SENIOR SUBORDINATED BRIDGE LOAN AGREEMENT

Exhibit 10.2

 

$383,612,600

SENIOR SUBORDINATED

BRIDGE LOAN AGREEMENT

Dated as of October 17, 2005,

Among

AFFINION GROUP HOLDINGS, INC.,

AFFINION GROUP, INC.,

as Borrower,

THE LENDERS PARTY HERETO,

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Administrative Agent,

DEUTSCHE BANK SECURITIES INC.,

as Syndication Agent,

and

BANC OF AMERICA BRIDGE LLC,

and

BNP PARIBAS SECURITIES CORP.,

as Documentation Agents

 

CREDIT SUISSE FIRST BOSTON LLC,

as Joint Lead Arranger and Joint Bookrunner

and

DEUTSCHE BANK SECURITIES INC.,

as Joint Lead Arranger and Joint Bookrunner

 

TABLE OF CONTENTS

 

 

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Exhibits and Schedules

 

 

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SENIOR SUBORDINATED BRIDGE LOAN AGREEMENT (this “ Agreement ”), dated as of October 17, 2005, among AFFINION GROUP HOLDINGS, INC., a Delaware corporation (“ Holdings ”), AFFINION GROUP, INC., a Delaware corporation (the “ Borrower ”), the LENDERS (as hereinafter defined) from time to time party hereto, CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as administrative agent for the Lenders (“ Credit Suisse ” or, together with any successor administrative agent appointed pursuant hereto, in such capacity, the “ Administrative Agent ”), DEUTSCHE BANK SECURITIES INC. (“ DBSI ”), as syndication agent (in such capacity, the “ Syndication Agent ”) and BANC OF AMERICA BRIDGE LLC (“ Banc of America Bridge ”) and BNP PARIBAS SECURITIES CORP. (“ BNPPSC ”), as documentation agents (in such capacity, each, a “ Documentation Agent ” and together, the “ Documentation Agents ”).

WHEREAS, Holdings was organized by the Fund, to acquire (the “ Acquisition ”) (a) all of the Equity Interests in Cendant Marketing Group, LLC (formerly, Cendant Membership Services Holdings LLC, “ CMG ”), a Delaware limited liability company and a direct wholly owned subsidiary of Cendant Corporation, a Delaware corporation (the “ Seller ”), and (b) 10,000,000 ordinary shares of £1 each in the capital of Cendant International Holdings Limited, a private company limited by shares incorporated in England and Wales with registered number 3458969 and an indirect wholly owned subsidiary of the Seller (“ CIH ” and, together with CMG, the “ Companies ”);

WHEREAS, in order to effect the Acquisition, Holdings created the Borrower, its wholly owned Subsidiary, and the Seller, Holdings and the Borrower entered into the Purchase Agreement, dated as of July 26, 2005 (as amended by Amendment No. 1, dated as of the date hereof, and as further amended from time to time in accordance with the terms hereof and thereof, the “ Purchase Agreement ”), setting forth the terms and conditions of the Acquisition;

WHEREAS, in connection with the consummation of the Acquisition and the payment of certain fees and expenses related thereto, the Borrower has requested the Lenders to extend credit in the form of Bridge Loans on the Closing Date in an aggregate principal amount not in excess of $383,612,600.

NOW, THEREFORE, the Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

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

“ Acquisition ” shall have the meaning assigned to such term in the recitals hereto.

“ Adjusted Eurocurrency Rate ” shall mean, for any Interest Period, an interest rate per annum equal to the rate per annum obtained by dividing (i) the rate per annum

determined by the Administrative Agent at approximately 11:00 a.m. (London time), on the date that is two Business Days prior to the commencement of such Interest Period by reference to the British Bankers’ Association Interest Settlement Rates for deposits in U.S. Dollars (as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rates) for a period equal to such interest period or to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in U.S. Dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period, by (ii) a percentage equal to 100% minus the Eurocurrency Rate Reserve Percentage for such Interest Period.

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

“ Administrative Questionnaire ” shall mean an Administrative Questionnaire in the form of Exhibit B or in such other form as may be supplied by the Administrative Agent.

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

“ Agent Parties ” shall have the meaning assigned to such term in Section 10.18(c) .

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

“ Agreement ” shall have the meaning assigned to such term in the preamble hereto, as amended from time to time in accordance with the terms hereof.

“ Applicable Insurance Laws and Regulations ” shall mean any laws, rules and regulations of any government or governmental authority or agency, including of any Applicable Insurance Regulatory Authority, applicable to the Insurance Business or the Insurance Subsidiaries.

“ Applicable Insurance Regulatory Authority ” shall mean, when used with respect to any Insurance Subsidiary, the insurance department or similar administrative authority or agency located in (x) the state or other jurisdiction in which such Insurance Subsidiary is domiciled or (y) to the extent asserting regulatory jurisdiction over such Insurance Subsidiary, the insurance department, authority or agency in each state or other jurisdiction in which such Insurance Subsidiary is licensed, and shall include any Federal insurance regulatory department, authority or agency that may be created in the future and that asserts regulatory jurisdiction over such Insurance Subsidiary.

“ Approved Fund ” shall have the meaning assigned to such term in Section 10.04(b) .

 

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“ Asset Acquisition ” shall mean, for purposes of calculating any financial ratios, any Permitted Business Acquisition the aggregate consideration for which exceeds $1,000,000.

“ Asset Disposition ” shall mean, for purposes of calculating any financial ratios, any sale, transfer or other disposition by the Borrower or any Subsidiary to any person other than the Borrower or any Subsidiary, to the extent otherwise permitted hereunder of any asset or group of related assets (other than inventory or other assets sold, transferred or otherwise disposed of in the ordinary course of business) in one or a series of related transactions, the Net Proceeds from which exceed $1,000,000.

“ Assignee ” shall have the meaning assigned to such term in Section 10.04(b) .

“ Assignment and Acceptance ” shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent and the Borrower (if required by Section 10.04 ), in the form of Exhibit A or such other form as shall be approved by the Administrative Agent.

“ Available Free Cash Flow Amount ” shall have the meaning assigned to such term in, and shall be calculated to be same as such amount in, the Credit Agreement.

“ Banking Subsidiary ” shall mean any Subsidiary that is an Insured Depository Institution (as defined in Section 3 of the Federal Deposit Insurance Act, 12 U.S.C. § 1813).

“ Bankruptcy Law ” means Title 11, U.S. Code, or any similar foreign, federal or state law for the relief of debtors.

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

“ Board of Directors ” shall mean, as to any person, the board of directors or managers, as applicable, of such person (or, if such person is a partnership, the board of directors or other governing body of the general partner of such person) or any duly authorized committee thereof.

“ Borrower ” shall have the meaning assigned to such term in the preamble hereto.

“ Borrowing ” shall mean the incurrence of the Bridge Loans.

“ Borrowing Request ” shall mean a request by the Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit C .

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

“ Bridge Loans ” shall mean the initial loans made by the Lenders to the Borrower pursuant to clause (a)  of Section 2.01 and shall include any interest in excess of the Cash Cap to the extent paid in the form of additional Bridge Loans pursuant to Section 2.13(a)(iii) .

“ Budget ” shall have the meaning assigned to such term in Section 5.04(f) .

 

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“ Business Day ” shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided , that when used in connection with a Eurocurrency Loan, the term “ Business Day ” shall also exclude any day on which banks are not open for dealings in deposits in the applicable currency in the London interbank market.

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

“ Cash Cap ” shall have the meaning assigned to such term in Section 2.13(a)(iii) .

“ Cash Interest Expense ” shall mean, with respect to any person on a consolidated basis for any period, Interest Expense for such period, less , without duplication, the sum of (a) pay-in-kind Interest Expense or other noncash Interest Expense (including as a result of the effects of purchase accounting), (b) to the extent included in Interest Expense, the amortization of any financing fees paid by, or on behalf of, Holdings, the Borrower or any Subsidiary, including such fees paid in connection with the Transactions, (c) the amortization of debt discounts, if any, or fees in respect of Swap Agreements and (d) cash interest income of Holdings, the Borrower and the Subsidiaries for such period; provided , that Cash Interest Expense shall exclude any one-time financing fees paid in connection with the Transactions or one-time amendment fees paid in connection with any amendment of this Agreement.

“ Cendant ” shall mean Cendant Corporation, a Delaware corporation.

A “ Change in Control ” shall be deemed to occur if:

(a) a majority of the seats (other than vacant seats) on the Board of Directors of Holdings shall at any time be occupied by persons who were neither (a) nominated by the Board of Directors of Holdings or a Permitted Holder, (b) appointed by directors so nominated nor (c) appointed by the Fund or a Fund Affiliate; or

(b) a “ change of control ” shall occur under (i) the Senior Notes, any Senior Subordinated Notes or any Demand Securities or any Permitted Refinancing Indebtedness in respect of any of the foregoing, (ii) the Seller Preferred Equity or (iii) any Material Indebtedness; or

(c) Holdings shall fail to own, directly or indirectly, beneficially and of record, 100% of all issued and outstanding Equity Interests of the Borrower; or

(d) Permitted Holders, collectively, shall fail to own beneficially, directly or indirectly, in the aggregate Equity Interests representing at least 51% of (i) the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of Holdings or (ii) the common stock represented by the issued and outstanding Equity Interests of Holdings.

 

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“ Change in Law ” shall mean (a) the adoption of any law, rule or regulation after the Closing Date, (b) any change in law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender (or, for purposes of Section 2.15(b) , by any lending office of such Lender or by such Lender’s holding company, if any) with any written request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date.

“ Charges ” shall have the meaning assigned to such term in Section 10.09 .

“ CIH ” shall have the meaning assigned to such term in the recitals hereto.

“ Closing Date ” shall mean October 17, 2005.

“ CMG ” shall have the meaning assigned to such term in the recitals hereto.

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

“ Commitment ” shall mean, with respect to each Lender, the commitment of such Lender to make Bridge Loans hereunder on the Closing Date, expressed as an amount representing the maximum aggregate permitted principal amount of the Bridge Loans to be made by such Lender hereunder on the Closing Date. The initial amount of each Lender’s Commitment is set forth on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable. The initial aggregate amount of the Lenders’ Commitments is $383,612,600.

“ Communications ” shall have the meaning assigned to such term in Section 10.18(a) .

“ Companies ” shall have the meaning assigned to such term in the recitals hereto.

“ Conduit Lender ” shall mean any special purpose corporation organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument; provided , that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender; provided , further that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 2.15 , 2.16 , 2.17 or 10.05 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (b) be deemed to have any Commitment.

“ Consolidated Debt ” at any date shall mean the sum of (without duplication) all Indebtedness (other than letters of credit, to the extent undrawn) consisting of Capital Lease Obligations, bankers’ acceptances, Indebtedness for borrowed money, Disqualified Stock and Indebtedness in respect of the deferred purchase price of property or services of the Borrower and the Subsidiaries determined on a consolidated basis on such date.

 

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“ Consolidated Fixed Charges ” shall mean, with respect to the Borrower and the Subsidiaries on a consolidated basis for any period, the sum, without duplication, of:

(a) the consolidated interest expense (net of interest income) to the extent it relates to Indebtedness of the Borrower and the Subsidiaries for such period, and to the extent such expense was deducted in computing Consolidated Net Income, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to obligations under any Swap Agreement, but excluding the amortization or write-off of deferred financing fees or expenses of any bridge or other financing fee in connection with the Transactions; plus

(b) the consolidated interest of the Borrower and the Subsidiaries that was capitalized during such period; plus

(c) any interest expense on Indebtedness of another person that is Guaranteed by the Borrower and the Subsidiaries or secured by a Lien on assets of the Borrower and the Subsidiaries, whether or not such Guarantee or Lien is called upon;

in each case, on a consolidated basis and in accordance with GAAP.

“ Consolidated Leverage Ratio ” shall mean, on any date, the ratio of (a) Consolidated Total Debt as of such date to (b) EBITDA for the period of four consecutive fiscal quarters most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP; provided , that to the extent any Asset Disposition or Asset Acquisition (or any similar transaction or transactions that require a waiver or a consent of the provisions of Section 6.04 or Section 6.05 by the Required Lenders pursuant to Section 10.08 and such waiver or consent has been obtained in accordance with the terms hereof), including the Transactions, has occurred during the relevant Test Period, EBITDA shall be determined for the respective Test Period on a Pro Forma Basis for such occurrences.

