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REVOLVING CREDIT AGREEMENT
among
KINDERCARE LEARNING CENTERS, INC.
The Several Lenders
from Time to Time Parties Hereto
CITIBANK, N.A.,
as Letter of Credit Issuer
CITICORP NORTH AMERICA, INC.,
as Administrative Agent
CREDIT SUISSE FIRST BOSTON,
acting through its Cayman Islands Branch,
as Syndication Agent
and
UBS AG, Cayman Islands Branch,
as Documentation Agent
Dated as of July 1, 2003
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[CSM Reference 6700-465]
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TABLE OF CONTENTS
Page
SECTION 1.
Definitions
SECTION 2
Amount and Terms of Credit
2.1. Commitments............................................................29
2.2. Minimum Amount of Each Borrowing; Maximum Number of Borrowings.........30
2.3. Notice of Borrowing....................................................30
2.4. Disbursement of Funds..................................................31
2.5. Repayment of Loans; Evidence of Debt...................................32
2.6. Conversions and Continuations..........................................33
2.7. Pro Rata Borrowings....................................................33
2.8. Interest...............................................................34
2.9. Interest Periods.......................................................35
2.10. Increased Costs, Illegality, etc.......................................35
2.11. Compensation...........................................................37
2.12. Change of Lending Office...............................................38
2.13. Notice of Certain Costs................................................38
SECTION 3
Letters of Credit
3.1. Letters of Credit.......................................................38
3.2. Letter of Credit Requests...............................................39
3.3. Letter of Credit Participations.........................................39
3.4. Agreement to Repay Letter of Credit Drawings............................41
3.5. Increased Costs.........................................................42
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3.6. Successor Letter of Credit Issuer.......................................43
SECTION 4
Fees; Commitments
4.1. Fees....................................................................43
4.2. Voluntary Reduction of Commitments......................................44
4.3. Mandatory Termination of Commitments....................................44
SECTION 5
Payments
5.1. Voluntary Prepayments...................................................44
5.2. Mandatory Prepayments...................................................45
5.3. Method and Place of Payment.............................................46
5.4. Net Payments............................................................47
5.5. Computations of Interest and Fees.......................................49
SECTION 6
Conditions Precedent to Closing Date
6.1. Credit Documents........................................................49
6.2. Certificates, Filings and Recordings....................................50
6.3. Closing Certificates....................................................50
6.4. Corporate Proceedings of Each Credit Party..............................50
6.5. Corporate Documents.....................................................51
6.6. No Material Adverse Change..............................................51
6.7. Fees....................................................................51
6.8. Required Approvals......................................................51
6.9. Audited Financial Statements............................................51
6.10. Evidence of Insurance...................................................51
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6.11. Synthetic Lease Termination.............................................51
6.12. The Closing Date Securitization.........................................51
6.13. No Litigation...........................................................52
6.14. Existing Credit Agreement...............................................52
6.15. Legal Opinions..........................................................52
SECTION 7
Conditions Precedent to All Credit Events
7.1. No Default; Representations and Warranties..............................52
7.2. Notice of Borrowing; Letter of Credit Request...........................52
SECTION 8
Representations, Warranties and Agreements
8.1. Corporate Status........................................................53
8.2. Corporate Power and Authority...........................................53
8.3. No Violation............................................................53
8.4. Litigation..............................................................53
8.5. Margin Regulations......................................................54
8.6. Governmental Approvals..................................................54
8.7. Investment Company Act..................................................54
8.8. True and Complete Disclosure; Delivery of Documents.....................54
8.9. Financial Condition; Financial Statements...............................54
8.10. Tax Returns and Payments................................................55
8.11. Compliance with ERISA...................................................55
8.12. Subsidiaries............................................................55
8.13. Patents, etc............................................................56
8.14. Environmental Laws......................................................56
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8.15. Properties..............................................................56
8.16. Security Documents......................................................57
SECTION 9
Affirmative Covenants
9.1. Information Covenants...................................................57
9.2. Books, Records and Inspections..........................................60
9.3. Maintenance of Insurance................................................60
9.4. Payment of Taxes........................................................60
9.5. Consolidated Corporate Franchises.......................................61
9.6. Compliance with Statutes, Obligations, etc..............................61
9.7. ERISA...................................................................61
9.8. Good Repair.............................................................62
9.9. Transactions with Affiliates............................................62
9.10. End of Fiscal Years; Fiscal Quarters....................................62
9.11. Additional Guarantors...................................................62
9.12. Additional Pledgors.....................................................63
9.13. Additional Grantors.....................................................63
9.14. Further Assurances......................................................64
9.15. Use of Proceeds.........................................................66
9.16. Changes in Business.....................................................66
9.17. New Centers.............................................................66
9.18. Synthetic Lease Documents...............................................66
SECTION 10
Negative Covenants
10.1. Limitation on Indebtedness..............................................66
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10.2. Limitation on Liens.....................................................69
10.3. Limitation on Fundamental Changes.......................................70
10.4. Limitation on Sale of Assets............................................72
10.5. Limitation on Investments...............................................73
10.6. Limitation on Dividends.................................................75
10.7. Limitation on Debt Payments and Amendments..............................75
10.8. Limitation on Sale Leasebacks...........................................76
10.9. Consolidated Total Debt to Consolidated EBITDA Ratio....................76
10.10. Consolidated EBITDA Plus Consolidated Lease Expense to Consolidated
Interest Expense Plus Consolidated Lease Expense Ratio.................76
10.11. Capital Expenditures...................................................76
SECTION 11
Events of Default
11.1. Payments...............................................................77
11.2. Representations, etc...................................................77
11.3. Covenants..............................................................77
11.4. Default Under Other Agreements.........................................77
11.5. Bankruptcy, etc........................................................78
11.6. ERISA..................................................................78
11.7. Guarantee..............................................................78
11.8. Pledge Agreement.......................................................79
11.9. Security Agreement.....................................................79
11.10. Mortgages..............................................................79
11.11. Judgments..............................................................79
11.12. Change of Control......................................................79
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SECTION 12
The Administrative Agent
12.1. Appointment............................................................80
12.2. Delegation of Duties...................................................80
12.3. Exculpatory Provisions.................................................80
12.4. Reliance by Administrative Agent.......................................80
12.5. Notice of Default......................................................81
12.6. Non-Reliance on Administrative Agent and Other Lenders.................81
12.7. Indemnification........................................................82
12.8. Administrative Agent in Its Individual Capacity........................82
12.9. Successor Agent........................................................82
SECTION 13
Miscellaneous
13.1. Amendments and Waivers.................................................82
13.2. Notices; Method of Delivery............................................83
13.3. No Waiver; Cumulative Remedies.........................................86
13.4. Survival of Representations and Warranties.............................86
13.5. Payment of Expenses and Taxes..........................................86
13.6. Successors and Assigns; Participations and Assignments.................87
13.7. Replacements of Lenders under Certain Circumstances....................90
13.8. Adjustments; Set-off...................................................90
13.9. Counterparts...........................................................91
13.10. Severability...........................................................91
13.11. Integration............................................................91
13.12. GOVERNING LAW..........................................................91
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13.13. Submission to Jurisdiction; Waivers....................................91
13.14. Acknowledgements.......................................................92
13.15. WAIVERS OF JURY TRIAL..................................................92
13.16. Confidentiality........................................................92
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SCHEDULES
Schedule 1.1(a) Qualified Transferees
Schedule 1.1(b) Mortgaged Properties
Schedule1.1(c) Commitments and Addresses of Lenders
Schedule 6.15 Local Counsel
Schedule 8.12 Subsidiaries
Schedule 8.15(b) Condemnation Proceedings; Dispositions
Schedule 10.1 Other Indebtedness
Schedule 10.2 Other Liens
EXHIBITS
Exhibit A Form of Guarantee
Exhibit B Form of Mortgages
Exhibit C Form of Perfection Certificate
Exhibit D Form of Pledge Agreement
Exhibit E Form of Security Agreement
Exhibit F Form of Letter of Credit Request
Exhibit G Form of Closing Certificate
Exhibit H-1 Form of Legal Opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
Exhibit H-2 Form of Legal Opinion of Local Counsel
Exhibit H-3 Form of Legal Opinion of Xxxxxxx Xxxxx LLP
Exhibit H-4 Form of Legal Opinion of Xxxx X. Xxxxxxxxx
Exhibit I Form of Assignment and Acceptance
Exhibit J Form of Promissory Note
Exhibit K Form of Confidentiality Agreement
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REVOLVING CREDIT AGREEMENT dated as of July 1, 2003 (this
"Agreement"), among KINDERCARE LEARNING CENTERS, INC., a Delaware corporation
(the "Borrower"), the lending institutions from time to time parties hereto
(each a "Lender" and, collectively, the "Lenders"), CITIBANK, N.A., as Letter of
Credit Issuer (such term and each other capitalized term used but not defined in
this introductory statement having the meaning provided in Section 1), CITICORP
NORTH AMERICA, INC., as Administrative Agent, CREDIT SUISSE FIRST BOSTON, acting
through its Cayman Islands Branch, as Syndication Agent, and UBS AG, CAYMAN
ISLANDS BRANCH, as Documentation Agent.
The Borrower has requested the Lenders to extend credit in the form of
Revolving Credit Loans at any time and from time to time prior to the Revolving
Credit Maturity Date, in an aggregate principal amount at any time outstanding
not in excess of $125,000,000 less the sum of (i) the aggregate Letter of Credit
Outstandings at such time and (ii) the aggregate principal amount of all
Swingline Loans outstanding at such time. The Borrower has requested the Letter
of Credit Issuer to issue Letters of Credit at any time and from time to time
prior to the L/C Maturity Date, in an aggregate face amount at any time
outstanding not in excess of $75,000,000. The Borrower has requested the
Swingline Lender to extend credit in the form of Swingline Loans at any time and
from time to time prior to the Swingline Maturity Date, in an aggregate
principal amount at any time outstanding not in excess of $10,000,000.
The Letters of Credit and the proceeds of Revolving Credit Loans and
Swingline Loans will be used by the Borrower for general corporate purposes.
The parties hereto hereby agree as follows:
SECTION 1. Definitions. (a) As used herein, the following terms shall
have the meanings specified in this Section 1 unless the context otherwise
requires (it being understood that defined terms in this Agreement shall include
in the singular number the plural and in the plural the singular):
"ABR" shall mean, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate
in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any
change in the ABR due to a change in the Prime Rate, the Three-Month Secondary
CD Rate or the Federal Funds Effective Rate shall be effective as of the opening
of business on the effective day of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"ABR Loan" shall mean each Loan bearing interest at the rate provided
in Section 2.8(a) and, in any event, shall include all Swingline Loans.
"Acquired EBITDA" shall mean, with respect to any Acquired Entity or
Business, any Converted Restricted Subsidiary, any Sold Entity or Business or
any Converted Unrestricted Subsidiary (any of the foregoing, a "Pro Forma
Entity") for any period, the sum of the amounts for such period of (a) income
from continuing operations before income taxes and extraordinary items,
1
(b) interest expense, (c) depreciation expense, (d) amortization expense,
including amortization of deferred financing fees, (e) non-recurring charges,
(f) non-cash charges, (g) losses on asset sales and (h) restructuring charges or
reserves less the sum of the amounts for such period of (i) non-recurring gains,
(j) non-cash gains and (k) gains on asset sales, all as determined on a
consolidated basis for such Pro Forma Entity in accordance with GAAP.
"Acquired Entity or Business" shall have the meaning provided in the
definition of the term "Consolidated EBITDA".
"Acquisition Subsidiary" shall mean (a) any Subsidiary of the Borrower
that is formed or acquired after the Closing Date in connection with a Permitted
Acquisition, provided that at such time (or promptly thereafter) the Borrower
designates such Subsidiary an Acquisition Subsidiary in a written notice to the
Administrative Agent, (b) any Restricted Subsidiary on the Closing Date
subsequently designated as an Acquisition Subsidiary by the Borrower in a
written notice to the Administrative Agent, provided that (i) such designation
shall be deemed to be an investment on the date of such designation in an
Acquisition Subsidiary in an amount equal to the sum of (x) the net worth of
such Restricted Subsidiary immediately prior to such designation (such net worth
to be calculated without regard to any Guarantee provided by such Restricted
Subsidiary) and (y) the aggregate principal amount of any Indebtedness owed by
such Restricted Subsidiary to the Borrower or any other Restricted Subsidiary
immediately prior to such designation, all calculated, except as set forth in
the parenthetical to clause (x), on a consolidated basis in accordance with GAAP
and (ii) no Default or Event of Default would result from such designation and
(c) each Subsidiary of an Acquisition Subsidiary; provided, however, that at the
time of any written designation by the Borrower to the Administrative Agent that
any Acquisition Subsidiary shall no longer constitute an Acquisition Subsidiary,
such Acquisition Subsidiary shall cease to be an Acquisition Subsidiary to the
extent no Default or Event of Default would result from such designation. On or
promptly after the date of its formation, acquisition or designation, as
applicable, each Acquisition Subsidiary (other than an Acquisition Subsidiary
that is a Foreign Subsidiary) shall have entered into a tax sharing agreement
containing terms that, in the reasonable judgment of the Administrative Agent,
provide for an appropriate allocation of tax liabilities and benefits.
"Adjusted Total Revolving Credit Commitment" shall mean at any time
the Total Revolving Credit Commitment less the aggregate Revolving Credit
Commitments of all Defaulting Lenders.
"Administrative Agent" shall mean Citicorp North America, Inc.,
together with its affiliates, as the administrative agent for the Lenders under
this Agreement and the other Credit Documents and any successor administrative
agent appointed in accordance with Section 12.
"Administrative Agent's Office" shall mean the office of the
Administrative Agent located at Xxx Xxxxx Xxx, Xxxxx 000, Xxx Xxxxxx, Xxxxxxxx
00000, or such other office as the Administrative Agent may hereafter designate
in writing as such to the other parties hereto.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly,
2
the power (a) to vote 10% or more of the securities having ordinary voting power
for the election of directors of such corporation or (b) to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
"Agents" shall mean the Administrative Agent, the Documentation Agent
and the Syndication Agent.
"Aggregate Revolving Credit Outstandings" shall have the meaning
provided in Section 5.2(b).
"Agreement" shall mean this Revolving Credit Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
"Applicable ABR Margin" shall mean, with respect to each ABR Loan at
any date, the applicable percentage per annum set forth below based upon the
Status in effect on such date:
Applicable ABR
Status Margin
------ --------------
Level I Status 2.00%
Level II Status 1.25%
Level III Status 0.75%
"Applicable Eurodollar Margin" shall mean, with respect to each
Eurodollar Revolving Credit Loan at any date, the applicable percentage per
annum set forth below based upon the Status in effect on such date:
Applicable Eurodollar
Status Margin
------ ---------------------
Level I Status 3.25%
Level II Status 2.50%
Level III Status 2.00%
"Arrangers" shall mean Citigroup Global Markets Inc. and Credit Suisse
First Boston, as the co-arrangers and bookrunners under this Agreement and the
other Credit Documents.
"Authorized Officer" shall mean the Chairman of the Board, the
President, the Chief Financial Officer, the Treasurer, any Senior Vice President
or any other senior officer of the Borrower designated as such in writing to the
Administrative Agent by the Borrower.
"Available Amount" shall mean, on any date (the "Reference Date"), an
amount equal on such date to (a) the sum of (i) for the purposes of Sections
10.5(l), 10.5(o) and 10.7, $75,000,000, (ii) an amount equal to the cumulative
amount of Excess Cash Flow for all fiscal quarters completed after the Closing
Date and prior to the Reference Date, (iii) the amount of any capital
contributions (other than any equity contribution made in accordance with
Section 10.5(c)(i)) made in cash to the Borrower from and including the Business
Day immediately
3
following the Closing Date through and including the Reference Date, (iv) an
amount equal to the Net Cash Proceeds received by the Borrower after the Closing
Date and on or prior to the Reference Date from any issuance of equity
securities by the Borrower, (v) the aggregate amount of all cash dividends and
other cash distributions received by the Borrower or any Guarantor from any
Acquisition Subsidiaries, Minority Investments or Unrestricted Subsidiaries
after the Closing Date and on or prior to the Reference Date (other than the
portion of any such dividends and other distributions that is used by the
Borrower or any Guarantor to pay taxes), (vi) the aggregate amount of all cash
repayments of principal received by the Borrower or any Guarantor from any
Acquisition Subsidiaries, Minority Investments or Unrestricted Subsidiaries
after the Closing Date and on or prior to the Reference Date in respect of loans
made by the Borrower or any Guarantor to such Acquisition Subsidiaries, Minority
Investments or Unrestricted Subsidiaries and (vii) the aggregate amount of all
net cash proceeds received by the Borrower or any Guarantor in connection with
the sale, transfer or other disposition of its ownership interest in any
Acquisition Subsidiary, Minority Investment or Unrestricted Subsidiary after the
Closing Date and on or prior to the Reference Date minus (b) the sum on such
date of (i) the aggregate amount of any investments (including loans) made by
the Borrower or any Restricted Subsidiary (other than any Acquisition
Subsidiary) in or to Acquisition Subsidiaries pursuant to Section 10.5(j) after
the Closing Date and on or prior to the Reference Date, (ii) the aggregate
amount of any investments (including loans) made by the Borrower or any
Restricted Subsidiary (other than any Acquisition Subsidiary) pursuant to
Section 10.5(o) after the Closing Date and on or prior to the Reference Date,
(iii) the aggregate amount of any investments made by the Borrower or any
Restricted Subsidiary to acquire the Remaining Public Equity pursuant to Section
10.5(l) after the Closing Date and on or prior to the Reference Date and (iv)
the aggregate price paid by the Borrower in connection with any prepayment,
repurchase or redemption of Subordinated Indebtedness pursuant to Section
10.7(a)(i)(A) (or applied to the prepayment of (x) Revolving Credit Loans, (y)
Swingline Loans and (z) Unpaid Drawings in accordance with Section 5.2(b) in
lieu thereof) after the Closing Date and on or prior to the Reference Date.
"Available Commitment" shall mean an amount equal to the excess, if
any, of the amount of the Total Revolving Credit Commitment over (b) the sum of
(i) the aggregate principal amount of all Revolving Credit Loans (but not
Swingline Loans) then outstanding and (ii) the aggregate Letter of Credit
Outstandings at such time.
"Available Foreign Investment Amount" shall mean, on any date (the
"Investment Date"), an amount equal to (a) the sum of (i) $100,000,000, (ii) the
aggregate amount of all cash dividends and other cash distributions received by
the Borrower or any Guarantor from any Restricted Foreign Subsidiaries after the
Closing Date and on or prior to the Investment Date (other than the portion of
any such dividends and other distributions that is used by the Borrower or any
Guarantor to pay taxes), (iii) the aggregate amount of all cash repayments of
principal received by the Borrower or any Guarantor from any Restricted Foreign
Subsidiaries after the Closing Date and on or prior to the Investment Date in
respect of loans made by the Borrower or any Guarantor to such Restricted
Foreign Subsidiaries and (iv) the aggregate amount of all net cash proceeds
received by the Borrower or any Guarantor in connection with the sale, transfer
or other disposition of its ownership interest in any Restricted Foreign
Subsidiary after the Closing Date and on or prior to the Investment Date minus
(b) the aggregate amount of any investments (including loans) made by the
Borrower or any Restricted Subsidiary (other than any Restricted Foreign
Subsidiary) in or
4
to Restricted Foreign Subsidiaries pursuant to Section 10.5(j) or 10.5(k) after
the Closing Date and on or prior to the Investment Date.
"Bankruptcy Code" shall have the meaning provided in Section 11.5.
"Base CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is one
and the denominator of which is one minus the C/D Reserve Percentage and (b) the
C/D Assessment Rate.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrower Common Stock" shall mean any class of outstanding common
stock of the Borrower.
"Borrowing" shall mean and include (a) the incurrence of Swingline
Loans from the Swingline Lender on a given date and (b) the incurrence of one
Type of Revolving Credit Loan on a given date (or resulting from conversions on
a given date) having, in the case of Eurodollar Revolving Credit Loans, the same
Interest Period (provided that ABR Loans incurred pursuant to Section 2.10(b)
shall be considered part of any related Borrowing of Eurodollar Revolving Credit
Loans).
"Business Day" shall mean (a) for all purposes other than as covered
by clause (b) below, any day excluding Saturday, Sunday and any day that shall
be in The City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(b) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Revolving Credit Loans, any
day that is a Business Day described in clause (a) and which is also a day for
trading by and between banks in Dollar deposits in the relevant interbank
Eurodollar market.
"Capital Expenditures" shall mean, for any period, the aggregate of
all expenditures (whether paid in cash or accrued as liabilities and including
in all events all amounts expended or capitalized under Capital Leases, but
excluding any amount representing capitalized interest) by the Borrower and the
Restricted Subsidiaries during such period that, in conformity with GAAP, are or
are required to be included as additions during such period to property, plant
or equipment reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries, provided that the term "Capital Expenditures" shall not include
(a) expenditures made in connection with the replacement, substitution or
restoration of assets (i) to the extent financed from insurance proceeds paid on
account of the loss of or damage to the assets being replaced or restored or
(ii) with awards of compensation arising from the taking by eminent domain or
condemnation of the assets being replaced, (b) the purchase price of equipment
that is purchased simultaneously with the trade-in of existing equipment but
only to the extent that the gross amount of such purchase price is reduced by
the credit granted by the seller of such equipment for the equipment being
traded in at such time, (c) the purchase of plant, property or equipment made
within one year of the sale of any asset to the
5
extent purchased with the proceeds of such sale or (d) expenditures that
constitute any part of Consolidated Lease Expense.
"Capitalized Lease Obligations" shall mean, as applied to any Person,
all obligations under Capital Leases of such Person or any of its Subsidiaries,
in each case taken at the amount thereof accounted for as liabilities in
accordance with GAAP.
"Capital Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is, or is required to be, accounted for as a capital lease
on the balance sheet of that Person.
"C/D Assessment Rate" shall mean for any day as applied to any ABR
Loan, the annual assessment rate in effect on such day that is payable by a
member of the Bank Insurance Fund maintained by the Federal Deposit Insurance
Corporation or any successor thereto (the "FDIC") classified as well-capitalized
and within supervisory subgroup "B" (or a comparable successor assessment risk
classification) within the meaning of 12 C.F.R. ss. 327.4(a) (or any successor
provision) to the FDIC for the FDIC's insuring time deposits at offices of such
institution in the United States.
"C/D Reserve Percentage" shall mean for any day as applied to any ABR
Loan, the percentage (expressed as a decimal) that is in effect on such day, as
prescribed by the Board, for determining the reserve requirement for a
Depositary Institution (as defined in Regulation D of the Board) in respect of
new non-personal time deposits in Dollars having a maturity that is 30 days or
more.
"Center" shall mean any facility primarily providing for the care,
education or development of infants or other children, or part of such facility
(including related office buildings, parking lots or other related real
property), now or hereafter owned, leased or operated by the Borrower or any of
its Subsidiaries, in each case including the land on which such facility is
located, all buildings and other improvements thereon, including leasehold
improvements, all fixtures, furniture, equipment, inventory and other tangible
personal property located in or used in connection with such facility and all
accounts receivable and other intangible personal property (other than motor
vehicles) related to the ownership, lease or operation of such facility, all
whether now existing or hereafter acquired.
"Change of Control" shall mean and be deemed to have occurred if (a)
(i) KKR, its Affiliates and the Management Group shall at any time not own, in
the aggregate, directly or indirectly, beneficially and of record, at least 35%
of the outstanding Voting Stock of the Borrower (other than as the result of one
or more widely distributed offerings of Borrower Common Stock, in each case
whether by the Borrower or by KKR, its Affiliates or the Management Group)
and/or (ii) any person, entity or "group" (within the meaning of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended) shall at any time
have acquired direct or indirect beneficial ownership of a percentage of the
outstanding Voting Stock of the Borrower that exceeds the percentage of such
Voting Stock then beneficially owned, in the aggregate, by KKR, its Affiliates
and the Management Group, unless, in the case of either clause (i) or (ii)
above, KKR, its Affiliates and the Management Group have, at such time, the
right or the ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the Borrower;
6
and/or (b) at any time Continuing Directors shall not constitute a majority of
the Board of Directors of the Borrower.
"Closing Date" shall mean the date on which the conditions specified
in Section 6 are satisfied (or waived in accordance with Section 13.1).
"Closing Date Securitization" shall mean the structured financing by
the Closing Date Securitization Subsidiaries to be consummated on the Closing
Date pursuant to and in accordance with the Closing Date Securitization
Documentation that involves the sale, transfer or other disposition of certain
Centers to a Closing Date Securitization Subsidiary, the making of a loan to
such Closing Date Securitization Subsidiary and the granting of mortgages and
other forms of security as collateral therefor.
"Closing Date Securitization Cooperation Agreement" shall mean that
certain Cooperation Agreement dated as of July 1, 2003, between KC Propco, LLC,
and Xxxxxx Xxxxxxx Mortgage Capital Inc., as amended, supplemented, extended,
severed, restated or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Closing Date Securitization Documentation" shall mean, collectively,
(a) the Closing Date Securitization Loan Agreement, (b) the Closing Date
Securitization Cooperation Agreement, (c) the Closing Date Securitization Loan
Documents, (d) the Closing Date Securitization Management Agreement, (e) the
Closing Date Securitization Lease and (f) any other Closing Date Securitization
Loan Document.
"Closing Date Securitization Lease" shall mean that certain Lease
Agreement dated as of July 1, 2003, between KC Propco, LLC, and KC Opco, LLC, as
amended, supplemented, extended, severed, restated or otherwise modified from
time to time in accordance with the terms thereof and hereof.
"Closing Date Securitization Loan Agreement" shall mean that certain
Loan Agreement, dated as of July 1, 2003, between KC Propco, LLC and Xxxxxx
Xxxxxxx Capital Inc., as amended, supplemented, extended, severed, restated or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"Closing Date Securitization Loan Documents" shall have the meaning
provided to the term "Loan Documents" in the Closing Date Securitization Loan
Agreement, each as amended, supplemented, extended, severed, restated or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"Closing Date Securitization Management Agreement" shall mean that
certain Management Agreement dated as of July 1, 2003, between KC Opco, LLC and
KinderCare Learning Centers, Inc., as amended, supplemented, extended, severed,
restated or otherwise modified from time to time in accordance with the terms
thereof and hereof.
"Closing Date Securitization Subsidiary" shall mean any Restricted
Subsidiary hereinbefore or hereinafter formed in connection with the Closing
Date Securitization, including pursuant to the Closing Date Securitization
Cooperation Agreement.
7
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement, and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean any and all "Collateral", as defined in the
Pledge Agreement or the Security Agreement, and the Mortgaged Properties, as
applicable.
"Commitment Fee Rate" shall mean, with respect to the Available
Commitment on any day, the rate per annum set forth below opposite the Status in
effect on such day:
Commitment
Status Fee Rate
------ ----------
Level I Status 0.500%
Level II Status 0.500%
Level III Status 0.400%
"Communications" shall have the meaning provided in Section 13.2.
"Confidential Information" shall have the meaning provided in Section
13.16.
"Consolidated Earnings" shall mean, for any period, "income from
continuing operations before income taxes and extraordinary items" of the
Borrower and the Restricted Subsidiaries for such period, determined in a manner
consistent with the manner in which such amount was determined in accordance
with the audited financial statements referred to in Section 9.1(a).
"Consolidated EBITDA" shall mean, for any period, the sum, without
duplication, of the amounts for such period of (a) Consolidated Earnings, (b)
Consolidated Interest Expense, (c) depreciation expense, (d) amortization
expense, including amortization of deferred financing fees, (e) non-recurring
charges, (f) non-cash charges, (g) losses on asset sales, (h) restructuring
charges or reserves and (i) in the case of any period ending prior to the fiscal
quarter ending September 19, 2003, Transaction Expenses less the sum of the
amounts for such period of (j) non-recurring gains, (k) non-cash gains and (l)
gains on asset sales, all as determined on a consolidated basis for the Borrower
and the Restricted Subsidiaries in accordance with GAAP, provided that (i)
except as provided in clause (ii) below, there shall be excluded from
Consolidated Earnings for any period the income from continuing operations
before income taxes and extraordinary items of all Unrestricted Subsidiaries for
such period to the extent otherwise included in Consolidated Earnings and (ii)
for purposes of the definition of the term "Permitted Acquisition" and Sections
10.3, 10.9 and 10.10, (x) there shall be included in determining Consolidated
EBITDA for any period (A) the Acquired EBITDA of any Person, property, business
or asset (other than an Unrestricted Subsidiary) acquired and not subsequently
sold, transferred or otherwise disposed of (but not including the Acquired
EBITDA of any related Person, property, business or assets to the extent not so
acquired) by the Borrower or any Restricted Subsidiary during such period (each
such Person, property, business or asset acquired and not subsequently so
disposed of, an "Acquired Entity or Business"), and the Acquired EBITDA of any
Unrestricted Subsidiary that is converted
8
into a Restricted Subsidiary during such period (each, a "Converted Restricted
Subsidiary"), in each case based on the actual Acquired EBITDA of such Acquired
Entity or Business or Converted Restricted Subsidiary for such period (including
the portion thereof occurring prior to such acquisition or conversion) and (B)
an adjustment in respect of each Acquired Entity or Business acquired during
such period equal to the amount of the Pro Forma Adjustment with respect to such
Acquired Entity or Business for such period (including the portion thereof
occurring prior to such acquisition or conversion) as specified in the Pro Forma
Adjustment Certificate delivered to the Lenders and the Administrative Agent and
(y) there shall be excluded in determining Consolidated EBITDA for any period
the Acquired EBITDA of any Person, property, business or asset (other than an
Unrestricted Subsidiary) sold, transferred or otherwise disposed of by the
Borrower or any Restricted Subsidiary during such period (each such Person,
property, business or asset so sold or disposed of, a "Sold Entity or
Business"), and the Acquired EBITDA of any Restricted Subsidiary that is
converted into an Unrestricted Subsidiary during such period (each, a "Converted
Unrestricted Subsidiary"), in each case based on the actual Acquired EBITDA of
such Sold Entity or Business or Converted Unrestricted Subsidiary for such
period (including the portion thereof occurring prior to such sale, transfer,
disposition or conversion).
"Consolidated EBITDA Plus Consolidated Lease Expense to Consolidated
Interest Expense Plus Consolidated Lease Expense Ratio" shall mean, as of any
date of determination, the ratio of (a) Consolidated EBITDA for the relevant
Test Period plus Consolidated Lease Expense for the relevant Test Period to (b)
Consolidated Interest Expense for the relevant Test Period plus Consolidated
Lease Expense for the relevant Test Period.
