EXHIBIT 4.1
CONFORMED COPY OF
EXECUTION COPY
CHILDTIME CHILDCARE, INC.
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AMENDED AND RESTATED CREDIT AGREEMENT
dated as of January 31, 2002
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BANK ONE, MICHIGAN
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
January 31, 2002 (this "Agreement"), is by and between CHILDTIME CHILDCARE,
INC., an Illinois corporation (the "Company"), and BANK ONE, MICHIGAN, a
Michigan banking corporation formerly known as NBD Bank (the "Bank").
INTRODUCTION
The Company and the Bank are parties to the Credit Agreement,
dated as of February 1, 1996, as amended or modified from time to time (the
"Existing Credit Agreement"), pursuant to which the Bank provides to the Company
a revolving credit facility, including letters of credit, in the aggregate
principal amount of $10,000,000, in order to provide funds and other financial
accommodations for working capital and the Company's other general corporate
purposes. The Company has requested the Bank to amend and restate the Existing
Credit Agreement in order to, among other things, extend the expiry date of the
credit facility, increase the aggregate principal amount of the credit facility
to $17,500,000, and secure the credit facility with a security interest in
substantially all of the personal property assets of the Company and the
Subsidiary Guarantors (as defined below) and liens on certain real property of
the Company and the Subsidiary Guarantors, and the Bank is willing to so amend
and restate the Existing Credit Agreement with the Company on the terms and
conditions herein set forth.
In consideration of the premises and of the mutual agreements
herein contained, the parties hereto amend and restate the Existing Credit
Agreement and otherwise agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Certain Definitions. As used herein the following terms
shall have the following respective meanings:
"Adjusted EBIT" of any person for any period means the sum of
(a) EBIT of such person for such period plus, to the extent deducted in
determining such EBIT, (b) Operating Lease Rental Expense of such person for
such period.
"Advance" means any Loan and any Letter of Credit Advance.
"Affiliate", when used with respect to any person, means any
other person which, directly or indirectly, controls or is controlled by or is
under common control with such person. For purposes of this definition "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), with respect to any person, means possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
by contract or otherwise.
"Applicable Margin" means, for purposes of determining the
Eurodollar Rate applicable to Eurodollar Rate Loans outstanding at any time, the
commitment fees payable under Section 2.3(a) and the Letter of Credit fees
payable under Section 2.3(c), the applicable percentage set forth below:
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TOTAL DEBT TO EBITDA RATIO APPLICABLE MARGIN FOR DETERMINING APPLICABLE MARGIN FOR DETERMINING
THE EURODOLLAR RATE AND THE LETTER THE COMMITMENT FEES UNDER SECTION
OF CREDIT FEES UNDER SECTION 2.3(c) 2.3(a)
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Less than or equal to 0.50 to 1.00 1.75% 0.35%
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Greater than 0.50 to 1.00 but not 2.00% 0.35%
greater than 1.75 to 1.00
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Greater than 1.75 to 1.00 2.25% 0.50%
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The Applicable Margin shall be adjusted quarterly (upward or downward),
if necessary, on the first day of the month following the month in which the
financial statements are required to be delivered under Section 5.1(d)(iii) for
the first three fiscal quarters of each fiscal year and under Section 5.1(d)(iv)
for the fourth fiscal quarter of each fiscal year, based on the Total Debt to
EBITDA Ratio reflected in such financial statements, beginning with the
financial statements to be delivered for the first fiscal quarter ending after
the Effective Date; provided that, notwithstanding the foregoing, (a) the
Applicable Margin as of the Effective Date shall be set at the level
corresponding to a Total Debt to EBITDA Ratio of greater than 0.50 to 1.00 but
not greater than 1.75 to 1.00 and (b) upon and during the continuance of any
Event of Default, the Applicable Margin shall be set at the level corresponding
to a Total Debt to EBITDA Ratio of greater than 1.75 to 1.00.
"Business Day" means a day other than a Saturday, Sunday or
other day on which the Bank is not open to the public for carrying on
substantially all of its banking functions in Detroit, Michigan.
"Capital Lease" of any person means any lease which, in
accordance with Generally Accepted Accounting Principles, is or should be
capitalized on the books of such person.
"Change-of-Control" means: (a) Permitted Holders shall cease
to own and control, free and clear of all Liens, at least 51% (on a fully
diluted basis) of the issued and outstanding shares of voting capital stock of
the Parent Guarantor and have the right and authority to appoint, designate or
otherwise elect at least 51% of the members of the board of directors of the
Parent Guarantor or (b) the Parent Guarantor shall cease to own and control,
free and clear of all Liens, 100% (on a fully diluted basis) of the issued and
outstanding shares of voting capital stock of the
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Company and have the right and authority to appoint, designate or otherwise
elect all of the members of the board of directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations thereunder.
"Commitment" means the commitment of the Bank to make Advances
pursuant to Section 2.1, in amounts not exceeding an aggregate principal amount
outstanding of $17,500,000, as such amount may be reduced from time to time
pursuant to Section 2.2.
"Consolidated" or "consolidated" means, when used with
reference to any financial term in this Agreement, the aggregate for two or more
persons of the amounts signified by such term for all such persons determined on
a consolidated basis in accordance with Generally Accepted Accounting
Principles.
"Contingent Liabilities" of any person means, as of any date,
all obligations of such person or of others for which such person is
contingently liable, as obligor, guarantor, surety, accommodation party, partner
or in any other capacity, or in respect of which obligations such person assures
a creditor against loss or agrees to take any action to prevent any such loss
(other than endorsements of negotiable instruments for collection in the
ordinary course of business), including without limitation all reimbursement
obligations of such person in respect of any letters of credit, surety bonds or
similar obligations (including, without limitation, bankers' acceptances) and
all obligations of such person to advance funds to, or to purchase assets,
property or services from, any other person in order to maintain the financial
condition of such other person; provided that Contingent Liabilities of any
person shall not include any contingent obligation of such person under a
contract entered into by such person in the ordinary course of business, which
contingent obligation would not, upon the occurrence of the event or events upon
which such obligation is conditioned, be classified as a liability on a balance
sheet of such person prepared in accordance with Generally Accepted Accounting
Principles.
"Contractual Obligation" means as to any person, any provision
of any security issued by such person or of any agreement, instrument or other
undertaking to which such person is a party or by which it or any of its
property is bound.
"Cumulative Net Income" of any person means, as of any date,
the Net Income of such person for the period commencing on the specified date
through the end of the most recently completed fiscal year of such person (but
without reduction for any net loss incurred for any fiscal year during such
period), taken as one accounting period.
"Debt Service Coverage Ratio" of any person for any period
means the ratio of (a) Adjusted EBIT of such person for such period to (b) Fixed
Charges of such person for such period.