“ Consolidated Net Income ” shall mean, with respect to any person for any period, the aggregate of the Net Income of such person and its subsidiaries for such period, on a consolidated basis, plus the amount that the provision for taxes exceeds cash taxes paid by such Person and its Restricted Subsidiaries in such period; provided , however , that, without duplication,

(a) any net after-tax extraordinary or nonrecurring or unusual gains, losses, income, expense or charges (less all fees and expenses relating thereto), including, without limitation, any severance, relocation or other restructuring costs and transition expenses incurred as a direct result of the transition of the Borrower to an independent operating company in connection with the Transactions and fees, expenses or charges related to any offering of Equity Interests of such person, any Investment, any acquisition or any offering of Indebtedness permitted to be incurred by this Agreement (in each case,

 

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whether or not successful), including any such fees, expenses or charges related to the Transactions, in each case, shall be excluded;

(b) any increase in amortization or depreciation or any one-time non-cash charges resulting from purchase accounting in connection with any acquisition that is consummated on or after the Closing Date shall be excluded;

(c) the cumulative effect of a change in accounting principles during such period shall be excluded;

(d) any net after-tax gains or losses on disposal of discontinued operations shall be excluded;

(e) any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to business dispositions or asset dispositions other than in the ordinary course of business (as determined in good faith by senior management or the Board of Directors of the Borrower) shall be excluded;

(f) any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of indebtedness shall be excluded;

(g) the Net Income for such period of any person that is not a subsidiary of such person, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments actually paid in cash (or to the extent converted into cash) to the referent person or a subsidiary thereof in respect of such period;

(h) the Net Income for such period of any subsidiary of such person shall be excluded to the extent that the declaration or payment of dividends or similar distributions by such subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such subsidiary or its equityholders, unless such restrictions with respect to the payment of dividends or similar distributions have been legally waived; provided , that the Consolidated Net Income of such person shall be increased by the amount of dividends or other distributions or other payments actually paid in cash (or converted into cash) by any such subsidiary to such person or a subsidiary of such person (subject to the provisions of this clause (h) ) , to the extent not already included therein;

(i) any non-cash impairment charge or asset write-off resulting from the application of Statement of Financial Accounting Standards No. 142 and 144, and the amortization of intangibles arising pursuant to No. 141, shall be excluded;

(j) any non-cash expenses realized or resulting from employee benefit plans or post-employment benefit plans, grants of stock appreciation or similar rights, stock

 

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options or other rights to officers, directors and employees of such person or any of its Subsidiaries shall be excluded;

(k) any one-time non-cash compensation charges shall be excluded;

(l) non-cash gains, losses, income and expenses resulting from fair value accounting required by Statement of Financial Accounting Standards No. 133 and related interpretations shall be excluded;

(m) the effects of purchase accounting as a result of the Acquisition shall be excluded;

(n) accruals and reserves that are established within twelve months after the Closing Date and that are so required to be established in accordance with GAAP shall be excluded (until such time as such items require an expenditure of cash); and

(p) to the extent not already reflected in Consolidated Net Income, the amount of any accrual, reserve or other charge that reduces Net Income of such Person that was taken in respect of expected or actual Losses by reason of (x) any legal proceedings disclosed in the Offering Circular, including the financial statements included therein, or relating to the same facts and circumstances as disclosed, or (y) a breach or violation of law, in each case, shall be excluded; provided , that (as certified in a Certificate delivered to the Administrative Agent and signed by any two of the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Borrower) the Borrower has (i) a reasonable good faith belief that it is entitled to be indemnified by Cendant pursuant to the Purchase Agreement in respect of such Losses in an amount greater than or equal to the amount to be excluded from the calculation of Consolidated Net Income pursuant to this clause (p)  and (ii) provided Cendant a notice in respect of the Borrower’s intent to seek indemnity; provided , further , that (x) if Net Income is increased as a result of any amounts received from Cendant in respect of such an indemnity and the right to be so indemnified was used in a prior period to increase Consolidated Net Income pursuant to this clause (p) , such amounts received shall be excluded from Consolidated Net Income and (y) to the extent the actual indemnity received is less than the expected indemnity amount excluded in a prior period pursuant to this clause (p) , Consolidated Net Income shall be reduced by the difference in the period in which such lower actual indemnity amounts are received or in which a final judgment of a court of competent jurisdiction is made that the Borrower is entitled to no indemnity.

“ Consolidated Total Assets ” shall mean, as of any date, the total assets of the Borrower and the Subsidiaries, determined on a consolidated basis in accordance with GAAP, as set forth on the consolidated balance sheet of the Borrower as of such date.

“ Consolidated Total Debt ” at any date shall mean (i) Consolidated Debt on such date less (ii) the Unrestricted Cash and Permitted Investments of the Borrower and its Subsidiaries on such date; provided , that the Unrestricted Cash and Permitted Investments of any

 

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Subsidiaries that are not Loan Parties to be included in clause (ii)  as a reduction of Consolidated Debt may not exceed $15,000,000 in the aggregate.

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

“ Conversion Date ” shall mean October 17, 2006.

“ Conversion Fee ” shall have the meaning assigned to such term in Section 2.12(a) .

“ Credit Agreement ” shall mean the Credit Agreement dated as of October 17, 2005 among the Borrower, Holdings, the lenders parties thereto, and the other parties thereto in their capacities as Issuing Bank and Swingline Lender, the Administrative Agent, the Syndication Agent and the Documentation Agents, as it may be amended, amended and restated, supplemented or otherwise modified from time to time.

“ Credit Agreement Documents ” shall mean the Credit Agreement and each of the other “Loan Documents,” as such term is defined in the Credit Agreement.

“ Credit Facilities ” shall mean any revolving credit facilities (including any letter of credit and swingline loan subfacilities thereunder) and any term loan facilities made available to the Borrower and its Subsidiaries pursuant to the Credit Agreement.

“ Cumulative Equity Proceeds Amount ” shall have the meaning assigned to such term in, and shall be calculated to be same as such amount in, the Credit Agreement.

“ Cure Amount ” shall have the meaning assigned to such term in Section 7.03(a) .

“ Cure Right ” shall have the meaning assigned to such term in Section 7.03(a) .

“ Debt Service ” shall mean, with respect to Holdings, the Borrower and the Subsidiaries on a consolidated basis for any period, Cash Interest Expense for such period plus scheduled principal amortization of Consolidated Debt for such period.

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

“ Defaulting Lender ” shall mean any Lender with respect to which a Lender Default is in effect.

“ Demand Offering ” shall have the meaning assigned to such term in Section 2.10(b) .

“ Demand Securities ” shall have the meaning assigned to such term in Section 2.10(b) .

 

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“ Disqualified Stock ” shall mean, with respect to any person, any Equity Interests of such person that, by their terms (or by the terms of any security into which such Equity Interests are convertible or for which such Equity Interests are redeemable or exchangeable), or upon the happening of any event, (i) mature or are mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than as a result of a change of control or asset sale), (ii) are convertible or exchangeable other than at the option of the issuer thereof for Indebtedness or Disqualified Stock or (iii) are redeemable at the option of the holder thereof (other than upon the occurrence of a Change of Control (or similar event), sale or disposition of all or substantially all of the assets of the Borrower and its Subsidiaries, or the acceleration of the Loans, subject, in each case, to the prior payment in full in cash of all Obligations), in whole or in part, in each case prior to 91 days after the latest to mature of any Loan; provided , however , that only the portion of the Equity Interests that so mature or are mandatorily redeemable, are so convertible or exchangeable or are so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided , further , that if such Equity Interests are issued to any employee or to any plan for the benefit of employees of the Borrower or the Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Stock solely because they may be required to be repurchased by the Borrower in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided , still further , that any class of Equity Interests of such person that by its terms authorizes such person to satisfy its obligations thereunder by delivery of Equity Interests that are not Disqualified Stock shall not be deemed to be Disqualified Stock; provided , still further , that the Seller Preferred Equity, as in effect on the date hereof, shall not be deemed to be Disqualified Stock.

“ Dividends ” shall have the meaning assigned to such term in Section 6.06 .

“ Documentation Agents ” shall have the meaning assigned to such term in the preamble hereto.

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

“ EBITDA ” shall mean, with respect to the Borrower and the Subsidiaries on a consolidated basis for any period, the Consolidated Net Income of the Borrower and the Subsidiaries for such period (without giving effect to the amount added to Net Income in calculating Consolidated Net Income for the excess of the provision for taxes over cash taxes) plus (a) the sum of without duplication:

(i) to the extent deducted or otherwise excluded in calculating Consolidated Net Income for such period, provision for taxes based on income, profits or capital of the Borrower and the Subsidiaries for such period, without duplication, including, without limitation, state franchise and similar taxes, and including an amount equal to the amount of tax distributions actually made to the holders of Equity Interests of the Borrower and the Subsidiaries in respect of such period in accordance with Section 6.06(b) , which shall be included as though such amounts had been paid as income taxes directly by the Borrower or any Subsidiary; plus

 

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(ii) to the extent deducted or otherwise excluded in calculating Consolidated Net Income for such period, Consolidated Fixed Charges of the Borrower and the Subsidiaries for such period; plus

(iii) to the extent deducted or otherwise excluded in calculating Consolidated Net Income for such period, depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash charges or expenses to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of the Borrower and the Subsidiaries for such period; plus

(iv) to the extent deducted or otherwise excluded in calculating Consolidated Net Income for such period, the amount of any restructuring charges or expenses (which, for the avoidance of doubt, shall include retention payments and special supplemental bonus payable in connection with the Acquisition or otherwise, exit costs, severance payments, systems establishment costs or excess pension charges); plus

(v) EBITDA Scheduled Adjustments; plus

(vi) an amount of $3,000,000 for each of the four consecutive calendar quarters commencing with the calendar quarter beginning January 1, 2005, representing anticipated cost savings from the 2005 Reorganization (as defined in the Offering Circular); plus

(vii) to the extent permitted to be paid pursuant to Section 6.07(b) , the amount of management, monitoring, consulting and advisory fees and related expenses paid to the Fund or any Fund Affiliate (or any accruals relating to such fees and related expenses) during such period; provided , however , that such amount shall not exceed in any four-quarter period the greater of (x) $2,500,000 and (y) 1% of EBITDA of the Borrower and the Subsidiaries on a consolidated basis for the immediately preceding fiscal year (calculated without giving effect to this clause (vii) ); minus

(b) non-cash items increasing such Consolidated Net Income for such period (excluding the recognition of deferred revenue or any non-cash items which represent the reversal of any accrual of, or reserve for, anticipated cash charges in any prior period and any items for which cash was received in any prior period and excluding amounts increasing Consolidated Net Income pursuant to clause (p)  of the definition of Consolidated Net Income);

in each case, on a consolidated basis and determined in accordance with GAAP; provided , that for purposes of calculating EBITDA for any period including a fiscal quarter ended June 30, 2005 or earlier, EBITDA for any such applicable fiscal quarter shall be, in the case of the fiscal quarter ended, (A) September 30, 2004, $68,100,000, (B) December 31, 2004, $84,400,000, (C) March 31, 2005, $53,900,000, and (D) June 30, 2005, $52,400,000.

Notwithstanding the preceding, the provision for taxes based on the income or profits of, the Consolidated Fixed Charges of, the depreciation and amortization and other non-cash expenses

 

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or non-cash items of and the restructuring charges or expenses of, a Subsidiary of the Borrower will be added to (or subtracted from, in the case of non-cash items described in clause (b)  above) Consolidated Net Income to compute EBITDA, (A) in the same proportion that the Net Income of such Subsidiary was added to compute such Consolidated Net Income of the Borrower, and (B) only to the extent that a corresponding amount of the Net Income of such Subsidiary would be permitted at the date of determination to be dividended or distributed to the Borrower by such Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders.

“ EBITDA Scheduled Adjustments ” shall mean the adjustments to EBITDA set forth on Schedule 1.01(a) attached hereto.

“ EMU Legislation ” shall mean the legislative measures of the European Union for the introduction of, changeover to or operation of the euro in one or more member states.

“ Engagement Letter ” shall mean the Engagement Letter dated July 26, 2005, by and among Holdings, the Borrower and the Joint Lead Arrangers.

“ environment ” shall mean ambient and indoor air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources such as flora and fauna, the workplace or as otherwise defined in any Environmental Law.

“ Environmental Laws ” shall mean all applicable laws (including common law), rules, regulations, codes, ordinances, orders, decrees, directives, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the generation, management, Release or threatened Release of, or exposure to, any Hazardous Material or to health and safety matters (to the extent relating to the environment or Hazardous Materials).

“ Equity Financing ” shall mean, in connection with the consummation of the Acquisition, the issuance by Holdings of Equity Interests to the Permitted Holders and the Seller Preferred Equity to the Seller and/or its designee.

“ Equity Financing Documents ” shall mean, collectively, (a) the Registration Rights Agreement, dated as of the date hereof, between Holdings and Affinion Group Holdings, LLC, (b) the Subscription Agreement and Redemption Agreement, dated as of the date hereof, between Holdings and Affinion Group Holdings, LLC, (c) the Seller Warrants, and (d) the Seller Preferred Equity Documents, as the same may be amended from time to time in accordance with the terms hereof and thereof.

“ Equity Interests ” of any person shall mean any and all shares, interests, rights to purchase or otherwise acquire, warrants, options, participations or other equivalents of or interests in (however designated) equity or ownership of such person, including any preferred stock, any limited or general partnership interest and any limited liability company membership

 

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interest, and any securities or other rights or interests convertible into or exchangeable for any of the foregoing.

