EXHIBIT 4.1
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
by and among
EDUCATION MANAGEMENT CORPORATION
as the Borrower
THE BANKS PARTY HERETO
as the Banks
and
NATIONAL CITY BANK OF PENNSYLVANIA,
as the Agent
and
WACHOVIA BANK, NATIONAL ASSOCIATION, as Syndication Agent
SUNTRUST BANK, as Syndication Agent
FLEET NATIONAL BANK, as Documentation Agent
and
JPMORGAN CHASE BANK, as Documentation Agent
August 18, 2003
TABLE OF CONTENTS
Page
----
INDEX OF EXHIBITS..........................................................................v
INDEX OF SCHEDULES........................................................................vi
ARTICLE I. DEFINITIONS.....................................................................2
1.1 Defined Terms...................................................................2
1.2 GAAP Definitions...............................................................19
1.3 Other Definitional Conventions.................................................19
1.4 Headings.......................................................................20
ARTICLE II. THE CREDIT....................................................................20
2.1 Revolving Credit Loans.........................................................20
2.2 Swing Loans; Supplemental Swing Loans..........................................24
2.3 Letters of Credit..............................................................29
2.4 Term Loan Subfacility..........................................................35
2.5 Certain Provisions Relating to Interest Rates..................................38
2.6 Yield Protection and Reimbursement.............................................43
2.7 Capital Adequacy...............................................................45
2.8 [Intentionally Omitted.].......................................................46
2.9 Lending Offices................................................................46
2.10 Time, Place and Manner of Payments.............................................46
2.11 Payment From Accounts Maintained by the Borrower...............................46
2.12 Swing Loan Settlement Date Procedures..........................................46
2.13 Substitution of a Bank.........................................................47
ARTICLE III. SECURITY; SET-OFF............................................................47
3.1 Security Interests; Mortgages..................................................47
3.2 Set-Off........................................................................48
ARTICLE IV. REPRESENTATIONS AND WARRANTIES................................................48
4.1 Existence......................................................................48
4.2 Authority......................................................................49
4.3 Capitalization of Subsidiaries.................................................49
4.4 Validity and Enforceability....................................................49
4.5 No Conflict....................................................................49
4.6 Consents.......................................................................50
4.7 Litigation.....................................................................50
4.8 Compliance With Applicable Laws, etc...........................................50
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4.9 Financial Statements...........................................................50
4.10 Environmental Matters..........................................................50
4.11 Deferred Compensation Plans....................................................51
4.12 Title to Properties............................................................52
4.13 Intellectual Property..........................................................52
4.14 Tax Returns and Payments.......................................................53
4.15 Material Adverse Change........................................................53
4.16 Solvency.......................................................................53
4.17 Investment Company Act.........................................................53
4.18 Public Utility Holding Company Act.............................................54
4.19 Liens and Security Interests...................................................54
4.20 Margin Stock...................................................................54
4.21 Updates to Schedules...........................................................54
4.22 Disclosure.....................................................................54
4.23 Use of Proceeds................................................................55
4.24 Insurance......................................................................55
4.25 Material Contracts; Burdensome Restrictions....................................55
4.26 Employment Matters.............................................................55
4.27 Senior Debt Status.............................................................56
ARTICLE V. AFFIRMATIVE COVENANTS..........................................................56
5.1 Use of Proceeds................................................................56
5.2 Furnishing Information.........................................................56
5.3 Preservation of Existence......................................................60
5.4 Payment of Taxes and Fees......................................................60
5.5 Notice of Change of Business...................................................60
5.6 Hazard and Casualty Insurance..................................................60
5.7 Good Repair....................................................................61
5.8 Corporate Records..............................................................61
5.9 Inspection of Records and Properties...........................................61
5.10 Continued Ownership of Active Subsidiaries.....................................61
5.11 Compliance With Laws...........................................................61
5.12 Further Assurances.............................................................62
5.13 Liens and Security Interests...................................................62
5.14 Good Standing Certificates.....................................................63
ARTICLE VI. NEGATIVE COVENANTS............................................................63
6.1 Maintenance of Ratio of Total Funded Debt to EBITDA............................63
6.2 [Intentionally Omitted]........................................................63
6.3 Net Worth......................................................................63
6.4 Fixed Charge Coverage Ratio....................................................63
6.5 Disposal of Assets.............................................................63
6.6 Permitted Indebtedness.........................................................64
6.7 Prohibition on Encumbrances....................................................65
6.8 Advance of Funds and Investments...............................................67
6.9 Dividend and Redemption Restrictions...........................................68
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6.10 Merger.........................................................................68
6.11 Regulations X, T and U Compliance..............................................69
6.12 Cohort Default Rates...........................................................69
6.13 Permitted Acquisitions.........................................................69
6.14 Change Fiscal Year.............................................................70
6.15 Change of Business.............................................................71
6.16 Amendment to Purchase Agreement................................................71
6.17 Affiliate Transactions.........................................................71
6.18 Prepayment of Indebtedness.....................................................71
ARTICLE VII. CONDITIONS PRECEDENT.........................................................71
7.1 All Revolving Credit Loan, Term Loans, Swing Loan, Supplemental Swing Loan
and All Letters of Credit...................................................71
7.2 Conditions Precedent to the Initial Revolving Credit Disbursement and the
Issuance of the Initial Letter of Credit....................................72
ARTICLE VIII. EVENTS OF DEFAULT...........................................................75
8.1 Payment Default................................................................75
8.2 Cross Defaults.................................................................75
8.3 Insolvency.....................................................................75
8.4 Dissolution....................................................................76
8.5 Adverse Judgments..............................................................76
8.6 Failure to Comply With Certain Covenants.......................................76
8.7 Failure to Comply With Other Covenants.........................................76
8.8 Material Adverse Change........................................................76
8.9 Misrepresentation..............................................................76
8.10 Change of Control..............................................................76
8.11 Events Relating to Plans or Benefit Arrangements...............................77
8.12 Consequences of an Event of Default............................................77
ARTICLE IX. AGREEMENT AMONG BANKS.........................................................78
9.1 Appointment and Grant of Authority.............................................78
9.2 Non-Reliance on Agent..........................................................78
9.3 Responsibility of Agent and Other Matters......................................79
9.4 Action on Instructions.........................................................80
9.5 Action in Event of Default.....................................................80
9.6 Indemnification................................................................80
9.7 Agent's Rights as a Bank.......................................................81
9.8 Advances by Agent..............................................................81
9.9 Payment to Banks...............................................................81
9.10 Pro Rata Sharing...............................................................82
9.11 Successor Agent................................................................82
ARTICLE X. MISCELLANEOUS..................................................................82
10.1 Amendments and Waivers........................................................82
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10.2 Notices.......................................................................84
10.3 Holiday Payments..............................................................85
10.4 Tax Withholding...............................................................85
10.5 Survival......................................................................86
10.6 Costs.........................................................................86
10.7 Certain Taxes.................................................................87
10.8 Successors, Assigns and Participations........................................87
10.9 Confidentiality...............................................................89
10.10 Indemnification...............................................................90
10.11 Integration...................................................................91
10.12 Severability..................................................................91
10.13 APPLICABLE LAW................................................................91
10.14 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.................................91
10.15 Counterparts..................................................................92
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INDEX OF EXHIBITS
Exhibit Designation Exhibit Name
------------------- ------------
Exhibit "A" Form of Revolving Credit Note
Exhibit "B" Form of Swing Loan Note
Exhibit "C" Form of Request for Revolving Credit
Loan/Advance of Term Loan/Swing Loan/Supplemental Swing
Loan
Exhibit "D" [Intentionally Omitted]
Exhibit "E" Form of Supplemental Swing Loan Note
Exhibit "F" [Intentionally Omitted]
Exhibit "G" Form of Form of Bank Joinder
Exhibit "H" Form of Pledge Agreement
Exhibit "I" [Intentionally Omitted]
Exhibit "J" Form of Mortgage and Security Agreement
Exhibit "K" Form of Compliance Certificate
Exhibit "L" Form of Opinion of Counsel to
Borrower
Exhibit "M" Form of Assignment and Assumption
Agreement
Exhibit "N" Form of Borrower Agreement of Guaranty and Suretyship
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INDEX OF SCHEDULES
1.1 Commitments of Banks
2.3 Letters of Credit Under Existing Credit Agreement
4.1 Active Subsidiaries
4.3 Ownership of Stock; Rights or Options
4.7 Litigation
4.10 Environmental Matters
4.11 Deferred Compensation Plans
4.12 Owned Real Property
4.13 Intellectual Property
6.6 Permitted Existing Indebtedness of the Borrower
6.7 Permitted Existing Encumbrances
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This Second Amended and Restated Credit Agreement is dated as of
August 18, 2003 by and among EDUCATION MANAGEMENT CORPORATION, a Pennsylvania
corporation (the "Borrower"), the FINANCIAL INSTITUTIONS listed on Schedule 1.1
hereto and each other financial institution which, from time to time, becomes a
party hereto in accordance with Sections 2.1(j) or 10.8 (individually, a "Bank"
and collectively the "Banks"), and NATIONAL CITY BANK OF PENNSYLVANIA, as the
Agent for the Banks and the Issuing Bank (the "Agent") WACHOVIA BANK, NATIONAL
BANK, as Syndication Agent, SUNTRUST BANK, as Syndication Agent, FLEET NATIONAL
BANK, as Documentation Agent, and JPMORGAN CHASE BANK, as Documentation Agent.
WITNESSETH:
WHEREAS, the Borrower and certain of the Banks are parties to that
certain Amended and Restated Credit Agreement dated as of September 20, 2001, as
amended (the "Existing Credit Agreement") pursuant to which the Banks made
available to the Borrower a revolving credit facility in the aggregate principal
amount of $150,000,000, with such revolving credit facility containing
sub-facilities for (i) the issuance of standby letters of credit in an aggregate
amount not to exceed $35,000,000, (ii) a swing line of credit of up to
$10,000,000 in the aggregate at any one time outstanding and (iii) a
supplemental swing line of credit in the aggregate amount of up to $30,000,000
at any one time outstanding. The Existing Credit Agreement also contained a term
loan in the amount of $50,000,000;
WHEREAS, the Borrower has entered into certain acquisition agreements
pursuant to which the Borrower contemplates the acquisition of certain other
Persons in businesses similar to the Subsidiaries of the Borrower by acquiring
the stock of such other Persons, acquiring the assets of such Person, or merging
such other Persons with and into a wholly owned Subsidiary of the Borrower;
WHEREAS, the Borrower has requested the Banks to increase the
revolving credit facility to $250,000,000, with such revolving credit facility
to contain sub-facilities for (i) the issuance of standby and commercial letters
of credit in an aggregate amount not to exceed (a) $150,000,000 from the Closing
Date to September 30, 2003 and (b) $75,000,000 from and after September 30,
2003, (ii) a swing line of credit of up to $15,000,000 in the aggregate at any
one time outstanding, (iii) a supplemental swing line of credit of up to
$30,000,000 in the aggregate at any one time outstanding and (iv) a term loan
sublimit in the amount of $125,000,000; and
WHEREAS, the Banks are willing to provide such credit upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of mutual promises contained herein
and other valuable consideration and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I. DEFINITIONS
1.1 Defined Terms.
As used herein, the following terms shall have the meaning specified unless
the context otherwise requires:
"Accredited Subsidiary" means each Subsidiary which is accredited or
approved, as applicable, by accrediting agencies, including but not limited to
the Accrediting Commission of Career Schools and Colleges of Technology, the
National Association of Trade and Technical Schools, the American Bar
Association, the Southern Association of Colleges and Schools, the North Central
Association of Colleges and Schools or any other similar Person which accredits,
certifies, or otherwise approves proprietary post-secondary vocational or career
training schools or schools offering associate, bachelor, masters or doctorate
degrees.
"Acquiring Person" means any Person or group of two or more Persons acting
as a partnership, limited partnership, syndicate, or other group for the purpose
of acquiring, holding or disposing of voting stock of the Borrower, together
with all affiliates and associates (as defined in Rule 12b-2 under the
Securities and Exchange Act of 1934, as amended) of such Person or Persons.
"Active Subsidiary" means individually, and "Active Subsidiaries" shall
mean collectively, (i) each Subsidiary of the Borrower shown on Schedule 4.1
hereof as being an Active Subsidiary as of the Closing Date and (ii) each other
Subsidiary of the Borrower which at any time in the future (A) becomes an
Accredited Subsidiary or (B) has revenues (on a consolidated basis) of $300,000
or more in any Fiscal Year.
"AEC" means American Education Centers, Inc. a Delaware corporation.
"AEC Purchase Agreement" means that Stock Purchase Agreement dated as of
June 24, 2003among Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx
Living Trust, Xxxxxxx X. Xxxxxx III Living Trust, Xxxxx Xxxxxxxx Living Trust,
Xxxxxxx Xxxxx, Xxxxxx Xxxxxx, Technology Leaders L.P., a Delaware limited
partnership, Technology Leaders First Corp., a British Virgin Islands
corporation; J. Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxx Xxxxx; American Education
Centers, Inc., a Delaware corporation, Xxxxx Xxxxxx Education Corporation, a
Delaware corporation, Commonwealth Business College Education Corporation, a
Delaware corporation, Xxxxx School of Business Education Corporation, a Delaware
corporation, Xxxxxxxxxxxxxx College Education Corporation, a Delaware
corporation, and Michiana College Education Corporation, a Delaware corporation;
Xxxxxxx X. Xxxxxx, in his capacity as the Sellers' representative; and Borrower.
"Affiliate" means, as to any Person, any second Person which, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such Person. For purposes of this definition, the
terms "control", "controlled by", and "under common control with" shall mean the
possession of the power to direct or cause the direction of the management and
policies of any Person, whether through the ownership of shares, by contract or
otherwise.
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"Agent" means National City Bank of Pennsylvania, or any successor agent,
in its capacity as the administrative agent for the Banks and the Issuing Banks
under this Credit Agreement and the other Loan Documents.
"Agent's Fee" means fees payable to the Agent, for its own account, for
arranging and administering the Credit Facility as described in the Agent's
Letter (i.e. all fees payable under such letter, except for the Closing Fee).
"Agent's Letter" means that certain fee letter dated August 15, 2003,
between the Borrower and the Agent.
"Applicable Base Rate Margin" shall have the meaning ascribed to it in
Subsection 2.5(b) hereof.
"Applicable Eurodollar Rate Margin" shall have the meaning ascribed to it
in Subsection 2.5(b) hereof.
"Applicable Money Market Rate Margin" shall have the meaning ascribed to it
in Subsection 2.5(b) hereof.
"Argosy" means Argosy Education Group, Inc., an Illinois corporation.
"Article" means an article of this Credit Agreement unless another document
is specifically referenced.
"Assignment and Assumption Agreement" means an Assignment and Assumption
Agreement substantially in the form of Exhibit "M" hereto by and among a
Purchasing Bank, a Transferor Bank and the Agent, on behalf of itself and the
remaining Banks, and consented to by the Borrower to the extent required by
Section 10.8.
"Authorized Officer" means Chairman, Chief Executive Officer, President,
Vice President, Chief Financial Officer, Treasurer, Controller or Assistant
Treasurer of any Person. The Agent, the Banks and the Issuing Banks shall be
entitled to rely on the incumbency certificates delivered pursuant to Section
7.2 for the initial designation of each Authorized Officer of the Borrower.
Additions or deletions to the list of Authorized Officers may be made by the
Borrower, at any time, by delivering to the Agent, for redelivery to the Banks
and the Issuing Banks, a revised fully-executed incumbency certificate for the
Borrower.
"Availability Period" shall mean the period from and including the Closing
Date to but excluding the Repayment Date.
"Banks" shall mean collectively, and "Bank" shall mean separately, the
financial institutions named on Schedule 1.1, National City Bank and, unless the
context clearly requires otherwise, and the Issuing Banks, together with their
respective successors and assigns.
"Bank Indebtedness" means the liability of the Borrower, as of any date of
determination, without duplication, to pay the Commitment Fee, the Agent's Fee,
the Letter of Credit Fees, the Issuance Fee, the outstanding principal amount of
the Revolving Credit Loans, the Swing Loans,
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the Supplemental Swing Loans, the Term Loan and any draws upon any Letter of
Credit, interest thereon, any other amounts due pursuant to Article II hereof,
all obligations under the Guaranty Agreement, all obligations to Banks and
Affiliates of Banks under interest rate agreements permitted under Section
6.6(xi) and all reasonable out-of-pocket expenses incurred by the Banks or the
Agent in connection with the preparation, negotiation, administration,
enforcement of this Credit Agreement, the Revolving Credit Notes, the Swing Loan
Note, the Supplemental Swing Loan Notes, the other Loan Documents, the
transactions contemplated thereby, or the protection of the Agent's, the Banks'
or any Issuing Bank's rights under any of the foregoing described instruments
(including but not limited to the reasonable fees and expenses of counsel) to
the extent such expenses are the responsibility of the Borrower pursuant to this
Credit Agreement.
"Bank Joinder" means a joinder substantially in the form of Exhibit "G"
hereto.
"Base Net Worth" shall mean the sum of 85% of Net Worth as of the Fiscal
Year ended June 30, 2003 plus 50% of consolidated net income of the Borrower and
its Subsidiaries for each Fiscal Quarter in which net income was earned (as
opposed to a net loss) during the period from July 1, 2003 through the date of
determination.
"Base Rate" means, as of any date of determination, a rate of interest per
annum equal to the higher of (i) the Prime Rate, as of such date of
determination, or (ii) the sum of (A) the Federal Funds Rate plus (B) one-half
of one percent (0.5%) per annum, as of such date of determination. Such interest
rate shall change automatically from time to time, effective as of the effective
date of each change in the Prime Rate or the Federal Funds Rate.
"Base Rate Loan" means any of the Loans bearing interest at a rate
determined on the basis of the Base Rate.
"Base Rate Option" means the interest rate option described in item (i) of
Subsection 2.5(b) hereof.
"Benefit Arrangement" means an "employee benefit plan" within the meaning
of Section 3(3) of ERISA, which is not a Plan or a Multiemployer Plan and which
is maintained, or otherwise contributed to, by any Person for the benefit of
employees of such Person or an ERISA Affiliate thereof.
"Borrower" means Education Management Corporation, a corporation organized
and existing under the laws of the Commonwealth of Pennsylvania and having its
principal office at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
00000.
"Borrowing Date" means, with respect to any Loan, the date for the making
thereof or the renewal or conversion thereof at or to the same or a different
Option, which shall be a Business Day.
"Business Day" means (i) with respect to any borrowing or payment on,
renewal of or conversion to a Eurodollar Rate Loan, any day other than (a) a
Saturday or Sunday, (b) a day on which commercial banks in Pittsburgh,
Pennsylvania are required or authorized by law to close and (c) a day on which
dealings are not carried on in the London interbank market; and (ii) for
4
all other purposes, any day other than (a) a Saturday or Sunday or (b) a day on
which commercial banks in Pittsburgh, Pennsylvania are required or authorized by
law to close.
"Capital Adequacy Event" shall have the meaning ascribed to such term in
Section 2.7
"Capital Compensation Amount" shall have the meaning ascribed to such term
in Section 2.7.
"Capital Expenditures" means the total capital expenditures of the Borrower
and its Subsidiaries excluding (i) capital expenditures of the Borrower and its
Subsidiaries which are classified as leasehold improvements on the books and
records of the Borrower, (ii) capital expenditures of the Borrower and its
Subsidiaries related to expansion projects or new programs, and (iii) capital
expenditures related to Subsidiaries of the Borrower that were recently acquired
or incorporated (and have commenced operations) by the Borrower as of the time
at which the Fixed Charges are calculated, as follows:
-----------------------------------------------------------------------------------------------
Dates upon which Fixed Charges are Capital expenditures of Subsidiaries acquired or
Calculated: incorporated after the following dates are excluded:
-----------------------------------------------------------------------------------------------
September 30, 2003 through June 30, 2004 June 30, 2002
-----------------------------------------------------------------------------------------------
September 30, 2004 through June 30, 2005 June 30, 2003
-----------------------------------------------------------------------------------------------
September 30, 2005 through June 30, 2006 June 30, 2004
-----------------------------------------------------------------------------------------------
September 30, 2006 through June 30, 2007 June 30, 2005
-----------------------------------------------------------------------------------------------
"Capitalized Lease" means, as to any Person, any lease of tangible or
intangible property (whether real, personal or mixed) by such Person as the
lessee under which the obligations of the lessee would be included in
determining total liabilities as shown on the liability side of a balance sheet
of such Person in accordance with GAAP.
"Capitalized Lease Obligations" means, as to any Person and as of any date
of determination, the principal amount of liability of such Person reflecting
the aggregate discounted value of all future payments due under all Capitalized
Leases calculated in accordance with GAAP including, but not limited to
Statement of Financial Accounting Standards No. 13.
"Change of Control" means (i) an Acquiring Person shall have acquired, or
obtained the right to acquire, legal or beneficial ownership of 50% or more of
the outstanding shares of the voting stock of the Borrower; or (ii) the
replacement or resignation (other than by reason of death, illness or
incapacity) within any period of twelve (12) consecutive calendar months, of a
majority of the members of the board of directors of the Borrower (the "Board"),
which results in members of the Board who were in office at the beginning of
such period constituting less than a majority of the members of the Board
(unless such replacement or resignation shall have been
5
effected or initiated by a majority of the members of the board in office at the
beginning of such period or who became members of the board without effectuating
a Change of Control).
"Closing Date" shall mean the Business Day on which the first Loan shall be
made, which shall be August 15, 2003, or, if all the conditions specified in
Section 7.2 have not been satisfied or waived by such date, not later than
August 15, 2003, as designated by the Borrower by at least two (2) Business
Days' advance notice to the Agent, or such other date as the parties agree. The
closing shall take place at 11 A.M., Pittsburgh time, on the Closing Date at the
Pittsburgh, Pennsylvania offices of Xxxxxxxx Ingersoll Professional Corporation,
or at such other time and place as the parties agree.
"Closing Fee" means the fees paid to the Agent under the Agent's Letter
(other than the Agent's underwriting/arrangement fees and administrative fees)
which are allocated to the Banks in accordance with their pro rata share of the
aggregate Commitment Amount.
"Code" means the Internal Revenue Code of 1986, as the same may be amended
from time to time and the regulations and rulings promulgated thereunder,
together with any successor legislation thereto.
"Cohort Default Rate" shall have the meaning ascribed thereto by the DOE in
Title 34, Chapter VI, Part 668, Subpart B, Section 17 of the Code of Federal
Regulations (34 C.F.R. (S) 668.17), as the same may be amended from time to
time.
"Collateral" shall mean the Pledged Collateral and, if Mortgages are
required under Section 3.1, the Real Property.
"Commitment Amount" means, with respect to each Bank, the aggregate dollar
amount of its Revolving Credit Commitment, Swing Loan Commitment and
Supplemental Swing Loan Commitment.
"Commitment Fee" means the fee described in Subsection 2.1(g) of this
Credit Agreement.
"Commitment Percentage" means, with respect to each Bank, the percentage
amount set forth for such Bank under the caption "Percentage Amount" on Schedule
1.1 or in any Assignment and Assumption Agreement executed by such Bank, whether
in the capacity as a Purchasing Bank or a Transferor Bank, as such percentage
amount may be amended from time to time.
"Compliance Certificate" means a compliance certificate substantially in
the form of Exhibit "K" hereto which shall be delivered by the Borrower to the
Agent and to each Bank in accordance with Subsection 5.2(d) hereof.
"Consideration" means with respect to any Permitted Acquisition, the
aggregate of (i) the cash paid by any of the Borrower and the Subsidiaries of
the Borrower, directly or indirectly, to the seller in connection therewith,
exclusive of any earn-out payments made to the seller based upon the performance
of the Person or business acquired after the effective date of the Permitted
Acquisition, (ii) the value of the capital stock or warrants for the issuance of
capital stock of the
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Borrower or any Subsidiary issued to the seller in connection therewith (valued
on the date that a definitive agreement is executed in connection with any
Permitted Acquisition), (iii) the Indebtedness for Borrowed Money incurred or
assumed by any of the Borrower and its Subsidiaries, whether in favor of the
seller or otherwise and whether fixed or contingent, (iv) any Guarantee given or
incurred by the Borrower or any Subsidiary in connection therewith, and (v) any
other consideration given or obligation incurred by the Borrower or any
Subsidiary in connection therewith.
"Consolidated" means the consolidation of the accounts of any two or more
Persons in accordance with GAAP.
"Consolidated Tangible Net Worth" means as of any date of determination
total stockholders' equity less intangible assets of the Borrower and its
Subsidiaries as of such date determined and consolidated in accordance with
GAAP.
"Contamination" means the presence in soil, groundwater or surface water of
Hazardous Substances in sufficient quantity or concentration to require material
investigation, corrective action or remediation under any Environmental Law.
"Controlled Group" means, as to any Person, (i) a controlled group of
corporations as defined in Section 1563 of the Code or (ii) a group of trades or
businesses under common control as defined in Section 414(c) of the Code of
which such Person is a part or may become a part.
"Credit Agreement" means this Credit Agreement together with the exhibits
and schedules hereto and hereof and all extensions, renewals, amendments,
modifications, restatements and replacements hereof and hereto.
"Credit Facility" means the revolving credit facility consisting of the
Revolving Credit Commitment in the aggregate amount of $250,000,000 with a
standby and commercial letter of credit sub-facility in the aggregate amount of
(a) $150,000,000 from the Closing Date to September 30, 2003 and $75,000,000
from and after September 30, 2003 and a Swing Loan sub-facility in an amount of
$15,000,000 and a Supplemental Swing Loan sub-facility in an amount of
$30,000,000 and a Term Loan sub-facility in the aggregate amount of
$125,000,000.
"Default" means an event, condition, act or omission to act which
constitutes a default in the performance or observance of any covenant,
agreement or provision of any Loan Document, which event, condition, act or
omission to act would become or constitute an Event of Default with the passage
of time, the giving of notice or both, and without subsequent cure within any
applicable period of time.
"Disbursement" means the one or more advances of proceeds to the Borrower
made pursuant to Sections 2.1 and 2.2 and 2.4.
"Document" means any document, as that term is defined in the UCC, of any
Person, whether now owned or hereafter acquired or created.
"DOE" means the United States Department of Education or as the context may
require, the United States Secretary of Education, or any successor thereto.
7
"DOL" means the United States Department of Labor or as the context may
require, the United States Secretary of Labor, or any successor thereto.
"Dollars" or "$" means the legal tender of the United States of America.
"EBITDA" means, for any period, on a Consolidated basis, the sum of net
income, depreciation and amortization, other non-cash charges to net income,
interest expense, and income tax expense, minus non-cash credits to net income,
in each case of the Borrower and its Subsidiaries for such period determined and
consolidated in accordance with GAAP.
"Encumbrance" means any encumbrance, mortgage, lien (statutory or other),
charge, pledge, hypothecation, security interest, assignment, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement and any Capitalized Lease having substantially the
same economic effect as any of the foregoing) in, upon or against any asset of
any Person, whether or not voluntarily given.
"Environmental Claim" means any claim, suit, notice, order, demand or other
communication made by any Person, including the Borrower, with respect to the
Borrower, any of its Subsidiaries or any of their respective properties, whether
owned or leased, that: (i) asserts a violation of any Environmental Law; (ii)
asserts a liability under any Environmental Law; (iii) orders an investigation,
corrective action, remediation or other response under any Environmental Law;
(iv) alleges personal injury or property damage resulting from Hazardous
Substances; or (v) alleges that there is or may be Contamination.
"Environmental Law" means any and all statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, grants, franchises,
licenses, agreements or other governmental restrictions issued, promulgated or
granted by any Governmental Person relating to the environment or the release of
any materials into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as the
same may be amended, from time to time, and the rulings and regulations
promulgated thereunder, together with any successor legislation thereto.
"ERISA Affiliate" means, as of any date of determination and as to any
Person, any member of a Controlled Group of which such Person is a member, and
any trade or business (whether or not incorporated) under common control with
such Person, and all other entities which, together with such Person, are or
were treated as a single employer under Section 414 of the Code (which shall
include any Subsidiary of such Person).
"Eurodollar Rate" means, with respect to each Eurodollar Rate Loan, the
rate of interest per annum with respect to any Interest Period obtained by the
Agent by dividing (the resulting quotient rounded upward to the nearest 1/100th
of 1% per annum) (i) the rate of interest determined by the Agent in accordance
with its usual procedures (which determination shall be conclusive, absent
manifest error) to be the average of the London interbank offered rates listed
on the "LIBO" page of the Reuters Monitor Money Rate Service (or an appropriate
successor thereto or, if Reuters or its successor ceases to provide such quotes,
a comparable replacement as determined by the Agent) at 11:00 A.M. (London,
England time) one (1) Business Day prior to
8
the first day of each Interest Period for an amount comparable to the Eurodollar
Rate Loan for such Interest Period and having a Borrowing Date and a maturity
comparable to such Interest Period by (ii) a number (expressed as a decimal)
equal to (A) 1.00 minus (B) the Eurodollar Reserve Percentage, if any. The
Eurodollar Rate described above may also be expressed by the following formula:
Average of London interbank offered rates listed on
Eurodollar Rate = "LIBO" page of Reuters Monitor Money Rate Service
-------------------------------------------------
[1.00 - Eurodollar Reserve Percentage]
"Eurodollar Rate Loans" means any of the Loans bearing interest at a rate
determined on the basis of the Eurodollar Rate.
"Eurodollar Rate Option" means the interest rate option described in item
(ii) of Subsection 2.5(b) hereof.
"Eurodollar Reserve Percentage" means, for any Interest Period, that
percentage (expressed as a decimal), as calculated by the Agent, which is in
effect on the first day of such Interest Period, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirements (including without limitation supplemental,
marginal or emergency reserve requirements) with respect to eurocurrency funding
(currently referred to as "Eurocurrency Liabilities") of a member bank in such
system in an amount comparable to the Eurodollar Rate Loan for such Interest
Period and for a duration comparable to such Interest Period.
"Event of Default" means any event described in Article VIII of this Credit
Agreement.
"Expiration Date" shall have the same meaning as "Repayment Date."
"FDIC" means the Federal Deposit Insurance Corporation or any Person
succeeding to its functions.
"Federal Funds Rate" means, for any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations at approximately 10:00 A.M. (Pittsburgh, Pennsylvania time) on
such day on such transactions received by the Agent from three (3) Federal funds
brokers of recognized standing selected by the Agent in its sole discretion.
"Fiscal Quarter" shall mean each three-month fiscal period of the Borrower
beginning respectively on each successive January 1, April 1, July 1 and October
1 during the term hereof and ending on the immediately succeeding March 31, June
30, September 30 and December 31.
"Fiscal Year" shall mean each annual fiscal period of the Borrower
beginning July 1 and ending on the immediately succeeding June 30.
9
"Fixed Charge Coverage Ratio" shall mean the ratio of EBITDA to
consolidated Fixed Charges.
"Fixed Charges" means for any period of determination the sum of net
interest expense, income taxes, scheduled principal installments on Indebtedness
for Borrowed Money, dividends, Capital Expenditures and payments under
Capitalized Lease Obligations, in each case of the Borrower and its Subsidiaries
determined and consolidated in accordance with GAAP.
"GAAP" shall mean generally accepted United States accounting principles
which shall include, but not be limited to, the official interpretations thereof
as defined by the Financial Accounting Standards Board, its predecessors and its
successors.
"Government Acts" shall have the meaning ascribed to it in Subsection
2.3(g) hereof.
"Governmental Person" means the government of the United States or the
government of any state or locality therein, any political subdivision or any
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body or entity, or other regulatory bureau, authority, body or entity
of the United States or any state or locality therein, including the FDIC, the
Comptroller of the Currency or the Board of Governors of the Federal Reserve
System, any central bank or any comparable authority.
"Governmental Rule" means any law, statute, rule, regulation, ordinance,
order, judgment, guideline or decision of any Governmental Person (including,
without limitation, Governmental Acts).