"Default" means any event or condition, which might become an
Event of Default with notice or lapse of time or both.
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"Dollars" and "$" means the lawful money of the United States
of America.
"EBIT" of any person for any period means the Net Income of
such person for such period, plus, to the extent deducted in determining such
Net Income, (a) Interest Expense of such person for such period, and (b) income
and other taxes of such person determined by reference to income or profits of
such person for such period.
"EBITDA" of any person for any period means the Net Income of
such person for such period, plus, to the extent deducted in determining such
Net Income and without duplication, (a) Interest Expense of such person for such
period, (b) income and other taxes of such person determined by reference to
income or profits of such person for such period, (c) depreciation and
amortization of such person for such period, and (d) Extraordinary Charges
(within those certain limits set forth in the definition of that term).
"Effective Date" means the effective date specified in the
final paragraph of this Agreement.
"Environmental Certificate" means, with respect to any
Guarantor, the Bank's standard form of Environmental Certificate in
substantially the form annexed hereto as Exhibit A, or with respect to the
Company and the Parent Guarantor, the Environmental Certificate dated February,
1996 executed and delivered by the Company and the Parent Guarantor to the Bank
in connection with the Existing Credit Agreement.
"Environmental Laws" has the meaning ascribed thereto in the
Environmental Certificate.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder.
"ERISA Affiliate" means, with respect to any person, any trade
or business (whether or not incorporated) which, together with such person or
any Subsidiary of such person, would be treated as a single employer under
Section 414 of the Code and the regulations promulgated thereunder.
"Eurodollar Business Day" means, with respect to any
Eurodollar Rate Loan, a day which is both a Business Day and a day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Eurodollar Interest Period" means, with respect to any
Eurodollar Rate Loan, the period commencing on the day such Eurodollar Rate Loan
is made or converted to a Eurodollar Rate Loan and ending on the day which is
one, two, three or six months thereafter (or such longer period acceptable to
the Bank requested by the Company), as the Company may elect under Section 2.4
or 2.7, and each subsequent period commencing on the last day of the immediately
preceding Eurodollar Interest Period and ending on the day which is one, two,
three or six months thereafter (or such longer period acceptable to the Bank
requested by the Company), as the Company may
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elect under Section 2.4 or 2.7, provided, however, that (a) any Eurodollar
Interest Period which commences on the last Eurodollar Business Day of a
calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last
Eurodollar Business Day of the appropriate subsequent calendar month, (b) each
Eurodollar Interest Period which would otherwise end on a day which is not a
Eurodollar Business Day shall end on the next succeeding Eurodollar Business Day
or, if such next succeeding Eurodollar Business Day falls in the next succeeding
calendar month, on the next preceding Eurodollar Business Day, and (c) no
Eurodollar Interest Period which would end after the Termination Date shall be
permitted.
"Eurodollar Rate" means, with respect to any Eurodollar Rate
Loan and the related Eurodollar Interest Period, the per annum rate that is
equal to the sum of:
(a) the Applicable Margin, plus
(b) the rate per annum obtained by dividing (i) the per annum
rate of interest at which deposits in Dollars for such Eurodollar Interest
Period and in an aggregate amount comparable to the amount of such Eurodollar
Rate Loan are offered to the Bank by other prime banks in the London interbank
market at approximately 11:00 a.m. London time on the second Eurodollar Business
Day prior to the first day of such Eurodollar Interest Period by (ii) an amount
equal to one minus the stated maximum rate (expressed as a decimal) of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) that are specified on the first day of
such Eurodollar Interest Period by the Board of Governors of the Federal Reserve
System (or any successor agency thereto) for determining the maximum reserve
requirement with respect to eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board) maintained by a member
bank of such System;
all as conclusively determined by the Bank, such sum to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%).
"Eurodollar Rate Loan" means any Loan, which bears interest at
the Eurodollar Rate.
"Extraordinary Charges" means the following one-time,
non-recurring items: (a) the $2,280,000 charge as taken by the Parent Guarantor
and reported in the Parent Guarantor's 10-Q for the period ended October 12,
2001 (for environmental remediation charges and lease termination charges
totaling $2,280,000); (b) the additional charges taken by the Parent Guarantor
totaling $465,000 as outlined in the projections sent to the Bank on December
12, 2001; and (c) the $1,500,000 of additional charges taken by the Parent
Guarantor in its fiscal quarter ended October 12, 2001 as provided to the Bank
and detailed in the Parent Guarantor's press release dated November 26, 2001
(consisting of the $600,000 allowance for doubtful accounts, $200,000 for
non-cash stock options, $300,000 for the establishment of four regional offices,
$200,000 for training expense, and $200,000 for a reversal of a prior period
accounting accrual); provided that the aggregate amount of Extraordinary Charges
shall not exceed (i) $3,780,000 for the fiscal quarter of the Parent Guarantor
ended October 12, 2001, (ii) $4,150,000
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cumulatively through the end of the reporting period of the Parent Guarantor
ending on or about January 4, 2002, and (iii) $4,245,000 cumulatively through
the end of the fiscal year of the Parent Guarantor ending on or about March 29,
2002.
"Event of Default" means any of the events or conditions
described in Section 6.1.
"Fair Market Value" means the fair market value determined in
accordance with the requirements of the Financial Institutions Reform, Recovery
and Enforcement Act, as amended, and the regulations promulgated thereunder.
"Federal Funds Rate" means the per annum rate established and
announced by the Bank from time to time as the opening federal funds rate paid
by the Bank in its regional federal funds market for overnight borrowings from
other banks, as conclusively determined by the Bank; which Federal Funds Rate
shall change simultaneously with any change in such announced rate.
"Fixed Charges" of any person means, for any period, the sum
of (a) Interest Expense of such person for such period, plus (b) Operating Lease
Rental Expense of such person for such period.
"Floating Rate" means the per annum rate equal to the greater
of (a) the sum of the Prime Rate in effect from time to time plus the Applicable
Margin, and (b) the sum of one percent (1%) per annum plus the Federal Funds
Rate in effect from time to time; which Floating Rate shall change
simultaneously with any change in such Prime Rate or Federal Funds Rate, as the
case may be.
"Floating Rate Loan" means any Loan, which bears interest at
the Floating Rate.
"Generally Accepted Accounting Principles" means generally
accepted accounting principles applied on a basis consistent with that reflected
in the financial statements referred to in Section 4.6.
"Guarantors" shall mean the Parent Guarantor and the
Subsidiary Guarantors; and "Guarantor" shall mean any one of such Guarantors.
"Guaranty Agreements" shall mean the Parent Guaranty Agreement
and the Subsidiary Guaranty Agreements; and "Guaranty Agreement" shall mean any
one of such Guaranty Agreements.
"Hazardous Materials" has the meaning ascribed thereto in the
Environmental Certificate.