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

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

“ ERISA Event ” shall mean (a) any Reportable Event; (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, the failure to make by its due date a required installment under Section 412(m) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (d) the incurrence by Holdings, the Borrower, a Subsidiary or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by Holdings, the Borrower, a Subsidiary or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention, or the institution by the PBGC of proceedings, to terminate any Plan or to appoint a trustee to administer any Plan; (f) the incurrence by Holdings, the Borrower, a Subsidiary or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by Holdings, the Borrower, a Subsidiary or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Holdings, the Borrower, a Subsidiary or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

“ euro ” or “ € ” shall mean the currency constituted by the Treaty on the European Union and as referred to in the EMU Legislation.

“ Eurocurrency Liabilities ” has the meaning specified in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“ Eurocurrency Rate Reserve Percentage ” means, with respect to any Interest Period, the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurocurrency Borrowings denominated in U.S. Dollars is determined) having a term equal to such Interest Period.

 

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

“ Exchange ” shall have the meaning assigned to such term in Section 2.04(a) .

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“ Exchange Date ” shall have the meaning assigned to such term in Section 2.04(c) .

“ Exchange Request ” shall have the meaning assigned to such term in Section 2.04(d) .

“ Excluded Contributions ” shall mean the Permitted Investments or other assets (valued at their Fair Market Value as determined in good faith by senior management or the Board of Directors of the Borrower) received by the Borrower from:

(a) contributions in respect of its common stock and

(b) the sale (other than to a Subsidiary of the Borrower or pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of the Borrower or any of its Subsidiaries) of Equity Interests (other than Disqualified Stock) of the Borrower to Holdings,

in each case, as designated as Excluded Contributions pursuant to an Officer’s Certificate executed by a Responsible Officer of the Borrower; provided , that, notwithstanding anything to the contrary, Excluded Contributions shall not include any amounts included in Cumulative Equity Proceeds Amount, any Excluded Equity Proceeds and any Permitted Cure Securities (including the Cure Amount).

“ Excluded Equity Proceeds ” shall have the meaning assigned to such term in, and shall be calculated to be same as such amount in, the Credit Agreement.

“ Excluded Indebtedness ” shall mean all Indebtedness permitted to be incurred under Section 6.01 (as amended or waived from time to time) other than Section 6.01(b)(ii) , (j)(ii) , and (s) .

“ Excluded Taxes ” shall mean, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, the following taxes, including interest, penalties or other additions thereto:

(a) income taxes imposed on (or measured by) its net income or franchise taxes imposed on (or measured by) its gross or net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, in each case including any political subdivision thereof,

 

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(b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) above,

(c) any withholding tax that is attributable to a Lender’s failure to comply with Section 2.17(e) (other than as a result of a change in law), and

(d) any withholding tax that is in effect and would apply to amounts payable hereunder by the Borrower at the time such Lender becomes a party to this Agreement (or designates a new Lending Office),

except, in the case of clause (d)   above, to the extent that (i) such Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from a Loan Party with respect to any withholding tax pursuant to Section 2.17(a) or (ii) such withholding tax shall have resulted from the making of any payment to a location other than the office designated by the Administrative Agent or such Lender for the receipt of payments of the applicable type.

“ Fair Market Value ” means, with respect to any asset or property, the price that could be negotiated in an arms’-length transaction between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction.

“ Federal Funds Rate ” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“ Fees ” shall mean the Conversion Fees and any and all other fees payable to the Administrative Agent or any Lender pursuant to this Agreement or any of the other Loan Documents, including the Fee Letter except to the extent related to the Credit Facilities.

“ Financial Officer ” of any person shall mean the Chief Financial Officer, principal accounting officer, Treasurer, Assistant Treasurer or Controller of such person.

“ Flow Through Entity ” means an entity that is treated as a partnership not taxable as a corporation, a grantor trust or a disregarded entity for U.S. federal income tax purposes or subject to treatment on a comparable basis for purposes of state, local or foreign tax law.

“ Foreign Subsidiary ” shall mean any Subsidiary (together with its successors) that is incorporated or organized under the laws of any jurisdiction other than the United States of America, any State thereof or the District of Columbia.

 

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“ Fund ” shall mean (i) Apollo Overseas Partners V, L.P., (ii) Apollo Netherlands Partners V(A), L.P., (iii) Apollo Netherlands Partners (V)(B), L.P., (iv) Apollo German Partners V GmbH KG & Co., and (v) Apollo Investment Fund V, L.P.

“ Fund Affiliate ” shall mean (a) each Affiliate of the Fund that is neither a “ portfolio company ”, whether or not controlled, nor a company controlled by a “ portfolio company ” or in which a “ portfolio company ” has made an investment (including joint ventures) and (b) any individual who is a partner or employee of the Fund.

“ GAAP ” shall mean generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis, subject to the provisions of Section 1.02 ; provided , that any reference to the application of GAAP in Sections 3.13(a) , 3.13(b) , 3.20 , 5.03 , 5.07 and 6.02(e) , to a Foreign Subsidiary (and not as a consolidated Subsidiary of the Borrower) shall mean generally accepted accounting principles in effect from time to time in the jurisdiction of organization of such Foreign Subsidiary.

“ Governmental Authority ” shall mean any federal, state, local or foreign court or governmental agency, authority, instrumentality, regulator or regulatory or legislative body.

“ Guarantee ” of or by any person (the “ guarantor ”) shall mean (a) any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay or otherwise) or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, (iv) entered into for the purpose of assuring in any other manner the holders of such Indebtedness or other obligation of the payment thereof or to protect such holders against loss in respect thereof (in whole or in part) or (v) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or other obligation, or (b) any Lien on any assets of the guarantor securing any Indebtedness or other obligation (or any existing right, contingent or otherwise, of the holder of Indebtedness or other obligation to be secured by such a Lien) of any other person, whether or not such Indebtedness or other obligation is assumed by the guarantor; provided , however , that the term “ Guarantee ” shall not include endorsements for collection or deposit, in either case in the ordinary course of business, or customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or disposition of assets permitted under this Agreement.

“ Guarantee Agreement ” shall mean the Senior Subordinated Guarantee Agreement, in the form of Exhibit D , as amended, supplemented or otherwise modified from time to time, among Holdings and each Subsidiary Loan Party and the Administrative Agent.

 

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“ Hazardous Materials ” shall mean all pollutants, contaminants, wastes, chemicals, materials, substances and constituents, including explosive or radioactive substances or petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls or radon gas, of any nature subject to regulation or which can give rise to liability under any Environmental Law.

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

“ Immaterial Subsidiary ” shall mean any Subsidiary that (a) did not, as of the last day of the fiscal quarter of the Borrower most recently ended, have assets with a value in excess of 5% of the Consolidated Total Assets or revenues representing in excess of 5% of total revenues of the Borrower and the Subsidiaries on a consolidated basis as of such date and (b) taken together with all Unrestricted Subsidiaries designated pursuant to clause (ii)  of the definition thereof and all other Immaterial Subsidiaries as of the last day of the fiscal quarter of the Borrower most recently ended, did not have assets with a value in excess of 10% of the Consolidated Total Assets or revenues representing in excess of 10% of total revenues of the Borrower and the Subsidiaries on a consolidated basis as of such date; provided , that any Subsidiary that is a “ Significant Subsidiary ” as such term (or any similar term) is used in the Senior Notes Indenture shall not be an “ Immaterial Subsidiary ” hereunder. Each Immaterial Subsidiary shall be set forth in Schedule 1.01(b) , and the Borrower shall update such Schedule from time to time after the Closing Date as necessary to reflect all Immaterial Subsidiaries at such time (the selection of Subsidiaries to be added to or removed from such Schedule to be made as the Borrower may determine).

“ Indebtedness ” of any person shall mean, without duplication, (a) all obligations of such person for borrowed money, (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such person under conditional sale or other title retention agreements relating to property or assets purchased by such person, (d) all obligations of such person issued or assumed as the deferred purchase price of property or services (other than current trade liabilities and current intercompany liabilities (but not any refinancings, extensions, renewals or replacements thereof) incurred in the ordinary course of business and maturing within 365 days after the incurrence thereof), (e) all Guarantees by such person of Indebtedness of others, (f) all Capital Lease Obligations of such person, (g) all payments that such person would have to make in the event of an early termination, on the date Indebtedness of such person is being determined, in respect of outstanding Swap Agreements, (h) the principal component of all obligations, contingent or otherwise, of such person as an account party in respect of letters of credit, (i) the principal component of all obligations of such person in respect of bankers’ acceptances and (j) the amount of all obligations of such person with respect to the redemption, repayment or other repurchase of any Disqualified Stock (excluding accrued dividends that have not increased the liquidation preference of such Disqualified Stock). The Indebtedness of any person shall include the Indebtedness of any partnership in which such person is a general partner, other than to the extent that the instrument or agreement evidencing such Indebtedness expressly limits the liability of such person in respect thereof; provided , however , that, notwithstanding the foregoing, solely for purposes of calculating any financial covenant in Section 6.10 or Section 6.11 or calculating any financial ratio, Indebtedness shall be deemed not to include (i) contingent obligations incurred in the ordinary course of business, (ii) deferred or prepaid revenues, (iii) purchase price holdbacks in

 

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respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller, (iv) with respect to the Borrower, the Seller Preferred Stock, whether or not reflected as a liability of the Borrower on the balance sheet of the Borrower, as in effect as of the Closing Date and as permitted to be amended pursuant to Section 6.08(b) , so long as the Borrower and its Subsidiaries do not have any obligations or liabilities in respect thereof, contingent or otherwise, (v) obligations to make payments in respect of money backed guarantees offered to customers in the ordinary course of business, (vi) obligations to make payments to one or more insurers in respect of profit sharing arrangements entered into in the ordinary course of business, or (vii) any Indebtedness of Holdings deemed to be Indebtedness of the Borrower on its balance sheet under GAAP but for which the Borrower and its Subsidiaries do not have any obligations or liabilities, contingent or otherwise.

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

“ Indemnitee ” shall have the meaning assigned to such term in Section 10.05(b) .

“ Ineligible Institution ” shall mean the persons identified in writing to the Administrative Agent by the Borrower on the Closing Date, and as may be identified in writing to the Administrative Agent by the Borrower from time to time thereafter, with the written consent of the Administrative Agent, by delivery of a notice thereof to the Administrative Agent setting forth such person or persons (or the person or persons previously identified to Agent that are to be no longer considered “ Ineligible Institutions ”).

“ Information ” shall have the meaning assigned to such term in Section 3.14(a) .

“ Information Memorandum ” shall mean the Confidential Information Memorandum dated September 2005 for the Credit Facilities, as modified or supplemented prior to the Closing Date.

“ Initial Lenders ” shall mean Credit Suisse, Deutsche Bank AG Cayman Islands Branch, Banc of America Bridge and BNPPSC and each of their respective affiliates.

“ Insurance Business ” shall mean one or more aspects of the business of soliciting, administering, selling, issuing or underwriting insurance or reinsurance.

“ Insurance Reserves ” shall mean all reserves required by Applicable Insurance Laws and Regulations to by maintained by any company engaged in the Insurance Business, including, without limitation, adequate reserves for incurred losses and incurred loss adjustment expenses, whether or not reported.

“ Insurance Subsidiary ” shall mean any Subsidiary that is licensed by any Applicable Insurance Regulatory Authority to conduct, and conducts, an Insurance Business.

“ Interest Coverage Ratio ” shall mean, on any date, the ratio of (a) EBITDA to (b) Cash Interest Expense of the Borrower and the Subsidiaries, in each case, for the period of four consecutive fiscal quarters most recently ended as of such date, all determined on a consolidated basis in accordance with GAAP.

 

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“ Interest Expense ” shall mean, with respect to any person for any period, the sum of, without duplication, (a) gross interest expense of such person for such period on a consolidated basis, including (i) the amortization of debt discounts, (ii) the amortization of all fees (including fees with respect to Swap Agreements) payable in connection with the incurrence of Indebtedness to the extent included in interest expense, (iii) the portion of any payments or accruals with respect to Capital Lease Obligations allocable to interest expense and (iv) net payments and receipts (if any) pursuant to interest rate hedging obligations, and excluding amortization of deferred financing fees and expensing of any bridge or other financing fees, (b) capitalized interest of such person, whether paid or accrued, and (c) commissions, discounts, yield and other fees and charges incurred for such period in connection with any receivables financing of such person or any of its subsidiaries that are payable to persons other than Holdings, the Borrower and the Subsidiaries.

“ Interest Payment Date ” means, with respect to any Loan, the last day of the Interest Period applicable to such Loan, the Conversion Date and the day on which any Loan is repaid or prepaid.

“ Interest Period ” means, initially, the period commencing on the Closing Date and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is three months thereafter, and each successive three-month period commencing on the last day of the preceding interest period and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is three months thereafter; provided , that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.

“ Investment ” shall have the meaning set forth in Section 6.04 .

“ Investment Bank ” shall mean the investment banks retained by the Borrower pursuant to the Engagement Letter.