"Guarantee" means, as to any Person, any obligation, direct or indirect, by
which such Person undertakes to guaranty, assume or remain liable for the
payment or performance of another Person's obligations, including but not
limited to (i) endorsements of negotiable instruments, (ii) discounts with
recourse, (iii) agreements to pay or perform upon a second Person's failure to
pay or perform, (iv) remaining liable on obligations assumed by a second Person,
(v) agreements to maintain the capital, working capital, solvency or general
financial condition of a second Person and (vi) agreements for the purchase or
other acquisition of products, materials, supplies or services, if in any case
payment therefor is to be made regardless of the non-delivery of such products,
materials or supplies or the non-furnishing of such services.
"Guaranty Agreement" shall mean the Agreement of Guaranty and Suretyship in
substantially the form of Exhibit N executed and delivered by the Borrower to
the Agent for the benefit of the Banks.
"Hazardous Substances" means any (i) hazardous, toxic or polluting
substances or wastes as defined by any Environmental Law; (ii) petroleum
products; or (iii) other substances determined to be hazardous in any law
currently in effect or hereafter enacted.
"Indebtedness for Borrowed Money" as applied to any Person means (i) the
direct liabilities of such Person for money borrowed or credit received (other
than trade accounts payable incurred in the ordinary course of business),
whether evidenced by a bond, note, debenture, Capitalized Lease Obligation,
deferred purchase price arrangement, title retention device, reimbursement
agreement or otherwise, including but not limited to any liabilities
10
calculated in accordance with GAAP with respect to any currency swap agreement,
interest rate swap, cap, collar or floor agreement or other interest rate
management device, and (ii) the contingent liabilities of such Person under any
Guarantee (including the amount of any guarantee obligations arising under any
student loan programs) of the liabilities described in clause (i) above.
"Indemnified Party" shall have the meaning ascribed to it in Section 10.10
hereof.
"Interest Period" means any individual Interest Period of one (1), two (2),
three (3) or six (6) months (if available) selected by the Borrower pursuant to
the terms and conditions of Subsection 2.5(c) hereof, commencing on the
Borrowing Date, conversion date or renewal date of a Eurodollar Rate Loan to
which such period shall apply.
"IRS" means the United States Internal Revenue Service or, as the context
may require, the United States Department of Treasury, or any successor thereto.
"Issuance Fee" means the fee described in item (ii) of Subsection 2.3(e)
hereof.
"Issuing Bank" means individually and "Issuing Banks" mean collectively,
the Agent and any other Bank designated by the Agent as an Issuing Bank pursuant
to Section 2.3 hereof, in their capacities as issuers of the Letters of Credit
hereunder.
"Lending Office" means, as to any Bank, its office located at the address
set forth in its administrative questionnaire as its "Lending Office" or such
other office as such Bank may thereafter designate as its "Lending Office" by
notice to the Borrower and the Agent.
"Letter of Credit" means any stand-by or commercial letter of credit issued
by an Issuing Bank pursuant to Section 2.3 hereof and the other terms and
provisions hereof, for the account of the Borrower or for the account of any of
the Borrower's Subsidiaries, provided that the Borrower is a guarantor and
surety thereof, as any such letter of credit may from time to time be amended,
modified, renewed, extended, supplemented or replaced.
"Letter of Credit Exposure" means, at any date of determination, with
respect to each Bank with a Revolving Credit Commitment, such Bank's pro rata
share of the Stated Amount of any Letter of Credit then in effect.
"Letter of Credit Fees" means the fees described in item (i) of Subsection
2.3(e) hereof.
"Loan" means any and, "Loans" mean collectively, the Revolving Credit
Loans, the Swing Loans, the Supplemental Swing Loans and the Term Loans.
"Loan Documents" means this Credit Agreement, the Notes, the Pledge
Agreement, the Mortgages, if any, the Guaranty Agreement, the Agent's Letter,
each Compliance Certificate, each Request for Revolving Credit Loans, each Swing
Loan Request, each Supplemental Swing Loan Request, any application or agreement
for a Letter of Credit and any interest rate protection agreement entered into
between the Borrower and its Subsidiaries and any Bank or any Affiliate of any
Bank as permitted under Section 6.6(xi).
11
"Loan Parties" means the Borrower and each of its Subsidiaries which is a
signatory of any of the Loan Documents.
"Loan Request" shall mean either a Revolving Credit Loan Request, a Swing
Loan Request, a Supplemental Swing Loan Request or a Term Loan Request.
"Margin Stock" means "margin stock" as defined in Regulation U.
"Material Adverse Change" means any circumstance or event which (i) has, or
is substantially likely to have, a material adverse effect upon the validity or
enforceability of this Credit Agreement or any of the other Loan Documents, (ii)
is, or is substantially likely to be, adverse to the business, properties,
assets, financial condition or results of operations of the Borrower and its
Subsidiaries, taken as a whole, and which impairs materially, or could
reasonably be expected to impair materially, the ability of the Borrower to duly
and punctually pay or perform its obligations under the Loan Documents,
including without limitation, the loss of any Title IV funding(s) that is
substantially likely to result in the foregoing or (iii) impairs materially, or
is substantially likely to impair materially, the ability of the Agent or the
Banks, to the extent permitted, to enforce the Agent's or the Banks' legal
remedies pursuant to this Credit Agreement and the other Loan Documents.
"Material Adverse Effect" means an effect that results in or causes or has
a reasonable likelihood of resulting in or causing a Material Adverse Change.
"Material Indebtedness" has the meaning ascribed to that term in Section
8.2.
"Material Subsidiary" means individually, and "Material Subsidiaries" shall
mean collectively (i) any Subsidiary of the Borrower which had annual revenues
equal to or greater than $3,000,000 for the Fiscal Year ended June 30, 2003,
(ii) any Subsidiary of the Borrower not included in the preceding item (i) which
hereafter has annual revenues equal to or greater than $3,000,000 in any Fiscal
Year of the Borrower, and (iii) any Person acquired by the Borrower or any
Subsidiary of the Borrower after the Closing Date which at the time of the
acquisition had annual revenues equal to or greater than $3,000,000 in its most
recent fiscal year or at any time thereafter.
"Money" means all money, as that term is defined in the UCC, of any Person,
whether now owned or hereafter acquired.
"Money Market Rate" shall be an interest rate as from time to time
determined by the Agent as being the sum of the Federal Funds Rate plus 50 basis
points.
"Money Market Rate Loan" means any Loan which bears, or is to bear,
interest under the Money Market Rate Option.
"Money Market Rate Option" means the interest rate option described in item
(iii) of Subsection 2.5(b) hereof.
"Mortgage" shall mean the Mortgage and Security Agreement in substantially
the form of Exhibit "J" with respect to the Real Property which may be, pursuant
to Subsection 3.1 hereof,
12
executed and delivered by the Borrower and any Subsidiary which owns Real
Property to the Agent for the benefit of the Banks.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which any Person is making or accruing an obligation to
make contributions or has within any of the preceding five (5) plan years made
or accrued an obligation to make contributions.
"Multiple Employer Plan" means a Plan which has two or more contributing
sponsors (including the Borrower or any member of the Controlled Group) at least
two of whom are not under common control, as such plan is described in Sections
4063 and 4064 of ERISA.
"National City Bank" means National City Bank of Pennsylvania, together
with its successors and assigns.
"Net Proceeds" means, with respect to the sale, assignment, lease,
sublease, transfer or other disposition of any of the assets of the Borrower or
its Subsidiaries, in any transaction or series of coordinated transactions, the
net after-tax proceeds of any such transaction after (i) taking into account any
adjustments for basis, gain or other adjustment recognized under the Code and
(ii) deducting therefrom any reasonable closing costs paid by the Borrower or
such Subsidiary in connection therewith.
"Net Worth" shall mean as of any date of determination total stockholders'
equity of the Borrower and its Subsidiaries as of such date determined and
consolidated in accordance with GAAP.
"Note" means any and, "Notes" shall mean collectively, all of the Revolving
Credit Notes, the Swing Loan Note, and the Supplemental Swing Loan Notes.
"Option" means either the Base Rate Option, Money Market Rate Option or the
Eurodollar Rate Option.
"Participant" shall mean any financial institution or other Person which
purchases an individual interest in all or any part of the Revolving Credit
Loans, the Term Loans or any particular segment of any Portion thereof.
"Participation" means any sale, made in accordance with the provisions of
Subsection 10.8(d), by any Bank to any Participant of an undivided interest in
all or a part of, such Bank's Revolving Credit Commitment, Revolving Credit
Loans and Term Loan, if any.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions.
"Permitted Acquisition" shall have the meaning set forth in Section 6.13.
"Permitted Encumbrances" shall mean those Encumbrances allowed pursuant to
Section 6.7(a) hereof.
13
"Person" means any individual, partnership, corporation, trust, joint
venture or unincorporated organization and any government or any agency,
political subdivision or department thereof.
"Plan" shall mean any "single employer plan" within the meaning of Section
4001(a)(15) of ERISA established and maintained by the Borrower or any ERISA
Affiliate.
"Pledge Agreement" shall mean the Pledge Agreement in substantially the
form of Exhibit "H" executed and delivered by the Borrower and any Subsidiary
owning capital stock, partnership interests or limited liability company
interests in any of the Material Subsidiaries, to the Agent for the benefit of
the Banks.
"Pledged Collateral" shall mean the property of the Borrower and the
Subsidiaries in which security interests are to be granted under the Pledge
Agreement
"Portion" means, at any time, the aggregate principal amount of the
Revolving Credit Loans and Term Loans outstanding hereunder which bears interest
at a specific interest rate for a specific Interest Period pursuant to a request
for borrowing or a notice of interest rate election.
"Prime Rate" means the interest rate per annum publicly announced from time
to time by the Agent as its prime rate, which rate may not be the lowest
interest rate then being charged commercial borrowers by the Agent.
"Prior Security Interest" shall mean a valid and enforceable perfected
first-priority security interest under the Uniform Commercial Code in the
Pledged Collateral which is junior in its lien priority only to (i) Encumbrances
described in Section 6.7(a)(ii) to the extent such prospective tax payments are
given priority by statute, or (ii) Encumbrances described in Sections
6.7(a)(vii) and(viii).
"Prohibited Transaction" shall mean any one or more of the prohibited
transactions defined under Section 406 of ERISA or Section 4975 of the Code and
which is not exempt as a statutory, individual or class exemption under Section
408 of ERISA or Section 4975 of the Code.
"Proprietary Information" means all non-public information about the
Borrower or any of its Subsidiaries which has been furnished by the Borrower or
any of its Subsidiaries, whether furnished before or after the Closing Date, and
regardless of the manner in which it is furnished.
"Purchasing Bank" means a Bank which becomes a party to this Credit
Agreement by executing an Assignment and Assumption Agreement.
"Real Property" shall mean the real estate owned by the Borrower and the
Subsidiaries set forth on Schedule 4.12, which may, subject to the terms of
Section 3.1, be encumbered by the Mortgages.
"Register" shall have the meaning ascribed to it in Subsection 10.8(c)
hereof.
"Regulations" shall have the meaning ascribed to that term in Section 10.4.
14
"Regulation D" means Regulation D promulgated by the Board of Governors of
the Federal Reserve System (12 C.F.R. Part 204 et seq.), from time to time in
effect and as may hereafter be amended and shall include any successor or other
regulation or official interpretation thereof issued by said Board of Governors.
"Regulation T" means Regulation T promulgated by the Board of Governors of
the Federal Reserve System (12 C.F.R. Part 220 et seq.), from time to time in
effect and as may hereafter be amended and shall include any successor or other
regulation or official interpretation thereof issued by said Board of Governors.
"Regulation U" means Regulation U promulgated by the Board of Governors of
the Federal Reserve System (12 C.F.R. Part 221 et seq.), from time to time in
effect and as may hereafter be amended and shall include any successor or other
regulation or official interpretation thereof issued by said Board of Governors.
"Regulation X" means Regulation X promulgated by the Board of Governors of
the Federal Reserve System (12 C.F.R. Part 224 et seq.), from time to time in
effect and as may hereafter be amended and shall include any successor or other
regulation or official interpretation thereof issued by said Board of Governors.
"Release" means any material spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of
Hazardous Substances into the environment.
"Repayment Date" means August 15, 2008.
"Reportable Event" means any one or more events defined in Section 4043(b)
of ERISA for which the thirty (30) day notice period has not been waived by the
PBGC.
"Request for Revolving Credit Loan" means any written request for a
revolving credit loan executed by the Borrower and delivered to the Agent
substantially in the form of Exhibit "C" to this Credit Agreement.
"Required Banks" means, as of any date of determination:
(i) if there are no Loans(excluding Swing Loans), Letters of
Credit or Letter of Credit reimbursement obligations, Banks whose Revolving
Credit Commitments aggregate at least 51% of the Revolving Credit Commitments of
all of the Banks, or
(ii) if there are Loans (excluding Swing Loans), Letters of
Credit or Letter of Credit reimbursement obligations outstanding, any Bank or
group of Banks if the sum of the Loans (excluding Swing Loans), Letter of Credit
Exposure and Letter of Credit reimbursement obligations of such Banks then
outstanding aggregates at least 51% of the total principal amount of all of the
Loans (excluding Swing Loans), Letter of Credit Exposure and Letter of Credit
reimbursement obligations then outstanding. The Revolving Credit Loans and
Letter of Credit reimbursement obligations shall be deemed, for purposes of this
definition, to be in favor of the Agent and not a participating Bank if the
Agent has made the advance and such
15
Bank has not made its pro rata advance in respect thereof and shall be deemed to
be in favor of such Bank to the extent of its advance if it has made its pro
rata advance in respect thereof.
"Revolving Credit Bank" means any financial institution listed on Schedule
1.1 as having a Commitment Amount with respect to Revolving Credit Loans and
each other financial institution which, from time to time, becomes a party to
this Credit Agreement in accordance with Subsection 10.8(b) hereof and purchases
a Commitment Amount with respect to Revolving Credit Loans.
"Revolving Credit Commitment" shall mean, as to any Bank at any time, the
amount initially set forth opposite its name on Schedule 1.1 in the column
labeled "Amount of Commitment for Revolving Credit Loans" (as the same may be
reduced in accordance with Section 2.1(f) and 2.1(k)), and thereafter in the
most recent Assignment and Assumption Agreement executed by such Bank, whether
in the capacity as a Purchasing Bank or a Transferor Bank.
"Revolving Credit Disbursement" means the several Revolving Credit Loans
made simultaneously by each Revolving Credit Bank under the Revolving Credit
Commitment.
"Revolving Credit Loan" means each loan of funds by a Revolving Credit Bank
of its Commitment Percentage for the revolving credit loans as described in
Section 2.1 hereof.
"Revolving Credit Loan Account" means the bookkeeping account established
by each Revolving Credit Bank in the name of the Borrower pursuant to Subsection
2.1(i) hereof.
"Revolving Credit Loan Request" shall mean a request for Revolving Credit
Loans made in accordance with Section 2.1(c) hereof.
"Revolving Credit Note" and "Revolving Credit Notes" means any one or all
of the promissory notes of the Borrower evidencing Bank Indebtedness of the
Borrower hereunder with respect to the Revolving Credit Loans, which Revolving
Credit Notes shall be substantially in the form of Exhibit "A" to this Credit
Agreement, and all extensions, renewals, amendments, modifications, restatements
or replacements thereto or thereof.
"Stated Amount" means the amount available to the beneficiary of any Letter
of Credit for drawing thereunder as such amount is reduced in accordance with
the provisions of such Letter of Credit.
"Subsection" means a numbered subsection of this Credit Agreement, unless
another document is specifically referenced.
"Subsidiary" means any corporation, partnership, limited liability company,
association, joint stock company, trust, unincorporated organization, or joint
venture of which at least a majority of the outstanding stock having by the
terms thereof ordinary voting power to elect a majority of the Board of
Directors of such corporation is at the time directly or indirectly owned or
controlled by the Borrower or by one or more of its Subsidiaries.
16
"Subsidiary Guarantee" shall mean a Guarantee, in a form acceptable to the
Agent, to be executed and delivered by a Subsidiary in accordance with the
provisions of Subsection 6.6(ix) herein which shall provide that such Subsidiary
shall unconditionally guarantee and become surety for a portion of the Bank
Indebtedness that is limited in amount to the principal amount of the
Indebtedness for Borrowed Money incurred by such Subsidiary in accordance with
Subsection 6.6(ix) and reduced as the principal amount of such Indebtedness for
Borrowed Money is repaid by such Subsidiary in the ordinary course of business
(including without limitation, any prepayments of principal made by the
Subsidiary in the ordinary course of its business so long as such prepayments
are not made with a direct or indirect purpose of reducing or eliminating the
obligations of such Subsidiary under the Subsidiary Guarantee).
"Supplemental Swing Loan Banks" means any financial institution listed on
Schedule 1.1 to this Credit Agreement as having a Commitment Amount with respect
to Supplemental Swing Loans and each other financial institution which, from
time to time, becomes a party to this Credit Agreement in accordance with
Subsection 10.8(b) hereof and purchases a Commitment Amount with respect to
Supplemental Swing Loans.
"Supplemental Swing Loan Commitment" shall mean the dollar amount set forth
for each Supplemental Swing Loan Bank under the caption "Supplemental Swing Loan
Commitment" on Schedule 1.1 to this Credit Agreement signed by such Bank or in
any Assignment and Assumption Agreement executed by such Bank, whether in the
capacity as a Purchasing Bank or a Transferor Bank. The aggregate Supplemental
Swing Loan Commitments of all of the Supplemental Swing Loan Banks shall not
exceed $30,000,000 in the aggregate. Notwithstanding anything contained in this
Agreement or any of the other Loan Documents to the contrary, the foregoing
commitment is a sub-facility of such Bank's Revolving Credit Commitment and as
such shall mature, expire, be proportionally reduced or terminate upon the
occurrence of a like event affecting such Bank's Revolving Credit Commitment.
"Supplemental Swing Loan Note" and "Supplemental Swing Loan Notes" shall
mean any one or all of the Supplemental Swing Loan Notes of the Borrower in the
form of Exhibit "E" evidencing the Supplemental Swing Loans, together with all
amendments, extensions, renewals, replacements, refinancings or refundings
thereof in whole or in part.
"Supplemental Swing Loan Request" shall mean a request for Supplemental
Swing Loans made in accordance with Section 2.2B(c) hereof.
"Supplemental Swing Loans" shall mean collectively and Supplemental Swing
Loan shall mean separately all Supplemental Swing Loans or any Supplemental
Swing Loan made by Supplemental Swing Loan Banks to the Borrower pursuant to
Section 2.2B hereof.
"Swing Loan Commitment" shall mean National City Bank's commitment to make
Swing Loans to the Borrower pursuant to Section 2.2A hereof in an aggregate
principal amount of up to $15,000,000 outstanding at any time. Notwithstanding
anything contained in this Agreement or any of the other Loan Documents to the
contrary, the foregoing commitment is a sub-facility of National City Bank's
Revolving Credit Commitment, and as such shall mature, expire, be proportionally
reduced or terminate upon the occurrence of a like event affecting National
City's Revolving Credit Commitment.
17
"Swing Loan Note" shall mean the Swing Loan Note of the Borrower in the
form of Exhibit "B" evidencing the Swing Loans, together with all amendments,
extensions, renewals, replacements, refinancings or refundings thereof in whole
or in part.
"Swing Loan Request" shall mean a request for Swing Loans made in
accordance with Section 2.2A(b) hereof.
"Swing Loans" shall mean collectively and Swing Loan shall mean separately
all Swing Loans or any Swing Loan made by National City Bank to the Borrower
pursuant to Section 2.2A hereof.
"Swing Loan Settlement Date" shall mean the Tuesday of each week (if such
day is a Business Day and if not, the next succeeding Business Day) and any
other Business Day on which the Agent elects to effect settlement pursuant to
Section 2.12.
"Teach-Out Obligations" means those certain obligations of any Person under
various state laws to provide for the completion of any enrolled student's
education in the event of the closing of a school.
"Termination Event" means (i) a Reportable Event with respect to a Plan or
an event described in Section 4062(e) of ERISA with respect to a Plan, (ii) the
withdrawal of the Borrower or any ERISA Affiliate from a Plan during a plan year
in which the Borrower or any such ERISA Affiliate was a "substantial employer"
as such term is defined in Section 4001(a)(2) of ERISA and the incurrence of
liability to the PBGC under Section 4063 of ERISA, (iii) the incurrence of
liability by the Borrower or any such ERISA Affiliate under Section 4064 of
ERISA upon the termination of a Plan, (iv) the distribution of a notice of
intent to terminate a Plan pursuant to Section 4041(a)(2) of ERISA or the
treatment of a Plan amendment as a termination under Section 4041 of ERISA, or
(v) the institution of proceedings to terminate a Plan by the PBGC under Section
4042 of ERISA.
"Termination Proceeding" means, with respect to any Plan, any termination
proceeding under Section 4042 of ERISA or any successor section of ERISA.
"Term Loans" means the term loan of each Bank made to the Borrower as
described in Section 2.4 hereof.
"Term Loan Request" shall have the meaning ascribed to that term in Section
2.4(a)(i).
"Total Funded Debt" means, as of the end of any Fiscal Quarter, on a
Consolidated basis without duplication (including but not limited to any
duplication reflecting Guarantees of the Borrower or any Subsidiary permitted by
Subsection 6.6(iii) hereof), the difference between (a) Indebtedness for
Borrowed Money of the Borrower and its Subsidiaries, as of such date, and (b)
all unrestricted cash and cash equivalents in excess of $5,000,000 held by the
Borrower and its Subsidiaries including without limitation the cash balance as
at the end of such Fiscal Quarter held by the Agent or any Bank in cash
collateral, escrow, direct loan, reserve, electronic funds transfer, trust or
other unrestricted accounts (exclusive of any such accounts which do not appear
on the Borrower's or such Subsidiary's balance sheet) on behalf of the Borrower
or any of its Subsidiaries.
18
"Transfer Effective Date" means for each Assignment and Assumption
Agreement, the date upon which such Assignment and Assumption Agreement is
effective.
"Transferor Bank" means a selling Bank pursuant to an Assignment and
Assumption Agreement.
"UCC" means the Uniform Commercial Code as now adopted and from time to
time amended in the Commonwealth of Pennsylvania or any other jurisdiction which
controls the perfection of a security interest.
"Unfunded Benefit Liabilities" means with respect to any Plan, the amounts
described in Section 4001(a)(18) of ERISA.
"Unreimbursed Amount" shall have the meaning assigned to it in Subsection
2.3(c) hereof.
"Withdrawal Liability" means "withdrawal liability" as defined by the
provisions of Part 1 of Subtitle E to Title IV of ERISA.
1.2 GAAP Definitions.
Accounting terms used in this Credit Agreement but not defined herein shall
have the meanings ascribed to them under GAAP as in effect from time to time;
provided, however, that all accounting terms used in Sections 6.1, 6.3. and 6.4
shall have the meaning given to such terms under GAAP as in effect on the date
hereof applied on a basis consistent with those used in preparing the Borrower's
historical financial statements. In the event of any change after the date
hereof in GAAP, and if such change would result in the inability to determine
compliance with the financial covenants set forth in Sections 6.1, 6.3 and 6.4
based upon the Borrower's regularly prepared financial statements by reason of
the preceding sentence, then the parties hereto agree to endeavor, in good
faith, to agree upon an amendment to this Credit Agreement that would adjust
such financial covenants in a manner that would not affect the substance
thereof, but would allow compliance therewith to be determined in accordance
with the Borrower's financial statements at that time; until this Credit
Agreement is so amended, the covenants shall remain as set forth in this Credit
Agreement.
1.3 Other Definitional Conventions.
(i) All terms defined in this Credit Agreement shall have the
above-defined meanings when used in this Credit Agreement, the other Loan
Documents, exhibits, schedules, appendices or any other document or certificate
executed or delivered in connection with this Credit Agreement, unless the
context thereof shall otherwise clearly require.
(ii) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Credit Agreement shall refer to this Credit Agreement
as a whole and not to any particular provision of this Credit Agreement, and
Section and Subsection references are to this Credit Agreement unless otherwise
specified.
19
(iii) All terms defined in this Credit Agreement in the singular shall
have comparable meanings when used in plural, and vice versa, unless otherwise
specified.
(iv) The word "or" as used herein shall mean and connote non-exclusive
alternatives, unless expressly stated or the context clearly requires otherwise.
1.4 Headings.
The headings of the Sections and Subsections of this Credit Agreement are
inserted for convenience only and shall not be deemed to constitute a part
hereof.
ARTICLE II. THE CREDIT
2.1 Revolving Credit Loans.
(a) Revolving Credit Commitment. The Revolving Credit Banks severally
agree, subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, that the Borrower shall have
the right to borrow, repay and reborrow during the Availability Period an
aggregate principal amount not to exceed TWO HUNDRED FIFTY MILLION AND NO/100
DOLLARS ($250,000,000) at any one time outstanding (the "Revolving Credit
Commitment"); provided, however, the amount otherwise available for borrowing
under the Revolving Credit Commitments as of any time of determination shall be
reduced by the sum of (i) the aggregate Stated Amounts of all Letters of Credit
issued and outstanding, as of such date of determination plus (ii) the aggregate
unreimbursed draws of any Letter of Credit plus (iii) the outstanding principal
balance of all Swing Loans plus (iv) the outstanding principal balance of all
Supplemental Swing Loans, plus (v) the outstanding principal balance of all Term
Loans.
(b) Individual Bank Commitment Amount. Each of the Revolving Credit
Banks shall be severally liable for advancing its respective Commitment
Percentage of the Revolving Credit Loans set forth on Schedule 1.1 (as the same
may be reduced in accordance with Section 2.1(f)), or on the most recent
Assignment and Assumption Agreement to which such Bank is a party; provided,
however, that no such Revolving Credit Bank shall be required to make a
Revolving Credit Loan if such loan would cause that Revolving Credit Bank's
Revolving Credit Loans plus it's pro rata share of (i) the outstanding principal
balance of all Swing Loans, (ii) the outstanding principal balance of all
Supplemental Swing Loans, (iii) the stated amount of all Letters of Credit
issued and outstanding, (iv) the unreimbursed draws of any Letter of Credit, and
(v) the outstanding principal balance of all Term Loans to exceed the Commitment
Amount for Revolving Credit Loans set forth on Schedule 1.1 or on the most
recent Assignment and Assumption Agreement to which such Bank is a party.
(c) Revolving Credit Disbursements.
(i) Each Revolving Credit Disbursement under Subsection 2.1(a) shall
be in the aggregate amount of $1,000,000 or more, provided that each increment
in excess of $1,000,000 shall be $100,000 or an integral multiple thereof. The
obligation of the Borrower to repay, on or before the Repayment Date, the
aggregate unpaid principal amount of all Revolving Credit Disbursements made by
the Revolving Credit Banks shall be evidenced by Revolving
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Credit Notes substantially in the form of Exhibit "A" hereto, one made by the
Borrower to the order of each Revolving Credit Bank in the Commitment Amount for
Revolving Credit Loans of such Revolving Credit Bank and delivered to each such
Revolving Credit Bank. The principal amount actually due and owing each
Revolving Credit Bank under the Revolving Credit Loans shall be the aggregate
unpaid principal amount of all Revolving Credit Loans made by such Revolving
Credit Bank, all as shown on the Revolving Credit Loan Accounts established
pursuant to Subsection 2.1(i) hereof.
(ii) Each request for a Revolving Credit Disbursement under Subsection
2.1(a) shall be made by 1:00 P.M. (Pittsburgh, Pennsylvania time) to the Agent
orally or in writing, by an Authorized Officer, (A) in the case of Base Rate
Loans, on or before the same Business Day of the proposed Revolving Credit
Disbursement and (B) in the case of Eurodollar Rate Loans, at least three (3)
Business Days prior to the proposed Revolving Credit Disbursement, in each case
specifying the date on which such Revolving Credit Disbursement is to be made,
the amount thereof, selecting the interest rate therefor pursuant to Subsection
2.5(b) hereof and, if appropriate, selecting the Interest Period therefor. Each
written request for a Revolving Credit Disbursement shall be evidenced by, and
each oral request for a Revolving Credit Disbursement hereunder shall be
followed by, a request for Revolving Credit Loan substantially in the form of
Exhibit "C" hereto (a "Revolving Credit Loan Request"), duly executed by an
Authorized Officer of the Borrower. Promptly upon receipt of such notice, the
Agent shall notify each Revolving Credit Bank of the Borrower's request and the
amount of such requested Revolving Credit Disbursement which is to be advanced
by such Revolving Credit Bank. Each such Revolving Credit Bank shall make its
pro rata share of such Revolving Credit Disbursement available at the Agent's
principal office in immediately available funds no later than 4:00 P.M.
(Pittsburgh, Pennsylvania time) on the date of the requested Revolving Credit
Disbursement. Each Revolving Credit Disbursement shall be credited by the Agent
to a demand deposit account of the Borrower at the Agent's principal office no
later than 4:30 P.M. (Pittsburgh, Pennsylvania time) on the date of such
Revolving Credit Disbursement.
(d) Interest. The Revolving Credit Notes shall bear interest on the
actual unpaid principal amount thereof from time to time outstanding from the
date thereof until payment in full as set forth in Section 2.5 hereof.
(e) Voluntary Prepayments. The Borrower shall have the right at its
option to prepay any Portion of the Revolving Credit Loans, in whole or in part,
at any time, subject to Borrower's obligation to pay a premium in accordance
with Section 2.6(ii)(A) if a Eurodollar Rate Loan (or part thereof) is prepaid
on a date other than the last day of the applicable Interest Period. Each such
prepayment shall be applied first to the principal balance of the Revolving
Credit Loans and then to any accrued and unpaid interest. Each partial
prepayment shall be in the aggregate amount of $500,000 or more, provided that
each increment in excess of $500,000 shall be $100,000 or an integral multiple
thereof. The Borrower shall give the Agent prior written notice of each
voluntary prepayment specifying the aggregate principal amount to be prepaid,
the date of prepayment and, if one or more Eurodollar Rate Options are in
effect, the Portion(s) of the Revolving Credit Loans being prepaid. Notice of
prepayment having been given as aforesaid, the principal amount specified in
such notice shall become due and payable on the prepayment date.
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(f) Voluntary Permanent Reduction of the Revolving Credit Commitment.
The Borrower, upon three (3) Business Days' written notice to the Agent, may
permanently reduce the Revolving Credit Commitment by a minimum reduction of at
least $5,000,000; provided, however, that if such reduction would require
repayment of then outstanding amounts of the Revolving Credit Loans or any Swing
Loans, Supplemental Swing Loans or Term Loans, such repayment must occur on or
before the date on which the voluntary permanent reduction becomes effective.
(g) Commitment Fee. The Borrower agrees to pay to the Agent, for the
benefit of the Revolving Credit Banks, on October 1, 2003, and quarterly in
arrears thereafter on the first day of each succeeding January, April, July and
October during the term of the Revolving Credit Commitment and on the Repayment
Date, a commitment fee equal to the average daily difference between the
Revolving Credit Commitments of the Banks minus the sum of the Banks' Revolving
Credit Loans outstanding (including Supplemental Swing Loans outstanding but
excluding any outstanding Swing Loans of National City Bank) and Letter of
Credit Exposure and Term Loans outstanding during the immediately preceding
Fiscal Quarter. The commitment fee shall be calculated at a rate per annum set
forth in the chart below based upon the Ratio of the Borrower's Total Funded
Debt to EBITDA:
=====================================================================
Ratio of Total Funded Debt to EBITDA Commitment Fee (per annum)
---------------------------------------------------------------------
Greater than 2.0 to 1.0 35.0 basis points
---------------------------------------------------------------------
Greater than 1.5 to 1.0 but less than or
equal to 2.0 to 1.0 30.0 basis points
---------------------------------------------------------------------
Greater than 1.0 to 1.0 but less than or
equal to 1.5 to 1.0 25.0 basis points
---------------------------------------------------------------------
Greater 0.50 to 1.0 but less than or
equal to 1.0 to 1.0 20.0 basis points
---------------------------------------------------------------------
Less than or equal to 0.50 to 1.0 20.0 basis points
=====================================================================
The Commitment Fee due hereunder shall be calculated on the basis of a 365-366
day year and the actual number of days elapsed. Upon receipt by the Agent of the
quarterly financial statements delivered pursuant to Subsection 5.2(a) hereof,
the applicable percentage shall be adjusted, if necessary, effective on the
first day of the calendar month following delivery of such quarterly financial
statements. In calculating the above ratio, Total Funded Debt shall be
determined as of the end of such Fiscal Quarter and EBITDA shall be measured, on
a rolling four quarter basis, for the immediately preceding four Fiscal Quarters
then ended, taking into account the pro forma adjustments to EBITDA, if any,
made in accordance with the description in Section 6.1. Notwithstanding the
table of applicable percentages set forth above and the adjustment to the
Commitment Fee in accordance with the terms of this subsection 2.1(g), during
the period from the Closing Date through the six month anniversary of the
Closing Date, the Commitment Fee (per annum) shall not be less than 25 basis
points.