"Indebtedness" of any person means, as of any date, (a) all
obligations of such person for borrowed money, (b) all obligations of such
person as lessee under any Capital Lease, (c) all obligations which are secured
by any Lien existing on any asset or property of such person whether or not the
obligation secured thereby shall have been assumed by such person (to the extent
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of such Lien if such obligation is not assumed), (d) all obligations of such
person for the unpaid purchase price for goods, property or services acquired by
such person, except for trade accounts payable arising in the ordinary course of
business, (e) all obligations of such person to purchase goods, property or
services where payment therefor is required regardless of whether delivery of
such goods or property or the performance of such services is ever made or
tendered (generally referred to as "take or pay contracts"), (f) all liabilities
of such person in respect of Unfunded Benefit Liabilities under any Plan of such
person or of any ERISA Affiliate, (g) all Rate Management Obligations of such
person (valued, as applicable, in an amount equal to the highest termination
payment, if any, that would be payable by such person upon termination for any
reason on the date of determination), and (h) all obligations of others similar
in character to those described in clauses (a) through (g) of this definition
for which such person is contingently liable, as guarantor, surety,
accommodation party, partner or in any other capacity, or in respect of which
obligations such person assures a creditor against loss or agrees to take any
action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including
without limitation all reimbursement obligations of such person in respect of
letters of credit, surety bonds or similar obligations and all obligations of
such person to advance funds to, or to purchase assets, property or services
from, any other person in order to maintain the financial condition of such
other person, and all other Contingent Liabilities.
"Interest Expense" of any person for any period means all
interest paid or payable during such period by such person on Indebtedness of
such person, including, without limitation, the interest component of all
obligations of such person under Capital Leases.
"Interest Payment Date" means (a) with respect to any
Eurodollar Rate Loan, the last day of each Interest Period with respect to such
Eurodollar Rate Loan and, in the case of any Interest Period exceeding three
months, those days that occur during such Interest Period at intervals of three
months after the first day of such Interest Period, and (b) in all other cases,
the last Business Day of each March, June, September and December occurring
after the date hereof, commencing with the first such Business Day occurring
after the date of this Agreement.
"Interest Period" means any Eurodollar Interest Period.
"Letter of Credit" means a standby letter of credit having a
stated expiry date or date upon which the draft must be reimbursed not later
than twelve months after the date of issuance or, in the case of up to an
aggregate outstanding principal amount of $275,000 of Letter of Credit Advances,
five years after the date of issuance, issued by the Bank for the account of the
Company under an application and related documentation acceptable to the Bank
requiring, among other things, immediate reimbursement by the Company to the
Bank in respect of all drafts or other demand for payment honored thereunder and
all expenses paid or incurred by the Bank relative thereto.
"Letter of Credit Advance" means any issuance of a Letter of
Credit under Section 2.4 made pursuant to Section 2.1.
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"Letter of Credit Documents" shall have the meaning ascribed
thereto in Section 3.3(b).
"Lien" means any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, option, conditional sale or title
retaining contract, sale and leaseback transaction, financing statement filing,
lessor's or lessee's interest under any lease, subordination of any claim or
right, or any other type of lien, charge, encumbrance, preferential arrangement
or other claim or right.
"Loan" means any Revolving Credit Loan. Any such Loan or
portion thereof may also be denominated as a Floating Rate Loan or a Eurodollar
Rate Loan and such Loans are referred to herein as "types" of Loans.
"Loan Documents" means, collectively, this Agreement, the
Note, the Security Documents and all agreements, instruments and documents
executed pursuant thereto at any time.
"Mortgages" means the mortgages entered into by the Company or
any of the Guarantors for the benefit of the Bank pursuant to this Agreement in
form and substance satisfactory to the Bank, as amended or modified from time to
time.
"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations or condition (financial or otherwise) of
the Parent Guarantor and its Subsidiaries taken as a whole, (b) the ability of
the Company or any Guarantor to perform its obligations under any Loan Document,
or (c) the validity or enforceability of any Loan Document or the rights or
remedies of the Bank under any Loan Document.
"Multiemployer Plan" means any "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"Net Income" of any person for any period means the net income
of such person for such period (after deduction of income and other taxes of
such person determined by reference to income or profits of such person for such
period), determined in accordance with Generally Accepted Accounting Principles.
"Note" means the Revolving Credit Note.
"Operating Lease Rental Expense" of any person for any period
means the maximum amount of all rents and other payments (exclusive of property
taxes, property and liability insurance premiums and maintenance costs) paid or
required to be paid by such person during such period under any lease of real or
personal property in respect of which such person is obligated as a lessee or
user, other than Capital Leases.
"Overdue Rate" means (a) in respect of principal of Floating
Rate Loans, a rate per annum that is equal to the sum of two percent (2%) per
annum plus the Floating Rate, (b) in respect of principal of Eurodollar Rate
Loans, a rate per annum that is equal to the sum of two percent (2%)
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per annum plus the per annum rate in effect thereon until the end of the
then-current Interest Period for such Loan and, thereafter, a rate per annum
that is equal to the sum of two percent (2%) per annum plus the Floating Rate,
and (c) in respect of other amounts payable by the Company hereunder (other than
interest), a per annum rate that is equal to the sum of two percent (2%) per
annum plus the Floating Rate.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Parent Guarantor" shall mean Childtime Learning Centers,
Inc., a Michigan corporation, which is the parent of the Company.
"Parent Guaranty Agreement" shall mean an irrevocable guaranty
agreement, in form and substance satisfactory to the Bank, made by the Parent
Guarantor in favor of the Bank, as amended or modified from time to time.
"Permitted Holders" shall mean (i) Xxxxxx X. Xxxxxxx and (ii)
any person controlled by Xxxxxx X. Xxxxxxx.
"Permitted Liens" means Liens permitted by Section 5.2(e)
hereof.
"person" shall include an individual, a corporation, an
association, a partnership, a limited liability company, a trust or estate, a
joint stock company, an unincorporated organization, a joint venture, a trade or
business (whether or not incorporated), a government (foreign or domestic) and
any agency or political subdivision thereof, or any other entity.
"Plan" means, with respect to any person, any pension plan
(including a Multiemployer Plan) subject to Title IV of ERISA or to the minimum
funding standards of Section 412 of the Code which has been established or
maintained by such person, any Subsidiary of such person or any ERISA Affiliate,
or by any other person if such person, any Subsidiary of such person or any
ERISA Affiliate could have liability with respect to such pension plan.
"Pledge Agreements" means the pledge agreements entered into
by the Parent Guarantor, the Company or any of their respective Subsidiaries for
the benefit of the Bank pursuant to this Agreement with respect to their
respective ownership interests from time to time in the Company or any other
Subsidiaries of the Parent Guarantor, any other capital stock and any other
investment property owned by any of them, in form and substance satisfactory to
the Bank, as amended or modified from time to time.