"Consolidated Interest Expense" shall mean, for any period, cash
interest expense (including that attributable to Capital Leases and Indebtedness
incurred pursuant to the Closing Date Securitization, in each case in accordance
with GAAP), net of cash interest income, of the Borrower and the Restricted
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of the Borrower and the Restricted Subsidiaries, including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under Hedge Agreements
(other than currency swap agreements, currency future or option contracts and
other similar agreements), but excluding, however, amortization of deferred
financing costs and any other amounts of non-cash interest, all as calculated on
a consolidated basis in accordance with GAAP, provided that (a) except as
provided in clause (b) below, there shall be excluded from Consolidated Interest
Expense for any period the cash interest expense (or income) of all Unrestricted
Subsidiaries for such period to the extent otherwise included in Consolidated
Interest Expense and (b) for purposes of the definition of the term "Permitted
Acquisition" and Sections 10.3 and 10.10, (i) there shall be included in
determining Consolidated Interest Expense for any period the cash interest
expense (or income) of any Acquired Entity or Business acquired during such
period and of any Converted Restricted Subsidiary converted during such period,
in each case based on the cash interest expense (or income) of such Acquired
Entity or Business or Converted Restricted Subsidiary for such period (including
the portion thereof occurring prior to such acquisition or conversion) assuming
any Indebtedness incurred or repaid in connection with any such acquisition or
conversion had been incurred or prepaid on the first day of such period and (ii)
there shall be excluded in determining Consolidated Interest Expense for any
period the cash interest expense (or income) of any Sold Entity or Business
sold, transferred or otherwise disposed of during such period and of any
Converted Unrestricted Subsidiary converted during such period, in each case
based on the actual cash interest expense (or income) of such Sold Entity or
Business
9
or Converted Unrestricted Subsidiary for such period (including the portion
thereof occurring prior to such sale, transfer, disposition or conversion).
"Consolidated Lease Expense" shall mean, for any period, all rental
expenses of the Borrower and the Restricted Subsidiaries during such period
under operating leases for real or personal property (including in connection
with the Closing Date Securitization and any other Real Estate Financings),
excluding real estate taxes, insurance costs and common area maintenance charges
and net of sublease income, other than (a) obligations under vehicle leases
entered into in the ordinary course of business and (b) Capitalized Lease
Obligations, all as determined on a consolidated basis in accordance with GAAP,
provided that (i) except as provided in clause (ii) below, there shall be
excluded from Consolidated Lease Expense for any period the rental expenses of
all Unrestricted Subsidiaries for such period to the extent otherwise included
in Consolidated Lease Expense and (ii) for purposes of the definition of the
term "Permitted Acquisition" and Sections 10.3 and 10.10, (x) there shall be
included in determining Consolidated Lease Expense for any period the rental
expenses of any Acquired Entity or Business acquired during such period and of
any Converted Restricted Subsidiary converted during such period, in each case
based on the rental expenses of such Acquired Entity or Business or Converted
Restricted Subsidiary for such period (including the portion thereof occurring
prior to such acquisition or conversion) and (y) there shall be excluded in
determining Consolidated Lease Expense for any period the rental expenses of any
Sold Entity or Business sold, transferred or otherwise disposed of during such
period and of any Converted Unrestricted Subsidiary converted during such
period, in each case based on the actual rental expenses of such Sold Entity or
Business or Converted Unrestricted Subsidiary for such period (including the
portion thereof occurring prior to such sale, transfer, disposition or
conversion).
"Consolidated Net Income" shall mean, for any period, the consolidated
net income (or loss) of the Borrower and the Restricted Subsidiaries, determined
on a consolidated basis in accordance with GAAP; provided, however, that the
term "Consolidated Net Income" shall be deemed to include any increases during
such period to consolidated additional paid-in capital of the Borrower and the
Restricted Subsidiaries, determined on a consolidated basis in accordance with
GAAP, to the extent such increases are attributable to tax benefits from net
operating losses incurred prior to the Closing Date that are not otherwise
included in Consolidated Net Income for such period.
"Consolidated Total Debt" shall mean, as of any date of determination,
(a) the sum of (i) all Indebtedness of the Borrower and the Restricted
Subsidiaries for borrowed money outstanding on such date and (ii) all
Capitalized Lease Obligations of the Borrower and the Restricted Subsidiaries
outstanding on such date, all calculated on a consolidated basis in accordance
with GAAP minus (b) the aggregate amount of cash included in the cash accounts
listed on the consolidated balance sheet of the Borrower and its Restricted
Subsidiaries up to a maximum amount of $10,000,000 to the extent the use thereof
for application to payment of Indebtedness is not prohibited by law or any
contract to which the Borrower or any of the Restricted Subsidiaries is a party.
"Consolidated Total Debt to Consolidated EBITDA Ratio" shall mean, as
of any date of determination, the ratio of (a) Consolidated Total Debt as of the
last day of the relevant Test Period to (b) Consolidated EBITDA for such Test
Period.
10
"Consolidated Working Capital" shall mean, at any date, the excess of
(a) the sum of all amounts (other than cash, cash equivalents and bank
overdrafts) that would, in conformity with GAAP, be set forth opposite the
caption "total current assets" (or any like caption) on a consolidated balance
sheet of the Borrower and the Restricted Subsidiaries at such date over (b) the
sum of all amounts that would, in conformity with GAAP, be set forth opposite
the caption "total current liabilities" (or any like caption) on a consolidated
balance sheet of the Borrower and the Restricted Subsidiaries on such date, but
excluding (i) the current portion of any Funded Debt, (ii) without duplication
of clause (i) above, all Indebtedness consisting of Loans and Letter of Credit
Exposure to the extent otherwise included therein and (iii) the current portion
of deferred income taxes.
"Continuing Director" shall mean, at any date, an individual (a) who
is a member of the Board of Directors of the Borrower on the date hereof, (b)
who, as at such date, has been a member of such Board of Directors for at least
the 12 preceding months, (c) who has been nominated to be a member of such Board
of Directors, directly or indirectly, by KKR or Persons nominated by KKR or (d)
who has been nominated to be a member of such Board of Directors by a majority
of the other Continuing Directors then in office.
"Converted Restricted Subsidiary" shall have the meaning provided in
the definition of the term "Consolidated EBITDA".
"Converted Unrestricted Subsidiary" shall have the meaning provided in
the definition of the term "Consolidated EBITDA".
"Credit Documents" shall mean this Agreement, the Security Documents
and any promissory notes issued by the Borrower hereunder.
"Credit Event" shall mean and include the making (but not the
conversion or continuation) of a Loan and the issuance of a Letter of Credit.
"Credit Party" shall mean each of the Borrower, the Guarantors, the
Subsidiary Pledgors, the Subsidiary Grantors and the Mortgagors.
"Cumulative Consolidated Net Income Available to Common Stockholders"
means, as of any date of determination, Consolidated Net Income less cash
dividends paid with respect to preferred stock for the period (taken as one
accounting period) commencing on the Closing Date and ending on the last day of
the most recent fiscal quarter for which Section 9.1 Financials have been
delivered to the Lenders under Section 9.1.
"Default" shall mean any event, act or condition that with notice or
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.
"Dividends" shall have the meaning provided in Section 10.6.
11
"Documentation Agent" shall mean UBS AG, Cayman Islands Branch,
together with its affiliates, as the documentation agent for the Lenders under
this Agreement and the other Credit Documents.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower that
is organized under the laws of the United States, any state thereof, the
District of Columbia or any territory thereof.
"Drawing" shall have the meaning provided in Section 3.4(b).
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, written accusations or allegations,
investigations (other than internal reports prepared by the Borrower or any of
its Subsidiaries (a) in the ordinary course of such Person's business or (b) as
required in connection with a financing transaction or an acquisition or
disposition of real estate) or proceedings relating in any way to any
Environmental Law or any permit issued, or any approval given, under any such
Environmental Law (hereafter, "Claims"), including (i) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions, cost recovery or damages pursuant to any
applicable Environmental Law and (ii) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code and rule of common law
now or hereafter in effect and in each case as amended, and any binding judicial
or administrative interpretation thereof, including any binding judicial or
administrative order, agreement, consent decree or judgment, relating to the
environment, human health or safety or Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time. Section references to ERISA are to ERISA as
in effect at the date of this Agreement and any subsequent provisions of ERISA
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) that together with the Borrower or a Subsidiary would be deemed to be
a "single employer" within the meaning of 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.
"Eurodollar Rate" shall mean, with respect to each day during each
Interest Period pertaining to any Eurodollar Revolving Credit Loan, the rate of
interest determined on the basis of the rate for deposits in Dollars for a
period equal to such Interest Period commencing on the first day of such
Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M.
(London time) two Business Days prior to the beginning of such Interest Period.
In the event that such rate does not appear on Page 3750 of the Telerate Service
(or otherwise on such service), the
12
"Eurodollar Rate" for the purposes of this paragraph shall be determined by
reference to such other publicly available service for displaying eurodollar
rates as may be agreed upon by the Administrative Agent and the Borrower or, in
the absence of such agreement, the "Eurodollar Rate" for the purposes of this
paragraph shall instead be the rate per annum notified to the Administrative
Agent by the Reference Lender as the rate at which the Reference Lender is
offered Dollar deposits at or about 10:00 A.M. (New York time) two Business Days
prior to the beginning of such Interest Period, in the interbank eurodollar
market where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Revolving Credit Loans are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its Eurodollar
Revolving Credit Loans, as the case may be, to be outstanding during such
Interest Period.
"Eurodollar Revolving Credit Loan" shall mean any Revolving Credit
Loan bearing interest at a rate determined by reference to the Eurodollar Rate.
"Event of Default" shall have the meaning provided in Section 11.
"Excess Cash Flow" shall mean, for any period, an amount equal to the
excess of (a) the sum, without duplication, of (i) Consolidated Net Income for
such period, (ii) an amount equal to the amount of all non-cash charges to the
extent deducted in arriving at such Consolidated Net Income, (iii) decreases in
Consolidated Working Capital for such period and (iv) an amount equal to the
aggregate net non-cash loss on the sale, lease, transfer or other disposition of
assets by the Borrower and the Restricted Subsidiaries during such period (other
than sales in the ordinary course of business) to the extent deducted in
arriving at such Consolidated Net Income over (b) the sum, without duplication,
of (i) an amount equal to the amount of all non-cash credits included in
arriving at such Consolidated Net Income, (ii) the aggregate amount actually
paid by the Borrower and the Restricted Subsidiaries in cash during such period
on account of Capital Expenditures (excluding the principal amount of
Indebtedness incurred in connection with such Capital Expenditures, whether
incurred in such period or in a subsequent period), (iii) the aggregate amount
of all prepayments of Revolving Credit Loans and Swingline Loans made during
such period to the extent accompanying reductions of the Total Revolving Credit
Commitments, (iv) the aggregate amount of all principal payments of Indebtedness
of the Borrower or the Restricted Subsidiaries (including the principal
component of payments in respect of Capitalized Lease Obligations but excluding
Revolving Credit Loans and Swingline Loans) made during such period (other than
in respect of any revolving credit facility to the extent there is not an
equivalent permanent reduction in commitments thereunder), (v) an amount equal
to the aggregate net non-cash gain on the sale, lease, transfer or other
disposition of assets by the Borrower and the Restricted Subsidiaries during
such period (other than sales in the ordinary course of business) to the extent
included in arriving at such Consolidated Net Income, (vi) increases in
Consolidated Working Capital for such period, (vii) payments by the Borrower and
the Restricted Subsidiaries during such period in respect of long-term
liabilities of the Borrower and the Restricted Subsidiaries other than
Indebtedness, (viii) the amount of investments made during such period pursuant
to Section 10.5 to the extent that such investments were financed with
internally generated cash flow of the Borrower and the Restricted Subsidiaries,
(ix) the amount of dividends paid during such period pursuant to clause (c) of
the proviso to Section 10.5 and (x) the aggregate amount of expenditures
actually made by the Borrower and the Restricted Subsidiaries in cash during
such period (including expenditures for the
13
payment of financing fees) to the extent that such expenditures are not expensed
during such period.
"Excess Closing Date Securitization Proceeds" shall mean the excess of
(x) the aggregate proceeds received by the Closing Date Securitization
Subsidiaries from the Closing Date Securitization over (y) the sum of (i) the
aggregate payments made to lenders and other parties with respect to the
repayment of all loans outstanding under, and all other amounts due in respect
of, the Existing Credit Agreement and the discharge of all other obligations
under the Existing Credit Agreement and security interests relating thereto,
(ii) the aggregate payments made in connection with the Synthetic Lease
Termination and (iii) Transaction Expenses.
"Existing Credit Agreement" shall mean the Credit Agreement dated
February 13, 1997, by and among the Borrower, the lenders party thereto and
JPMorgan Chase Bank, a New York banking corporation (formerly named "The Chase
Manhattan Bank"), as Administrative Agent, as the same may have been amended,
supplemented or otherwise modified from time to time prior to the date hereof.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the per annum rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 4.1.
"Final Date" shall mean the date on which the Revolving Credit
Commitments shall have terminated, no Revolving Credit Loans shall be
outstanding and the Letter of Credit Outstandings shall have been reduced to
zero.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower that
is not a Domestic Subsidiary.
"Fronting Fee" shall have the meaning provided in Section 4.1(c).
"Funded Debt" shall mean all Indebtedness of the Borrower and the
Restricted Subsidiaries for borrowed money that matures more than one year from
the date of its creation or matures within one year from such date that is
renewable or extendable, at the option of the Borrower or one of the Restricted
Subsidiaries, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year from such date, including,
without limitation, all amounts of Funded Debt required to be paid or prepaid
within one year from the date of its creation and, in the case of the Borrower,
Indebtedness in respect of the Loans.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; provided, however, that
if there occurs after the date hereof any change in GAAP that affects in any
respect the calculation of any covenant contained in Section 10, the Lenders and
the Borrower shall negotiate in good faith amendments to the
14
provisions of this Agreement that relate to the calculation of such covenant
with the intent of having the respective positions of the Lenders and the
Borrower after such change in GAAP conform as nearly as possible to their
respective positions as of the date of this Agreement and, until any such
amendments have been agreed upon, the covenants in Section 10 shall be
calculated as if no such change in GAAP has occurred.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Granting Lender" shall have the meaning provided in Section 13.6(f).
"Guarantee" shall mean and include the Guarantee, made by each
Guarantor in favor of the Administrative Agent for the benefit of the Secured
Parties (as defined therein), substantially in the form of Exhibit A, as the
same may be amended, supplemented or otherwise modified from time to time.
"Guarantee Obligations" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including any obligation of such Person, whether or not contingent,
(a) to purchase any such Indebtedness or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase
or payment of any such Indebtedness or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
Indebtedness of the ability of the primary obligor to make payment of such
Indebtedness or (d) otherwise to assure or hold harmless the owner of such
Indebtedness against loss in respect thereof; provided, however, that the term
"Guarantee Obligations" shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the Indebtedness in respect of which such Guarantee
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith.
"Guarantor" shall mean each Domestic Subsidiary of the Borrower (other
than the Closing Date Securitization Subsidiaries) that is a Restricted
Subsidiary and is or becomes a party to the Guarantee.
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products or by-products, radioactive materials, friable asbestos, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing regulated levels of polychlorinated biphenyls, and
radon gas; (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances", "hazardous waste", "hazardous
materials", "extremely hazardous waste", "restricted hazardous waste", "toxic
substances", "toxic pollutants", "contaminants", or "pollutants", or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance or waste, exposure to which is prohibited,
limited or regulated by any Governmental Authority.
15
"Hedge Agreements" shall mean interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other similar agreements entered into by
the Borrower in order to protect the Borrower or any of the Restricted
Subsidiaries against fluctuations in interest rates or currency exchange rates.
"Indebtedness" of any Person shall mean (a) all indebtedness of such
Person for borrowed money, (b) the deferred purchase price of assets or services
that in accordance with GAAP would be shown on the liability side of the balance
sheet of such Person, (c) the face amount of all letters of credit issued for
the account of such Person and, without duplication, all drafts drawn
thereunder, (d) all Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such Indebtedness has been
assumed, (e) all Capitalized Lease Obligations of such Person, (f) all
obligations of such Person under interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements, (g) without
duplication, all Guarantee Obligations of such Person and (h) the principal
amount of any loans made to, and notes issued by, such Person in connection with
the Closing Date Securitization, provided that Indebtedness shall not include
trade payables and accrued expenses, in each case arising in the ordinary course
of business.
"Interest Period" shall mean, with respect to any Revolving Credit
Loan, the interest period applicable thereto, as determined pursuant to Section
2.9.
"KKR" shall mean each of Kohlberg Kravis Xxxxxxx & Co., L.P. and KKR
Associates, L.P.
"L/C Maturity Date" shall mean the date that is five Business Days
prior to the Revolving Credit Maturity Date.
"L/C Participant" shall have the meaning provided in Section 3.3(a).
"L/C Participation" shall have the meaning provided in Section 3.3(a).
"Lender" shall have the meaning provided in the preamble to this
Agreement. Unless the context otherwise requires, the terms "Lender" and
"Lenders" include the Letter of Credit Issuer and the Swingline Lender.
"Lender Affiliate" shall mean, with respect to any Lender, any other
Person Controlled by such Lender. For the purposes of this definition only,
"Control" means the ownership, directly or indirectly, in the aggregate of more
than fifty percent (50%) of the beneficial ownership interest of a Person and
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise.
"Lender Default" shall mean (a) the failure (which has not been cured)
of a Lender to make available its portion of any Borrowing or to fund its
portion of any unreimbursed payment under Section 3.3 or (b) a Lender having
notified the Administrative Agent and/or the Borrower that it does not intend to
comply with the obligations under Section 2.1(a), 2.1(c) or 3.3, in the case
16
of either clause (a) or clause (b) above, as a result of the appointment of a
receiver or conservator with respect to such Lender at the direction or request
of any regulatory agency or authority.
"Letter of Credit" shall mean each standby letter of credit issued
pursuant to Section 3.1.
"Letter of Credit Commitment" shall mean $75,000,000, as the same may
be reduced from time to time pursuant to Section 3.1.
"Letter of Credit Exposure" shall mean, with respect to any Lender,
such Lender's Revolving Credit Commitment Percentage of the Letter of Credit
Outstandings.
"Letter of Credit Fee" shall have the meaning provided in Section
4.1(b).
"Letter of Credit Issuer" shall mean Citibank, N.A. or any successor
to Citibank, N.A. pursuant to Section 3.6.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (a) the aggregate Stated Amount of all outstanding Letters
of Credit and (b) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section
3.2.
"Level I Status" shall mean, on any date, the Consolidated Total Debt
to Consolidated EBITDA Ratio is greater than 3.75:1.00 as of such date.
"Level II Status" shall mean, on any date, the circumstance that Level
I Status does not exist and the Consolidated Total Debt to Consolidated EBITDA
Ratio is greater than or equal to 2.75:1.00 as of such date.
"Level III Status" shall mean, on any date, the circumstance that
neither Level I Status nor Level II Status exists as of such date.
"Lien" shall mean any mortgage, pledge, security interest,
hypothecation, assignment, lien (statutory or other) or similar encumbrance
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement or any lease in the nature thereof).
"Loan" shall mean any Revolving Credit Loan or Swingline Loan made by
any Lender hereunder.
"Management Group" shall mean, at any time, the Chairman of the Board,
the President, any Executive Vice President or Vice President, the Treasurer and
the Secretary of the Borrower at such time.
"Mandatory Borrowing" shall have the meaning provided in Section
2.1(c).
17
"Material Adverse Change" shall mean any change in the business,
assets, operations, properties or financial condition of the Borrower and its
Subsidiaries, taken as a whole, that would materially adversely affect the
ability of the Borrower and the other Credit Parties, taken as a whole, to
perform their obligations under this Agreement and the other Credit Documents,
taken as a whole.
"Material Adverse Effect" shall mean a circumstance or condition
affecting the business, assets, operations, properties or financial condition of
the Borrower and its Subsidiaries, taken as a whole, that would materially
adversely affect (a) the ability of the Borrower and the other Credit Parties,
taken as a whole, to perform their obligations under this Agreement and the
other Credit Documents, taken as a whole, or (b) the rights and remedies of the
Administrative Agent and the Lenders under this Agreement and the other Credit
Documents taken as a whole.
"Material Subsidiary" shall mean, at any date of determination, any
Restricted Subsidiary of the Borrower (a) whose total assets at the last day of
the Test Period ending on the last day of the most recent fiscal period for
which Section 9.1 Financials have been delivered were equal to or greater than
5% of the consolidated total assets of the Borrower and the Restricted
Subsidiaries at such date or (b) whose gross revenues for such Test Period were
equal to or greater than 5% of the consolidated gross revenues of the Borrower
and the Restricted Subsidiaries for such period, in each case determined in
accordance with GAAP.
"Minimum Borrowing Amount" shall mean (a) with respect to a Borrowing
of Revolving Credit Loans, $1,000,000 and (b) with respect to a Borrowing of
Swingline Loans, $100,000.
"Mini-Skools" shall mean Mini-Skools Limited, an Alberta corporation
and a Foreign Subsidiary of the Borrower.
"Minority Investment" shall mean any Person (other than a Subsidiary)
in which the Borrower or any Restricted Subsidiary owns capital stock or other
equity interests.
"Moody's" shall mean Xxxxx'x Investors Service, Inc. or any successor
by merger or consolidation to its business.
"Mortgage" shall mean a mortgage, deed of trust, deed to secure debt
and other security document, substantially in the form of Exhibit B, granting a
Lien on a Mortgaged Property to secure the Obligations.
"Mortgaged Properties" shall mean (i) initially, the Centers and the
other owned real properties of the Credit Parties specified on Schedule 1.1(b)
and (ii) each other Center and other parcel of real property and improvements
thereto with respect to which a Mortgage is granted pursuant to Section 9.14(b)
or 9.14(c).
"Mortgagor" shall mean each mortgagor that grants a Mortgage.
"Net Cash Proceeds" shall mean, with respect to any issuance by the
Borrower of equity securities, (a) the gross cash proceeds (including payments
from time to time in respect of installment obligations, if applicable) received
by or on behalf of the Borrower or any of the
18
Restricted Subsidiaries in respect of such issuance less (b) the reasonable and
customary fees, commissions, expenses, issuance costs, discounts and other costs
paid by the Borrower or any of the Restricted Subsidiaries in connection with
such issuance (other than those payable to the Borrower or any Subsidiary of the
Borrower), in each case only to the extent not already deducted in arriving at
the amount referred to in clause (a) above.
"Non-Defaulting Lender" shall mean and include each Lender other than
a Defaulting Lender.
"Non-Excluded Taxes" shall have the meaning provided in Section
5.4(a).
"Non-US Lender" shall have the meaning provided in Section 5.4.
"Non-US Participant" shall have the meaning provided in Section 5.4.
"Notes" shall mean the promissory notes issued to Lenders in
accordance with Section 13.6 evidencing the Revolving Credit Loans owing to such
Lenders.
"Notice" shall have the meaning provided in Section 13.2(b).
"Notice of Borrowing" shall have the meaning provided in Section 2.3.
"Notice of Conversion or Continuation" shall have the meaning provided
in Section 2.6.
"Obligations" shall have the meaning assigned to such term in the
Security Documents.
"Participant" shall have the meaning provided in Section 13.6(a)(ii).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Perfection Certificate" means a certificate in substantially the form
of Exhibit C delivered on the Closing Date.
"Permitted Acquisition" shall mean the acquisition, by merger or
otherwise, by the Borrower or any of the Restricted Subsidiaries of assets or
capital stock or other equity interests, so long as (a) such acquisition and all
transactions related thereto shall be consummated in accordance with applicable
law; (b) such acquisition shall, in the case of the acquisition of capital stock
or other equity interests by the Borrower or any Restricted Domestic Subsidiary,
result in the issuer of such capital stock or other equity interests becoming a
Restricted Domestic Subsidiary and a direct Restricted Domestic Subsidiary in
the case of such an acquisition by the Borrower; (c) after giving effect to such
acquisition, no Default or Event of Default shall have occurred and be
continuing; and (d) the Borrower shall be in compliance, on a pro forma basis
after giving effect to such acquisition (including any Indebtedness assumed or
permitted to exist or incurred pursuant to Sections 10.1(j) and 10.1(k),
respectively, and any related Pro Forma Adjustment), with the covenants set
forth in Sections 10.9 and 10.10, as such covenants are recomputed as at the
last day
19
of the most recently ended Test Period under such Sections as if such
acquisition had occurred on the first day of such Test Period.
"Permitted Investments" shall mean (a) securities issued or
unconditionally guaranteed by the United States government or any agency or
instrumentality thereof, in each case having maturities of not more than 24
months from the date of acquisition thereof; (b) securities issued by any state
of the United States of America or any political subdivision of any such state
or any public instrumentality thereof or any political subdivision of any such
state or any public instrumentality thereof having maturities of not more than
24 months from the date of acquisition thereof and, at the time of acquisition,
having an investment grade rating generally obtainable from either S&P or
Moody's (or, if at any time neither S&P nor Moody's shall be rating such
obligations, then from another nationally recognized rating service); (c)
commercial paper issued by any Lender or any bank holding company owning any
Lender; (d) commercial paper maturing no more than 12 months after the date of
creation thereof and, at the time of acquisition, having a rating of at least
A-2 or P-2 from either S&P or Moody's (or, if at any time neither S&P nor
Moody's shall be rating such obligations, an equivalent rating from another
nationally recognized rating service); (e) domestic and eurodollar certificates
of deposit or bankers' acceptances maturing no more than two years after the
date of acquisition thereof issued by any Lender or any other bank having
combined capital and surplus of not less than $250,000,000 in the case of
domestic banks and $100,000,000 (or the dollar equivalent thereof) in the case
of foreign banks; (f) repurchase agreements with a term of not more than 30 days
for underlying securities of the type described in clauses (a), (b) and (e)
above entered into with any bank meeting the qualifications specified in clause
(e) above or securities dealers of recognized national standing; (g) shares of
investment companies that are registered under the Investment Company Act of
1940 and invest solely in one or more of the types of securities described in
clauses (a) through (f) above; and (h) in the case of investments by any
Restricted Foreign Subsidiary, other customarily utilized high-quality
investments in the country where such Restricted Foreign Subsidiary is located.
"Permitted Liens" shall mean (a) Liens for taxes, assessments or
governmental charges or claims not yet delinquent or which are being contested
in good faith and by appropriate proceedings for which appropriate reserves have
been established in accordance with GAAP; (b) Liens in respect of property or
assets of the Borrower or any of its Subsidiaries imposed by law, such as
carriers', warehousemen's and mechanics' Liens and other similar Liens arising
in the ordinary course of business, in each case so long as such Liens arise in
the ordinary course of business and do not individually or in the aggregate have
a Material Adverse Effect; (c) Liens arising from judgments or decrees in
circumstances not constituting an Event of Default under Section 11.11; (d)
Liens incurred or deposits made in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business; (e) ground
leases in respect of real property on which facilities owned or leased by the
Borrower or any of its Subsidiaries are located; (f) easements, rights-of-way,
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances not interfering in any material respect with the business of the
Borrower and its Subsidiaries taken as a whole; (g) any interest or title of a
lessor or secured by a lessor's interest under any lease permitted by this
Agreement; (h) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; (i) Liens on goods the purchase
20
price of which is financed by a documentary letter of credit issued for the
account of the Borrower or any of its Subsidiaries, provided that such Lien
secures only the obligations of the Borrower or such Subsidiaries in respect of
such letter of credit to the extent permitted under Section 10.1; and (j) leases
or subleases granted to others not interfering in any material respect with the
business of the Borrower and its Subsidiaries, taken as a whole.
"Permitted Mortgage Financing" shall mean any financing (or series of
related financings) by the Borrower or any of the Restricted Subsidiaries after
the Closing Date that is secured by a mortgage on one or more Centers (other
than Centers subject to the Lien of any Mortgage), provided that (a) the
recourse of the lenders with respect to such financing is limited solely to such
mortgaged Centers, except with respect to customary exceptions, including
environmental liabilities, fraud, intentional misrepresentation, gross
negligence, misapplication of funds, misapplication of insurance and
condemnation proceeds and intentional waste, where the recourse of the lenders
may be to the Borrower or its Restricted Subsidiaries and (b) such financing is
consummated for fair value as determined at the time of consummation in good
faith by the Board of Directors of the Borrower (which such determination may
take into account any investment of the Borrower or such Restricted Subsidiary
in connection with, and any other material economic terms of, such financing).
"Permitted Sale Leaseback" shall mean any Sale Leaseback consummated
by the Borrower or any of the Restricted Subsidiaries after the Closing Date
with respect to one or more Centers (other than, subject to Section 9.14(c),
Centers subject to the Lien of any Mortgage), provided that such Sale Leaseback
is consummated for fair value as determined at the time of consummation in good
faith by the Board of Directors of the Borrower (which such determination may
take into account any retained interest or other investment of the Borrower or
such Restricted Subsidiary in connection with, and any other material economic
terms of, such Sale Leaseback).
"Permitted Securitization" shall mean any structured financing (or
series of related structured financings) by the Borrower or any of the
Restricted Subsidiaries after the Closing Date that involves the sale, transfer
or other disposition of one or more Centers (other than Centers subject to the
Lien of any Mortgage) to a Real Estate Financing Entity and the making of a loan
to such Real Estate Financing Entity and the granting of mortgages and other
forms of security as collateral therefor, provided that such structured
financing is consummated for fair value as determined at the time of
consummation in good faith by the Board of Directors of the Borrower (which such
determination may take into account any retained interest or other investment of
the Borrower or such Restricted Subsidiary in connection with, and any other
material economic terms of, such structured financing).
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any Governmental Authority.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA and subject to Title IV of ERISA, that is or
was within any of the preceding five plan years maintained or contributed to by
(or to which there is or was an obligation to contribute or to make payments to)
the Borrower, a Subsidiary or an ERISA Affiliate.
"Platform" shall have the meaning provided in Section 13.2.
21
"Pledge Agreement" shall mean and include the Pledge Agreement entered
into by the Borrower, the other pledgors party thereto and the Administrative
Agent for the benefit of the Secured Parties identified therein, substantially
in the form of Exhibit D, as the same may be amended, supplemented or otherwise
modified from time to time.
"Post-Closing Closing Date Securitization Documentation" shall have
the meaning provided in Section 9.1(i).
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Administrative Agent as its reference rate in
effect at its principal office in New York City (the Prime Rate not being
intended to be the lowest rate of interest charged by Citicorp North America,
Inc. in connection with extensions of credit to debtors).
"Pro Forma Adjustment" shall mean, for any period, with respect to the
Acquired EBITDA of any Acquired Entity or Business or the Consolidated EBITDA of
the Borrower affected by the acquisition of such Acquired Entity or Business,
the pro forma increase or decrease in such Acquired EBITDA or such Consolidated
EBITDA, as the case may be, projected by the Borrower in good faith as a result
of reasonably identifiable and supportable net cost savings or additional net
costs, as the case may be, realizable during such period by combining the
operations of such Acquired Entity or Business with the operations of the
Borrower and its Subsidiaries, provided that so long as such net cost savings or
additional net costs will be realizable at any time during such period, it may
be assumed, for purposes of projecting such pro forma increase or decrease to
such Acquired EBITDA or such Consolidated EBITDA, as the case may be, that such
net cost savings or additional net costs will be realizable during the entire
such period, provided further that any such pro forma increase or decrease to
such Acquired EBITDA or such Consolidated EBITDA, as the case may be, shall be
without duplication for net cost savings or additional net costs actually
realized during such period and already included in such Acquired EBITDA or such
Consolidated EBITDA, as the case may be.