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(h) Repayment. On the Repayment Date, the Borrower shall repay in full
all of the then unpaid and outstanding Revolving Credit Loans, together with all
interest thereon to the date of such repayment and all other fees and costs due
hereunder.
(i) Revolving Credit Loan Account. Each Revolving Credit Bank shall
open and maintain on its books a Revolving Credit Loan Account in the name of
the Borrower with respect to such Revolving Credit Bank's Revolving Credit
Loans, repayments, prepayments, the computation and payment of interest and the
computation of other amounts due and sums paid to the Agent, on behalf of such
Revolving Credit Bank, pursuant to this Section 2.1. Except in the case of
manifest error in computation, such Revolving Credit Loan Account shall be
conclusive and binding on the Borrower as to the amount at any time due to such
Revolving Credit Bank from the Borrower pursuant to this Section 2.1.
(j) Increase in Revolving Credit Commitments. The Borrower may request
an increase in the amount of the Revolving Credit Commitments provided that (i)
any such increase shall not cause the total amount of Revolving Credit
Commitments to exceed $275,000,000, as such amount may be reduced from time to
time pursuant to Section 6.6(x), and (ii) any such increase shall be in
increments of not less than $5,000,000. If the Borrower desires to increase the
Revolving Credit Commitments, the Borrower shall offer the existing Banks the
opportunity to participate in any such increase before requesting that another
lender join this Agreement as a Bank to provide a Revolving Credit Commitment,
provided however, that no Bank shall be obligated to increase its Revolving
Credit Commitment and no such Bank's Revolving Credit Commitment shall be
increased without its consent. Any new lender shall be subject to the approval
of the Agent. If such increase is provided by a new lender, such new lender and
Agent shall execute a Bank Joinder and such new lender shall thereby join this
Agreement and each of the Loan Documents as a Bank on the effective date of the
increase. If such increase in Revolving Credit Commitments is provided by either
a new lender, or by one or more of the existing Banks but not ratably by all of
the existing Banks, the Borrower shall repay all of the outstanding Revolving
Credit Loans on the effective date of the increase, subject to the Borrower's
obligation under Section 2.6 [Yield Protection and Reimbursement]. The Banks
shall participate in any new Revolving Credit Loans made on or after the
effective date of the increase ratably according to their Revolving Credit
Commitments as modified on the date of such increase. It is acknowledged that
the Borrower can use the proceeds of new Revolving Credit Loans made on the
effective date of such increase to repay any existing Revolving Credit Loans on
that date, provided that the Borrower has complied with Section 2.1(c)
[Revolving Credit Disbursements] and the other requirements for the making of
such Revolving Credit Loans hereunder and Section 2.6 [Yield Protection and
Reimbursement].
(k) Mandatory Reduction of Revolving Credit Commitments. The Revolving
Credit Commitments shall be automatically reduced (i) on the date and by an
amount equal to the scheduled amortization on the Term Loans as provided for in
Section 2.4(c) regardless of whether any Terms Loans are outstanding on such
date, and (ii) on the date of incurrence and by the amount by which Indebtedness
for Borrowed Money incurred by the Borrower and its Subsidiaries exceeds
$100,000,000, in accordance with and subject to Section 6.6(x).
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2.2 Swing Loans; Supplemental Swing Loans.
A. Swing Loans.
(a) Swing Loan Commitment. Subject to the terms and conditions hereof
and relying upon the representations and warranties herein set forth, and in
order to facilitate loans and repayments between Swing Loan Settlement Dates,
National City Bank may, at its option, cancelable at any time for any reason
whatsoever, make swing loans (the "Swing Loans") to the Borrower at any time or
from time to time after the date hereof to, but not including, the Expiration
Date, in an aggregate principal amount up to but not in excess of $15,000,000
(the "Swing Loan Commitment"), provided that the sum of (i) the aggregate Stated
Amounts of all Letters of Credit issued and outstanding, as of such date of
determination plus (ii) the aggregate unreimbursed draws of any Letter of Credit
plus (iii) the outstanding principal balance of all Swing Loans plus (iv) the
outstanding principal balance of all Supplemental Swing Loans, plus (v) the
outstanding principal balance of all Revolving Credit Loans plus (vi) the
outstanding principal balance of all Term Loans, shall not exceed the Revolving
Credit Commitments of all the Banks. Within such limits of time and amount and
subject to the other provisions of this Agreement, the Borrower may borrow,
repay and reborrow pursuant to this Section 2.2A. It is acknowledged by National
City Bank that a cancellation of the Swing Loan Commitment shall not in and of
itself reduce National City Bank's Revolving Credit Commitment.
(b) Swing Loan Requests. Except as otherwise provided herein, the
Borrower may from time to time prior to the Expiration Date request National
City Bank to make Swing Loans by delivery to National City Bank not later than
1:00 P.M. (Pittsburgh, Pennsylvania time) on the proposed Borrowing Date of a
duly completed request therefor substantially in the form requested by National
City Bank or by telephone immediately confirmed in writing by letter, facsimile
or telex (each, a "Swing Loan Request"), it being understood that the Agent may
rely on the authority of any individual making such a telephonic request without
the necessity of receipt of such written confirmation. Each Swing Loan Request
shall be irrevocable and shall specify the proposed Borrowing Date, the interest
rate Option and the principal amount of such Swing Loan, which shall be not less
than $100,000.
(c) Making Swing Loans. So long as National City Bank elects to make
Swing Loans, National City Bank shall, after receipt by it of a Swing Loan
Request pursuant to Section 2.2, fund such Swing Loan to the Borrower in U.S.
Dollars and immediately available funds at the Agent's principal office prior to
3:00 P.M. (Pittsburgh, Pennsylvania time) on the Borrowing Date.
(d) Swing Loan Note. The obligation of the Borrower to repay the
unpaid principal amount of the Swing Loans made to it by National City Bank,
together with interest thereon shall be evidenced by a demand promissory note of
the Borrower dated the Closing Date in substantially the form attached hereto as
Exhibit "B" payable to the order of National City Bank in a face amount equal to
the Swing Loan Commitment.
(e) Borrowings to Repay Swing Loans. National City Bank may, at its
option, exercisable at any time for any reason whatsoever, demand repayment of
the Swing Loans from the Revolving Credit Banks, and each Bank shall make a
Revolving Credit Loan in an amount
24
equal to such Bank's Commitment Percentage of Revolving Credit Loans of the
aggregate principal amount of the outstanding Swing Loans, plus, if National
City Bank so requests, accrued interest thereon, provided that no Bank shall be
obligated in any event to make Revolving Credit Loans in excess of its Revolving
Credit Commitment minus such Bank's outstanding Revolving Credit Loans,
Supplemental Swing Loans, Term Loans, Letter of Credit Exposure and pro rata
share of unreimbursed draws of any Letter of Credit. Revolving Credit Loans made
pursuant to the preceding sentence shall bear interest at the Base Rate Option
and shall be deemed to have been properly requested in accordance with Section
2.1 without regard to any of the requirements of that provision pertaining to
Loan Requests and each Revolving Credit Bank acknowledges and agrees that its
obligation to make Revolving Credit Loans in accordance with the terms of this
Section 2.2A(e) is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including without limitation non-satisfaction of the
conditions set forth in Section 7. National City Bank shall provide notice to
the Banks (which may be telephonic or written notice by letter, facsimile or
telex) that such Revolving Credit Loans are to be made under this Section 2.2A
and of the apportionment among the Banks, and the Banks shall be unconditionally
obligated to fund such Revolving Credit Loans (whether or not the conditions
specified in Section 2.1 are then satisfied) by the time National City Bank so
requests, which shall not be earlier than 3:00 P.M. (Pittsburgh, Pennsylvania
time) on the Business Day next after the date the Banks receive such notice from
National City Bank.
(f) Voluntary Prepayments. The Borrower shall have the right at its
option to prepay any Portion of the Swing Loans, in whole or in part, at any
time. Each such prepayment shall be applied first to the principal balance of
the Swing Loans and then to any accrued and unpaid interest. Each partial
prepayment shall be in the aggregate amount of $100,000 or more, provided that
each increment in excess of $100,000 shall be $10,000 or an integral multiple
thereof unless the Borrower is prepaying the entire outstanding principal
balance of the Swing Loans. The Borrower shall give the Agent prior written
notice of each voluntary prepayment specifying the aggregate principal amount to
be prepaid and the date of prepayment. Notice of prepayment having been given as
aforesaid, the principal amount specified in such notice shall become due and
payable on the prepayment date.
(g) Permanent Reduction of the Swing Loan Commitment.
(A) Voluntary Reduction. The Borrower, upon three (3) Business Days'
written notice to the Agent, may permanently reduce the Swing Loan Commitment by
a minimum reduction of at least $1,000,000; provided, however, that if such
reduction would require repayment of then outstanding amounts of the Swing
Loans, such repayment must occur on or before the date on which the voluntary
permanent reduction becomes effective.
(B) Mandatory Reduction. In the event that the Borrower shall have
reduced the Revolving Credit Commitment of the Banks and National City Bank's
Swing Loan Commitment is greater than its Revolving Credit Commitment as so
reduced, then the Swing Loan Commitment shall be automatically reduced to
National City Bank's Revolving Credit Commitment. In the event that National
City Bank's Swing Loans exceed the Swing Loan Commitment, the Borrower shall
contemporaneously with the reduction in the commitment prepay the Swing Loans to
an amount less than the Swing Loan Commitment, as so reduced.
25
(h) Interest. The Swing Loan Notes shall bear interest on the actual
unpaid principal amount thereof from time to time outstanding from the date
thereof until payment in full as set forth in Section 2.5 hereof.
B. Supplemental Swing Loans.
(a) Supplemental Swing Loan Commitment. The Supplemental Swing Loan
Banks severally agree, subject to the terms and conditions hereof and relying
upon the representations and warranties herein set forth, that the Borrower
shall have the right to borrow, repay and reborrow during the Availability
Period an aggregate principal amount not to exceed THIRTY MILLION AND NO/100
DOLLARS ($30,000,000) at any one time outstanding (the "Supplemental Swing Loan
Commitments"); provided, however, the sum of (i) the aggregate Stated Amounts of
all Letters of Credit issued and outstanding, as of such date of determination
plus (ii) the aggregate unreimbursed draws of any Letter of Credit plus (iii)
the outstanding principal balance of all Swing Loans plus (iv) the outstanding
principal balance of all Supplemental Swing Loans plus (v) the outstanding
principal balance of all Revolving Credit Loans plus (vi) the outstanding
principal balance of all Term Loans, shall not exceed the Revolving Credit
Commitments of all the Banks.
(b) Individual Bank Supplemental Swing Loan Commitment Amount. The
Commitment Percentage with respect to Supplemental Swing Loans for each
Supplemental Swing Loan Bank shall be the same Commitment Percentage as such
Bank's Commitment Percentage for Revolving Credit Loans hereunder. Each
Supplemental Swing Loan to be advanced in accordance with Section 2.2B(a) shall
be advanced pro rata among the Supplemental Swing Loan Banks in an amount
corresponding to its pro rata share of the Revolving Credit Commitments. Each of
the Supplemental Swing Loan Banks shall be severally liable for advancing its
respective Commitment Percentage for Revolving Credit Loans set forth opposite
such Supplemental Swing Loan Bank's name on Schedule 1.1; provided, however,
that no such Supplemental Swing Loan Bank shall be required to make a
Supplemental Swing Loan to the extent such loan would cause that Bank's
Revolving Credit Loans, Term Loans, Supplemental Swing Loans, Swing Loans and
pro rata share of the Letters of Credit outstanding plus unreimbursed draws of
any Letter of Credit in the aggregate, to exceed its Revolving Credit Commitment
set forth on Schedule 1.1 or on the most recent Assignment and Assumption
Agreement to which such Bank is a party.
(c) Supplemental Swing Loan Requests. Except as otherwise provided
herein, the Borrower may from time to time prior to the Expiration Date request
the Supplemental Swing Loan Banks to make Supplemental Swing Loans by delivery
to Agent not later than 1:00 P.M. (Pittsburgh, Pennsylvania time) on the
Business Day of the proposed Borrowing Date of a duly completed request therefor
substantially in the form requested by Agent or by telephone immediately
confirmed in writing by letter, facsimile or telex (each, a "Supplemental Swing
Loan Request"), it being understood that the Agent may rely on the authority of
any individual making such a telephonic request without the necessity of receipt
of such written confirmation. Each Supplemental Swing Loan Request shall be
irrevocable, shall specify the proposed Borrowing Date and the principal amount
of such Supplemental Swing Loan, which shall be not less than $500,000, and
shall elect an interest rate option, as permitted herein, to be applicable to
such borrowing.
26
(d) Making Supplemental Swing Loans. Promptly upon receipt of notice
from the Borrower of its election to borrow Supplemental Swing Loans, the Agent
shall notify each Supplemental Swing Loan Bank of the Borrower's request and the
amount of such requested Supplemental Swing Loan which is to be advanced by such
Supplemental Swing Loan Bank. Each such Supplemental Swing Loan Bank shall make
its pro rata share of such Supplemental Swing Loan disbursement available at the
Agent's principal office in immediately available funds no later than 4:00 P.M.
(Pittsburgh, Pennsylvania time) on the date of the requested Supplemental Swing
Loan. Each Supplemental Swing Loan shall be credited by the Agent to a demand
deposit account of the Borrower at the Agent's principal office no later than
4:30 P.M. (Pittsburgh, Pennsylvania time) on the date of such Supplemental Swing
Loan.
(e) Supplemental Swing Loan Note. The obligation of the Borrower to
repay the unpaid principal amount of the Supplemental Swing Loans made to it by
the Supplemental Swing Loan Banks, together with interest thereon shall be
evidenced by a demand promissory note of the Borrower dated the Closing Date in
substantially the form attached hereto as Exhibit "E" payable to the order of
each Supplemental Swing Loan Bank in a face amount equal to such Bank's
Supplemental Swing Loan Commitment.
(f) Borrowings to Repay Supplemental Swing Loans. Each Supplemental
Swing Loan Bank may, at its option, exercisable at any time for any reason
whatsoever, demand that the Supplemental Swing Loans of such Bank be converted
to Revolving Credit Loans by providing Agent with written instructions to such
effect. Upon receipt of a demand by any Supplemental Swing Loan Bank to convert
its Supplemental Swing Loans to Revolving Credit Loans, each Bank shall make a
Revolving Credit Loan in an amount equal to such Bank's Commitment Percentage of
Revolving Credit Loans of the aggregate principal amount of the Supplemental
Swing Loans being converted, plus, if such Supplemental Swing Loan Bank so
requests, accrued interest thereon, provided that no Bank shall be obligated in
any event to make Revolving Credit Loans in excess of its Revolving Credit
Commitment minus such Bank's outstanding Supplemental Swing Loans, Term Loans,
Letter of Credit Exposure and pro rata share of unreimbursed draws for any
Letter of Credit. Revolving Credit Loans made pursuant to the preceding sentence
shall bear interest at the Base Rate Option and shall be deemed to have been
properly requested in accordance with Section 2.1 without regard to any of the
requirements of that provision pertaining to Loan Requests and each Revolving
Credit Bank acknowledges and agrees that its obligation to make Revolving Credit
Loans in accordance with the terms of the Section 2.2(B)(f) is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including without limitation non-satisfaction of the conditions set forth in
Section 7. The Agent shall provide notice to the Banks (which may be telephonic
or written notice by letter, facsimile or telex) that such Revolving Credit
Loans are to be made under this Section 2.2 and of the apportionment among the
Banks, and the Banks shall be unconditionally obligated to fund such Revolving
Credit Loans (whether or not the conditions specified in Section 2.1 are then
satisfied) by the time Agent so requests, which shall not be earlier than 3:00
P.M. (Pittsburgh, Pennsylvania time) on the Business Day next after the date the
Banks receive such notice from Agent.
(g) Mandatory Conversion of Supplemental Swing Loans. In the event
that the Borrower has Supplemental Swing Loans outstanding for more than seven
(7) calendar days, the Borrower shall borrow Revolving Credit Loans in an amount
necessary to repay such
27
Supplemental Swing Loans. In the event that the Borrower fails to promptly
comply with the preceding sentence, the Agent shall in its own discretion be
permitted to issue a demand on the Banks for Revolving Credit Loans under the
preceding sentence, all as if the Supplemental Swing Loan Banks had demanded
conversion.
(h) Voluntary Prepayments. The Borrower shall have the right at its
option to prepay any Portion of the Supplemental Swing Loans, in whole or in
part, at any time. Each such prepayment shall be applied first to the principal
balance of the Supplemental Swing Loans and then to any accrued and unpaid
interest. Each partial prepayment shall be in the aggregate amount of $500,000
or more, provided that each increment in excess of $500,000 shall be $100,000 or
an integral multiple thereof unless the Borrower is prepaying the entire
outstanding principal balance of the Supplemental Swing Loans. The Borrower
shall give the Agent prior written notice of each voluntary prepayment
specifying the aggregate principal amount to be prepaid and the date of
prepayment. Notice of prepayment having been given as aforesaid, the principal
amount specified in such notice shall become due and payable on the prepayment
date.
(i) Permanent Reduction of the Supplemental Swing Loan Commitment.
(A) Voluntary Reduction. The Borrower, upon three (3) Business Days'
written notice to the Agent, may permanently reduce the Supplemental Swing Loan
Commitment by a minimum reduction of at least $5,000,000; provided, however,
that if such reduction would require repayment of then outstanding amounts of
the Supplemental Swing Loans, such repayment must occur on or before the date on
which the voluntary permanent reduction becomes effective.
(B) Mandatory Reduction. In the event that the Borrower shall have
reduced the Revolving Credit Commitments with the effect that the Supplemental
Swing Loan Commitment of any Supplemental Swing Loan Bank is greater than such
Bank's Revolving Credit Commitment as so reduced, then such Bank's Supplemental
Swing Loan Commitment shall be automatically reduced to such Bank's Revolving
Credit Commitment. In the event that such Bank's Supplemental Swing Loans exceed
such Bank's Supplemental Swing Loan Commitment, the Borrower shall
contemporaneously with the reduction in the commitment prepay the Supplemental
Swing Loans to an amount less than the Supplemental Swing Loan Commitment, as so
reduced.
(j) Interest. The Supplemental Swing Loan Notes shall bear interest on
the actual unpaid principal amount thereof from time to time outstanding from
the date thereof until payment in full as set forth in Section 2.5 hereof.
C. Establishment of Canadian Swing Loan Subfacility.
The Borrower may request that the Banks establish a Canadian swing
loan subfacility pursuant to which a Subsidiary organized in Canada may borrow
up to the equivalent of $10,000,000 US from National City Bank, Canada Branch or
such other lender designated by the Agent and under which each Bank will have an
obligation to purchase a participation interest, based on such Bank's ratable
share, in such Canadian swing loan upon the request of the Agent; provided that
the establishment of such Canadian swing loan shall not increase any Bank's
28
Revolving Credit Commitment hereunder. The establishment of such Canadian swing
loan subfacility shall be made pursuant to an amendment to this Credit Agreement
acceptable to the Agent in its reasonable discretion, and notwithstanding
anything to the contrary contained in Section 10.1 or elsewhere in this Credit
Agreement to the extent such amendment relates to the terms and provisions of
the Canadian swing loans and the procedures for loan requests, funding,
reimbursement and risk participations in such Canadian swing loan substantially
similar to those of the Swing Loans, will not require the consent of the Banks
or the Required Banks.
2.3 Letters of Credit.
(a) Issuance of Letter of Credit. Subject to the terms and conditions
of this Credit Agreement and in reliance upon the representations and warranties
of the Borrower set forth herein, the Agent (and, upon request of the Borrower,
consent of the Agent, and consent of the requested Issuing Bank, any other Bank
designated by the Borrower in accordance with the terms of this Section) agrees
to issue Letters of Credit, upon the request of the Borrower during the
Availability Period, for the account of the Borrower and its Subsidiaries in an
aggregate Stated Amount not to exceed (i) from the Closing Date to September 30,
2003, ONE HUNDRED FIFTY MILLION AND NO/100 DOLLARS ($150,000,000), and (ii) from
September 30, 2003 and thereafter, SEVENTY FIVE MILLION AND NO/100 DOLLARS
($75,000,000), in each case minus any unreimbursed draws of any Letter of
Credit; provided, however, the sum of the outstanding principal balance of
Revolving Credit Loans, the Swing Loans, the Supplemental Swing Loans, the
Stated Amount of issued Letters of Credit and the aggregate unreimbursed draws
of any Letter of Credit and Term Loans shall at no time exceed the Revolving
Credit Commitment as the same may be reduced from time to time; provided
further, that exclusive of the Letters of Credit (if any) issued to fund the
escrow fund in connection with the acquisition of AEC under Section 1.2(a)(i) of
the AEC Purchase Agreement, the aggregate Stated Amount of all Letters of Credit
shall not exceed SEVENTY FIVE MILLION AND NO/100 DOLLARS ($75,000,000). The
issuance of any Letter of Credit in accordance with the provisions of this
Subsection 2.3(a) shall be in accordance with the relevant Issuing Bank's then
current practices relating to the issuance by such Issuing Bank of stand-by and
commercial letters of credit, as the case may be, including without limitation,
the execution of appropriate application and reimbursement agreements, as well
as subject to the satisfaction of each condition set forth in Section 7.1
hereof. No Letter of Credit shall be issued with an expiration date beyond the
earlier of the Repayment Date or one year from the date of issuance. Letters of
Credit may be issued for the account of the Borrower or for the account of a
Subsidiary of the Borrower (upon receipt by the relevant Issuing Bank from the
account party of an application and reimbursement agreement for a Letter of
Credit and related documents required by such Issuing Bank with respect to such
Letter of Credit). The aggregate amount of all Letters of Credit issued for the
account of the Subsidiaries of the Borrower shall not exceed Twenty Million and
00/100 Dollars ($20,000,000) at any one time outstanding. The Letters of Credit
issued for the account of the Subsidiaries of the Borrower shall be included in
the One Hundred Fifty Million and 00/100 Dollars ($150,000,000) or Seventy Five
Million and 00/100 Dollars ($75,000,000), as applicable, aggregate maximum
dollar amount of Letters of Credit set forth above. All reimbursement
obligations of the Subsidiaries of the Borrower with respect to Letters of
Credit issued for the account of such Subsidiaries shall be guarantied by the
Borrower pursuant to the Guaranty Agreement.
29
Subject to the terms and conditions of this Credit Agreement,
each of the Letters of Credit listed on Schedule 2.3 hereof, shall from and
after the date hereof be deemed to be a Letter of Credit issued under and
pursuant to the terms of this Credit Agreement.
From time to time the Borrower may request that a Bank other
than National City issue Letters of Credit on its behalf (or on behalf of its
Subsidiary) hereunder by submitting a written request to such effect to the
Agent, which request the Agent shall forward to the requested Bank; in the event
that such requested Bank consents thereto, and subject to the consent of the
Agent, the Agent shall be permitted to designate one or more of such additional
Banks as "Issuing Banks" hereunder.
(b) Risk Participations.
(i) Participations. Immediately upon the issuance of any Letter of
Credit, and thereafter, immediately upon each increase or decrease in the Stated
Amount thereof, each Revolving Credit Bank hereby agrees to irrevocably purchase
and shall be deemed to have irrevocably purchased from the relevant Issuing Bank
an undivided, full risk, non-recourse participation in each such Letter of
Credit (including any such increase or decrease in the Stated Amount of each
such Letter of Credit) and in draws thereunder in an amount equal to such
Revolving Credit Bank's Commitment Percentage of Revolving Credit Loans of the
maximum Stated Amount thereof which is or at any time may become available to be
drawn thereunder.
(ii) Restrictions. In the event that any Issuing Bank is required for
any reason to refund or repay to the Borrower, any guarantor or any other Person
(other than a Revolving Credit Bank hereunder) all or any portion of any amount
remitted to such Issuing Bank pursuant to this Credit Agreement, the relevant
Issuing Bank shall promptly notify the Agent, which will in turn promptly notify
each Revolving Credit Bank thereof and the Revolving Credit Banks shall promptly
remit to the Agent, for the benefit of such Issuing Bank, within three (3)
Business Days following demand therefor, their respective Commitment Percentages
for Revolving Credit Loans of the amount which is so refunded or repaid. In the
event any restrictions are imposed upon such Issuing Bank or any of the
Revolving Credit Banks by any Governmental Rule of any Governmental Person
having jurisdiction over the banking activities of such Issuing Bank or any
other Revolving Credit Bank, which would prevent such Issuing Bank from issuing
the Letter of Credit or amending the Letter of Credit or would prevent any
Revolving Credit Bank from honoring its obligations under this Section 2.3, the
commitment of such Issuing Bank to issue the Letter of Credit or enter into any
amendment with respect thereto shall be immediately suspended.
(iii) Notice of Restrictions. If any Revolving Credit Bank believes
any such restriction would prevent such Revolving Credit Bank from honoring its
obligations under this Section 2.3, it shall promptly notify the Agent. The
Agent shall promptly notify the Borrower, the relevant Issuing Bank and the
other Revolving Credit Banks of the existence and nature of (A) any restriction
which would cause the suspension of the commitment of such Issuing Bank to issue
the Letter of Credit or to enter into amendments with respect thereto and (B)
any restriction which would prevent any Revolving Credit Bank from honoring its
obligations under this Section 2.3.
30
(iv) Effect of Restrictions. Upon receipt of any notice pursuant to
item (iii) above, the Borrower will thereupon undertake reasonable efforts to
obtain the cancellation of each Letter of Credit; provided, however, that the
refusal of any beneficiary of any Letter of Credit to surrender such Letter of
Credit will not be an Event of Default hereunder and the Borrower shall
undertake good faith efforts to obtain a substitute letter of credit for such
Letter of Credit. Nothing contained in this Subsection 2.3(b) shall be deemed a
termination of the Revolving Credit Commitment and, in the event of a suspension
of the commitment of the relevant Issuing Bank to issue Letters of Credit or to
enter into amendments with respect thereto as set forth above, the Borrower may
continue to borrow under the Revolving Credit Commitment provided the
requirements of Section 7.1 hereof are complied with.
(c) Payment of Amounts Drawn Under Letters of Credit. Upon each
request for a draw under any Letter of Credit by the beneficiary thereof, the
relevant Issuing Bank shall immediately notify the Borrower and the Agent, and
the Borrower shall reimburse, or cause the reimbursement of, such Issuing Bank
on demand in an amount in same day funds equal to the amount of such draw;
provided, however, unless the Borrower shall have notified the Agent and such
Issuing Bank prior to such time that the Borrower intends to reimburse such
Issuing Bank for all or a portion of the amount of such draw with funds other
than the proceeds of Revolving Credit Loans, the Borrower shall conclusively be
deemed to have given a request for a Disbursement under Subsection 2.1(c) hereof
to the Agent requesting the Revolving Credit Banks to make Revolving Credit
Loans at the Base Rate Option on the first Business Day immediately following
the date on which such draw is honored in an aggregate amount equal to the
excess of the amount of such drawing over the amount theretofore received by
such Issuing Bank in reimbursement thereof (the "Unreimbursed Amount"), plus
accrued interest on such amount at the rate set forth in Subsection 2.3(e)(iii)
hereof. If the Borrower shall be deemed to have given a request for a
Disbursement under Subsection 2.1(c) hereof to the Agent pursuant to this
Subsection 2.3(c), then, (notwithstanding the satisfaction or waiver of the
conditions specified in Section 7.1 hereof), the Revolving Credit Banks shall,
on the first Business Day immediately following the date of such draw, make
Revolving Credit Loans at the Base Rate Option in the aggregate amount of the
Unreimbursed Amount plus accrued interest on such amount at the rate set forth
in Subsection 2.3(e)(iii) hereof. The proceeds of any such Revolving Credit
Loans shall be applied directly by the Agent, upon receipt thereof from the
Banks, to reimburse the relevant Issuing Bank for the Unreimbursed Amount plus
accrued interest on such amount. The foregoing shall not limit or impair the
obligation of the Borrower to reimburse such Issuing Bank on demand.
(d) Payment by the Banks. In the event that the Borrower shall fail to
reimburse the relevant Issuing Bank on demand as provided in Subsection 2.3(c)
above in an amount equal to the amount of any draw honored by such Issuing Bank
under any Letter of Credit, such Issuing Bank shall promptly notify the Agent
and each Revolving Credit Bank of the Unreimbursed Amount plus the accrued
interest on such amount and of such Bank's respective participation therein.
Each Revolving Credit Bank shall make available to the relevant Issuing Bank an
amount equal to its respective participation in same day funds, at the office of
such Issuing Bank specified in such notice, not later than 12:00 Noon
(Pittsburgh, Pennsylvania time) on the Business Day specified in such notice by
such Issuing Bank. In the event that any Revolving Credit Bank fails to make
available to the relevant Issuing Bank the amount of such Revolving Credit
Bank's participation in such Letter of Credit as provided in this Subsection
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2.3(d), such Issuing Bank shall be entitled to recover such amount on demand
from such Revolving Credit Bank together with interest at the Federal Funds Rate
for a period of three (3) Business Days after demand and thereafter, at the Base
Rate. Nothing in this Subsection 2.3(d) shall be deemed to prejudice the right
of any Revolving Credit Bank to recover from the relevant Issuing Bank any
amounts made available by such Revolving Credit Bank to such Issuing Bank
pursuant to this Subsection 2.3(d) in the event that it is determined by a court
of competent jurisdiction that payment of such amounts with respect to any
Letter of Credit by such Issuing Bank constituted gross negligence or willful
misconduct on the part of such Issuing Bank. The relevant Issuing Bank shall
distribute to each other Revolving Credit Bank which has paid all amounts
payable by it under this Subsection 2.3(d) with respect to such Letter of
Credit, such other Revolving Credit Bank's pro rata share of all payments
received by such Issuing Bank from the Borrower in reimbursement of a draw
honored by such Issuing Bank under such Letter of Credit when such payments are
received.
(e) Compensation.
(i) Letter of Credit Fees. On the first day of each October, January,
April and July hereafter and on the Repayment Date, the Borrower agrees to pay
to the Agent, on behalf of each Revolving Credit Bank, to be shared by the
Revolving Credit Banks on a pro rata basis in accordance with each Revolving
Credit Bank's risk participation in such Letter of Credit pursuant to Subsection
2.3(b) hereof, a nonrefundable fee (computed on the basis of a year of 360 days
and actual day elapsed), payable in arrears, equal to the product of (A) the
average Stated Amount of each Letter of Credit outstanding over the preceding
Fiscal Quarter (or such shorter period, if less than a quarter) times (B) the
applicable percentage per annum as determined below:
==============================================================
Applicable Letter
of
Credit Percentage
Ratio of Total Funded Debt to EBITDA (per annum)
--------------------------------------------------------------
Greater than 2.0 to 1.0 150 basis points
--------------------------------------------------------------
Greater than 1.5 to 1.0, but less than or
equal to 2.0 to 1.0 125 basis points
--------------------------------------------------------------
Greater than 1.0 to 1.0, but less than or
equal to 1.5 to 1.0 100 basis points
--------------------------------------------------------------
Greater than 0.50 to 1.0, but less than or
equal to 1.0 to 1.0 87.5 basis points
--------------------------------------------------------------
Less than or equal to 0.50 to 1.0 75 basis points
==============================================================
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Upon receipt by the Agent of the quarterly financial statements delivered
pursuant to Subsection 5.2(a) hereof, the applicable percentage shall be
adjusted, if necessary, effective on the first day of the calendar month
following delivery of such quarterly financial statements. In calculating the
above ratio, Total Funded Debt shall be determined as of the end of such Fiscal
Quarter and EBITDA shall be measured, on a rolling four quarter basis, for the
immediately preceding four Fiscal Quarters then ended, taking into account the
pro forma adjustments to EBITDA, if any, made in accordance with the description
in Section 6.1. Notwithstanding the Table of applicable percentages set forth
above and the adjustments to the applicable Letter of Credit percentage in
accordance with the terms of this Section 2.3(e)(i), during the period from the
Closing Date through the six month anniversary of the Closing Date, the
applicable Letter of Credit percentage shall not be less than 100 basis points.