"Prime Rate" means a rate per annum equal to the prime rate of
interest announced from time to time by the Bank or its parent (which is not
necessarily the lowest rate charged to any customer), changing when and as said
prime rate.
"Prohibited Transaction" means any transaction involving any
Plan, which is proscribed by Section 406 of ERISA or Section 4975 of the Code.
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"Rate Management Transaction" means any transaction (including
an agreement with respect thereto) now existing or hereafter entered into
between the Company and the Bank or any Affiliate thereof which is a rate swap,
basis swap, forward rate transaction, commodity swap, commodity option, equity
or equity index swap, equity or equity index option, bond option, interest rate
option, foreign exchange transaction, cap transaction, floor transaction, collar
transaction, forward transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions) or any combination
thereof, whether linked to one or more interest rates, foreign currencies,
commodity prices, equity prices or other financial measures.
"Rate Management Obligations" of a person means any and all
obligations of such person, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under (a) any
and all Rate Management Transactions, and (b) any and all cancellations, buy
backs, reversals, terminations or assignments of any Rate Management
Transactions.
"Reportable Event" means a reportable event as described in
Section 4043(b) of ERISA including those events as to which the thirty (30) day
notice period is waived under Part 2615 of the regulations promulgated by the
PBGC under ERISA.
"Requirement of Law" means as to any person, the certificate
of incorporation and by-laws or other organizational or governing documents of
such person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other governmental authority, in each case applicable
to or binding upon such person or any of its property to which such person or
any of its property is subject.
"Revolving Credit Loan" means any borrowing under Section 2.4
evidenced by the Revolving Credit Note and made pursuant to Section 2.1.
"Revolving Credit Note" means any promissory note of the
Company evidencing the Revolving Credit Loans, in substantially the form annexed
hereto as Exhibit B, as amended or modified from time to time and together with
any promissory note or notes issued in exchange or replacement therefor.
"Security Agreements" shall mean the pledge and security
agreements entered into by the Company and the Guarantors for the benefit of the
Bank pursuant to this Agreement, in form and substance satisfactory to the Bank,
as amended or modified from time to time.
"Security Documents" shall mean, collectively, the Mortgages,
the Pledge Agreements, the Security Agreements and the Guaranty Agreements and
all other related agreements and documents, including financing statements and
similar documents, delivered pursuant to this Agreement or otherwise entered
into by any person to secure the Advances.
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"Subsidiary" of any person means any other person (whether now
existing or hereafter organized or acquired) in which (other than directors
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency), at the
time as of which any determination is being made, are owned, beneficially and of
record, by such person or by one or more of the other Subsidiaries of such
person or by any combination thereof. "Subsidiary", when used with respect to
the Parent Guarantor, shall include, without limitation, the Company.
"Subsidiary Guarantors" shall mean the Subsidiaries of the
Company, the Parent Guarantor or any other Guarantor that from time to time make
Subsidiary Guaranty Agreements pursuant to Section 5.1(f); and "Subsidiary
Guarantor" shall mean any one of the Subsidiary Guarantors.
"Subsidiary Guaranty Agreements" shall mean the irrevocable
guaranty agreements, in form and substance satisfactory to the Bank, from time
to time made by Subsidiaries of the Company, the Parent Guarantor or any other
Guarantor pursuant to Section 5.1(f), as amended or modified from time to time;
and "Subsidiary Guaranty Agreement" shall mean any one of the Subsidiary
Guaranty Agreements.
"Tangible Net Worth" of any person means, as of any date, (a)
the amount of any capital stock, paid-in capital, and similar equity accounts,
plus (or minus in the case of a deficit) the capital surplus and retained
earnings of such person and the amount of any foreign currency translation
adjustment account shown as a capital account of such person, less (b) the net
book value of all items of the following character which are included in the
assets of such person: (i) goodwill, including, without limitation, the excess
of the cost to such person of acquiring any asset over the book value of such
asset on the books of such person, (ii) organization or experimental expenses,
(iii) unamortized debt discount and expense, (iv) patents, trademarks, trade
names and copyrights, (v) treasury stock, (vi) deferred charges, (vii)
franchises, licenses and permits, and (viii) other assets which are deemed
intangible assets under Generally Accepted Accounting Principles.
"Termination Date" means the earlier to occur of (a) September
30, 2004, and (b) the date on which the Commitment shall be terminated pursuant
to Section 2.2 or 6.2.
"Total Debt" of any person means, as of any date, (a) all
obligations of such person for borrowed money, (b) all obligations of such
person representing the deferred purchase price of property or services (other
than accounts payable arising in the ordinary course of such person's business
payable on terms customary in the trade), (c) all obligations which are
evidenced by notes, acceptances, or other instruments, (d) all reimbursement
obligations of such person in respect of letters of credit, surety bonds or
similar obligations, and (e) all other contingent obligations of such person,
including without limitation as guarantor, surety, accommodation party, partner
or in any other capacity (other than endorsements of negotiable instruments for
collection in the ordinary course of business).
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"Total Debt to EBITDA Ratio" means, as of the end of any
fiscal quarter of the Parent Guarantor, the ratio of (a) the Consolidated Total
Debt of the Parent Guarantor and its Subsidiaries as of the end of such fiscal
quarter of the Parent Guarantor to (b) the Consolidated EBITDA of the Parent
Guarantor and its Subsidiaries for the period of four consecutive fiscal
quarters of the Parent Guarantor then ended.
"Unfunded Benefit Liabilities" means, with respect to any Plan
as of any date, the amount of the unfunded benefit liabilities determined in
accordance with Section 4001(a)(18) of ERISA.
1.2 Other Definitions; Rules of Construction. As used herein,
the terms "Bank", "Company", "Existing Credit Agreement" and "this Agreement"
shall have the respective meanings ascribed thereto in the introductory
paragraph of this Agreement. Such terms, together with the other terms defined
in Section 1.1, shall include both the singular and the plural forms thereof and
shall be construed accordingly. All computations required hereunder and all
financial terms used herein shall be made or construed in accordance with
Generally Accepted Accounting Principles unless such principles are inconsistent
with the express requirements of this Agreement; provided that, if the Company
notifies the Bank that the Company wishes to amend any covenant in Article V to
eliminate the effect of any change in Generally Accepted Accounting Principles
in the operation of such covenant (or if the Bank notifies the Company that the
Bank wishes to amend Article V for such purpose), then the Company's compliance
with such covenant shall be determined on the basis of Generally Accepted
Accounting Principles in effect immediately before the relevant change in
Generally Accepted Accounting Principles became effective, until either such
notice is withdrawn or such covenant is amended in a manner satisfactory to the
Company and the Bank. Use of the terms "herein", "hereof", and "hereunder" shall
be deemed references to this Agreement in its entirety and not to the Section or
clause in which such term appears. References to "Sections" and "subsections"
shall be to Sections and subsections, respectively, of this Agreement unless
otherwise specifically provided.
