5, the City promptly shall execute and deliver, at the Company's request, all UCC financing statements, security documents, acknowledgements, assignments and other Financing Documents securing, evidencing or otherwise pertaining to the Project
Financing; provided, however, that the City and the Trustee shall not be liable for any of the indebtedness evidencing the Project Financing or for any other obligations of the Company, as borrower, under the Financing Documents in the Company's own name or as the authorized agent for the City even if such agency is not specified. No separate signature or authorization from the City shall be required for the execution and delivery of any such Financing Documents. All third parties entering into any Financing Documents or other documents executed in connection therewith or receiving delivery of or the benefit from any Financing Documents or other such documents ("PROJECT EQUIPMENT LENDER") shall be entitled to rely upon the same as having been executed by the Company as the agent for the City, unless the Project Equipment Lender has actual notice that the agency granted herein has been terminated because of an uncured Event of Default hereunder. The City hereby names, appoints and constitutes the Company as its irrevocable attorney-in-fact, coupled with and interest, to execute and deliver on behalf of the City each and every of the Financing Documents, subject to the limitation of liability set forth above.
In the event that the Company consummates a Project Financing with respect to the Project and collateralizes all or a portion of the Project under the Financing Documents, then the following provisions shall be applicable in addition to, but not exclusive of, the Financing Documents or any additional documents to which the City becomes a party with respect to the Project Financing:
(a) This Lease may not be modified, amended, cancelled or surrendered by agreement between the City and the Company, without the prior written consent of the Project Equipment Lender of which the City and the Trustee have received written notice;
(b) There shall be no merger of title between the leasehold estate created under this Lease and the ownership interest held by the City in and to the Project notwithstanding that this Lease or said leasehold estate and ownership interest shall be owned by one and the same person or persons, without the prior written consent of the lender providing financing for the Project (the "Project Lender");
(c) Provided that the mailing address of the Project Lender is provided to the City and the Trustee in writing, the City shall send each Project Lender a copy of each notice of default and each notice of termination given to the Company under this Lease at the same time as such notice is sent to the Company. No such notice to the Company shall be effective unless a copy thereof is served upon each Project Lender;
(d) Each Project Lender shall have the same time period which the Company has after service of any required notice upon it, within which to remedy or cause to be remedied, any payment default under this Lease plus thirty
(30) days, and the City shall accept performance by the Project Lender as timely performance by the Company.
(e) Such Project Lender shall not be required to continue possession or continue foreclosure proceedings hereunder if the particular default has been cured.
(f) The City may exercise any of its rights or remedies with respect to any other default by the Company, subject to the rights of Project Lender;
(g) In the case of default by the Company under this Lease, other than a default in the payment of money, the City shall take no action to effect termination of this Lease by service of a notice or otherwise, without first giving notice to the Project Lender and a reasonable time within which either to obtain possession of the Project and to remedy such default or to institute and to prosecute diligently foreclosure proceedings or otherwise acquire the Company's leasehold estate under this Lease, provided, however, that the City's right to terminate this Lease by reason of a default which is not susceptible to being remedied by the Project Lender shall be null and void and not effective against the Project Lender, its designee, or a purchaser in foreclosure that acquires title to all or a portion of the Project;
(h) If this Lease shall terminate prior to the expiration of the Lease Term, the City may in its sole and absolute discretion enter into a new lease for the Project with the Project Lender or its designee, for the remainder of the Lease Term effective as of the date of termination, upon the same terms and conditions as contained in this Lease, except that such new lease shall not guarantee possession of the Project to the new tenant as against the Company or anyone claiming by or through the Company, and the City, simultaneous with the execution and delivery of such new lease, shall turn over to the new tenant all monies, if any, then held by the City under the Lease on behalf of the Company, on condition that:
(i) The Project Lender shall make written notice of its
election to enter into such new lease within thirty
(30) days after such termination; and
(ii) On the commencement date of the term of the new lease, the new tenant shall cure all defaults of the Company under the Lease susceptible being cured by the payment of money by the Project Lender and shall pay or cause to be paid to the City and the Trustee on that date all reasonable fees, costs, charges and expenses, including reasonable counsel fees and expenses, court costs and
disbursements, incurred by the City and the Trustee in connection with any such default and termination as well as in connection with the execution and delivery of such new lease;
(i) If the Project Lender, its designee or purchaser in foreclosure shall become the new tenant either following foreclosure or in liquidation of the indebtedness, or in lieu of the foreclosure, and thereafter the Project Lender, its nominee or purchaser in foreclosure shall assign its interest in this Lease or any new lease, the same shall be released from all liability occurring from and after the date of such assignment with the express written consent of the City.
In the event that the City or the Trustee engages counsel to review any Financing Documents in connection with any request for the City to execute any of the Financing Documents or otherwise collateralize the Project, then the Company shall reimburse the City or the Trustee for its reasonable counsel fees and expenses incurred in connection with such review.
SECTION 10.6. INDEMNIFICATION OF CITY AND TRUSTEE. The Company shall
indemnify and save the City and the Trustee harmless from and against all
claims, demands, liabilities and losses by or on behalf of any person, firm or
corporation arising from the conduct or management of, or from any work or thing
done in, on or about, the Project during the Lease Term, and against and from
all claims arising during the Lease Term from (a) any condition of the Project
caused by the Company, (b) any breach or default on the part of the Company in
the performance of any of its obligations under this Lease, (c) any contract
entered into in connection with the improvement and installation of the Project,
(d) any act of negligence of the Company or of any of its agents, contractors,
servants, employees or licensees, (e) any act of negligence of any assignee or
sublessee of the Company, or of any agents, contractors, servants, employees or
licensees of any assignee or sublessee of the Company, and (f) ownership of the
Project by the City. The Company shall indemnify and save the City and the
Trustee harmless from and against all fees, penalties, costs, claims, demands,
liabilities, losses and expenses including but not limited to, those items
referenced in Sections 6.2(b) and 8.3(b) of this Lease (except those which have
arisen from the willful misconduct or gross negligence of the City or the
Trustee) incurred in or in connection with any action or proceeding brought
thereon, to this Lease, the Indenture and the Bonds, and upon notice from the
City or the Trustee, the Company agrees to defend them or any of them in any
such action or proceeding (except those which have arisen from the willful
misconduct or gross negligence of the City or the Trustee). The Trustee shall
notify the Company in writing within 14 days after receipt of any claim
described in this Section. Provided that neither the City or the Trustee shall
suffer any loss, cost or liability, the Company shall have complete control of
any payment in settlement or compromise of a claim or satisfaction of a judgment
resulting from a claim described in this Section. This Section 10.6 shall
survive the expiration or other termination of this Lease.
SECTION 10.7. DEPRECIATION, INVESTMENT TAX CREDIT AND OTHER TAX BENEFITS. The City agrees that any depreciation, investment tax credit or any other tax benefits with respect to the Project or any part thereof shall be made available to the Company, and the City will fully cooperate with the Company in any effort by the Company to avail itself of any such depreciation, investment tax credit or other tax benefits.