(ii) Issuance Fee. In addition to the Letter of Credit Fees set forth
in Subsection 2.3(e)(i) above, the Borrower shall pay to the Agent, for the sole
account of each Issuing Bank, an Issuance Fee equal to one-eighth of one percent
(1/8%) of the Stated Amount of each Letter of Credit issued by such Issuing
Bank, payable quarterly in arrears on the first day of each October, January,
April and July hereafter and on the Repayment Date.
(iii) Interest and Other Fees.
(A) With respect to any draw made under any Letter of Credit, the
Borrower shall pay interest, payable on demand, on the amount paid by the
relevant Issuing Bank in respect of such draw from the Business Day of the draw
through the date such amount is reimbursed by the Borrower (including any such
reimbursement out of the proceeds of Revolving Credit Loans pursuant to
Subsection 2.3(c) hereof) at a rate which is at all times equal to (A) if no
Event of Default shall have occurred and be continuing, the Base Rate or (B) if
any Event of Default shall have occurred and be continuing, two percent (2.00%)
per annum in excess of the Base Rate; and
(B) With respect to the issuance, amendment or transfer of any Letter
of Credit and a draw made thereunder, the Borrower shall pay documentary and
processing charges in accordance with the relevant Issuing Bank's standard
schedule for such charges in effect at the time of such issuance, amendment,
transfer or draw, as the case may be.
(f) Duty to Review Demands; Obligation Absolute. The obligation of the
Borrower to reimburse the relevant Issuing Bank for draws made under any Letter
of Credit and the obligations of the Revolving Credit Banks under Subsection
2.3(d) hereof shall be absolute, unconditional and irrevocable and shall be paid
directly in accordance with the terms of this Credit Agreement under all
circumstances, including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of such Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right which
the Borrower may have at any time against a beneficiary or any transferee of
such Letter of Credit (or any Persons for whom any such transferee may be
acting), the relevant Issuing Bank, any Revolving Credit Bank or any other
Person, whether in connection with this Credit Agreement,
33
the transactions contemplated herein or any unrelated transaction (including any
underlying transaction between the Borrower or one of its Subsidiaries and the
beneficiary of such Letter of Credit);
(iii) any draft, demand, certificate or any other document presented
under such 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 provided that any act or failure to act on the part of the
relevant Issuing Bank does not constitute gross negligence or willful misconduct
on the part of such Issuing Bank;
(iv) payment by the relevant Issuing Bank under such Letter of Credit
against presentation of a demand, draft or certificate or other document which
does not comply with the terms of such Letter of Credit; provided that such
payment does not constitute gross negligence or willful misconduct on the part
of such Issuing Bank;
(v) any other circumstance or happening whatsoever, which is
substantially similar to any of the foregoing; and
(vi) the fact that an Event of Default shall have occurred and be
continuing.
(g) Indemnification; Nature of an Issuing Bank's Duties. In addition
to amounts payable as elsewhere provided in this Section 2.3, the Borrower
hereby agrees to protect, indemnify, pay and save each Revolving Credit Bank
(including, without limitation, each Issuing Bank) harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) which such Revolving Credit Bank
may incur or be subject to as a consequence, direct or indirect, of (i) the
issuance of the Letter of Credit or any amendment thereto, other than as a
result of the gross negligence or willful misconduct of the relevant Issuing
Bank as determined by a court of competent jurisdiction, (ii) the failure of the
relevant Issuing Bank to honor a draw under any Letter of Credit if such Issuing
Bank in good faith and upon advice of counsel believes that it is prohibited
from making such payment as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Person (all
such acts or omissions herein called "Government Acts"), or (iii) any material
breach by the Borrower of any representation, warranty, covenant, term or
condition in, or the occurrence of any default under, any document related to
the issuance or any amendment of any Letter of Credit.
As between the Borrower and the relevant Issuing Bank, the Borrower
assumes all risks of the acts and omissions of, or misuse of any Letter of
Credit by, the beneficiary of any Letter of Credit. In furtherance and not in
limitation of the foregoing, the relevant Issuing Bank shall not be responsible:
(i) for the form, validity, sufficiency, accuracy, genuineness or legal effect
of any document submitted by any party in connection with the application for or
the issuance or amendment of any Letter of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (ii) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason; (iii) for failure of a
beneficiary of any Letter of Credit to comply fully with conditions required in
order to draw upon any Letter of Credit; (iv) for errors,
34
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telecopy, telex or otherwise, whether or not they be
in cipher; (v) for errors in interpretation of technical terms; (vi) for any
loss or delay in the transmission or otherwise of any document required in order
to make a draw under any Letter of Credit or of the proceeds thereof; (vii) for
the misapplication by a beneficiary of any Letter of Credit of the proceeds of
any drawing under any Letter of Credit; (viii) for any consequences arising from
causes beyond the control of such Issuing Bank, including, without limitation,
any Government Acts; and (ix) for any other circumstances whatsoever in making
or failing to make payment under any Letter of Credit; except that the Borrower
shall have a claim against such Issuing Bank, and such Issuing Bank shall be
liable to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential, damages suffered by the Borrower, as determined by a
court of competent jurisdiction to be the result of (i) such Issuing Bank's
willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit comply with the terms of any Letter of
Credit, (ii) such Issuing Bank's payment on a draw under any Letter of Credit to
any Person other than the beneficiary of any Letter of Credit or its lawful
successor, representative or assign or (iii) such Issuing Bank's willful failure
to pay under any Letter of Credit after the presentation to it by the
beneficiary of any Letter of Credit or its lawful successor, representative or
assign of a sight draft and certificate or other documents strictly complying
with the terms and conditions of any Letter of Credit, unless such Issuing Bank
in good faith and upon advice of counsel believes that it is prohibited by law
or other legal authority from making such payment. None of the above shall
affect, impair, or prevent the vesting of any of the relevant Issuing Bank's
rights or powers hereunder.
Except for the relevant Issuing Bank's obligations under any Letter of
Credit, such Issuing Bank shall have no liability to the Borrower or to any
other Person resulting from a reduction of the credit rating of such Issuing
Bank or any deterioration in such Issuing Bank's financial condition.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the relevant
Issuing Bank under or in connection with the Letter of Credit or the related
sight drafts or certificates or documents, if taken or omitted in good faith,
shall not put such Issuing Bank under any resulting liability to the Borrower.
(h) Construction of Application and Agreement for Letter of Credit.
This Credit Agreement is intended to supplement any application or agreement
executed and delivered in connection with the issuance of any Letter of Credit
hereunder. Whenever possible, this Credit Agreement is to be construed as
consistent with any such application or agreement and, to the extent that the
provisions of this Credit Agreement and such application or agreement conflict,
the terms of this Credit Agreement shall control.
2.4 Term Loan Subfacility.
(a) Term Loans. Subject to the terms and conditions hereof, and
relying upon the representations and warranties herein set forth, each Bank with
a Revolving Credit Commitment severally agrees that the Borrower shall have the
right to borrow, repay and reborrow term loans in an aggregate amount not to
exceed ONE HUNDRED TWENTY FIVE MILLION AND
35
NO/100 DOLLARS (each a "Term Loan" and collectively, the "Term Loans"), provided
however, that the sum of (i) the outstanding principal balance of Revolving
Credit Loans, the Swing Loans, the Supplemental Swing Loans, the Stated Amount
of issued Letters of Credit, the unreimbursed draws of any Letter of Credit and
the Term Loans shall at not at any time exceed the Revolving Credit Commitments
as the same may be reduced from time to time. Notwithstanding anything contained
in the Agreement or any of the other Loan Documents to the contrary, the Term
Loan facility is a sub-facility of the Revolving Credit Commitments, and as such
shall mature, expire, be proportionally reduced or terminate upon the occurrence
of a like event affecting the Revolving Credit Commitments.
(i) The request by the Borrower for the advance with respect to the
Term Loans under this Section 2.4 shall be made by 1:00 P.M. (Pittsburgh,
Pennsylvania time) to the Agent in writing, by an Authorized Officer, (A) in the
case of Base Rate Loans, at least one (1) Business Day prior to the proposed
advance of the Term Loans and (B) in the case of Eurodollar Rate Loans, at least
three (3) Business Days prior to the proposed advance of the Term Loans, in each
case specifying the date on which such advance of the Term Loans is to be made,
selecting the interest rate therefor pursuant to Subsection 2.5(b) hereof and,
if appropriate, selecting the Interest Period therefor. The Borrower's written
request for the advance of the Term Loans shall be a request for the advance of
the entire amount of the Term Loans and shall be evidenced by a Request for Term
Loans substantially in the form of Exhibit "C" hereto (a "Term Loan Request"),
duly executed by an Authorized Officer of the Borrower. Promptly upon receipt of
such notice, the Agent shall notify each Bank of the Borrower's request, and
each such Bank shall make its pro rata share of such advance under the Term
Loans available at the Agent's principal office in immediately available funds
no later than 4:00 P.M. (Pittsburgh, Pennsylvania time) on the date of the
requested advance of Term Loans.
(ii) [Intentionally omitted.]
(b) Individual Bank Term Loans. The Commitment Percentage with respect
to Term Loans for each Revolving Credit Bank shall be the same Commitment
Percentage as such Bank's Commitment Percentage for Revolving Credit Loans
hereunder. Each Term Loan to be advanced shall be advanced pro rata among the
Revolving Credit Banks in an amount corresponding to its pro rata share of the
Revolving Credit Commitments; provided, however, that no Revolving Credit Bank
shall be required to make a Term Loan to the extent such loan would cause that
Bank's Revolving Credit Loans, Supplemental Swing Loans, Swing Loans, pro rata
share of Letters of Credit outstanding, unreimbursed draws of an Letter of
Credit plus Term Loans to exceed the Revolving Credit Commitment set forth on
Schedule 1.1 or in the most recent Assignment and Assumption Agreement to which
such Bank is a party. The failure of any Bank to make a Term Loan shall not
relieve any other Bank of its obligations to make a Term Loan nor shall it
impose any additional liability on any other Bank hereunder.
(c) Amortization of Term Loans; Mandatory Reduction of Revolving
Credit Commitments. The principal amount of all Term Loans shall be payable in
four (4) consecutive annual installments, each in the amount of $5,000,000,
commencing October 1, 2004 and on October 1 each year thereafter, with a final
payment of the remaining principal balance and accrued and unpaid interest due
on the Repayment Date. On October 1 of each year, the Revolving Credit
Commitments and Term Loan sublimit shall be automatically, permanently
36
reduced by an amount equal to the scheduled amortization of the Term Loans on
such date, and such reduction of Revolving Credit Commitments shall apply pro
rata among the Revolving Credit Banks.
(d) Interest. The Term Loans shall bear interest on the actual unpaid
principal amount thereof from time to time outstanding from the date thereof
until payment in full as set forth in Section 2.5 hereof.
(e) Voluntary Prepayments. The Borrower shall have the right at its
option to prepay any Portion of the Term Loans, in whole or in part, at any
time, subject to Borrower's obligation to pay a premium in accordance with
Section 2.6(ii)(A) if a Eurodollar Rate Loan (or part thereof) is prepaid on a
date other than the last day of the applicable Interest Period. Each such
prepayment shall be applied first to the principal balance of the Term Loans and
then to any accrued and unpaid interest. Each partial prepayment shall be in the
aggregate amount of $500,000 or more, provided that each increment in excess of
$500,000 shall be $100,000 or an integral multiple thereof. The Borrower shall
give the Agent prior written notice of each voluntary prepayment specifying the
aggregate principal amount to be prepaid, the date of prepayment and, if one or
more Eurodollar Rate Options are in effect, the Portion(s) of the Term Loans
being prepaid. Notice of prepayment having been given as aforesaid, the
principal amount specified in such notice shall become due and payable on the
prepayment date.
(f) Mandatory Prepayments. Within ten (10) days of any sale of assets
by the Borrower or any Subsidiary authorized by Section 6.5 when the fair market
value of the assets subject to such sale plus the fair market value of all such
sales in any Fiscal Year of the Borrower exceeds $5,000,000 in the aggregate,
the Borrower shall make a mandatory prepayment of principal on the Term Loans
equal to the Net Proceeds of such sale (as estimated in good faith by the
Borrower and acceptable to the Agent), together with accrued interest on such
principal amount. Within five (5) days of any receipt by the Borrower or any
Subsidiary of insurance or condemnation proceeds in excess of $5,000,000 other
than insurance and condemnation proceeds relating to the Collateral which are
addressed in the Loan Documents, the Borrower shall make a mandatory prepayment
of principal on the Term Loans equal to the amount of insurance and condemnation
proceeds received by the Borrower or any Subsidiary. Exclusive of the proceeds
of Indebtedness permitted under Section 6.6, upon any receipt by the Borrower or
any Subsidiary of proceeds of loans or other Indebtedness for Borrowed Money,
the Borrower shall make a mandatory prepayment of principal on the Loans equal
to the amount of proceeds of such loans or other Indebtedness for Borrowed
Money. All prepayments pursuant to this Section 2.4(f) shall be applied first to
payment of the principal amount of the Term Loans pro rata to the remaining
scheduled amortization payments thereunder.
(g) Repayment. On the Repayment Date, the Borrower shall repay in full
all of the then unpaid and outstanding Term Loans, together with all interest
thereon to the date of such repayment and all other fees and costs due
hereunder.
37
2.5 Certain Provisions Relating to Interest Rates.
The Notes shall bear interest, on the actual unpaid principal amount
thereof from time to time outstanding, from the date thereof until payment in
full, at one or more of the rates of interest set forth in this Section 2.5.
(a) Interest Payments. The Borrower shall pay accrued interest on the
unpaid aggregate principal balance of the Notes in arrears (A) with respect to
each Base Rate Loan and Money Market Rate Loan (i) on the first day of each
October, January, April and July of each year during the term hereof, (ii) at
maturity, whether by acceleration or otherwise, of the Notes, and (iii)
thereafter on demand until all amounts outstanding under the Notes are paid in
full; and (B) with respect to each Eurodollar Rate Loan (i) on the last day of
each Interest Period (provided, however, if the Interest Period chosen for any
Eurodollar Rate Loan exceeds three (3) months, interest on that Eurodollar Rate
Loan shall be due and payable on the last day of every three (3) month period
during such Interest Period and on the last day of such Interest Period), (ii)
at maturity, whether by acceleration or otherwise, of the Notes, and (iii)
thereafter on demand until all amounts outstanding under the Notes are paid in
full.
(b) Interest Rates. The unpaid principal amount of the Loans shall
bear interest for each day until due at one or more rates selected by the
Borrower from among the Options set forth below (subject to the permitted
interest rates that may be selected for each type of Loan as described below);
it being understood that, subject to the provisions of this Credit Agreement,
the Borrower may select different Options to apply simultaneously to different
Portions of the Loans but may select no more than eight (8) different Interest
Periods to apply to Eurodollar Rate Loans. In the event that any Swing Loan or
Supplemental Swing Loan is bearing interest at the Money Market Rate Option, no
additional Swing Loans or Supplemental Swing Loans, as the case may be, may be
borrowed at, or converted to, the Money Market Rate Option with respect to such
type of Loans. The Revolving Credit Loans shall bear interest at either the Base
Rate Option or the Eurodollar Rate Option. The Swing Loans shall bear interest
at the Base Rate Option or the Money Market Rate Option. The Supplemental Swing
Loans shall bear interest at either the Money Market Rate Option or the Base
Rate Option. The Term Loans shall bear interest at either the Base Rate Option
or the Eurodollar Rate Option.
(i) Base Rate Option. Interest under the Base Rate Option shall accrue
at a rate per annum (computed upon the basis of a year of 360 days and the
actual number of days elapsed) for each day equal to the sum of (A) the Base
Rate plus (B) the Applicable Base Rate Margin determined below.
38
============================================================
Applicable Base
Rate Margin
Ratio of Total Funded Debt to EBITDA (per annum)
------------------------------------------------------------
Greater than 2.0 to 1.0 25 basis points
------------------------------------------------------------
Greater than 1.5 to 1.0, but less than or
equal to 2.0 to 1.0 0 basis points
------------------------------------------------------------
Greater than 1.0 to 1.0, but less than or
equal to 1.5 to 1.0 0 basis points
------------------------------------------------------------
Greater than 0.50 to 1.0, but less than or
equal to 1.0 to 1.0 0 basis points
------------------------------------------------------------
Less than or equal to 0.50 to 1.0 0 basis points
============================================================
Upon receipt by the Agent of the quarterly financial statements delivered
pursuant to Subsection 5.2(a) hereof, the Applicable Base Rate Margin shall be
adjusted, if necessary, effective on the first day of the calendar month
following delivery of such quarterly financial statements. In calculating the
above ratio, Total Funded Debt shall be determined as of the end of such Fiscal
Quarter and EBITDA shall be measured, on a rolling four quarter basis, for the
immediately preceding four Fiscal Quarters then ended, taking into account the
pro forma adjustments to EBITDA, if any, made in accordance with the description
in Section 6.1.
(ii) Eurodollar Rate Option. Interest under the Eurodollar Rate Option
shall accrue at a rate per annum (computed upon the basis of a year of 360 days
and the actual number of days elapsed) for each day equal to the sum of (A) the
Eurodollar Rate for each Interest Period plus (B) the Applicable Eurodollar Rate
Margin as determined below.
==============================================================
Applicable
Eurodollar
Rate Margin
Ratio of Total Funded Debt to EBITDA (per annum)
--------------------------------------------------------------
Greater than 2.0 to 1.0 150 basis points
--------------------------------------------------------------
Greater than 1.5 to 1.0, but less than or
equal to 2.0 to 1.0 125 basis points
--------------------------------------------------------------
Greater than 1.0 to 1.0, but less than or
equal to 1.5 to 1.0 100 basis points
--------------------------------------------------------------
Greater than 0.50 to 1.0, but less than or
equal to1.0 to 1.0 87.5 basis points
--------------------------------------------------------------
Less than or equal to 0.50 to 1.0 75 basis points
==============================================================
Upon receipt by the Agent of the quarterly financial statements delivered
pursuant to Subsection 5.2(a) hereof, the Applicable Eurodollar Rate Margin
shall be adjusted, if necessary, effective on the first day of the calendar
month following delivery of such quarterly financial statements. In calculating
the above ratio, Total Funded Debt shall be determined as of the end of such
Fiscal Quarter and EBITDA shall be measured, on a rolling four quarter basis,
for the immediately preceding four Fiscal Quarters then ended, taking into
account the pro forma adjustments to EBITDA, if any, made in accordance with the
description in Section 6.1. Notwithstanding the table of applicable percentages
set forth above and the adjustment to the
39
Applicable Eurodollar Rate Margin in accordance with the terms of this
subsection 2.5(b)(ii), during the period from the Closing Date through the six
month anniversary of the Closing Date, the Applicable Eurodollar Rate Margin
(per annum) shall not be less than 100 basis points.
(iii) Money Market Rate Option. Interest under the Money Market Rate
Option shall accrue at a rate per annum (computed upon the basis of a year of
360 days and the actual number of days elapsed) for each day equal to the sum of
(A) the Money Market Rate in effect on each given day plus (B) the Applicable
Money Market Rate Margin as determined below.
==============================================================
Applicable Money
Market
Ratio of Total Funded Debt to Rate Margin
EBITDA (per annum)
------------------------------------------ -----------------
Greater than 2.0 to 1.0 150 basis points
Greater than 1.5 to 1.0, but less than or
equal to 2.0 to 1.0 125 basis points
Greater than 1.0 to 1.0, but less than or
equal to 1.5 to 1.0 100 basis points
Greater than 0.50 to 1.0, but less than or
equal to 1.0 to 1.0 87.5 basis points
Less than or equal to 0.50 to 1.0 75 basis points
==============================================================
Upon receipt by the Agent of the quarterly financial statements delivered
pursuant to Subsection 5.2(a) hereof, the Applicable Money Market Rate Margin
shall be adjusted, if necessary, effective on the first day of the calendar
month following delivery of such quarterly financial statements. In calculating
the above ratio, Total Funded Debt shall be determined as of the end of such
Fiscal Quarter and EBITDA shall be measured, on a rolling four quarter basis,
for the immediately preceding four Fiscal Quarters then ended, taking into
account the pro forma adjustments to EBITDA, if any, made in accordance with the
description in Section 6.1. Notwithstanding the table of applicable percentages
set forth above and the adjustment to the Applicable Money Market Rate Margin in
accordance with the terms of this subsection 2.5(b)(iii), during the period from
the Closing Date through the six month anniversary of the Closing Date, the
Applicable Money Market Rate Margin (per annum) shall not be less than 100 basis
points.
(iv) Payment Default Rate. Upon the expiration of any cure period
relating to an Event of Default pursuant to Section 8.1 hereof, and during the
period in which such Event of Default continues, (A) the principal amount of the
Base Rate Loans and Money Market Rate Loans, whether or not the same have become
due and payable by maturity, acceleration, declaration or otherwise shall bear
interest at a rate per annum which shall be two hundred (200) basis points above
the rate otherwise in effect for the Base Rate Loans and Money Market Rate
Loans, respectively, and (B) the principal amount of all of the Eurodollar Rate
Loans, whether or not the same have become due and payable by maturity,
acceleration, declaration or otherwise, shall bear interest, until the end of
the current Interest Period, at a rate per annum which shall be two hundred
(200) basis points (2%) above the rate otherwise in effect for the Eurodollar
Rate
40
Loans. At the end of each then current Interest Period, such Eurodollar Rate
Loans shall automatically be converted to Base Rate Loans, and thereafter the
interest rate shall be calculated in accordance with item (A) of this Subsection
2.5(iv).
(c) Interest Periods; Limitations on Elections. In the event that the
Borrower shall at any time fail to elect an interest rate to be applicable to a
Portion of the Loan, such Portion shall bear interest at the Base Rate Option,
until a different interest rate is elected by the Borrower in accordance with
the provisions of this Agreement. At any time when the Borrower shall select,
convert to or renew the Eurodollar Rate Option to apply to all or any Portion of
the outstanding Revolving Credit Loans, it may fix one or more Interest Periods
to apply to Eurodollar Rate Loans. All the foregoing, however, is subject to the
following:
(i) any Interest Period which would otherwise end on a day which is
not a Business Day shall be extended to the next Business Day unless such
Business Day falls in the succeeding calendar month in which case such Interest
Period shall end on the next preceding Business Day;
(ii) any Interest Period which begins on the last day of a calendar
month or on a day for which there is no numerically corresponding day in the
subsequent calendar month during which such Interest Period is to end shall end
on the last Business Day of such subsequent month;
(iii) the Eurodollar Rate Loan for each Interest Period shall be in an
aggregate principal amount of $1,000,000 or more; provided, however, that each
incremental unit in excess of $1,000,000 shall be $100,000 or an integral
multiple thereof; and
(iv) no Interest Period may be elected which would end after the
Repayment Date.
(d) Elections, Conversions or Renewals of Interest Rate Options.
Elections of or conversions to the Base Rate Option shall continue in effect
until converted as hereinafter provided. Elections of, conversions to or
renewals of the Eurodollar Rate Option shall expire as to each Eurodollar Rate
Loan at the expiration of the applicable Interest Period.
At any time with respect to any Base Rate Loan or at the expiration of
the applicable Interest Period with respect to any Eurodollar Rate Loan, the
Borrower (subject to Subsection 2.5(e)) may cause all or any part of the
principal amount of such Loan to be converted to and/or (in the case of
Eurodollar Rate Loans) to be renewed under the Eurodollar Rate Option by notice
to the Agent as hereinafter provided. Such notice (i) may be oral or in writing
and if oral immediately confirmed in writing to the Agent, (ii) shall be
irrevocable, (iii) shall be given not later than 1:00 P.M. (Pittsburgh,
Pennsylvania time) not less than three (3) Business Days prior to the proposed
effective date for conversion to or renewal of, either in whole or in part, the
Eurodollar Rate Option and (iv) shall set forth:
(A) the effective date, which shall be a Business Day;
(B) the new Interest Period or Interest Periods selected; and
41
(C) with respect to each such Interest Period, the aggregate principal
amount of the corresponding Eurodollar Rate Loan.
At the expiration of each Interest Period, any part (including the
whole) of the principal amount of the corresponding Eurodollar Rate Loan, as to
which no notice of conversion or renewal has been received as provided above,
shall automatically be converted to a Base Rate Loan. The Agent shall notify the
Borrower of any such automatic conversion.
(e) Eurodollar Rate Unascertainable. In the event that, on any date on
which the Eurodollar Rate would otherwise be set, the Agent shall have
determined (which determination shall be prima facie evidence of the
unascertainability of the Eurodollar Rate) that, by reason of circumstances
affecting the eurodollar market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate, the Agent shall give prompt notice of such
determination to the Borrower, and, until the Agent notifies the Borrower that
the circumstances giving rise to such determination no longer exist, the right
of the Borrower to borrow under, convert to or renew the Eurodollar Rate Option
shall be suspended. Any notice of borrowing under, conversion to or renewal of a
Eurodollar Rate Loan which was to become effective during the period of such
suspension shall be treated as a request to borrow under, convert to or renew a
Base Rate Loan with respect to the principal amount therein specified.
(f) Illegality. If any Bank shall determine in good faith (which
determination shall be final and conclusive) that compliance by such Bank or its
Lending Office with any applicable law, treaty or governmental rule, regulation,
guideline, order, request or directive (whether or not having the force of law),
or the interpretation or application thereof by any governmental authority, has
made it unlawful or commercially impractical for any such Bank to make or
maintain Eurodollar Rate Loans (including but not limited to acquiring
eurodollar liabilities to fund Eurodollar Rate Loans), such Bank shall give
notice of such determination to the Agent and the Borrower; provided, however,
that before the giving of such notice pursuant to this Subsection 2.5(f), such
Bank shall designate a different Lending Office, if such designation will avoid
the need for such notice and will not in the judgment of such Bank be otherwise
disadvantageous to such Bank (in determining the issue of "disadvantageous," no
Bank shall be permitted to rely solely upon the basis that it would be
disadvantageous to continue to have Loans subject to the Eurodollar Rate Option
because it is more profitable to compute interest at the Base Rate Option).
Notwithstanding any provision of this Credit Agreement to the contrary, unless
and until such Bank shall have given notice that the circumstances giving rise
to such determination no longer apply:
(A) with respect to any Interest Periods thereafter commencing,
interest on any Eurodollar Rate Loan shall be computed and payable under the
Base Rate Option; and
(B) on such date, if any, as shall be required by law, any Eurodollar
Rate Loans then outstanding shall be automatically converted to Base Rate Loans
and the Borrower shall pay to the Agent, for the account of the Banks, the
accrued and unpaid interest on such Eurodollar Rate Loans to (but not including)
the date of such conversion.
Such Bank shall furnish to the Agent and the Borrower a certificate as
to the amount necessary to compensate such Bank for the costs associated with
any prepayment
42
pursuant to Subsection 2.5(f)(B) above (which certificate shall be prima facie
evidence of the amount owed by the Borrower to such Bank), and the Borrower
shall pay such amount to the Agent for the account of such Bank, as additional
consideration hereunder, within fifteen (15) days of the Borrower's receipt of
such certificate.
2.6 Yield Protection and Reimbursement.
(i) Yield Protection. Except for changes addressed in Subsection
2.5(f), if any Governmental Rule issued after the Closing Date or if any change
on or after the Closing Date in any Governmental Rule (including, without
limitation, Regulation D) or the interpretation or application thereof by any
Governmental Person charged with the administration thereof (whether or not
having the force of law):
(A) subjects any Bank, its Lending Office or any Issuing Bank to any
tax, duty, levy, impost, charge, fee, deduction or withholding of any kind
hereunder (other than (x) a tax, including, without limitation, a branch tax,
imposed or based upon the income of such Bank, its Lending Office or such
Issuing Bank and (y) any franchise tax imposed on such Bank, its Lending Office
or such Issuing Bank by the laws of the jurisdiction under which such Bank, such
Lending Office or such Issuing Bank is organized or any political subdivision
thereof) or changes the basis of taxation of any Bank, its Lending Office or any
Issuing Bank with respect to the payments by the Borrower of principal or
interest due hereunder (other than any change which affects, and to the extent
that it affects, the taxation by the United States or any state thereof of the
total net income of such Bank or such Issuing Bank);
(B) imposes, modifies or deems applicable any reserve, special deposit
or similar requirements against assets of, deposits with or for the account of,
or credit extended, commitments to lend or any Letters of Credit issued or
participations purchased therein by any Bank, its Lending Office, any Issuing
Bank or any corporation controlling such Bank or such Issuing Bank (other than
such requirements which are included in determining the applicable rate or rates
of interest hereunder); or
(C) imposes upon any Bank, its Lending Office or any Issuing Bank any
other obligation or condition with respect to this Credit Agreement,
and the result of all of the foregoing is to increase the cost to such Bank, its
Lending Office, any Issuing Bank or any corporation controlling such Bank or
such Issuing Bank, of making the Loans, extending the Revolving Credit
Commitment, issuing any Letter of Credit or making or maintaining any
participation in any Letter of Credit, reduce the net after-tax income
receivable by such Bank, its Lending Office or such Issuing Bank from payments
under this Credit Agreement or impose any expense upon any Bank, its Lending
Office, any Issuing Bank or any corporation controlling such Bank, reduce the
rate of return on the capital of such Bank, its Lending Office, such Issuing
Bank or any corporation controlling such Bank by an amount which such Bank or
such Issuing Bank in good xxxxx xxxxx material,
(A) the Bank or any Issuing Bank so affected shall promptly
notify the Borrower and the Agent of the happening of such event; and of the
amount determined by such Bank, its Lending Office or such Issuing Bank (which
determination shall be prima facie
43
evidence of the amount owed by the Borrower to such Bank) to be necessary to
compensate such Bank or the relevant Issuing Bank for such increase in cost,
reduction in net after tax-income or additional expense;
(B) the Borrower shall pay to the affected Bank or the affected
Issuing Bank, on demand, as additional interest on the Loans or draws under any
Letter of Credit, such amount as will compensate such Bank or such Issuing Bank
for such additional cost or expense or reduced amount, calculated from the date
of the notification by such Bank or such Issuing Bank; and
(C) the Borrower may pay to such affected Bank or affected
Issuing Bank the affected Loan or draw under any Letter of Credit in full
without the payment of any additional amount other than on account of such
Bank's or such Issuing Bank's out-of-pocket losses (including funding losses, if
any, as provided in paragraph (ii) below) not otherwise provided for in
subparagraph (B) immediately above.
A certificate as to the increased cost or reduced amount as a result of any of
the foregoing events shall be promptly submitted by such Bank or such Issuing
Bank to the Borrower and the Agent in accordance with the provisions of Section
10.2 hereof. Such certificate shall, in the absence of manifest error, be
conclusive and binding as to the amount thereof. Notwithstanding anything
contained in this Section 2.6 to the contrary, each Bank agrees that it will not
make a request for compensation unless at such time the Bank is making a similar
claim for compensation from certain of its other borrowers which are similarly
situated.
(ii) Reimbursement of Costs and Losses.
(A) Voluntary Breakage. The Borrower hereby agrees to indemnify each
Bank against any loss or expense which such Bank may sustain or incur as a
consequence of the Borrower (x) failing to make any borrowing, conversion or
renewal of a Eurodollar Rate Loan on the scheduled date, or (y) failing to make
when due (whether by declaration, acceleration or otherwise); any payment or
prepayment of any amount due hereunder or in voluntarily making any payment or
prepayment of any Eurodollar Rate Loan or any part thereof on any day other than
the last day of its Interest Period.