ARTICLE II.
THE COMMITMENT AND THE ADVANCES
2.1 Commitment of the Bank.
(a) Advances. The Bank agrees, subject to the terms
and conditions of this Agreement, to make Revolving Credit Loans to the Company
pursuant to Section 2.4 and Section 3.3, and to make Letter of Credit Advances
to the Company pursuant to Section 2.4, from time to time from and including the
Effective Date to but excluding the Termination Date, not to exceed in aggregate
principal amount at any time outstanding the amount determined pursuant to
Section 2.1(b).
(b) Limitation on Amount of Advances. Notwithstanding
anything in this Agreement to the contrary, the aggregate principal amount of
the Advances made by the Bank at any time outstanding shall not exceed the
amount of the Activated Credit as of the date any such
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Advance is made, provided, however, that the aggregate principal amount of
Letter of Credit Advances outstanding at any time shall not exceed $3,000,000.
For purposes of this Agreement, a Letter of Credit Advance (i) shall be deemed
outstanding in an amount equal to the sum of the maximum amount available to be
drawn under the related Letter of Credit on or after the date of determination
and on or before the stated expiry date thereof plus the amount of any draws
under such Letter of Credit that have not been reimbursed as provided in Section
3.3 and (ii) shall be deemed outstanding at all times on and before such stated
expiry date or such earlier date on which all amounts available to be drawn
under such Letter of Credit have been fully drawn, and thereafter until all
related reimbursement obligations have been paid pursuant to Section 3.3. As
provided in Section 3.3, upon each payment made by the Bank in respect of any
draft or other demand for payment under any Letter of Credit, the amount of any
Letter of Credit Advance outstanding immediately prior to such payment shall be
automatically reduced by the amount of each Revolving Credit Loan deemed
advanced in respect of the related reimbursement obligation of the Company.
2.2 Termination or Reduction of Commitment. The Company shall
have the right to terminate or reduce the Commitment at any time and from time
to time at its option, provided that (a) the Company shall give thirty (30)
days' prior written notice of such termination or reduction to the Bank
specifying the amount and effective date thereof, (b) each partial reduction of
the Commitment shall be in a minimum amount of $2,000,000 and in an integral
multiple of $1,000,000, (c) no such termination or reduction shall be permitted
with respect to any portion of the Commitment as to which a request for an
Advance pursuant to Section 2.4 is then pending and (d) the Commitment may not
be terminated if any Advances are then outstanding and may not be reduced below
the principal amount of Advances then outstanding. The Commitment or any portion
thereof terminated or reduced pursuant to this Section 2.2 may not be
reinstated.
2.3 Fees. (a) The Company agrees to pay to the Bank a
commitment fee on the daily average unused amount of the Commitment during any
calendar quarter, for the period from the Effective Date to but excluding the
Termination Date, at a rate equal to the Applicable Margin. Accrued commitment
fees shall be payable quarterly in arrears on the last Business Day of each
March, June, September and December, commencing on the first such Business Day
occurring after the Effective Date, and on the Termination Date.
(b) The Company also agrees to pay to the Bank
facility fee in the amount of $20,000 payable on or prior to the Effective Date.
The facility fee shall be deemed earned upon receipt and shall not be
refundable.
(c) On or before the date of issuance of any Letter
of Credit and any renewal or extension thereof, and each anniversary thereof,
the Company further agrees to pay to the Bank a fee computed at the rate per
annum equal to the Applicable Margin of the maximum amount available to be drawn
from time to time under such Letter of Credit for the period from and including
such date to and including the earlier of (i) the date that is 12 months after
such date or (ii) the stated expiry date of such Letter of Credit. Such fees are
nonrefundable and the Company shall not be entitled to any rebate of any portion
thereof if such Letter of Credit does not remain outstanding through its stated
expiry date or for any other reason. The Company further agrees to pay to the
Bank, on demand, such other customary and reasonable administrative fees,
charges and
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expenses of the Bank in respect of the issuance, negotiation, acceptance,
amendment, transfer and payment of such Letter of Credit or otherwise payable
pursuant to the application and related documentation under which such Letter of
Credit is issued.
2.4 Disbursement of Advances. (a) The Company shall give the
Bank notice of its request for each Advance in substantially the form of Exhibit
C hereto not later than 1:00 p.m. Detroit time (i) three Eurodollar Business
Days prior to the date such Advance is requested to be made if such Advance is
to be made as a Eurodollar Rate Loan, (ii) five Business Days prior to the date
any Letter of Credit Advance is requested to be made, and (iii) on the Business
Day such Advance is requested to be made in all other cases, which notice shall
specify whether a Eurodollar Rate Loan or Floating Rate Loan or a Letter of
Credit Advance is requested and, in the case of each requested Eurodollar Rate
Loan, the Interest Period to be initially applicable to such Loan and, in the
case of each Letter of Credit Advance, such information as may be necessary for
the issuance thereof by the Bank. Subject to the terms and conditions of this
Agreement, the proceeds of each such requested Loan shall be made available to
the Company by depositing the proceeds thereof in immediately available funds,
in an account maintained and designated by the Company at the principal office
of the Bank. Subject to the terms and conditions of this Agreement, the Bank
shall, on the date any Letter of Credit Advance is requested to be made, issue
the related Letter of Credit for the account of the Company. Notwithstanding
anything herein to the contrary, the Bank may decline to issue any requested
Letter of Credit on the basis that the beneficiary, the purpose of issuance or
the terms or the conditions of drawing are unacceptable to it in its reasonable
discretion; provided that Letters of Credit requested by the Company in
accordance with the terms of this Agreement in the ordinary course of business
in support of worker's compensation insurance or construction performance
guaranties shall be acceptable to the Bank.
(b) All Revolving Credit Loans made under this
Section 2.4 shall be evidenced by the Revolving Credit Note, and all such Loans
shall be due and payable and bear interest as provided in Article III. The Bank
is hereby authorized by the Company to record on the schedule attached to the
Note, or in its books and records, the date, amount and type of each Loan and
the duration of the related Interest Period (if applicable), the amount of each
payment or prepayment of principal thereon, and the other information provided
for on such schedule, which schedule or books and records, as the case may be,
shall constitute prima facie evidence of the information so recorded, provided,
however, that failure of the Bank to record, or any error in recording, any such
information shall not relieve the Company of its obligation to repay the
outstanding principal amount of the Loans, all accrued interest thereon and
other amounts payable with respect thereto in accordance with the terms of the
Notes and this Agreement. Subject to the terms and conditions of this Agreement,
the Company may borrow Revolving Credit Loans under this Section 2.4 and under
Section 3.3, prepay Revolving Credit Loans pursuant to Section 3.1, and reborrow
Revolving Credit Loans under this Section 2.4 and under Section 3.3.