SECTION 10.8. COMPANY TO MAINTAIN ITS CORPORATE EXISTENCE. The Company agrees that until the Bonds are paid or payment is provided for in accordance with the terms of the Indenture, it will maintain its existence, and will not dissolve or otherwise dispose of all or substantially all of its assets; provided, however, that the Company may, without violating the agreement contained in this Section, consolidate with or merge into another domestic entity (i.e., an entity formed and existing under the laws of one of the states of the United States) or permit one or more other domestic entities to consolidate with or merge into it, or may sell or otherwise transfer to another domestic entity all or substantially all of its assets as an entirety and thereafter dissolve, provided, the surviving, resulting or transferee entity expressly assumes in writing all the obligations of the Company contained in this Lease; and, further provided, that the surviving, resulting or transferee entity, as the case may be, has a consolidated net worth (after giving effect to said consolidation, merger or transfer) at least equal to or greater than that of the Company immediately prior to said consolidation, merger or transfer and there shall be delivered to the City and the Trustee a certificate of an independent certified public accountant to such effect or the surviving or transferee entity is otherwise reasonably acceptable to the City, such acceptability being evidenced to the Trustee by a certificate of the City for such effect. The term "net worth", as used in this Section, shall mean the difference obtained by subtracting total liabilities (not including as a liability any capital or surplus item) from total assets of the Company and all of its subsidiaries. Merger or consolidation with an affiliate of the Company shall not require compliance with this Section 10.8. In any such consolidation, merger or transfer the Company shall comply with the provisions of Section 13.1 hereof to the extent applicable.
SECTION 10.9. SECURITY INTERESTS. The City and the Company agree to
enter into all instruments (including financing statements and statements of
continuation) necessary for perfection of and continuance of the perfection of
the security interests of the City and the Trustee in the Project. The City
shall cause to be filed all such instruments which the Owner of the Bonds shall
deem necessary to be filed and the Trustee shall continue or cause to be
continued the liens of such instruments for so long as the Bonds shall be
Outstanding. The City and the Company shall cooperate with the Trustee in this
regard by executing such continuation statements and providing such information
as the Trustee may require to renew such liens. Additionally, the Trustee shall
maintain a file showing the description of all machinery and equipment
constituting a part of the Project, said file to be compiled from the
certificates furnished to the Trustee pursuant to Section 4.4, Section 4.7 and
Section 8.5 hereof and upon which certification the Trustee may conclusively
rely.
If, at any time during the term of this Lease, the Company changes its state of formation, changes its form of organization, changes its name, or takes any other action which could affect the proper location for filing of Uniform Commercial Code financing statements or continuation statements or which could render existing filings seriously misleading or invalid, the Company shall immediately provide written notice of such change to the City and the Trustee, and thereafter promptly deliver to the City or the Trustee such additional information or documentation regarding such change as the City or the Trustee may reasonably request for the purpose of amendment and/or refilling, at the expense of the Company, as may be reasonably determined to be necessary by City or the Trustee, and their respective attorneys.
SECTION 10.10. ENVIRONMENTAL MATTERS. The Company covenants, represents and warrants to the City and the Trustee, and their respective successors and assigns, that the Project Site and its existing uses have at all times during the period the Company and/or the City has owned the Project Site complied with, and the Project shall comply with, and the Company is not in violation and shall not violate, in connection with the ownership, use, maintenance or operation of the Project and the conduct of the business related thereto, any applicable "Environmental Law", as hereinafter defined, relating to "Hazardous Materials", as hereinafter defined. The term "Environmental Laws" shall mean all Federal, State and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Materials and the rules, regulations, policies, guidelines, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Hazardous Materials Transportation Act, as amended, the Resource Conservation and Recovery Act, as amended, the Toxic Substances Control Act, as amended, the Clean Air Act, the Federal Water Pollution Control Act of 1972, and the Superfund Amendments and Reauthorization Act of 1986. The term "Hazardous Materials" shall mean any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum, petroleum-based products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances or related materials as set forth in any Environmental Law or other materials which may or could pose a hazard to the health and safety of the occupants of the Project or the occupants and/or owners of property near the Project. Without limiting the generality of the foregoing:
(a) The Company, its agents, employees and independent contractors, (i) have and shall operate the Project and have and at all times will receive, handle, use, store, treat, transport and dispose of all Hazardous Materials in strict compliance with all applicable Environmental Laws and other health or safety statutes, ordinances, orders, rules, standards, regulations or requirements, and (ii) have removed from the Project any Hazardous Materials that do not comply with the foregoing;
(b) There are no existing or pending statutes, orders, standards, rules or regulations relating to environmental matters requiring any remedial actions or other work, repairs, construction or capital expenditures with respect to the Project, nor has the Company received any notice of any of the same;
(c) No Hazardous Materials have, to the knowledge of the Company, been or will be released into the environment, or have been spilled, discharged, or disposed of at or on the Project Site except as previously disclosed in writing to City by or on behalf of Company, nor has the Project Site been, or will it be, used at any time by any person as a landfill or a disposal site for Hazardous Materials or for garbage, waste or refuse of any kind;
(d) There are no electrical transformers, except as disclosed in the environmental report provided to the City and the Trustee, or other equipment containing dielectric fluid containing polychlorinated biphenyls located in the Project, on or under the Project Site, nor is there any friable asbestos contained in the Project, nor will the Company permit the installation of same;
(e) There are no underground storage tanks under the Project Site nor, to the knowledge of the Company, have any been removed from the Project Site;
(f) No notices of any violation of any of the matters referred to in the foregoing sections relating to the Project Site or the Project or their use have been received by the Company, and there are no writs, injunctions, decrees, orders or judgments outstanding, and to the knowledge of the Company no lawsuits, claims, proceedings or investigations pending or threatened, relating to the ownership, use, maintenance or operation of the Project, nor is there any basis for any such lawsuit, claim, proceeding or investigation being instituted or filed; and
(g) The Project Site is not listed in the United States Environmental Protection Agency's National Priorities List of Hazardous Waste Sites nor any other log, list, schedule, inventory or record of Hazardous Materials or Hazardous Waste sites whether maintained by the United States, or any state or local governmental unit.