(B) Involuntary Breakage. The Borrower hereby agrees to indemnify each
Bank against any loss or expense which such Bank may sustain or incur as a
consequence of the Borrower (x) failing, through no fault of its own, including,
without limitation, the circumstances specified in Subsection 2.5(f), to make
any borrowing, conversion or renewal of a Eurodollar Rate Loan on the scheduled
date, (y) failing to make when due (whether by declaration, acceleration or
otherwise) any payment or prepayment of any amount due hereunder or (z) making
any payment or prepayment of any Eurodollar Rate Loans or any part thereof on
any day other than the last day of its Interest Period, including, but not
limited to, any premium or penalty incurred by such Bank in respect of funds
borrowed by it for the purpose of making or maintaining any Eurodollar Rate Loan
or any part thereof as determined by such Bank in the exercise of its sole but
reasonable discretion.
44
(iii) Notice of Costs and Losses. Each Bank will promptly notify the
Borrower and the Agent of any event of which it has knowledge which will entitle
such Bank to compensation pursuant to this Section 2.6 and will designate a
different Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. Any Bank incurring such loss or expense
pursuant to this Section 2.6 shall furnish to the Borrower (through the Agent) a
certificate signed by an appropriate officer of such Bank as to the amount of
any such loss or expense showing the related calculations in reasonable detail
(which certificate shall be prima facie evidence of the amount owed by the
Borrower to such Bank), and the Borrower shall pay such amount to such Bank
within thirty (30) days of the Borrower's receipt of such certificate).
Notwithstanding the foregoing provisions of this Section 2.6, the Borrower shall
only be obligated to compensate any Bank for any amount arising or accruing
during (x) any time or period commencing not more than ninety (90) days prior to
the date on which such Bank notifies the Agent and the Borrower that it proposes
to demand such compensation and identifies to the Agent and the Borrower the
statute, regulation or other basis upon which the claimed compensation is or
will be based and (y) any time or period during which, because of the
retroactive application of such statute, regulation or other basis, such Bank
did not know that such amount would arise or accrue.
The Borrower's obligations under this Section 2.6 shall survive the
termination of this Credit Agreement and repayment of the Bank Indebtedness.
2.7 Capital Adequacy.
If, after the Closing Date, any adoption of, any change to or any change in
the interpretation of any Governmental Rule by any Governmental Person
exercising control over banks or financial institutions generally or any court
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by any Bank or any corporation
controlling such Bank (a "Capital Adequacy Event"), and the result of such
Capital Adequacy Event is to reduce the rate of return on capital of such Bank
or the capital of any corporation controlling such Bank as a consequence thereof
to a level below that which such Bank could have achieved but for such Capital
Adequacy Event (taking into consideration such Bank's policies with respect to
capital adequacy) by an amount which such Bank deems to be material, such Bank
shall promptly deliver to the Borrower and the Agent a statement of the amount
necessary to compensate such Bank for the reduction in the rate of return on its
capital attributable to its Loans and the commitments under this Credit
Agreement (the "Capital Compensation Amount"). Each Bank shall determine the
Capital Compensation Amount in good faith, using reasonable attribution and
averaging methods. Each Bank shall, from time to time, furnish to the Borrower
and the Agent a certificate as to the amount so determined. Such certificate
shall, in the absence of manifest error, be conclusive and binding as to the
amount thereof. Such amount shall be due and payable by the Borrower to such
Bank ten (10) days after such notice is given. As soon as practicable after any
Capital Adequacy Event, such Bank shall submit to the Borrower and the Agent
estimates of the Capital Compensation Amounts that would be payable as a
function of such Bank's commitments hereunder.
The Borrower's obligations under this Section 2.7 shall survive the
termination of this Credit Agreement and repayment of the Bank Indebtedness.
45
2.8 [Intentionally Omitted.]
2.9 Lending Offices.
Each Bank may book its Loans at any Lending Office selected by such Bank
and may change its Lending Office from time to time. All terms of this Credit
Agreement shall apply to any such Lending Office and the Notes shall be deemed
held by each Bank for the benefit of such Lending Office. Each Bank may, by
written notice to the Agent and the Borrower, designate a Lending Office through
which its Loans will be made by it and for whose account payments are to be
made.
2.10 Time, Place and Manner of Payments.
All payments to be made by the Borrower under the Notes or of the Agent's
Fee, the Commitment Fee and all other amounts due the Agent, whether for its own
account or for the benefit of the Banks, hereunder shall be made at the
principal office of the Agent set forth in Article X. All payments to be made by
the Borrower under this Credit Agreement shall be paid in Dollars in immediately
available funds no later than 1:30 P.M. (Pittsburgh, Pennsylvania time) on the
date such payment is due. Except as specified elsewhere, if the date on which
any payment is due is not a Business Day such payment shall be due and payable
on the next succeeding day which is a Business Day. Such extension of time shall
be included in computing any interest or fees in respect of such payment.
2.11 Payment From Accounts Maintained by the Borrower.
In the event that any payment of principal, interest, Agent's Fee, the
Closing Fee, the Commitment Fee, the Letter of Credit Fees or any other amount
due the Agent, whether for its own account or for the benefit of the Banks,
under the Loan Documents is not paid when due, the Agent is hereby authorized to
effect such payment by debiting any demand deposit account of the Borrower
maintained with the Agent. This right of debiting accounts of the Borrower is in
addition to any right of set-off accorded the Agent hereunder or by operation of
law.
2.12 Swing Loan Settlement Date Procedures.
In order to minimize the transfer of funds between the Banks and National
City Bank, the Borrower may borrow, repay and reborrow Swing Loans and National
City Bank may make Swing Loans as provided herein during the period between
Settlement Dates. On each Swing Loan Settlement Date, not later than 2:00 P.M.
(Pittsburgh, Pennsylvania time), the Agent shall notify each Bank of its
Commitment Percentage for Revolving Credit Loans of the total of the Revolving
Credit Loans to be made on such date to repay the Swing Loans. Prior to 4:00
P.M. (Pittsburgh, Pennsylvania time) on such Swing Loan Settlement Date, each
Bank with Revolving Credit Commitments shall pay to the Agent the amount of its
Revolving Credit Loan to repay the outstanding Swing Loans. These settlement
procedures are established solely as a matter of administrative convenience, and
nothing contained in this Section 2.12 shall relieve the Banks of their
obligations to fund Revolving Credit Loans on dates other than a Swing Loan
Settlement Date pursuant to Section 2.1 or 2.2(B).
46
2.13 Substitution of a Bank.
If (i) the obligation of any Bank to fulfill its obligations in relation to
the issuance of any Letter of Credit or the purchase of any risk participations
therein under Section 2.3 has been suspended pursuant to Subsection 2.3(b)(ii)
hereof, (ii) the obligation of any Bank to make Eurodollar Rate Loans has been
suspended pursuant to Subsection 2.5(e) hereof, (iii) any Bank has demanded
compensation under Section 2.5 or Section 2.6 hereof or (iv) any Bank has failed
to fund any Loan properly requested hereunder, the Agent shall, at the request
of the Borrower and with the assistance of the Borrower, undertake in good faith
to obtain a mutually satisfactory substitute lending institution or lending
institutions (which may be one or more of the Banks) to purchase the Revolving
Credit Note and the Supplemental Swing Loan Note, as the case may be, and assume
the Revolving Credit Loans, the Supplemental Swing Loans, the Revolving Credit
Commitment and the Supplemental Swing Loan Commitment of such Bank, as the case
may be, provided, however, in no way shall the Agent's efforts in trying to
obtain a substitute lending institution imply that the Agent or National City
Bank has any obligation to acquire such interest for its own account.
ARTICLE III. SECURITY; SET-OFF
3.1 Security Interests; Mortgages.
The Borrower hereby grants, and shall cause the Subsidiaries to grant to
the Agent for the benefit of the Agent and the Banks, as security for the Bank
Indebtedness, a security interest in all the capital stock and related property
of the Material Subsidiaries organized under the laws of a state or territory of
the United States and described in the Pledge Agreement and will cause all of
the capital stock and related property of (i) any Material Subsidiary organized
under the laws of a state or territory of the United States acquired pursuant
Section 6.13 or (ii) any Subsidiary organized under the laws of a state or
territory of the United States that becomes a Material Subsidiary after the date
hereof, to be pledged to the Agent for the benefit of the Banks. In the event
that the quarterly financial statements delivered to the Agent and the Banks
pursuant to Subsection 5.2(a) hereof evidence that the ratio of Total Funded
Debt to EBITDA is equal to or greater than 1.75 to 1.0 for two consecutive
Fiscal Quarters, the Borrower shall grant and shall cause its Subsidiaries to
grant to the Agent for the benefit of the Agent and the Banks, as security for
the Bank Indebtedness, a mortgage lien and security interest in the Real
Property and related property (that is not encumbered by a Permitted Encumbrance
identified on Schedule 6.7 or permitted under Section 6.7(viii) which would
prohibit the granting of a Mortgage in favor of the Agent), pursuant to
Mortgages substantially in the form of Exhibit J with appropriate changes to
reflect local law requirements, all as the Agent may require in its reasonable
discretion; provided however, that if the aggregate value of all Real Property
owned by the Borrower and its Subsidiaries which is not located in any state or
territory of the United States is less than $10,000,0000, such Real Property is
not required to be subject to a mortgage lien in favor of the Agent. In
connection with the Borrower's and such Subsidiaries' execution and delivery of
the Mortgages, the Borrower and such Subsidiaries shall deliver (i) title
insurance policies or binders in favor of the Agent for the benefit of the Banks
in customary ALTA current mortgagee's form, and in amount satisfactory to the
Agent, with premiums paid thereon, issued by a title insurance company
acceptable to the Agent and insuring the new Mortgages as a valid first priority
Lien upon the relevant Loan Party's title to the owned real property and (ii) an
opinion of counsel as
47
required by the Agent with respect to the Mortgages.
Thereafter, in the event that the quarterly financial statements delivered
to the Agent and the Banks pursuant to Subsection 5.2(a) hereof evidence that
the ratio of Total Funded Debt to EBITDA is less than 1.75 to 1.0 for two
consecutive Fiscal Quarters of the Borrower (as calculated in accordance with
Section 6.1) and no Event of Default has occurred and is continuing, the Agent
shall release the liens and security interests granted by the Borrower and its
Subsidiaries pursuant to the Mortgages. In the event that the liens pursuant to
the Mortgages have been released pursuant to the terms of the preceding sentence
and the ratio of Total Funded Debt to EBITDA (as calculated in accordance with
Section 6.1) thereafter equals or exceeds 1.75 to 1.0 for two consecutive Fiscal
Quarters, then upon request of the Agent as directed by the Required Banks, the
Borrower shall re-grant and shall cause its Subsidiaries to re-grant to the
Agent for the benefit of the Agent and the Banks, as security for the Bank
Indebtedness, a mortgage lien and security interest in the Real Property and
related property (that is not encumbered by a Permitted Encumbrance identified
in Section 6.7(viii) which would prohibit the granting of a Mortgage in favor of
the Agent).
3.2 Set-Off.
The Borrower hereby gives to the Banks a lien and security interest for the
amount of any Bank Indebtedness upon and in any property, credits, securities or
Monies (whether matured or unmatured) of the Borrower which may at any time be
delivered to, or be in the possession of, or owed by any Bank or any affiliate
of any Bank in any capacity whatever, including the balance of any deposit
account but excluding any trust, fiduciary, reserve, electronic funds transfer
or direct loan accounts, in each case maintained by the Borrower with such Bank.
The Borrower hereby authorizes each Bank in case of an Event of Default, at such
Bank's option, at any time and from time to time, to apply, at the discretion of
such Bank, to the payment of Bank Indebtedness, any and all such property,
credits, securities or Monies now or hereafter in the hands of such Bank
belonging or owed to the Borrower.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
To induce the Banks, the Issuing Banks and the Agent to enter into
this Credit Agreement, to induce the Banks to make the Revolving Credit Loans,
the Term Loans, the Swing Loans, and the Supplemental Swing Loans herein
provided for, and to induce the Issuing Banks to issue the Letters of Credit
herein provided for, the Borrower represents and warrants to the Agent, the
Banks and the Issuing Banks that:
4.1 Existence.
(a) Borrower's Existence. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and is duly qualified and in good standing as a
foreign corporation, authorized to do business in each jurisdiction where,
because of the nature of its activities or properties, such qualification is
required, except for those foreign jurisdictions where the Borrower's
non-qualification would not have a Material Adverse Effect.
48
(b) Active Subsidiary's Existence. Schedule 4.1 attached hereto sets
forth each Active Subsidiary of the Borrower in existence as of the Closing
Date. Except for Active Subsidiaries that have entered into a merger as
permitted by Section 6.10 herein and are not the surviving corporation, each of
the Borrower's Active Subsidiaries is duly organized, validly existing and in
good standing under the laws of the state of its incorporation and is duly
qualified and in good standing as a foreign corporation, authorized to do
business in each jurisdiction where, because of the nature of its activities or
properties, such qualification is required, except for those foreign
jurisdictions where such Active Subsidiary's non-qualification would not have a
Material Adverse Effect.
4.2 Authority.
The Borrower has full power, authority and legal right to engage in the
activities conducted or proposed to be conducted by it and, with respect to the
Loans and Letters of Credit, to execute, deliver and perform its obligations
under the Loan Documents. The Borrower has taken all corporate actions necessary
or appropriate to authorize the execution, delivery and performance of the Loan
Documents.
4.3 Capitalization of Subsidiaries.
Schedule 4.3 lists all of the Subsidiaries of the Borrower, the issued and
outstanding stock of each Subsidiary and the owner thereof. All capital stock of
the Subsidiaries identified on Schedule 4.3 has been duly authorized and validly
issued and is fully paid and nonassessable. There is no stock or securities
convertible or exchangeable for any shares of such Subsidiary's common stock.
Except as set forth on Schedule 4.3, there are no outstanding rights or options
to subscribe for or to purchase any of such Subsidiary's capital stock or any
stock or securities convertible into or exchangeable for any Subsidiary's common
stock.
4.4 Validity and Enforceability.
This Credit Agreement constitutes a legal, valid and binding obligation of
the Borrower, enforceable in accordance with its terms, subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law). The Notes, and each other Loan Documents, when duly executed by the
Borrower, and delivered in accordance with this Credit Agreement, will
constitute legal, valid and binding obligations of the Borrower and the Active
Subsidiaries (as the case may be), enforceable in accordance with their
respective terms, subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and to general principles of equity (regardless
of whether considered in a proceeding in equity or at law).
4.5 No Conflict.
The execution and delivery of this Credit Agreement, the Notes, and the
other Loan Documents by the Borrower and the other Loan Parties does not
conflict with or constitute a violation of, breach of, or default under (i) its
respective Certificate/Articles of Incorporation or By-Laws, (ii) any indenture,
mortgage, deed of trust, lease, note agreement or other agreement or
49
instrument to which the Borrower or any other Loan Party is a party or by which
the Borrower or any other Loan Party is bound, or (iii) any Governmental Rule of
any Governmental Person having jurisdiction over the Borrower or any other Loan
Party or any of their respective activities or property.
4.6 Consents.
All consents, approvals, authorizations and orders of governmental or
regulatory authorities which are required for the consummation of the
transactions contemplated by this Credit Agreement, the Notes and the other Loan
Documents, or which, in any way, would materially adversely affect the validity
or enforceability of any such Loan Document, if not obtained, have been
obtained.
4.7 Litigation.
Except as set forth on Schedule 4.7, there are no actions, suits,
investigations, litigation or governmental proceedings pending, or to the
knowledge of the Borrower threatened, against it or any Active Subsidiary with
respect to the Borrower or any Active Subsidiary, the results of which would
individually or in the aggregate constitute a Material Adverse Change.
4.8 Compliance With Applicable Laws, etc.
Neither the Borrower nor any of its Active Subsidiaries is in default with
respect to any order, writ, injunction or decree (i) of any court or (ii) of any
Governmental Person and the Borrower and its Active Subsidiaries are each
complying with all applicable statutes and regulations of each Governmental
Person having jurisdiction over their respective activities; provided, however,
the Borrower shall not be deemed in violation of this Section 4.8 as a result of
any non-compliance if (A) such order, writ, injunction or decree is being
contested by the Borrower or any Active Subsidiary in good faith and by proper
proceedings appropriately conducted or (B) the non-compliance with such order,
writ, injunction, decree statute or regulation would not constitute a Material
Adverse Change.
4.9 Financial Statements.
Copies of the Borrower's (i) audited Consolidated financial statements for
the Fiscal Year ended June 30, 2002 and (ii) unaudited Consolidated financial
statements for the Fiscal Year ended June 30, 2003, each prepared on a basis not
inconsistent with that of the preceding Fiscal Year, have been furnished to the
Agent, and each such statement presents fairly the Consolidated financial
condition of the Borrower as of such date and the results of its operations.
4.10 Environmental Matters.
(i) Except as set forth on Schedule 4.10 hereto, to the best of the
Borrower's knowledge:
(A) the Borrower and each of its Active Subsidiaries is in compliance
with all applicable Environmental Laws except where noncompliance with any such
Environmental Law has not, or could not reasonably be expected to, result in a
Material Adverse Effect;
50
(B) other than materials used or produced, held, transported and
disposed of in accordance with all Environmental Laws, neither the Borrower nor
any Active Subsidiary has used in its operations, and the property of the
Borrower or such Active Subsidiary is not now and has never been used by the
Borrower or such Active Subsidiary (or, to the best knowledge of the Borrower
after due inquiry, by any predecessor in possession or other Person) for
treatment, generation, storage, recycling, or disposal of Hazardous Substances
in violation of any Environmental Laws, except where noncompliance with any such
Environmental Law has not, or could not reasonably be expected to, result in a
Material Adverse Effect;
(C) no Hazardous Substances are present at any property owned or
leased by the Borrower or any Active Subsidiary, nor will any Hazardous
Substances be present upon any such property or in the operation thereof by the
Borrower or any Active Subsidiary, except which are handled in accordance with
all Environmental Laws, in proper storage containers or where such Hazardous
Substances have not been brought to or stored on the property by the Borrower or
its Active Subsidiaries and have not, or could not reasonably be expected to,
result in a Material Adverse Effect; and
(D) the Borrower and its Active Subsidiaries have all necessary and
appropriate environmental permits, including but not limited to those for air
emissions, water discharges, and treatment, storage and disposal of the
Hazardous Substances, except where noncompliance with any the foregoing has not,
or could not reasonably be expected to, result in a Material Adverse Effect.
(ii) There are no past, pending or, to the best of the Borrower's
knowledge, threatened Environmental Claims by or against the Borrower or any
Active Subsidiary or with respect to any property of the Borrower or such Active
Subsidiary that, individually or in the aggregate, could have a Material Adverse
Effect on the Borrower and its Active Subsidiaries, taken as a whole.
4.11 Deferred Compensation Plans.
Except as listed on Schedule 4.11 attached hereto, neither the Borrower nor
any of its Active Subsidiaries has any employee pension benefit plan (as that
term is defined in Section 3(2)(A) of ERISA) other than an employee stock
ownership plan.
Except as set forth on Schedule 4.11:
(A) The Borrower and each ERISA Affiliate is in compliance in all
material respects with any applicable provisions of ERISA with respect to all
Benefit Arrangements, Plans and Multiemployer Plans. There has been no
Prohibited Transaction with respect to any Benefit Arrangement or any Plan or,
to the best knowledge of the Borrower, with respect to any Multiemployer Plan or
Multiple Employer Plan, which could result in any material liability of the
Borrower or any ERISA Affiliates. The Borrower and all ERISA Affiliates have
made when due any and all payments required to be made under any agreement
relating to a Multiemployer Plan or a Multiple Employer Plan or any Governmental
Rule pertaining thereto. With respect to each Plan and Multiemployer Plan, the
Borrower and all ERISA Affiliates (i) have fulfilled in all material respects
their obligations under the minimum funding standards of ERISA, (ii) have not
51
incurred any liability to the PBGC, and (iii) have not had asserted against them
any penalty for failure to fulfill the minimum funding requirements of ERISA.
(B) To the best of the Borrower's knowledge, each Multiemployer Plan
and Multiple Employer Plan is able to pay benefits thereunder when due.
(C) Neither the Borrower nor any ERISA Affiliate has instituted or
intends to institute proceedings to terminate any Plan.
(D) No event requiring notice to the PBGC under Section 302(f)(4)(A)
of ERISA has occurred or is reasonably expected to occur with respect to any
Plan, and no amendment with respect to which security is required under Section
307 of ERISA has been made or is reasonably expected to be made to any Plan.
(E) The aggregate actuarial present value of all benefit liabilities
(whether or not vested) under each Plan, determined on a plan termination basis,
as disclosed in, and as of the date of, the most recent actuarial report for
such Plan, does not exceed the aggregate fair market value of the assets of such
Plan.
(F) Neither the Borrower nor any ERISA Affiliate has incurred or
reasonably expects to incur any material withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. Neither the Borrower nor any ERISA
Affiliate has been notified by any Multiemployer Plan or Multiple Employer Plan
that such Multiemployer Plan or Multiple Employer Plan has been terminated
within the meaning of Title IV of ERISA and, to the best knowledge of the
Borrower, no Multiemployer Plan or Multiple Employer Plan is reasonably expected
to be reorganized or terminated, within the meaning of Title IV of ERISA.
(G) To the extent that any Benefit Arrangement is insured, the
Borrower and all ERISA Affiliates have paid when due all premiums required to be
paid for all periods through the Closing Date. To the extent that any Benefit
Arrangement is funded other than with insurance, the Borrower and all ERISA
Affiliates have made when due all contributions required to be paid for all
periods through the Closing Date.
(H) All Plans, Benefit Arrangements and Multiemployer Plans have been
administered in accordance with their terms and applicable Governmental Rule.
4.12 Title to Properties.
The Borrower and each Active Subsidiary has good title to all of its
properties and assets except for (i) defects in title which, taken as a whole,
are not material to the Borrower or such Active Subsidiary and (ii) other
Permitted Encumbrances. All of the Borrower's and each Active Subsidiary's Real
Property is listed on Schedule 4.12 hereto.
4.13 Intellectual Property.
The Borrower and each Active Subsidiary owns or licenses all patents,
patent applications, trademarks, trademark applications, permits, service marks,
trade names, copyrights, copyright applications, licenses, franchises,
authorizations and other intellectual
52
property rights that are necessary for the operations of its business, without
infringement upon or conflict with the rights of any other Person with respect
thereto, except where the consequences in the aggregate would not be reasonably
expected to have a Material Adverse Effect. To the best knowledge of the
Borrower, (i) no device, product, process, method, substance, part or component
or other material now employed, or now contemplated to be employed, by the
Borrower or any Active Subsidiary infringes upon or conflicts with any rights
owned by any other Person and (ii) no claim or litigation regarding any of the
foregoing is pending or threatened. No patent, invention, device, application,
principle and no Governmental Rule, standard or code involving the Borrower's or
any Active Subsidiary's intellectual property is pending or, to the knowledge of
the Borrower, proposed, except where the consequences in the aggregate would not
be reasonably expected to have a Material Adverse Effect. All of the Borrower's
and each Active Subsidiary's material patents, trademarks, permits, service
marks, trade names, copyrights, licenses, franchises and authorizations are
listed on Schedule 4.13 hereto.
4.14 Tax Returns and Payments.
The Borrower and each of its Active Subsidiaries have filed all United
States Federal tax returns and the Borrower and each Active Subsidiary has filed
all other material state or foreign tax returns, or extensions for the filing of
such tax returns within the time parameters permitted by law, which, to the
knowledge of the Borrower, are required by law to be filed by them (except where
the failure to file such tax returns would not materially adversely affect the
business, Consolidated financial conditions or the Consolidated results of
operations of the Borrower and its Subsidiaries as a whole) and have paid all
taxes due pursuant to such returns or pursuant to any assessments levied upon
the Borrower, the Active Subsidiaries or any of their respective properties,
assets or income which are due and payable, (other than those assessments,
taxes, fees or other charges, the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the Borrower
or such Active Subsidiary). The charges, accruals and reserves on the books of
the Borrower and its Active Subsidiaries, in respect of federal, state and
foreign income taxes for all fiscal periods to date, are adequate in accordance
with GAAP.
4.15 Material Adverse Change.
Since June 30, 2002, there has been no Material Adverse Change in
operations or financial condition of the Borrower, individually, or the Borrower
and its Subsidiaries taken as a whole.
4.16 Solvency.
The Borrower and each Active Subsidiary is, and after giving effect to the
transactions contemplated pursuant to this Credit Agreement and the other Loan
Documents will be, solvent.
4.17 Investment Company Act.
The Borrower is not an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended from time to
time, or a company under
53
the "control" of an "investment company," as those terms are defined in such
Act, and shall not become such an "investment company" or under such "control."
4.18 Public Utility Holding Company Act.
The Borrower is not a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or an "affiliate" of
a "subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended from time to time.
4.19 Liens and Security Interests.
Except for Permitted Encumbrances, there are no liens or security interests
on any of the real or personal property of the Borrower or any Active
Subsidiary.
4.20 Margin Stock.
The Borrower does not engage or intend to engage principally, or as one of
its important activities, in the business of extending credit for the purpose,
immediately, incidentally or ultimately, of purchasing or carrying margin stock
(within the meaning of Regulation U). No part of the proceeds of any Loan has
been or will be used, immediately, incidentally or ultimately, to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or to refund Indebtedness originally
incurred for such purpose, or for any purpose which entails a violation of or
which is inconsistent with the provisions of the regulations of the Board of
Governors of the Federal Reserve System. Neither the Borrower nor any Active
Subsidiary of the Borrower holds or intends to hold margin stock in such amounts
that more than 25% of the reasonable value of the assets of the Borrower or
Active Subsidiary of the Borrower are or will be represented by margin stock.
4.21 Updates to Schedules.
Should any of the information or disclosures provided on any of the
Schedules attached hereto become outdated or incorrect in any material respect,
the Borrower shall promptly provide the Agent in writing with such revisions or
updates to such Schedule as may be necessary or appropriate to update or correct
same; provided, however, that no Schedule shall be deemed to have been amended,
modified or superseded by any such correction or update, nor shall any breach of
warranty or representation resulting from the inaccuracy or incompleteness of
any such Schedule be deemed to have been cured thereby, unless and until the
Required Banks, in their sole and absolute discretion, shall have accepted in
writing such revisions or updates to such Schedule.
4.22 Disclosure.
Neither this Credit Agreement nor any other document, statement,
certificate or other instrument delivered to the Agent or the Banks by or on
behalf of the Borrower pursuant to this Credit Agreement or any other Loan
Document contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein, in light of the circumstances under which they were made, not
misleading. There is no
54
fact known to the Borrower which materially and adversely affects or, so far as
the Borrower now foresees, will in the future materially and adversely affect
the business, operations, affairs, condition, properties, assets, financial
condition or results of operations of the Borrower and its Active Subsidiaries
which has not been set forth in this Credit Agreement or in the other documents,
instruments, certificates or statements (financial or otherwise) furnished to
the Agent or the Banks by or on behalf of the Borrower prior to or on the
Closing Date.
4.23 Use of Proceeds.
The Borrower and its Subsidiaries intend to use the proceeds of the Loans
in accordance with Section 5.1.
4.24 Insurance.
All insurance policies and other bonds to which Borrower or any of its
Subsidiaries is a party are valid and in full force and effect. No notice has
been given or claim made and no grounds exist to cancel or avoid any of such
policies or bonds or to reduce the coverage provided thereby. Such policies and
bonds provide adequate coverage from reputable and financially sound insurers,
or an insurance captive Subsidiary of the Borrower which is adequately
capitalized and is conformity with the standards of the insurance industry, all
as in the judgment of the Agent, insuring risks required to be covered
hereunder, in amounts sufficient to insure the assets and risks of Borrower and
each of its Subsidiaries in accordance with prudent business practice in the
industry of the Borrower and its Subsidiaries.
4.25 Material Contracts; Burdensome Restrictions.
All material contracts relating to the business operations of Borrower and
each of its Subsidiaries, including all material employee benefit plans and
material labor contracts, are valid, binding and enforceable upon the Borrower
or its Subsidiary and each of the other parties thereto in accordance with their
respective terms, and there is no material default thereunder, to the Borrower's
knowledge, with respect to parties other than the Borrower or its Subsidiary.
Neither the Borrower nor any of its Subsidiaries is bound by any contractual
obligation, or subject to any restriction in any organization document, or any
requirement of Governmental Rule which could reasonably be expected to result in
a Material Adverse Change.
4.26 Employment Matters.
The Borrower and its Subsidiaries conduct their businesses in compliance
with employment Governmental Rules, except where the failure to do so could not
reasonably be expected to result in a Material Adverse Change. There are no
outstanding grievances, arbitration awards or appeals therefrom arising out of
any labor contracts or current or threatened strikes, picketing, handbilling or
other work stoppages or slowdowns at facilities of any of the Borrower or any of
its Subsidiaries which in any case could reasonably result in a Material Adverse
Change.
55
4.27 Senior Debt Status.
The obligations of Borrower under this Credit Agreement and each
of the other Loan Documents to which it is a party do rank and will rank at
least pari passu in priority of payment with all other Indebtedness for Borrowed
Money of Borrower. There is no lien upon or with respect to any of the
properties or income of Borrower or Subsidiary of Borrower which secures
indebtedness or other obligations of any Person except for Permitted
Encumbrances.
ARTICLE V. AFFIRMATIVE COVENANTS
From the date hereof and for so much longer thereafter as the
Revolving Credit Commitment is in effect or any of the Bank Indebtedness remains
unpaid, the Borrower agrees, for the benefit of the Banks, the Issuing Banks and
the Agent, that:
5.1 Use of Proceeds.
Proceeds of the Revolving Credit Loans and the Term Loans shall be used by
the Borrower (a) to refinance the revolving credit loans, if any, outstanding
under the Borrower's Existing Credit Agreement, (b) for the payment of the
purchase price and related expenses in connection with the acquisitions by the
Borrower or its Subsidiaries of the ownership interests of AEC, and (c) for
general working capital purposes of the Borrower and its Active Subsidiaries,
including but not limited to capital expenditures, the acquisition and
development of additional schools, draws to meet DOE regulatory requirements and
Permitted Acquisitions. Proceeds of the Swing Loans shall be used by the
Borrower to finance its general working capital purposes on a day-to-day basis.
Proceeds of the Supplemental Swing Loans shall be used by the Borrower to
finance its short term borrowing needs for general corporate purposes. Subject
to Section 2.3, the Letters of Credit may be issued in the aggregate stated
principal amount not in excess of $150,000,000 for the period from the Closing
Date to September 30, 2003 and $75,000,000 thereafter, at any one time
outstanding for general corporate purposes.
5.2 Furnishing Information.
The Borrower will maintain a system of accounting established and
administered in accordance with GAAP consistently applied, and will maintain its
books in a manner so as to enable it to produce GAAP statements. Further, the
Borrower will:
(a) Quarterly Reports of Borrower. Beginning with the Fiscal Quarter
ending September 30, 2003, furnish to the Agent, for redelivery to each Bank, as
soon as practicable but in any event within forty-five (45) days after the end
of each of the first, second and third Fiscal Quarters of the Borrower, copies
of (i) internally prepared Consolidated balance sheets of the Borrower, the
consolidating balance sheets, as at the close of each such Fiscal Quarter and
(ii) internally prepared Consolidated statements of profit and loss, of retained
earnings and cash flows of the Borrower, the consolidating statements of profit
and loss, of retained earnings and cash flows, for the quarter then ended and
for the period from the beginning of the Fiscal Year to the date of such balance
sheet, together with figures in comparative form for the corresponding date or
period, as the case may be, one year prior thereto, all prepared in accordance
with GAAP, consistently applied, except for the absence of notes thereon and
subject to year-end adjustments, and in such reasonable detail as the Agent may
request; provided, however, the Borrower shall
56
be deemed in compliance with the timing requirements of this Section if the
Borrower shall file its 10Q statement with the Securities Exchange Commission in
a timely fashion and shall promptly send a copy of the financial statements to
the Agent.
(b) Annual Reports of Borrower. Furnish to the Agent after the end of
each Fiscal Year, for redelivery to each Bank, as soon as practicable but in any
event within one hundred twenty (120) days after the end of each Fiscal Year
beginning on or after July 1, 2002, copies of the annual audited Consolidated
financial statements of the Borrower which shall include, among other things,
(A) the Consolidated balance sheet and Consolidated statements of income of the
Borrower, the consolidating balance sheets and consolidating statements of
income, as at the end of such Fiscal Year, (B) a Consolidated statement of
profit and loss, the consolidating statement of income and loss, and (C) a
summary of transactions in the stockholders' equity account of the Borrower, all
in reasonable detail, all prepared in accordance with GAAP and all certified
without qualification by an independent public accountant selected by the
Borrower and satisfactory to the Agent; provided, however, the Borrower shall be
deemed in compliance with the timing requirements of this Section if the
Borrower shall file its 10K statement with the Securities Exchange Commission in
a timely fashion and shall promptly send a copy of the financial statements to
the Agent.