“ Joint Lead Arrangers ” shall Credit Suisse and Deutsche Bank Securities Inc.

“ Lender ” shall mean each financial institution listed on Schedule 2.01 , as well as any person that becomes a “Lender” hereunder pursuant to Section 10.04 .

“ Lender Default ” shall mean (a) the refusal (which has not been retracted) of a Lender to make available its portion of any Borrowing or (b) a Lender having notified in writing the Borrower and/or the Administrative Agent that it does not intend to comply with its obligations under Section 2.06 .

“ Lending Office ” shall mean, as to any Lender, the applicable branch, office or Affiliate of such Lender designated by such Lender to make Loans to the Borrower.

 

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“ Lien ” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, hypothecation, 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 (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities (other than securities representing an interest in a joint venture that is not a Subsidiary), any purchase option, call or similar right of a third party with respect to such securities; provided , that in no event shall an operating lease or an agreement to sell be deemed to constitute a Lien.

“ Loan Documents ” shall mean this Agreement, the Guarantee Agreement and any promissory note issued under Section 2.09(e) , and solely for the purposes of Sections 4.01(l) and 7.01(c) hereof, the Fee Letter dated July 26, 2005, by and among Holdings, the Borrower, Credit Suisse, the Joint Lead Arrangers and the other parties thereto.

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

“ Loans ” shall mean the Bridge Loans and the Term Loans.

“ Local Time ” shall mean New York City time.

“ Losses ” shall have the meaning assigned to such term in Section 6.01(w) .

“ Management Group ” means the group consisting of the directors, executive officers and other management personnel of Holdings and the Borrower on the Closing Date together with (a) any new directors of Holdings or the Borrower whose election by such Boards of Directors or whose nomination for election by the shareholders of Holdings was approved by a vote of a majority of the directors of Holdings then still in office who were either directors on the Closing Date or whose election or nomination was previously so approved and (b) executive officers and other management personnel of Holdings or the Borrower hired at a time when the directors on the Closing Date together with the directors so approved constituted a majority of the directors of Holdings.

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

“ Material Adverse Effect ” shall mean the existence of any event, development or circumstance that, subsequent to December 31, 2004, has had or could reasonably be expected to have a material adverse effect on (a) the Transactions, (b) the business, property, operations or condition of the Borrower and the Subsidiaries, taken as a whole, or (c) the validity or enforceability of any material Loan Document or the rights and remedies of the Administrative Agent and the Lenders thereunder.

“ Material Indebtedness ” shall mean Indebtedness (other than Loans) of any one or more of Holdings, the Borrower or any Subsidiary in an aggregate principal amount exceeding $30,000,000.

“ Material Subsidiary ” shall mean any Subsidiary other than Immaterial Subsidiaries.

 

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“ Maturity Date ” shall mean April  17 , 2014.

“ Maximum Rate ” shall have the meaning assigned to such term in Section 10.09 .

“ Moody’s ” shall mean Moody’s Investors Service, Inc.

“ Multiemployer Plan ” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which Holdings, the Borrower or any Subsidiary or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding six plan years made or accrued an obligation to make contributions.

“ Netcentives Assets ” shall mean the portfolio of patents that relate to online award redemption programs, which expire on December 14, 2015.

“ Netcentives Asset Sale ” shall mean the sale, conveyance, transfer, license or other disposition of the Netcentives Assets.

“ Net Income ” shall mean, with respect to any person, the net income (loss) of such person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends minus an amount equal to the amount of tax distributions actually made to the holders of Equity Interests of such person or any parent of such person in respect of a period in accordance with Section 6.06(b(i) as if such amounts had been paid as income taxes directly by such person but only to the extent such amounts have not already been accounted for as taxes reducing the net income (loss) of such person.

“ Net Proceeds ” shall mean:

(a) 100% of the cash proceeds actually received by any Loan Party (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise and including casualty insurance settlements and condemnation awards, but only as and when received) from any loss, damage, destruction or condemnation of, or any sale, transfer or other disposition (including any sale and leaseback of assets and any mortgage or lease of real property) to any person of any asset or assets of the Borrower or any Subsidiary Loan Party (other than those of the type described in (regardless of whether the Senior Subordinated Exchange Notes Applicable Covenants are then in effect) Section 6.05(a) , (b) , (c) , (e) , (f)  (except to the extent of any cash consideration), (g) , (i) , (j) , or (m) ) net of (i) attorneys’ fees, accountants’ fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, required debt payments (including, without limitation, mandatory prepayments required by the Credit Agreement) and required payments of other obligations relating to the applicable asset (other than pursuant hereto), other customary expenses and brokerage, consultant and other customary fees actually incurred in connection therewith and (ii) Taxes paid or payable as a result thereof; provided , that, if no Event of Default exists, the Borrower or any Subsidiary may deliver a certificate of a Responsible Officer of the Borrower to the Administrative Agent promptly after receipt of any such proceeds setting forth the Borrower’s or such Subsidiary’s intention to use, or to commit to use, any portion of such proceeds, to acquire, maintain, develop, construct,

 

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improve, upgrade or repair assets useful in the business of the Borrower and the Subsidiary Loan Parties or to make Investments permitted by Section 6.04 (regardless of whether the Senior Subordinated Exchange Notes Applicable Covenants are then in effect), in each case, if such certificate shall have been delivered, within twelve months of such receipt, such portion of such proceeds shall not constitute Net Proceeds except to the extent (A) not so used (or committed to be used) within such twelve-month period or (B) if committed to be used within such twelve-month period, not so used within 18 months of such receipt); provided , further , that (x) no proceeds realized in a single transaction or series of related transactions shall constitute Net Proceeds unless such proceeds shall exceed $5,000,000 and (y) no proceeds shall constitute Net Proceeds in any fiscal year until the aggregate amount of all such proceeds in such fiscal year shall exceed $10,000,000;

(b) 100% of the cash proceeds from the incurrence, issuance or sale by any Loan Party of any Indebtedness (other than Excluded Indebtedness), additional Senior Notes, the Senior Subordinated Notes, Permitted Indebtedness and Demand Securities, in each case, (i) net of all taxes and fees (including investment banking fees), commissions, discounts, costs and other expenses, in each case incurred in connection with such issuance or sale and (ii) in excess of the amount of mandatory prepayments, if any, required (and actually made) under the Credit Agreement; and

(c) 100% of the cash proceeds from the issuance or sale by any Loan Party (including Holdings) of any Equity Interests (other than (x) any such issuance or sale of Equity Interests of a Subsidiary that would constitute a sale, transfer or disposition of assets subject to clause (a)  of this definition, (y) Permitted Equity Cure Securities and (z) any such issuance or sale to the Fund or any Fund Affiliate), net of all taxes and fees (including investment banking fees), commissions, costs and other expenses, in each case incurred in connection with such issuance or sale.

For purposes of calculating the amount of Net Proceeds, fees, commissions and other costs and expenses payable to Holdings or the Borrower or any Affiliate of either of them shall be disregarded, except for financial advisory fees customary in type and amount paid to Affiliates of the Fund.

“ Non-Consenting Lender ” shall have the meaning assigned to such term in Section 2.19(c) .

“ Note ” shall have the meaning assigned to such term in Section 2.09(e) .

“ Obligations ” shall, unless otherwise indicated, have the meaning assigned to the term “Loan Document Obligations” in the Guarantee Agreement.

“ Offering Circular ” shall mean the offering circular dated October 3, 2005 prepared in connection with the offering of the Senior Notes.

“ Other Taxes ” shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment

 

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made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, the Loan Documents, and any and all interest and penalties related thereto.

“ Overdraft Line ” shall have the meaning assigned to such term in Section 6.01(r) .

“ Participant ” shall have the meaning assigned to such term in Section 10.04(c) .

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

“ Permitted Business Acquisition ” shall have the meaning assigned to such term in the Credit Agreement, and any calculations and other conditions required to be determined or satisfied for any transaction to constitute a “ Permitted Business Acquisition ” shall be performed in accordance with the Credit Agreement, so long as immediately after giving effect thereto: (i) no Event of Default shall have occurred and be continuing or would result therefrom; (ii) all transactions related thereto shall be consummated in accordance with applicable laws; and (iii) the person acquired in such acquisition, if acquired by the Borrower or a Domestic Subsidiary, shall be merged into the Borrower or a Subsidiary Loan Party or become upon consummation of such acquisition a Subsidiary Loan Party.

“ Permitted Cure Security ” shall mean Equity Interests of Holdings other than Disqualified Stock.

“ Permitted Holder ” shall mean each of (a) the Fund and the Fund Affiliates and (b) the Management Group, with respect to not more than 10% of the total voting power of the Equity Interests of Holdings or the Borrower.

“ Permitted Indebtedness ” means any unsecured Indebtedness that (a) is expressly subordinated in right of payment to Senior Debt (as defined in Section 8.02 ) and pari passu or junior in right of payment to the Obligations, subject to Section 6.13 , (b) will not mature prior to the Maturity Date, (c) has no scheduled amortization, payments of principal, sinking fund payments or similar scheduled payments, (d) has covenant, default and remedy provisions, in the aggregate, substantially as set forth in the Senior Subordinated Exchange Notes Indenture or otherwise no more restrictive or expansive in scope than those contained in Senior Notes Indenture (except as may be appropriate for senior subordinated notes in high yield debt offerings), and (e) the terms and provisions of which are otherwise permitted under this Agreement.

“ Permitted Investments ” shall mean:

(a) U.S. Dollars, Sterling, euros, or, in the case of any Foreign Subsidiary, such local currencies held by it from time to time in the ordinary course of business;

(b) securities issued or directly and fully guaranteed or insured by the government of, or any agency or instrumentality thereof, the United States of America, Mexico or any member state of the European Union, in each case, with maturities not exceeding two years after the date of acquisition;

 

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(c) in the case of any Foreign Subsidiary, securities issued or directly and fully guaranteed or insured by the government of, or any agency or instrumentality thereof, in each case with maturities not exceeding 270 days after the date of acquisition and held by it from time to time in the ordinary course of business;

(d) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances, in each case with maturities not exceeding one year and overnight bank deposits and demand deposits (in their respective local currencies), in each case with any commercial bank having capital and surplus in excess of $500,000,000 or the foreign currency equivalent thereof and whose long-term debt is rated “ A ” or the equivalent thereof by Moody’s or S&P (or, in the case of an obligor domiciled outside of the United States, reasonably equivalent ratings of another internationally recognized credit rating agency);

(e) repurchase obligations for underlying securities of the types described in clauses (b)  and (d)  above entered into with any financial institution meeting the qualifications specified in clause (d)  above;

(f) commercial paper issued by a corporation (other than an Affiliate of Borrower) rated at least “ A-1 ” or the equivalent thereof by Moody’s or S&P (or, in the case of an obligor domiciled outside of the United States, reasonably equivalent ratings of another internationally recognized credit rating agency) and in each case maturing within one year after the date of acquisition;

(g) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody’s or S&P in each case with maturities not exceeding two years from the date of acquisition;

(h) Indebtedness issued by persons (other than the Fund or any of its Affiliates) with a rating of “ A ” or higher from S&P or “ A-2 ” or higher from Moody’s (or, in the case of an obligor domiciled outside of the United States, reasonably equivalent ratings of another internationally recognized credit rating agency) in each case with maturities not exceeding two years from the date of acquisition; and

(i) investment funds investing at least 95% of their assets in securities of the types described in clauses (a)  through (h)  above.

“ Permitted Refinancing Indebtedness ” shall mean any Indebtedness issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund (collectively, to “ Refinance ”), the Indebtedness being Refinanced (or previous refinancings thereof constituting Permitted Refinancing Indebtedness); provided , that (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced ( plus unpaid accrued interest and premium thereon and underwriting discounts, fees, commissions and expenses), (b) the average life to maturity of such Permitted Refinancing Indebtedness is greater than or equal to that of the Indebtedness being Refinanced, (c) if the

 

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Indebtedness being Refinanced is subordinated in right of payment to the Obligations under this Agreement, such Permitted Refinancing Indebtedness shall be subordinated in right of payment to such Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being Refinanced, (d) if the Indebtedness being Refinanced is pari passu in right of payment with the Obligations under this Agreement, such Permitted Refinancing Indebtedness shall be pari passu or subordinated in right of payment to such Obligations, (e) no Permitted Refinancing Indebtedness shall have obligors that are not Loan Parties hereunder, or greater guarantees or security, than the Indebtedness being Refinanced and (f) if the Indebtedness being Refinanced is secured by any collateral, such Permitted Refinancing Indebtedness may be secured by such collateral (including in respect of Indebtedness of Foreign Subsidiaries that are not Loan Parties otherwise permitted under this Agreement only, any collateral pursuant to after-acquired property clauses to the extent any such collateral secured the Indebtedness being Refinanced).

“ person ” shall mean any natural person, corporation, business trust, joint venture, association, company, partnership, limited liability company or government, individual or family trusts, or any agency or political subdivision thereof.

“ Plan ” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code and in respect of which Holdings, the Borrower, any Subsidiary or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“ Platform ” shall have the meaning assigned to such term in Section 10.18(b) .