The Company agrees to indemnify and reimburse the City and the Trustee, and their respective successors and assigns, for any breach of these representations and warranties and from any loss, damage, expense or cost arising out of or incurred by the City or the Trustee which is the result of a breach of, misstatement of or misrepresentation of the above covenants, representations and warranties, or for any loss, damage, expense or cost sustained as a result of there being located on the Project any Hazardous Materials or dangerous, toxic or hazardous pollutants, chemicals, wastes or substances, together with all attorneys' fees incurred in connection with the defense of any action against the City, the Trustee or the Company arising out of the above. These covenants, representations, warranties and indemnities shall be deemed continuing covenants, representations, warranties and indemnities running with the land for the benefit of the City and the Trustee, and their respective successors and assigns, including any purchaser at a foreclosure sale, any transferee of the title of the City or the Trustee or any subsequent purchaser thereof at a foreclosure sale, and any subsequent owner of the Project claiming through or under the title of the City or the Trustee and shall survive any acquisition of title of the City or the Trustee. The amount of all such indemnified loss, damage, expense or cost, shall bear interest thereon at the Prime or Base Rate of the Trustee plus two percent (2%), and shall become immediately due and payable in full on demand of the City or the Trustee and their respective successors and assigns. The Company shall be notified in writing of any event requiring indemnification hereunder and the Company shall have the right to defend the City or the Trustee with counsel approved by the City or the Trustee, as the case may be.
SECTION 10.11. OBLIGATIONS UNDER INDENTURE. The Company will perform the obligations assigned to it in the Indenture.
SECTION 10.12. EQUAL OPPORTUNITY IN EMPLOYMENT.
(a) General. The Company will refrain from any unlawful employment practice as presently defined in the Code of Ordinances of the City. The Company will post at its office of employment notices of the provisions of Section 38-132 of the Code of Ordinances of the City. The Company will implement the Certificate of Compliance or Affirmative Action Program submitted to the City. The Company is bound by the terms of Sections 38-81 through 38-82 and Rules and Regulations promulgated for the administration of these sections.
(b) Access to Information. Upon request, the Company will permit the Director of Human Relations of the City, or his designee, to preview documents as necessary to ascertain compliance at the Project Site with the Affirmative Action Program required in connection with this Lease.
(c) Failure to Comply. If the Company shall fail or refuse to comply with the terms of this Article, the Company will be subject to the enforcement provisions of Section 38-83 of the Code of Ordinances of Kansas City, Missouri and the Rules and Regulations promulgated thereunder.
(d) Transmittals. HRD Form 1016-026 will be fully executed and submitted prior to issuance of the Bonds.
SECTION 10.13. SALES TAX OBLIGATION. Notwithstanding any provision to the contrary contained in this Lease, if any taxing authority shall deny the City's exemption from the payment of sales tax on any Project, the Company may, at its costs, contest such denial and if it is ultimately determined that the contested sales tax is due on the Project then the Company shall pay all applicable sales tax on such Project.
ARTICLE XI
OPTION AND OBLIGATION TO PURCHASE THE PROJECT
SECTION 11.1. OPTION TO PURCHASE THE PROJECT. The Company or its successors under this Lease shall have, and is hereby granted, the option to purchase all or a portion of the Project at any time, prior to the expiration of the Lease Term upon payment in full of all or a portion of the Bonds then outstanding or provision for their payment having been made pursuant to Article XIII of the Indenture. To exercise such option the Company shall give written notice to the City and to the Trustee, if any of the Bonds shall then be unpaid or provision for their payment shall not have been made in accordance with the provisions of the Indenture, and shall specify therein the date of closing such purchase, which date shall be not less than thirty (30) nor more than 180 days from the date such notice is mailed, and in case of a redemption of the Bonds in accordance with the provisions of the Indenture the Company shall make arrangements satisfactory to the Trustee for the giving of the required notice of redemption. The purchase price payable by the Company in the event of its exercise of the option granted in this Section shall be the sum of the following:
(a) an amount of money which, when added to the amount then on deposit in the Bond Fund (or the amount deemed then on deposit in the Bond Fund if the Company is the sole Bondowner), will be sufficient to redeem all the then outstanding Bonds on the earliest redemption date as defined in Article III of the Indenture next succeeding the closing date of the purchase, including, without limitation, principal and interest to accrue to said redemption date and redemption expense; plus
(b) an amount of money equal to the Additional Rent due for the remaining Lease Term; plus
(c) an amount of money equal to the Trustee's and the Paying Agent's agreed to and reasonable fees and expenses under the Indenture accrued and to accrue until such redemption of the Bond; plus
(d) the sum of $100.00 for the purchase of all the Project.
At its option, to be exercised at least five (5) days prior to the date of closing such purchase, the Company may deliver to the Trustee for cancellation Bonds not previously paid, and the Company shall receive a credit against the purchase price payable by the Company in an amount equal to 100% of the principal amount of the Bonds so delivered for cancellation.
SECTION 11.2. CONVEYANCE OF THE PROJECT. At the closing of the purchase of the Project pursuant to this Article, the City will upon receipt of the purchase price deliver to the Company the following:
(a) If the Indenture shall not at the time have been satisfied in full, a release from the Trustee of the Project from the lien and/or security interest of the Indenture, in such form as reasonably requested by the Company.
(b) Documents, in such form as reasonably requested by the Company, conveying to the Company or its successors under this Lease legal title to the Project, as it then exists, subject to the following: (i) those liens and encumbrances, if any, to which title to the Project was subject when conveyed to the City; (ii) those liens and encumbrances created by the Company or to the creation or suffering of which the Company consented; (iii) those liens and encumbrances resulting from the failure of the Company to perform or observe any of the agreement on its part contained in this Lease; (iv) Permitted Encumbrances other than the Indenture and this Lease; and (v) if the Project or any part thereof is being condemned, the rights and title of any condemning authority.
SECTION 11.3. RELATIVE POSITION OF OPTION AND INDENTURE. The options and obligation to purchase the Project granted to the Company in this Article shall be and remain prior and superior to the Indenture and may be exercised whether or not the Company is in default under this Lease, provided that such default will not result in nonfulfillment of any condition to the exercise of any such option.
SECTION 11.4. OBLIGATION TO PURCHASE THE PROJECT. The Company or its successors under this Lease hereby agrees to purchase, and the City hereby agrees to sell, all of the Project for the sum of $100.00 at the expiration or termination of the Lease Term following full payment of the Bonds or provision for payment thereof having been made in accordance with the provisions of the Indenture. As a result, the City shall not sell, transfer or convey an interest in the Project except as provided in this Article XI.