(c) Budgets; Forecasts. Furnish to the Agent, for redelivery to each
Bank, as soon as practicable but in any event within forty-five (45) days after
the commencement of each Fiscal Year, a copy of the Borrower's budget and
forecast for such year, in form and content acceptable to the Agent; provided,
however that with respect to the fiscal year commencing July 1, 2003, such
budget and forecast shall be delivered within ninety (90) days after the
commencement of such fiscal year.
(d) Compliance Certificate. Together with each delivery of financial
statements pursuant to Subsections 5.2(a) and 5.2(b), a Compliance Certificate
substantially in the form of Exhibit "K" attached hereto, signed by the Chief
Financial Officer, or in his absence, the Treasurer of the Borrower, stating
that he has caused the terms of this Credit Agreement and of the Notes to be
reviewed and has made, or caused to be made under his supervision, a review of
the transactions and condition of the Borrower and its Active Subsidiaries
during the accounting period covered by such financial statements and that
nothing has come to his attention to lead him to believe that any Event of
Default hereunder or any condition or event which, after notice or lapse of time
or both, would constitute an Event of Default exists. If any such Event of
Default, condition or event existed or exists, such certificate shall specify
the nature and period of existence thereof and what action the Borrower or such
Active Subsidiary has taken or is taking or proposes to take with respect
thereto. Each such certificate shall also contain, for the period to which the
same relates, calculations in reasonable detail manifesting compliance as of the
close of such accounting period with the covenants contained in Sections 6.1
through 6.7 inclusive and Section 6.13 hereof. Such certificate shall in all
respects be in form and substance satisfactory to Agent.
(e) Notification of Defaults. Furnish to the Agent, for redelivery to
each Bank, prompt notice upon the occurrence of any event of default or of any
event which, with the giving of notice or the lapse of time, or both, would
constitute an event of default under any Indebtedness for Borrowed Money
involving liabilities in excess of $500,000 in the aggregate.
57
(f) Other Reports, Information and Notices. The Borrower will deliver
or cause to be delivered to the Agent, for redelivery to each Bank, within the
time periods set forth below, the following other reports, information and
notices:
(i) Notice of Events of Default and Material Adverse Changes. Promptly
after any Authorized Officer of the Borrower has learned of the occurrence or
existence of an Event of Default or a Material Adverse Change, telephonic notice
thereof specifying the details thereof, the anticipated effect thereof and the
action which the Borrower has taken, is taking or proposes to take with respect
thereto, which notice shall be promptly confirmed in writing within five (5)
days by an Authorized Officer of the Borrower.
(ii) Notice of Breach of Material Contract. Promptly after any
Authorized Officer of the Borrower has learned of the occurrence or existence of
a default by any party to any material contract to which the Borrower or any
Active Subsidiary is a party which default has had or which may reasonably be
expected to have a Material Adverse Effect, telephonic notice thereof specifying
the details thereof, the anticipated effect thereof and the action which the
Borrower is taking or proposes to take with respect thereto, which notice shall
be promptly confirmed in writing within five (5) days by an Authorized Officer
of the Borrower.
(iii) Notice of Litigation.
(A) Promptly after any Authorized Officer of the Borrower has
knowledge thereof, written notice of any action, suit, proceeding or
investigation before any Governmental Person affecting the Borrower or any
Active Subsidiary, except for actions, suits, proceedings and investigations
which, if adversely determined, would not and could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Change; and
(B) promptly after any Authorized Officer of the Borrower has
knowledge thereof, written notice of any decision, ruling, judgment which has
had or which could reasonably be expected to have a Material Adverse Effect and
any appeal, reversal or other significant action in connection with any such
action, suit, proceeding or investigation before any Governmental Person
affecting the Borrower or any Active Subsidiary.
(iv) Orders, Etc. Promptly after receipt thereof, a copy of any order,
writ, decree, judgment, decision or injunction issued by any Governmental Person
in any proceeding, action, suit or investigation to which the Borrower or any
Active Subsidiary is a party which would or could reasonably be expected to
result in a Material Adverse Change.
(v) ERISA Reports.
(A) As soon as possible, and in any event not later than the date
notice is sent to the PBGC, notice of any Reportable Event regarding any Plan or
Benefit Arrangement of the Borrower, any Active Subsidiary of the Borrower or
any ERISA Affiliate and an explanation of any action which has been or which is
proposed to be taken with respect thereto;
(B) concurrent with the filing thereof, a copy of any request to the
United States Secretary of the Treasury for a waiver or variance of the minimum
funding standards of
58
Section 302 of ERISA and Section 412 of the Code with respect to any Plan or
Benefit Arrangement of the Borrower, any Active Subsidiary of the Borrower or
any ERISA Affiliate;
(C) as soon as possible, but in no event later than sixty (60) days
after an officer of the Borrower becomes aware of unfunded accumulated benefit
obligations for any Plan of the Borrower or any ERISA Affiliate, as determined
in accordance with the Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 87, Employer's Accounting for Pensions (or
any superseding statement thereto), written notice of the occurrence of such
event;
(D) upon the request of the Agent, copies of each annual report (Form
5500 Series) with accompanying schedules filed with respect to any Plan or
Benefit Arrangement of the Borrower or any ERISA Affiliate;
(E) promptly after receipt thereof, a copy of any notice which the
Borrower or any ERISA Affiliate may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Benefit Arrangement, or to
appoint a trustee to administer any Plan or Benefit Arrangement, or to assert
any liability under Title IV of ERISA against the Borrower or any ERISA
Affiliate;
(F) a copy of any notice of assessment of Withdrawal Liability
received by the Borrower or any ERISA Affiliate in relation to any Multiemployer
Plan;
(G) as soon as possible, and in no event later than the date
notification is sent to the PBGC, notice of the failure by the Borrower or any
ERISA Affiliate to make a required installment or other payment under Section
302 of ERISA and Section 412 of the Code;
(H) concurrent with the filing thereof, a copy of any Notice of Intent
to Terminate any Plan of the Borrower or any ERISA Affiliate filed under Section
4041(c) of ERISA; and
(I) promptly after receipt thereof, but without any obligation or
responsibility to secure the same, copies of any calculations of estimated
Unfunded Benefit Liabilities (or, if applicable, the portions of any estimated
Unfunded Benefit Liabilities that would be allocated to the Borrower or any
ERISA Affiliate under Sections 4063 and 4064 or Section 4062(e) of ERISA) for
any Plans of the Borrower, any Active Subsidiary of the Borrower or any ERISA
Affiliate.
(vi) Notice of Environmental Claims. Promptly after receipt thereof,
the Borrower shall deliver to the Agent, for redelivery to the Banks, notice of
any material Environmental Claim.
(vii) Tax Returns. The Borrower shall deliver to the Agent, for
redelivery to the Banks, promptly upon request, copies of all Federal and
foreign tax returns and reports filed by the Borrower or any Active Subsidiary
in respect of taxes measured by income (excluding sales, use and like taxes).
(viii) Notices of Tax Audits. Promptly, and in any event within ten
(10) days after receipt thereof by the Borrower or any Active Subsidiary, the
Borrower shall furnish to the
59
Agent, for redelivery to the Banks, a copy of each notice from any Governmental
Person received by the Borrower or any Active Subsidiary of a threatened
material adverse adjustment to any Federal or foreign tax return of the Borrower
or any Active Subsidiary, as applicable and a copy of each subsequent notice
with respect thereto from any such Governmental Person.
(g) Updates to Schedules. Together with each delivery of the
Borrower's annual financial statements pursuant to Subsection 5.2(b) hereof, the
Borrower shall provide the Agent, for redelivery to the Banks, with written
revisions or updates to Schedule 4.1, 4.3, 4.7, 4.10, 4.11, 4.12 and 4.13;
provided, however, that no schedule shall be deemed to have been amended,
modified or superseded by any such correction or update, nor shall any breach of
warranty or representation resulting from the inaccuracy or incompleteness of
any such schedule be deemed to have been cured thereby, unless and until the
Required Banks, in their sole and absolute discretion, shall have accepted in
writing such revisions or updates to such schedule.
5.3 Preservation of Existence.
Except as otherwise permitted pursuant to Section 6.10, at its own cost and
expense, the Borrower will, and will cause each Active Subsidiary to, do all
things necessary to preserve and keep in full force and effect its corporate
existence and its qualification under the laws of the state of its
incorporation. Further, the Borrower will, and will cause each Active
Subsidiary, other than Active Subsidiaries which no longer exist as a result of
a transaction permitted pursuant to Section 6.10, to maintain, preserve and
renew all rights, powers and privileges which are material to the Consolidated
operation of the Borrower's business, including the accreditation of its
Accredited Subsidiaries (the loss of which accreditation shall be deemed for
purposes of this Credit Agreement to be material).
5.4 Payment of Taxes and Fees.
The Borrower will, and will cause each of its Active Subsidiaries to,
promptly pay and discharge all taxes, assessments, and governmental charges and
levies upon it or upon its income, profits or property except for taxes,
assessments and governmental charges or levies (a) the payment of which is being
contested in good faith by appropriate proceedings, or (b) the non-payment of
which would not reasonably be expected to have a Material Adverse Effect on the
Borrower and its Subsidiaries taken as a whole, and as to which it shall have
set aside on its books reserves for such claims as are determined to be adequate
by the application of GAAP consistently applied.
5.5 Notice of Change of Business.
The Borrower will promptly give written notice to the Agent, for redelivery
to the Banks, if the Borrower or any of its Active Subsidiaries which is a
Person primarily engaged in proprietary education or other related fields ceases
to be so primarily engaged.
5.6 Hazard and Casualty Insurance.
The Borrower will, and will cause each Active Subsidiary to, keep and
maintain hazard and casualty insurance with responsible insurance companies on
such of the properties of the Borrower and its Active Subsidiaries, in such
amounts and against such risks as is customarily
60
maintained by similar businesses similarly situated and owning, leasing or
operating similar properties. If Mortgages are required under Section 3.1
hereof, with respect to the Real Property and related property in which a lien
is granted to Agent pursuant to the Mortgages, the Borrower and its Subsidiaries
shall deliver to the Agent such insurance policies or certificates of insurance
as reasonably required by Agent, with additional insured, mortgagee and lender
loss payable special endorsements attached thereto in form and substance
satisfactory to the Agent naming the Agent on behalf of the Banks as additional
insured, mortgagee and lender loss payee.
5.7 Good Repair.
The Borrower will, and will cause each Active Subsidiary to, do all things
necessary to maintain, preserve, protect and keep its respective property in
good repair, working order and condition, ordinary wear and tear excepted, and
make all necessary and proper repairs, renewals and replacements so that its
respective business carried on in connection therewith may be conducted at all
times as presently conducted.
5.8 Corporate Records.
The Borrower will, and will cause each Active Subsidiary to, maintain
proper books of record and account in accordance with sound accounting practice
in which full, true and correct entries shall be made of all its respective
property and assets and its respective dealings and business affairs.
5.9 Inspection of Records and Properties.
The Borrower will, and will cause each Active Subsidiary to, permit, on
reasonable prior notice from the Agent or any Bank or their respective agents or
representatives (but upon the occurrence and during the continuation of an Event
of Default, without the requirement of reasonable prior notice), to visit during
regular office hours any of their respective properties, to examine their
respective physical assets, books of account and other records, and to discuss
their respective affairs and accounts with, and be advised about them by the
management of the Borrower or any Active Subsidiary, and as often as the Agent
or such Bank may reasonably request.
5.10 Continued Ownership of Active Subsidiaries.
Except as permitted by Section 6.5, without the written consent of all of
the Banks, the Borrower shall not sell, transfer or otherwise dispose of any of
its capital stock of an Active Subsidiary.
5.11 Compliance With Laws.
The Borrower will, and will cause each Active Subsidiary to, perform and
promptly comply in all material respects, and cause all property of the Borrower
and each Active Subsidiary to be maintained, used and operated in all material
respects in accordance with all Governmental Rules (including, without
limitation, zoning ordinances, building codes and Environmental Laws) of every
duly constituted Governmental Person applicable to the Borrower, each Active
Subsidiary or any of their respective properties) except for those alleged
61
violations which are being contested in good faith and by appropriate
proceedings promptly initiated and diligently conducted and if an appropriate
provision, as shall be required by GAAP, shall have been made therefor. The
foregoing notwithstanding, the Borrower shall not be deemed to be in violation
of this Section 5.11 as the result of any failure to comply with such
Governmental Rule if (A) the applicability of such Governmental Rule is being
contested by the Borrower or any Active Subsidiary in good faith and by proper
proceedings appropriately conducted or (B) the non-compliance with such
Governmental Rule would not reasonably be expected to materially and adversely
affect the business operations or financial condition of the Borrower or its
Active Subsidiaries or the ability of the Borrower and its Active Subsidiaries,
taken as a whole, to perform their respective obligations under the Loan
Documents. Without limiting the generality of the foregoing, the Borrower will,
and will cause each Subsidiary to, comply with (i) all applicable Laws, the
violation of which would terminate or materially impair the eligibility of The
Borrower or any Subsidiary for participation, if applicable, in student
financial assistance programs under Title IV, where such termination or material
impairment would have a Material Adverse Effect, (ii) the federal
Truth-in-Lending Act, 15 U.S.C. (S) 1601 et seq., and all other consumer credit
laws applicable to The Borrower or any Subsidiary in connection with the
advancing of student loans, except for such laws and regulations the violation
of which, in the aggregate, will not result in the assessment of penalties and
damages claims against the Borrower or any Subsidiary where such penalties and
damage claims would have a Material Adverse Effect, (iii) all statutory and
regulatory requirements for authorization to provide post-secondary education in
the jurisdictions in which its educational facilities are located, except for
such requirements the violation of which will not have a Material Adverse
Effect, and (iv) if applicable, all requirements for continuing its
accreditations, except for such requirements the violation of which would not
have a Material Adverse Effect (including cases where the governing board of the
institution in good faith elected to seek or permit the termination of such
accreditation which would not have a Material Adverse Effect).
5.12 Further Assurances.
At any time and from time to time, upon the Agent's request, the Borrower
shall, and shall cause each Active Subsidiary to, make, execute and deliver, or
cause to be made, executed and delivered, to the Agent and where appropriate
shall cause to be recorded or filed, and from time to time thereafter to be
re-recorded and refiled at such time and in such offices and places as shall be
deemed reasonably desirable by the Banks, any and all such further certificates
and other documents as the Banks may consider necessary or desirable in order to
continue and preserve the obligations of the Borrower under the Notes and other
Loan Documents.
5.13 Liens and Security Interests.
If Mortgages are required under Section 3.1, the Borrower shall and
shall cause each Subsidiary which owns Real Property required to be granted as
security for the Obligations hereunder to execute and deliver and shall cause to
be recorded Mortgages and corresponding financing statements in favor of the
Agent for the benefit of the Banks, and shall cause such other documents related
thereto to be delivered to the Agent, as the Agent shall reasonably request.
62
5.14 Good Standing Certificates.
Borrower will and will cause the Art Institutes International, Inc. to
deliver to the Agent within thirty (30) days after the Closing Date, a
certificate of good standing issued by the Secretary of State of the
Commonwealth of Pennsylvania.
ARTICLE VI. NEGATIVE COVENANTS
From the date hereof and for so much longer thereafter as the
Revolving Credit Commitment is in effect or any of the Bank Indebtedness remains
unpaid, the Borrower agrees, for the benefit of the Banks, the Issuing Banks and
the Agent, that:
6.1 Maintenance of Ratio of Total Funded Debt to EBITDA.
The Borrower will not permit or suffer to exist, as of the end of each
Fiscal Quarter ending hereafter, its ratio of Total Funded Debt, as determined
as of the end of such Fiscal Quarter, to EBITDA, as determined for the
immediately preceding four (4) Fiscal Quarters then ended to be greater than 2.5
to 1.0.
For purposes of calculating compliance with the foregoing ratio of Total
Funded Debt to EBITDA, as well as for purposes of (a) calculating compliance
with the covenants required to be measured under Section 6.13(v), (b)
calculating the applicable interest rates on the Loans pursuant to Sections
2.5(b)(i) through (iii), and (c) calculating the applicable Commitment Fees and
Letter of Credit Fees under Section 2.1(g) and 2.3(e) respectively, EBITDA shall
be calculated on a pro forma basis using the historical financial statements of
the Borrower and its Subsidiaries, and the other Persons and businesses acquired
pursuant to Permitted Acquisitions.
6.2 [Intentionally Omitted].
6.3 Net Worth.
The Borrower will not permit at any time Net Worth to be less than Base Net
Worth.
6.4 Fixed Charge Coverage Ratio.
The Borrower will not permit or suffer to exist, as determined on each
Fiscal Quarter ending hereafter for the immediately preceding four Fiscal
Quarters then ended (i.e. a rolling four Fiscal Quarter basis), its Fixed Charge
Coverage Ratio to be less than 1.10 to 1.0.
For purposes of calculating compliance with the foregoing Fixed Charge
Coverage Ratio, EBITDA for Subsidiaries owned by the Borrower less than four
Fiscal Quarters at the time of the calculation of the Fixed Charge Coverage
Ratio shall not be subject to the pro forma adjustments provided for in Section
6.1.
6.5 Disposal of Assets.
The Borrower will not, nor will it permit any of its Subsidiaries to, sell,
lease or otherwise dispose of, in any one Fiscal Year during the term hereof,
assets having an aggregate
63
fair market value in excess of $5,000,000 or directly or indirectly enter into
an agreement or arrangement whereby the Borrower or any of its Subsidiaries
shall sell or transfer assets having an aggregate fair market value in excess of
$5,000,000; provided, however, that with the consent of the Required Banks, the
Borrower and its Subsidiaries shall be permitted to make such agreements,
arrangements and dispositions of assets having an aggregate fair market value in
excess of $5,000,000 in any one Fiscal Year so long as the net proceeds of such
dispositions in excess of $5,000,000 are paid to the Agent as a mandatory
prepayment of the Loans in accordance with Section 2.4(f). Provided no Event of
Default has occurred and is continuing, the Agent shall release any Encumbrance
of the Agent and the Banks in the assets of the Borrower and its Subsidiaries
disposed of in accordance with the foregoing permitted dispositions. In addition
to the dispositions permitted above, the Borrower and its Subsidiaries may make
the dispositions of assets which consist of (i) the sale of inventory in the
ordinary course of business, (ii) a merger or consolidation otherwise permitted
pursuant to Section 6.10, and (iii) prior to the occurrence and during the
continuation of a Default or Event of Default, the sale and lease-back of owned
real estate and improvements which are not subject to the lien of any of the
Mortgages.
6.6 Permitted Indebtedness.
The Borrower will not, and will not permit any Subsidiary to, guarantee or
incur or suffer to exist any Indebtedness for Borrowed Money except:
(i) the Bank Indebtedness and reimbursement obligations of the
Borrower's Subsidiaries related to Letters of Credit;
(ii) Indebtedness for Borrowed Money secured by Permitted
Encumbrances;
(iii) Guarantees of Indebtedness for Borrowed Money to the extent such
Indebtedness for Borrowed Money is permitted by this Section 6.6;
(iv) Indebtedness for Borrowed Money incurred by any Subsidiary and
due to the Borrower;
(v) Indebtedness for Borrowed Money not specifically enumerated in
items (i) through (iv) above outstanding on the Closing Date as more fully set
forth on Schedule 6.6, as the same may be extended or renewed but not increased.
(vi) Guarantees of Teach-Out Obligations and other education-related
obligations of the Borrower or its Active Subsidiaries;
(vii) Indebtedness incurred in connection with a Permitted
Acquisition;
(viii) Guarantees of any student loan programs of the Borrower or its
Active Subsidiaries in an aggregate amount of up to $5,000,000;
(ix) Indebtedness for Borrowed Money in a principal amount of up to
$25,000,000 in the aggregate outstanding in connection with real estate
financings and sale and lease-back real estate transactions (other than sale and
lease-back transactions prohibited by Section 6.5 above), including without
limitation, any reimbursement obligations incurred with
64
respect to a bond financing that is secured by real estate, provided that,
neither the Borrower nor any Subsidiary of the Borrower shall Guarantee any
Indebtedness for Borrowed Money permitted under this Subsection (other than the
Guarantee by Argosy of the Indebtedness for Borrowed Money of Western State
University College of Law ("WSU") in favor of Union Bank of California in
connection with a real estate financing of real property owned by WSU, solely to
the extent that the aggregate principal amount of such Indebtedness subject to
such Guarantee does not exceed $3,500,000) and, further provided that, if such
Indebtedness for Borrowed Money is incurred by a Subsidiary, the Subsidiary
shall execute a Subsidiary Guarantee;
(x) In addition to the other Indebtedness for Borrowed Money permitted
by this Section 6.6, unsecured Indebtedness for Borrowed Money whether now
outstanding or hereafter incurred by the Borrower or any Subsidiary that when
aggregated with other Indebtedness for Borrowed Money of the type permitted by
this Subsection (x) of the Borrower and all of the Subsidiaries (excluding Bank
Indebtedness) is not more than $125,000,000 at any time; provided, however, that
if Indebtedness for Borrowed Money in excess of $100,000,000 is incurred under
this Section 6.6(x), the Revolving Credit Commitments as well as the ability to
increase such Revolving Credit Commitments provided for in Section 2.1(j) shall,
on the date any such Indebtedness for Borrowed Money is incurred, be
automatically and permanently reduced to the extent such Indebtedness for
Borrowed Money exceeds $100,000,000; provided, further that the Revolving Credit
Commitments shall not be required to be reduced below $250,000,000 pursuant to
this Section 6.6(x); and
(xi) Indebtedness for Borrowed Money incurred by the Borrower or its
Subsidiaries with respect to any currency swap agreement, interest rate swap,
cap, collar or floor agreement or other interest rate management device,
provided that (w) such agreements or devices are not entered into for
speculative purposes (x) the other party to such agreement shall be a Bank or a
financial institution acceptable to the Agent in its reasonable discretion, (y)
such Bank or financial institution shall calculate its credit exposure in a
reasonable and customary manner utilizing standards and contracts on forms
promulgated by the International Swap Dealers Association, and (z) except for
agreements with Banks and Affiliates of Banks which are secured by the Loan
Documents, the obligations of the Borrower and its Subsidiaries shall be
unsecured.
6.7 Prohibition on Encumbrances.
(a) Lien Prohibition. The Borrower will not create, assume, incur or
suffer to exist, or allow any Subsidiary to create, assume, incur or suffer to
exist, any Encumbrance upon any of its assets, whether now owned or hereafter
acquired, nor acquire nor agree to acquire any asset subject to an Encumbrance,
except:
(i) Encumbrances in favor of the Agent and/or the Banks granted
hereunder or under the other Loan Documents;
(ii) Encumbrances for taxes or assessments or governmental charges or
levies which are not due or remain payable, without penalty, or which are being
contested in good faith by appropriate proceedings and with respect to which the
Borrower or the affected Subsidiary
65
has created reserves which are determined by the Borrower to be adequate by the
application of GAAP consistently applied;
(iii) Encumbrances to secure the obligations of the Borrower or any
Subsidiary under workmen's compensation laws, unemployment insurance laws,
social security laws or other similar legislation;
(iv) Encumbrances to secure the obligations of the Borrower or any
Active Subsidiary directly associated with state licensing or accreditation
requirements;
(v) Encumbrances in connection with bids, tenders, performance bonds,
contracts or leases (including, without limitation, the posting of collateral
for any operating lease) to which the Borrower or any Subsidiary is a party, or
to secure public or statutory obligations in an amount of up to $1,000,000 in
the aggregate;
(vi) Encumbrances for landlords', mechanics', carriers', workmen's,
warehousemen's, materialmen's or repairmen's liens or other like Encumbrances in
the ordinary course of business;
(vii) Encumbrances upon tangible personal property securing loans and
capital leases to any Subsidiary or Borrower or deferred payments by the
Borrower or any Subsidiary for the purchase or lease under a Capitalized Lease
of such tangible personal property, provided that the amount of the Indebtedness
for Borrowed Money secured by the Encumbrance does not exceed the purchase price
of such tangible personal property and the Encumbrances do not extend to any
other property of such Subsidiary or the Borrower;
(viii) Encumbrances on particular parcels of real estate or buildings
that are given in connection with typical mortgage-type financings to secure
Indebtedness for Borrowed Money that is permitted under Section 6.6(ix);
provided however, such Encumbrances shall not encumber any of the Collateral;
provided further, that such Encumbrances do not secure Indebtedness for Borrowed
Money in excess of $15,000,000;
(ix) Encumbrances to secure surety, replevin, attachment or appeal
bonds relating to legal proceedings to which the Borrower or any Subsidiary is a
party;
(x) Encumbrances arising out of judgments or awards against the
Borrower or any Subsidiary with respect to which the Borrower is currently
engaged in proceedings for review or appeal and with respect to which the
Borrower shall have secured a stay of execution pending such proceedings for
review or appeal, provided, that the aggregate amount of the foregoing shall at
no time exceed $5,000,000;
(xi) minor survey exceptions, minor Encumbrances, easements or
reservations of, or rights of others for, rights of way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning or other
restrictions as to the use of real properties or Encumbrances incidental to the
conduct of the business of the Borrower or its Subsidiaries or to the ownership
of their properties which were not incurred in connection with Indebtedness for
Borrowed Money or other extensions of credit and which do not in the aggregate
materially
66
adversely affect the value of said properties or materially impair their use in
the operation of the business of the Borrower or such Subsidiaries;
(xii) Encumbrances to secure any extension, renewal or replacement (or
successive extensions, renewals or replacements) as a whole, or in part, of any
obligations secured by any Encumbrances referred to in the foregoing clauses (i)
through (xi) and clause (xiii), provided that (y) such extended, renewed or
replaced Encumbrances shall be limited to all or a part of the same property
that secured the Encumbrances extended, renewed or replaced (plus improvements
on such property) and (z) the obligations secured by such Encumbrances at such
time are not increased except in accordance with the terms thereof; and
(xiii) Encumbrances not specifically enumerated in items (i) through
(xii) above which were in existence on the date hereof and described on Schedule
6.7 hereto.
(b) Agreements Restricting Encumbrances. Except for agreements related
to secured financing permitted under Section 6.7(vii) and (viii), neither the
Borrower, nor any Subsidiary, shall enter into any agreement, with any Person
conditioning, restricting or in any way prohibiting the creation of a security
interest, pledge, lien or other Encumbrance on or against or with respect to any
of its now owned or hereafter acquired right, title or interest real or personal
property in favor of the Agent and the Banks.
6.8 Advance of Funds and Investments.
(a) Advance of Funds. The Borrower will not, nor will it permit any
Subsidiary to, make any advance, loan or extension of credit to any Person,
except: (a) extension of trade credit and student loans in the ordinary course
of business; provided, that extension of credit for student loans shall not
exceed an aggregate amount at any time outstanding of (i) $50,000,000 from the
Closing Date to the first anniversary of the Closing Date, (ii) $55,000,000 from
the first anniversary of the Closing Date to the second anniversary of the
Closing Date and (iii) $60,000,000 from and after the second anniversary of the
Closing Date; (b) Indebtedness for Borrowed Money permitted by Subsection 6.6
hereof; (c) advances to employees made by the Borrower or any Subsidiary in the
ordinary course of its business, and (d) other loans and advances made in the
ordinary course of business not to exceed $5,000,000 in the aggregate at any one
time outstanding.
(b) Investments. The Borrower will not, nor will it permit any
Subsidiary to, make any capital contribution to, purchase any stocks, bonds,
notes, debentures or other securities of, or make any other investment in any
other Person, except (a) existing Subsidiaries; (b) investments in prime
commercial paper rated at least A-1 by Standard and Poor's Ratings Group (S&P)
and P-1 by Xxxxx'x Investors Service Inc. ("Moody's") which mature not more than
270 days from the date of acquisition; investments in variable rate demand notes
and auction rate notes rated at least A-minus by S&P or A-3 by Moody's which
mature not more than one year form the date of acquisition; repurchase
agreements and reverse repurchase agreements (i) with any bank (or broker-dealer
subsidiary or affiliate of any bank) provided that the institution has capital
resources in excess of $500,000,000 and is rated at least A-minus by S&P or A-3
by Moody's, or (ii) any primary dealer of United States government securities,
related to marketable, direct obligations or securities issued or
unconditionally guaranteed or insured by
67
the United States of America or any U.S. Government related entity which mature
not more than one year from the date of acquisition; domestic and eurodollar
time deposits, overnight deposits, Bankers' acceptances and certificates of
deposit, maintained at or issued by any branch or any bank or trust company
organized or licensed under the laws of the United States of America or any
state, provided that the institution has capital resources in excess of
$500,000,000 and is rated at least A-minus by S&P or A-3 by Moody's, which
mature no more than one year from the date of acquisition; mutual funds,
including money market mutual funds, which invest primarily in securities listed
in the preceding investments in this item (b) and have assets of at least
$1,000,000,000; (c) acquisitions permitted by Section 6.13 hereof and (d) up to
$10,000,000 of monies invested (or liabilities incurred) subsequent to the
Closing Date in joint ventures and strategic investments in the same line of
business as the Borrower and its Subsidiaries.
6.9 Dividend and Redemption Restrictions.
(a) Dividend Restrictions. The Borrower shall not pay cash dividends
or distributions on its capital stock while the Credit Facility is outstanding
except, that so long as no Event of Default is in existence or will result
therefrom and the Borrower is in pro forma compliance with the financial
covenants contained in Sections 6.1, 6.3 and 6.4 hereof prior to and after
giving effect to such dividends or distributions, the Borrower may pay cash
dividends or distributions.
(b) Redemption Restrictions. The Borrower shall not, nor shall it
permit any Subsidiary to, purchase the Borrower's capital stock while the Credit
Facility is outstanding, except, that so long as no Event of Default is in
existence or will result therefrom, the Borrower may repurchase subsequent to
the Closing Date its publicly traded securities in an aggregate amount of up to
$50,000,000, plus fifty percent (50%) of the net proceeds of any capital stock
or other ownership interest issued by the Borrower after the Closing Date (other
than in connection with Permitted Acquisitions or in connection with capital
stock purchased by officers, directors and employees of the Borrower and its
Subsidiaries), provided however, that the aggregate amount of all such
securities repurchases does not exceed $100,000,000.
(c) Subsidiary Dividends. No Subsidiary shall enter into any agreement
or covenant that prohibits, conditions or limits such Subsidiary from paying or
declaring dividends or paying any inter-company obligations whether now
outstanding or hereafter arising.
6.10 Merger.
(a) The Borrower shall not merge or consolidate with any other Person
unless (i) the Borrower is the surviving corporation, and (ii) no Event of
Default occurs or is reasonably likely to occur as a result of such a merger or
consolidation.
(b) The Borrower shall not permit any Subsidiary to merge or
consolidate with any Person (other than the Borrower or another Subsidiary)
unless (i) such Subsidiary is the surviving corporation or, if such Subsidiary
is not the surviving corporation, the surviving corporation's stock is owned,
directly or indirectly, by the Borrower and, in the event such Subsidiary is a
Material Subsidiary, such capital stock is subject to the Pledge Agreement
(unless the lien of the Pledge Agreement has terminated in accordance with
Section 3.1), and (ii) no
68
Event of Default occurs or is reasonably likely to occur as a result of such
merger or consolidation.
6.11 Regulations X, T and U Compliance.
The Borrower will not, nor shall it permit any of its Subsidiaries to, use,
or permit the use of, the proceeds of any borrowings hereunder to purchase or
carry Margin Stock or otherwise act so as to cause the Banks, in extending
credit hereunder, to be in contravention of Regulations X, T and U.
6.12 Cohort Default Rates.
The Borrower will not permit any Active Subsidiary whose operating income
for the most recently completed Fiscal Year equals or exceeds seven and one-half
percent (7-1/2%) of the aggregate operating income of all Active Subsidiaries
for the same fiscal period to have a Cohort Default Rate in excess of
twenty-five percent (25%) per year for the two (2) previous years.