2.5 Conditions for First Disbursement. The obligation of the
Bank to make the first Advance hereunder is subject to receipt by the Bank of
the following documents and completion of the following matters, in form and
substance satisfactory to the Bank:
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(a) Charter Documents of Company. Certificates of
recent date of the appropriate authority or official of the Company's state of
incorporation (listing all charter documents of the Company on file in that
office if such listing is available) and certifying as to the good standing and
corporate existence of the Company, together with copies of such charter
documents of the Company, certified as of a recent date by such authority or
official and certified as true and correct as of the Effective Date by a duly
authorized officer of the Company (or a bring-down of a prior certification
thereof);
(b) By-Laws and Corporate Authorizations of Company.
The Company's by-laws (or a bring-down of a prior certification thereof),
together with all authorizing resolutions and evidence of other corporate action
taken by the Company to authorize its execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party, and the
consummation by the Company of the transactions contemplated hereby, certified
as true and correct as of the Effective Date by a duly authorized officer of the
Company;
(c) Incumbency Certificate of Company. A certificate
of incumbency of the Company containing, and attesting to the genuineness of,
the signatures of those officers authorized to act on behalf of the Company in
connection with this Agreement and the other Loan Documents and the consummation
by the Company of the transactions contemplated hereby, certified as true and
correct as of the Effective Date by a duly authorized officer of the Company;
(d) Charter Documents of Parent Guarantor.
Certificates of recent date of the appropriate authority or official of the
Parent Guarantor's state of incorporation (listing all charter documents of the
Parent Guarantor on file in that office if such listing is available) and
certifying as to the good standing and corporate existence of the Parent
Guarantor, together with copies of such charter documents of the Parent
Guarantor, certified as a recent date by such authority or official and
certified as true and correct as of the Effective Date by a duly authorized
officer of the Parent Guarantor (or a bring-down of a prior certification
thereof);
(e) By-Laws and Corporate Authorizations of Parent
Guarantor. The Parent Guarantor's by-laws (or a bring-down of a prior
certification thereof), together with all authorizing resolutions and evidence
of other corporate action taken by the Parent Guarantor to authorize its
execution, delivery and performance of the Loan Documents to which it is a
party, and the consummation by the Parent Guarantor of the transactions
contemplated thereby, certified as true and correct as of the Effective Date by
a duly authorized officer of the Parent Guarantor;
(f) Incumbency Certificate of Parent Guarantor. A
certificate of incumbency of the Parent Guarantor containing, and attesting to
the genuineness of, the signatures of those officers authorized to act on behalf
of the Parent Guarantor in connection with the Loan Documents to which it is a
party and the consummation by the Parent Guarantor of the transactions
contemplated thereby, certified as true and correct as of the Effective Date by
a duly authorized officer of the Parent Guarantor;
(g) Charter Documents of Subsidiary Guarantors.
Certificates of recent date of the appropriate authority or official of each
Subsidiary Guarantor's respective state of
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incorporation (listing all charter documents of each such Guarantor on file in
that office if such listing is available) and certifying as to the good standing
and corporate existence of each such Guarantor, together with copies of such
charter documents of each such Guarantor, certified as a recent date by such
authority or official and certified as true and correct as of the Effective Date
by a duly authorized officer of each such Guarantor;
(h) By-Laws and Corporate Authorizations of
Subsidiary Guarantors. Each Subsidiary Guarantor's respective by-laws, together
with all authorizing resolutions and evidence of other corporate action taken by
each such Guarantor to authorize its execution, delivery and performance of the
Loan Documents to which it is a party, and the consummation by each such
Guarantor of the transactions contemplated thereby, certified as true and
correct as of the Effective Date by a duly authorized officer of such Guarantor;
(i) Incumbency Certificates of Subsidiary Guarantors.
A certificate of incumbency of each Subsidiary Guarantor, respectively,
containing, and attesting to the genuineness of, the signatures of those
officers authorized to act on behalf of each such Guarantor in connection with
the Loan Documents to which it is a party and the consummation by each such
Guarantor of the transactions contemplated thereby, certified as true and
correct as of the Effective Date by a duly authorized officer of each such
Guarantor;
(j) Note. The Revolving Credit Note duly executed on
behalf of the Company;
(k) Guaranty Agreements. The Parent Guaranty
Agreement and the Subsidiary Guaranty Agreements duly executed on behalf of the
Parent Guarantor and each Subsidiary Guarantor, respectively;
(l) Personal Property Security Documents. The
Security Agreements duly executed on behalf of the Company and the Guarantors,
respectively, granting to the Bank the personal property collateral intended to
be provided pursuant to Section 2.10, together with:
(i) Recording, Filing, Etc. Evidence of the
recordation, filing and other action (including payment of any applicable taxes
or fees) in such jurisdictions as the Bank may deem necessary or appropriate
with respect to the Security Documents, including the filing of financing
statements and similar documents which the Bank may deem necessary or
appropriate to create, preserve or perfect the liens, security interests and
other rights intended to be granted to the Bank thereunder, together with
Uniform Commercial Code record searches in such offices as the Bank may request;
and
(ii) Casualty and Other Insurance. Evidence
that the casualty and other insurance required pursuant to this Agreement and
the Security Agreements is in full force and effect;
(m) Legal Opinion. The favorable written opinions of
counsel for the Company and the Guarantors with respect to such matters as the
Bank may reasonably request;
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(n) Consents, Approvals, Etc. Copies of all
governmental and nongovernmental consents, approvals, authorizations,
declarations, registrations or filings, if any, required on the part of the
Company or the Guarantors in connection with the execution, delivery and
performance of this Agreement, the Note and the Security Documents or the
transactions contemplated hereby or as a condition to the legality, validity or
enforceability of this Agreement, the Note or the Security Documents, certified
as true and correct and in full force and effect as of the Effective Date by a
duly authorized officer of the Company, or, if none is required, a certificate
of such officer to that effect;
(o) Fee. The facility fee described in Section
2.3(b); and
(p) Other Documents and Matters. Such other
documents, and completion of such other matters, as the Bank may reasonably
request and the Company or any Guarantor, as the case may be, can reasonably
provide, including without limitation completion of the Bank's due diligence
with respect to the Parent and the Company (including without limitation their
respective business, assets, operations and condition (financial or otherwise)).