ARTICLE XII
DEFAULTS AND REMEDIES
SECTION 12.1. EVENTS OF DEFAULT. If any one or more of the following events shall occur and be continuing, it is hereby defined as and declared to be and to constitute an "Event of Default" or "default" under this Lease:
(a) Default in the due and punctual payment of Basic Rent on the date due or failure to pay Additional Rent within ten (10) days after the Trustee has given the Company written notice of a default in the payment of Additional Rent; or
(b) Default in the due observance or performance of any other covenant, agreement, obligation or provision of this Lease on the Company's part to be observed or performed, which default shall continue for thirty (30) days after the City or the Trustee has given the Company's written notice specifying such default (or such longer period as shall be reasonably required to cure such default; provided that (i) the Company has commenced such cure within said 30-day period, and (ii) the Company diligently prosecutes such cure to completion);
(c) The Company shall: (i) admit in writing its inability to pay
its debts as they become due; or (ii) file a petition in
bankruptcy or for reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under
the Bankruptcy Code as now or in the future amended or any
other similar present or future federal or state statute or
regulation, or file a pleading asking for such relief; or
(iii) make an assignment for the benefit of creditors; or (iv)
consent to the appointment of a trustee, receiver or
liquidator for all or a major portion of its property or shall
fail to have the appointment of any trustee, receiver or
liquidator made without the Company's consent or acquiescence,
vacated or set aside; or (v) be finally adjudicated as
bankrupt or insolvent under any federal or state law; or (vi)
be subject to any proceeding, or suffer the entry of a final
and nonappealable court order, under any federal or state law
appointing a trustee, receiver or liquidator for all or a
major part of its property or ordering the winding-up or
liquidation of its affairs, or approving a petition filed
against it under the Bankruptcy Code, as now or in the future
amended, which order or proceeding, if not consented to by it,
shall not be dismissed, vacated, denied, set aside or stayed
within sixty (60) days after the day of entry or commencement;
or (vii) suffer a writ or warrant of attachment or any similar
process to be issued by any court against all or any
substantial portion of its property, and such writ or warrant
of attachment or any similar process is not contested, stayed,
or is not released within sixty (60) days after the final
entry, or levy or after any contest is finally adjudicated or any stay is vacated or set aside; or
(d) The Company shall vacate or abandon the Project, or shall have been ejected from the Project or any portion thereof by reason of a defect in title to the Project, and the same shall remain uncared for and unoccupied for a period of sixty (60) days.
SECTION 12.2. REMEDIES ON DEFAULT. If any Event of Default referred to in Section 12.1 hereof shall have occurred and be continuing beyond the applicable cure period, then the City may at the City's election (subject, however, to any restrictions against acceleration of the maturity of the Bonds or termination of this Lease in the Indenture), then or at any time thereafter, and while such Event of Default shall continue, take any one or more of the following actions:
(a) cause all amounts payable with respect to the Basic Rent and
Additional Rent for the remainder of the term of the Lease to
become due and payable, as provided in the Indenture thirty
(30) days after written notice of its intention to do so; or
(b) give the Company written notice of intention to terminate this Lease on a date specified therein, which date shall not be earlier than thirty (30) days after such notice is given, and if all defaults have not then been cured, on the date so specified, the Company's rights to possession of the Project shall cease and this Lease shall thereupon be terminated, and the City may re-enter and take possession of the Project; or
(c) having terminated the Lease pursuant to Section 12.2(b) hereof, direct the Trustee to sell the Project; all proceeds from any such sale shall be applied in accordance with Section 908 of the Indenture; or
(d) without terminating this Lease, take possession of the Project pursuant to legal proceedings or pursuant to any notice provided for by law, and having elected to take possession of the Project without terminating this Lease, the City shall use reasonable diligence to relet the Project, or parts thereof, for such term or terms and at such rental and upon such other terms and conditions as the City may deem advisable, with the right to make alterations and repairs to the Project, and no such taking of possession of the Project by the City shall be construed as an election on the City's part to terminate this Lease, and no such taking of possession by the City shall relieve the Company of its obligation to pay Basic Rent or Additional Rent (at the time or times provided herein), or of any of its other obligations under this Lease, all of which shall survive such taking of possession, and the Company shall continue to pay the Basic Rent and Additional Rent provided for in this
Lease until the end of the Lease Term, whether or not the Project shall have been relet, less the net proceeds, if any, of any reletting of the Project after deducting all of the City's reasonable expenses in or in connection with such reletting, including without limitation all repossession costs, brokerage commissions, legal expenses, expenses of employees, alteration costs and expenses of preparation for reletting. Said net proceeds of any reletting shall be deposited in the Bond Fund.
Having elected to take possession of the Project without terminating this Lease under (d) above, the City may (subject, however, to any restrictions against termination of this Lease in the Indenture), by notice to the Company given at any time thereafter while the Company is in default in the payment of Basic Rent or Additional Rent or in the performance of any other obligation under this Lease, elect to terminate this Lease on a date to be specified in such notice, which date shall be not earlier than thirty (30) days after taking possession under (d) above, and if all defaults shall not have then been cured, on the date so specified this Lease shall thereupon be terminated. If in accordance with any of the foregoing provisions of this Article the City shall have the right to elect to take possession of the Project, the City may, subject to the provisions of Section 11.4 hereof, in accordance with local law, enter the Project and remove any portion of the Project without being guilty of any manner of trespass and without prejudice to any remedies for arrears of rent or preceding breach of covenant. The City may take whatever action at law or in equity including causing the appointment of a receiver or receivers for the Company and/or its assets which may appear necessary or desirable to collect rent then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement or covenant of the Company under this Lease.
In the enforcement of any remedy provided in this Section, the Trustee may treat all expenses of enforcement, including reasonable legal, accounting and advertising fees and expenses, as Additional Rent then due and payable by the Company.
Any amount collected pursuant to action taken under this Section shall be paid to the Trustee and applied, first, to the payment of any costs, expenses and fees incurred by the City or the Trustee as a result of taking such action and, next, any balance shall be used to satisfy any payment then due by payment into the Bond Fund and applied in accordance with the Indenture and, then, to satisfy any other Additional Rent then due or to cure any other Event of Default.
SECTION 12.3. SURVIVAL OF OBLIGATIONS. The Company covenants and agrees with the City and Bondowners that its obligations under this Lease shall survive the cancellation and termination of this Lease, for any cause, and that the Company shall continue to pay the Basic Rent and Additional Rent and perform all other obligations provided for in this Lease, all at the time or times provided in this Lease; provided, however, that upon the payment of all Basic Rent and Additional Rent required under Article V hereof, and upon the satisfaction and discharge of the Indenture under
Section 1301 thereof, the Company's obligation under this Lease shall thereupon cease and terminate in full, except that obligations with respect to Section 11.4 hereof, compensation and indemnification of the City and the Trustee required hereunder or in the Indenture shall not so terminate until fully discharged.
SECTION 12.4. PERFORMANCE OF THE COMPANY'S OBLIGATIONS BY THE CITY. If
the Company shall fail to keep or perform any of its obligations as provided in
this Lease in the making of any payment or performance of any obligation, then
the City, or the Trustee in the City's name, may (but shall not be obligated so
to do) upon the continuance of such failure on the Company's part for thirty
(30) days after written notice of such failure is given the Company by the City
or the Trustee, and without waiving or releasing the Company from any obligation
hereunder, as an additional but not exclusive remedy, make any such payment or
perform any such obligation, and all reasonable sums so paid by the City or the
Trustee and all necessary incidental reasonable fees, costs and expenses
incurred by the City or the Trustee in performing such obligations shall be
deemed Additional Rent and shall be paid to the City or the Trustee on demand,
with interest thereon at the prime rate of the Trustee plus two percent (2%) per
annum, and if not so paid by the Company, the City or the Trustee shall have the
same rights and remedies provided for in Section 12.2 hereof in the case of
default by the Company in the payment of Basic Rent.
