Classmates.com 2004 Annual Report Download - page 95

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Term Loan
In December 2004, the Company borrowed $100 million through a term loan facility dated December 3, 2004. A small portion of the
proceeds of the term loan facility were used to purchase shares tendered pursuant to the Company's tender offer and pay related fees and
expenses. Going forward, the funds will be used for general corporate purposes, stock repurchases and acquisitions, subject to certain limitations.
The term loan matures in four years and amortizes in an annual amount of $23.3 million in years one, two and three and $30 million in year
four, payable in quarterly installments. The Company has the option to maintain the term loan as either base rate loans or Eurodollar loans, but at
no time shall there be outstanding more than four Eurodollar loans. Interest on the loans outstanding under the term loan facility will be payable,
at the Company's option, at (a) a base rate equal to the higher of (i) the prime rate plus a margin of 2% and (ii) 0.50% in excess of the overnight
federal funds rate plus a margin of 2% or (b) at a eurodollar rate generally equal to LIBOR with a maturity comparable to a selected interest
period, plus a margin of 3%. At December 31, 2004, the Company maintained the $100 million in a base rate loan bearing interest at 7.25%. In
January 2005, the Company converted the base rate loan into multiple Eurodollar loans with staggered interest periods.
The Company may make optional prepayments of the term loan, in whole or in part (subject to a minimum prepayment amount), without
premium or penalty, and subject to the reimbursement of lenders' customary breakage costs in the case of a prepayment of Eurodollar
borrowings. Subject to certain limitations, the Company is required to make prepayments of a portion of the term loan from excess cash flow
(commencing in the first quarter of 2006), proceeds of asset sales, insurance recovery and condemnation events and the issuance of equity and
debt.
The facility is collateralized by substantially all of the Company's assets and is unconditionally guaranteed by each of the Company's
domestic subsidiaries.
The credit agreement contains certain financial and other covenants that place restrictions on additional indebtedness by the Company, liens
against the Company's assets, payment of dividends, consolidation, merger, purchase or sale of assets, capital expenditures, investments and
acquisitions. At December 31, 2004, the Company was in compliance with all covenants.
The credit agreement also includes certain customary events of default such as payment defaults, cross-defaults to other indebtedness,
bankruptcy and insolvency, and a change in control, the occurrence of which would cause all amounts under the agreement to become
immediately due and payable. At December 31, 2004, no events of default had occurred.
Future minimum principal payments are as follows at December 31, 2004 (in thousands):
In March 2005, the Company made a $25 million voluntary prepayment on the term loan. The $25 million will reduce the principal
repayments on a pro rata basis.
F-26
Year Ending
December 31,
2005
$
23,333
2006
23,333
2007
23,334
2008
30,000
Total
$
100,000