"Pro Forma Adjustment Certificate" shall mean any certificate of an
Authorized Officer of the Borrower delivered pursuant to Section 9.1(h) or
setting forth the information described in clause (iv) to Section 9.1(d).
"Qualified Transferee" shall mean (i) a real estate investment trust,
a bank, a financial institution, a savings and loan association, an investment
bank, an insurance company, a trust company, a commercial credit corporation, a
pension plan, a pension fund or pension advisory firm, a mutual fund, a
government entity or plan, (ii) an investment company, a money management firm
or a "qualified institutional buyer" within the meaning of Rule 144A promulgated
under the Securities Act of 1933, as amended, or an institutional "accredited
investor" within the meaning of Regulation D promulgated under the Securities
Act of 1933, as amended, which is regularly engaged in the business of making or
owning mezzanine loans or loans of similar types to the loan made pursuant to
the Closing Date Securitization Loan Agreement, (iii) an investment fund, a
limited liability company, a limited partnership or a general partnership (a
"Permitted Investment Fund") where a Qualified Transferee or an entity which is
not subject to a bankruptcy proceeding and is a nationally-recognized manager of
investment funds investing in debt or equity interests which is investing
through a fund which has committed capital of at least $250,000,000 acts as the
general partner, managing member or fund manager and at least 50% of
22
the equity interests in such Permitted Investment Fund are owned, directly or
indirectly, by one or more of the following: a Qualified Transferee, an
institutional "accredited investor", within the meaning of Regulation D
promulgated under the Securities Act of 1933, as amended, and/or a "qualified
institutional buyer" within the meaning of Rule 144A promulgated under the
Securities Exchange Act of 1934, as amended (provided each institutional
"accredited investor" or "qualified institutional buyer" meets the test set
forth in clause (v) (A) below), (iv) any other lender or entity (including any
opportunity funds) regularly engaged in the business of making mortgage,
mezzanine or corporate loans which has been approved as a Qualified Transferee
hereunder by the Rating Agencies (as defined in the Closing Date Securitization
Loan Agreement), (v) an institution substantially similar to any of the
foregoing entities described in clause (i) or (ii) of this definition, and as to
each of the entities described in clauses (i), (ii) or (v) provided such entity
(A) has total assets (in name or under management) in excess of $650,000,000 and
(except with respect to a pension advisory firm or similar fiduciary)
capital/statutory surplus or shareholder's equity of $250,000,000; and (B) is
regularly engaged in the business of making or owning corporate loans,
commercial real estate loans or commercial loans secured by a pledge of
interests in a mortgage borrower, (vi) any entity listed on Schedule 1.1(a)
hereto or (vii) any entity Controlled (as defined below) by any one or more of
the entities described in this definition. For purposes of this definition only,
"Control" means the ownership, directly or indirectly, in the aggregate of more
than fifty percent (50%) of the beneficial ownership interest of an entity and
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of an entity, whether through the
ability to exercise voting power, by contract or otherwise.
"Real Estate Financing" shall mean any Permitted Mortgage Financing,
Permitted Sale Leaseback, Permitted Securitization or the Closing Date
Securitization.
"Real Estate Financing Entity" shall mean any special purpose entity
formed in connection with Real Estate Financings, including the Closing Date
Securitization Subsidiaries.
"Reference Lender" shall mean Citicorp North America, Inc.
"Register" shall have the meaning provided in Section 13.6(c).
"Regulation D" shall mean Regulation D of the Board as from time to
time in effect and any successor to all or a portion thereof establishing
reserve requirements.
"Regulation T" shall mean Regulation T of the Board as from time to
time in effect and any successor to all or a portion thereof establishing margin
requirements.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and any successor to all or a portion thereof establishing margin
requirements.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and any successor to all or a portion thereof establishing margin
requirements.
"Remaining Public Equity" shall mean all the Borrower Common Stock in
existence on the Closing Date and which is not beneficially owned, directly or
indirectly, by KKR, its Affiliates or the Management Group on the Closing Date,
including any additional Borrower Common Stock or other capital stock or equity
interests in the Borrower issued in respect of such
23
Borrower Common Stock in existence on the Closing Date as a result of a stock
split, recapitalization, merger, combination, consolidation or otherwise, but
excluding any management equity plan or stock option plan or similar agreement.
"Reportable Event" shall mean an event described in Section 4043 of
ERISA and the regulations thereunder.
"Required Lenders" shall mean, at any date, (a) Non-Defaulting Lenders
having or holding a majority of the Adjusted Total Revolving Credit Commitment
at such date or (b) if the Total Revolving Credit Commitment has been terminated
or for the purposes of acceleration pursuant to Section 11, the holders
(excluding Defaulting Lenders) of a majority of the outstanding principal amount
of the Loans and Letter of Credit Exposures (excluding the Loans and Letter of
Credit Exposures of Defaulting Lenders) in the aggregate at such date.
"Requirement of Law" shall mean, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or assets or to which such
Person or any of its property or assets is subject.
"Restricted Domestic Subsidiary" shall mean each Restricted Subsidiary
that is also a Domestic Subsidiary.
"Restricted Foreign Subsidiary" shall mean any Foreign Subsidiary that
is also a Restricted Subsidiary.
"Restricted Subsidiary" shall mean any Subsidiary of the Borrower
other than an Unrestricted Subsidiary.
"Revolving Credit Commitment" shall mean, (a) with respect to each
Lender that is a Lender on the date hereof, the amount set forth opposite such
Lender's name on Schedule 1.1(c) as such Lender's "Revolving Credit Commitment"
and (b) in the case of any Lender that becomes a Lender after the date hereof,
the amount specified as such Lender's "Revolving Credit Commitment" in the
Assignment and Acceptance pursuant to which such Lender assumed a portion of the
Total Revolving Credit Commitment, in each case as the same may be changed from
time to time pursuant to the terms hereof.
"Revolving Credit Commitment Percentage" shall mean at any time, for
each Lender, the percentage obtained by dividing such Lender's Revolving Credit
Commitment by the Total Revolving Credit Commitment, provided that at any time
when the Total Revolving Credit Commitment shall have been terminated, each
Lender's Revolving Credit Commitment Percentage shall be its Revolving Credit
Commitment Percentage as in effect immediately prior to such termination.
"Revolving Credit Loan" shall have the meaning provided in Section
2.1.
"Revolving Credit Maturity Date" shall mean the date that is five
years after the Closing Date, or, if such date is not a Business Day, the next
preceding Business Day.
24
"Sale Leaseback" shall mean any transaction or series of related
transactions pursuant to which the Borrower or any of the Restricted
Subsidiaries sells, transfers or otherwise disposes of any property, real or
personal, whether now owned or hereafter acquired, and thereafter rents or
leases such property or other property which it intends to use for substantially
the same purpose or purposes as the property being sold, transferred or
disposed.
"S&P" shall mean Standard & Poor's Ratings Services or any successor
by merger or consolidation to its business.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Section 9.1 Financials" shall mean the financial statements
delivered, or required to be delivered, pursuant to Section 9.1(a) or (b)
together with the accompanying officer's certificate delivered, or required to
be delivered, pursuant to Section 9.1(d).
"Security Agreement" shall mean and include the Security Agreement
entered into by the Borrower, the other grantors party thereto and the
Administrative Agent for the benefit of the Secured Parties identified therein,
substantially in the form of Exhibit E, as the same may be amended, supplemented
or otherwise modified from time to time.
"Security Agreement Permitted Liens" shall mean (A) the Lien created
by the Security Agreement, (B) Liens permitted by Sections 10.2(a), (b) or
(d)(y), (C) to the extent permitted by Sections 10.1(j) or 10.1(k), Liens
permitted by Sections 10.2(f) or 10.2(g)(ii) and (D) to the extent replacing,
extending or renewing any of the foregoing, Liens permitted by Section 10.2(h).
"Security Documents" means the Security Agreement, the Pledge
Agreement, the Guarantee, the Mortgages and each other security agreement or
other instrument or document executed and delivered pursuant to Section 9.11,
9.12, 9.13 or 9.14 or pursuant to any of the Security Documents to secure any of
the Obligations.
"Sold Entity or Business" shall have the meaning provided in the
definition of the term "Consolidated EBITDA".
"SPC" shall have the meaning provided in Section 13.6(f).
"Specified Subsidiary" shall mean, at any date of determination, (a)
any Material Subsidiary or (b) any Unrestricted Subsidiary (i) whose total
assets at the last day of the Test Period ending on the last day of the most
recent fiscal period for which Section 9.1 Financials have been delivered were
equal to or greater than 15% of the consolidated total assets of the Borrower
and its Subsidiaries at such date or (ii) whose gross revenues for such Test
Period were equal to or greater than 15% of the consolidated gross revenues of
the Borrower and its Subsidiaries for such period, in each case determined in
accordance with GAAP.
"Stated Amount" of any Letter of Credit shall mean the maximum amount
from time to time available to be drawn thereunder, determined without regard to
whether any conditions to drawing could then be met.
25
"Status" shall mean, as to the Borrower as of any date, the existence
of Level I Status, Level II Status or Level III Status as the case may be, on
such date. Changes in Status resulting from changes in the Consolidated Total
Debt to Consolidated EBITDA Ratio shall become effective (the date of such
effectiveness, the "Effective Date") as of the first day following the most
recent fiscal year or period for which (a) Section 9.1 Financials are delivered
to the Lenders under Section 9.1 and (b) an officer's certificate is delivered
by the Borrower to the Lenders setting forth, with respect to such Section 9.1
Financials, the then-applicable Status, and shall remain in effect until the
next change to be effected pursuant to this definition, provided that (i) if the
Borrower shall have made any payments in respect of interest or commitment fees
during the period (the "Interim Period") from and including the Effective Date
to but excluding the day any change in Status is determined as provided above,
then the amount of the next such payment due on or after such day shall be
increased or decreased by an amount equal to any underpayment or overpayment so
made by the Borrower during such Interim Period, (ii) notwithstanding the
foregoing, for the period from and including the Closing Date to but excluding
the day that is 180 days following the Closing Date, the Status of the Borrower
for the purposes of this Agreement shall be deemed to be Level I and (iii) each
determination of the Consolidated Total Debt to Consolidated EBITDA Ratio
pursuant to this definition shall be made with respect to the Test Period ending
at the end of the fiscal period covered by the relevant financial statements.
"Subordinated Indebtedness" shall mean Indebtedness of the Borrower
for borrowed money that is subordinated in right of payment to the Obligations,
including the Subordinated Notes.
"Subordinated Note Indenture" shall mean the Indenture dated as of
February 13, 1997, as the same may be amended, supplemented or otherwise
modified from time to time, between the Borrower and HSBC Bank USA (formerly
known as Marine Midland Bank), as trustee, pursuant to which the Subordinated
Notes were issued.
"Subordinated Notes" shall mean the 9-1/2% Senior Subordinated Notes
of the Borrower due 2009 issued pursuant to the Subordinated Note Indenture.
"Subsidiary" of any Person shall mean and include (a) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (b) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Subsidiary Grantor" shall mean each Domestic Subsidiary of the
Borrower, other than any Acquisition Subsidiary or Real Estate Financing Entity,
that is a Restricted Subsidiary and is or becomes a party to the Security
Agreement.
26
"Subsidiary Pledgor" shall mean each Domestic Subsidiary of the
Borrower that is a Restricted Subsidiary, other than any Acquisition Subsidiary
or Real Estate Financing Entity, and is or becomes a party to the Pledge
Agreement.
"Swingline Commitment" shall mean $10,000,000.
"Swingline Lender" means Citicorp North America, Inc., in its capacity
as lender of Swingline Loans hereunder.
"Swingline Loans" shall have the meaning provided in Section 2.1(b).
"Swingline Maturity Date" shall mean, with respect to any Swingline
Loan, the date that is five Business Days prior to the Revolving Credit Maturity
Date.
"Syndication Agent" shall mean Credit Suisse First Boston, acting
through its Cayman Islands Branch, together with its affiliates, as the
syndication agent for the Lenders under this Agreement and the other Credit
Documents.
"Synthetic Lease Documents" shall mean (a) the Participation Agreement
among the Borrower, The KinderCare Realty Trust 1999, Scotia Banc Inc., JPMorgan
Chase Bank (formerly known as The Chase Manhattan Bank) and the Lenders from
time to time party thereto dated as of September 2, 1999 and (b) the Operative
Documents (as defined therein), in each case as amended, supplement or otherwise
modified from time to time.
"Synthetic Lease Termination" shall mean (a) the purchase of all the
properties that are subject to the synthetic lease transaction provided for in
the Synthetic Lease Documents by payment of the Purchase Option Price (as
defined in the Synthetic Lease Documents) with respect to such properties and
the termination of all obligations to pay rent on such properties, (b) the
repayment in full of all loans outstanding under, and all other amounts due in
respect of, and the permanent termination of the commitments under the Synthetic
Lease Documents and (c) the release of all mortgages and other security
interests granted in connection with the Synthetic Lease Documents.
"Test Period" shall mean, for any determination under this Agreement,
the four consecutive fiscal quarters of the Borrower then last ended.
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate, expressed as a per annum rate, for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next preceding Business Day,
the average of the secondary market quotations for three-month certificates of
deposit of major money center banks in New York City received at approximately
10:00 A.M. (New York time) on such day (or, if such day shall not be a Business
Day, on the next preceding Business Day) by the Administrative Agent from three
New York City negotiable certificate of deposit dealers of recognized standing
selected by it.
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"Total Revolving Credit Commitment" shall mean the sum of the
Revolving Credit Commitments of all the Lenders.
"Transaction Expenses" shall mean any fees or expenses incurred or
paid by the Borrower or any of its Subsidiaries in connection with (a) this
Agreement and the other Credit Documents, (b) the Closing Date Securitization
and (c) the transactions contemplated hereby or thereby (including the Synthetic
Lease Termination).
"Transferee" shall have the meaning provided in Section 13.6(e).
"Type" shall mean as to any Revolving Credit Loan, its nature as an
ABR Loan or a Eurodollar Revolving Credit Loan.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the present value of the accrued benefits under the Plan as of the
close of its most recent plan year, determined in accordance with Statement of
Financial Accounting Standards No. 87 as in effect on the date hereof, based
upon the actuarial assumptions that would be used by the Plan's actuary in a
termination of the Plan, exceeds the fair market value of the assets allocable
thereto.
"Unpaid Drawing" shall have the meaning provided in Section 3.4(a).
"Unrestricted Subsidiary" shall mean (a) any Subsidiary of the
Borrower that is formed or acquired after the Closing Date, provided that at
such time (or promptly thereafter) the Borrower designates such Subsidiary an
Unrestricted Subsidiary in a written notice to the Administrative Agent, (b) any
Restricted Subsidiary re-designated after the Closing Date as an Unrestricted
Subsidiary by the Borrower in a written notice to the Administrative Agent,
provided that (x) such re-designation shall be deemed to be an investment on the
date of such re-designation in an Unrestricted Subsidiary in an amount equal to
the sum of (i) the net worth of such re-designated Restricted Subsidiary
immediately prior to such re-designation (such net worth to be calculated
without regard to any Guarantee provided by such Restricted Subsidiary) and (ii)
the aggregate principal amount of any Indebtedness owed by such Restricted
Subsidiary to the Borrower or any other Restricted Subsidiary immediately prior
to such re-designation, all calculated, except as set forth in the parenthetical
to clause (i), on a consolidated basis in accordance with GAAP, and (y) no
Default or Event of Default would result from such re-designation and (c) each
Subsidiary of an Unrestricted Subsidiary; provided, however, that (a) at the
time of any written re-designation by the Borrower to the Administrative Agent
that any Unrestricted Subsidiary shall no longer constitute an Unrestricted
Subsidiary, such Unrestricted Subsidiary shall cease to be an Unrestricted
Subsidiary to the extent no Default or Event of Default would result from such
re-designation and (b) no Closing Date Securitization Subsidiary may be
designated or re-designated, as the case may be, an Unrestricted Subsidiary. On
or promptly after the date of its formation, acquisition or re-designation, as
applicable, each Unrestricted Subsidiary (other than an Unrestricted Subsidiary
that is a Foreign Subsidiary) shall have entered into a tax sharing agreement
containing terms that, in the reasonable judgment of the Administrative Agent,
provide for an appropriate allocation of tax liabilities and benefits.
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"Voting Stock" shall mean, with respect to any Person, shares of such
Person's capital stock having the right to vote for the election of directors of
such Person under ordinary circumstances.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section references are to
Sections of this Agreement unless otherwise specified. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation".
SECTION 2. Amount and Terms of Credit.
2.1. Commitments. (a) Subject to and upon the terms and conditions
herein set forth, each Lender severally agrees to make a loan or loans (each a
"Revolving Credit Loan" and, collectively, the "Revolving Credit Loans") to the
Borrower, which Revolving Credit Loans (i) shall be made at any time and from
time to time on and after the Closing Date and prior to the Revolving Credit
Maturity Date, (ii) may, at the option of the Borrower, be incurred and
maintained as, and/or converted into, ABR Loans or Eurodollar Revolving Credit
Loans, provided that all Revolving Credit Loans made by each of the Lenders
pursuant to the same Borrowing shall, unless otherwise specifically provided
herein, consist entirely of Revolving Credit Loans of the same Type, (iii) may
be repaid and reborrowed in accordance with the provisions hereof, (iv) shall
not exceed for any such Lender at any time outstanding that aggregate principal
amount that, when added to the product of (x) such Lender's Revolving Credit
Commitment Percentage and (y) the sum of (I) the aggregate Letter of Credit
Outstandings at such time and (II) the aggregate principal amount of all
Swingline Loans then outstanding, equals the Revolving Credit Commitment of such
Lender at such time and (v) shall not, after giving effect thereto and to the
application of the proceeds thereof, exceed for all Lenders at any time
outstanding the aggregate principal amount that, when added to the sum of (x)
the Letter of Credit Outstandings at such time and (y) the aggregate principal
amount of all Swingline Loans then outstanding, equals the Total Revolving
Credit Commitment then in effect. On the Revolving Credit Maturity Date, all
Revolving Credit Loans shall be repaid in full.
(b) Subject to and upon the terms and conditions herein set forth, the
Swingline Lender in its individual capacity agrees, at any time and from time to
time on and after the Closing Date and prior to the Swingline Maturity Date, to
make a loan or loans (each a "Swingline Loan" and, collectively, the "Swingline
Loans") to the Borrower, which Swingline Loans (i) shall be ABR Loans, (ii)
shall have the benefit of the provisions of Section 2.1(c), (iii) shall not
exceed at any time outstanding the Swingline Commitment, (iv) shall not, after
giving effect thereto and to the application of the proceeds thereof, exceed in
the aggregate at any time outstanding the principal amount that, when added to
the aggregate principal amount of all Revolving Credit Loans then outstanding
and all Letter of Credit Outstandings at such time, equals the Total Revolving
Credit Commitment then in effect and (v) may be repaid and reborrowed in
accordance with the provisions hereof. On the Swingline Maturity Date, each
outstanding Swingline Loan shall be repaid in full. The Swingline Lender shall
not make any Swingline Loan after receiving a written notice from the Borrower
or any Lender stating that a Default or Event of Default exists and is
continuing until such time as the Swingline Lender shall have received written
notice of
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(i) rescission of all such notices from the party or parties originally
delivering such notice or (ii) the waiver of such Default or Event of Default in
accordance with the provisions of Section 13.1.
(c) On any Business Day, the Swingline Lender may, in its sole
discretion, give notice to the Lenders that all then-outstanding Swingline Loans
shall be funded with a Borrowing of Revolving Credit Loans, in which case a
Borrowing of Revolving Credit Loans constituting ABR Loans (each such Borrowing,
a "Mandatory Borrowing") shall be made on the immediately succeeding Business
Day by all Lenders pro rata based on each Lender's Revolving Credit Commitment
Percentage, and the proceeds thereof shall be applied directly to the Swingline
Lender to repay the Swingline Lender for such outstanding Swingline Loans. Each
Lender hereby irrevocably agrees to make such Revolving Credit Loans upon one
Business Day's notice pursuant to each Mandatory Borrowing in the amount and in
the manner specified in the preceding sentence and on the date specified to it
in writing by the Swingline Lender notwithstanding (i) that the amount of the
Mandatory Borrowing may not comply with the minimum amount for each Borrowing
specified in Section 2.2, (ii) whether any conditions specified in Section 7 are
then satisfied, (iii) whether a Default or an Event of Default has occurred and
is continuing, (iv) the date of such Mandatory Borrowing or (v) any reduction in
the Total Revolving Credit Commitment after any such Swingline Loans were made.
In the event that, in the sole judgment of the Swingline Lender, any Mandatory
Borrowing cannot for any reason be made on the date otherwise required above
(including as a result of the commencement of a proceeding under the Bankruptcy
Code in respect of the Borrower), each Lender hereby agrees that it shall
forthwith purchase from the Swingline Lender (without recourse or warranty) such
participation of the outstanding Swingline Loans as shall be necessary to cause
the Lenders to share in such Swingline Loans ratably based upon their respective
Revolving Credit Commitment Percentages, provided that all principal and
interest payable on such Swingline Loans shall be for the account of the
Swingline Lender until the date the respective participation is purchased and,
to the extent attributable to the purchased participation, shall be payable to
the Lender purchasing same from and after such date of purchase.
2.2. Minimum Amount of Each Borrowing; Maximum Number of Borrowings.
The aggregate principal amount of each Borrowing of Revolving Credit Loans or
Swingline Loans shall be in a multiple of $100,000 and shall not be less than
the Minimum Borrowing Amount with respect thereto (except that Mandatory
Borrowings shall be made in the amounts required by Section 2.1(c)). More than
one Borrowing may be incurred on any date, provided that at no time shall there
be outstanding more than 8 Borrowings of Eurodollar Revolving Credit Loans under
this Agreement.
2.3. Notice of Borrowing. (a) Whenever the Borrower desires to incur
Revolving Credit Loans hereunder (other than Mandatory Borrowings or borrowings
to repay Unpaid Drawings), it shall give the Administrative Agent at the
Administrative Agent's Office (i) prior to 12:00 Noon (New York time) at least
three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing of Eurodollar Revolving Credit Loans and
(ii) prior to 12:00 Noon (New York time) at least one Business Day's prior
written notice (or telephonic notice promptly confirmed in writing) of each
Borrowing of ABR Loans. Each such notice (together with each notice of a
Borrowing of Swingline Loans pursuant to Section 2.3(b), a "Notice of
Borrowing"), except as otherwise expressly provided in Section 2.10, shall be
irrevocable and shall specify (i) the aggregate principal amount of the
Revolving Credit Loans to be made pursuant to such Borrowing, (ii) the date of
Borrowing (which shall be a
30
Business Day) and (iii) whether the respective Borrowing shall consist of ABR
Loans or Eurodollar Revolving Credit Loans and, if Eurodollar Revolving Credit
Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall promptly give each Lender written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing of
Revolving Credit Loans, of such Lender's proportionate share thereof and of the
other matters covered by the related Notice of Borrowing.
(b) Whenever the Borrower desires to incur Swingline Loans hereunder,
it shall give the Administrative Agent written notice (or telephonic notice
promptly confirmed in writing) of each Borrowing of Swingline Loans prior to
3:00 P.M. (New York time) on the date of such Borrowing. Each such notice shall
be irrevocable and shall specify (i) the aggregate principal amount of the
Swingline Loans to be made pursuant to such Borrowing and (ii) the date of
Borrowing (which shall be a Business Day). The Administrative Agent shall
promptly give the Swingline Lender written notice (or telephonic notice promptly
confirmed in writing) of each proposed Borrowing of Swingline Loans and of the
other matters covered by the related Notice of Borrowing.
(c) Mandatory Borrowings shall be made upon the notice specified in
Section 2.1(c), with the Borrower irrevocably agreeing, by its incurrence of any
Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section.
(d) Borrowings to reimburse Unpaid Drawings shall be made upon the
notice specified in Section 3.4(a).
(e) Without in any way limiting the obligation of the Borrower to
confirm in writing any notice it may give hereunder by telephone, the
Administrative Agent may act prior to receipt of written confirmation without
liability upon the basis of such telephonic notice believed by the
Administrative Agent in good faith to be from an Authorized Officer of the
Borrower. In each such case the Borrower hereby waives the right to dispute the
Administrative Agent's record of the terms of any such telephonic notice.
2.4. Disbursement of Funds. (a) No later than 12:00 Noon (New York
time) on the date specified in each Notice of Borrowing (including Mandatory
Borrowings), each Lender will make available its pro rata portion, if any, of
each Borrowing requested to be made on such date in the manner provided below,
provided that all Swingline Loans shall be made available in the full amount
thereof by the Swingline Lender no later than 2:00 P.M. (New York time) on the
date requested.
(b) Each Lender shall make available all amounts it is to fund under
any Borrowing in Dollars and immediately available funds to the Administrative
Agent at the Administrative Agent's Office and the Administrative Agent will
(except in the case of Mandatory Borrowings and Borrowings to repay Unpaid
Drawings) make available to the Borrower by depositing to the Borrower's account
at the Administrative Agent's Office the aggregate of the amounts so made
available in Dollars and the type of funds received. Unless the Administrative
Agent shall have been notified by any Lender prior to the date of any such
Borrowing that such Lender does not intend to make available to the
Administrative Agent its portion of the Borrowing or Borrowings to be made on
such date, the Administrative Agent may assume that such Lender
31
has made such amount available to the Administrative Agent on such date of
Borrowing, and the Administrative Agent, in reliance upon such assumption, may
(in its sole discretion and without any obligation to do so) make available to
the Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Lender and the Administrative
Agent has made available same to the Borrower, the Administrative Agent shall be
entitled to recover such corresponding amount from such Lender. If such Lender
does not pay such corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent shall promptly notify the Borrower,
and the Borrower shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to recover
from such Lender or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower to the
date such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to (i) if paid by such Lender, the Federal Funds Effective
Rate or (ii) if paid by the Borrower, the then-applicable rate of interest,
calculated in accordance with Section 2.8, for the respective Loans.
(c) Nothing in this Section 2.4 shall be deemed to relieve any Lender
from its obligation to fulfill its commitments hereunder or to prejudice any
rights that the Borrower may have against any Lender as a result of any default
by such Lender hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to fulfill its commitments
hereunder).
2.5. Repayment of Loans; Evidence of Debt. (a) The Borrower shall
repay to the Administrative Agent, for the benefit of the Lenders, on the
Revolving Credit Maturity Date, the then-unpaid Revolving Credit Loans. The
Borrower shall repay to the Administrative Agent, for the account of the
Swingline Lender, on the Swingline Maturity Date, the then-unpaid Swingline
Loans.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to the
appropriate lending office of such Lender resulting from each Loan made by such
lending office of such Lender from time to time, including the amounts of
principal and interest payable and paid to such lending office of such Lender
from time to time under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
Section 13.6(c), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount of each Loan made
hereunder, whether such Loan is a Revolving Credit Loan or a Swingline Loan, the
Type of each Loan made and the Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable
from the Borrower to each Lender or the Swingline Lender hereunder and (iii) the
amount of any sum received by the Agent hereunder from the Borrower and each
Lender's share thereof.
(d) The entries made in the Register and accounts and subaccounts
maintained pursuant to paragraphs (b) and (c) of this Section 2.5 shall, to the
extent permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided, however,
that the failure of any Lender or the Administrative Agent to maintain such
account, such Register or such subaccount, as applicable, or any error therein,
shall
32
not in any manner affect the obligation of the Borrower to repay (with
applicable interest) the Loans made to the Borrower by such Lender in accordance
with the terms of this Agreement.
2.6. Conversions and Continuations. (a) The Borrower shall have the
option on any Business Day to convert all or a portion equal to at least the
Minimum Borrowing Amount of the outstanding principal amount of Revolving Credit
Loans of one Type into a Borrowing or Borrowings of another Type or to continue
the outstanding principal amount of any Eurodollar Revolving Credit Loans as
Eurodollar Revolving Credit Loans for an additional Interest Period, provided
that (i) no partial conversion of Eurodollar Revolving Credit Loans shall reduce
the outstanding principal amount of Eurodollar Revolving Credit Loans made
pursuant to a single Borrowing to less than the Minimum Borrowing Amount, (ii)
ABR Loans may not be converted into Eurodollar Revolving Credit Loans if a
Default or Event of Default is in existence on the date of the conversion and
the Administrative Agent has or the Required Lenders have determined in its or
their sole discretion not to permit such conversion, (iii) Eurodollar Revolving
Credit Loans may not be continued as Eurodollar Revolving Credit Loans for an
additional Interest Period if a Default or Event of Default is in existence on
the date of the proposed continuation and the Administrative Agent has or the
Required Lenders have determined in its or their sole discretion not to permit
such continuation and (iv) Borrowings resulting from conversions pursuant to
this Section 2.6 shall be limited in number as provided in Section 2.2. Each
such conversion or continuation shall be effected by the Borrower by giving the
Administrative Agent at the Administrative Agent's Office prior to 12:00 Noon
(New York time) at least three Business Days' (or one Business Day's notice in
the case of a conversion into ABR Loans) prior written notice (or telephonic
notice promptly confirmed in writing) (each a "Notice of Conversion or
Continuation") specifying the Revolving Credit Loans to be so converted or
continued, the Type of Revolving Credit Loans to be converted or continued into
and, if such Revolving Credit Loans are to be converted into or continued as
Eurodollar Revolving Credit Loans, the Interest Period to be initially
applicable thereto. The Administrative Agent shall give each Lender notice as
promptly as practicable of any such proposed conversion or continuation
affecting any of its Revolving Credit Loans.
(b) If any Default or Event of Default is in existence at the time of
any proposed continuation of any Eurodollar Revolving Credit Loans and the
Administrative Agent has or the Required Lenders have determined in its or their
sole discretion not to permit such continuation, such Eurodollar Revolving
Credit Loans shall be automatically converted on the last day of the current
Interest Period into ABR Loans. If upon the expiration of any Interest Period in
respect of Eurodollar Revolving Credit Loans, the Borrower has failed to elect a
new Interest Period to be applicable thereto as provided in paragraph (a) above,
the Borrower shall be deemed to have elected to convert such Borrowing of
Eurodollar Revolving Credit Loans into a Borrowing of ABR Loans effective as of
the expiration date of such current Interest Period.
2.7. Pro Rata Borrowings. Each Borrowing of Revolving Credit Loans
under this Agreement shall be granted by the Lenders pro rata on the basis of
their then-applicable Revolving Credit Commitments. It is understood that no
Lender shall be responsible for any default by any other Lender in its
obligation to make Loans hereunder and that each Lender shall be obligated to
make the Loans provided to be made by it hereunder, regardless of the failure of
any other Lender to fulfill its commitments hereunder.
33
2.8. Interest. (a) The unpaid principal amount of each ABR Loan shall
bear interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum that shall at all times be the
Applicable ABR Margin plus the ABR in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Revolving Credit
Loan shall bear interest from the date of the Borrowing thereof until maturity
thereof (whether by acceleration or otherwise) at a rate per annum that shall at
all times be the Applicable Eurodollar Margin in effect from time to time plus
the relevant Eurodollar Rate.