SECTION 12.5. RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies reserved by the City and the Company hereunder and those provided by law shall be construed as cumulative and continuing rights. No one of them shall be exhausted by the exercise thereof on one or more occasions. The City and the Company shall each be entitled to specific performance and injunctive or other equitable relief for any breach or threatened breach of any of the provisions of this Lease, notwithstanding availability of an adequate remedy at law, and each party hereby waives the right to raise such defense in any proceeding in equity.
SECTION 12.6. WAIVER OF BREACH. No waiver of any breach of any covenant or agreement herein contained shall operate as a waiver of any subsequent breach of the same covenant or agreement or as a waiver of any breach of any other covenant or agreement, and in case of a breach by the Company of any covenant, agreement or undertaking by the Company, the City may nevertheless accept from the Company any payment or payments hereunder without in any way waiving City's right to exercise any of its rights and remedies provided for herein with respect to any such breach or breaches of the Company which were in existence at the time such payment or payments were accepted by the City.
SECTION 12.7. NOTICE OF DEFAULTS UNDER SECTION 12.1; OPPORTUNITY OF COMPANY TO CURE DEFAULTS.
(a) Anything herein to the contrary notwithstanding, no default specified in Section 12.1(b)(c) or (d) shall constitute an Event of Default until actual notice of such default by registered or certified mail shall be given by the Trustee or by the Owners of twenty-five percent (25%) in aggregate principal amount of all Bonds Outstanding to the Company and the Company shall have had thirty (30) days after receipt of such notice to correct said default or cause said default to be corrected, and shall not have corrected said default or caused said default to be corrected within such period; provided, however, if any such default shall be such that it cannot be corrected within such period, it shall not constitute an Event of Default if corrective action is instituted by the Company within such period and diligently pursued until the default is corrected.
(b) With regard to any alleged default concerning which notice is given to the Company under the provisions of this Section, the Company hereby grants the City full authority for account of the Company to perform any covenant or obligation, the nonperformance of which is alleged in said notice to constitute a default, in the name and stead of the Company, with full power to do any and all things and acts to the same extent that the Company could do and perform any such things and acts in order to remedy such default.
SECTION 12.8. TRUSTEE'S EXERCISE OF THE CITY'S REMEDIES. Whenever any Event of Default shall have occurred and be continuing, the Trustee may, but except as otherwise provided in the Indenture shall not be obliged to, exercise any or all of the rights of the City under this Article, upon notice as required of the City unless the City has already given the required notice. In addition, the Trustee shall have available to it all of the remedies prescribed by the Indenture.
ARTICLE XIII
ASSIGNMENT AND SUBLEASE
SECTION 13.1. ASSIGNMENT; SUBLEASE. The Company may assign this Lease in whole or in part, and may sublease the Project as a whole or in part, without the necessity of obtaining the consent of the Trustee, subject, however, to each of the following conditions:
(a) The prior written consent of the City, which consent shall not be unreasonably withheld; provided, however, the consent of the City shall
not be required for a sublease by and between the Company and Ameritrade or an assignment or sublease to or with any successor to the Company or any entity owned by or under common ownership with the Company;
(b) Except upon prior written consent of the City, no assignment or sublease shall relieve the Company from primary liability for any of its obligations hereunder, and in the event of any such assignment or sublease the Company shall continue to remain primarily liable for payment of the Basic Rent and Additional Rent specified in Sections 5.1 and 5.2 hereof and for performance and observance of the other covenants, warranties, representations and agreements on its part herein provided to be performed and observed by it to the same extent as though no assignment or sublease had been made.
(c) Any assignee shall assume the obligations of the Company hereunder to the extent of the interest assigned;
(d) The Company shall, at least thirty (30) days prior to such assignment or sublease, furnish or cause to be furnished to the City and to the Trustee a true and complete copy of each such assignment and assumption of obligations or sublease, as the case may be, unless such assignment or sublease is to or with any successor to the Company or any entity owned by or under common ownership with the Company.
SECTION 13.2. ASSIGNMENT OF REVENUES BY CITY. The City shall assign and pledge any rents, revenues and receipts receivable under this Lease, to the Trustee pursuant to the Indenture as security for payment of the principal of, interest and premium, if any, on the Bonds and the Company hereby consents to such pledge and assignment.
SECTION 13.3. RESTRICTIONS ON SALE OR ENCUMBRANCE OF PROJECT BY CITY. During this Lease Term, the City agrees that, except to secure the Bonds to be issued pursuant to the Indenture, it will not sell, assign, encumber, mortgage, transfer or convey the Project or any interest therein.
ARTICLE XIV
AMENDMENTS, CHANGES AND MODIFICATIONS
SECTION 14.1. AMENDMENTS, CHANGES AND MODIFICATIONS. Except as otherwise provided in this Lease or in the Indenture, after the date hereof and prior to the payment in full of the Bonds (or provision for the payment thereof having been made in accordance with the provisions of the Indenture), this Lease may not be effectively
amended, changed, modified, altered or terminated without the prior written consent of the Trustee, given in accordance with the provisions of the Indenture.
ARTICLE XV
MISCELLANEOUS PROVISIONS
SECTION 15.1. NOTICES. All notices, certificates or other communications required or desired to be given hereunder shall be in writing and shall be deemed duly given when (a) mailed by registered or certified mail, postage prepaid, or (b) sent by overnight delivery or other delivery service which requires written acknowledgment of receipt by the addressee, addressed as follows (except that notices, certificates or communications to the Trustee shall be effective upon receipt):
(a) To the City:
City of Kansas City, Missouri
414 East 12th Street, 1st Floor
Kansas City, Missouri 64106
Attn: City Treasurer
Telecopier Number: (816) 513-1020
and to:
City of Kansas City, Missouri
City Hall
Law Department, 28th Floor
414 East 12th Street
Kansas City, Missouri 64106
Attn: City Attorney
Telecopier Number: (816) 513-3133
(b) To the Company:
MasterCard International, LLC 2200 MasterCard Boulevard O'Fallon, MO 63366 Attention: Michael Manchisi, Senior Vice President - Global Operations Administration and Finance Telecopier Number: (636) 722-6714
(c) To the Trustee:
UMB Bank, N.A.
2401 Grand Boulevard, Suite 200
Kansas City, Missouri 64108
Attn: Corporate Trust Department
Telecopier Number: (816) 860-3021
Except as provided above, all notices given by certified or registered mail as aforesaid shall be deemed fully given as of the date they are so mailed. A duplicate copy of each notice, certificate or other communication given hereunder by the City or the Company to the other shall also be given to the Trustee. The City, the Company and the Trustee may from time to time designate, by notice given hereunder to the others of such parties, such other address to which subsequent notices, certificates or other communications shall be sent.