2.6 Further Conditions for Disbursement. The obligation of the
Bank to make any Advance (including the first Advance), or any continuation or
conversion under Section 2.7, is further subject to the following conditions
being satisfied:
(a) The representations and warranties contained in
Article IV shall be true and correct on and as of the date such Advance is made
(both before and after such Advance is made) as if such representations and
warranties were made on and as of such date;
(b) No Default or Event of Default shall exist or
shall have occurred and be continuing on the date such Advance is made (whether
before or after such Advance is made); and
(c) In the case of any Letter of Credit Advance, the
Company shall have delivered to the Bank an application for the related Letter
of Credit and other related documentation requested by and acceptable to the
Bank appropriately completed and duly executed on behalf of the Company.
The Company shall be deemed to have made a representation and warranty to the
Bank at the time of the making of, and the continuation or conversion of, each
Advance to the effects set forth in clauses (a) and (b) of this Section 2.6. For
purposes of this Section 2.6, the representations and warranties contained in
Section 4.6 shall be deemed made with respect to both the financial statements
referred to therein and the most recent financial statements delivered pursuant
to Section 5.1(d)(ii) and (iii).
2.7 Subsequent Elections as to Loans. The Company may elect
(a) to continue a Eurodollar Rate Loan, or a portion thereof, as a Eurodollar
Rate Loan or (b) to convert a Eurodollar Rate Loan, or a portion thereof, to a
Floating Rate Loan or (c) to convert a Floating Rate Loan, or a
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portion thereof, to a Eurodollar Rate Loan in each case by giving notice thereof
to the Bank in substantially the form of Exhibit D hereto not later than 1:00
p.m. Detroit time three Eurodollar Business Days prior to the date any such
continuation of or conversion to a Eurodollar Rate Loan is to be effective and
not later than 1:00 p.m. Detroit time on the Business Day such continuation or
conversion is to be effective in all other cases, provided that an outstanding
Eurodollar Rate Loan may only be converted on the last day of the then current
Interest Period with respect to such Loan, and provided, further, if a
continuation of a Loan as, or a conversion of a Loan to, a Eurodollar Rate Loan
is requested, such notice shall also specify the Interest Period to be
applicable thereto upon such continuation or conversion. If the Company shall
not timely deliver such a notice with respect to any outstanding Eurodollar Rate
Loan, the Company shall be deemed to have elected to convert such Eurodollar
Rate Loan to a Floating Rate Loan on the last day of the then current Interest
Period with respect to such Loan.
2.8 Limitation of Requests and Elections. Notwithstanding any
other provision of this Agreement to the contrary, if, upon receiving a request
for a Eurodollar Rate Loan pursuant to Section 2.4, or a request for a
continuation of a Eurodollar Rate Loan as a Eurodollar Rate Loan, or a request
for a conversion of a Floating Rate Loan to a Eurodollar Rate Loan pursuant to
Section 2.7, (a) deposits in Dollars for periods comparable to the Interest
Period elected by the Company are not available to the Bank in the London
interbank market, or (b) the Eurodollar Rate will not adequately and fairly
reflect the cost to the Bank of making, funding or maintaining the related
Eurodollar Rate Loan, or (c) by reason of national or international financial,
political or economic conditions or by reason of any applicable law, treaty or
other international agreement, rule or regulation (whether domestic or foreign)
now or hereafter in effect, or the interpretation or administration thereof by
any governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any guideline, request or directive of
such authority (whether or not having the force of law), including without
limitation exchange controls, it is impracticable, unlawful or impossible for,
or shall limit or impair the ability of, the Bank to make or fund the relevant
Loan or to continue such Loan as a Eurodollar Rate Loan or to convert a Loan to
a Eurodollar Rate Loan, then the Company shall not be entitled, so long as such
circumstances continue, to request a Eurodollar Rate Loan pursuant to Section
2.4 or a continuation of or conversion to a Eurodollar Rate Loan pursuant to
Section 2.7. In the event that such circumstances no longer exist, the Bank
shall again consider requests for Eurodollar Rate Loans pursuant to Section 2.4,
and requests for continuations of and conversions to Eurodollar Rate Loans
pursuant to Section 2.7.
2.9 Minimum Amounts; Limitation on Number of Advances; Etc.
Except for (a) Advances which exhaust the entire remaining amount of the
Commitment, and (b) payments required pursuant to Section 3.8, each Eurodollar
Rate Loan and each continuation thereof or conversion thereto pursuant to
Section 2.7 shall be in a minimum amount of $1,000,000 or in an integral
multiple of $50,000, each Floating Rate Loan and each prepayment thereof shall
be in a minimum amount of $25,000 and in an integral multiple thereof, and each
Letter of Credit Advance shall be in a minimum amount of $10,000. The aggregate
number of Eurodollar Rate Loans outstanding at any one time under this Agreement
may not exceed ten. The aggregate number of Letter of Credit Advances
outstanding at any time under this Agreement may not exceed ten.
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2.10 Security and Collateral. To secure the payment when due of
the Note and all other obligations of the Company under this Agreement to the
Bank, the Company shall execute and deliver, or cause to be executed and
delivered, to the Bank Security Documents granting the following:
(a) First-priority security interests in all present
and future personal property of the Company, other than fixtures.
(b) First-priority pledges of all ownership interests
from time to time in the Company or any other Subsidiaries of the Parent
Guarantor, and any other capital stock and any other investment property owned
by the Parent Guarantor, the Company or any other Guarantor.
(c) Guarantees of the Parent Guarantor, the Company,
all other Subsidiaries of the Parent Guarantor or the Company, and all
Subsidiaries of any Guarantor.
(d) First-priority security interests in all present
and future personal property of the Guarantors.
(e) In accordance with Section 5.1(f), first-priority
mortgage liens on certain real property of the Company and the Guarantors.
(f) All other security and collateral described in
the Security Documents.
ARTICLE III.
PAYMENTS AND PREPAYMENTS OF ADVANCES
3.1 Principal Payments and Prepayments. (a) Unless earlier
payment is required under this Agreement, the Company shall pay to the Bank on
the Termination Date the entire outstanding principal amount of the Revolving
Credit Loans.
(b) The Company may at any time and from time to time
prepay all or a portion of the Loans, without premium or penalty, provided that
(i) the Company may not prepay any portion of any Loan as to which an election
for a continuation of or a conversion to a Eurodollar Rate Loan is pending
pursuant to Section 2.7, and (ii) unless earlier payment is required under this
Agreement, any Eurodollar Rate Loan may only be prepaid on the last day of the
then current Interest Period with respect to such Loan.
3.2 Interest Payments. The Company shall pay interest to the
Bank on the unpaid principal amount of each Loan, for the period commencing on
the date such Loan is made until such Loan is paid in full, on each Interest
Payment Date and at maturity (whether at stated maturity, by acceleration or
otherwise), and thereafter on demand, at the following rates per annum:
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(a) During such periods that such Loan is a Floating
Rate Loan, the Floating Rate; and
(b) During such periods that such Loan is a
Eurodollar Rate Loan, the Eurodollar Rate applicable to such Loan for each
related Eurodollar Interest Period.