(c) If all or a portion of (i) the principal amount of any Loan or
(ii) any interest payable thereon shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum that is (x) in the case of overdue principal, the
rate that would otherwise be applicable thereto plus 2% or (y) in the case of
any overdue interest, to the extent permitted by applicable law, the rate
described in Section 2.8(a) plus 2% from and including the date of such
non-payment to but excluding the date on which such amount is paid in full
(after as well as before judgment).
(d) Interest on each Loan shall accrue from and including the date of
any Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each ABR Loan, quarterly in arrears on the last day of
each March, June, September and December, (ii) in respect of each Eurodollar
Revolving Credit Loan, on the last day of each Interest Period applicable
thereto and, in the case of an Interest Period in excess of three months, on
each date occurring at three-month intervals after the first day of such
Interest Period, (iii) in respect of each Loan (except, in the case of
prepayments, any ABR Loan), on any prepayment (on the amount prepaid), at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(e) All computations of interest hereunder shall be made in accordance
with Section 5.5.
(f) The Administrative Agent, upon determining the interest rate for
any Borrowing of Eurodollar Revolving Credit Loans, shall promptly notify the
Borrower and the relevant Lenders thereof. Each such determination shall, absent
clearly demonstrable error, be final and conclusive and binding on all parties
hereto.
34
2.9. Interest Periods. At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion or Continuation in respect of the making of,
or conversion into or continuation as, a Borrowing of Eurodollar Revolving
Credit Loans (in the case of the initial Interest Period applicable thereto) or
prior to 10:00 A.M. (New York time) on the third Business Day prior to the
expiration of an Interest Period applicable to a Borrowing of Eurodollar
Revolving Credit Loans, the Borrower shall have the right to elect by giving the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) the Interest Period applicable to such Borrowing, which Interest Period
shall, at the option of the Borrower, be a one, two, three, six or (if available
to all the Lenders making such loans as determined by such Lenders in good faith
based on prevailing market conditions) a nine or twelve month period.
Notwithstanding anything to the contrary contained above:
(a) the initial Interest Period for any Borrowing of Eurodollar
Revolving Credit Loans shall commence on the date of such Borrowing (including
the date of any conversion from a Borrowing of ABR Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence on the
day on which the next preceding Interest Period expires;
(b) if any Interest Period relating to a Borrowing of Eurodollar
Revolving Credit Loans begins on the last Business Day of a calendar month or
begins on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest Period shall
end on the last Business Day of the calendar month at the end of such Interest
Period;
(c) if any Interest Period would otherwise expire on a day that is not
a Business Day, such Interest Period shall expire on the next succeeding
Business Day, provided that if any Interest Period in respect of a Eurodollar
Revolving Credit Loan would otherwise expire on a day that is not a Business Day
but is a day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business Day; and
(d) the Borrower shall not be entitled to elect any Interest Period in
respect of any Eurodollar Revolving Credit Loan if such Interest Period would
extend beyond the Revolving Credit Maturity Date of such Loan.
2.10. Increased Costs, Illegality, etc. (a) In the event that (x) in
the case of clause (i) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Lender shall have reasonably determined (which
determination shall, absent clearly demonstrable error, be final and conclusive
and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising on or after the
Closing Date affecting the interbank Eurodollar market, adequate and
fair means do not exist for ascertaining the applicable interest rate
on the basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Revolving Credit Loans (other than any such
increase or reduction attributable to
35
taxes) because of (x) any change since the date hereof in any
applicable law, governmental rule, regulation, guideline or order (or
in the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation,
guideline or order), such as, for example, without limitation, a
change in official reserve requirements, and/or (y) other
circumstances affecting the interbank Eurodollar market or the
position of such Lender in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Revolving Credit Loan has become unlawful by compliance by
such Lender in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental rule,
regulation, guideline or order not having the force of law even though
the failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the date
hereof that materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Lender (or the Administrative Agent, in the
case of clause (i) above) shall within a reasonable time thereafter give notice
(if by telephone confirmed in writing) to the Borrower and to the Administrative
Agent of such determination (which notice the Administrative Agent shall
promptly transmit to each of the other Lenders). Thereafter (x) in the case of
clause (i) above, Eurodollar Revolving Credit Loans shall no longer be available
until such time as the Administrative Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such notice by the Administrative
Agent no longer exist (which notice the Administrative Agent agrees to give at
such time when such circumstances no longer exist), and any Notice of Borrowing
or Notice of Conversion or Continuation given by the Borrower with respect to
Eurodollar Revolving Credit Loans that have not yet been incurred shall be
deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower shall pay to such Lender, promptly after receipt of written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
reasonable discretion shall determine) as shall be required to compensate such
Lender for such increased costs or reductions in amounts receivable hereunder
(it being agreed that a written notice as to the additional amounts owed to such
Lender, showing in reasonable detail the basis for the calculation thereof,
submitted to the Borrower by such Lender shall, absent clearly demonstrable
error, be final and conclusive and binding upon all parties hereto) and (z) in
the case of clause (iii) above, the Borrower shall take one of the actions
specified in Section 2.10(b) as promptly as possible and, in any event, within
the time period required by law.
(b) At any time that any Eurodollar Revolving Credit Loan is affected
by the circumstances described in Section 2.10(a)(ii) or (iii), the Borrower may
(and in the case of a Eurodollar Revolving Credit Loan affected pursuant to
Section 2.10(a)(iii) shall) either (x) if the affected Eurodollar Revolving
Credit Loan is then being made pursuant to a Borrowing, cancel said Borrowing by
giving the Administrative Agent telephonic notice (confirmed promptly in
writing) thereof on the same date that the Borrower was notified by a Lender
pursuant to Section 2.10(a)(ii) or (iii) or (y) if the affected Eurodollar
Revolving Credit Loan is then outstanding, upon at least three Business Days'
notice to the Administrative Agent, require the affected Lender to convert each
such Eurodollar Revolving Credit Loan into an ABR Loan, provided that if more
than one
36
Lender is affected at any time, then all affected Lenders must be treated in the
same manner pursuant to this Section 2.10(b). (c) If, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, the National Association of Insurance
Commissioners, central bank or comparable agency charged with the interpretation
or administration thereof, or compliance by a Lender or its parent with any
request or directive made or adopted after the date hereof regarding capital
adequacy (whether or not having the force of law) of any such authority,
association, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's or its parent's capital or assets
as a consequence of such Lender's commitments or obligations hereunder to a
level below that which such Lender or its parent could have achieved but for
such adoption, effectiveness, change or compliance (taking into consideration
such Lender's or its parent's policies with respect to capital adequacy), then
from time to time, promptly after demand by such Lender (with a copy to the
Administrative Agent), the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or its parent for such
reduction, it being understood and agreed, however, that a Lender shall not be
entitled to such compensation as a result of such Lender's compliance with, or
pursuant to any request or directive to comply with, any such law, rule or
regulation as in effect on the date hereof. Each Lender, upon determining in
good faith that any additional amounts will be payable pursuant to this Section
2.10(c), will give prompt written notice thereof to the Borrower, which notice
shall set forth in reasonable detail the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not,
subject to Section 2.13, release or diminish any of the Borrower's obligations
to pay additional amounts pursuant to this Section 2.10(c) upon receipt of such
notice.
2.11. Compensation. If (a) any payment of principal of any Eurodollar
Revolving Credit Loan is made by the Borrower to or for the account of a Lender
other than on the last day of the Interest Period for such Eurodollar Revolving
Credit Loan as a result of a payment or conversion pursuant to Section 2.5, 2.6,
2.10, 5.1, 5.2 or 13.7, as a result of acceleration of the maturity of the Loans
pursuant to Section 11 or for any other reason, (b) if any Borrowing of
Eurodollar Revolving Credit Loans is not made as a result of a withdrawn Notice
of Borrowing, (c) if any ABR Loan is not converted into a Eurodollar Revolving
Credit Loan as a result of a withdrawn Notice of Conversion or Continuation, (d)
if any Eurodollar Revolving Credit Loan is not continued as a Eurodollar
Revolving Credit Loan as a result of a withdrawn Notice of Conversion or
Continuation or (e) if any prepayment of principal of any Eurodollar Revolving
Credit Loan is not made as a result of a withdrawn notice of prepayment pursuant
to Section 5.1 or 5.2, the Borrower shall, after receipt of a written request by
such Lender (which request shall set forth in reasonable detail the basis for
requesting such amount), pay to the Administrative Agent for the account of such
Lender any amounts required to compensate such Lender for any additional losses,
costs or expenses that such Lender may reasonably incur as a result of such
payment, failure to convert, failure to continue or failure to prepay, including
any loss, cost or expense (excluding loss of anticipated profits) actually
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund or maintain such Eurodollar Revolving Credit
Loan.
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2.12. Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.10(a)(ii),
2.10(a)(iii), 2.10(b), 3.5 or 5.4 with respect to such Lender, it will, if
requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any Loans
affected by such event, provided that such designation is made on such terms
that such Lender and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Nothing in this Section 2.12 shall
affect or postpone any of the obligations of the Borrower or the right of any
Lender provided in Section 2.10, 3.5 or 5.4.
2.13. Notice of Certain Costs. Notwithstanding anything in this
Agreement to the contrary, to the extent any notice required by Section 2.10,
2.11, 3.5 or 5.4 is given by any Lender more than 180 days after such Lender has
knowledge (or should have had knowledge) of the occurrence of the event giving
rise to the additional cost, reduction in amounts, loss, tax or other additional
amounts described in such Sections, such Lender shall not be entitled to
compensation under Section 2.10, 2.11, 3.5 or 5.4, as the case may be, for any
such amounts incurred or accruing prior to the giving of such notice to the
Borrower.
SECTION 3. Letters of Credit.
3.1. Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower, at any time and from time to time on
or after the Closing Date and prior to the L/C Maturity Date, may request that
the Letter of Credit Issuer issue, for the account of the Borrower, a standby
letter of credit or letters of credit in such form as may be approved by the
Letter of Credit Issuer in its reasonable discretion.
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings at such time, would exceed the Letter of Credit Commitment then in
effect; (ii) no Letter of Credit shall be issued the Stated Amount of which,
when added to the sum of (x) the Letter of Credit Outstandings at such time and
(y) the aggregate principal of all Revolving Credit Loans and Swingline Loans
then outstanding, would exceed the Total Revolving Credit Commitment then in
effect; (iii) each Letter of Credit shall have an expiration date occurring no
later than one year after the date of issuance thereof, unless otherwise agreed
upon by the Administrative Agent and the Letter of Credit Issuer, provided that
in no event shall such expiration date occur later than the L/C Maturity Date;
(iv) each Letter of Credit shall be denominated in Dollars; and (v) no Letter of
Credit shall be issued by the Letter of Credit Issuer after it has received a
written notice from the Borrower or any Lender stating that a Default or Event
of Default has occurred and is continuing until such time as the Letter of
Credit Issuer shall have received a written notice of (x) rescission of such
notice from the party or parties originally delivering such notice or (y) the
waiver of such Default or Event of Default in accordance with the provisions of
Section 13.1.
(c) Upon at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) to the Administrative Agent and
the Letter of Credit Issuer (which notice the Administrative Agent shall
promptly transmit to each of the Lenders), the Borrower shall have the right, on
any day, permanently to terminate or reduce the Letter of Credit Commitment in
38
whole or in part, provided that, after giving effect to such termination or
reduction, the Letter of Credit Outstandings shall not exceed the Letter of
Credit Commitment.
3.2. Letter of Credit Requests. (a) Whenever the Borrower desires that
a Letter of Credit be issued for its account, it shall give the Administrative
Agent and the Letter of Credit Issuer at least five (or such lesser number as
may be agreed upon by the Administrative Agent and the Letter of Credit Issuer)
Business Days' written notice thereof. Each notice shall be executed by the
Borrower and shall be in the form of Exhibit F (each a "Letter of Credit
Request"). The Administrative Agent shall promptly transmit copies of each
Letter of Credit Request to each Lender.
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Borrower that the Letter of Credit may be
issued in accordance with, and will not violate the requirements of, Section
3.1(b).
3.3. Letter of Credit Participations. (a) Immediately upon the
issuance by the Letter of Credit Issuer of any Letter of Credit, the Letter of
Credit Issuer shall be deemed to have sold and transferred to each other Lender
(each such other Lender, in its capacity under this Section 3.3, an "L/C
Participant"), and each such L/C Participant shall be deemed irrevocably and
unconditionally to have purchased and received from the Letter of Credit Issuer,
without recourse or warranty, an undivided interest and participation (each an
"L/C Participation"), to the extent of such L/C Participant's Revolving Credit
Commitment Percentage, in such Letter of Credit, each substitute letter of
credit, each drawing made thereunder and the obligations of the Borrower under
this Agreement with respect thereto, and any security therefor or guaranty
pertaining thereto (although Letter of Credit Fees will be paid directly to the
Administrative Agent for the ratable account of the L/C Participants as provided
in Section 4.1(b) and the L/C Participants shall have no right to receive any
portion of any Fronting Fees).
(b) In determining whether to pay under any Letter of Credit, the
Letter of Credit Issuer shall have no obligation relative to the L/C
Participants other than to confirm that any documents required to be delivered
under such Letter of Credit have been delivered and that they appear to comply
on their face with the requirements of such Letter of Credit. Any action taken
or omitted to be taken by the Letter of Credit Issuer under or in connection
with any Letter of Credit issued by it, if taken or omitted in the absence of
gross negligence or willful misconduct, shall not create for the Letter of
Credit Issuer any resulting liability.
(c) In the event that the Letter of Credit Issuer makes any payment
under any Letter of Credit issued by it and the Borrower shall not have repaid
such amount in full to the Letter of Credit Issuer pursuant to Section 3.4(a),
the Letter of Credit Issuer shall promptly notify the Administrative Agent and
each L/C Participant of such failure, and each L/C Participant shall promptly
and unconditionally pay to the Administrative Agent, for the account of the
Letter of Credit Issuer, the amount of such L/C Participant's Revolving Credit
Commitment Percentage of such unreimbursed payment in Dollars and in immediately
available funds; provided, however, that no L/C Participant shall be obligated
to pay to the Administrative Agent for the account of the Letter of Credit
Issuer its Revolving Credit Commitment Percentage of such unreimbursed amount
arising from any wrongful payment made by the Letter of Credit Issuer under a
Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of the
39
Letter of Credit Issuer. If the Letter of Credit Issuer so notifies, prior to
11:00 A.M. (New York time) on any Business Day, any L/C Participant required to
fund a payment under a Letter of Credit, such L/C Participant shall make
available to the Administrative Agent for the account of the Letter of Credit
Issuer such L/C Participant's Revolving Credit Commitment Percentage of the
amount of such payment on such Business Day in immediately available funds. If
and to the extent such L/C Participant shall not have so made its Revolving
Credit Commitment Percentage of the amount of such payment available to the
Administrative Agent for the account of the Letter of Credit Issuer, such L/C
Participant agrees to pay to the Administrative Agent for the account of the
Letter of Credit Issuer, forthwith on demand, such amount, together with
interest thereon for each day from such date until the date such amount is paid
to the Administrative Agent for the account of the Letter of Credit Issuer at
the Federal Funds Effective Rate. The failure of any L/C Participant to make
available to the Administrative Agent for the account of the Letter of Credit
Issuer its Revolving Credit Commitment Percentage of any payment under any
Letter of Credit shall not relieve any other L/C Participant of its obligation
hereunder to make available to the Administrative Agent for the account of the
Letter of Credit Issuer its Revolving Credit Commitment Percentage of any
payment under such Letter of Credit on the date required, as specified above,
but no L/C Participant shall be responsible for the failure of any other L/C
Participant to make available to the Administrative Agent such other L/C
Participant's Revolving Credit Commitment Percentage of any such payment.
(d) Whenever the Letter of Credit Issuer receives a payment in respect
of an unpaid reimbursement obligation as to which the Administrative Agent has
received for the account of the Letter of Credit Issuer any payments from the
L/C Participants pursuant to the preceding clause (c) above, the Letter of
Credit Issuer shall pay to the Administrative Agent and the Administrative Agent
shall promptly pay to each L/C Participant that has paid its Revolving Credit
Commitment Percentage of such reimbursement obligation, in Dollars and in
immediately available funds, an amount equal to such L/C Participant's share
(based upon the proportionate aggregate amount originally funded by such L/C
Participant to the aggregate amount funded by all L/C Participants) of the
principal amount of such reimbursement obligation and interest thereon accruing
after the purchase of the respective L/C Participations.
(e) The obligations of the L/C Participants to make payments to the
Administrative Agent for the account of the Letter of Credit Issuer with respect
to Letters of Credit shall be irrevocable and not subject to counterclaim,
set-off or other defense or any other qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including under any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
that the Borrower may have at any time against a beneficiary named in
a Letter of Credit, any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), the Administrative
Agent, the Letter of Credit Issuer, any Lender or other Person,
whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions
(including any
40
underlying transaction between the Borrower and the beneficiary named
in any such Letter of Credit);
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default;
provided, however, that no L/C Participant shall be obligated to pay to the
Administrative Agent for the account of the Letter of Credit Issuer its
Revolving Credit Commitment Percentage of any unreimbursed amount arising from
any wrongful payment made by the Letter of Credit Issuer under a Letter of
Credit as a result of acts or omissions constituting willful misconduct or gross
negligence on the part of the Letter of Credit Issuer.
3.4. Agreement to Repay Letter of Credit Drawings. (a) The Borrower
hereby agrees to reimburse the Letter of Credit Issuer, by making payment to the
Administrative Agent in Dollars in immediately available funds at the
Administrative Agent's Office, for any payment or disbursement made by the
Letter of Credit Issuer under any Letter of Credit (each such amount so paid
until reimbursed, an "Unpaid Drawing") not later than 5:00 P.M. (New York time),
on the date of such payment or disbursement, if the Borrower shall have received
notice of such payment or disbursement by the Letter of Credit Issuer prior to
10:00 A.M. (New York time) on such date, or, if such notice has not been
received by the Borrower prior to such time on such date, then not later than
5:00 P.M. (New York time) on the Business Day immediately following the date of
such payment or disbursement, with interest on the amount so paid or disbursed
by the Letter of Credit Issuer, to the extent not reimbursed prior to 5:00 P.M.
(New York time) on the date of such payment or disbursement, from and including
the date paid or disbursed to but excluding the date the Letter of Credit Issuer
is reimbursed therefor, at a rate per annum that shall at all times be the
Applicable ABR Margin plus the ABR as in effect from time to time, provided
that, notwithstanding anything contained in this Agreement to the contrary, (i)
unless the Borrower shall have notified the Administrative Agent and the Letter
of Credit Issuer prior to 10:00 A.M. on the date of such drawing (to the extent
the Borrower shall have received notice of such drawing prior to such time on
such date) or on the Business Day immediately following the date of such drawing
(to the extent the Borrower shall not have received notice of such drawing prior
to 10:00 A.M. on the date of such drawing) that the Borrower intends to
reimburse the Letter of Credit Issuer for the amount of such drawing with funds
other than the proceeds of Loans, the Borrower shall be deemed to have given a
Notice of Borrowing to the Administrative Agent requesting that the Lenders make
Revolving Credit Loans (which shall initially be ABR Loans) on the date on which
such drawing is honored (or the Business Day immediately following the date such
drawing is honored to the extent the Borrower shall not have received notice of
such drawing prior to 10:00 A.M. on such date) in an amount equal to the amount
of such drawing and (ii) the Administrative Agent shall notify each Lender of
such drawing and the amount of its Revolving Credit Loan to be made in respect
thereof, and each Lender shall be irrevocably obligated to make a Revolving
Credit Loan that is an ABR Loan to the Borrower in the amount of its Revolving
Credit Commitment
41
Percentage of the applicable Unpaid Drawing by 12:00 noon (New York time) on
such Business Day by making the amount of such Revolving Credit Loan available
to the Administrative Agent at the Administrative Agent's Office. Such Revolving
Credit Loans shall be made without regard to the Minimum Borrowing Amount. The
Administrative Agent shall use the proceeds of such Revolving Credit Loans
solely for purpose of reimbursing the Letter of Credit Issuer for the related
Unpaid Drawing.
(b) The Borrower's obligations under this Section 3.4 to reimburse the
Letter of Credit Issuer with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
that the Borrower or any other Person may have or have had against the Letter of
Credit Issuer, the Administrative Agent or any Lender (including in its capacity
as an L/C Participant), including any defense based upon the failure of any
drawing under a Letter of Credit (each a "Drawing") to conform to the terms of
the Letter of Credit or any non-application or misapplication by the beneficiary
of the proceeds of such Drawing, provided that the Borrower shall not be
obligated to reimburse the Letter of Credit Issuer for any wrongful payment made
by the Letter of Credit Issuer under the Letter of Credit issued by it as a
result of acts or omissions constituting willful misconduct or gross negligence
on the part of the Letter of Credit Issuer.
3.5. Increased Costs. If after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or actual compliance by the Letter of Credit Issuer or any L/C
Participant with any request or directive made or adopted after the date hereof
(whether or not having the force of law), by any such authority, central bank or
comparable agency shall either (a) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against letters of
credit issued by the Letter of Credit Issuer, or any L/C Participant's L/C
Participation therein, or (b) impose on the Letter of Credit Issuer or any L/C
Participant any other conditions affecting its obligations under this Agreement
in respect of Letters of Credit or L/C Participations therein or any Letter of
Credit or such L/C Participant's L/C Participation therein; and the result of
any of the foregoing is to increase the cost to the Letter of Credit Issuer or
such L/C Participant of issuing, maintaining or participating in any Letter of
Credit, or to reduce the amount of any sum received or receivable by the Letter
of Credit Issuer or such L/C Participant hereunder (other than any such increase
or reduction attributable to taxes) in respect of Letters of Credit or L/C
Participations therein, then, promptly after receipt of written demand to the
Borrower by the Letter of Credit Issuer or such L/C Participant, as the case may
be (a copy of which notice shall be sent by the Letter of Credit Issuer or such
L/C Participant to the Administrative Agent), the Borrower shall pay to the
Letter of Credit Issuer or such L/C Participant such additional amount or
amounts as will compensate the
42
Letter of Credit Issuer or such L/C Participant for such increased cost or
reduction, it being understood and agreed, however, that the Letter of Credit
Issuer or a L/C Participant shall not be entitled to such compensation as a
result of such Person's compliance with, or pursuant to any request or directive
to comply with, any such law, rule or regulation as in effect on the date
hereof. A certificate submitted to the Borrower by the Letter of Credit Issuer
or a L/C Participant, as the case may be (a copy of which certificate shall be
sent by the Letter of Credit Issuer or such L/C Participant to the
Administrative Agent), setting forth in reasonable detail the basis for the
determination of such additional amount or amounts necessary to compensate the
Letter of Credit Issuer or such L/C Participant as aforesaid shall be conclusive
and binding on the Borrower absent clearly demonstrable error.
3.6. Successor Letter of Credit Issuer. The Letter of Credit Issuer
may resign as Letter of Credit Issuer upon 60 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower. If the Letter of Credit
Issuer shall resign as Letter of Credit Issuer under this Agreement, then the
Borrower shall appoint from among the Lenders with Revolving Credit Commitments
a successor issuer of Letters of Credit, whereupon such successor issuer shall
succeed to the rights, powers and duties of the Letter of Credit Issuer, and the
term "Letter of Credit Issuer" shall mean such successor issuer effective upon
such appointment. At the time such resignation shall become effective, the
Borrower shall pay to the resigning Letter of Credit Issuer all accrued and
unpaid fees pursuant to Sections 4.1(c) and (d). The acceptance of any
appointment as the Letter of Credit Issuer hereunder by a successor Lender shall
be evidenced by an agreement entered into by such successor, in a form
satisfactory to the Borrower and the Administrative Agent and, from and after
the effective date of such agreement, such successor Lender shall have all the
rights and obligations of the previous Letter of Credit Issuer under this
Agreement and the other Credit Documents. After the resignation of the Letter of
Credit Issuer hereunder, the resigning Letter of Credit Issuer shall remain a
party hereto and shall continue to have all the rights and obligations of a
Letter of Credit Issuer under this Agreement and the other Loan Documents with
respect to Letters of Credit issued by it prior to such resignation, but shall
not be required to issue additional Letters of Credit. After any retiring Letter
of Credit Issuer's resignation as Letter of Credit Issuer, the provisions of
this Agreement relating to the Letter of Credit Issuer shall inure to its
benefit as to any actions taken or omitted to be taken by it (a) while it was
Letter of Credit Issuer under this Agreement or (b) at any time with respect to
Letters of Credit issued by such Letter of Credit Issuer.
SECTION 4. Fees; Commitments.
4.1. Fees. (a) The Borrower agrees to pay to the Administrative Agent,
for the account of each Lender (in each case pro rata according to the
respective Revolving Credit Commitments of all Lenders), a commitment fee for
each day from and including the Closing Date to but excluding the Final Date.
Such commitment fee shall be payable in arrears (x) on the last day of each
March, June, September and December (for the three-month period (or portion
thereof) ended on the such day) and (y) on the Final Date (for the period ended
on such date for which no payment has been received pursuant to clause (x)
above), and shall be computed for each day during such period at a rate per
annum equal to the Commitment Fee Rate in effect on such day on the Available
Commitments in effect on such day. Notwithstanding the foregoing, the Borrower
shall not be obligated to pay any amounts to any Defaulting Lender pursuant to
this Section 4.1.
(b) The Borrower agrees to pay to the Administrative Agent, for the
account of the Lenders pro rata on the basis of their respective Letter of
Credit Exposure, a fee in respect of each Letter of Credit (the "Letter of
Credit Fee"), for the period from and including the date of issuance of such
Letter of Credit to but excluding the termination date of such Letter of Credit
computed at the per annum rate for each day equal to the Applicable Eurodollar
Margin for Revolving Credit Loans minus 0.125% per annum on the average daily
Stated Amount of such Letter of Credit. Such Letter of Credit Fees shall be due
and payable quarterly in arrears (x) on the last day of each March, June,
September and December (for the three-month period (or portion
43
thereof) ended on the such day) and (y) on the Final Date (for the period ended
on such date for which no payment has been received pursuant to clause (x)
above).
(c) The Borrower agrees to pay to the Administrative Agent, for the
account of the Letter of Credit Issuer a fee in respect of each Letter of Credit
issued by it (the "Fronting Fee"), for the period from and including the date of
issuance of such Letter of Credit to but excluding the termination date of such
Letter of Credit, computed at the rate for each day equal to 0.125% per annum on
the average daily Stated Amount of such Letter of Credit. Such Fronting Fees
shall be due and payable quarterly in arrears (x) on the last day of each March,
June, September and December (for the three-month period (or portion thereof)
ended on the such day) and (y) on the Final Date (for the period ended on such
date for which no payment has been received pursuant to clause (x) above).
(d) The Borrower agrees to pay directly to the Letter of Credit Issuer
upon each issuance of, drawing under, and/or amendment of, a Letter of Credit
issued by it such amount as the Letter of Credit Issuer and the Borrower shall
have agreed upon for issuances of, drawings under or amendments of, letters of
credit issued by it.
(e) The Borrower agrees to pay to the Administrative Agent, for its
own account, and the account of each of the Lenders with Revolving Credit
Commitment on the Closing Date, the fees in the amounts and on the dates
previously agreed to in writing by the Borrower and the Administrative Agent.
4.2. Voluntary Reduction of Commitments. Upon at least one Business
Day's prior written notice (or telephonic notice promptly confirmed in writing)
to the Administrative Agent at the Administrative Agent's Office (which notice
the Administrative Agent shall promptly transmit to each of the Lenders), the
Borrower shall have the right, without premium or penalty, on any day,
permanently to terminate or reduce the Revolving Credit Commitments in whole or
in part, provided that (a) any such reduction shall apply proportionately and
permanently to reduce the Revolving Credit Commitment of each of the Lenders,
(b) any partial reduction pursuant to this Section 4.2 shall be in the amount of
at least $1,000,000 and (c) after giving effect to such termination or reduction
and to any prepayments of the Loans made on the date thereof in accordance with
this Agreement, the sum of (i) the aggregate outstanding principal amount of the
Revolving Credit Loans and the Swingline Loans and (ii) the Letter of Credit
Outstandings shall not exceed the Total Revolving Credit Commitment.
4.3. Mandatory Termination of Commitments. (a) The Total Revolving
Credit Commitment shall terminate at 5:00 P.M. (New York time) on the Revolving
Credit Maturity Date.
(b) The Swingline Commitment shall terminate at 5:00 P.M. (New York
time) on the Swingline Maturity Date.
SECTION 5. Payments.
5.1. Voluntary Prepayments. The Borrower shall have the right to
prepay Revolving Credit Loans and Swingline Loans, without premium or penalty,
in whole or in part from time to time on the following terms and conditions: (a)
the Borrower shall give the Administrative Agent at the Administrative Agent's
Office written notice (or telephonic notice
44
promptly confirmed in writing) of its intent to make such prepayment, the amount
of such prepayment and (in the case of Eurodollar Revolving Credit Loans) the
specific Borrowing(s) pursuant to which made, which notice shall be given by the
Borrower no later than (i) in the case of Revolving Credit Loans, 10:00 A.M.
(New York time) one Business Day prior to, or (ii) in the case of Swingline
Loans, 10:00 A.M. (New York time) on, the date of such prepayment and shall
promptly be transmitted by the Administrative Agent to each of the Lenders or
the Swingline Lender, as the case may be; (b) each partial prepayment of any
Borrowing of Revolving Credit Loans shall be in a multiple of $100,000 and in an
aggregate principal amount of at least $1,000,000 and each partial prepayment of
Swingline Loans shall be in a multiple of $100,000 and in an aggregate principal
amount of at least $100,000, provided that no partial prepayment of Eurodollar
Revolving Credit Loans made pursuant to a single Borrowing shall reduce the
outstanding Eurodollar Revolving Credit Loans made pursuant to such Borrowing to
an amount less than the Minimum Borrowing Amount for Eurodollar Revolving Credit
Loans; and (c) any prepayment of Eurodollar Revolving Credit Loans pursuant to
this Section 5.1 on any day other than the last day of an Interest Period
applicable thereto shall be subject to compliance by the Borrower with the
applicable provisions of Section 2.11. At the Borrower's election in connection
with any prepayment pursuant to this Section 5.1, such prepayment shall not be
applied to any Revolving Credit Loan of a Defaulting Lender.
5.2. Mandatory Prepayments. (a) Aggregate Revolving Credit
Outstandings. If on any date the sum of the outstanding principal amount of the
Revolving Credit Loans and Swingline Loans and the aggregate amount of Letter of
Credit Outstandings (all the foregoing, collectively, the "Aggregate Revolving
Credit Outstandings") exceeds the Total Revolving Credit Commitment as then in
effect, the Borrower shall forthwith repay on such date the principal amount of
Swingline Loans and, after all Swingline Loans have been paid in full, Revolving
Credit Loans, in an amount equal to such excess. If, after giving effect to the
prepayment of all outstanding Swingline Loans and Revolving Credit Loans, the
Aggregate Revolving Credit Outstandings exceed the Total Revolving Credit
Commitment then in effect, the Borrower shall pay to the Administrative Agent an
amount in cash equal to such excess and the Administrative Agent shall hold such
payment for the benefit of the Lenders as security for the obligations of the
Borrower hereunder (including obligations in respect of Letter of Credit
Outstandings) pursuant to a cash collateral agreement to be entered into in form
and substance satisfactory to the Administrative Agent (which shall permit
certain investments in Permitted Investments satisfactory to the Administrative
Agent, until the proceeds are applied to the secured obligations).