SECTION 15.2. CITY SHALL NOT UNREASONABLY WITHHOLD CONSENTS AND APPROVALS. Wherever in this Lease it is provided that the City shall, may or must give its approval or consent, or execute supplemental agreements or schedules, the City shall not unreasonably, arbitrarily or unnecessarily withhold, refuse to give or delay such approvals or consents or refuse to execute or delay the execution of such supplemental agreements or schedules.
SECTION 15.3. NET LEASE. The parties hereto agree (a) that this Lease shall be deemed and construed to be a net lease, (b) that the payments of Basic Rent are designed to provide the City and the Trustee funds adequate in amount to pay all principal of and interest accruing on the Bonds as the same become due and payable, (c) that to the extent that the payments of Basic Rent are not sufficient to provide the City and the Trustee with funds sufficient for the purposes aforesaid, the Company shall be obligated to pay, and it does hereby covenant and agree to pay, upon demand therefor, as Additional Rent, such further sums of money, in cash, as may from time to time be required for such purposes, and (d) that if after the principal of and interest on the Bonds and all costs incident to the payment of the Bonds have been paid in full and the Trustee or the City holds unexpended funds received in accordance with the terms hereof such unexpended funds shall, after payment therefrom of all sums then due and owing by the Company under the terms of this Lease, and except as otherwise provided in this Lease and the Indenture, become the absolute property of and be paid over forthwith to the Company.
SECTION 15.4. NO PECUNIARY LIABILITY. No provision, covenant or agreement contained in this Lease, the Indenture or the Bond, or any obligation herein or therein imposed upon the City, or the breach thereof, shall constitute or give rise to or impose upon the City a pecuniary liability or a charge upon the general credit or taxing powers of the City of Kansas City or the State of Missouri. Nothing herein will preclude a proper party in interest from seeking and obtaining, to the extent permitted by law, specific
performance against the City for any failure to comply with any term, condition, covenant or agreement herein or in the Indenture; provided, that no costs, expenses or other monetary relief will be recoverable from the City.
SECTION 15.5. GOVERNING LAW. This Lease shall be construed in accordance with and governed by the laws of Missouri.
SECTION 15.6. BINDING EFFECT. This Lease shall be binding upon and shall inure to the benefit of the City and the Company and their respective successors and assigns.
SECTION 15.7. SEVERABILITY. If for any reason any provision of this Lease shall be determined to be invalid or unenforceable, the validity and enforceability of the other provisions hereof shall not be affected thereby.
SECTION 15.8. EXECUTION IN COUNTERPARTS. This Lease may be executed simultaneously in several counterparts, each of which shall be deemed to be an original and all of which shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed in their respective corporate names and their respective corporate seals to be hereunto affixed and attested by their duly authorized officers, all as of the date first above written.
[The remainder of this page intentionally left blank.]
THIS LEASE AGREEMENT is hereby executed as of the date first hereinabove written.
CITY OF KANSAS CITY, MISSOURI
By: /s/ Kevin Riper
----------------------------------
Director of Finance
[SEAL]
ATTEST:
By: /s/ Linda F. Becker
-----------------------------
City Clerk
|
THIS LEASE AGREEMENT is hereby executed as of the date first hereinabove written.
MASTERCARD INTERNATIONAL, LLC
By: /s/ Frantz Vincent
------------------------------
Name: Frantz Vincent
Title: Vice President
|
(SEAL)
ATTEST:
By: ______________________________________________ Name: ______________________________________________ Title: ______________________________________________
ACKNOWLEDGMENT
STATE OF MISSOURI )
) SS.
COUNTY OF JACKSON )
|
On this _____ day of April, 2003, before me, a Notary Public in and for said State, personally appeared Kevin Riper who acknowledged himself to be the Director of Finance of the CITY OF KANSAS CITY, MISSOURI, and Linda Becker, who acknowledged herself to be the City Clerk of the CITY OF KANSAS CITY, MISSOURI, a constitutional charter city and municipal corporation organized and existing under the laws of the State of Missouri, and that they, as such Director of Finance and City Clerk are authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the City by themselves as Director of Finance and City Clerk.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year last above written.
My Appointment Expires:
ACKNOWLEDGMENT
STATE OF _________ )
) SS.
COUNTY OF ________ )
|
On this _____ day of April, 2003, before me, the undersigned, a Notary Public, appeared _______________________, to me personally known, who, being by me duly sworn, did say that he/she is the _______________________ of MasterCard International, LLC, a Delaware limited liability company, and that said instrument was signed in behalf of said company by authority of its sole member, and said ____________________acknowledged said instrument to be executed for the purposes therein stated and as the free act and deed of said company.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year last above written.
My Appointment Expires:
EXHIBIT A
PROJECT SITE
TRACT 1: (THE ESTATE OR INTEREST IN THIS TRACT WHICH IS FEE SIMPLE)
All of LOT 2, T.W.A. ADMINISTRATIVE CENTER, a subdivision in Kansas City, Platte County, Missouri, according to the recorded plat thereof, filed in Flat Book 17, Page 88, described as follows: Commencing at the Northwest corner of the Southeast 1/4 of Section 23, Township 52, Range 34; thence South 89 degrees 42 minutes 46 seconds East along the North line of said Southeast 1/4, 237.97 feet to the Northwest corner of said LOT 2, said point being the point of beginning of the tract to be described herein; thence South 89 degrees 42 minutes 46 seconds East, along the North line of said LOT 2, 1087.49 feet to the Westerly Right-of-Way line of Ambassador Drive; thence South 00 degrees 16 minutes 50 seconds West along said Right-of-Way line, 30.00 feet; thence North 89 degrees 42 minutes 46 seconds West, parallel with the North line of said LOT 2,574.65 feet; thence South 00 degrees 16 minutes 50 seconds West, parallel with the West line of said Ambassador Drive 626.92 feet; thence North 89 degrees 42 minutes 46 seconds West, parallel with the North line of said Lot 2,493.19 feet to the Easterly Right-of-Way line of interstate No. 29, said line also being the West line of said Lot 2; thence Northerly along said line, on a curve to the left, having a radius of 11,589.16 feet and an Initial tangent bearing of North 00 degrees 11 minutes 33 seconds East, an arc distance of 657.31 feet to the point of beginning, located as shown on that certain Survey prepared by Robert L. Buford Land Surveyors under seal of Charles E. Kutz, Missouri Registered Land Surveyor #2379, dated August 22, 2002, last revised October 16, 2002 and referred to as Job No. P-02117.