6.13 Permitted Acquisitions.
(a) Except for the merger of Subsidiaries permitted under Section
6.10, the Borrower will not, nor will it permit any Subsidiary to acquire all or
substantially all of the assets of any second Person or acquire the stock of any
second Person or make any other investment in any second Person, provided that
the Borrower or any Subsidiary of the Borrower may acquire all the ownership
interests of or substantially all the assets of a second Person (a "Permitted
Acquisition") if each of the following requirements are met:
(i) the Borrower or the Subsidiary acquiring ownership interests in
such Person shall, in the case of any Person which constitutes a Material
Subsidiary, if required pursuant to Section 3.1, cause such ownership interests
to be pledged to the Agent for the benefit of the Banks pursuant to the Pledge
Agreement and, if required pursuant to Section 3.1, shall cause the Agent to
receive a lien pursuant to a Mortgage on any Real Property acquired in
connection with the Permitted Acquisition;
(ii) the board of directors or other equivalent governing body of such
Person shall have approved such Permitted Acquisition;
(iii) the business acquired, or the business conducted by the Person
whose ownership interests are being acquired, as applicable, shall be
substantially the same as one or more line or lines of business conducted by the
Borrower and its Subsidiaries or a reasonable extension of such line or lines of
business and shall comply with Section 6.15;
(iv) no Default or Event of Default shall exist immediately prior to
and after giving effect to such Permitted Acquisition;
(v) after giving effect to the Permitted Acquisition, the Borrower
shall be in compliance with Sections 6.1 through 6.4 on a pro forma basis for
the twelve month period ended immediately prior to and after giving effect to
the closing of the Permitted Acquisition,
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with any pro forma adjustments relating to the Permitted Acquisition to be
acceptable to the Agent. The Borrower shall demonstrate that it shall be in pro
forma compliance with the covenants set forth in Sections 6.1 through 6.4
(including in such computation Indebtedness for Borrowed Money or other
liabilities assumed or incurred in connection with such Permitted Acquisition
and giving pro forma effect to net Consolidated EBITDA of the Person or assets
so acquired) by delivering at least five (5) Business Days prior to such
Permitted Acquisition a certificate in the form of Exhibit "K" evidencing such
compliance;
(vi) in connection with the closing of any single Permitted
Acquisition, the Consideration for such Permitted Acquisition other than capital
stock of the Borrower, shall not exceed (a) in any Fiscal Year, 0.5 times EBITDA
of the Borrower and its Subsidiaries for the four Fiscal Quarters ended
immediately prior to the execution of the acquisition agreement in connection
with such Permitted Acquisition, and (b) when aggregated with the Permitted
Acquisitions previously consummated in such Fiscal Year of the Borrower, shall
not cause the aggregate Consideration (other than capital stock of the Borrower)
in such Fiscal Year to exceed EBITDA of the Borrower and its Subsidiaries for
the four fiscal quarters ended immediately prior to the execution of the
acquisition agreement in connection with such Permitted Acquisition and (c) when
aggregated with the Permitted Acquisitions previously consummated in such Fiscal
Year of the Borrower, shall not cause the aggregate Consideration (including
capital stock of the Borrower) in such Fiscal Year to exceed one and one half
(1.5) times EBITDA of the Borrower and its Subsidiaries for the four fiscal
quarters ended immediately prior to the execution of the acquisition agreement
in connection with such Permitted Acquisition;
(vii) in connection with the closing of any single Permitted
Acquisition when the Consideration exceeds $5,000,000, or when the Consideration
for such Permitted Acquisition plus the Consideration for all Permitted
Acquisitions previously consummated in the same Fiscal Year of the Borrower
exceeds $10,000,000, the Borrower shall deliver to the Agent, for redelivery to
the Banks (a) consolidating financial projections of the Borrower and its
Subsidiaries incorporating the pending Permitted Acquisition for a one year
period after the acquisition, including the year of acquisition; and (b)
consolidated financial projections of the Borrower and its Subsidiaries
incorporating the pending Permitted Acquisition for a three year period after
the acquisition, including the year of acquisition; and
(viii) the Borrower shall deliver to the Agent for redelivery to the
Banks (a) copies of a description and financial statements of the entity or
assets to be acquired and upon the request of the Agent, related due diligence
information obtained by the Borrower, and (b) copies of any agreements entered
into or proposed to be entered into by the Borrower or any Subsidiary in
connection with such Permitted Acquisition and shall deliver to the Agent such
other information about such Person or its assets as the Agent or any Bank may
reasonably require.
6.14 Change Fiscal Year.
The Borrower will not, nor shall it permit any of its Subsidiaries to,
change its Fiscal Year.
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6.15 Change of Business.
The Borrower shall not engage, and shall cause each Subsidiaries to refrain
from engaging, in any business other than its primary presently conducted
businesses and other related ancillary businesses.
6.16 Amendment to Purchase Agreement.
The Borrower will not, nor shall it permit any of its Subsidiaries to,
amend the AEC Purchase Agreement without the prior written consent of the Agent.
6.17 Affiliate Transactions.
The Borrower will not, and will not permit any of its Active Subsidiaries
to, enter into or carry out any transaction (including purchasing property or
services from or selling property or services to any Affiliate or any Borrower
or Subsidiary or other Person) with any Affiliate unless such transaction is not
otherwise prohibited by this Agreement, is entered into in the ordinary course
of business upon fair and reasonable arm's length terms and conditions which are
fully disclosed to the Agent and is in accordance with all applicable
Governmental Rules.
6.18 Prepayment of Indebtedness.
Without the prior written consent of the Agent, the Borrower will not, and
will not permit any of its Subsidiaries to, at any time, directly or indirectly,
prepay any Indebtedness for Borrowed Money (other than to the Banks), or
repurchase, redeem, retire or otherwise acquire any Indebtedness for Borrowed
Money of Borrower or any of its Subsidiaries.
ARTICLE VII. CONDITIONS PRECEDENT
7.1 All Revolving Credit Loan, Term Loans, Swing Loan, Supplemental Swing
Loan and All Letters of Credit.
The obligation to make each Revolving Credit Loan, the Term Loan, each
Swing Loan and each Supplemental Swing Loan and to issue each Letter of Credit
is subject to the performance by each of the Borrower of its obligations under
this Credit Agreement and to the satisfaction of the following further
conditions:
(a) Request for Revolving Credit Loan or Issuance of Letter of Credit.
(i) Except for a Revolving Credit Disbursement made simultaneously with the
execution of this Credit Agreement, receipt by the Agent, on behalf of the
Banks, of a Request for Revolving Credit Loan, Request for Term Loan, Swing Loan
Request or Supplemental Swing Loan Request satisfying the requirements of this
Agreement or (ii) receipt by the Agent, on behalf of the relevant Issuing Bank,
of a fully-executed and completed application and agreement for Letter of
Credit.
(b) No Default or Event of Default. The fact that, at the time of each
Revolving Credit Disbursement, the Term Loan, Swing Loan, Supplemental Swing
Loan or issuance of each Letter of Credit, no Default or Event of Default, shall
have occurred and be continuing.
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(c) No Material Adverse Change. There shall not have occurred and be
continuing (i) any Material Adverse Change or (ii) any event which has had, or
could reasonably be expected to have, a Material Adverse Effect.
(d) Compliance With Covenants. The fact that, at the time of each
Revolving Credit Loan, the Term Loan, Swing Loan, Supplemental Swing Loan or
issuance of each Letter of Credit (after giving effect to such Loan or Letter of
Credit), the Borrower shall be in compliance with the covenants contained in
Sections 5 and 6 hereof.
(e) Representations Correct. The fact that the representations and
warranties contained in this Credit Agreement and the other Loan Documents are
true and correct on and as of the date of borrowing, except to the extent that
such representations and warranties relate solely to an earlier date (in which
case, such representations and warranties shall have been true and correct on
and as of such earlier date).
Each request for a Revolving Credit Disbursement, the Term Loan, a Swing Loan,
Supplemental Swing Loan and each request for the issuance of a Letter of Credit,
whether made orally or in writing, by the Borrower shall be deemed to be, as of
the date of such request, a representation and warranty by the Borrower as to
the facts specified in Subsections 7.l(b), 7.l(c), 7.l(d) and 7.l(e).
7.2 Conditions Precedent to the Initial Revolving Credit Disbursement and
the Issuance of the Initial Letter of Credit.
The obligation of the Banks to make the initial Revolving Credit
Disbursement and of the Issuing Banks to issue the initial Letters of Credit,
are subject to the satisfaction of each of the following conditions precedent in
addition to the applicable conditions precedent set forth in Section 7.1 above:
(a) Credit Agreement. Receipt by the Agent of a counterpart original
of this Credit Agreement duly executed by each Bank, the Issuing Banks, the
Borrower and the Agent.
(b) Revolving Credit Notes. Receipt by the Agent, for redelivery to
each Revolving Credit Bank, of a duly executed Revolving Credit Note made
payable to such Revolving Credit Bank in an amount equal to its respective
Commitment Amount for Revolving Credit Loans.
(c) Swing Loan Note. Receipt by the Agent, for redelivery to National
City Bank, of a duly executed Swing Loan Note made payable to National City Bank
in an amount equal to its Swing Loan Commitment.
(d) Supplemental Swing Loan Notes. Receipt by the Agent, for
redelivery to each Supplemental Swing Loan Bank, of a duly executed Supplemental
Swing Loan Note made payable to such Supplemental Swing Loan Bank in an amount
equal to its respective Supplement Swing Loan Commitment.
(e) [Intentionally omitted.]
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(f) Liens and Security Interests. Receipt by the Agent, on behalf of
the Banks, of the Pledge Agreement, duly executed and delivered by the Borrower
and the Subsidiaries, as the case may be, accompanied by such financing
statements, stock certificates, stock powers, acknowledgements and other related
documents as shall be necessary to perfect the security interest of the Agent
for the benefit of the Banks.
(g) Insurance. The Borrower shall have delivered evidence acceptable
to the Agent that adequate insurance in compliance with Section 4.24 is in full
force and effect and that all premiums then due thereon have been paid.
(h) Corporate Documents. Receipt by the Agent, on behalf of the Banks,
of a copy, duly certified as of the Closing Date by the secretary or assistant
secretary of the Borrower and the Subsidiaries executing and delivering the
Pledge Agreement of (i) the charter documents of such corporation, (ii) the
By-Laws of such corporation, (iii) the resolutions of the applicable board of
directors authorizing the borrowings hereunder and the execution and delivery of
the Loan Documents to be executed by it, (iv) all documents evidencing all other
necessary corporate action and (v) all approvals or consents, if any, with
respect to this Credit Agreement and the other Loan Documents to be executed by
it.
(i) Incumbency Certificates. Receipt by the Agent, on behalf of the
Banks, of a certificate of the secretary or assistant secretary of the Borrower
and the Subsidiaries executing and delivering the Pledge Agreement and the
Mortgages, certifying the names and offices of the officers of each such
corporation authorized to sign this Credit Agreement and the other Loan
Documents, and all other documents or certificates to be delivered hereunder,
together with the true signatures of such officers.
(j) Good Standing Certificates. Receipt by the Agent, on behalf of the
Banks, of a certificate of good standing for the Borrower issued by the
Secretary of State for each state in which the Borrower is authorized to do
business, other than Pennsylvania, issued no more than thirty (30) days prior to
the Closing Date.
(k) Certificates of Incorporation. Receipt by the Agent, on behalf of
the Banks, of a copy, duly certified by the appropriate governmental official,
of the Articles of Incorporation of the Borrower.
(l) Closing Certificate. Receipt by the Agent, on behalf of the Banks,
of a certificate duly executed by an Authorized Officer of the Borrower
certifying that the conditions precedent set forth in Subsection 7.l(b), 7.l(c),
7.l(d) and 7.l(e) above have been satisfied as of the Closing Date.
(m) Closing Fees. Receipt by the Agent, on behalf of the Banks, of the
Closing Fees and all other fees and expenses to be paid by the Borrower under
the Loan Documents.
(n) Opinion of Borrower's Counsel. Receipt by the Agent, on behalf of
the Banks, of an opinion of Xxxxxxxxxxx & Xxxxxxxx LLP, counsel to the Borrower
and its Subsidiaries, substantially in the form of Exhibit "L" attached hereto,
and such other opinions of counsel as required by the Agent.
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(o) Regulatory Approvals. All regulatory approvals, licenses and
permits from Governmental Persons or other Persons to conduct the business
conducted by the Borrower and its Subsidiaries and to enter into the
transactions contemplated hereby shall have been obtained.
(p) [Intentionally omitted.]
(q) [Intentionally omitted.]
(r) Lien Searches. Receipt of the Agent, on behalf of the Banks, of
satisfactory evidence that there are no liens or security interests in property
of the Borrower and the Subsidiaries other than Permitted Encumbrances, and that
the liens and security interest granted to the Agent for the benefit of the
Banks under the Pledge Agreement and the Mortgages constitutes a Prior Security
Interest.
(s) No Actions or Proceedings. No litigation, investigation or
proceeding before or by any arbitrator or Governmental Person shall be
continuing or threatened against Borrower, any Subsidiary, or against the
officers or directors of Borrower or any Subsidiary (A) in connection with the
Loan Documents or any of the transactions contemplated thereby and which, in the
reasonable opinion of Agent, is deemed material or (B) which could, in the
reasonable opinion of Agent, cause a Material Adverse Change; and (ii) no
injunction, writ, restraining order or other order of any nature materially
adverse to Borrower or any Subsidiary or the conduct of its business or
inconsistent with the due consummation of the transactions contemplated herby
shall have been issued by any Governmental Person.
(t) Proceedings Satisfactory. Receipt by the Agent, on behalf of the
Banks, of evidence that all proceedings taken in connection herewith and the
consummation of the transactions contemplated hereby and all documents and
papers relating hereto have been completed or duly executed, and receipt by the
Agent, on behalf of the Banks, of such documents and papers, all in form and
substance reasonably satisfactory to the Agent and the Agent's special counsel,
as the Agent or its special counsel may reasonably request in connection
therewith.
(u) Refinancing. To permit the refinancing by the Banks of the
revolving credit loans, all as outstanding under the Existing Credit Agreement,
Borrower shall have delivered to the Agent not later than 11:00 A.M.
(Pittsburgh, Pennsylvania time) three (3) Business Days prior to the first
borrowing hereunder an appropriately completed irrevocable Loan Request pursuant
to which Loans in an amount sufficient to refinance the revolving credit loans
and prepay the term loans under the Existing Credit Agreement shall be
requested. Each Bank which was a lender under the Existing Credit Agreement by
execution of this Agreement, waives all notice of prepayment of loans and all
notice of termination of the commitments under the Existing Credit Agreement.
All letters of credit issued and outstanding under the Existing Credit Agreement
shall from and after the Closing Date be deemed to be Letters of Credit
outstanding under Section 2.3 of this Credit Agreement, and the Letter of Credit
Exposure shall be reallocated to the Banks under this Credit Agreement in
accordance with the respective Commitment Amount of each Bank.
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ARTICLE VIII. EVENTS OF DEFAULT
An Event of Default shall mean the occurrence or existence of any one or
more of the following events or conditions (whatever the reason therefore and
whether voluntary, involuntary or effected by operation of Governmental Rule):
8.1 Payment Default.
(i) Default in the payment of principal of any of the Notes or
reimbursement obligations with respect to any Letter of Credit.
(ii) Default in the payment of any interest on or the payment of the
Commitment Fee or the Agent's Fee or any other amount due under the Bank
Indebtedness and continuance of any such nonpayment for ten (10) days after due
date.
8.2 Cross Defaults.
Failure of the Borrower or any of its Subsidiaries to pay when due any
Indebtedness for Borrowed Money aggregating in excess of $5,000,000 ("Material
Indebtedness"); or the default by the Borrower or any of its Subsidiaries in the
performance (beyond the applicable grace period with respect thereto, if any) of
any term, provision or condition contained in any agreement under which any such
Material Indebtedness was created or is governed, or any other event shall occur
or condition exist, the effect of which default or event is to cause, or to
permit the holder or holders of such Material Indebtedness to cause, such
Material Indebtedness to become due prior to its stated maturity; or any
Material Indebtedness of the Borrower or any of its Subsidiaries shall be
declared to be due and payable or required to be prepaid or repurchased (other
than by a regularly scheduled payment) prior to the stated maturity thereof.
8.3 Insolvency.
(a) Involuntary Proceedings. A proceeding shall have been instituted
in a court having jurisdiction seeking a decree or order for relief in respect
of the Borrower or any Subsidiary in an involuntary case under the Federal
bankruptcy laws, or any other similar applicable Federal, state or foreign law,
now or hereafter in effect, or for the appointment of a receiver, liquidator,
trustee, sequestrator or similar official for the Borrower, or any Subsidiary or
for a substantial part of its property, or for the winding up or liquidation of
its affairs, and such shall remain undismissed or unstayed and in effect for a
period of sixty (60) days.
(b) Voluntary Proceedings. The Borrower or any Subsidiary shall
institute proceedings to be adjudicated a voluntary bankrupt, or shall consent
to the filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under the Federal bankruptcy laws, or
any other similar applicable Federal, state or foreign law now or hereinafter in
effect, or shall consent or acquiesce in or to the filing of any such petition
or shall consent to or acquiesce in the appointment of a receiver, liquidator,
trustee, sequestrator or similar official for the Borrower or any Subsidiary or
for a substantial part of its property, or shall make an assignment for the
benefit of creditors, or shall admit in writing its inability to pay its debts
generally as they become due, or action shall be taken by the Borrower or any
Subsidiary in furtherance of any of the aforesaid purposes.
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8.4 Dissolution.
The existence of the Borrower or any Active Subsidiary is terminated,
unless permitted in accordance with Section 6.10.
8.5 Adverse Judgments.
Any court shall render a final judgment or judgments against the Borrower
or any Subsidiary in an aggregate amount of $5,000,000 or more in excess of any
insurance protecting against such liability and such judgment or judgments shall
not be satisfactorily appealed, stayed, discharged, vacated or set aside within
thirty (30) days after entry; or any property of the Borrower or any Subsidiary
shall be attached under a claim or claims in an aggregate amount of $5,000,000
or more in excess of any insurance protecting against the liabilities on which
such attachments are based and such attachments shall not be released or
provided for to the satisfaction of the Banks within thirty (30) days.
8.6 Failure to Comply With Certain Covenants.
Default by the Borrower in the performance of any of the agreements and
covenants set forth in Section 5.9 or in Article VI hereof or default by any of
the Subsidiaries in the performance of the material agreements and material
covenants set forth in the other Loan Documents to which it is a party.
8.7 Failure to Comply With Other Covenants.
Default by the Borrower in the performance of any of the agreements and
covenants set forth in Article V hereof (other than Section 5.9) or in any of
the Loan Documents (other than material agreements and material covenants
constituting an Event of Default under Section 8.6) and continuance thereof for
thirty (30) days after notice thereof to the Borrower from the Agent as directed
by the Required Banks.
8.8 Material Adverse Change.
The occurrence of any Material Adverse Change subsequent to the Closing
Date or subsequent to the delivery of the information provided by the Borrower
to the Agent and the Banks prior to the Closing Date.
8.9 Misrepresentation.
Any representation or warranty made by the Borrower in (i) this Credit
Agreement or (ii) any of the other Loan Documents is untrue in any material
respect, or any schedule, statement, report, notice or writing furnished by the
Borrower or on behalf of the Borrower to the Agent or the Banks is untrue in any
material respect on the date as of which the facts set forth are stated or
certified.
8.10 Change of Control.
A Change of Control shall occur.
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8.11 Events Relating to Plans or Benefit Arrangements.
Any of the following occurs: (i) any Reportable Event, which the Agent
determines in good faith constitutes grounds for the termination of any Plan by
the PBGC or the appointment of a trustee to administer or liquidate any Plan,
shall have occurred and be continuing; (ii) proceedings shall have been
instituted or other action taken to terminate any Plan, or a termination notice
shall have been filed with respect to any Plan; (iii) a trustee shall be
appointed to administer or liquidate any Plan; (iv) the PBGC shall give notice
of its intent to institute proceedings to terminate any Plan or Plans or to
appoint a trustee to administer or liquidate any Plan; (v) the Borrower or any
member of the Controlled Group shall fail to make any contributions when due to
a Plan or a Multiemployer Plan; (vi) the Borrower or any member of the
Controlled Group shall withdraw completely or partially from a Multiemployer
Plan; (vii) the Borrower or any member of the Controlled Group shall withdraw
(or shall be deemed under Section 4062(e) of ERISA to withdraw) from a plan
subject to Section 4063 of ERISA in which the Controlled Group is considered to
be a substantial employer for purposes of Section 4063; or (viii) the Borrower
or any member of the Controlled Group shall make any amendment to a Plan with
respect to which security is required under Section 307 of ERISA; and, in the
case of the occurrence of (i), (ii), (iii), (iv), (v), (vi), (vii) or (viii)
above, the Agent determines in good faith that the amount of the Borrower's
liability is likely to exceed the greater of 10% of its Consolidated Tangible
Net Worth or $1,000,000;.
8.12 Consequences of an Event of Default.
(a) Consequence of an Event of Default Set Forth in Sections 8.3 and
8.4. Upon the occurrence of an Event of Default set forth in Section 8.3 or 8.4
hereof, the Revolving Credit Commitment, the Swing Loan Commitment and the
Supplemental Swing Loan Commitment shall automatically terminate and the amounts
outstanding under the Notes shall become immediately due and payable, without
necessity of demand, presentation, protest, notice of dishonor or notice of
default. Thereafter, the Banks shall have no further obligation to make any
additional Loans or issue any additional Letters of Credit hereunder. Upon the
occurrence of an Event of Default set forth in Section 8.3 or Section 8.4, the
Banks shall have the full panoply of rights and remedies granted to them under
this Credit Agreement and the other Loan Documents and all those rights and
remedies granted by law to creditors. No exercise of one right or remedy shall
be deemed a waiver of other rights or remedies.
(b) Consequences of Remaining Events of Default. During the
continuance of any Event of Default set forth in Sections 8.1, 8.2, 8.5, 8.6,
8.7, 8.8, 8.9, 8.10 or 8.11 hereof (unless remedied, waived or cured to the
satisfaction of the Banks required pursuant to Section 10.1), the Banks shall
have no further obligation to make any additional Loans or issue any additional
Letters of Credit hereunder; and the Agent may, and at the request of the
Required Banks shall, by written or telegraphic notice to the Borrower, declare
the Revolving Credit Commitment, the Swing Loan Commitment and the Supplemental
Swing Loan Commitment terminated and the Notes then outstanding and interest
accrued thereon and all other liabilities of the Borrower hereunder to the Banks
to be forthwith due and payable. Thereupon the Revolving Credit Commitment, the
Swing Loan Commitment and the Supplemental Swing Loan Commitment shall be
terminated and all amounts due hereunder and under any Notes outstanding shall
be due and payable without presentment, demand, protest or other notice of any
77
kind to the Borrower, all of which are hereby expressly waived. Upon the
occurrence of an Event of Default set forth in Sections 8.1, 8.2, 8.5, 8.6, 8.7,
8.8, 8.9, 8.10 or 8.11 hereof, the Banks shall have the full panoply of rights
and remedies granted to them under this Credit Agreement and the other Loan
Documents and all those rights and remedies granted by law to creditors. No
exercise of one right or remedy shall be deemed a waiver of other rights or
remedies.
ARTICLE IX. AGREEMENT AMONG BANKS
9.1 Appointment and Grant of Authority.
Each of the Banks hereby appoints and designates National City Bank, and
National City Bank hereby agrees to act as, the initial Agent under this Credit
Agreement and the other Loan Documents. As such Agent, National City Bank shall
have and may exercise such powers under this Credit Agreement and the other Loan
Documents as are specifically delegated to the Agent, by the terms hereof or
thereof, together with such other powers as are incidental thereto. Without
limiting the foregoing, each Bank, and each holder of a Note by its acceptance
of such Note, hereby authorizes the Agent, on behalf of the Banks, to execute
all of the Loan Documents (other than this Credit Agreement) and to accept all
of the Loan Documents and all other agreements, documents or instruments
reasonably required to carry out the intent of the parties to this Credit
Agreement. The Agent may perform any of its duties hereunder or under the Loan
Documents by and through its officers, directors, agents, employees or
affiliates.
Each of the Banks hereby appoints and designates Wachovia Bank, National
Association, as Syndication Agent, SunTrust Bank, as Syndication Agent, Fleet
National Bank, as Documentation Agent, and JPMorgan Chase Bank, as Documentation
Agent, and each such Bank hereby agrees to act in such capacity under this
Credit Agreement and the other Loan Documents. As either Syndication Agent or
Documentation Agent, each such Bank shall have and may exercise only such powers
as are specifically delegated to it by the Agent from time to time and which it
agrees to exercise. Such Banks shall not be deemed to have assumed any duties or
responsibilities under this Credit Agreement and the other Loan Documents by
reason of its designation as Syndication Agent or Documentation Agent.
9.2 Non-Reliance on Agent.
Each Bank agrees that it has, independently and without reliance on the
Agent, based on such documents and information as it has deemed appropriate,
made its own credit analysis and evaluation (including but not limited to an
environmental review) of the Borrower and its operations, and decision to enter
into this Credit Agreement. Further, each Bank agrees that it will,
independently and without reliance upon the Agent, and based on such documents
and information as it shall deem reasonable and appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Credit Agreement and the other Loan Documents. Each Bank acknowledges
that a copy of this Credit Agreement and the exhibits and schedules hereto have
been made available to it and to its legal counsel for review and each Bank
acknowledges that it is satisfied with the form and substance of this Credit
Agreement and the exhibits and schedules hereto. Except as otherwise provided in
this Credit Agreement, the Agent shall have no duty or responsibility, either
initially or on a continuing
78
basis, to keep any Bank or any holder of a Note informed as to the performance
or observance by the Borrower of this Credit Agreement or any other document or
instrument referred to or provided for in this Credit Agreement or to inspect
the properties or books of the Borrower. The Agent, in the absence of gross
negligence or willful misconduct, shall not be liable to any Bank for its
failure to relay or furnish to the Bank any information.
9.3 Responsibility of Agent and Other Matters.
(a) Ministerial Nature of Duties. As between the Banks and themselves,
the Agent shall have no duties or responsibilities except those expressly set
forth in this Credit Agreement or in the other Loan Documents, and those duties
and responsibilities shall be subject to the limitations and qualifications set
forth in this Article IX. The duties of the Agent shall be ministerial and
administrative in nature.
(b) Limitation of Liability. As between the Banks and Agent, neither
the Agent nor any of its directors, officers, employees, agents or affiliates
shall be liable for any action taken or omitted (whether or not such action
taken or omitted is within or without the Agent's responsibilities and duties
expressly set forth in this Credit Agreement) under or in connection with this
Credit Agreement or any other instrument or document executed or delivered in
connection herewith except for gross negligence or willful misconduct. Without
limiting the foregoing, neither the Agent nor any of its directors, officers,
employees, agents or affiliates shall be responsible for, or have any duty to
examine (i) the genuineness, execution, validity, effectiveness, enforceability,
collectibility, value or sufficiency of (A) this Credit Agreement or any of the
other Loan Documents or (B) any other document or instrument furnished pursuant
to or in connection with this Credit Agreement, (ii) the collectibility of any
amounts owed by the Borrower to the Banks, (iii) the truthfulness of any
recitals, statements, representations or warranties made to the Agent or the
Banks in connection with this Credit Agreement or any other Loan Documents, (iv)
any failure of any party to this Credit Agreement to receive any communication
sent, including any telegram, telex, teletype, facsimile transmission or
telephone message or any writing, application, notice, report, statement,
certificate, resolution, request, order, consent letter or other instrument or
paper or communication entrusted to the mails or to a delivery service, or (v)
the assets, liabilities, financial condition, results of operations or business,
or creditworthiness of the Borrower.
(c) Reliance. The Agent shall be entitled to act, and shall be fully
protected in acting upon, any telegram, facsimile transmission or any writing,
application, notice, report, statement, certificate, resolution, request, order,
consent, letter or other instrument, paper or communication believed by the
Agent in good faith to be genuine and correct and to have been signed or sent or
made by a proper Person. The Agent may consult counsel (including counsel of the
Borrower), independent public accountants and other experts selected by it and
shall be entitled to act, and shall be fully protected in any action taken in
good faith, in accordance with advice given by such counsel, independent public
accountants and other experts. The Agent may employ agents and attorneys-in-fact
and shall not be liable for the default or misconduct of any such agents or
attorneys-in-fact selected by the Agent with reasonable care. The Agent shall
not be bound to ascertain or inquire as to the performance or observance of any
of the terms, provisions or conditions of this Credit Agreement or any of the
other Loan Documents on the part of the Borrower, the other Loan Parties or any
other party thereto.
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9.4 Action on Instructions.
As between the Agent and the Banks, the Agent shall be required to act and
shall be fully protected in so acting and shall be entitled to refrain from
acting, and shall be fully protected in refraining from so acting, under this
Credit Agreement, the other Loan Documents or any other instrument or document
executed or delivered in connection herewith or therewith, in accordance with
written instructions from the Required Banks or, in the case of the matters set
forth in items (A) through (F) of Section 10.l, from all of the Banks.
9.5 Action in Event of Default.
As between the Agent and the Banks, if an Event of Default has occurred and
is continuing, the Banks shall promptly consult with one another in an attempt
to agree upon a mutually acceptable course of conduct. Failing unanimous
agreement upon a course of conduct and if the Banks wish to exercise any of
their rights and remedies under the Credit Agreement or under any other Loan
Document, the Agent will exercise the rights of the Banks hereunder or
thereunder as directed by the Required Banks.
9.6 Indemnification.
To the extent the Borrower does not reimburse and save harmless the Agent
according to the terms of this Credit Agreement for and from all costs, expenses
and disbursements in connection herewith, such costs, expenses and disbursements
shall be borne by the Banks ratably. Each Bank hereby severally agrees on such
basis (i) to reimburse and indemnify the Agent for such Bank's pro rata share of
all such reasonable costs, expenses and disbursements on request and (ii) to the
extent of each such Bank's pro rata share, to indemnify and save harmless the
Agent against and from any and all liabilities, losses, obligations, damages,
penalties, claims, actions, judgments and suits and other costs, expenses and
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent, arising out of or in connection with this
Credit Agreement, the other Loan Documents or any other agreement, instrument or
document executed or delivered in connection herewith or therewith, or any
request of the Required Banks or all of the Banks, as the case may be, including
without limitation the reasonable costs, expenses and disbursements in
connection with defending themselves against any claim or liability, or
answering any subpoena or other process related to the exercise or performance
of any of its powers or duties under this Credit Agreement, the other Loan
Documents, or any of the other agreements, instruments or documents executed or
delivered in connection herewith. The foregoing notwithstanding, no Bank shall
be liable for any portion of such losses, obligations, damages, penalties,
claims, actions, judgments and suits, and other costs, expense and disbursements
resulting from or as a consequence of (A) the Agent's gross negligence or
willful misconduct, (B) a claim against the Agent or the Banks with respect to
which each Bank was not given notice and the opportunity to participate (at its
own expense) in the defense thereof or (C) a compromise and settlement agreement
entered into without the consent of all of the Banks.
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9.7 Agent's Rights as a Bank.
With respect to the commitment of the Agent as a Bank hereunder, the other
Loan Documents and any other agreements, instruments and documents delivered
pursuant hereto and any Loans of the Agent under this Credit Agreement, and any
other amounts due to the Agent under this Credit Agreement or the other Loan
Documents, the Agent shall have the same rights and powers, duties and
obligations under this Credit Agreement, the other Loan Documents or other
agreement, instrument or document as any Bank and may exercise such rights and
powers and shall perform such duties and fulfill such obligations as though it
were not the Agent. The terms "Banks", "Required Banks", "holder" or any similar
term shall, unless the context clearly indicates otherwise, include the Agent in
its individual capacity. The Agent may accept deposits from, lend money to, and
generally engage, and continue to engage, in any kind of banking, trust or other
business with the Borrower, any Subsidiary of the Borrower or any Affiliate
thereof as if it were not the Agent hereunder and may accept fees and other
consideration from the Borrower, any Subsidiary of the Borrower or any Affiliate
thereof for services in connection with the Credit Agreement or otherwise
without having to account for the same to the Banks.