(b) If on any date on which the Borrower intends to prepay,
repurchase, redeem or defease any Subordinated Indebtedness in accordance with
Section 10.7, the sum of the outstanding principal amount of (i) Revolving
Credit Loans, (ii) Swingline Loans and (iii) Unpaid Drawings exceeds
$25,000,000, the Borrower shall, prior to any such prepayment, repurchase,
redemption or defeasance of Subordinated Indebtedness, repay on such date the
principal amount of Unpaid Drawings, and after all Unpaid Drawings have been
paid in full, Swingline Loans and, after all Swingline Loans have been paid in
full, Revolving Credit Loans, from the Available Amount, the net proceeds of any
Permitted Sale-Leaseback and the Excess Closing Date Securitization Proceeds
that the Borrower would otherwise have used to prepay, repurchase, redeem or
defease Subordinated Indebtedness in accordance with Section 10.7 such that the
sum of the outstanding amount of (x) Revolving Credit Loans, (y) Swingline Loans
and (z) Unpaid Drawings no longer exceeds $25,000,000.
45
(c) Application to Revolving Credit Loans. With respect to each
prepayment of Revolving Credit Loans required by Section 5.2(a) or (b), the
Borrower may designate the Types of Loans that are to be prepaid and the
specific Borrowing(s) pursuant to which made, provided that (i) Eurodollar
Revolving Credit Loans may be designated for prepayment pursuant to this Section
5.2 only on the last day of an Interest Period applicable thereto unless all
Eurodollar Revolving Credit Loans with Interest Periods ending on such date of
required prepayment and all ABR Loans have been paid in full; (ii) if any
prepayment of Eurodollar Revolving Credit Loans made pursuant to a single
Borrowing shall reduce the outstanding Revolving Credit Loans made pursuant to
such Borrowing to an amount less than the Minimum Borrowing Amount for
Eurodollar Revolving Credit Loans, such Borrowing shall immediately be converted
into ABR Loans; (iii) each prepayment of any Loans made pursuant to a Borrowing
shall be applied pro rata among such Loans; and (iv) notwithstanding the
provisions of the preceding clause (iii), no prepayment made pursuant to Section
5.2(a) or (b) of Revolving Credit Loans shall be applied to the Revolving Credit
Loans of any Defaulting Lender. In the absence of a designation by the Borrower
as described in the preceding sentence, the Administrative Agent shall, subject
to the above, make such designation in its reasonable discretion with a view,
but no obligation, to minimize breakage costs owing under Section 2.11.
(d) Eurodollar Interest Periods. In lieu of making any payment
pursuant to this Section 5.2 in respect of any Eurodollar Revolving Credit Loan
other than on the last day of the Interest Period therefor, so long as no
Default or Event of Default shall have occurred and be continuing, the Borrower
at its option may deposit with the Administrative Agent an amount equal to the
amount of the Eurodollar Revolving Credit Loan to be prepaid and such Eurodollar
Revolving Credit Loan shall be repaid on the last day of the Interest Period
therefor in the required amount. Such deposit shall be held by the
Administrative Agent in a corporate time deposit account established on terms
reasonably satisfactory to the Administrative Agent, earning interest at the
then-customary rate for accounts of such type. Such deposit shall constitute
cash collateral for the Obligations, provided that the Borrower may at any time
direct that such deposit be applied to make the applicable payment required
pursuant to this Section 5.2.
5.3. Method and Place of Payment. (a) Except as otherwise specifically
provided herein, all payments under this Agreement shall be made, without
set-off, counterclaim or deduction of any kind, to the Administrative Agent for
the ratable account of the Lenders entitled thereto, the Letter of Credit Issuer
or the Swingline Lender, as the case may be, not later than 12:00 Noon (New York
time) on the date when due and shall be made in immediately available funds and
in lawful money of the United States of America at the Administrative Agent's
Office, it being understood that written or facsimile notice by the Borrower to
the Administrative Agent to make a payment from the funds in the Borrower's
account at the Administrative Agent's Office shall constitute the making of such
payment to the extent of such funds held in such account. The Administrative
Agent will thereafter cause to be distributed on the same day (if payment was
actually received by the Administrative Agent prior to 2:00 P.M. (New York time)
on such day) like funds relating to the payment of principal or interest or Fees
ratably to the Lenders entitled thereto.
(b) Any payments under this Agreement that are made later than 2:00
P.M. (New York time) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day that is not a
46
Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest shall be
payable during such extension at the applicable rate in effect immediately prior
to such extension.
5.4. Net Payments. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any current or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings (including
mortgage recording taxes and similar fees), now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding (i) net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on the Administrative Agent or any Lender and (ii) any taxes imposed on the
Administrative Agent or any Lender as a result of a current or former connection
between the Administrative Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Administrative Agent or such Lender having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement). If
any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions
or withholdings ("Non-Excluded Taxes") are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder, the amounts
so payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement; provided,
however, that the Borrower shall not be required to increase any such amounts
payable to any Lender that is not organized under the laws of the United States
of America or a state thereof (each such Lender, a "Non-U.S. Lender") if such
Non-U.S. Lender fails to comply with the requirements of paragraph (b) of this
Section 5.4. Whenever any Non-Excluded Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Administrative
Agent for its own account or for the account of such Lender, as the case may be,
a certified copy of an original official receipt received by the Borrower
showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Administrative Agent and the Lenders
for any incremental taxes, interest, costs or penalties that may become payable
by the Administrative Agent or any Lender as a result of any such failure. The
agreements in this Section 5.4(a) shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) Each Non-U.S. Lender shall:
(i) deliver to the Borrower and the Administrative Agent two
copies of either United States Internal Revenue Service Form W8-ECI
or, in the case of Non-U.S. Lender claiming exemption from U.S.
Federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest", a Form W-8BEN, or
any subsequent versions thereof or successors thereto (and, if such
Non-U.S. Lender delivers a Form W-8BEN, a certificate representing
that such Non-U.S. Lender is not a bank for purposes of Section 881(c)
of the Code, is not a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the
47
Borrower (within the meaning of Section 864(d)(4) of the Code)),
properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or reduced rate of, U.S. Federal withholding
tax on payments by the Borrower under this Agreement;
(ii) deliver to the Borrower and the Administrative Agent two
further copies of any such form or certification on or before the date
that any such form or certification expires or becomes obsolete and
after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower
or the Administrative Agent;
unless in any such case any change in treaty, law or regulation has occurred
prior to the date on which any such delivery would otherwise be required that
renders any such form inapplicable or would prevent such Lender from duly
completing and delivering any such form with respect to it and such Lender so
advises the Borrower and the Administrative Agent. Each Person that shall become
a Participant pursuant to Section 13.6 or a Lender pursuant to Section 13.6
shall, upon the effectiveness of the related transfer, be required to provide
all the forms and statements required pursuant to this Section 5.4(b), provided
that in the case of a Participant such Participant shall furnish all such
required forms and statements to the Lender from which the related participation
shall have been purchased.
(c) The Borrower shall not be required to indemnify any Non-U.S.
Lender, or to pay any additional amounts to any Non-U.S. Lender, in respect of
U.S. Federal withholding tax pursuant to paragraph (a) above to the extent that
(i) the obligation to withhold amounts with respect to U.S. Federal withholding
tax existed on the date such Non-U.S. Lender became a party to this Agreement
(or, in the case of a Participant that is not incorporated or organized under
the laws of the United States of America or a state thereof (each such
Participant, a "Non-U.S. Participant"), on the date such Participant became a
Participant hereunder); provided, however, that this clause (i) shall not apply
to the extent that (x) the indemnity payments or additional amounts any Lender
(or Participant) would be entitled to receive (without regard to this clause
(i)) do not exceed the indemnity payment or additional amounts that the person
making the assignment, participation or transfer to such Lender (or Participant)
would have been entitled to receive in the absence of such assignment,
participation or transfer, or (y) such assignment, participation or transfer had
been requested by the Borrower, (ii) the obligation to pay such additional
amounts would not have arisen but for a failure by such Non-U.S. Lender or
Non-U.S. Participant to comply with the provisions of paragraph (b) above or
(iii) any of the representations or certifications made by a Non-U.S. Lender or
Non-U.S. Participant pursuant to paragraph (b) above are incorrect at the time a
payment hereunder is made, other than by reason of any change in treaty, law or
regulation having effect after the date such representations or certifications
were made.
(d) If the Borrower determines in good faith that a reasonable basis
exists for contesting any taxes for which indemnification has been demanded
hereunder, the relevant Lender or the Administrative Agent, as applicable, shall
cooperate with the Borrower in challenging such
48
taxes at the Borrower's expense if so requested by the Borrower. If any Lender
or the Administrative Agent, as applicable, receives a refund of a tax for which
a payment has been made by the Borrower pursuant to this Agreement, which refund
in the good faith judgment of such Lender or Administrative Agent, as the case
may be, is attributable to such payment made by the Borrower, then the Lender or
the Administrative Agent, as the case may be, shall reimburse the Borrower for
such amount as the Lender or Administrative Agent, as the case may be,
determines to be the proportion of the refund as will leave it, after such
reimbursement, in no better or worse position than it would have been in if the
payment had not been required. A Lender or Administrative Agent shall claim any
refund that it determines is available to it, unless it concludes in its
reasonable discretion that it would be adversely affected by making such a
claim. Neither the Lender nor the Administrative Agent shall be obliged to
disclose any information regarding its tax affairs or computations to the
Borrower in connection with this paragraph (d) or any other provision of this
Section 5.4.
(e) Each Lender represents and agrees that, on the date hereof and at
all times during the term of this Agreement, it is not and will not be a conduit
entity participating in a conduit financing arrangement (as defined in Section
7701(1) of the Code and the regulations thereunder) with respect to the
Borrowings hereunder unless the Borrower has consented to such arrangement prior
thereto.
5.5. Computations of Interest and Fees. (a) Interest on Eurodollar
Revolving Credit Loans and, except as provided in the next succeeding sentence,
ABR Loans shall be calculated on the basis of a 360-day year for the actual days
elapsed. Interest on ABR Loans in respect of which the rate of interest is
calculated on the basis of the Prime Rate and interest on overdue interest shall
be calculated on the basis of a 365- (or 366-, as the case may be) day year for
the actual days elapsed.
(b) Fees and Letter of Credit Outstandings shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed.
SECTION 6. Conditions Precedent to Closing Date.
The agreement of each Lender to make its Initial Loan under this
Agreement and the obligation of the Letter of Credit Issuer to issue Letters of
Credit shall not become effective until the date on which each of the following
conditions is satisfied (or waived in accordance with Section 13.1):
6.1. Credit Documents. The Administrative Agent shall have received:
(a) this Agreement, executed and delivered by a duly authorized
officer of the Borrower and each Lender;
(b) the Guarantee, executed and delivered by a duly authorized officer
of each Guarantor;
(c) the Pledge Agreement, executed and delivered by a duly authorized
officer of each of the Borrower and each Subsidiary Pledgor party thereto;
49
(d) the Security Agreement, executed and delivered by a duly
authorized officer of each of the Borrower and each Subsidiary Grantor
party thereto; and
(e) the Mortgages, executed and delivered by a duly authorized officer
of each mortgagor thereunder.
6.2. Certificates, Filings and Recordings. The Administrative Agent
shall have received:
(a) all certificates representing securities pledged under the Pledge
Agreement, accompanied by instruments of transfer and undated stock powers
endorsed in blank;
(b) for filing, registration or recording by the Administrative Agent,
all documents and instruments, including Uniform Commercial Code financing
statements, required by law or reasonably requested by the Administrative
Agent to be filed, registered or recorded to (i) create the Liens intended
to be created by the Security Agreement and (ii) perfect such Liens to the
extent required by, and with the priority required by, this Agreement and
the Security Agreement (or such documents and instruments shall have been
otherwise filed, registered or recorded);
(c) a completed Perfection Certificate dated the Closing Date and
signed by an Authorized Officer, together with all attachments contemplated
thereby;
(d) subject to Section 9.14(e), the results of a search of the Uniform
Commercial Code (or equivalent) filings made with respect to the grantors
party to the Security Agreement in the jurisdictions contemplated by the
Perfection Certificate and copies of the financing statements (or similar
documents) disclosed by such search and evidence reasonably satisfactory to
the Administrative Agent that the Liens indicated by such financing
statements (or similar documents) are permitted by the Credit Documents or
have been released; and
(e) for recording in the recording office specified on Schedule
1.1(b), executed counterparts of each Mortgage.
6.3. Closing Certificates. The Administrative Agent shall have
received a certificate of each Credit Party, dated the Closing Date,
substantially in the form of Exhibit G, with appropriate insertions, executed by
the President or any Vice President and the Secretary or any Assistant Secretary
of such Credit Party, and attaching the documents referred to in Sections 6.4
and 6.5.
6.4. Corporate Proceedings of Each Credit Party. The Administrative
Agent shall have received a copy of the resolutions, in form and substance
satisfactory to the Administrative Agent, of the Board of Directors of each
Credit Party (or a duly authorized committee thereof) authorizing (a) the
execution, delivery and performance of the Credit Documents (and any agreements
relating thereto) to which it is a party and (b) in the case of the Borrower,
the extensions of credit contemplated hereunder.
50
6.5. Corporate Documents. The Administrative Agent shall have received
true and complete copies of the certificate of incorporation and by-laws (or
equivalent organizational documents) of each Credit Party.
6.6. No Material Adverse Change. There shall have been no material
adverse change in the business, assets, operations, properties or financial
condition of the Borrower and its Subsidiaries, taken as a whole, since May 31,
2002.
6.7. Fees. The Administrative Agent shall have received the fees
referred to in Section 4.1(e) to be received on the Closing Date and all
expenses (including the reasonable fees, disbursements and other charges of one
lead counsel and additional local counsel that are agreed upon between the
Arrangers and the Borrower) for which invoices have been presented on or prior
to the Closing Date.
6.8. Required Approvals. All requisite material Governmental
Authorities and third parties shall have approved or consented to the
transactions contemplated hereby to the extent required, all applicable appeal
periods shall have expired and there shall be no governmental or judicial
action, actual or threatened, that could reasonably be expected to restrain,
prevent or impose materially burdensome conditions on the transactions
contemplated hereby.
6.9. Audited Financial Statements. The Administrative Agent shall have
received the consolidated balance sheet of the Borrower and its Subsidiaries at
May 31, 2002, and the related consolidated statements of income and cash flows
for the fiscal year ended as of such date, which statements shall have been
audited by Deloitte & Touche LLP, independent certified public accountants, who
delivered an unqualified opinion with respect thereto.
6.10. Evidence of Insurance. The Administrative Agent shall have
received evidence that the insurance required by Section 9.3 and the Mortgages
is in effect.
6.11. Synthetic Lease Termination. The Synthetic Lease Termination
shall have been consummated or shall be consummated on the Closing Date
simultaneously with the consummation of the transactions to be consummated on
the Closing Date contemplated hereby and the Administrative Agent shall have
received reasonably satisfactory evidence of such repayment, termination and
discharge.
6.12. The Closing Date Securitization. On or prior to the Closing
Date, the Administrative Agent shall have received complete and correct copies
of the Closing Date Securitization Documentation entered into on or prior to the
Closing Date certified by an Authorized Officer as being complete and correct
copies of such documentation (it being understood that such certified copies of
such documentation shall include a form of Mortgage (as defined in the Closing
Date Securitization Loan Agreement) by KC Propco, LLC for the benefit of Xxxxxx
Xxxxxxx Mortgage Capital Inc and a form of Assignment of Leases and Rents (as
defined in the Closing Date Securitization Loan Agreement) by KC Propco, LLC for
the benefit of Xxxxxx Xxxxxxx Mortgage Capital Inc. in each case in lieu of
executed versions of such documents). The Closing Date Securitization shall have
been consummated or shall be consummated simultaneously with the closing of this
Agreement on the terms and conditions set forth in such Closing Date
51
Securitization Documentation. The Closing Date Securitization Subsidiaries shall
have received not less than $275,000,000 in gross cash proceeds from the Closing
Date Securitization.
6.13. No Litigation. There shall be no litigation or administrative
proceeding that would reasonably be expected to have a material adverse effect
on the business, assets, operations, properties or financial condition of the
Borrower and its Subsidiaries, taken as a whole, or on the ability of the
parties to consummate the transactions contemplated hereby.
6.14. Existing Credit Agreement. All loans outstanding under, and all
other amounts due in respect of, the Existing Credit Agreement shall have been
repaid in full; the commitments under the Existing Credit Agreement shall have
been permanently terminated; all obligations under the Existing Credit Agreement
and security interests relating thereto shall have been discharged; and the
Administrative Agent shall have received reasonably satisfactory evidence of
such repayment, termination and discharge.
6.15. Legal Opinions. The Administrative Agent shall have received,
with a counterpart for each Lender, the executed legal opinions of (a) Xxxxxxx
Xxxxxxx & Xxxxxxxx LLP, special New York counsel to the Borrower, substantially
in the form of Exhibit H-1, (b) each local counsel to the Borrower listed on
Schedule 6.15 substantially in the form of Exhibit H-2, (c) Xxxxxxx Xxxxx LLP,
special Alberta counsel to Mini-Skools, substantially in the form of Exhibit
H-3, and (d) Xxx X. Xxxxxxxxx, General Counsel of the Borrower, substantially in
the form of Exhibit H-4, and the Borrower hereby instructs such counsel to
deliver such legal opinions.
SECTION 7. Conditions Precedent to All Credit Events. The agreement of
each Lender to make any Loan requested to be made by it on any date (including
its initial Loan, but excluding Mandatory Borrowings) and the obligation of the
Letter of Credit Issuer to issue Letters of Credit on any date is subject to the
satisfaction of the following conditions precedent:
7.1. No Default; Representations and Warranties. At the time of each
Credit Event and also after giving effect thereto (a) no Default or Event of
Default shall have occurred and be continuing and (b) all representations and
warranties made by any Credit Party contained herein or in the other Credit
Documents shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and as of
the date of such Credit Event (except where such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall have been true and correct in all material respects as of such
earlier date).
7.2. Notice of Borrowing; Letter of Credit Request. (a) Prior to the
making of each Revolving Credit Loan (other than any Revolving Credit Loan made
pursuant to Section 3.4(a)) and each Swingline Loan, the Administrative Agent
shall have received a Notice of Borrowing (whether in writing or by telephone)
meeting the requirements of Section 2.3.
(b) Prior to the issuance of each Letter of Credit, the Administrative
Agent and the Letter of Credit Issuer shall have received a Letter of Credit
Request meeting the requirements of Section 3.2(a).
52
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by each Credit Party to each of the Lenders that all
the applicable conditions specified above exist as of that time.
SECTION 8. Representations, Warranties and Agreements. In order to
induce the Lenders to enter into this Agreement, to make the Loans and issue or
participate in Letters of Credit as provided for herein, the Borrower makes the
following representations and warranties to, and agreements with, the Lenders,
all of which shall survive the execution and delivery of this Agreement and the
making of the Loans and the issuance of the Letters of Credit:
8.1. Corporate Status. The Borrower and each Material Subsidiary (a)
is a duly organized and validly existing corporation or other entity in good
standing under the laws of the jurisdiction of its organization and has the
corporate or other organizational power and authority to own its property and
assets and to transact the business in which it is engaged and (b) has duly
qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified, except where the failure
to be so qualified could not reasonably be expected to result in a Material
Adverse Effect.
8.2. Corporate Power and Authority. Each Credit Party has the
corporate or other organizational power and authority to execute, deliver and
carry out the terms and provisions of the Credit Documents to which it is a
party and has taken all necessary corporate or other organizational action to
authorize the execution, delivery and performance of the Credit Documents to
which it is a party. Each Credit Party has duly executed and delivered each
Credit Document to which it is a party and each such Credit Document constitutes
the legal, valid and binding obligation of such Credit Party enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency or similar laws affecting creditors' rights generally
and subject to general principles of equity.
8.3. No Violation. Neither the execution, delivery and performance by
any Credit Party of the Credit Documents to which it is a party nor compliance
with the terms and provisions thereof nor the consummation of the transactions
contemplated hereby or by the Closing Date Securitization will (a) contravene
any applicable provision of any material law, statute, rule, regulation, order,
writ, injunction or decree of any court or governmental instrumentality, (b)
result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien upon any of the property or
assets of the Borrower or any of the Restricted Subsidiaries (other than Liens
permitted by the Credit Documents) pursuant to, the terms of any material
indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement
or other material instrument to which the Borrower or any of the Restricted
Subsidiaries is a party or by which it or any of its property (including the
Mortgaged Properties) or assets is bound or (c) violate any provision of the
certificate of incorporation or By-Laws (or equivalent organizational document)
of the Borrower or any of the Restricted Subsidiaries.
8.4. Litigation. Except as set forth in the Borrower's Form 10-K for
the fiscal year ended May 31, 2002, or in the Borrower's Form 10-Q for the
fiscal quarters ended September 20, 2002, December 13, 2002 or March 7, 2003, in
each case as filed with the SEC, there are no actions, suits or proceedings
(including Environmental Claims) pending or, to the knowledge of the
53
Borrower, threatened with respect to the Borrower or any of its Subsidiaries
that could reasonably be expected to result in a Material Adverse Effect.
8.5. Margin Regulations. Neither the making of any Loan hereunder nor
the use of the proceeds thereof will violate the provisions of Regulation T, U
or X of the Board.
8.6. Governmental Approvals. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any Governmental Authority is required to authorize or is required
in connection with (a) the execution, delivery and performance of any Credit
Document or (b) the legality, validity, binding effect or enforceability of any
Credit Document, except any of the foregoing the failure to obtain or make could
not reasonably be expected to have a Material Adverse Effect.
8.7. Investment Company Act. The Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
8.8. True and Complete Disclosure; Delivery of Documents. (a) All
factual information and data (taken as a whole) heretofore or contemporaneously
furnished by the Borrower, any of its Subsidiaries or any of their respective
authorized representatives in writing to the Administrative Agent and/or any
Lender on or before the Closing Date (including all information contained in the
Credit Documents) for purposes of or in connection with this Agreement or any
transaction contemplated herein was true and complete in all material respects
on the date as of which such information or data is dated or certified and was
not incomplete by omitting to state any material fact necessary to make such
information and data (taken as a whole) not misleading at such time in light of
the circumstances under which such information or data was furnished, it being
understood and agreed that for purposes of this Section 8.8(a), such factual
information and data shall not include projections and pro forma financial
information.
(b) The projections and pro forma financial information contained in
the information and data referred to in paragraph (a) above were based on good
faith estimates and assumptions believed by such Persons to be reasonable at the
time made, it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected
results.
(c) The Borrower has previously made available, and has caused each
Subsidiary of the Borrower to make available, to the Administrative Agent true,
correct and complete copies of all existing title policies or other evidence of
record ownership that indicate the current name of the record owner of each of
the Mortgaged Properties.
8.9. Financial Condition; Financial Statements. (a) The consolidated
balance sheet of the Borrower and its Subsidiaries at May 31, 2002, and the
related consolidated statements of income and cash flows for the fiscal year
ended as of such date, which statements have been audited by Deloitte & Touche
LLP, independent certified public accountants, who delivered an unqualified
opinion with respect thereto, and (b) the unaudited consolidated balance sheet
of the Borrower and its Subsidiaries at September 20, 2002, at December 13, 2002
and at March 7, 2003, and the related consolidated statements of income and cash
flows for the respective fiscal quarters and portions of the fiscal year ended
as of such dates, in each case present fairly in all material
54
respects the consolidated financial position of the Borrower and its
Subsidiaries at the respective dates of said statements and the results of
operations for the respective periods covered thereby. All such financial
statements have been prepared in accordance with GAAP consistently applied
except to the extent provided in the notes to said financial statements and, in
the case of said financial statements referred to in clause (b), subject to
normal year-end audit adjustments. There has been no Material Adverse Change
since May 31, 2002, other than solely as a result of changes in general economic
conditions.
8.10. Tax Returns and Payments. Each of the Borrower and its
Subsidiaries has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it that have become due, other than
those not yet delinquent or contested in good faith. The Borrower and each of
its Subsidiaries have paid, or have provided adequate reserves (in the good
faith judgment of the management of the Borrower) in accordance with GAAP for
the payment of, all material federal, state and foreign income taxes applicable
for all prior fiscal years and for the current fiscal year to the Closing Date.
8.11. Compliance with ERISA. Each Plan is in compliance with ERISA,
the Code and any applicable Requirement of Law; no Reportable Event has occurred
(or is reasonably likely to occur) with respect to any Plan; no Plan is
insolvent or in reorganization (or is reasonably likely to be insolvent or in
reorganization), and no written notice of any such insolvency or reorganization
has been given to the Borrower, any Subsidiary or any ERISA Affiliate; no Plan
(other than a multiemployer plan) has an accumulated or waived funding
deficiency (or is reasonably likely to have such a deficiency); neither the
Borrower nor any Subsidiary nor any ERISA Affiliate has incurred (or is
reasonably likely expected to incur) any liability to or on account of a Plan
pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or
4204 of ERISA or Section 4971 or 4975 of the Code or has been notified in
writing that it will incur any liability under any of the foregoing Sections
with respect to any Plan; no proceedings have been instituted (or are reasonably
likely to be instituted) to terminate or to reorganize any Plan or to appoint a
trustee to administer any Plan, and no written notice of any such proceedings
has been given to the Borrower, any Subsidiary or any ERISA Affiliate; and no
lien imposed under the Code or ERISA on the assets of the Borrower or any
Subsidiary or any ERISA Affiliate exists (or is reasonably likely to exist) nor
has the Borrower, any Subsidiary or any ERISA Affiliate been notified in writing
that such a lien will be imposed on the assets of the Borrower, any Subsidiary
or any ERISA Affiliate on account of any Plan, except to the extent that a
breach of any of the foregoing representations, warranties or agreements in this
Section 8.11 would not result, individually or in the aggregate, in an amount of
liability that would be reasonably likely to have a Material Adverse Effect. No
Plan (other than a multiemployer plan) has an Unfunded Current Liability that
would, individually or when taken together with any other liabilities referenced
in this Section 8.11, be reasonably likely to have a Material Adverse Effect.
With respect to Plans that are multiemployer plans (as defined in Section 3(37)
of ERISA), the representations and warranties in this Section 8.11, other than
any made with respect to (a) liability under Section 4201 or 4204 of ERISA or
(b) liability for termination or reorganization of such Plans under ERISA, are
made to the best knowledge of the Borrower.
8.12. Subsidiaries. Schedule 8.12 lists each Subsidiary of the
Borrower (and (x) the direct and indirect ownership interest of the Borrower
therein and (y) whether such Subsidiary
55
is a Guarantor, Subsidiary Grantor or Subsidiary Pledgor as of the Closing
Date), in each case existing on the Closing Date. To the knowledge of the
Borrower, each Material Subsidiary as of the Closing Date has been so designated
on Schedule 8.12.
8.13. Patents, etc.. The Borrower and each of the Restricted
Subsidiaries have obtained all patents, trademarks, servicemarks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their respective businesses as currently
conducted and as proposed to be conducted, except where the failure to obtain
any such rights could not reasonably be expected to have a Material Adverse
Effect.
8.14. Environmental Laws. (a) Other than instances of noncompliance
that could not reasonably be expected to have a Material Adverse Effect: (i) the
Borrower and each of its Subsidiaries are and have been in compliance with all
Environmental Laws in all jurisdictions in which the Borrower and each of its
Subsidiaries are currently doing and have done business (including having
obtained, maintained and complied with all material permits required under
Environmental Laws); and (ii) the Borrower will comply and cause each of its
Subsidiaries to comply with all such Environmental Laws (including all permits
required under Environmental Laws).
(b) Neither the Borrower nor any of its Subsidiaries has used,
managed, treated, stored, transported or disposed, or arranged for the
treatment, transportation or disposal, of Hazardous Materials at or from any
currently or formerly owned Real Estate (as defined in Section 9.1(f)) or
facility relating to its business in a manner that could reasonably be expected
to have a Material Adverse Effect.
8.15. Properties. (a) The Borrower and each of the Restricted
Subsidiaries have good title to or leasehold interest in all properties
(including all Mortgaged Properties) that are necessary for the operation of
their respective businesses as currently conducted and as proposed to be
conducted, free and clear of all Liens (other than, in the case of any Mortgaged
Property, Permitted Liens and, in the case of other properties, any Liens
permitted by the Credit Documents) and except where the failure to have such
good title could not reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 8.15(b), neither the Borrower nor
any Subsidiary of the Borrower has received any notice of, or has any knowledge
of, any pending or contemplated condemnation proceeding affecting any of the
Mortgaged Properties or any sale or disposition thereof in lieu of condemnation.
Except as set forth on Schedule 8.15(b), as of the Closing Date, to the actual
knowledge of the Borrower (without further investigation or review of their
records or agreements) but subject to Section 9.1(j), neither the Borrower nor
any Subsidiary of the Borrower is obligated under any right of first refusal,
option or other contractual right to sell, assign or otherwise dispose of any
Mortgaged Property or any interest therein.
(c) All certificates of occupancy and/or completion and other permits,
licenses, consents and approvals required by law or by any order, rule or
regulation of any Governmental Authority for the use and operation of the
Mortgaged Properties for their intended purposes have been issued and are in
full force and effect except to the extent that the failure to have them could
not reasonably be expected to have a Material Adverse Effect.
56
8.16. Security Documents. The Security Agreement, the Pledge Agreement
and the Mortgages are effective to create, for the ratable benefit of the
holders of the Obligations, a legal, valid and enforceable security interest in
the Collateral and, when such Collateral is delivered to the Administrative
Agent and for so long as the Administrative Agent remains in possession of such
Collateral or when financing statements in appropriate form are filed in the
offices specified in the Perfection Certificate (as such information is updated
pursuant to the certificates delivered pursuant to Section 9.1(d)) or when
Mortgages are recorded in the offices specified on Schedule 1.1(b), as
applicable, the security interests created by the Security Agreement, the Pledge
Agreement and the Mortgages shall constitute perfected first-priority security
interests in all right, title and interest of the pledgor thereunder in such
Collateral, in each case prior and superior in right to any other Person, other
than with respect to the rights of Persons pursuant to Permitted Liens or, in
the case of Collateral (as defined in the Security Agreement), Security
Agreement Permitted Liens.
SECTION 9. Affirmative Covenants. The Borrower hereby covenants and
agrees that on the Closing Date and thereafter, for so long as this Agreement is
in effect and until the Revolving Credit Commitments, the Swingline Commitment
and each Letter of Credit have terminated and the Loans and Unpaid Drawings,
together with interest, Fees and all other Obligations incurred hereunder, are
paid in full:
9.1. Information Covenants. The Borrower will furnish to each Lender
and the Administrative Agent:
(a) Annual Financial Statements. On or before the date on which
financial statements for each fiscal year of the Borrower are required to be
filed with the SEC (or, if such financial statements are not required to be so
filed, no later than 90 days following the end of each fiscal year of the
Borrower), the consolidated balance sheet of (i) the Borrower and the Restricted
Subsidiaries and (ii) the Borrower and its Subsidiaries, in each case as at the
end of such fiscal year and the related consolidated statement of income and
retained earnings and of cash flows for such fiscal year, setting forth
comparative consolidated figures for the preceding fiscal year, and certified by
independent certified public accountants of recognized national standing whose
opinion shall not be qualified as to the scope of audit or as to the status of
the Borrower or any of the Material Subsidiaries as a going concern, together in
any event with a certificate of such accounting firm stating that in the course
of its regular audit of the business of the Borrower and the Material
Subsidiaries, which audit was conducted in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge of any
Default or Event of Default relating to Section 10.9 and 10.10 that has occurred
and is continuing or, if in the opinion of such accounting firm such a Default
or Event of Default has occurred and is continuing, a statement as to the nature
thereof.