TRACT 2: (THE ESTATE OR INTEREST IN THIS TRACT IS EASEMENT)
A non-exclusive, perpetual appurtenant easement for Ingress and Egress and Parking established in Document No. 14289, in Book 670, Page 517, as amended by the instrument recorded May 5, 1993, as Document No. 6108, in Book 790, Page 89, and as amended by the instrument recorded April 29, 1994, in Book 811, Page 904, as Document No. 7138, over the following described property: Commencing at the Northwest corner of said Southeast 1/4; thence South 89 degrees 42 minutes 46 seconds East, along the North line of said Southeast 1/4, 750.81 feet to the point of beginning of the easement to be described herein; thence South 89 degrees 42 minutes 46 seconds East, continuing along said North line, 149.00 feet; thence South 00 degrees 16 minutes 50 seconds West, parallel with the East line of Lot 1, T.W.A., ADMINISTRATIVE CENTER 498.65 feet; thence South 89 degrees 42 minutes 46 seconds East, parallel with the North line of said Southeast 1/4, 425.65 feet to the West right-of way line of Ambassador Drive; thence South 00 degrees 16 minutes 50 seconds West, along said right-of-way line, 50.00 feet; thence North 89 degrees 42 minutes 46 seconds West, parallel with the North line of said Southeast 1/4, 494.65 feet; thence South 00 degrees 16 minutes 50 seconds West, 180.00 feet; thence North 89 degrees 42 minutes 46 seconds West 80.00 feet; thence North 00 degrees 16 minutes 50 seconds East 71.73 feet to the Southeast corner of Lot 2, T.W.A. ADMINISTRATIVE CENTER; thence North 00 degrees 16 minutes 50 seconds East along the Easterly line of said lot 2 and its Northerly
prolongation, 656.92 feet to the point of beginning, located as shown on that certain Survey prepared by Robert L. Buford Land Surveyors under seal of Charles E. Kutz, Missouri Registered Land Surveyor #2379, dated August 22, 2002, last revised October 16, 2002 and referred to as Job No. P-02117.
TRACT 3: (THE ESTATE OR INTEREST IN THIS TRACT IS EASEMENT)
Sanitary sewer easement established in Document No. 14290, in Book 670, Page 518, described as follows: a strip of land 10.00 feet in width in the Southeast 1/4 of Section 23, Township 52, Range 34, Kansas City, Platte County, Missouri, lying 5.00 feet on each side of the following described centerline: Commencing at the Northwest corner of the Southeast 1/4 of said Section 23; thence South 89 degrees 42 minutes 46 seconds East along the North line of said Southeast 1/4, 750.81 feet; thence South 0 degrees 16 minutes 50 seconds West, 601.42 feet to the true point of beginning oE the centerline to be herein described; thence South 59 degrees 35 minutes 51 seconds East, 57.27 feet to the point of termination, located as shown on that certain Survey prepared by Robert L. Buford Land Surveyors under seal of Charles E. Kutz, Missouri Registered Land Surveyor #2379, dated August 22, 2002, last revised October 16, 2002 and referred to as Job No. P-02117
TRACT 4: (THE ESTATE OR INTEREST IN THIS TRACT IS EASEMENT)
Gas line easement established by the instrument recorded May 5, 1993, as
Document No. 6111, Book 790, Page 92. and as amended and restated ay that
certain instrument recorded April 29, 1994. in Book 811, Page 903, as Document
No. 7137, described as follows: A Strip of land 15 feet in width, over and
across Lot 1, T.W.A. ADMINISTRATIVE CENTER, a subdivision of land in Kansas
City, Platte County, Missouri, according to the recorded plat of such
subdivision, recorded in Deed Book 17, Page 88, Platte County, Missouri,
records, lying 7.5 feet on either side of the following described centerline:
Beginning at a point on the North line of said Lot 1, said point being North 89
degrees 42 minutes 46 seconds West along said North line, 276.34 feet from the
Southeast corner of Lot 2, said T.W.A. ADMINISTRATIVE CENTER; thence South 00
degrees 17 minutes 14 seconds West 127.20 feet; thence North 89 degrees 42
minutes 46 seconds West, 217.17 feet to a point on the West line of said Lot 1,
and the point of termination of said centerline. Said centerline and the Gas
line easement being located as shown on that certain Survey prepared by Robert
L. Buford Land Surveyors under seal of Charles E. Kutz, Missouri Registered Land
Surveyor #2379, dated August 22, 2002, last revised October 16, 2002 and
referred to as Job No. P-02117.
TRACT 5: (THE ESTATE OR INTEREST IN THIS TRACT IS EASEMENT)
Storm sewer easement established by the instrument recorded May 5, 1993, as document No. 6113, Book 790, Page 94, and as amended and restated by the certain instrument recorded April 29, 1994, in Book 811, Page 902, as Document No. 7136, across a portion of Lot 1. T.W.A. Administrative Center, as more specifically described therein, and located as shown on that certain Survey prepared by Robert L. Buford Land Surveyors under seat of Charles E. Kutz, Missouri Registered Land Surveyor #2379, dated August 22, 2002, last revised October 16, 2002 and referred to as Job No. P-02117.
TRACT 6: (THE ESTATE OR INTEREST IN THIS TRACT IS EASEMENT)
Electric line easement established by the instrument recorded May 5, 1993, as Document No. 6112, Book 790, Page 93, corrected by the instrument recorded August 12, 1993, as Document No.12098 in Book 796, Page 56, and as amended and restated by the certain instrument recorded April 29, 1994, in Book 811, Page 905, as Document No. 7139, described as follows: A strip of land 15 feet in width, over and across Lot 1, T.W.A. Administrative Center, a subdivision of land in Kansas City, Platte County, Missouri, according to the recorded plat of such subdivision, recorded in Deed Book 17, Page 88, Platte County, Missouri records, lying 7.5 feet on either side of the following described centerline; Beginning at a point on the North line of said Lot 1, said point being 50.35 feet East from the Northwest corner of said Lot 1 and the Southwest corner of Lot 2, T.W.A. Administrative Center, recorded in the aforesaid plat of subdivision; thence South 11 degrees 15 minutes 27 seconds West, 226.24 feet to a point located 8.12 feet from the West line of said Lot 1, at the point of termination of said centerline, said point of termination being shown as Manhole No. 8, which Manhole No. 8, together with centerline and the Electric Line Easement all being located as shown on that certain Survey prepared by Robert L. Buford Land Surveyors under seal of Charles E. Kutz, Missouri Registered Land Surveyor #2379, dated August 22, 2002, last revised October 16, 2002 and referred to as Job No. P-02117.