“ Prepayment Minimum ” shall mean $2,000,000.

“ Prepayment Multiple ” shall mean $1,000,000.

“ Presumed Tax Rate ” shall mean the highest effective marginal statutory combined U.S. federal, state and local income tax rate prescribed for an individual residing in New York City (taking into account (a) the deductibility of state and local income taxes for U.S. federal income tax purposes, assuming the limitation of Section 68(a)(2) of the Code applies and taking into account any impact of Section 68(f) of the Code, and (b) the character (long-term or short-term capital gain, dividend income or other ordinary income) of the applicable income).

“ primary obligor ” shall have the meaning assigned to such term in the definition of the term “ Guarantee .”

“ Pro Forma Basis ” shall mean, as to any person, for any events as described below that occur subsequent to the commencement of a period for which the financial effect of such events is being calculated, and giving effect to the events for which such calculation is being made, such calculation as will give pro forma effect to such events as if such events occurred on the first day of the four consecutive fiscal quarter period ended on or before the occurrence of such event (the “ Reference Period ”): (i) in making any determination of EBITDA, pro forma effect shall be given to any Asset Disposition and to any Asset Acquisition (or any similar transaction or transactions that require a waiver or a consent of the provisions of

 

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Section 6.04 or Section 6.05 by the Required Lenders pursuant to Section 10.08 and such waiver or consent has been obtained in accordance with the terms hereof), in each case that occurred during the Reference Period (or, in the case of determinations made pursuant to the definition of “ Specified Covenant Release ” and pursuant to Section 6.01(s) , Section 6.02(c) , Section 6.02(i) , Section 6.02(l) , Section 6.04 (to the extent relating to the calculation of the Consolidated Leverage Ratio) or Section 6.08(b) occurring during the Reference Period or thereafter and through and including the date upon which the incurrence or cancellation of Indebtedness or incurrence, creation, assumption or acquisition of Liens is consummated); (ii) in making any determination on a Pro forma Basis, (A) all Indebtedness (including Indebtedness incurred or assumed and for which the financial effect is being calculated, whether incurred under this Agreement or otherwise, but excluding normal fluctuations in revolving Indebtedness incurred for working capital purposes and not to finance any acquisition) incurred or permanently repaid during the Reference Period (or, in the case of determinations made pursuant to the definition of “ Specified Covenant Release ” and pursuant to Section 6.01(s) , Section 6.02(c) , Section 6.02(i) , Section 6.02(l) , Section 6.04 (to the extent relating to the calculation of the Consolidated Leverage Ratio) or Section 6.08(b) occurring during the Reference Period or thereafter and through and including the date upon which the incurrence or cancellation of Indebtedness or incurrence, creation, assumption or acquisition of Liens is consummated) shall be deemed to have been incurred or repaid at the beginning of such period and (B) Interest Expense of such person attributable to interest on any Indebtedness, for which pro forma effect is being given as provided in preceding clause (A) , bearing floating interest rates shall be computed on a pro forma basis as if the rates that would have been in effect during the period for which pro forma effect is being given had been actually in effect during such periods; and (iii) for purposes of Section 6.08(b)(ii)(B) , Indebtedness of Holdings to be incurred thereunder, in making any determination on a Pro Forma Basis, such Indebtedness shall be deemed to be Indebtedness of (including all prior Indebtedness incurred under Section 6.08(b)(ii)(B) ), and incurred by, the Borrower.

Pro forma calculations made pursuant to the definition of this term “ Pro Forma Basis ” shall be determined in good faith by a Responsible Officer of the Borrower. Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination of the Borrower, to reflect operating expense reductions, other operating improvements or synergies reasonably expected to result from the applicable pro forma event (including, to the extent applicable, from the Transactions) in the 12-month period following the consummation of the pro forma event. The Borrower shall deliver to the Administrative Agent a certificate of a Responsible Officer of the Borrower setting forth such demonstrable or additional operating expense reductions and other operating improvements or synergies and information and calculations supporting them in reasonable detail.

“ Pro Forma Closing Balance Sheet ” shall have the meaning assigned to such term in Section 3.05(a)(i) .

“ Pro Forma Closing EBITDA ” shall mean, “ Pro Forma Adjusted EBITDA ” as calculated in the Offering Circular.

“ Pro Forma Closing Financial Statements ” shall have the meaning assigned to such term in Section 3.05 .

 

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“ Pro Forma Closing Income Statements ” shall have the meaning assigned to such term in Section 3.05 .

“ Projections ” shall mean the projections of the Borrower and the Subsidiaries provided to and approved by, the Administrative Agent and the Initial Lenders prior to the Closing Date, and any other projections and any forward-looking statements (including statements with respect to booked business) of such entities furnished to the Lenders or the Administrative Agent by or on behalf of Holdings, the Borrower or any of the Subsidiaries prior to the Closing Date.

“ Purchase Agreement ” shall have the meaning assigned to such term in the recitals hereto.

“ Reference Period ” shall have the meaning assigned to such term in the definition of the term “ Pro forma Basis.”

“ Refinance ” shall have the meaning assigned to such term in the definition of the term “Permitted Refinancing Indebtedness,” and “ Refinanced ” shall have a meaning correlative thereto.

“ Register ” shall have the meaning assigned to such term in Section 10.04(b) .

“ Registration Rights Agreement ” shall mean a registration rights agreement in form and substance reasonably satisfactory to the Administrative Agent (it being agreed that, except as provided below, a registration rights agreement substantially similar to the registration rights agreement entered into in connection with the issuance of the Senior Notes (the “ Senior Notes Registration Rights Agreement ”) is satisfactory to the Administrative Agent and the Borrower), which will provide, subject to the terms and limitations set forth in such registration rights agreement, that after the date (the “ Original Issue Date ”) on which the initial issuance of Senior Subordinated Exchange Notes (the “Initial Senior Subordinated Exchange Notes” ) are issued:

(a) (i) the Borrower and the Subsidiary Loan Parties will use their commercially reasonable efforts to prepare and file with the SEC, within 90 days after the Original Issue Date, an exchange offer registration statement with respect to the Initial Senior Subordinated Exchange Notes and any additional Senior Subordinated Exchange Notes issued on or prior to five (5) Business Days prior to the commencement of the Registered Exchange Offer (as defined below) (the “ Exchange Offer Registration Statement ”) and use their commercially reasonable efforts to cause the Exchange Offer Registration Statement to become effective on or prior to 210 days after the Original Issue Date, (ii) as soon as practicable after the effectiveness of the Exchange Offer Registration Statement, the Borrower will commence the exchange offer (the “ Registered Exchange Offer ”) and the keep the Registered Exchange Offer open for not less than 20 Business Days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to holders of the Initial Senior Subordinated Exchange Notes and (iii) the Borrower will be required to consummate the Registered Exchange Offer no later than 30 Business Days after the date on which the Exchange

 

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Offer Registration Statement is declared effective and will issue exchange notes in exchange for all of the Initial Senior Subordinated Exchange Notes validly tendered in the exchange offer;

(b) (i) if the Registered Exchange Offer is not permitted by applicable law or SEC policy or consummated within the required time period, (ii) the Registered Exchange Offer is not consummated within 30 Business Days of the 210th day after the Issue Date, (iii) any holder of the Initial Senior Subordinated Exchange Notes notifies the Borrower in writing on or prior to the 60th day after the consummation of the Registered Exchange Offer that (A) such holder is prohibited by applicable law or SEC policy from participating in the Registered Exchange Offer, or (B) such holder may not resell the registered Senior Subordinated Exchange Notes (the “ Registered Senior Subordinated Exchange Notes” ) acquired by it in the Registered Exchange Offer to the public without delivering a prospectus and that the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such holder, or (C) such holder is a broker-dealer, and holds Senior Subordinated Exchange Notes acquired directly from the Borrower or one of its affiliates, or (iv) upon the first issuance of Senior Subordinated Exchange Notes subsequent to (5) Business Days prior to the commencement of the Registered Exchange Offer (and, therefore, not included in the Registered Exchange Offer) (the date of such issuance and each subsequent issuance, a “Subsequent Issue Date” ) (each of the conditions described in the foregoing clauses (i) through (iv)  occur, including in the case of clause (iii)  the receipt of the required notice, being a “Trigger Event” and the date on which such Trigger Event occurs being a “ Trigger Date” ), the Borrower and the Subsidiary Loan Parties shall use their commercially reasonable efforts to prepare and file with the SEC as soon as practicable after the first such Trigger Date (the “Initial Trigger Date” ) and use its commercially reasonable efforts to cause to become effective, on or prior to 30 days after such Initial Trigger Date (the “Subsequent Effectiveness Date” ), a shelf registration statement providing for the resale of Senior Subordinated Exchange Notes (the “ Shelf Registration Statement ”); provided , that the Subsequent Effectiveness Date shall be extended to 210 days after the Trigger Date to the extent that the Borrower receives notice that such Shelf Registration Statement will be reviewed by the SEC;

(c) (i) immediately after the Initial Trigger Date, the Borrower shall notify holders of Senior Subordinated Notes of the Borrower’s obligation to file a Shelf Registration Statement and accompany such notice with a form of notice and questionnaire (the “Holder Questionnaire” ) pursuant to which a holder may elect to be named as a selling security holder in, and have its Senior Subordinated Exchange Notes registered for resale by, the Shelf Registration Statement; (ii) at the time the Shelf Registration Statement is declared effective, each holder of Senior Subordinated Exchange Notes who provided to the Borrower the Holder Questionnaire on or prior to the date that is ten (10) Business Days (or such subsequent date as may be determined by the Borrower) prior to such time of effectiveness shall be named as a selling security holder in the Shelf Registration Statement and the related prospectus in such a manner as to permit such holder to freely transfer its Senior Subordinated Exchange Notes with the delivery of such prospectus; and (iii) after the Subsequent Effectiveness Date, the Borrower shall use its commercially reasonable efforts to amend or supplement, as

 

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necessary, the Shelf Registration Statement within (10) ten Business Days of its receipt of a Holder Questionnaire (or, in the case of Holder Questionnaires received by the Borrower nine (9) or fewer Business Days prior to the Subsequent Effectiveness Date, within (10) ten Business Days of the Subsequent Effectiveness Date) to ensure that the Shelf Registration Statement will permit any holder that provided the Holder Questionnaire to freely transfer its Senior Subordinated Exchange Notes;

(d) the Borrower and the Subsidiary Loan Parties will pay liquidated damages (“ Additional Interest ”) in the amounts set forth in clause (e)  below if any of the following events occur (each such event referred to in clause (i) through (iv)  below as a “ Registration Failure ”): (i) the Borrowers fail to file, amend or supplement any of the registration statements required by the Registration Rights Agreement on or before the date specified for such filing, amendment or supplement (except, with respect to amending or supplementing the Shelf Registration Statement as set forth in clause (c)(iii) above, as permitted in the Registration Rights Agreement for blackout periods), or (ii) any of such registration statements is not declared effective by the SEC on or prior to the date specified for such effectiveness (the “ Effectiveness Target Date ”), or (iii) the Borrowers fail to consummate the exchange offer within 30 Business Days after the Effectiveness Target Date for the Exchange Offer Registration Statement; or (iv) the Exchange Offer Registration Statement or the Shelf Registration Statement is declared effective but thereafter ceases to be effective or usable (except as permitted in the Registration Rights Agreement for blackout periods) in connection with the exchange or resale of the Senior Subordinated Exchange Notes during the periods specified in the Registration Rights Agreement.

(e) (i) Additional Interest shall accrue on the principal amount of the Senior Subordinated Exchange Notes (it being expressly understood that, with respect to the Shelf Registration Statement, Additional Interest shall be payable only with respect to securities requested to be registered) over and above the interest set forth in the title of the Senior Subordinated Exchange Notes from and including the date on which any such Registration Failure shall occur to but excluding the date on which all such Registration Failure have been cured, at an initial rate of 0.25%  per annum (the “ Additional Interest Rate ” ) for the first 90-day period immediately following the occurrence of such Registration Default; (ii) the Additional Interest Rate shall increase by an additional 0.25%  per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum Additional Interest Rate of 1.00%  per annum ; and (iii) all accrued Additional Interest will be paid in arrears on each quarterly (or, if applicable for such Senior Subordinated Exchange Notes, semi-annual) interest payment date.

“ Regulation U ” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“ Regulation X ” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

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“ Related Fund ” shall mean, with respect to any Lender that is a fund that invests in bank or commercial loans and similar extensions of credit, any other fund that invests in bank or commercial loans and similar extensions of credit and is advised or managed by (a) such Lender, (b) an Affiliate of such Lender or (c) an entity (or an Affiliate of such entity) that administers, advises or manages such Lender.

“ Related Parties ” shall mean, with respect to any specified person, such person’s Affiliates and the respective directors, officers, employees, agents and advisors of such person and such person’s Affiliates.

“ Release ” shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, emanating or migrating in, into, onto or through the environment.