9.8 Advances by Agent.
Unless the officers of the Agent responsible for administering this Credit
Agreement shall have been notified in writing by a Bank prior to the date of any
Disbursement that such Bank will not make the amount which would constitute its
pro rata share of such Disbursement available to the Agent on the date of such
Loan, the Agent may (but shall not be required to) assume that such Bank has
made such amount available to the Agent on the date of such Loan and the Agent,
in reliance upon such assumption, may make available to the Borrower a
corresponding amount. If such pro rata share is made available to the Agent on a
date after the date of such Disbursement, such Bank shall pay to the Agent on
demand an amount equal to the product of (i) during each day included in the
period referred to in (iii) below, the Federal Funds Rate during each day
included in such period, multiplied by (ii) the amount of such Bank's pro rata
share of such Disbursement, multiplied by (iii) a fraction, the numerator of
which is the number of days that elapse from and including the date of such Loan
to the date on which such pro rata share of such Disbursement shall become
immediately available to the Agent and the denominator of which is 360. A
statement of the Agent submitted to such Bank with respect to any amounts owing
under this Section 9.8 shall be prima facie evidence as to the amount owed by
such Bank to the Agent. If such Bank's pro rata share is not in fact made
available to the Agent by such Bank within three (3) Business Days of such
Borrowing Date, the Agent shall be entitled to recover such amount with interest
thereon at the rate per annum equal to the Base Rate during such period, on
demand, from such Bank.
9.9 Payment to Banks.
Promptly after receipt by the Agent from the Borrower of any principal
repayment of the Loans, interest due on the Loans, any fees or other amounts due
under any Loan Document (except for such amounts which are payable for the sole
account of any Bank or the Agent), the Agent shall distribute to each Bank that
Bank's pro rata share of the funds so received; provided that in the event
payments are received by 1:30 P.M., (Pittsburgh, Pennsylvania time) by the Agent
with respect to the Loans and such payments are not distributed to the Banks on
the same
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day received by the Agent, the Agent shall pay the Banks the Federal Funds Rate,
with respect to the amount of such payments for each day held by the Agent and
not distributed to the Banks.
9.10 Pro Rata Sharing.
All interest and principal payments on the Loans, all Commitment Fees, the
Closing Fee and any other fees (specifically excluding the Agent's Fee and the
fee payable to the relevant Issuing Bank in connection with the issuance of any
Letter of Credit) are to be divided pro rata among the Banks. Any sums obtained
from the Borrower by any Bank by reason of the exercise of its rights of setoff,
banker's lien or in collection shall be shared (net of costs) pro rata among the
Banks. Nothing in this Section 9.10 shall be deemed to require the sharing among
the Banks of collections specifically relating to, or of the proceeds of any
collateral securing, any other Indebtedness of the Borrower to any Bank.
9.11 Successor Agent.
(a) Resignation of the Agent. Subject to a successor Agent being
appointed and such Person accepting the duties and obligations of the Agent
hereunder and under the Loan Documents, the Agent may resign from the
performance of its functions and duties hereunder and under the other Loan
Documents at any time by giving at least sixty (60) days prior written notice to
the Banks and the Borrower. In the event that the Agent gives notice of its
desire to resign from the performance of its functions and duties hereunder and
under the Loan Documents, then the Borrower and the Agent shall use all
reasonable commercial efforts to identify, and the Required Banks shall appoint,
a successor who shall be reasonably satisfactory to the Required Banks and the
Borrower (provided that such approval of the Borrower shall not be unreasonably
withheld and that no such approval of the Borrower shall be required after the
occurrence and during the continuance of an Event of Default). If a successor
Agent shall not have been appointed within said sixty (60) day period, the
Required Banks shall, after consultation with the Borrower, appoint a successor
Agent from among the Banks. Any such successor agent shall succeed to the
rights, powers and duties of the Agent.
(b) Rights of the Former Agent. Upon the appointment of such successor
agent, the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Credit Agreement. After any retiring Agent's
resignation hereunder as administrative agent for the Banks hereunder, the
provisions of this Article IX shall inure to the benefit of such retiring Agent
as to any actions taken or omitted to be taken by it while it was Agent under
this Credit Agreement.
ARTICLE X. MISCELLANEOUS
10.1 Amendments and Waivers.
(a) Amendments to Credit Agreement or Any Loan Document. Subject to
the remaining provisions of this Section 10.1, the Agent, the Banks, the Issuing
Banks, the Borrower and the other Loan Parties may, from time to time, enter
into amendments, modifications, extensions, supplements and replacements to and
of this Credit Agreement or any other Loan Document and the Banks or the
Required Banks, as the case may be, may, from time to time,
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waive compliance with a provision hereof or thereof. No amendment or waiver of
any provision of this Credit Agreement, the Notes or any other Loan Document
(other than amendments or waivers to any interest rate protection agreement with
a Bank or an Affiliate of a Bank entered into in accordance with Section
6.6(xi), which amendment or waiver shall comply with Section 6.6(xi) and require
consent of such Bank or Affiliate), nor any consent to any departure therefrom
by the Borrower shall be effective unless the same shall be in writing and
signed by the Borrower or other Person, whichever is the obligor of the document
to be amended or the provisions of which are being waived, and the Agent and the
Required Banks, and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
The foregoing notwithstanding, no amendment, waiver or consent shall do any
of the following unless in writing and signed by all of the Banks (or the Agent
with the consent of all of the Banks):
(A) subject to Section 2.1(j), increase the Revolving Credit
Commitment, the Commitment Amount of any Bank, the Commitment Percentage of any
Bank, the Swing Loan Commitment, the Supplemental Swing Loan Commitment or the
maximum aggregate principal amount of any of the Notes;
(B) except as contemplated in this Credit Agreement, reduce the
interest rate on the Loans or Letters of Credit or any fees in connection
therewith;
(C) postpone the Repayment Date or the date any payment of principal,
interest or fees are due in connection with the Loans, or any reimbursement
obligations are due in connection with the Letters of Credit;
(D) release any collateral securing the Bank Indebtedness other than
pursuant to the terms of this Credit Agreement or release the Borrower of its
obligations under the Guaranty Agreement;
(E) amend this Section 10.1; or
(F) amend the definition of "Required Banks".
In the case of any waiver or consent relating to any provision of this Credit
Agreement, the parties shall be restored to their former positions and rights
hereunder, and the Event of Default so waived or consented to shall be deemed to
be cured and not continuing; but no such waiver or consent shall extend to any
subsequent or other Event of Default or impair any right consequent thereon.
Any such supplemental agreement shall apply equally to the Borrower, the
affected party, if any, and each of the Banks and shall be binding upon the
Borrower, the Banks, the Agent and all future holders of the Notes.
(b) Waivers. No delay on the part of the Banks in the exercise of any
power or right shall operate as a waiver thereof, nor shall any single or
partial exercise of any power or right preclude other or further exercise
thereof, or the exercise of any other power or right. In the
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case of any waiver, the Borrower, the Banks and the Agent shall be restored to
their former positions and rights, and any Event of Default waived shall be
deemed to be cured and not continuing, but no such waiver shall extend to any
subsequent or other Event of Default, or impair any right consequent thereon.
10.2 Notices.
(a) Notice to the Borrower. All notices required to be sent to the
Borrower shall be sent to the Borrower to following address, by hand delivery,
by recognized national overnight courier service, by facsimile transmission or
other means of electronic data communication, or by the United States Mail,
first class, postage prepaid:
If by United States Mail: If by other means:
Education Management Corporation Education Management Corporation
000 Xxxxx Xxxxxx 000 Xxxxx Xxxxxx
00xx Xxxxx 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000 Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Chief Financial Officer Attention: Chief Financial Officer
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
(b) Notice to the Agent. All notices required to be sent to the Agent
shall be sent to the following address, by hand delivery, by recognized national
overnight courier service, by facsimile transmission or other means of
electronic data communication, or by the United States Mail, first class,
postage prepaid:
If by United States Mail: If by other means:
National City Bank of Pennsylvania National City Bank of Pennsylvania
National City Center National City Center
000 Xxxxxx Xxxxxx 000 Xxxxxx Xxxxxx
Location Number 3028 Location Number 3028
Xxxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, Agent Services Attention: Xxxxx Xxxxxx, Agent Services
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telecopier: (000) 000-0000 Telecopier: (000) 000-0000
Telecopier (Lending): (000) 000-0000 Telecopier (Lending): (000) 000-0000
(c) Notice to the Banks. All notices required to be delivered to the
Banks pursuant to this Credit Agreement and the other Loan Documents shall be in
writing and shall be sent to the address set forth on Schedule 1.1, by hand
delivery, by recognized national overnight courier service, by facsimile
transmission or other means of electronic data communication, or by the United
States mail, first class, postage prepaid.
(d) Receipt of Notices. All such notices shall be effective three (3)
days after mailing, one (1) day after deposit with the courier service, the date
of electronic transmission (receipt confirmed) or when received, whichever is
earlier. The Borrower, the Banks and the
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Agent may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
10.3 Holiday Payments.
If any payments to be made by the Borrower hereunder shall become due on a
date not a Business Day, such payments shall be made on the next succeeding
Business Day.
10.4 Tax Withholding.
Each Bank or assignee or participant of a Bank that is not
incorporated under the Laws of the United States of America or a state thereof
(and, upon the written request of the Agent, each other Bank or assignee or
participant of a Bank) agrees that it will deliver to each of the Borrower and
the Agent two (2) duly completed appropriate valid Withholding Certificates (as
defined under (S) 1.1441-1(c)(16) of the Income Tax Regulations (the
"Regulations")) certifying its status (i.e. U.S. or foreign person) and, if
appropriate, making a claim of reduced, or exemption from, U.S. withholding tax
on the basis of an income tax treaty or an exemption provided by the Internal
Revenue Code. The term "Withholding Certificate" means a Form W-9; a Form
W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and
certifications as required under (S) 1.1441-1(e)(2) and/or (3) of the
Regulations; a statement described in (S) 1.871-14(c)(2)(v) of the Regulations;
or any other certificates under the Internal Revenue Code or Regulations that
certify or establish the status of a payee or beneficial owner as a U.S. or
foreign person. Each Bank, assignee or participant required to deliver to the
Borrower and the Agent a Withholding Certificate pursuant to the preceding
sentence shall deliver such valid Withholding Certificate as follows: (A) each
Bank which is a party hereto on the Closing Date shall deliver such valid
Withholding Certificate at least five (5) Business Days prior to the first date
on which any interest or fees are payable by the Borrower hereunder for the
account of such Bank; (B) each assignee or participant shall deliver such valid
Withholding Certificate at least five (5) Business Days before the effective
date of such assignment or participation (unless the Agent in its sole
discretion shall permit such assignee or participant to deliver such valid
Withholding Certificate less than five (5) Business Days before such date in
which case it shall be due on the date specified by the Agent). Each Bank,
assignee or participant which so delivers a valid Withholding Certificate
further undertakes to deliver to each of the Borrower and the Agent two (2)
additional copies of such Withholding Certificate (or a successor form) on or
before the date that such Withholding Certificate expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent
Withholding Certificate so delivered by it, and such amendments thereto or
extensions or renewals thereof as may be reasonably requested by the Borrower or
the Agent. Notwithstanding the submission of a Withholding Certificate claiming
a reduced rate of or exemption from U.S. withholding tax, the Agent shall be
entitled to withhold United States federal income taxes at the full 30%
withholding rate if in its reasonable judgment it is required to do so under the
due diligence requirements imposed upon a withholding agent under (S)
1.1441-7(b) of the Regulations. Further, the Agent is indemnified under (S)
1.1461-1(e) of the Regulations against any claims and demands of any Bank or
assignee or participant of a Bank for the amount of any tax it deducts and
withholds in accordance with regulations under (S) 1441 of the Internal Revenue
Code.
85
At least five (5) Business Days prior to the first date on which interest
or fees are payable hereunder for the account of each Bank, each Bank that is
not incorporated under the laws of the United States of America or a state
thereof agrees that it will deliver to the Agent and the Borrower two (2) duly
completed copies of either (i) IRS Form W-9, 1001 or 4224 or such other
applicable form prescribed by the IRS, certifying in each case that such Bank is
entitled to receive payments under this Credit Agreement or its Note(s), as the
case may be, without deduction or withholding of United States federal income
taxes, or is subject to such tax at a reduced rate under an applicable tax
treaty or (ii) IRS Form W-8 or such other applicable form prescribed by the IRS
or a certificate of such Bank indicating that no such exemption or reduced rate
of taxation is allowable with respect to such payments. Each Bank which delivers
an IRS Form W-8, W-9, 4224 or 1001 further undertakes to deliver to the Agent
and the Borrower two (2) additional copies of any such form (or any successor
form) on or before the date on which that form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form so
delivered by it, and such amendments thereto or extensions or renewals thereof
as may be reasonably requested by the Borrower or the Agent, either certifying
that such Bank is entitled to receive payments under this Credit Agreement or
its Note(s), as the case may be, without deduction or withholding of any United
States federal income taxes or is subject to such tax at a reduced rate under an
applicable tax treaty or stating the date on which that no such exemption or
reduced rate is allowable. The Agent shall be entitled to withhold, from each
payment made to such Bank hereunder or under the Note(s) payable to it, United
States federal income taxes at the full withholding rate unless each Bank
referred to in the first sentence of this Section 10.4 establishes an exemption
or at the applicable reduced rate established pursuant to the above provisions.
10.5 Survival.
Until payment in full of the Bank Indebtedness and expiration of all
outstanding Letters of Credit, and the termination of the Revolving Credit
Commitment, the Swing Loan Commitment and the Supplemental Swing Loan
Commitment, all covenants, agreements, warranties and representations made
herein and in all certificates or other documents delivered in connection with
this Credit Agreement by or on behalf of the Borrower, shall survive the
advances of money made by the Banks to the Borrower hereunder and the delivery
of the Notes, and all such covenants, agreements, warranties and representations
shall inure to the benefit of the successors and assigns of the Banks and the
Agent whether or not so expressed.
10.6 Costs.
The Borrower shall pay:
(i) All reasonable costs and expenses of the Agent (including without
limitation the reasonable fees and disbursements of the Agent's counsel),
incurred in connection with the preparation, negotiation, execution and delivery
of this Credit Agreement and the other Loan Documents and any and all other
documents and instruments prepared in connection herewith, including but not
limited to all amendments, extensions, modifications, waivers, consents and
other documents and instruments prepared or entered into from time to time,
including after the Closing Date;
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(ii) All reasonable costs and expenses of the Agent and the Banks
(including without limitation the reasonable fees and disbursements of the
Agent's and each of the Bank's counsel) in connection with (A) the enforcement
of this Credit Agreement and the other Loan Documents (whether through
negotiations, legal proceedings or otherwise) arising pursuant to a breach by
the Borrower of any of the terms, conditions, representations, warranties or
covenants of any Loan Document to which it is a party, and (B) defending or
prosecuting any actions, suits or proceedings relating to any of the Loan
Documents.
All of such costs and expenses shall be payable by the Borrower to the Banks or
the Agent, as the case may be, upon demand or as otherwise agreed upon by the
Banks or the Agent and the Borrower, and shall constitute Bank Indebtedness
under this Credit Agreement. The Borrower's obligation to pay such costs and
expenses shall survive the termination of this Credit Agreement and the
satisfaction of all of the Borrower's obligations hereunder.
10.7 Certain Taxes.
The Borrower agrees to pay, and save the Banks harmless from, all liability
for any stamp or other taxes which may be payable with respect to the execution
or delivery of this Credit Agreement or the Loan Documents or the issuance of
the Notes, which obligation of the Borrower shall survive the termination of
this Credit Agreement.
10.8 Successors, Assigns and Participations.
(a) Benefit of Agreement. Subject to the remaining provisions of this
Section 10.8, this Credit Agreement shall be binding upon the Borrower, the
Agent and the Banks and their respective successors and assigns, and shall inure
to the benefit of the Borrower, the Agent and the Banks and the successors and
assigns of the Agent and the Banks; provided, however that the Borrower may not
assign its rights or duties hereunder or under any other Loan Document without
the prior written consent of the Banks and the Agent.
(b) Assignments. Subject to the remaining provisions of this
Subsection 10.8(b), any Bank, at any time, in the ordinary course of its
commercial banking business and in accordance with applicable law, may sell to
one or more Purchasing Banks (which Purchasing Banks may be Affiliates of the
Transferor Bank), a portion or all of its rights and obligations under this
Credit Agreement and the Note(s) then held by it pursuant to an Assignment and
Assumption Agreement substantially in the form of Exhibit "M" and executed by
the Transferor Bank and such Purchasing Bank and, if required pursuant to this
Section 10.8, consented to by the Agent and the Borrower which consent shall not
be withheld without a good faith reason; subject, however to the following
requirements:
(i) The Borrower and the Agent must give their prior consent to any
such assignment (other than an assignment made by a Bank to another Bank or an
Affiliate of a Bank) which consent shall not be unreasonably withheld;
(ii) Each such assignment must be in a minimum amount of $5,000,000 or
the remaining amount of the Transferor Bank's Commitment Amount if less, or, if
in excess thereof, in integral multiples of $1,000,000, unless otherwise agreed
by the Borrower and the Agent, and each such assignment of a Revolving Credit
Commitment shall include the same percentage of
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the Supplemental Swing Loan Commitment of the Transferor Bank as the percentage
of the Revolving Credit Commitment being transferred by the Transferor Bank;
(iii) [Intentionally omitted]
(iv) No Purchasing Bank may make assignments unless otherwise agreed
by the Borrower, such consent to not be unreasonably withheld by the Borrower;
and
(v) On the date such assignment is made, the Transferor Bank shall pay
to the Agent a $3,500 service fee for each assignment;
provided, however the restrictions set forth in Subsection 10.8(b)(i), (ii),
(iii) and (iv) above shall not apply in the case of any assignment by any
Transferor Bank upon the occurrence and during the continuation of an Event of
Default.
Upon the execution, delivery, acceptance and recording of any such
Assignment and Assumption Agreement, from and after the Transfer Effective Date
set forth in such Assignment and Assumption Agreement, (a) the Purchasing Bank
thereunder shall be a party hereto as a Bank and, to the extent provided in such
Assignment and Assumption Agreement, shall have the rights and obligations of a
Bank hereunder with a Commitment Amount and Commitment Percentage, and (b) the
Transferor Bank thereunder shall be released from its obligations as a Bank
under this Credit Agreement to the extent provided in such Assignment and
Assumption Agreement. Such Assignment and Assumption Agreement shall be deemed
to amend this Credit Agreement to the extent, and only to the extent, necessary
to reflect the addition of such Purchasing Bank as a Bank and the resulting
adjustment of Commitment Percentages arising from the purchase by such
Purchasing Bank of all or a portion of the rights and obligations of such
Transferor Bank under this Credit Agreement and its Note(s), as the case may be.
On or prior to the Transfer Effective Date, the Borrower shall execute and
deliver to the Agent, in exchange for the surrendered Note(s) held by the
Transferor Bank, a new Note(s) to the order of such Purchasing Bank in an amount
equal to the Commitment Amount assumed by it and purchased by it pursuant to
such Assignment and Assumption Agreement, and new Note(s) to the order of the
Transferor Bank in an amount equal to the Commitment Amount retained by it
hereunder, if any.
(c) Assignment Register. The Agent shall maintain, at its address
referred to in Subsection 10.2(b) hereof, a copy of each Assignment and
Assumption Agreement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Banks, and the amount of the
Commitment Amount of each Bank, if any, then in effect, and the amount of the
Loans owing to each Bank, from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and the Borrower, the Agent and
the Banks may treat each Person whose name is recorded in the Register as the
owner of the Loans for all purposes of this Credit Agreement. The Register shall
be available at the office of the Agent set forth in Subsection 10.2(b) hereof
for inspection by the Borrower or any Bank at any reasonable time and from time
to time upon reasonable prior notice.
(d) Participations. Any Bank, in the ordinary course of its commercial
banking business and in accordance with applicable law, may sell to one or more
Participants a
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Participation in any Loan owing to such Bank, the interest of such Bank in (i)
any Revolving Credit Note or (ii) the Commitment Amount of such Bank. In the
event of any such sale by a Bank of a Participation to a Participant, such
Bank's obligations under this Credit Agreement to the other parties to this
Credit Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, such Bank shall remain the holder of
its Note(s) for all purposes under this Credit Agreement (including voting
rights hereunder), and the Borrower, the other Banks and the Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Credit Agreement or the other Loan
Documents; provided, however, that no Bank shall transfer or grant any
Participation under which the Participant shall have rights to approve any
amendment, modification or waiver of this Credit Agreement or any other Loan
Document except to the extent such amendment, modification or waiver would (i)
reduce or increase the principal amount of such Participant's Participation over
the amount then in effect, (ii) decrease the interest rate relating to the
Loans, (iii) reduce the Commitment Fee or any other Fee payable to the
Participant, (iv) postpone any date fixed for any payment of principal of or
interest on the Loans, reimbursement obligations, the Commitment Fee or any
other Fees or obligations of the Borrower set forth in Article II or (v) release
any collateral granted to the Agent, on behalf of the Bank, to secure the Bank
Indebtedness.
(e) Other Assignments. Notwithstanding the foregoing provisions of
this Section 10.8, any Bank may, at any time and from time to time, assign all
or any portion of its rights under this Credit Agreement and its Note(s) to a
Federal Reserve Bank in support of borrowings made by such Bank from such
Federal Reserve Bank. No such assignment shall release any assigning Bank from
its obligations hereunder.
(f) Disclosure. The Borrower authorizes each Bank to disclose to any
Participant or Purchasing Bank and any prospective Participant or Purchasing
Bank any and all financial information in such Bank's possession concerning the
Borrower and its Subsidiaries which has been delivered to such Bank by or on
behalf of the Borrower pursuant to this Credit Agreement or in connection with
such Bank's credit evaluation of the Borrower prior to becoming a party to this
Credit Agreement.
10.9 Confidentiality.
Unless otherwise agreed to in writing by the Borrower, the Agent and the
Banks hereby agree to keep all Proprietary Information confidential and not to
disclose or reveal any Proprietary Information to any Person other than the
Agent's or the Banks' directors, officers, employees, Affiliates and agents and
to actual or potential Purchasing Banks and Participants, and then only on a
confidential basis; provided, however, that the Agent or the Banks may disclose
Proprietary Information (i) as required by any Governmental Rule, (ii) to their
respective attorneys and accountants, (iii) as requested or required by any
state, federal or foreign authority or examiner regulating banks or banking; or
(iv) in connection with any litigation or enforcement proceedings; and further,
provided, that the Agent or the Banks may not disclose any confidential
information concerning identified students before giving the Borrower notice of
such proposed disclosure and affording it a reasonable opportunity to obtain a
judicial protective order from a court of competent jurisdiction.
Notwithstanding anything herein to the contrary, the information subject to this
Section 10.9 shall not include, and the Agent and each Bank may
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disclose without limitation of any kind, any information with respect to the
"tax treatment" and "tax structure" (in each case, within the meaning of
Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby
and all materials of any kind (including opinions or other tax analyses) that
are provided to the Agent or such Bank relating to such tax treatment and tax
structure; provided that with respect to any document or similar item that in
either case contains information concerning the tax treatment or tax structure
of the transaction as well as other information, this sentence shall only apply
to such portions of the document or similar item that relate to the tax
treatment or tax structure of the Loans, Letters of Credit and transactions
contemplated hereby.
10.10 Indemnification.
The Borrower will indemnify and hold harmless the Agent and the Banks, any
of their respective directors, officers or employees and each Person, if any,
who controls the Agent or the Banks within the meaning of the Securities Act of
1933 or the Securities and Exchange Act of 1934 (any and all of whom are
referred to as an "Indemnified Party") from and against any and all losses,
claims, damages and liabilities (including but not limited to any Environmental
Claim or the liability of any Bank thereon), joint or several (including but not
limited to all legal fees or other expenses reasonably incurred by any
Indemnified Party in connection with the preparation for or defense of any
pending or threatened claim, action or proceeding, whether or not resulting in
any liability), to which such Indemnified Party may become subject (whether or
not such Indemnified Party is a party thereto) under any applicable federal or
state law or otherwise caused by or arising out of, or allegedly caused by or
arising out of, this Credit Agreement or any transaction contemplated hereby,
other than losses, claims, damages or liabilities resulting from the transfer of
any of the Notes in violation of any applicable law or regulation; provided, the
Borrower shall not be liable where any action or failure to act was due to the
gross negligence or willful misconduct of the Indemnified Party.
Promptly after receipt by an Indemnified Party of notice of any claim, action or
proceeding with respect to which an Indemnified Party is entitled to indemnity
hereunder, such Indemnified Party will notify the Borrower of such claim or the
commencement of such action or proceeding, provided that the failure of an
Indemnified Party to give notice as provided herein shall not relieve the
Borrower of its obligations under this Section 10.10 with respect to such
Indemnified Party, except to the extent that the Borrower is actually prejudiced
by such failure. The Borrower will assume the defense of such claim, action or
proceeding and will employ counsel satisfactory to the Indemnified Party and
will pay the fees and expenses of such counsel. Notwithstanding the preceding
sentence, the Indemnified Party will be entitled, at the expense of the
Borrower, to employ counsel separate from counsel for the Borrower and for any
other party in such action if the Indemnified Party reasonably determines that a
conflict of interest or other reasonable basis exists which makes representation
by counsel chosen by the Borrower not advisable, provided that the Borrower
shall not be obligated to pay for the fees and expenses of more than one counsel
for all Indemnified Parties. In the event an Indemnified Party appears as a
witness in any action or proceeding brought against the Borrower (or any of
their respective officers, directors or employees) in which an Indemnified Party
is not named as a defendant, the Borrower agrees to reimburse such Indemnified
Party for all necessary, out-of-pocket expenses incurred by it (including fees
and expenses of counsel) in connection with its appearing as a witness.
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The Borrower's obligations under this Section 10.10 shall survive the
termination of this Credit Agreement and repayment of the Bank Indebtedness.
10.11 Integration.
This Credit Agreement together with the other Loan Documents constitutes
the entire agreement between the parties relating to this financing transaction
and its supersedes all prior understandings and agreements, whether written or
oral between the parties hereto concerning the transactions provided for herein.
10.12 Severability.
Any provision of this Credit Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
10.13 APPLICABLE LAW.
THIS CREDIT AGREEMENT AND THE NOTES, SHALL BE CONTRACTS MADE UNDER AND
GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REFERENCE TO
THE PROVISIONS THEREOF REGARDING CONFLICTS OF LAW.
10.14 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
THE PARTIES HERETO AGREE THAT ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS SHALL
BE COMMENCED IN THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY, PENNSYLVANIA OR
IN XXX XXXXXXXX XXXXX XX XXX XXXXXX XXXXXX FOR THE WESTERN DISTRICT OF
PENNSYLVANIA AND EACH PARTY AGREES THAT A SUMMONS AND COMPLAINT COMMENCING AN
ACTION OR PROCEEDING IN EITHER OF SUCH COURTS SHALL BE PROPERLY SERVED AND SHALL
CONFER PERSONAL JURISDICTION IF SERVED PERSONALLY OR BY CERTIFIED MAIL TO THE
PARTY IN RESPECT OF THE BORROWER OR THE AGENT, AT ITS ADDRESS SET FORTH IN
SECTION 10.2 HEREOF AND IN RESPECT OF ANY BANK, AT ITS ADDRESS SET FORTH ON
SCHEDULE 1.1 OR ON THE ASSIGNMENT AND ASSUMPTION AGREEMENT TO WHICH SUCH BANK IS
A PARTY, OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA. FURTHER, THE BORROWER, THE AGENT AND THE BANKS HEREBY SPECIFICALLY
CONSENT TO THE PERSONAL JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY
COUNTY, PENNSYLVANIA AND THE DISTRICT COURT OF THE UNITED STATES FOR THE WESTERN
DISTRICT OF PENNSYLVANIA AND WAIVE AND HEREBY ACKNOWLEDGE THAT THE BORROWER, THE
AGENT AND THE BANKS ARE ESTOPPED FROM RAISING ANY CLAIM THAT EITHER SUCH COURT
LACKS PERSONAL JURISDICTION OVER THE BORROWER, THE AGENT OR THE BANKS SO AS TO
PROHIBIT EITHER SUCH COURT FROM ADJUDICATING ANY ISSUES RAISED IN A COMPLAINT
FILED WITH
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EITHER SUCH COURT CONCERNING THIS CREDIT AGREEMENT OR THE NOTES. THE BORROWER,
THE AGENT AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS CREDIT
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULL EXTENT
PERMITTED BY LAW.
10.15 Counterparts.
This Credit Agreement may be executed in as many identical counterparts as
may be convenient and by the different parties hereto on separate counterparts.
This Credit Agreement shall become binding when the Agent, the Banks and the
Borrower have executed at least one counterpart. Immediately after the execution
of counterparts and solely for the convenience of the parties hereto, the
Borrower and the Banks will execute sufficient counterparts so that Borrower
shall have counterparts executed by it, and the Banks shall have counterparts
executed by it and the Borrower. All counterparts shall constitute but one and
the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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[SIGNATURE PAGE 1 OF 13 TO AMENDED AND RESTATED CREDIT
AGREEMENT]
Executed as of the day and year first above Written.
EDUCATION MANAGEMENT CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
[SIGNATURE PAGE 2 OF 13 TO AMENDED AND RESTATED CREDIT
AGREEMENT]
NATIONAL CITY BANK OF PENNSYLVANIA,
individually and as Agent
By /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Vice President
[SIGNATURE PAGE 3 OF 13 TO AMENDED AND RESTATED CREDIT
AGREEMENT]
WACHOVIA BANK, NATIONAL
ASSOCIATION, individually and as
Syndication Agent
By /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
[SIGNATURE PAGE 4 OF 13 TO AMENDED AND RESTATED CREDIT
AGREEMENT]
SUNTRUST BANK, individually and as
Syndication Agent
By /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Director
[SIGNATURE PAGE 5 OF 13 TO AMENDED AND RESTATED CREDIT
AGREEMENT]
FLEET NATIONAL BANK, individually and as
Documentation Agent
By /s/ Xxxxxx XxXxxxxx
-------------------------------------
Name: Xxxxxx XxXxxxxx
Title: Senior Vice President
[SIGNATURE PAGE 6 OF 13 TO AMENDED AND RESTATED CREDIT
AGREEMENT]
JPMORGAN CHASE BANK, individually and as
Documentation Agent
By /s/ Xxxx Maconte
-------------------------------------
Name: Xxxx Maconte
Title: Vice President
[SIGNATURE PAGE 7 OF 13 TO AMENDED AND RESTATED CREDIT
AGREEMENT]
BANK ONE, NA
(Main Office Chicago)
By /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Managing Director
[SIGNATURE PAGE 8 OF 13 TO AMENDED AND RESTATED CREDIT
AGREEMENT]
FIFTH THIRD BANK
By /s/ Xxxxxxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Vice President
[SIGNATURE PAGE 9 OF 13 TO AMENDED AND RESTATED CREDIT
AGREEMENT]
UNION BANK OF CALIFORNIA, N.A.
By /s/ Xxxxxxxx X. Xxx
-------------------------------------
Name: Xxxxxxxx X. Xxx
Title: Assistant Vice President
[SIGNATURE PAGE 10 OF 13 TO AMENDED AND RESTATED CREDIT
AGREEMENT]
LASALLE BANK NATIONAL ASSOCIATION
By /s/ Xxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
[SIGNATURE PAGE 11 OF 13 TO AMENDED AND RESTATED CREDIT
AGREEMENT]
CITIZENS BANK OF PENNSYLVANIA
By /s/ Xxxx X. Xxxxxx, Xx.
-------------------------------------
Name: Xxxx X. Xxxxxx, Xx.
Title: Vice President
[SIGNATURE PAGE 12 OF 13 TO AMENDED AND RESTATED CREDIT
AGREEMENT]
FIRSTMERIT BANK, N.A.
By /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
[SIGNATURE PAGE 13 OF 13 TO AMENDED AND RESTATED CREDIT
AGREEMENT]
BANK OF AMERICA, N.A.
By /s/ Xxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