TRACT 7; (THE ESTATE OR INTEREST IN THIS TRACT WHICH IS LEASEHOLD)
The leasehold estate created by the Conduit Lease executed by Trans World
Airlines, Inc., to Worldspan, L.P. a Delaware limited partnership, for a term of
years commencing May 1,1993 and ending April 30, 2092 (or upon such earlier
date as provided therein) recorded in Book 811, Page 910, as Document No. 7144,
in and to the Tenant Conduits (as defined in such Conduit Lease) and the
electrical lines therein contained located in the Duct Bank (as defined in such
Conduit Lease) such Duct Bank being located in a tract of land being 7.5 feet on
either side of the following described centerline: A strip of land 15 feet in
width, over and across Lot l, T.W.A. Administrative Center, a subdivision of
land in Kansas City, Platte County, Missouri, according to the recorded plat of
such subdivision, recorded in Deed Book 17, Page 88, Platte County, Missouri
records, lying 7.5 feet on either side of the following described centerline:
Beginning at a point on the North line of said Lot 1, said point being 50.35
feet East from the Northwest corner of said Lot 1 and the Southwest corner of
Lot 2, T.W.A. Administrative Center, recorded in the aforesaid plat of
subdivision; thence South 11 degrees 15 minutes 27 seconds West, 226.24 feet to
a point located 8.12 feet from the West line of said Lot 1, at the point of
termination of said centerline, said point of termination being shown as Manhole
No. 8, on that certain Plat of Survey dated May 4, 1993, last revised July
20,1993, prepared for PARS Service Partnership by Anderson Survey Company, (the
"Anderson Survey"), together with a strip of land 15 feet in width, over and
across Lot 2, T.W.A., Administrative Center, a subdivision of land in Kansas
City, Missouri, according to the aforesaid recorded plat, lying 7.5 feet on
either side of the following described centerline: Beginning at a point on the
South line of said Lot 2, said point being 50.35 feet East from the Southwest
corner of said Lot 2 and the Northwest corner of Lot 1, as described above;
thence in a Northeasterly direction to Manhole 8A as described and shown on the
Anderson Survey, together with a strip of land 15 feet in
width, over and across Lot 1, T.W.A. Administrative Center, Interstate Rte. 29, N.W. 115th Street and property known as Kansas City International Airport, being 7.5 feet on either side of the following described centerline: Commencing at Manhole No. 8 as described above on such Lot 1; thence over and across such Lot 1, Interstate Rte. 29, N.W. 115th Street and Kansas City International Airport the courses and distances shown and set forth on the Anderson Survey along the Strip of land being thereon identified as the "underground duct bank", to the point of termination, said point of termination being shown on the Anderson Survey as the Switch Gear Building. The aforesaid centerlines, and the location of the Tenant Conduits and the Duct Bank being more particularly described and shown on the Anderson Survey
EXHIBIT B
PROJECT IMPROVEMENTS AND PROJECT EQUIPMENT
All buildings, structures, improvements, equipment and machinery located on or to be acquired or purchased for the construction and improvement and equipping of the project Site pursuant to Article IV hereof and paid and all personal property, including, without limitation, furniture, fixtures, machinery, equipment and parts or other personal property installed or acquired or to be acquired for installation on the Project Site pursuant to Article IV hereof and paid for in whole or in part from the proceeds of Bonds and all replacements thereof and substitutions therefor made pursuant to the Lease.
EXHIBIT C
FORM OF REQUISITION CERTIFICATE
Requisition No. _________
Date: __________________
REQUISITION CERTIFICATE
TO: UMB Bank, N.A., AS TRUSTEE UNDER A TRUST INDENTURE DATED AS OF April 1,
2003, BETWEEN THE CITY OF KANSAS CITY, MISSOURI, AND THE TRUSTEE, AND
LEASE AGREEMENT DATED AS OF, BETWEEN THE CITY OF KANSAS CITY, MISSOURI,
AND MasterCard International.
The undersigned hereby requests that a total of $_____________ be paid for Project Costs (as defined in said Lease) in such amounts, to such payees and for such purposes as set forth on Schedule 1 attached hereto.
We hereby state and certify that: (a) the amounts requested are or were necessary and appropriate in connection with the acquisition, improvement and installation of the Project, have been properly incurred and are a proper charge against the Project Fund, and have been paid by or are justly due to the persons whose names and addresses are set forth on Schedule 1, for the Project Equipment detailed on Schedule 2 and have not been the basis of any previous requisition from the Project Fund; (b) as of this date, except for the amounts referred to above, there are, to the best of our knowledge, no outstanding statements which are due and payable for labor, wages, materials, supplies or services in connection with the acquisition and installation of the Project which, if unpaid, might become the basis of a vendors', mechanics', laborers' or materialmen's statutory or similar lien upon the Project or any part thereof, unless any such lien is being contested pursuant to Section 8.3(b) of the Lease; and (c) no part of the several amounts paid or due as stated above has been or is being made the basis for the withdrawal of any moneys from the Project Fund in any previous or pending application for payment made pursuant to said Lease.
For any payee which is the Company the undersigned hereby instructs the
Trustee to make such payment by electronic transfer to the following account:
Bank Name: ____________________, Bank Location: __________________, ABA No.
________________, Credit Account No. __________________, Account Name
_________________, ([______________]), Contact Person:
______________________________.
MasterCard International, LLC
By: ___________________________________
Name: _________________________________
Authorized Company Representative
SCHEDULE 1 TO REQUISITION CERTIFICATE
Amount Payee and Address Description ------ ----------------- ----------- |
SCHEDULE 2
PROJECT EQUIPMENT
EXHIBIT D
[Insert PILOT Schedule]
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
I, Robert W. Selander, certify that:
1. I have reviewed this quarterly report on Form 10-Q of MasterCard
Incorporated;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
5. The registrant’s other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent
functions):
Date: August 8, 2003
RULE 13a-14(a)/15d-14(a),
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) Evaluated the effectiveness of the registrant’s disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant’s internal
control over financial reporting that occurred during the registrant’s most
recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal control over financial
reporting; and
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
By:
/s/ ROBERT W. SELANDER
Robert W. Selander
President and
Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
I, Chris A. McWilton, certify that:
1. I have reviewed this quarterly report on Form 10-Q of MasterCard
Incorporated;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
5. The registrant’s other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent
functions):
Date: August 8, 2003
RULE 13a-14(a)/15d-14(a),
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) Evaluated the effectiveness of the registrant’s disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant’s internal
control over financial reporting that occurred during the registrant’s most
recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal control over financial
reporting; and
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
By:
/s/ CHRIS A. MCWILTON
Chris A. McWilton
Senior Vice President, Controller and
Acting Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
In connection with the Quarterly Report of MasterCard Incorporated (the
“Company”) on Form 10-Q for the period ending June 30, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Robert
W. Selander, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant
to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my
knowledge:
1. The Report fully complies with the requirements of section 13 (a) or
15 (d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ ROBERT W. SELANDER
August 8, 2003
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
Robert W. Selander
President and Chief Executive Officer
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
In connection with the Quarterly Report of MasterCard Incorporated (the
“Company”) on Form 10-Q for the period ending June 30, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Chris
A. McWilton, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant
to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my
knowledge:
1. The Report fully complies with the requirements of section 13 (a) or
15 (d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ CHRIS A. McWILTON
August 8, 2003
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
Chris A. McWilton
Senior Vice President, Controller and
Acting Chief Financial Officer