(b) Quarterly Financial Statements. As soon as available and in any
event on or before the date on which financial statements for each of the first
three quarterly accounting periods in each fiscal year of the Borrower are
required to be filed with the SEC (or, if such financial statements are not
required to be so filed, no later than 45 days following the end of each such
fiscal quarter of the Borrower) with respect to each of the first three
quarterly accounting periods in each fiscal year of the Borrower, the
consolidated balance sheet of (i) the Borrower and the Restricted Subsidiaries
and (ii) the Borrower and its Subsidiaries, in each case as at the end of such
57
quarterly period and the related consolidated statement of income for such
quarterly accounting period and for the elapsed portion of the fiscal year ended
with the last day of such quarterly period, and the related consolidated
statement of cash flows for the elapsed portion of the fiscal year ended with
the last day of such quarterly period, and setting forth comparative
consolidated figures for the related periods in the prior fiscal year or, in the
case of such consolidated balance sheet, for the last day of the prior fiscal
year, all of which shall be certified by an Authorized Officer of the Borrower,
subject to changes resulting from audit and normal year-end audit adjustments.
(c) Budgets. Within 60 days after the commencement of each fiscal year
of the Borrower, budgets of the Borrower in reasonable detail for the fiscal
year as customarily prepared by management of the Borrower for its internal use,
setting forth the principal assumptions upon which such budgets are based.
(d) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 9.1(a) and (b) a certificate of an
Authorized Officer of the Borrower to the effect that no Default or Event of
Default exists or, if any Default or Event of Default does exist, specifying the
nature and extent thereof, which certificate shall set forth (i) the
calculations required to establish whether the Borrower and its Subsidiaries
were in compliance with the provisions of Sections 10.9 and 10.10 as at the end
of such fiscal year or period, as the case may be, (ii) the Consolidated EBITDA
for the Test Period ended at the end of such fiscal year or period (including
the calculations required to establish such Consolidated EBITDA), (iii) a
specification of any change in the identity of the Restricted Subsidiaries,
Unrestricted Subsidiaries, Acquisition Subsidiaries, Real Estate Financing
Entities and Foreign Subsidiaries as at the end of such fiscal year or period,
as the case may be, from the Restricted Subsidiaries, Unrestricted Subsidiaries,
Acquisition Subsidiaries, Real Estate Financing Entities and Foreign
Subsidiaries, respectively, provided to the Lenders on the Closing Date or the
most recent fiscal year or period, as the case may be, (iv) the then applicable
Status and (v) the amount of any Pro Forma Adjustment not previously set forth
in a Pro Forma Adjustment Certificate or any change in the amount of a Pro Forma
Adjustment set forth in any Pro Forma Adjustment Certificate previously provided
and, in either case, in reasonable detail, the calculations and basis therefor.
At the time of the delivery of the financial statements provided for in Section
9.1(a) and (b), a certificate of an Authorized Officer setting forth in
reasonable detail the Available Amount as at the end of the fiscal year or
fiscal quarter, as applicable, to which such financial statements relate (it
being understood that such detail shall be sufficient to reconcile such
Available Amount with such financial statements). At the time of the delivery of
the financial statements provided for in Section 9.1(a), a certificate of an
Authorized Officer (x) setting forth the information required pursuant to
Section 2(a), (c) and (d) of the Perfection Certificate or confirming that there
has been no change in such information since the Closing Date or the date of the
most recent certificate delivered pursuant to this Section, as the case may be,
and (y) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (x) above.
(e) Notice of Default or Litigation. Promptly after an Authorized
Officer of the Borrower or any of its Subsidiaries obtains knowledge thereof,
notice of (i) the occurrence of any
58
event that constitutes a Default or Event of Default, which notice shall specify
the nature thereof, the period of existence thereof and what action the Borrower
proposes to take with respect thereto, and (ii) any litigation or governmental
proceeding pending against the Borrower or any of its Subsidiaries that could
reasonably be expected to result in a Material Adverse Effect.
(f) Environmental Matters. The Borrower will promptly advise the
Lenders in writing after obtaining knowledge of any one or more of the following
environmental matters, unless such environmental matters would not, individually
or when aggregated with all other such matters, be reasonably expected to result
in a Material Adverse Effect:
(i) Any pending or threatened Environmental Claim against the
Borrower or any of its Subsidiaries or any Real Estate (as defined
below);
(ii) Any condition or occurrence on any Real Estate that (x)
results in noncompliance by the Borrower or any of its Subsidiaries
with any applicable Environmental Law or (y) could reasonably be
anticipated to form the basis of an Environmental Claim against the
Borrower or any of its Subsidiaries or any Real Estate;
(iii) Any condition or occurrence on any Real Estate that could
reasonably be anticipated to cause such Real Estate to be subject to
any restrictions on the ownership, occupancy, use or transferability
of such Real Estate under any Environmental Law; and
(iv) The taking of any removal or remedial action in response to
the actual or alleged presence of any Hazardous Material on any Real
Estate.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Borrower's response thereto. The term "Real Estate" shall mean land, buildings
and improvements owned or leased by the Borrower or any of its Subsidiaries,
including all Mortgaged Properties but excluding all operating fixtures and
equipment, whether or not incorporated into improvements.
(g) Other Information. Promptly upon filing thereof, copies of any
filings on Form 10-K, 10-Q or 8-K or registration statements with, and reports
to, the SEC by the Borrower or any of its Subsidiaries (other than amendments to
any registration statement (to the extent such registration statement, in the
form it becomes effective, is delivered to the Lenders), exhibits to any
registration statement and any registration statements on Form S-8) and copies
of all financial statements, proxy statements, notices and reports that the
Borrower or any of its Subsidiaries shall send to the holders of any publicly
issued debt of the Borrower and/or any of its Subsidiaries (including the
Subordinated Notes) in their capacity as such holders (in each case to the
extent not theretofore delivered to the Lenders pursuant to this Agreement) and,
with reasonable promptness, such other information (financial or otherwise) as
the Administrative Agent on its own behalf or on behalf of any Lender may
reasonably request in writing from time to time.
(h) Pro Forma Adjustment Certificate. Not later than the date on which
Section 9.1 Financials are delivered for any period in which there has been
consummated the acquisition of any Acquired Entity or Business by the Borrower
or any Restricted Subsidiary for
59
which there shall be a Pro Forma Adjustment, a certificate of an Authorized
Officer of the Borrower setting forth the amount of such Pro Forma Adjustment
and, in reasonable detail, the calculations and basis therefor.
(i) Post-Closing Closing Date Securitization Documentation. (x) Not
less than 7 calendar days prior to the execution thereof, copies of any proposed
amendment, restatement, replacement, supplement or other modification to any
Closing Date Securitization Documentation (collectively, the "Post-Closing
Closing Date Securitization Documentation"), (y) within 5 days after the same
are sent to the intended recipients thereof, copies of any offering circular,
prospectus, prospectus supplement, private placement memorandum, other offering
document or other similar disclosure document prepared and delivered in
connection with the Closing Date Securitization, and (z) promptly following the
execution of any Post-Closing Date Securitization Documentation, complete and
correct copies thereof certified by an Authorized Officer as being complete and
correct copies of such documentation.
(j) Mortgaged Properties. In the event the Borrower or any of its
Subsidiaries (including any Mortgagor) becomes aware of any obligation under any
right of first refusal, option or other contractual right to sell, assign or
otherwise dispose of any Mortgaged Property or any interest therein not set
forth in Schedule 8.15(b), the Borrower shall, or shall cause such Subsidiary
to, promptly notify the Administrative Agent thereof.
9.2. Books, Records and Inspections. The Borrower will, and will cause
each of the Specified Subsidiaries to, permit officers and designated
representatives of the Administrative Agent or the Required Lenders to visit and
inspect any of the properties or assets of the Borrower and any such Specified
Subsidiary in whomsoever's possession to the extent that it is within the
Borrower's or such Specified Subsidiary's control to permit such inspection, and
to examine the books of account of the Borrower and any such Specified
Subsidiary and discuss the affairs, finances and accounts of the Borrower and of
any such Specified Subsidiary with, and be advised as to the same by, its and
their officers and independent accountants, all at such reasonable times and
intervals and to such reasonable extent as the Administrative Agent or the
Required Lenders may desire.
9.3. Maintenance of Insurance. The Borrower will, and will cause each
of the Material Subsidiaries to, at all times maintain in full force and effect,
with insurance companies which the Borrower believes (in the good faith judgment
of the management of the Borrower) are financially sound and responsible at the
time the relevant coverage is placed or renewed, insurance in at least such
amounts and against at least such risks (and with such risk retentions) as are
usually insured against in the same general area by companies engaged in the
same or a similar business, and will furnish to the Lenders, upon written
request from the Administrative Agent, information presented in reasonable
detail as to the insurance so carried.
9.4. Payment of Taxes. The Borrower will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which material penalties attach thereto, and all lawful material claims that, if
unpaid, could reasonably be expected to become a material Lien upon any
properties of the Borrower or any of the Restricted Subsidiaries, provided that
neither the Borrower nor any of its
60
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or
claim that is being contested in good faith and by proper proceedings if it has
maintained adequate reserves (in the good faith judgment of the management of
the Borrower) with respect thereto in accordance with GAAP and, in the case of a
Mortgaged Property, there is no risk of a forfeiture which, when aggregated with
the forfeiture of other Mortgaged Properties, could reasonably be expected to
result in the forfeiture of a material portion of all Mortgaged Property.
9.5. Consolidated Corporate Franchises. The Borrower will do, and will
cause each Material Subsidiary to do, or cause to be done, all things necessary
to preserve and keep in full force and effect its existence, corporate rights
and authority, except to the extent that the failure to do so could not
reasonably be expected to have a Material Adverse Effect; provided, however,
that the Borrower and its Subsidiaries may consummate any transaction permitted
under Section 10.3 or 10.4.
9.6. Compliance with Statutes, Obligations, etc. The Borrower will,
and will cause each Subsidiary to, comply with all applicable laws, rules,
regulations and orders (including any zoning, building, Environmental Law,
ordinance, code or approval or any building permits or any restrictions of
record or agreements affecting the Mortgaged Properties), except to the extent
the failure to do so could not reasonably be expected to have a Material Adverse
Effect.
9.7. ERISA. Promptly after the Borrower or any Subsidiary or any ERISA
Affiliate knows or has reason to know of the occurrence of any of the following
events that, individually or in the aggregate (including in the aggregate such
events previously disclosed or exempt from disclosure hereunder, to the extent
the liability therefor remains outstanding), would be reasonably likely to have
a Material Adverse Effect, the Borrower will deliver to each of the Lenders a
certificate of an Authorized Officer or any other senior officer of the Borrower
setting forth details as to such occurrence and the action, if any, that the
Borrower, such Subsidiary or such ERISA Affiliate is required or proposes to
take, together with any notices (required, proposed or otherwise) given to or
filed with or by the Borrower, such Subsidiary, such ERISA Affiliate, the PBGC,
a Plan participant (other than notices relating to an individual participant's
benefits) or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application is to be made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any required installment
payments) or an extension of any amortization period under Section 412 of the
Code with respect to a Plan; that a Plan having an Unfunded Current Liability
has been or is to be terminated, reorganized, partitioned or declared insolvent
under Title IV of ERISA (including the giving of written notice thereof); that a
Plan has an Unfunded Current Liability that has or will result in a lien under
ERISA or the Code; that proceedings will be or have been instituted to terminate
a Plan having an Unfunded Current Liability (including the giving of written
notice thereof); that a proceeding has been instituted against the Borrower, a
Subsidiary or an ERISA Affiliate pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; that the PBGC has notified the Borrower, any
Subsidiary or any ERISA Affiliate of its intention to appoint a trustee to
administer any Plan; that the Borrower, any Subsidiary or any ERISA Affiliate
has failed to make a required installment or other payment pursuant to Section
412 of the Code with respect to a Plan; or that the Borrower, any Subsidiary or
any ERISA Affiliate has incurred or will incur (or has been notified in writing
that it will incur) any liability (including any contingent or
61
secondary liability) to or on account of a Plan pursuant to Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or
4975 of the Code.
9.8. Good Repair. The Borrower will, and will cause each of the
Restricted Subsidiaries to, ensure that its properties (including the Mortgaged
Properties) and equipment used or useful in its business in whomsoever's
possession they may be, to the extent that it is within the Borrower's or such
Restricted Subsidiary's control to cause same, are kept in good repair, working
order and condition, normal wear and tear excepted, and that from time to time
there are made in such properties (including the Mortgaged Properties) and
equipment all needful and proper repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto, to the extent and in the manner
customary for companies in similar businesses and consistent with third party
leases, except in each case to the extent the failure to do so could be
reasonably expected to have a Material Adverse Effect.
9.9. Transactions with Affiliates. The Borrower will conduct, and
cause each of the Restricted Subsidiaries to conduct, all transactions with any
of its Affiliates on terms that are substantially as favorable to the Borrower
or such Restricted Subsidiary as it would obtain in a comparable arm's-length
transaction with a Person that is not an Affiliate, provided that the foregoing
restrictions shall not apply to (a) the payment of customary annual fees to KKR
and its Affiliates for management, consulting and financial services rendered to
the Borrower and its Subsidiaries, and investment banking fees paid to KKR and
its Affiliates for services rendered to the Borrower and its Subsidiaries in
connection with divestitures, acquisitions, financings and other transactions,
(b) customary fees paid to members of the Board of Directors of the Borrower and
its Subsidiaries and (c) transactions permitted by Section 10.6.
9.10. End of Fiscal Years; Fiscal Quarters. The Borrower will, for
financial reporting purposes, cause (a) each of its, and each of its
Subsidiaries', fiscal years to end on the Friday nearest May 31 of each year and
(b) each of its, and each of its Subsidiaries', fiscal quarters to end on (i)
the Friday 16 weeks after, (ii) the Friday 28 weeks after and (iii) the Friday
40 weeks after, the Friday nearest May 31 of each year; provided, however, that
the Borrower may, upon written notice to the Administrative Agent, change the
financial reporting convention specified above to any other financial reporting
convention reasonably acceptable to the Administrative Agent, in which case the
Borrower and the Administrative Agent will, and are hereby authorized by the
Lenders to, make any adjustments to this Agreement that are necessary in order
to reflect such change in financial reporting.
9.11. Additional Guarantors. The Borrower will cause (a) any Domestic
Subsidiary (other than any Unrestricted Subsidiary, Acquisition Subsidiary, Real
Estate Financing Entity or, to the extent permitted pursuant to Sections 10.1(j)
or 10.1(k), any Restricted Subsidiary or any acquired Person (as defined in
Section 10.1(k))) formed or otherwise purchased or acquired after the date
hereof and (b) any Subsidiary that is not a Domestic Subsidiary on the date
hereof but subsequently becomes a Domestic Subsidiary (other than any
Unrestricted Subsidiary, Acquisition Subsidiary or Real Estate Financing
Entity), in each case promptly after such formation, purchase, acquisition or
transformation, to execute a supplement to the Guarantee, substantially in the
form of Annex B thereto, in order to become a Guarantor.
62
9.12. Additional Pledgors. (a) The Borrower will cause (a) any
Domestic Subsidiary (other than any Unrestricted Subsidiary, Acquisition
Subsidiary, Real Estate Financing Entity or, to the extent permitted pursuant to
Sections 10.1(j) or 10.1(k), any Restricted Subsidiary or any acquired Person
(as defined in Section 10.1(k))) formed or otherwise purchased or acquired after
the date hereof and (b) any Subsidiary that is not a Domestic Subsidiary on the
date hereof but subsequently becomes a Domestic Subsidiary (other than any
Unrestricted Subsidiary, Acquisition Subsidiary or Real Estate Financing
Entity), in each case promptly after such formation, purchase, acquisition or
transformation, (i) to execute a supplement to the Pledge Agreement,
substantially in the form of Annex B thereto, in order to become a Subsidiary
Pledgor and (ii) to deliver to the Administrative Agent all Collateral required
to be delivered to the Administrative Agent pursuant to the terms of the Pledge
Agreement, provided that no such Domestic Subsidiary need execute such a
supplement to the Pledge Agreement after such formation, purchase, acquisition
or transformation to the extent such Domestic Subsidiary owns or holds no
Collateral required to be pledged to the Administrative Agent pursuant to the
terms of the Pledge Agreement, provided, further, that promptly after such time
as any such Domestic Subsidiary not required to execute such a supplement to the
Pledge Agreement pursuant to the immediately preceding proviso acquires any
Collateral of the nature required to be delivered to the Administrative Agent
pursuant to the terms of the Pledge Agreement, the Borrower shall cause such
Domestic Subsidiary to comply with the provisions of clauses (i) and (ii) above.
Subject to Section 10.2, it is hereby agreed and understood that, if the
ownership of the Closing Date Securitization Subsidiaries is restructured after
the Closing Date in such a manner that the Closing Date Securitization
Subsidiaries that were owned directly by Borrower on the Closing Date will be
subsequently owned indirectly by the Borrower, then the Administrative Agent, at
the request and sole expense of the Borrower, shall execute and deliver to the
Borrower all releases or other documents reasonably necessary or desirable for
the release of the Liens created by the Pledge Agreement relating to such
Closing Date Securitization Subsidiaries, and the Borrower will pledge to the
Administrative Agent, for the benefit of the Secured Parties, prior to or
concurrently with such release, all of the capital stock of any new directly
owned Closing Date Securitization Subsidiaries created after the Closing Date
pursuant to the Pledge Agreement and shall deliver to the Administrative Agent
all Collateral related to such newly created directly owned Closing Date
Securitization Subsidiaries pursuant to the terms of the Pledge Agreement. Any
execution and delivery of documents by the Administrative Agent in connection
with the releases contemplated by the immediately preceding sentence shall be
without recourse to or warranty by the Administrative Agent.
9.13. Additional Grantors. The Borrower will cause (a) any Domestic
Subsidiary (other than any Unrestricted Subsidiary, Acquisition Subsidiary, Real
Estate Financing Entity or, to the extent permitted pursuant to Sections 10.1(j)
or 10.1(k), any Restricted Subsidiary or any acquired Person (as defined in
Section 10.1(k))) formed or otherwise purchased or acquired after the date
hereof and (b) any Subsidiary that is not a Domestic Subsidiary on the date
hereof but subsequently becomes a Domestic Subsidiary (other than any
Unrestricted Subsidiary, Acquisition Subsidiary or Real Estate Financing
Entity), in each case promptly after such formation, purchase, acquisition or
transformation, (i) to execute a supplement to the Security Agreement,
substantially in the form of Annex B thereto, in order to become a Subsidiary
Grantor and (ii) to file, register or record (or deliver to the Administrative
Agent for filing, registration or recording) all documents and instruments,
including Uniform Commercial Code financing statements, required by law or
reasonably requested by the Administrative Agent to be filed, registered or
recorded to (x) create
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the Liens intended to be created by the Security Agreement and (y) perfect such
Liens to the extent required by, and with the priority required by, the Security
Agreement.
9.14. Further Assurances. (a) The Borrower will furnish to the
Administrative Agent 15 days prior written notice of any change (i) in any
Credit Party's legal name, (ii) in the jurisdiction of incorporation or
organization of any Credit Party, (iii) in the location of its chief executive
office, its principal place of business, any office in which it maintains books
or records relating to Collateral owned by it (including the establishment of
any such new office), (iv) in any Credit Party's identity or type of
organization or corporate structure or (v) in any Credit Party's Federal
Taxpayer Identification Number or organizational identification number. The
Borrower agrees to promptly provide the Administrative Agent with certified
organizational documents reflecting any of the changes described in the first
sentence of this paragraph. The Borrower agrees not to effect or permit any
change referred to in the first sentence of this paragraph unless all filings
have been made under the Uniform Commercial Code or otherwise that are required
in order for the Administrative Agent to continue at all times following such
change to have a valid, legal and perfected first-priority security interest in
all the Collateral other than with respect to rights of Persons pursuant to
Permitted Liens or, in the case of Collateral (as defined in the Security
Agreement), Security Agreement Permitted Liens. The Borrower also agrees
promptly to notify the Administrative Agent if any material portion of the
Collateral (a) is damaged or destroyed or (b) to the extent such material
portion of the Collateral consists of Intellectual Property (as defined in the
Security Agreement), may become abandoned, lost or dedicated to the public
(including as a result of a materially adverse determination or development with
respect to the ownership thereof or the right to register or keep and maintain
such Intellectual Property) or has been materially infringed, misappropriated or
diluted by a third party.
(b) The Borrower will, and will cause each other Credit Party to,
execute, acknowledge, deliver and cause to be duly filed any and all further
documents, financing statements, mortgages, deeds of trust, agreements and
instruments, and take all such further actions (including the filing and
recording of financing statements, mortgages, deeds of trust and other
documents), that may be required under any applicable law, or which the
Administrative Agent or the Required Lenders may reasonably request, in order to
grant, preserve, protect and perfect the validity and priority of the security
interests created or intended to be created by the Security Documents, all at
the expense of the Credit Parties.
(c) In the event (w) any Collateral is to be sold in accordance with
Section 10.3 or clauses (b), (c), (d) or (f) of Section 10.4, (x) any Person
elects to exercise any right of first refusal, option or other contractual right
granted to it by the Borrower or any of its Subsidiaries (including any
Mortgagor) to sell, assign or otherwise dispose of any Mortgaged Property or any
interest therein, (y) the Borrower requests the release of the security
interests granted pursuant to the Credit Documents in a Mortgaged Property in
connection with a Real Estate Financing pursuant to which such Mortgaged
Property will be mortgaged, sold, transferred or otherwise disposed of, or (z)
within 90 calendar days after the Closing Date, the Borrower requests the
release of the security interests granted pursuant to the Credit Documents in
any Mortgaged Property or Mortgaged Properties owned by Mini-Skools (which
request right shall not in any way limit the Borrower's request rights pursuant
to clause (y) above with respect to any Mortgaged Properties), the Borrower
shall either (A) (i) cause assets (which shall be Centers or other owned real
property of the Credit Parties in the event a Mortgaged Property is sold or
released) having at least comparable fair
64
market value to the Collateral being sold, assigned, disposed of or released, as
the case may be, to be substituted for such Collateral concurrently with the
release of the security interests granted pursuant to the Credit Documents in
such Collateral and cause such new assets to be subjected to a first-priority
Lien (other than with respect to rights of Persons pursuant to Permitted Liens
and, in the case of Collateral (as defined in the Security Agreement), Security
Agreement Permitted Liens) securing the Obligations and (ii) take, and cause the
other Credit Parties to take, such actions as shall be necessary or reasonably
requested by the Administrative Agent to grant and perfect such a Lien
concurrently with the release of the Collateral being sold, assigned or disposed
of, including the actions described in paragraph (b) of this Section (all at the
expense of the Credit Parties) or (B) in the event such substitution of
Collateral is not made as contemplated by the foregoing clause (A),
substantially simultaneously with such release of such assets, permanently
reduce the Revolving Credit Commitments pursuant to Section 4.2 in an aggregate
amount at least equal to the fair value of the Collateral for which no such
substitution is made. Any Mortgage delivered to the Administrative Agent in
accordance with clause (A) of the preceding sentence shall be accompanied by (x)
an existing title policy or other evidence of record ownership that indicates
the name of the record owner of each of the Mortgaged Properties the subject of
such Mortgage at the time of delivery of such Mortgage and (y) an opinion of
local counsel to the Borrower (or in the event a Subsidiary of the Borrower is
the Mortgagor, to such Subsidiary) substantially in the form of Exhibit H-2.
(d) On or prior to the 90th day following the occurrence of any
casualty or other damage to any Mortgaged Property (or any portion thereof or
interest therein) or any proceeding for the taking of any Mortgaged Property (or
any portion thereof or interest therein) under power of eminent domain or by
condemnation, the Borrower shall (i) notify the Administrative Agent of its
intent to repair or restore such Mortgaged Property to the condition thereof
prior to such casualty or damage, (ii)(x) cause assets (which shall be Centers
or other owned real property of the Credit Parties) having at least comparable
fair market value to the Mortgaged Property subject to such casualty, damage or
taking (determined prior to and without giving effect to such casualty, damage
or taking) to be substituted for such Mortgaged Property concurrently with the
release of the security interests granted pursuant to the Credit Documents in
such Mortgaged Property and cause such new assets to be subjected to a
first-priority Lien (other than with respect to rights of Persons pursuant to
Permitted Liens) securing the Obligations and (y) take, and cause the other
Credit Parties to take, such actions as shall be necessary or reasonably
requested by the Administrative Agent to grant and perfect such a Lien
concurrently with the release of the Mortgaged Property being replaced,
including the actions described in paragraph (b) of this Section (all at the
expense of the Credit Parties) or (iii) in the event such notice of intent to
repair or restore such Mortgaged Property is not made as contemplated by the
foregoing clause (i) and such substitution of Mortgaged Property is not made as
contemplated by the foregoing clause (ii), permanently reduce the Revolving
Credit Commitments pursuant to Section 4.2 in an aggregate amount at least equal
to the difference between the fair market value of the Mortgaged Property prior
to such casualty, damage or taking and the fair market value thereof after
giving effect to such casualty, damage or taking. In the event the Borrower
notifies the Administrative Agent of its intent to repair or restore Mortgaged
Property pursuant to clause (i) of the immediately preceding sentence, the
Borrower shall use commercially reasonable efforts to cause such repair or
restoration to be completed as promptly as possible following the delivery of
such notice. Any Mortgage delivered to the Administrative Agent in accordance
with clause (ii) of the preceding sentence shall be accompanied by (x) an
existing title policy or other evidence of record ownership that indicates the
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name of the record owner of each of the Mortgaged Properties the subject of such
Mortgage at the time of delivery of such Mortgage and (y) an opinion of local
counsel to the Borrower (or in the event a Subsidiary of the Borrower is the
Mortgagor, to such Subsidiary) substantially in the form of Exhibit H-2.
(e) As promptly as practicable, and in any event no later than 30 days
following the Closing Date, the Borrower shall deliver to the Administrative
Agent the results of a search of the Uniform Commercial Code (or equivalent)
filings made with respect to (a) KC Distance Learning, Inc. in Columbia County,
Pennsylvania and (b) Mini-Skools, Inc., a Domestic Subsidiary of the Borrower,
in the jurisdictions contemplated by the Perfection Certificate and copies of
the financing statements (or similar documents) disclosed by such search and
evidence reasonably satisfactory to the Administrative Agent that the Liens
indicated by such financing statements (or similar documents) are Security
Agreement Permitted Liens or have been released or terminated at the Borrower's
sole cost and expense.
9.15. Use of Proceeds. The Borrower will use the Letters of Credit and
the proceeds of all Loans for the purposes set forth in the introductory
statement to this Agreement.
9.16. Changes in Business. The Borrower and its Subsidiaries, taken as
a whole, will not fundamentally and substantively alter the character of their
business, taken as a whole, from the business conducted by the Borrower and its
Subsidiaries, taken as a whole, on the date hereof, which business is
educational activities and other business activities incidental or related to
any of the foregoing.
9.17. New Centers. The Borrower will cause each Center and all other
material real estate property related to Centers built, acquired or the
operation of which commenced after the Closing Date (other than any of the
foregoing to be directly or indirectly owned by a Foreign Subsidiary) to be
owned or leased by a Domestic Subsidiary that is a Restricted Subsidiary, the
capital stock or other equity interests of which has been pledged to the
Administrative Agent, for the benefit of the Secured Parties, pursuant to the
Pledge Agreement or a supplement thereto.
9.18. Synthetic Lease Documents. The Borrower will, and will cause its
Subsidiaries to, use commercially reasonable efforts to cause the lenders under
and the other parties to the Synthetic Lease Documents to terminate the
Synthetic Lease Documents promptly following the Closing Date (other than any
obligations, covenants and agreements that by their terms expressly survive the
termination of such Synthetic Lease Documents) to the extent not terminated on
the Closing Date. The Borrower will deliver evidence of such termination to the
Administrative Agent promptly following receipt thereof.