“ Remaining Present Value ” shall mean, as of any date with respect to any lease, the present value as of such date of the scheduled future lease payments with respect to such lease, determined with a discount rate equal to a market rate of interest for such lease reasonably determined at the time such lease was entered into.

“ Reportable Event ” shall mean any reportable event as defined in Section 4043(c) of ERISA or the regulations issued thereunder, other than those events as to which the 30-day notice period referred to in Section 4043(c) of ERISA has been waived, with respect to a Plan (other than a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code).

“ Required Lenders ” shall mean, at any time, Lenders having Loans outstanding, that, taken together, represent more than 50% of the sum of all Loans outstanding at such time. The Loans of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.

“ Responsible Officer ” of any person shall mean any executive officer or Financial Officer of such person and any other officer or similar official thereof responsible for the administration of the obligations of such person in respect of this Agreement.

“ S&P ” shall mean Standard & Poor’s Ratings Group, Inc.

“ Sale and Lease-Back Transaction ” shall have the meaning assigned to such term in Section 6.03 .

“ SEC ” shall mean the Securities and Exchange Commission or any successor thereto.

“ Securities Act ” shall mean the Securities Act of 1933, as amended.

“ Securities Notice ” shall have the meaning assigned to such term in Section 2.10(b) .

 

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“ Securities Offering ” shall have the meaning assigned to such term in Section 2.10(a) .

“ Seller ” shall have the meaning assigned to such term in the recitals hereto.

“ Seller Preferred Equity ” shall mean the Seller Preferred Stock, as amended from time to time in accordance with the terms hereof and thereof.

“ Seller Preferred Equity Documents ” shall mean the certificate of designation governing the Seller Preferred Stock and the Securityholder Rights Agreement dated as of the date hereof among Holdings, Affinion Group Holdings, LLC and Cendant, in each case as amended from time to time in accordance with the terms hereof and thereof.

“ Seller Preferred Stock ” shall mean the Series A Redeemable Exchangeable Preferred Stock issued by Holdings on October 17, 2005, plus any accrued and unpaid dividends paid-in-kind with respect to the Seller Preferred Stock from and after the Closing Date.

“ Seller Warrants ” shall mean the Warrant to Purchase Common Stock of Holdings dated October 17, 2005, or any warrant or warrants issued in connection with the partial exercise thereof, in each case as amended from time to time in accordance with the terms hereof and thereof.

“ Senior Notes ” shall mean $270,000,000 in initial aggregate principal amount of 10.125% Senior Notes due 2013 yielding gross cash proceeds of $266,387,400 on or prior to the Closing Date, and such additional 10.125% Senior Notes due 2013 or Senior Notes with the same terms other than coupon and maturity date, which may be the same as or later than (but not earlier than) the maturity date of the 10.125% Senior Notes due 2013.

“ Senior Notes Documents ” shall mean the Senior Notes, the Senior Notes Indenture and any documents, supplements, instruments and agreements delivered in connection therewith.

“ Senior Notes Indenture ” shall mean the indenture, dated as of October 17, 2005, among the Borrower, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., under which the Senior Notes are issued, as amended and supplemented from time to time in accordance with the terms hereof and thereof.

“ Senior Secured Bank Debt ” at any date shall mean the aggregate principal amount of Consolidated Total Debt outstanding at such date that consists of, without duplication, net of the Unrestricted Cash and Permitted Investments of the Borrower and its Subsidiaries on such date, (i) Indebtedness in respect of the Credit Facilities and (ii) senior Indebtedness secured by a Lien (other than Indebtedness of a Subsidiary that is not a Loan Party secured by a Lien on assets of a Subsidiary that is not a Loan Party) under Section 6.02(a) , (c) , (i) , (j)  or (l)  but only to the extent securing Indebtedness (in each case of clauses (i) and (ii) , other than letters of credit to the extent undrawn and not supporting Indebtedness of the type included in Consolidated Debt).

“ Senior Secured Bank Leverage Ratio ” shall mean, on any date, the ratio of (a) Senior Secured Bank Debt as of such date to (b) EBITDA for the period of four consecutive

 

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fiscal quarters of the Borrower most recently ended as of such date for which financial statements are available (such EBITDA, prior to any adjustments on a Pro Forma Basis, to be as determined from the certificate delivered pursuant to Section 5.04(c) for such period), all determined on a consolidated basis in accordance with GAAP provided , that to the extent any Asset Disposition or any Asset Acquisition (or any similar transaction or transactions that require a waiver or a consent of the provisions of Section 6.04 or Section 6.05 by the Required Lenders pursuant to Section 10.08 and such waiver or consent has been obtained in accordance with the terms hereof), including the Transactions, has occurred during the relevant Test Period, EBITDA shall be determined for the respective Test Period on a Pro Forma Basis for such occurrences.

“ Senior Subordinated Exchange Notes ” shall mean the Senior Subordinated Exchange Notes to be issued under the Senior Subordinated Exchange Notes Indenture in accordance with the provisions of this Agreement and the Senior Subordinated Exchange Notes Indenture.

“ Senior Subordinated Exchange Notes Applicable Covenants ” shall mean the applicable covenants and merger and successor provisions of the Senior Subordinated Exchange Notes Indenture.

“ Senior Subordinated Exchange Notes Documents ” shall mean the Senior Subordinated Exchange Notes, the Senior Subordinated Exchange Notes Indenture and any documents, supplements, instruments and agreements delivered in connection therewith.

“ Senior Subordinated Exchange Notes Event of Default Provisions ” shall mean the “ Events of Default ” provisions in the Senior Subordinated Exchange Notes Indenture other than any provisions thereof addressing payment defaults.

“ Senior Subordinated Exchange Notes Indenture ” shall mean an indenture capable of being qualified under the Trust Indenture Act of 1939, as amended, to be agreed between, and in form and substance reasonably satisfactory to, the Administrative Agent, the Borrower and the Investment Bank in light of the then prevailing market conditions, as such indenture may be amended and supplemented from time to time in accordance with the terms hereof and thereof.

“ Senior Subordinated Notes ” shall mean the senior subordinated notes proposed to be issued by the Borrower after the Closing Date to refinance the Loans having terms and conditions substantially the same as the terms and conditions of the Senior Subordinated Exchange Notes or as are otherwise reasonable and customary for issuance of high yield senior subordinated debt securities in light of the then prevailing market conditions as determined in the reasonable judgment by the Investment Bank in consultation with the Borrower.

“ Similar Business ” shall mean any business or activity of the Borrower or any of its Subsidiaries currently conducted or proposed as of the Closing Date, or any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof, or is complementary, incidental, ancillary or related thereto.

“ Specified Covenant Release ” shall mean, with respect to any specific transaction, the six-month anniversary of the Closing Date having occurred so long as at the time

 

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of such transaction, (a) the Consolidated Leverage Ratio, computed as at the last day of the most recently ended fiscal quarter of the Borrower to give effect to such transaction on a Pro Forma Basis (including, without limitation, the incurrence and assumption of all Indebtedness related to, or in connection with, such transaction) is less than 5.75 to 1.00 and the Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer of the Borrower to such effect, together with all relevant financial information, and (b) no Default or Event of Default shall have occurred and be continuing or result therefrom.

“ Statutory Reserves ” shall mean, with respect to any currency, the aggregate of the maximum reserve, liquid asset, fees or similar requirements (including any marginal, special, emergency or supplemental reserves or other requirements) established by any central bank, monetary authority, the Board, the Financial Services Authority, the European Central Bank or other Governmental Authority for any category of deposits or liabilities customarily used to fund loans in such currency, expressed in the case of each such requirement as a decimal. Such reserve percentages shall, in the case of U.S. Dollar-denominated Loans, include those imposed pursuant to Regulation D of the Board. Eurocurrency Loans shall be deemed to be subject to such reserve, liquid asset or similar requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under any applicable law, rule or regulation, including Regulation D. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve, liquid asset or similar requirement.

“ Sterling ” or “ £ ” shall mean the lawful money of the United Kingdom.

“ subsidiary ” shall mean, with respect to any person (herein referred to as the “ parent ”), any corporation, partnership, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, directly or indirectly, owned, Controlled or held, or (b) that is, at the time any determination is made, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

“ Subsidiary ” shall mean, unless the context otherwise requires, a subsidiary of the Borrower other than any Unrestricted Subsidiary.

“ Subsidiary Loan Party ” shall mean each Wholly Owned Domestic Subsidiary other than (a) Safecard Services Insurance Co., (b) any Banking Subsidiary, (c) any Unrestricted Subsidiary and (d) to the extent prohibited Applicable Insurance Laws and Regulations, any Insurance Subsidiary.

“ Subsidiary Spin-off ” shall mean each Subsidiary listed on Schedule 1.01(c) .

“ Swap Agreement ” shall mean any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided , that no phantom

 

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stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of Holdings, the Borrower or any of the Subsidiaries shall be a Swap Agreement.

“ Syndication Agent ” shall have the meaning assigned to such term in the preamble hereto.

“ Taxes ” shall mean any and all present or future taxes, levies, imposts, duties (including stamp duties), deductions, charges (including ad valorem charges) or withholdings imposed by any Governmental Authority and any and all interest and penalties related thereto.

“ Term Loan ” shall mean Loans that remain outstanding on and after the Conversion Date and shall include any interest in excess of the Cash Cap paid in the form of additional Term Loans pursuant to Section 2.13(a)(iii) .

“ Test Period ” shall mean, on any date of determination, the period of four consecutive fiscal quarters of the Borrower then most recently ended (taken as one accounting period).

“ Total Cap ” shall have the meaning assigned to such term in Section 2.13(a)(iii) .

“ Transaction Documents ” shall mean the Purchase Agreement and all material exhibits and schedules thereto and all agreements expressly contemplated thereby, the Loan Documents, the Senior Notes Documents, the Credit Agreement Documents and the Equity Financing Documents, in each case as amended from time to time in accordance with the terms hereof and thereof.

“ Transactions ” shall mean, collectively, the transactions to occur pursuant to the Transaction Documents, including (a) the Acquisition; (b) the execution and delivery of the Credit Agreement Documents and the initial borrowings thereunder; (c) the Equity Financing; (d) the issuance, and initial purchase, of the Senior Notes; (e) the execution and delivery of the Loan Documents and the funding of the Bridge Loans, conversion of Bridge Loans to Term Loans and the exchange of any Loans for Senior Subordinated Exchange Notes; and (e) the payment of all fees and expenses in connection therewith to be paid on, prior to or subsequent to the Closing Date and owing in connection with the foregoing.

“ Trustee ” shall mean Wells Fargo Bank, National Association or any other person acting as trustee under the Senior Subordinated Exchange Notes Indenture.

“ Unrestricted Cash ” shall mean cash or cash equivalents of the Borrower or any of its Subsidiaries that would not appear as “restricted” on a consolidated balance sheet of the Borrower or any of its Subsidiaries.

“ Unrestricted Subsidiary ” shall mean (i) any subsidiary of the Borrower identified on Schedule 1.01(d) hereto and (ii) any additional subsidiary of the Borrower designated as such by the Borrower that, together with all other Unrestricted Subsidiaries designated pursuant to this clause (ii) , constitutes in the aggregate less than 5% of (A) aggregate EBITDA on a trailing twelve months’ basis and (B) Consolidated Total Assets at such date of

 

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determination; provided , that, at any time an Unrestricted Subsidiary designation pursuant to this clause (ii)  causes the aggregate EBITDA or aggregate assets test set forth above to no longer be satisfied, the Unrestricted Subsidiary or Unrestricted Subsidiaries, as applicable, that has or have either the highest sales or the largest book value of assets, as applicable, of all such Unrestricted Subsidiaries as of the date of the most recent financial statements delivered pursuant to Section 5.04(a) or (b)  shall automatically constitute a Subsidiary and cease to constitute an Unrestricted Subsidiary and the Borrower shall promptly cause the Guarantee Agreement to be executed and delivered to the Administrative Agent (such that, following such conversion of each such Unrestricted Subsidiary to a Subsidiary the remaining Unrestricted Subsidiaries shall satisfy this definition); provided , that the EBITDA attributable to Banking Subsidiaries that are Unrestricted Subsidiaries shall not be included in the foregoing determination, only so long as the cumulative amount of Investments made by the Borrower and its Subsidiaries in Banking Subsidiaries does not exceed $20,000,000 in the aggregate.

“ Unrestricted Travel Rewards Subsidiary ” shall mean the Unrestricted Subsidiary of the Borrower the sole asset of which is a copy (but not the original) of the source code for the loyalty program established and/or to be established by Travel Rewards, Inc., a Delaware corporation.

“ U.S.A. Patriot Act ” shall mean the U.S.A. Patriot Act, Title III of Pub.L. 107-56 (signed into law October 26, 2001).

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

“ U.S. Lending Office ” shall mean, as to any Lender, the applicable branch, office or Affiliate of such Lender designated by such Lender to make Loans to the Borrower.

“ Wholly Owned Subsidiary ” of any person shall mean a subsidiary of such person, all of the Equity Interests of which (other than directors’ qualifying shares or nominee or other similar shares required pursuant to applicable law) are owned by such person or another Wholly Owned Subsidiary of such person.

“ Withdrawal Liability ” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

SECTION 1.02. Terms Generally . The definitions set forth or referred to in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “ include ,” “ includes ” and “including” shall be deemed to be followed by the phrase “ without limitation .” All references herein to Articles , Sections , Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, any reference in this Agreement to any Loan Document shall mean such document as amended, restated, supplemented or otherwise modified from time to time. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided , that, if the

 

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Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

SECTION 1.03. Effectuation of Transfers . Each of the representations and warranties of Holdings and the Borrower contained in this Agreement (and all corresponding definitions) are made after giving effect to the Transactions (or such portion thereof as shall be consummated as of the date of the applicable representation or warranty), unless the context otherwise requires.

SECTION 1.04. Currency Translation . For purposes of determining compliance as of any date with Section 6.01 , 6.02 , 6.03 , 6.04 , 6.05 , 6.06 or 6.07 , amounts incurred or outstanding in currencies other than U.S. Dollars shall be translated into U.S. Dollars at the exchange rates in effect on the first Business Day of the fiscal quarter in which such determination occurs or in respect of which such determination is being made, as such exchange rates shall be determined in good faith by the Borrower. No Default or Event of Default shall arise as a result of any limitation or threshold set forth in U.S. Dollars in Section 6.01 , 6.02 , 6.03 , 6.04 , 6.05 , 6.06 or 6.07 or paragraph (f)  or (j)  of Section 7.01 being exceeded solely as a result of changes in currency exchange rates from those applicable on the first day of the fiscal quarter in which such determination occurs or in respect of which such determination is being made.

ARTICLE II

The Credits

SECTION 2.01. Commitments . Subject to the terms and conditions set forth herein, each Lender agrees to make Bridge Loans to the Borrower in U.S. Dollars on the Closing Date in a principal amount not to exceed its Commitment.

SECTION 2.02. Loans and Borrowings . (a) The failure of any Lender to make any Bridge Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided , that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b) Each Lender at its option may make any Loan through any domestic or foreign branch or Affiliate of such Lender; provided , that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement and such Lender not be entitled to any amounts payable under Section 2.15 or 2.17 solely in respect of increased costs or taxes resulting from such exercise and existing at the time of such exercise.

(c) Amounts paid or prepaid in respect of Loans may not be reborrowed

 

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SECTION 2.03. Requests for Borrowings . To request a Borrowing, the Borrower shall notify the Administrative Agent of such request (as provided in Section 10.01 ) by telephone not later than 12:00 p.m., Local Time, one Business Day before the Closing Date. Such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower. Such telephonic and written Borrowing Request shall specify the following information: (i) the aggregate amount of the requested Borrowing, (ii) the date of such Borrowing, which shall be a Business Day, and (iii) the location and number of the Borrower’s account to which funds are to be disbursed.

SECTION 2.04. Term Loans; Senior Subordinated Exchange Notes . Subject to the terms and conditions set forth herein, the Bridge Loans may remain outstanding as such to but excluding the Conversion Date, whereupon the outstanding Bridge Loans shall automatically be converted, without the need for any action by any party hereto, to Term Loans. Unless the maturity of the Loans shall have been accelerated on or prior to the Conversion Date, on the Conversion Date the provisions of Articles V and VI and Section 7.01 (other than Sections 7.01(b) and (c) , which shall remain in full force and effect except that the grace period specified in Sections 7.01(c) thereof shall be changed from five Business Days to thirty days) and the defined terms relating thereto shall cease to be in effect and shall be replaced by the Senior Subordinated Exchange Notes Applicable Covenants (in the case of Articles V and VI ), the Senior Subordinated Exchange Notes Event of Default Provisions (in the case of Section 7.01 ) and the applicable defined terms set forth in the Senior Subordinated Exchange Notes Indenture (in the case of the applicable defined terms), each of which is hereby incorporated by reference herein, mutatis mutandis , for the benefit of the Administrative Agent and the Lenders, as fully and effectively as if set forth in full herein.

(a) Each Lender will have the option at any time on or after the Conversion Date to receive Senior Subordinated Exchange Notes in exchange for the Term Loans (or a portion thereof) (including any interest not required to be paid in cash) of such Lender then outstanding pursuant to Section 2.05 (each such event being referred to herein as an “ Exchange ”); provided , that the Borrower shall not be required to issue Senior Subordinated Exchange Notes until it shall have received Exchange Requests to issue not less than $25,000,000 aggregate principal amount of Senior Subordinated Exchange Notes.

(b) The principal amount of the Senior Subordinated Exchange Notes will equal 100.0% of the aggregate principal amount (including any accrued interest not required to be paid in cash) of the Loans (or the portions thereof) for which they are exchanged and will bear interest at a fixed rate per annum equal to the per annum rate in effect with respect to the Term Loans on the Exchange Date, except as provided pursuant to Section 2.13(a)(iv) . The Senior Subordinated Exchange Notes will rank pari passu with the Term Loans and will have the terms set forth in the Senior Subordinated Exchange Notes Indenture. On any date an Exchange occurs (an “ Exchange Date ”), the Borrower shall, pursuant to the provisions of this Article II , pay any accrued and unpaid interest required to be paid in cash on the Loans so exchanged except to the extent prohibited from doing so pursuant to the application of any subordination provisions in Article VIII . If a Default or Event of Default shall have occurred and be continuing on the date of such Exchange, (i) a Default or Event of Default, as the case may be, shall be deemed to have occurred and be continuing under the Subordinated Exchange Notes Indenture, (ii) any notices

 

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given or cure periods commenced while the Loan was outstanding shall be deemed given or commenced (as of the actual dates thereof) for all purposes with respect to the Senior Subordinated Exchange Notes (with the same effect as if the Senior Subordinated Exchange Notes had been outstanding as of the actual dates thereof), (iii) the subordination provisions under the Subordinated Exchange Notes Indenture shall be in effect with respect to the Senior Subordinated Exchange Notes, to the extent applicable, to the same extent that the subordination provisions in Article VIII are in effect as if such Default or Event of Default, as the case may be, had occurred under the Subordinated Exchange Notes Indenture, including, without limitation, as to any restrictions on cash payments (with any Payment Blockage Notice delivered pursuant to the provisions in Article VIII that is in effect at the time of such Exchange being deemed to be an effective delivery of a “ Payment Blockage Notice ” (or similar notice) under the Subordinated Exchange Notes Indenture as of the actual date of delivery of such Payment Blockage Notice (with the same effect as if the Senior Subordinated Exchange Notes had been outstanding as of the actual dates thereof), and (iv) the Senior Subordinated Exchange Notes shall accrue default interest under the Subordinated Exchange Notes Indenture to the same extent the Loans that were exchanged for such Senior Subordinated Exchange Notes accrue default interest. Receipt by a Lender of the Senior Subordinated Exchange Notes and all amounts due in respect of the corresponding Loans through the Exchange Date shall be in satisfaction of, and shall constitute the discharge of, the corresponding Loans and the Borrower and the Loan Parties will have no further obligations in respect of such Loans relating to any time from and after the time of such receipt; provided , that, notwithstanding anything to the contrary, (A) if a Lender receives Senior Subordinated Exchange Notes but not all accrued and unpaid interest required to be paid in cash on the Loans which were exchanged for such Senior Subordinated Exchange Notes, the Borrower’s and the Loan Parties’ obligations in respect thereof shall not be satisfied and discharged and interest and default interest shall accrue on such unpaid interest to the extent provided in this Agreement, (B) such satisfaction and discharge shall be deemed to occur upon the payment in full in cash of all such unpaid interest, together with any additional interest and default interest thereon, and (C) any such satisfaction and discharge shall not affect the obligations of the Borrower and the Loan Parties hereunder and the other Loan Documents with respect to such Loans, other than the principal thereof and interest thereon, to the extent arising or relating to any time prior to the time of such receipt.

(c) In order to effect an Exchange, a Lender shall provide the Administrative Agent and the Borrower written or telecopy notice (an “ Exchange Request ”) in the form to be attached as an exhibit to the Senior Subordinated Exchange Notes Indenture at least five Business Days prior to an Exchange Date, which shall be a Business Day, selected by such Lender for an Exchange in compliance with this Article II , together with such other information as may be reasonably requested by the Administrative Agent. Each Exchange Request shall specify (A) the Lender’s legal name; (B) the Exchange Date selected by such Lender and (C) the principal amount of the Loans to be exchanged pursuant to the applicable notice. Upon receipt of an Exchange Request, the Administrative Agent shall send, on the date that is five days prior to the Exchange Date specified in such Exchange Request, written or telecopy notice of such proposed Exchange to the Trustee, with a copy to the Borrower, that shall specify the information contained in such Exchange Request.

SECTION 2.05. Senior Subordinated Exchange Notes . (a) In the event that any Bridge Loans remain outstanding on the nine-month anniversary of the Closing Date, (i) the

 

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Borrower and the other Loan Parties (other than Holdings) shall enter into the Senior Subordinated Exchange Notes Indenture promptly thereafter (and in any event no later than 30 days prior to the Conversion Date), (ii) the Borrower shall execute and deliver to the Trustee certificates evidencing the full amount of the Senior Subordinated Exchange Notes that may be issued pursuant to the terms hereof, to be held by the Trustee, undated and unauthenticated, pending issuance pursuant to the terms hereof, (iii) the Borrower shall enter into the Registration Rights Agreement promptly thereafter (and in any event no later than 30 days prior to the Conversion Date), and (iv) the Borrower shall use its best efforts to obtain ratings from each of Moody’s and S&P for the Senior Subordinated Exchange Notes (and, if applicable, each tranche thereof) prior to the Conversion Date and, if not obtained by then, as soon as practicable thereafter.

(b) The Borrower shall, no later than ten Business Days prior to the Conversion Date, (i) use best efforts to cause the Senior Subordinated Exchange Notes to become eligible for deposit at The Depository Trust Company (including by the filing of an appropriately executed letter of representations), (ii) obtain “CUSIP” and “ISIN” numbers for the Senior Subordinated Exchange Notes and (iii) use best efforts, in cooperation with the Administrative Agent, to cause the Senior Subordinated Exchange Notes to be eligible for trading in the Private Offerings, Resales and Trading through Automatic Linkages (“ Portal ”) market.

(c) If Senior Subordinated Exchange Notes are issued pursuant to the terms hereof, then the Borrower shall register the Senior Subordinated Exchange Notes under the Securities Act in accordance with the terms set forth in the Registration Rights Agreement.

(d) On or prior to the fifth Business Day following the receipt of an Exchange Request from a Lender in accordance with Section 2.04(c) (and subject to the proviso set forth in Section 2.04(a) ) that requests the exchange of any Term Loan (or portion thereof to the extent permitted by Section 2.04 ) of such Lender for Senior Subordinated Exchange Notes, the Borrower shall use commercially reasonable efforts to cause the Trustee to deliver, in accordance with the instructions set forth in such Exchange Request and with the terms of the Senior Subordinated Exchange Notes Indenture, a fully executed and authenticated Senior Subordinated Exchange Note or Senior Subordinated Exchange Notes, bearing interest and with a maturity date as set forth for such Senior Subordinated Exchange Notes in the Senior Subordinated Exchange Notes Indenture, in exchange for such Term Loan, dated the date of the issuance of such Senior Subordinated Exchange Note. Such Senior Subordinated Exchange Note shall either (i) be recorded in book-entry form as a beneficial interest in one or more global notes deposited with the Trustee as custodian for The Depository Trust Company and credited to the account of the exchanging Lender directly or indirectly through its participant in the Depository Trust Company system, in each case in the same principal amount as such Term Loan (or portion thereof) being exchanged or (ii) if the foregoing is not reasonably practicable, be issued as a definitive registered note payable to the order of the holder or beneficial owner, as the case may be, in the same principal amount as such Term Loan (or portion thereof) being exchanged.

SECTION 2.06. Funding of Borrowings . (a) Each Lender shall make each Bridge Loan to be made by it on the Closing Date by wire transfer of immediately available funds by 12:00 noon, Local Time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make

 

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such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower designated by the Borrower in the applicable Borrowing Request.

(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a)  of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower agrees to pay to the Administrative Agent forthwith on demand (without duplication) such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at the greater of (i) (A) the Federal Funds Rate, and (B) the rate reasonably determined by the Administrative Agent to be the cost to it of funding such amount, and (ii) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing. If the Borrower pays such amount to the Administrative Agent, then such amount shall constitute a reduction of such Borrowing.

SECTION 2.07. [RESERVED] .

SECTION 2.08. Payments . (a) The Borrower shall make each payment (including principal of or interest on any Loan or any fees or other amounts) hereunder and under any other Loan Document not later than 12:00 noon (New York City time) on the date when due in immediately available dollars, without setoff, defense or counterclaim to the extent not permitted to be paid, and so paid, in the form of additional Loans. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. Each such payment shall be made to the Administrative Agent at its offices at Eleven Madison Avenue, New York, New York 10010 to the account designated by the Administrative Agent, except that payments pursuant to Sections 2.15 , 2.16 , 2.17 and 10.05 shall be made directly to the persons entitled thereto. The Administrative Agent shall promptly distribute to each Lender any payments received by the Administrative Agent on behalf of such Lender.