SECTION 10. Negative Covenants. The Borrower hereby covenants and
agrees that on the Closing Date and thereafter, for so long as this Agreement is
in effect and until the Revolving Credit Commitments, the Swingline Commitment
and each Letter of Credit have terminated and the Loans and Unpaid Drawings,
together with interest, Fees and all other Obligations incurred hereunder, are
paid in full:
10.1. Limitation on Indebtedness. The Borrower will not, and will not
permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to
exist any Indebtedness, except:
66
(a) Indebtedness arising under the Credit Documents;
(b) Indebtedness of (i) the Borrower to any Subsidiary of the Borrower
and (ii) Indebtedness of any Restricted Subsidiary to the Borrower or any other
Subsidiary of the Borrower;
(c) Indebtedness in respect of any bankers' acceptance, letter of
credit, warehouse receipt or similar facilities entered into in the ordinary
course of business;
(d) except as provided in clauses (j) and (k) below, Guarantee
Obligations incurred by (i) Restricted Subsidiaries in respect of Indebtedness
of the Borrower or other Restricted Subsidiaries that is permitted to be
incurred under this Agreement and (ii) the Borrower in respect of Indebtedness
of the Restricted Subsidiaries that is permitted to be incurred under this
Agreement;
(e) Guarantee Obligations incurred in the ordinary course of business
in respect of obligations of suppliers, customers, franchisees, lessors and
licensees;
(f) (i) Indebtedness (including Indebtedness arising under Capital
Leases) incurred within 270 days of the acquisition, construction or improvement
of fixed or capital assets to finance the acquisition, construction or
improvement of such fixed or capital assets or otherwise incurred in respect of
Capital Expenditures permitted by Section 10.11, (ii) Indebtedness arising under
Capital Leases entered into in connection with Real Estate Financings (other
than the Closing Date Securitization) and (iii) Indebtedness arising under
Capital Leases, other than Capital Leases entered into pursuant to subclauses
(i) and (ii) above, provided that the aggregate amount of Indebtedness incurred
pursuant to this subclause (iii) shall not exceed $75,000,000 at any time
outstanding, and (iv) any refinancing, refunding, renewal or extension of any
Indebtedness specified in subclause (i), (ii) or (iii) above, provided that the
principal amount thereof is not increased above the principal amount thereof
outstanding immediately prior to such refinancing, refunding, renewal or
extension;
(g) Indebtedness outstanding on the date hereof and listed on Schedule
10.1 and any refinancing, refunding, renewal or extension thereof, provided that
(i) the principal amount thereof is not increased above the principal amount
thereof outstanding immediately prior to such refinancing, refunding, renewal or
extension and (ii) the direct and contingent obligors with respect to such
Indebtedness are not changed;
(h) Indebtedness in respect of Hedge Agreements;
(i) Indebtedness in respect of the Subordinated Notes;
(j) (i) Indebtedness of a Person or Indebtedness attaching to assets
of a Person that, in either case, becomes a Restricted Subsidiary (including an
Acquisition Subsidiary) or Indebtedness attaching to assets that are acquired by
the Borrower or any Restricted Subsidiary (including any Acquisition
Subsidiary), in each case after the Closing Date as the result of a Permitted
Acquisition, provided that (w) such Indebtedness existed at the time such Person
became a Restricted Subsidiary or at the time such assets were acquired and, in
each case, was not created in anticipation thereof, (x) such Indebtedness is not
guaranteed in any respect by the Borrower or
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any Restricted Subsidiary (other than any such person that so becomes a
Restricted Subsidiary), (y)(A) the capital stock of such Person is pledged to
the Administrative Agent to the extent required under the Pledge Agreement, (B)
such Person executes a supplement to the Guarantee, the Pledge Agreement and the
Security Agreement to the extent required under Section 9.11, Section 9.12 and
Section 9.13, respectively, and (C) if any such Indebtedness is secured, the
Obligations are equally and ratably secured, provided that the requirements of
this subclause (y) shall not apply to an aggregate amount at any time
outstanding of up to (and including) $75,000,000 of the aggregate of (1) such
Indebtedness and (2) all Indebtedness as to which the proviso to clause
(k)(i)(y) below then applies, and (z) the aggregate amount of such Indebtedness
and all Indebtedness incurred under clause (k) below, when taken together, does
not exceed $175,000,000 in the aggregate at any time outstanding, provided that,
when calculating the outstanding amount of Indebtedness for purposes of this
subclause (z), Indebtedness of any Acquisition Subsidiary, Indebtedness
attaching to assets of any Acquisition Subsidiary and Indebtedness attaching to
assets acquired by any Acquisition Subsidiary shall be excluded, and (ii) any
refinancing, refunding, renewal or extension of any Indebtedness specified in
subclause (i) above, provided that (x) the principal amount of any such
Indebtedness so refinanced, refunded, renewed or extended is not increased above
the principal amount thereof outstanding immediately prior to such refinancing,
refunding, renewal or extension and (y) the direct and contingent obligors with
respect to such Indebtedness so refinanced, refunded, renewed or extended are
not changed;
(k) (i) Indebtedness of the Borrower or any Restricted Subsidiary
(including any Acquisition Subsidiary) incurred to finance a Permitted
Acquisition, provided that (x) such Indebtedness is not guaranteed in any
respect by any Restricted Subsidiary (other than any Person acquired (the
"acquired Person") as a result of such Permitted Acquisition or the Restricted
Subsidiary so incurring such Indebtedness) or, in the case of Indebtedness of
any Restricted Subsidiary, by the Borrower, (y)(A) the capital stock of such
acquired Person is pledged to the Administrative Agent to the extent required
under the Pledge Agreement, (B) such acquired Person executes a supplement to
the Guarantee, the Pledge Agreement and the Security Agreement to the extent
required under Section 9.11, Section 9.12 and Section 9.13, respectively and (C)
if a guarantee by such acquired Person of any such Indebtedness is secured by
assets of such acquired Person, the Obligations are equally and ratably secured,
provided that the requirements of this subclause (y) shall not apply to an
aggregate amount at any time outstanding of up to (and including) $75,000,000 of
the aggregate of (1) such Indebtedness and (2) all Indebtedness as to which the
proviso to clause (j)(i)(y) above then applies, and (z) the aggregate amount of
such Indebtedness and all Indebtedness assumed or permitted to exist under
clause (j) above, when taken together, does not exceed $175,000,000 in the
aggregate at any time outstanding, provided that, when calculating the
outstanding amount of Indebtedness for purposes of this subclause (z),
Indebtedness of any Acquisition Subsidiary, Indebtedness attaching to assets of
any Acquisition Subsidiary and Indebtedness attaching to assets acquired by any
Acquisition Subsidiary shall be excluded, and (ii) any refinancing, refunding,
renewal or extension of any Indebtedness specified in subclause (i) above,
provided that (x) the principal amount of any such Indebtedness so refinanced,
refunded, renewed or extended is not increased above the principal amount
thereof outstanding immediately prior to such refinancing, refunding, renewal or
extension and (y) the direct and contingent obligors with respect to such
Indebtedness so refinanced, refunded, renewed or extended are not changed;
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(l) Indebtedness of Restricted Foreign Subsidiaries in an aggregate
amount at any time outstanding not to exceed (i) $55,000,000 minus (ii) the
amount equal to (x) the aggregate amount of Indebtedness incurred and
outstanding at such time pursuant to clause (o) below minus (y) $75,000,000;
(m) (i) Indebtedness incurred in connection with any Real Estate
Financing (other than the Closing Date Securitization) and (ii) any refinancing,
refunding, renewal or extension of any Indebtedness specified in subclause (i)
above, provided that (x) the principal amount of any such Indebtedness so
refinanced, refunded, renewed or extended is not increased above the principal
amount thereof outstanding immediately prior to such refinancing, refunding,
renewal or extension and (y) the direct and contingent obligors with respect to
such Indebtedness so refinanced, refunded, renewed or extended are not changed;
and
(n) Indebtedness of the Closing Date Securitization Subsidiaries
incurred in connection with the Closing Date Securitization;
(o) (i) additional Indebtedness, provided that the aggregate amount of
Indebtedness incurred and remaining outstanding pursuant to this clause (n)
shall not at any time exceed the sum of (x) $75,000,000 and (y) the amount equal
to (A) $55,000,000 minus (B) the aggregate amount of Indebtedness then
outstanding under clause (l) above, and (ii) any refinancing, refunding, renewal
or extension of any Indebtedness specified in subclause (i) above.
10.2. Limitation on Liens. The Borrower will not, and will not permit
any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist
any Lien upon any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any Restricted Subsidiary, whether now owned or
hereafter acquired, except:
(a) Liens arising under the Credit Documents;
(b) Permitted Liens;
(c) Liens securing Indebtedness permitted pursuant to Section 10.1(f),
provided that such Liens attach at all times only to the assets so financed; (d)
(x) Liens existing on the date hereof and (y) Liens set forth on Schedule 10.2;
(e) (i) (x) Liens incurred in connection with the Closing Date
Securitization on the Closing Date and (y) Liens incurred in connection with the
Closing Date Securitization following the Closing Date to replace any Lien
incurred in connection with the Closing Date Securitization on the Closing Date,
provided that, at the time such replacement Lien is incurred and the Lien
incurred pursuant to clause (x) is released, the fair market value of the
property and assets subject to such Lien permitted by this clause (y) shall in
no event exceed 110.0% of the fair market value of the property or assets
subject to the Lien so replaced, (ii) Liens incurred by any other Real Estate
Financing Entity in connection with a Real Estate Financing (other than the
Closing Date Securitization) and (iii) Liens incurred by the Borrower or any
Restricted Subsidiary on Centers in connection with a Permitted Mortgage
Financing of such Centers;
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(f) Liens existing on the assets of any Person that becomes a
Restricted Subsidiary, or existing on assets acquired, pursuant to a Permitted
Acquisition to the extent the Liens on such assets secure Indebtedness permitted
by Section 10.1(j), provided that such Liens attach at all times only to the
same assets that such Liens attached to, and secure only the same Indebtedness
that such Liens secured, immediately prior to such Permitted Acquisition;
(g) (i) Liens placed upon the capital stock of any Restricted
Subsidiary acquired pursuant to a Permitted Acquisition to secure Indebtedness
of the Borrower or any other Restricted Subsidiary incurred pursuant to Section
10.1(k) in connection with such Permitted Acquisition, (ii) Liens placed upon
the assets of such Restricted Subsidiary to secure a guarantee by such
Restricted Subsidiary of any such Indebtedness of the Borrower or any other
Restricted Subsidiary and (iii) Liens placed upon the capital stock or assets of
any Acquisition Subsidiary to secure Indebtedness of such Acquisition Subsidiary
incurred pursuant to Section 10.1(k) in connection with any Permitted
Acquisition;
(h) the replacement, extension or renewal of any Lien permitted by
clauses (a) through (g) above upon or in the same assets theretofore subject to
such Lien or the replacement, extension or renewal (without increase in the
amount or change in any direct or contingent obligor) of the Indebtedness
secured thereby; and
(i) additional Liens so long as the aggregate principal amount of the
obligations so secured does not exceed $20,000,000 at any time outstanding;
provided that (a) in the event the ownership of the Closing Date Securitization
Subsidiaries is restructured after the Closing Date in the manner contemplated
by Section 9.12, no Liens, other than Liens securing Indebtedness or other
obligations incurred under the Closing Date Securitization Documentation
(including Indebtedness or other obligations incurred pursuant to a transaction
contemplated by the Closing Date Securitization Cooperation Agreement), may be
created, incurred, assumed or suffered to exist upon the equity interests of the
Closing Date Securitization Subsidiaries which have been released from the Lien
of the Pledge Agreement and (b) no Liens other than Permitted Liens may be
created, incurred, assumed or suffered to exist on any Mortgaged Property.
10.3. Limitation on Fundamental Changes. (a) Subject to 9.14(c), the
Borrower will not, and will not permit any of the Restricted Subsidiaries to,
enter into any merger, consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, assign, transfer or otherwise dispose of, all or substantially all its
business units, assets or other properties, except that:
(i) any Subsidiary of the Borrower or any other Person may be
merged or consolidated with or into the Borrower, provided that (A)
the Borrower shall be the continuing or surviving corporation or the
Person formed by or surviving any such merger or consolidation (if
other than the Borrower) shall be an entity organized or existing
under the laws of the United States, any state thereof, the District
of Columbia or any territory thereof (the Borrower or such Person, as
the case may be, being herein referred to as the "Successor
Borrower"), (B) after giving effect to such merger or consolidation,
the Successor Borrower shall be in compliance with
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Section 9.16, (C) the Successor Borrower (if other than the Borrower)
shall expressly assume all the obligations of the Borrower under this
Agreement and the other Credit Documents pursuant to a supplement
hereto or thereto in form reasonably satisfactory to the
Administrative Agent, (D) no Default or Event of Default would result
from the consummation of such merger or consolidation, (E) the
Successor Borrower shall be in compliance, on a pro forma basis after
giving effect to such merger or consolidation, with the covenants set
forth in Sections 10.9, and 10.10, as such covenants are recomputed as
at the last day of the most recently ended Test Period under such
Section as if such merger or consolidation had occurred on the first
day of such Test Period, (F) each Guarantor, unless it is the other
party to such merger or consolidation, shall have by a supplement to
the Guarantee confirmed that its Guarantee shall apply to the
Successor Borrower's obligations under this Agreement, (G) each
Subsidiary Grantor and each Subsidiary Pledgor, unless it is the other
party to such merger or consolidation, shall have by a supplement to
the Security Agreement or the Pledge Agreement, as applicable,
confirmed that its obligations thereunder shall apply to the Successor
Borrower's obligations under this Agreement, (H) each Mortgagor,
unless it is the other party to such merger or consolidation, shall
have by an amendment to or restatement of the applicable Mortgage
confirmed that its obligations thereunder shall apply to the Successor
Borrower's obligations under this Agreement, and (I) the Borrower
shall have delivered to the Administrative Agent an officer's
certificate and an opinion of counsel, each stating that such merger
or consolidation and such supplement to this Agreement, the Guarantee,
the Security Agreement and the Pledge Agreement and such amendment to
or restatement of such Mortgage comply with this Agreement, provided
further that if the foregoing are satisfied, the Successor Borrower
(if other than the Borrower) will succeed to, and be substituted for,
the Borrower under this Agreement;
(ii) any Subsidiary of the Borrower or any other Person may be
merged or consolidated with any one or more other Subsidiaries of the
Borrower, provided that (i) no Default or Event of Default would
result from such merger or consolidation, (ii) in the case of any
merger or consolidation involving one or more Restricted Subsidiaries,
a Restricted Subsidiary shall be the continuing or surviving entity,
(iii) in the case of any merger or consolidation involving one or more
Guarantors, a Guarantor shall be the continuing or surviving entity,
(iv) in the case of any merger or consolidation involving one or more
Subsidiary Grantors, a Subsidiary Grantor shall be the continuing or
surviving entity, (v) in the case of any merger or consolidation
involving one or more Subsidiary Pledgors, a Subsidiary Pledgor shall
be the continuing or surviving entity, and (vi) in the case of any
merger or consolidation involving one or more Mortgagors, a Mortgagor
shall be the continuing or surviving entity;
(iii) any Restricted Subsidiary that is not a Guarantor may sell,
lease, transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower, a Guarantor or
any other Restricted Subsidiary of the Borrower;
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(iv) any Guarantor may sell, lease, transfer or otherwise dispose
of any or all of its assets (upon voluntary liquidation or otherwise)
to the Borrower or any other Guarantor;
(v) any Closing Date Securitization Subsidiary may sell, lease,
transfer or otherwise dispose of any or all of its assets to the
extent permitted by the terms of the Closing Date Securitization
Documentation;
(vi) Mini-Skools may sell, lease, transfer or otherwise dispose
of any or all of its real property interests (including, subject to
Section 9.14(c), any Mortgaged Property owned by it) to any newly
created Domestic Subsidiary; and
(vii) the Borrower and any of the Restricted Subsidiary may enter
into any transaction permitted by the terms of Section 10.4, Section
10.5 or Section 10.6.
(b) No Closing Date Securitization Subsidiary will engage in any
business or business activity other than the activities contemplated by the
Closing Date Securitization Documentation (to the extent not otherwise
prohibited or restricted by the terms hereof), its obligations under the
Security Documents and its existence. The Closing Date Securitization
Subsidiaries will not own or acquire any assets (other than the Centers subject
to the Closing Date Securitization) or incur any liabilities (other than the
liabilities imposed by law including tax liabilities, and other liabilities
related to its existence and permitted business and activities specified in the
immediately preceding sentence, including liabilities arising under the Closing
Date Securitization and the Security Documents). The Borrower shall cause the
Closing Date Securitization Subsidiaries to remain Restricted Subsidiaries at
all times.
10.4. Limitation on Sale of Assets. Subject to Section 9.14(c), the
Borrower will not, and will not permit any of the Restricted Subsidiaries to,
(i) convey, sell, lease, assign, transfer or otherwise dispose of any of its
property, business or assets (including receivables and leasehold interests),
whether now owned or hereafter acquired (other than any such sale, transfer,
assignment or other disposition resulting from any casualty or condemnation, of
any assets of the Borrower or the Restricted Subsidiaries) or (ii) sell any
shares owned by it of any Restricted Subsidiary's capital stock to any Person
except that:
(a) the Borrower and the Restricted Subsidiaries may sell, transfer or
otherwise dispose of used or surplus equipment, vehicles, inventory and other
assets in the ordinary course of business;
(b) the Borrower and the Restricted Subsidiaries may sell, transfer or
otherwise dispose of other assets for fair value, provided that (i) the
aggregate amount of such sales, transfers and disposals by the Borrower and the
Restricted Subsidiaries taken as a whole pursuant to this clause (b) shall not
exceed in the aggregate $175,000,000 during the term of this Agreement, (ii) any
consideration in excess of $5,000,000 received by the Borrower or any Restricted
Subsidiary (other than an Acquisition Subsidiary or a Real Estate Financing
Entity) in connection with such sales, transfers and other dispositions of
assets pursuant to this clause (b) that is in the form of Indebtedness shall be
pledged to the Administrative Agent pursuant to the Pledge Agreement, (iii) with
respect to any such sale, transfer or disposition (or series of related sales,
72
transfers or dispositions) in an aggregate amount in excess of $10,000,000, the
Borrower shall be in compliance, on a pro forma basis after giving effect to
such sale, transfer or disposition, with the covenants set forth in Sections
10.9 and 10.10, as such covenants are recomputed as at the last day of the most
recently ended Test Period under such Sections as if such sale, transfer or
disposition had occurred on the first day of such Test Period, and (iv) after
giving effect to any such sale, transfer or disposition, no Default or Event of
Default shall have occurred and be continuing;
(c) the Borrower and the Restricted Subsidiaries may make sales of
assets for fair value to the Borrower or to any Restricted Subsidiary;
(d) any Restricted Subsidiary may effect any transaction permitted by
Section 10.3;
(e) the Borrower and the Restricted Subsidiaries may sell or discount
without recourse accounts receivable arising in the ordinary course of business
in connection with the compromise or collection thereof;
(f) the Borrower and the Restricted Subsidiaries may sell, transfer or
otherwise dispose of Centers in connection with Real Estate Financings;
(g) the Closing Date Securitization Subsidiaries may sell, transfer or
otherwise dispose of assets to the extent permitted by the terms of the Closing
Date Securitization Documentation; and
(h) (x) the Borrower and any Restricted Subsidiary (other than a
Restricted Foreign Subsidiary) may transfer capital stock in any Restricted
Subsidiary to the Borrower or any Restricted Subsidiary that is a party to the
Pledge Agreement and (y) any Restricted Foreign Subsidiary may transfer capital
stock in any Restricted Subsidiary to the Borrower, any Restricted Subsidiary
that is a party to the Pledge Agreement or any other Restricted Foreign
Subsidiary.
10.5. Limitation on Investments. The Borrower will not, and will not
permit any of the Restricted Subsidiaries to, make any advance, loan, extensions
of credit or capital contribution to, or purchase any stock, bonds, notes,
debentures or other securities of or any assets of, or make any other investment
in, any Person, except:
(a) extensions of trade credit and asset purchases in the ordinary
course of business;
(b) Permitted Investments;
(c) loans and advances to officers, directors and employees of the
Borrower or any of its Subsidiaries (i) to finance the purchase of capital stock
of the Borrower and (ii) for additional purposes not contemplated by subclause
(i) above in an aggregate principal amount at any time outstanding with respect
to this clause (ii) not exceeding $7,500,000;
(d) investments existing on the date hereof and any extensions,
renewals or reinvestments thereof, so long as the aggregate amount of all
investments pursuant to this clause (d) is not increased at any time above the
amount of such investments existing on the date hereof;
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(e) investments in Hedge Agreements permitted by Section 10.1(h);
(f) investments received in connection with the bankruptcy or
reorganization of suppliers or customers and in settlement of delinquent
obligations of, and other disputes with, customers arising in the ordinary
course of business;
(g) investments payment for which is made solely with capital stock of
the Borrower;
(h) investments constituting non-cash proceeds of sales, transfers and
other dispositions of assets to the extent permitted by Section 10.4;
(i) investments in any Guarantor;
(j) investments constituting Permitted Acquisitions, provided that the
aggregate amount of any such investment made by the Borrower or any Restricted
Subsidiary (other than any Acquisition Subsidiary) in any Acquisition Subsidiary
shall not exceed the Available Amount at the time of such investment, provided
further that the aggregate amount of any such investment made by the Borrower or
any Restricted Subsidiary (other than any Restricted Foreign Subsidiary) in any
Restricted Foreign Subsidiary shall not exceed (i) the Available Foreign
Investment Amount at the time of such investment minus (ii) the portion of the
Available Foreign Investment Amount being used at such time for investments made
pursuant to clause (o) below;
(k) investments in any Restricted Foreign Subsidiary, provided that
the aggregate amount of any such investment made by the Borrower or any
Restricted Subsidiary (other than any Restricted Foreign Subsidiary) shall not
exceed (i) the Available Foreign Investment Amount at the time of such
investment minus (ii) the portion of the Available Foreign Investment Amount
being used at such time for investments made pursuant to clause (o) below;
(l) investments made to pay for the repurchase, retirement or other
acquisition of the Remaining Public Equity in an aggregate amount at the time of
such investment not in excess of the lesser of (i) the Available Amount at such
time and (ii) the aggregate amount of such investments then permitted to be made
under the Subordinated Note Indenture;
(m) investments made in any Real Estate Financing Entity (other than
the Closing Date Securitization Subsidiaries) in connection with Real Estate
Financings (other than the Closing Date Securitization);
(n) investments made in any Closing Date Securitization Subsidiary in
connection with the Closing Date Securitization; and
(o) additional investments (including investments in Minority
Investments, Unrestricted Subsidiaries and Acquisition Subsidiaries) in an
aggregate amount at the time of such investment not in excess of the sum of (i)
the Available Amount at such time and (ii) the amount equal to (x) one-half of
the Available Foreign Investment Amount at such time minus (y) the amount at
such time by which the sum of the amounts referred to in clause (b) of the
definition of the term "Available Amount" exceeds the sum of the amounts
referred to in clause (a) of such definition.
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10.6. Limitation on Dividends. The Borrower will not declare or pay
any dividends (other than dividends payable solely in its capital stock or
rights, warrants or options to purchase its capital stock) or return any capital
to its stockholders or make any other distribution, payment or delivery of
property or cash to its stockholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for consideration, any shares of any
class of its capital stock now or hereafter outstanding (or any warrants for or
options or stock appreciation rights in respect of any of such shares), or set
aside any funds for any of the foregoing purposes (other than, in each case, in
connection with an investment permitted by Section 10.5), or permit any of the
Restricted Subsidiaries to purchase or otherwise acquire for consideration any
shares of any class of the capital stock of the Borrower, now or hereafter
outstanding (or any warrants for or options or stock appreciation rights in
respect of such shares) (all of the foregoing "Dividends"), provided that, so
long as no Default or Event of Default exists or would exist after giving effect
thereto, (a) the Borrower may redeem in whole or in part any capital stock of
the Borrower for another class of capital stock or rights to acquire capital
stock of the Borrower, provided that such other class of capital stock contains
terms and provisions at least as advantageous to the Lenders as those contained
in the capital stock redeemed thereby, (b) the Borrower may repurchase shares of
its capital stock (and/or warrants for or options or stock appreciation rights
in respect thereof) held by its officers, directors and employees so long as
such repurchase is pursuant to, and in accordance with the terms of, management
and/or employee stock plans, stock subscription agreements or shareholder
agreements and (c) the Borrower may declare and pay dividends on its capital
stock, provided that (i) the aggregate amount of dividends paid pursuant to this
clause (c) shall not at any time exceed the sum of (A) $30,000,000 plus (B) 50%
of Cumulative Consolidated Net Income Available to Common Stockholders at such
time and (ii) at the time of the payment of any such dividends and after giving
effect thereto, the Consolidated Total Debt to Consolidated EBITDA Ratio on the
date of such payment of such dividends shall be less than 3.00:1.00.
10.7. Limitation on Debt Payments and Amendments. (a) The Borrower
will not, and will not permit any of the Restricted Subsidiaries to, optionally
prepay, repurchase or redeem or otherwise defease any Subordinated Indebtedness;
provided, however, that so long as no Default or Event of Default has occurred
and is continuing or would result therefrom, the Borrower may, subject to
Section 5.2(b), optionally prepay, repurchase or redeem Subordinated
Indebtedness on any date in an amount equal to (i) the sum of (A) the Available
Amount in effect at such date, (B) an amount equal to the net proceeds of all
Permitted Sale-Leasebacks completed after the Closing Date and prior to such
date and (C) the Excess Closing Date Securitization Proceeds minus (ii) without
duplication of amounts that reduce the Available Amount pursuant to the terms of
the definition of Available Amount, the sum of (x) the aggregate price paid by
the Borrower in connection with any prepayment, repurchase or redemption of
Subordinated Indebtedness (or applied to the prepayment of (A) Revolving Credit
Loans, (B) Swingline Loans and (C) Unpaid Drawings in accordance with Section
5.2(b) in lieu thereof) after the Closing Date and prior to such date and (y)
the net proceeds of such Permitted Sale Leasebacks completed after the Closing
Date and prior to such date used for other purposes.
(b) Subject to the following sentence, the Borrower will not waive,
amend, modify, terminate or release the Subordinated Note Indenture or any
Closing Date Securitization Documentation, to the extent that any such waiver,
amendment, supplement, modification, termination or release would be adverse to
the Lenders in any material respect.
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10.8. Limitation on Sale Leasebacks. The Borrower will not, and will
not permit any of the Restricted Subsidiaries to, enter into or effect any Sale
Leasebacks of Centers, other than Permitted Sale Leasebacks.
10.9. Consolidated Total Debt to Consolidated EBITDA Ratio. The
Borrower will not permit the Consolidated Total Debt to Consolidated EBITDA
Ratio for any Test Period ending during any period set forth below to be greater
than the ratio set forth below opposite such period:
Period Ratio
------ -----
Closing Date through fourth
quarter of fiscal year 2003 5.50 to 1.00
Fiscal year 2004 5.25 to 1.00
Fiscal year 2005 4.75 to 1.00
Fiscal year 2006 4.25 to 1.00
Fiscal year 2007 3.75 to 1.00
Fiscal year 2008 through
Revolving Credit Maturity Date 3.25 to 1.00
10.10. Consolidated EBITDA Plus Consolidated Lease Expense to
Consolidated Interest Expense Plus Consolidated Lease Expense Ratio. The
Borrower will not permit the Consolidated EBITDA Plus Consolidated Lease Expense
to Consolidated Interest Expense Plus Consolidated Lease Expense Ratio for any
Test Period ending during any period set forth below to be less than the ratio
set forth below opposite such period:
Period Ratio
------ -----
Closing Date through fiscal
year 2005 1.40 to 1.00
Fiscal year 2006 1.45 to 1.00
Fiscal year 2007 1.50 to 1.00
Fiscal year 2008 through Revolving
Credit Maturity Date 1.60 to 1.00
10.11. Capital Expenditures. The Borrower will not, and will not
permit any of the Restricted Subsidiaries, to make any Capital Expenditures
(other than Permitted Acquisitions that constitute Capital Expenditures) that
would cause the aggregate amount of all Capital Expenditures made by the
Borrower and the Restricted Subsidiaries in any fiscal year of the Borrower set
forth below to exceed the amount set forth below opposite such fiscal year:
Fiscal Year Amount
----------- ------
2003 $110,000,000
2004 $110,000,000
2005 $115,000,000
2006 $120,000,000
2007 $125,000,000
2008 $130,000,000
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To the extent that Capital Expenditures made by the Borrower and the Restricted
Subsidiaries during any fiscal year are less than the maximum amount permitted
to be made for such fiscal year, 75% of such unused amount (each such amount, a
"carry-forward amount") may be carried forward to the immediately succeeding
fiscal year and utilized to make Capital Expenditures in such succeeding fiscal
year in the event the amount set forth above for such succeeding fiscal year has
been used (it being understood and agreed that (a) no carry-forward amount may
be carried forward beyond the first three fiscal years immediately succeeding
the fiscal year in which it arose, (b) no portion of the carry-forward amount
available for any fiscal year may be used until the entire amount of Capital
Expenditures permitted to be made in such fiscal year (without giving effect to
such carry-forward amount) shall be made and (c) if the carry-forward amount
available for any fiscal year is the sum of amounts carried forward from each of
the two or three immediately preceding fiscal years, no portion of such
carry-forward amount from the earlier of the two or three immediately preceding
fiscal years may be used until the entire portion of such carry-forward amount
from the more recent immediately preceding fiscal year shall have been used for
Capital Expenditures made in such fiscal year).
SECTION 11. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
11.1. Payments. The Borrower shall (a) default in the payment when due
of any principal of the Loans or (b) default, and such default shall continue
for five or more days, in the payment when due of any interest on the Loans or
any Fees or any Unpaid Drawings or of any other amounts owing hereunder or under
any other Credit Document; or
11.2. Representations, etc. Any representation, warranty or statement
made or deemed made by any Credit Party herein or in any Security Document or
any certificate delivered or required to be delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made; or
11.3. Covenants. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 9.1(f), 9.14(c) or Section 10 or (b) default in the due performance or
observance by it of any term, covenant or agreement (other than those referred
to in Section 11.1 or 11.2 or clause (a) of this Section 11.3) contained in this
Agreement or in any Security Document and such default shall continue unremedied
for a period of at least 30 days after receipt of written notice by the Borrower
from the Administrative Agent or the Required Lenders; or
11.4. Default Under Other Agreements. (a) The Borrower or any of the
Restricted Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) in excess of $12,500,000 in the
aggregate for the Borrower and such Subsidiaries beyond the period of grace, if
any, provided in the instrument or agreement under which such Indebtedness was
created or (ii) default in the observance or performance of any agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or (except in the case of
Indebtedness consisting of any Hedge Agreement) any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness (or a
77
trustee or agent on behalf of such holder or holders) to cause, any such
Indebtedness to become due prior to its stated maturity; or (b) without limiting
the provisions of clause (a) above, any such Indebtedness (other than
Indebtedness consisting of any Hedge Agreement) shall be declared to be due and
payable, or required to be prepaid other than by a regularly scheduled required
prepayment or as a mandatory prepayment, prior to the stated maturity thereof;
or
11.5. Bankruptcy, etc. The Borrower or any Specified Subsidiary shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against the
Borrower or any Specified Subsidiary and the petition is not controverted within
10 days after commencement of the case; or an involuntary case is commenced
against the Borrower or any Specified Subsidiary and the petition is not
dismissed within 60 days after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of the Borrower or any Specified Subsidiary;
or the Borrower or any Specified Subsidiary commences any other proceeding under
any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Borrower or any Specified
Subsidiary; or there is commenced against the Borrower or any Specified
Subsidiary any such proceeding that remains undismissed for a period of 60 days;
or the Borrower or any Specified Subsidiary is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Borrower or any Specified Subsidiary suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or the
Borrower or any Specified Subsidiary makes a general assignment for the benefit
of creditors; or any corporate action is taken by the Borrower or any Specified
Subsidiary for the purpose of effecting any of the foregoing; or
11.6. ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof or a waiver of such standard
or extension of any amortization period is sought or granted under Section 412
of the Code; any Plan is or shall have been terminated or is the subject of
termination proceedings under ERISA (including the giving of written notice
thereof); an event shall have occurred or a condition shall exist in either case
entitling the PBGC to terminate any Plan or to appoint a trustee to administer
any Plan (including the giving of written notice thereof); any Plan shall have
an accumulated funding deficiency (whether or not waived); the Borrower or any
Subsidiary or any ERISA Affiliate has incurred or is likely to incur a liability
to or on account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063,
4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code (including
the giving of written notice thereof); (b) there could result from any event or
events set forth in clause (a) of this Section 11.6 the imposition of a lien,
the granting of a security interest, or a liability, or the reasonable
likelihood of incurring a lien, security interest or liability; and (c) such
lien, security interest or liability will or would be reasonably likely to have
a Material Adverse Effect; or
11.7. Guarantee. The Guarantee or any material provision thereof shall
cease to be in full force or effect or any Guarantor thereunder or any Credit
Party shall deny or disaffirm in writing any Guarantor's obligations under the
Guarantee; or
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11.8. Pledge Agreement. The Pledge Agreement or any material provision
thereof shall cease to be in full force or effect (other than pursuant to the
terms hereof or thereof or as a result of acts or omissions of the
Administrative Agent or any Lender) or any pledgor thereunder or any Credit
Party shall deny or disaffirm in writing any pledgor's obligations under the
Pledge Agreement; or
11.9. Security Agreement. The Security Agreement or any material
provision thereof shall cease to be in full force or effect (other than pursuant
to the terms hereof or thereof or as a result of acts or omissions of the
Administrative Agent or any Lender) or any grantor thereunder or any Credit
Party shall deny or disaffirm in writing any grantor's obligations under the
Security Agreement; or
11.10. Mortgages. Mortgages (or any material provision thereof) over a
material portion of the Collateral shall cease to be in full force or effect
(other than pursuant to the terms hereof or thereof or as a result of acts or
omissions of the Administrative Agent or any Lender) or the Mortgagors
thereunder or any Credit Party shall deny or disaffirm in writing any
Mortgagor's obligations under such Mortgages; or
11.11. Judgments. One or more judgments or decrees shall be entered
against the Borrower or any of the Restricted Subsidiaries involving a liability
of $12,500,000 or more in the aggregate for all such judgments and decrees for
the Borrower and the Restricted Subsidiaries (to the extent not paid or fully
covered by insurance provided by a carrier not disputing coverage) and any such
judgments or decrees shall not have been vacated, discharged or stayed or bonded
pending appeal within 60 days from the entry thereof; or
11.12. Change of Control. A Change of Control shall occur;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Lenders, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against the Borrower,
except as otherwise specifically provided for in this Agreement (provided that,
if an Event of Default specified in Section 11.5 shall occur with respect to the
Borrower or any Specified Subsidiary, the result that would occur upon the
giving of written notice by the Administrative Agent as specified in clauses
(i), (ii) and (iv) below shall occur automatically without the giving of any
such notice): (i) declare the Total Revolving Credit Commitment terminated,
whereupon the Revolving Credit Commitment and Swingline Commitment, if any, of
each Lender or the Swingline Lender, as the case may be, shall forthwith
terminate immediately and any Fees theretofore accrued shall forthwith become
due and payable without any other notice of any kind; (ii) declare the principal
of and any accrued interest in respect of all Loans and all Obligations owing
hereunder and thereunder to be, whereupon the same shall become, forthwith due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; (iii) terminate any Letter of
Credit that may be terminated in accordance with its terms; and/or (iv) direct
the Borrower to pay (and the Borrower agrees that upon receipt of such notice,
or upon the occurrence of an Event of Default specified in Section 11.5 with
respect to the Borrower or any Specified Subsidiary, it will pay) to the
Administrative Agent at the Administrative Agent's Office such additional
amounts of cash, to be held as security for the Borrower's reimbursement
obligations for
79
Drawings that may subsequently occur thereunder, equal to the aggregate Stated
Amount of all Letters of Credit issued and then outstanding.
SECTION 12. The Administrative Agent.
12.1. Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Credit Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Credit Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Credit Document or
otherwise exist against the Administrative Agent.
12.2. Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement and the other Credit Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
12.3. Exculpatory Provisions. Neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (a) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Credit
Document (except for its or such Person's own gross negligence or willful
misconduct) or (b) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
other Credit Party or any officer thereof contained in this Agreement or any
other Credit Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under or
in connection with, this Agreement or any other Credit Document or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Credit Document or for any failure of the Borrower
or any other Credit Party to perform its obligations hereunder or thereunder.
The Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Credit
Document, or to inspect the properties, books or records of the Borrower.
12.4. Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including
counsel to the Borrower), independent accountants and other experts selected by
the Administrative Agent. The Administrative Agent may deem and treat the Lender
specified in the Register with respect to
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any amount owing hereunder as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Credit Document unless it shall first receive such advice or concurrence
of the Required Lenders as it deems appropriate or it shall first be indemnified
to its satisfaction by the Lenders against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Credit
Documents in accordance with a request of the Required Lenders, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Loans.
12.5. Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders, provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
12.6. Non-Reliance on Administrative Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
the Borrower or any other Credit Party, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and any other
Credit Party and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Credit Documents, and to
make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower and any other Credit Party. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, assets, operations, properties, financial
condition, prospects or creditworthiness of the Borrower or any other Credit
Party that may come into the possession of the Administrative Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
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12.7. Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective portions of the Total Revolving Credit
Commitment in effect on the date on which indemnification is sought (or, if
indemnification is sought after the date upon which the Revolving Credit
Commitments shall have terminated and the Loans shall have been paid in full,
ratably in accordance with their respective portions of the Total Revolving
Credit Commitment in effect immediately prior to such date), from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever that
may at any time (including at any time following the payment of the Loans) be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of, the Revolving Credit Commitments, this Agreement,
any of the other Credit Documents or any documents contemplated by or referred
to herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Administrative Agent under or in connection with
any of the foregoing, provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct. The agreements in
this Section 12.7 shall survive the payment of the Loans and all other amounts
payable hereunder.
12.8. Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower and any other
Credit Party as though the Administrative Agent were not the Administrative
Agent hereunder and under the other Credit Documents. With respect to the Loans
made by it, the Administrative Agent shall have the same rights and powers under
this Agreement and the other Credit Documents as any Lender and may exercise the
same as though it were not the Administrative Agent, and the terms "Lender" and
"Lenders" shall include the Administrative Agent in its individual capacity.
12.9. Successor Agent. The Administrative Agent may resign as
Administrative Agent upon 20 days' prior written notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Credit Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be approved by the Borrower (which approval shall not be
unreasonably withheld), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 12 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Credit Documents.
SECTION 13. Miscellaneous.
13.1. Amendments and Waivers. Neither this Agreement nor any other
Credit Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in
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accordance with the provisions of this Section 13.1. The Required Lenders may,
or, with the written consent of the Required Lenders, the Administrative Agent
may, from time to time, (a) enter into with the relevant Credit Party or Credit
Parties written amendments, supplements or modifications hereto and to the other
Credit Documents for the purpose of adding any provisions to this Agreement or
the other Credit Documents or changing in any manner the rights of the Lenders
or of the Borrower hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement or
the other Credit Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall directly (i) forgive any portion of any Loan or
extend the final scheduled maturity date of any Loan or reduce the stated rate,
or forgive any portion, or extend the date for the payment, of any interest or
fee payable hereunder (other than as a result of waiving the applicability of
any post-default increase in interest rates) or extend the final expiration date
of any Lender's Revolving Credit Commitment or extend the final expiration date
of any Letter of Credit beyond the L/C Maturity Date or increase the aggregate
amount of the Revolving Credit Commitments of any Lender, in each case without
the written consent of each Lender directly and adversely affected thereby, or
(ii) amend, modify or waive any provision of this Section 13.1 or reduce the
percentages specified in the definitions of the terms "Required Lenders", or
consent to the assignment or transfer by the Borrower of its rights and
obligations under any Credit Document to which it is a party (except as
permitted pursuant to Section 10.3), in each case without the written consent of
each Lender directly and adversely affected thereby, or (iii) amend, modify or
waive any provision of Section 12 without the written consent of the
then-current Administrative Agent, or (iv) amend, modify or waive any provision
of Section 3 without the written consent of the Letter of Credit Issuer, or (v)
amend, modify or waive any provisions hereof relating to Swingline Loans without
the written consent of the Swingline Lender, (vi) amend, modify or waive any
provision of Section 13.6(f) without the written consent of any SPC previously
identified in writing by a Granting Lender to the Administrative Agent in
accordance with Section 13.6(f) with Loans outstanding at the time of such
amendment, modification or waiver or (vii) except to the extent permitted under
the applicable Credit Document, release all or substantially all the Collateral
under the Pledge Agreement, the Security Agreement and the Mortgages or release
all or substantially all the Guarantors under the Guarantee, in each case
without the written consent of each Lender directly and adversely affected
thereby. Any such waiver and any such amendment, supplement or modification
shall apply equally to each of the affected Lenders and shall be binding upon
the Borrower, such Lenders, the Administrative Agent and all future holders of
the affected Loans. In the case of any waiver, the Borrower, the Lenders and the
Administrative Agent shall be restored to their former positions and rights
hereunder and under the other Credit Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing, it being
understood that no such waiver shall extend to any subsequent or other Default
or Event of Default or impair any right consequent thereon.
13.2. Notices; Method of Delivery. (a) All notices, requests and
demands to or upon the respective parties hereto to be effective shall be in
writing (including by facsimile transmission), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered,
or three days after being deposited in the mail, postage prepaid, or, in the
case of telecopy notice, when received, addressed as follows in the case of the
Borrower, the Administrative Agent and the Swingline Lender, and as set forth on
Schedule 1.1(c) in the case of
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the other parties hereto, or to such other address as may be hereafter notified
by the respective parties hereto:
The Borrower: KinderCare Learning Centers, Inc.
000 XX Xxxxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Attention: Xxx Xxxxxxxxx, Esq.
Fax: (000) 000-0000
with a copy to:
KinderCare Learning Centers, Inc.
In care of Kohlberg Kravis
Xxxxxxx & Co., L.P.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Fax: (000) 000-0000
The Administrative Agent: Citicorp North America, Inc.
Xxx Xxxxx Xxx, Xxxxx 000
Xxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx-Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Eivind Hegelstad
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
The Swingline Lender: Citicorp North America, Inc.
Xxx Xxxxx Xxx, Xxxxx 000
Xxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx-Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
The Letter of Credit Issuer Citibank, N.A.
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
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Attention: Eivind Hegelstad
Tel: (000) 000-0000
Fax: (000) 000-0000
with copy to
Xxxxxxxx Xxxxx-Xxxxxxxx
Xxx Xxxxx Xxx, Xxxxx 000
Xxx Xxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Sections 2.3, 2.6, 2.9, 4.2 and 5.1 shall not be
effective until received.
(b) So long as Citibank North America, Inc. or any of its Affiliates
is the Administrative Agent, the Borrower will use commercially reasonably
efforts to deliver any materials required to be delivered pursuant to Section
9.1 (and any other information required to be delivered to the Administrative
Agent for distribution to the Lenders pursuant to the terms of the Credit
Documents) in an electronic medium to the Administrative Agent and, if
necessary, the Lenders by email at xxxxxxxxxxxxxxx@xxxxxxxxx.xxx. The Borrower
agrees that the Administrative Agent may make such materials, as well as any
other written information, documents, instruments and other material relating to
the Borrower, any of its Subsidiaries or any other materials or matters relating
to this Agreement, the other Credit Documents, the Notes or any of the
transactions contemplated hereby or thereby (collectively, the "Communications")
available to the Lenders by posting such notices on "e-Disclosure" (the
"Platform"), the Administrative Agent's internet delivery system that is part of
the Administrative Agent's primary web portal. Although the primary web portal
is secured with a dual firewall and a user ID/password authorization system and
the Platform is secured through a single user per deal authorization method
whereby each user may access the Platform only on a deal-by-deal basis, the
Borrower acknowledges that (i) the distribution of material through an
electronic medium is not necessarily secure and that there are confidentiality
and other risks associated with such distribution, (ii) the Platform is provided
"as is" and "as available" and (iii) neither the Administrative Agent nor any of
its Affiliates warrants the accuracy, adequacy or completeness of the
Communications or the Platform and each expressly disclaims liability for errors
or omissions in the Communications or the Platform. No warranty of any kind,
express, implied or statutory, including any warranty of merchantability,
fitness for a particular purpose, non-infringement of third party rights or
freedom from viruses or other code defects, is made by the Administrative Agent
or any of its Affiliates in connection with the Platform. The Administrative
Agent acknowledges that it or its Affiliates have taken and shall continue to
take all security measures and actions that it deems to be reasonably necessary
or appropriate in view of currently available technology. The Administrative
Agent further agrees that it will require each user of the Platform to agree to
a contractual obligation of confidentiality prior to gaining access to the
Platform. Failure by the Borrower to comply with any of the requirements of this
paragraph shall not in any way constitute a violation of the Borrower's
agreements and covenants set forth in this Agreement and shall not constitute a
Default or an Event
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of Default hereunder or give rise to any right for the Administrative Agent
and/or the Lenders to exercise any rights or remedies under the Credit
Documents.
Each Lender agrees that notice to it (as provided in the next
sentence) (a "Notice") specifying that any Communications have been posted to
the Platform shall constitute effective delivery of such information, documents
or other materials to such Lender for purposes of this Agreement, provided that
if requested by any Lender the Administrative Agent shall deliver a copy of the
Communications to such Lender by email or telecopier. Each Lender agrees (i) to
notify the Administrative Agent in writing of such Lender's e-mail address to
which a Notice may be sent by electronic transmission (including by electronic
communication) on or before the date such Lender becomes a party to this
Agreement (and from time to time thereafter to ensure that the Administrative
Agent has on record an effective e-mail address for such Lender) and (ii) that
any Notice may be sent to such e-mail address.
13.3. No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Credit Documents
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder or thereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. A waiver by the Administrative Agent or any Lender of any right,
remedy, power or privilege hereunder on any one occasion shall not be construed
as a bar to any right or remedy that the Administrative Agent or any Lender
would otherwise have on any future occasion. The rights, remedies, powers and
privileges herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights, remedies, powers and
privileges provided by law.
13.4. Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Credit Documents and in any
document, certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement and the
making of the Loans hereunder.
13.5. Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse each Agent and each Arranger for all of their respective reasonable
and documented out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Credit Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including
the reasonable fees, disbursements and other charges of one lead counsel to the
Agents and the Arrangers and of local counsel (which local counsel shall be
agreed upon between the Arrangers and the Borrower), (b) to pay or reimburse
each Lender, each Arranger and each Agent for all its reasonable and documented
costs and expenses incurred in connection with the enforcement or preservation
of any rights under this Agreement, the other Credit Documents and any such
other documents, including the reasonable fees, disbursements and other charges
of counsel to each Lender, of counsel to each Arranger and of counsel to each
Agent, (c) to pay, indemnify, and hold harmless each Lender, each Arranger and
each Agent from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other similar taxes (including mortgage recording taxes and similar
fees), if any, that may be payable or determined to be payable in connection
with the execution and delivery of, or
86
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Credit Documents and any such other
documents, and (d) to pay, indemnify, and hold harmless each Lender, each
Arranger and each Agent and their respective directors, officers, employees,
trustees and agents from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever, including reasonable and
documented fees, disbursements and other charges of counsel, with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Credit Documents and any such other documents, including
any of the foregoing relating to the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of the
Borrower, any of its Subsidiaries or any of the property (including the
Mortgaged Properties) currently or formerly owned or operated by the Borrower or
any of its Subsidiaries, including any actual or alleged presence or release of
Hazardous Materials on or from any such property (all the foregoing in this
clause (d), collectively, the "indemnified liabilities"), provided that the
Borrower shall have no obligation hereunder to any Agent, any Arranger or any
Lender nor any of their respective directors, officers, employees, trustees and
agents with respect to indemnified liabilities arising from (i) the gross
negligence or willful misconduct of the party to be indemnified or (ii) disputes
among the Agents, the Arrangers, the Lenders and/or their transferees. The
agreements in this Section 13.5 shall survive repayment of the Loans and all
other amounts payable hereunder.
13.6. Successors and Assigns; Participations and Assignments. (a) (i)
This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Lenders, the Agents and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Lender.
(ii) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing to such
Lender, any Revolving Credit Commitment of such Lender or any other interest of
such Lender hereunder and under the other Credit Documents. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Credit Documents, and the
Borrower and the Administrative Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Credit Documents. In no event shall any Participant
under any such participation have any right to approve any amendment or waiver
of any provision of any Credit Document, or any consent to any departure by any
Credit Party therefrom, except to the extent that such amendment, waiver or
consent would directly forgive any principal of any Loan or reduce the stated
rate, or forgive any portion, or postpone the date for the payment, of any
interest or fee payable hereunder (other than as a result of waiving the
applicability of any post-default increase in interest rates), or increase the
aggregate amount of the Revolving Credit Commitments of any Lender or postpone
the date of the final scheduled maturity of any Loan, in each case to the extent
subject to such participation. The Borrower agrees that if amounts outstanding
under this Agreement are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the
87
right of setoff in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement, provided that, in
purchasing such participating interest, such Participant shall be deemed to have
agreed to share with the Lenders the proceeds thereof as provided in Section
13.8 as fully as if it were a Lender hereunder. The Borrower also agrees that
each Participant shall be entitled to the benefits of Sections 2.10 and 2.11
with respect to its participation in the Revolving Credit Commitments and the
Loans outstanding from time to time as if it were a Lender, provided that no
Participant shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(iii) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time and from time to time assign, with
notice thereof to the Borrower and the Administrative Agent, to any Lender or
any Lender Affiliate (with the consent of the Borrower if any increased costs
would result therefrom) thereof or, with the consent of the Borrower and the
Administrative Agent (which in each case shall not be unreasonably withheld, it
being understood that, without limitation, the Borrower shall have the right to
withhold its consent to any assignment if (i) in order for such assignment to
comply with applicable law, the Borrower would be required to obtain the consent
of, or make any filing or registration with, any Governmental Authority and/or
(ii) after giving effect to such assignment, 50% or more of the Total Revolving
Credit Commitments would be held by Lenders (including the proposed Assignee (as
defined below)) who are not, on such date, Qualified Transferees (as determined
by the Borrower)) to an additional bank, fund or other financial institution (an
"Assignee") all or any part of its rights and obligations under this Agreement
and the other Credit Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit I, executed by such Assignee, such
assigning Lender (and, in the case of an Assignee that is not then a Lender or
an Affiliate thereof, by the Borrower and the Administrative Agent) and
delivered to the Administrative Agent for its acceptance and recording in the
Register, provided that, except in the case of an assignment of all of a
Lender's interests under this Agreement, unless otherwise agreed to by the
Borrower and the Administrative Agent, no such assignment to an Assignee (other
than any Lender or any Affiliate thereof) shall be in an aggregate principal
amount of less than $5,000,000. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Revolving Credit Commitment as set
forth therein and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of Sections 2.10, 2.11, 3.5, 5.4
and 13.5). Notwithstanding any provision of this Agreement to the contrary, the
consent of the Borrower shall not be required for any assignment that occurs at
any time when any of the events described in Section 11.5 shall have occurred
and be continuing with respect to the Borrower.
(b) Nothing herein shall prohibit any Lender from pledging or
assigning all or any portion of its Loans to any Federal Reserve Bank in
accordance with applicable law (and, for
88
the avoidance of doubt, no Lender need obtain the consent of the Borrower or the
Administrative Agent in connection therewith). In order to facilitate such
pledge or assignment, the Borrower hereby agrees that, upon request of any
Lender at any time and from time to time after the Borrower has made its initial
borrowing hereunder, the Borrower shall provide to such Lender, at the
Borrower's own expense, a promissory note, substantially in the form of Exhibit
J, as the case may be, evidencing the Revolving Credit Loans, respectively,
owing to such Lender.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent referred to in Section 13.2
a copy of each Assignment and Acceptance delivered to it and a register (the
"Register") for the recordation of the names and addresses of the Lenders and
the Revolving Credit Commitment of, and principal amount of the Loans owing to,
each Lender from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Administrative Agent and
the Lenders shall treat each Person whose name is recorded in the Register as
the owner of a Loan or other obligation hereunder as the owner thereof for all
purposes of this Agreement and the other Credit Documents, notwithstanding any
notice to the contrary. Any assignment of any Loan or other obligation hereunder
shall be effective only upon appropriate entries with respect thereto being made
in the Register. The Register shall be available for inspection by the Borrower
or any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) (i) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an Affiliate thereof, by the Borrower and the Administrative
Agent) together with payment to the Administrative Agent of a registration and
processing fee of $3,500, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders party thereto and
the Borrower.
(e) Subject to Section 13.16, the Borrower authorizes each Lender to
disclose to any Participant or Assignee (each, a "Transferee") and any
prospective Transferee any and all financial information in such Lender's
possession concerning the Borrower and its Affiliates that has been delivered to
such Lender by or on behalf of the Borrower pursuant to this Agreement or which
has been delivered to such Lender by or on behalf of the Borrower in connection
with such Lender's credit evaluation of the Borrower and its Affiliates prior to
becoming a party to this Agreement, provided that neither the Administrative
Agent nor any Lender shall provide to any Transferee or prospective Transferee
any of the Confidential Information unless such person shall have previously
executed a Confidentiality Agreement in the form of Exhibit K.
(f) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (a
"SPC"), identified as such in writing from time to time by a Granting Lender to
the Administrative Agent and the Borrower, the option to provide to the Borrower
all or any part of any Loan that such Granting Lender would otherwise be
obligated to make to the Borrower pursuant to this Agreement, provided that (i)
nothing herein shall constitute a commitment by any SPC to make any Loan and
(ii) if a SPC elects not to exercise such option or otherwise fails to provide
all or any part of such Loan, the Granting Lender shall be obligated to make
such Loan pursuant to the terms hereof. The making of a Loan by a SPC hereunder
shall utilize the Revolving Credit Commitment of the Granting Lender
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to the same extent, and as if, such Loan were made by such Granting Lender. Each
party hereto hereby agrees that no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which shall
remain with the Granting Lender). In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this Section 13.6, any SPC may (i) with notice to, but without the prior
written consent of, the Borrower and the Administrative Agent and without paying
any processing fee therefor, assign all or a portion of its interests in any
Loans to the Granting Lender or to any financial institutions (consented to by
the Borrower and Administrative Agent) providing liquidity and/or credit support
to or for the account of such SPC to support the funding or maintenance of Loans
and (ii) disclose on a confidential basis any non-public information relating to
its Loans to any rating agency, commercial paper dealer or provider of any
surety, guarantee or credit or liquidity enhancement to such SPC. In the event
that the consent of all or any portion of the Lenders is required pursuant to
any provision of any Credit Document (other than pursuant to clause (vi) to the
proviso to Section 13.1) at a time when any Loan is held by any SPC (or any
assignee of any SPC), the Granting Lender that would otherwise have been
obligated to make such Loan shall remain exclusively entitled to grant or
withhold any consent applicable to such Loan, the SPC (or the assignee of such
SPC) holding such Loan shall not be entitled to grant or withhold any consent
applicable to such Loan and the other parties to the Credit Documents shall rely
exclusively on the instructions of the Granting Lender as to the granting or
withholding of any consent applicable to such Loan.
13.7. Replacements of Lenders under Certain Circumstances. The
Borrower shall be permitted to replace any Lender that (a) requests
reimbursement for amounts owing pursuant to Section 2.10, 2.12, 3.5 or 5.4, (b)
is affected in the manner described in Section 2.10(a)(iii) and as a result
thereof any of the actions described in such Section is required to be taken or
(c) becomes a Defaulting Lender, with a replacement bank or other financial
institution, provided that (i) such replacement does not conflict with any
Requirement of Law, (ii) no Event of Default shall have occurred and be
continuing at the time of such replacement, (iii) the Borrower shall repay (or
the replacement bank or institution shall purchase, at par) all Loans and other
amounts (other than any disputed amounts), pursuant to Section 2.10, 2.11, 2.12,
3.5 or 5.4, as the case may be) owing to such replaced Lender prior to the date
of replacement, (iv) the replacement bank or institution, if not already a
Lender, and the terms and conditions of such replacement, shall be reasonably
satisfactory to the Administrative Agent, (v) the replaced Lender shall be
obligated to make such replacement in accordance with the provisions of Section
13.6 (provided that the Borrower shall be obligated to pay the registration and
processing fee referred to therein) and (vi) any such replacement shall not be
deemed to be a waiver of any rights that the Borrower, the Administrative Agent
or any other Lender shall have against the replaced Lender.
13.8. Adjustments; Set-off. (a) If any Lender (a "benefited Lender")
shall at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 11.5, or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's
90
Loans, or interest thereon, such benefited Lender shall purchase for cash from
the other Lenders a participating interest in such portion of each such other
Lender's Loan, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefited Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefited Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.
(b) After the occurrence and during the continuance of an Event of
Default, in addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and application
made by such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
13.9. Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile or other electronic transmission), and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall be lodged with
the Borrower and the Administrative Agent.
13.10. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13.11. Integration. This Agreement and the other Credit Documents
represent the agreement of the Borrower, the Agents and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by any Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other
Credit Documents.
13.12. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
13.13. Submission to Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
91
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, any other Credit Documents to which it is
a party or any Letter of Credit, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of America for
the Southern District of New York and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 13.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section 13.13 any special, exemplary, punitive or consequential damages.
13.14. Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Credit Documents;
(b) none of the Agents or any Lender has any fiduciary relationship
with or duty to the Borrower arising out of or in connection with this Agreement
or any of the other Credit Documents, and the relationship between Agents and
Lenders, on one hand, and the Borrower, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Borrower and the Lenders.
13.15. WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR ANY
LETTER OF CREDIT AND FOR ANY COUNTERCLAIM THEREIN.
13.16. Confidentiality. Each Agent and each Lender shall hold all
non-public information furnished by or on behalf of the Borrower in connection
with such Lender's evaluation of whether to become a Lender hereunder or
obtained by such Lender or any Agent pursuant to the requirements of this
Agreement ("Confidential Information"), in accordance with its customary
procedure for handling confidential information of this nature and (in the case
of a Lender that is a
92
bank) in accordance with safe and sound banking practices and in any event may
make disclosure as required or requested by any governmental agency or
representative thereof or pursuant to legal process or to such Lender's or
Agent's attorneys, professional advisors or independent auditors, provided that
unless specifically prohibited by applicable law or court order, each Lender and
each Agent shall notify the Borrower of any request by any governmental agency
or representative thereof (other than any such request in connection with an
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information, and provided further that in no event shall any Lender or any
Agent be obligated or required to return any materials furnished by the Borrower
or any Subsidiary of the Borrower. Each Lender and each Agent agrees that it
will not provide to prospective Transferees or to prospective direct or indirect
contractual counterparties in swap agreements to be entered into in connection
with Loans made hereunder any of the Confidential Information unless such Person
shall have previously executed a Confidentiality Agreement in the form of
Exhibit K.
Notwithstanding anything express or implied to the contrary herein or
by the documents referred to or incorporated by reference herein, or any other
prior or future oral or written statements by any parties hereto with respect to
the transactions contemplated herein or by the other Credit Documents, and
whether or not any of them are legally binding, the obligations of
confidentiality contained herein and therein, as they relate to the transactions
contemplated by this Agreement, shall not apply to the tax structure or tax
treatment of such transactions, and each recipient (and its employees,
representatives, or other agents) may immediately disclose to any and all
persons, without limitation of any kind, the U.S. Federal income tax structure
and the U.S. Federal income tax treatment of such transactions and any opinions
or other tax analyses that have been provided by the parties hereto (or any
agent thereof) to the recipient regarding such tax structure or tax treatment.
However, no such recipient shall disclose any information relating to such tax
structure or tax treatment to the extent that non-disclosure is reasonably
necessary to comply with applicable securities laws. This paragraph is intended
to cause the transactions contemplated by this Agreement not to be treated as
having been offered under conditions of confidentiality for purposes of Section
1.6011-4(b)(3) (or any successor provision) of the Treasury regulations
promulgated under Section 6011 of the Internal Revenue Code of 1986, as amended,
and shall be construed in a manner consistent with such purpose.
93
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
KINDERCARE LEARNING CENTERS, INC.,
by /s/ XXX X. XXXXXXXXX
---------------------------------
Name: Xxx X. Xxxxxxxxx
Title: Senior Vice President
and General Counsel
CITIBANK, N.A.,
as Letter of Credit Issuer,
by /s/ XXXXXX X. XXXXX
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director & VP
CITICORP NORTH AMERICA, INC.,
as Administrative Agent
and as a Lender,
by /s/ XXXXXX X. XXXXX
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director & VP
94
SIGNATURE PAGE TO THE REVOLVING CREDIT
AGREEMENT dated as of July 2003, among
KINDERCARE LEARNING CENTERS, INC., a
Delaware corporation, the lending
institutions from time to time parties
hereto, CITIBANK, N.A., as Letter of
Credit Issuer, CITICORP NORTH AMERICA,
INC., as Administrative Agent, CREDIT
SUISSE FIRST BOSTON, acting through its
Cayman Islands Branch, as Syndication
Agent, and UBS AG, CAYMAN ISLANDS BRANCH,
as Documentation Agent.
CREDIT SUISSE FIRST BOSTON, acting
through its Cayman Islands Branch,
as Syndication Agent and as a
Lender,
By /s/ XXX XXXXX
------------------------------
Name: Xxx Xxxxx
Title: Director
By /s/ XXXXXXXXX XXXXXXX
------------------------------
Name: Xxxxxxxxx Xxxxxxx
Title: Associate
95
SIGNATURE PAGE TO THE REVOLVING CREDIT
AGREEMENT dated as of July 2003, among
KINDERCARE LEARNING CENTERS, INC., a
Delaware corporation, the lending
institutions from time to time parties
hereto, CITIBANK, N.A., as Letter of
Credit Issuer, CITICORP NORTH AMERICA,
INC., as Administrative Agent, CREDIT
SUISSE FIRST BOSTON, acting through its
Cayman Islands Branch, as Syndication
Agent, and UBS AG, CAYMAN ISLANDS BRANCH,
as Documentation Agent.
UBS AG, CAYMAN ISLANDS BRANCH, as
a Lender,
By /s/ XXXXXXXX X'XXXXX
------------------------------
Name: Xxxxxxxx X'Xxxxx
Title: Director
By /s/ XXXX XXXXXX
------------------------------
Name: Xxxx Xxxxxx
Title: Associate Director
96
SIGNATURE PAGE TO THE REVOLVING CREDIT
AGREEMENT dated as of July 2003, among
KINDERCARE LEARNING CENTERS, INC., a
Delaware corporation, the lending
institutions from time to time parties
hereto, CITIBANK, N.A., as Letter of
Credit Issuer, CITICORP NORTH AMERICA,
INC., as Administrative Agent, CREDIT
SUISSE FIRST BOSTON, acting through its
Cayman Islands Branch, as Syndication
Agent, and UBS AG, CAYMAN ISLANDS BRANCH,
as Documentation Agent.
BANK OF AMERICA, N.A.,
By /s/ XXXXXX XXXXXXXXX
------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Managing Director
97
SIGNATURE PAGE TO THE REVOLVING CREDIT
AGREEMENT dated as of July 2003, among
KINDERCARE LEARNING CENTERS, INC., a
Delaware corporation, the lending
institutions from time to time parties
hereto, CITIBANK, N.A., as Letter of
Credit Issuer, CITICORP NORTH AMERICA,
INC., as Administrative Agent, CREDIT
SUISSE FIRST BOSTON, acting through its
Cayman Islands Branch, as Syndication
Agent, and UBS AG, CAYMAN ISLANDS BRANCH,
as Documentation Agent.
CIBC INC.,
By /s/ XXXXXX XXXXXX
------------------------------
Name: Xxxxxx Xxxxxx
Title: Executive Director
CIBC World Markets
Corp. as Agent
98
SIGNATURE PAGE TO THE REVOLVING CREDIT
AGREEMENT dated as of July 2003, among
KINDERCARE LEARNING CENTERS, INC., a
Delaware corporation, the lending
institutions from time to time parties
hereto, CITIBANK, N.A., as Letter of
Credit Issuer, CITICORP NORTH AMERICA,
INC., as Administrative Agent, CREDIT
SUISSE FIRST BOSTON, acting through its
Cayman Islands Branch, as Syndication
Agent, and UBS AG, CAYMAN ISLANDS BRANCH,
as Documentation Agent.
U.S. BANK NATIONAL ASSOCIATION,
By /s/ XXXXX X. XXXX
------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
99
Schedules and Exhibits Omitted