(b) Except as otherwise expressly provided herein, whenever any payment (including principal of or interest on any Loan or any fees or other amounts) hereunder or under any other Loan Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or fees, if applicable.

(c) Any payment required to be made by the Administrative Agent hereunder shall be deemed to have been made by the time required if the Administrative Agent shall, at or before such time, have taken the necessary steps to make such payment in accordance with the

 

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regulations or operating procedures of the clearing or settlement system used by the Administrative Agent to make such payment.

SECTION 2.09. Repayment of Loans; Evidence of Debt . (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan of such Lender on the Maturity Date or such earlier date on which such Loan is required to be repaid in accordance with the provisions hereof.

(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, (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) any amount received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d) The entries made in the accounts maintained pursuant to paragraph (b)  or (c)  of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided , that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

(e) Any Lender may request that Loans made by it be evidenced by a promissory note (a “ Note ”). In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent and reasonably acceptable to the Borrower. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.04 ) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.10. Take-Out Financing . (a) The Borrower shall use its commercially reasonable efforts to consummate, promptly following the Closing Date, the offering and sale of the Senior Subordinated Notes (the “ Securities Offering ”) in an amount sufficient to repay all principal and other amounts then due or outstanding under this Agreement and the other Loan Documents from the net cash proceeds thereof and, in any event, subject to the conditions set forth in Section 2.10(b) , use its best efforts to refinance the Loans in full with the proceeds of the Demand Securities as promptly as practicable following the Closing Date.

(b) In the event the Securities Offering has not been consummated on or prior January 31, 2006 (or has not generated sufficient net cash proceeds to repay all principal and other amounts due or outstanding under this Agreement), then, at any time and from time to time

 

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during the period beginning on February 1, 2006 and ending on the date that is the earlier to occur of (x) the date that is eighteen months after the Closing Date or (y) the date on which 100% of the aggregate outstanding principal amount of all Loans (including any interest thereon permitted to be paid in the form of additional Loans) shall have been exchanged for Senior Subordinated Exchange Notes, upon notice by the Administrative Agent to the Borrower stating that, in its or the Investment Bank’s opinion, market conditions are such that the conditions specified in clause (v)  below can be satisfied (a “ Securities Notice ”), the Borrower shall execute an offering (a “ Demand Offering ”) of debt securities (“ Demand Securities ”) upon such terms and conditions as may be specified in the Securities Notice, it being understood that: (i) the Investment Bank will determine in its reasonable discretion after consultation with the Borrower whether the Demand Securities issued in the Demand Offering will be issued through a registered public offering or a private placement; (ii) the Demand Securities will have economic terms, including ranking, interest, yields and redemption prices, that are, in the reasonable judgment of the Investment Bank, necessary to ensure a successful placement of the Demand Securities and all other terms and arrangements with respect thereto will be customary for similar financings taking into account prevailing market conditions as reasonably determined by the Investment Bank; (iii) the maturity of any particular Demand Security shall not be earlier than the date that is eight and one-half years after the Closing Date and the weighted average life to maturity of all Demand Securities shall not be earlier than the date that is eight and one-half years after the Closing Date; (iv) no Demand Securities of Holdings will be offered; and (v) the weighted average yield of all Demand Securities and all other Indebtedness issued or incurred by the Borrower or any of its Subsidiaries after the Closing Date (including, without limitation, any Senior Subordinated Notes and any additional Senior Notes, but excluding any additional Indebtedness under the Credit Facilities (including incremental facilities thereunder)) the net cash proceeds of which were applied to prepay the Loans shall not exceed, during any period of time set forth in the grid below, the rate per annum set forth in the column opposite such period of time in the grid below (the “ Weighted Average Yield Caps ”); provided , that (A) the weighted average yield of all Demand Securities and all such other Indebtedness required to be paid in cash shall not exceed the Cash Cap, and the Borrower may elect to pay such excess yield on the Demand Securities by paying the appropriate excess yield on each relevant interest payment date with respect to any such Demand Securities through the addition to the then outstanding aggregate principal amount of such Demand Securities of a principal amount equal to all or a portion of such excess interest to be paid (with the Demand Securities with respect to which the yield may be so paid to be reasonably determined by the Investment Bank), (B) the yield on any particular Demand Security shall not exceed 13.50%  per annum , and (C) the Weighted Average Yield Cap shall only apply with respect to the yield on Demand Securities and not to any other Indebtedness, such other Indebtedness being referred to herein solely for purposes of determining the weighted average yield available for any Demand Securities to be offered.

 

 

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(c) Notwithstanding anything to the contrary contained herein, in the event of a failure by the Borrower to execute a Demand Offering within five (5) Business Days following receipt of a Securities Notice, the Administrative Agent shall have the right to increase the interest rate with respect to the Loans upon such failure (or any time thereafter) such that the aggregate weighted average interest rate of all outstanding Loans and any then outstanding Senior Subordinated Exchange Notes and Demand Securities shall not exceed 13.50%  per annum and the portion thereof payable in cash shall not exceed 12.35%  per annum . The interest rate with respect to the Loans following any adjustment pursuant to the preceding sentence shall continue as the applicable interest rate through the Maturity Date. After such a failure to execute a Demand Offering, this Agreement will be modified to provide for optional redemption, call premium terms and defeasance provisions that are customary for high yield securities and which shall be reasonably determined by the Administrative Agent based on market convention. In addition, the Conversion Fee, if not previously paid, shall become immediately due and payable upon any such failure to execute a Demand Offering. Each of the parties hereto hereby authorizes the Administrative Agent to memorialize such modifications in an amendment to this Agreement, which, in the absence of manifest error, shall be conclusive and binding on the parties hereto and which shall not require the consent of any other party hereto.

SECTION 2.11. Prepayment of Loans . (a) The Borrower shall have the right at any time and from time to time to prepay the Loans in whole or in part, without premium or penalty (but subject to Section 2.16 ) upon at least three days’ prior written or fax notice (or telephone notice promptly confirmed by written or fax notice) to the Administrative Agent before 11:00 a.m., New York City time in an aggregate principal amount that is an integral multiple of the Prepayment Multiple and not less than the Prepayment Minimum or, if less, the amount outstanding. Each notice of optional prepayment shall be irrevocable and shall specify the prepayment date and the principal amount of each Loan (or portion thereof) to be prepaid. All optional prepayments under this Section 2.11(a) shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment.

(b) All Net Proceeds shall be applied to prepay the Loans, without premium or penalty (but subject to Section 2.16 ) no later than one Business Day after receipt of such Net Proceeds, subject to the prior application of such Net Proceeds as required by the Credit Agreement and the Senior Notes Indenture to prepay or repurchase outstanding amounts thereunder (or as otherwise permitted to be applied thereunder in lieu of making such prepayments or repurchases) and subject to any limitations thereunder on prepayments of subordinated debt.

(c) In the event that a Change of Control occurs, the Borrower shall promptly (and in any event not later than 91 days following the occurrence of such Change of Control) prepay all outstanding Loans at par.

SECTION 2.12. Fees . (a) If the Bridge Loans have not been repaid in full on or prior to the Conversion Date, the Borrower shall pay the conversion fee (the “ Conversion Fee ”)

 

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in an amount equal to 2.50% of the aggregate principal amount of Bridge Loans being converted into Term Loans.

(b) The Conversion Fee shall be paid on the Conversion Date, in immediately available funds, to the Administrative Agent for distribution among the Lenders. Once paid, none of the Fees shall be refundable under any circumstances.

SECTION 2.13. Interest . (a) (i) Subject to the provisions of Sections 2.10(c) and 2.13(b) , Bridge Loans shall bear interest for each Interest Period on the unpaid principal thereof at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days) equal to (A) in the case of the initial Interest Period commencing on the Closing Date and the next succeeding Interest Period ( i.e. , the second Interest Period), 11.00%  per annum , and (B) in the case of each subsequent Interest Period, the interest rate in effect for the immediately preceding Interest Period plus 0.50%  per annum .

(ii) Subject to the provisions of Sections 2.10(c) and 2.13(b) , Term Loans shall bear interest for each Interest Period on the unpaid principal thereof at a rate p er annum (computed on the basis of the actual number of days elapsed over a year of 360 days) equal to (A) in the case of the initial Interest Period commencing on the Conversion Date, the interest rate in effect for the Bridge Loans immediately prior to the Conversion Date plus 0.50%  per annum , and (B) in the case of each subsequent Interest Period, the interest rate in effect for the immediately preceding Interest Period plus 0.50%  per annum .

(iii) Notwithstanding the foregoing clauses (i) and (ii) , the interest rate borne by the Loans in any Interest Period shall not exceed 12.00%  per annum (the “ Total Cap ”), except to the extent provided in Section 2.10(c) , subject to Section 2.13(b) . To the extent the interest rate borne by the Loans in any Interest Period exceeds a rate equal (A) 11.00%  per annum (the “ Cash Cap ”) or (B) solely to the extent provided in Section 2.10(c) , 12.35%  per annum , subject in each case to Section 2.13(b) , the Borrower may elect to pay such excess interest on the Loans by paying the appropriate excess interest on each relevant Interest Payment Date through the addition to the then outstanding aggregate principal amount of Loans of a principal amount equal to all or a portion of such excess interest to be paid.

(iv) Any Lender that surrenders Term Loans in exchange for Senior Subordinated Exchange Notes may elect to receive such Senior Subordinated Exchange Notes in multiple tranches of securities (with such tranches bearing different interest rates and having different maturities, ranking and other economic terms, all as reasonably determined by the Investment Bank; provided , that there shall not be more than four tranches of Senior Subordinated Exchange Notes in the aggregate without the consent of the Borrower), so long as (A) the weighted average yield of such tranches does not exceed the weighted average yield of such surrendered Term Loans (subject to any subsequent application of Section 2.10(c) , the provisions of the Senior Subordinated Exchange Notes equivalent to Section 2.13(b) , and the accrual of any additional interest or liquidated damages as contemplated in the definition of Registration Rights Agreement), (B) the weighted average maturity of such tranches is not less than the

 

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weighted average maturity of such surrendered Term Loans, and (C) the maturity of any particular Senior Subordinated Exchange Note shall not be earlier than the date that is eight years after the Closing Date. To the extent the weighted average interest rate borne on any outstanding Senior Subordinated Exchange Notes exceeds the Cash Cap, subject to the provisions of the Senior Subordinated Exchange Notes equivalent to Section 2.13(b) , the Borrower may elect to pay such excess interest on, as provided in the Indenture, including pursuant to any supplements thereto providing for such tranches, such tranches of outstanding Senior Subordinated Exchange Notes as reasonably determined by the Investment Bank (which may be, but are not required to be, limited to tranches of Senior Subordinated Exchange Notes bearing an interest rate in excess of the Cash Cap) by paying the appropriate excess interest on each relevant Interest Payment Date through the addition to the then outstanding aggregate principal amount of Senior Subordinated Exchange Notes of the applicable tranches of a principal amount equal to all or a portion of such excess interest to be paid.

(b) Any amount (whether of principal, interest, fees or otherwise) not paid when due hereunder or any other Loan Document shall bear interest, to the extent permitted by law (after as well as before judgment), at the rate then applicable to the outstanding Loans pursuant to the foregoing provisions of this Section 2.13 plus 2.00%  per annum . Notwithstanding anything to the contrary set forth herein, in no event shall the Total Cap or the Cash Cap or any other provision limit or affect the Borrower’s obligation to pay interest in cash on overdue amounts at the rate required to be paid by this Section 2.13(b) .

(c) Interest shall be payable in arrears (either in cash or, to the extent permitted by clause (a)(iii) above, by adding to the then outstanding principal amount of the Loans) on each Interest Payment Date; provided , that additional interest accruing pursuant to Section 2.13(b) shall be payable from time to time upon demand.

(d) 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.

SECTION 2.14. [RESERVED] .

SECTION 2.15. Increased Costs . (a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted Eurocurrency Rate); or

(ii) impose on any Lender or the London interbank market any other condition affecting this Agreement or Eurocurrency Loans made by such Lender or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurocurrency Loan or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower will

 

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pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

(b) If any Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

(c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as applicable, as specified in paragraph (a)  or (b)  of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

(d) Promptly after any Lender has determined that it will make a request for increased compensation pursuant to this Section 2.15 , such Lender shall notify the Borrower thereof. Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided , that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided , further , that if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

SECTION 2.16. Indemnity . The Borrower shall indemnify each Lender against any loss or expense that such Lender may sustain or incur as a consequence of (a) any event, other than a default by such Lender in the performance of its obligations hereunder, which results in (i) such Lender receiving or being deemed to receive any amount on account of the principal of any Loan prior to the end of the Interest Period in effect therefor or (ii) the Loan to be made by such Lender not being made after n