Notwithstanding the foregoing paragraphs (a) and (b), the Company shall pay
interest on demand by the Bank at the Overdue Rate on the outstanding principal
amount of any Loan and any other amount payable by the Company hereunder (other
than interest) at any time on or after an Event of Default if required in
writing by the Bank.
3.3 Letter of Credit Reimbursement Payments. (a) (i) The
Company agrees to pay to the Bank, on the day on which the Bank shall honor a
draft or other demand for payment presented or made under any Letter of Credit,
an amount equal to the amount paid by the Bank in respect of such draft or other
demand under such Letter of Credit and all expenses paid or incurred by the Bank
relative thereto. Unless the Company shall have made such payment to the Bank on
such day, upon each such payment by the Bank, the Bank shall be deemed to have
disbursed to the Company, and the Company shall be deemed to have elected to
satisfy its reimbursement obligation by, a Revolving Credit Loan bearing
interest at the Floating Rate in an amount equal to the amount so paid by the
Bank in respect of such draft or other demand under such Letter of Credit. Such
Revolving Credit Loan shall be disbursed notwithstanding any failure to satisfy
any conditions for disbursement of any Loan set forth in Article II hereof and,
to the extent of the Revolving Credit Loan so disbursed, the reimbursement
obligation of the Company under this Section 3.3 shall be deemed satisfied;
provided, however, that nothing in this Section 3.3 shall be deemed to
constitute a waiver of any Default or Event of Default caused by the failure to
the conditions for disbursement or otherwise.
(ii) If, for any reason (including without
limitation as a result of the occurrence of an Event of Default with respect to
the Company pursuant to Section 6.1(h)), Floating Rate Loans may not be made by
the Bank as described in Section 3.3(a)(i), then the Company agrees that each
reimbursement amount not paid pursuant to the first sentence of Section
3.3(a)(i) shall bear interest, payable on demand by the Bank, at the interest
rate then applicable to Floating Rate Loans.
(b) The reimbursement obligation of the Company under
this Section 3.3 shall be absolute, unconditional and irrevocable and shall
remain in full force and effect until all obligations of the Company to the Bank
hereunder shall have been satisfied, and such obligations of the Company shall
not be affected, modified or impaired upon the happening of any event, including
without limitation, any of the following, whether or not with notice to, or the
consent of, the Company:
(i) Any lack of validity or enforceability
of any Letter of Credit or any documentation relating to any Letter of Credit or
to any transaction related in any way to such Letter of Credit (the "Letter of
Credit Documents");
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(ii) Any amendment, modification, waiver,
consent, or any substitution, exchange or release of or failure to perfect any
interest in collateral or security, with respect to any of the Letter of Credit
Documents;
(iii) The existence of any claim, setoff,
defense or other right which the Company may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any persons or
entities for whom any such beneficiary or any such transferee may be acting),
the Bank or any other person or entity, whether in connection with any of the
Letter of Credit Documents, the transactions contemplated herein or therein or
any unrelated transactions;
(iv) Any draft or other statement or
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) Payment by the Bank to the beneficiary
under any Letter of Credit against presentation of documents which do not comply
with the terms of the Letter of Credit, including failure of any documents to
bear any reference or adequate reference to such Letter of Credit;
(vi) Any failure, omission, delay or lack on
the part of the Bank or any party to any of the Letter of Credit Documents to
enforce, assert or exercise any right, power or remedy conferred upon the Bank
or any such party under this Agreement or any of the Letter of Credit Documents,
or any other acts or omissions on the part of the Bank or any such party; or
(vii) Any other event or circumstance that
would, in the absence of this clause, result in the release or discharge by
operation of law or otherwise of the Company from the performance or observance
of any obligation, covenant or agreement contained in this Section 3.3.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which the Company has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to the Company
against the Bank. Nothing in this Section 3.3 shall limit the liability, if any,
of the Bank to the Company pursuant to Section 7.5.
3.4 Payment Method. (a) All payments to be made by the Company
hereunder will be made to the Bank in Dollars and in immediately available funds
not later than 1:00 p.m. at the principal office of the Bank specified in
Section 7.2. Payments received after 1:00 p.m. at the place for payment shall be
deemed to be payments made prior to 1:00 p.m. at the place for payment on the
next succeeding Business Day. The Company hereby authorizes the Bank to charge
its account with the Bank in order to cause timely payment of amounts due
hereunder to be made (subject to sufficient funds being available in such
account for that purpose).
(b) At the time of making each such payment, the
Company shall, subject to the other terms and conditions of this Agreement,
specify to the Bank that Loan or other obligation of the Company hereunder to
which such payment is to be applied. In the event that the
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Company fails to so specify the relevant obligation or if an Event of Default
shall have occurred and be continuing, the Bank may apply such payments as it
may determine in its sole discretion.
3.5 No Setoff or Deduction. All payments of principal of and
interest on the Loans and other amounts payable by the Company hereunder shall
be made by the Company without setoff or counterclaim, and, subject to the next
succeeding sentence, free and clear of, and without deduction or withholding
for, or on account of, any present or future taxes, levies, imposts, duties,
fees, assessments, or other charges of whatever nature, imposed by any
governmental authority, or by any department, agency or other political
subdivision or taxing authority. If any such taxes, levies, imposts, duties,
fees, assessments or other charges are imposed, the Company will pay such
additional amounts as may be necessary so that payment of principal of and
interest on the Loans and other amounts payable hereunder, after withholding or
deduction for or on account thereof, will not be less than any amount provided
to be paid hereunder and, in any such case, the Company will furnish to the Bank
certified copies of all tax receipts evidencing the payment of such amounts
within 45 days after the date any such payment is due pursuant to applicable
law.
3.6 Payment on Non-Business Day; Payment Computations. Except
as otherwise provided in this Agreement to the contrary, whenever any
installment of principal of, or interest on, any Loan or any other amount due
hereunder becomes due and payable on a day which is not a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day and, in
the case of any installment of principal, interest shall be payable thereon at
the rate per annum determined in accordance with this Agreement during such
extension. Computations of interest and other amounts due under this Agreement
shall be made on the basis of a year of 360 days (or 365 or 366 days, as the
case may be, when determining the Floating Rate) for the actual number of days
elapsed, including the first day but excluding the last day of the relevant
period.
3.7 Additional Costs. (a) In the event that any applicable
law, treaty or other international agreement, rule or regulation (whether
domestic or foreign) now or hereafter in effect and whether or not presently
applicable to the Bank, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by the Bank with any guideline, request or directive of
any such authority (whether or not having the force of law), shall (i) affect
the basis of taxation of payments to the Bank of any amounts payable by the
Company under this Agreement (other than taxes imposed on the overall net income
of the Bank, by the jurisdiction, or by any political subdivision or taxing
authority of any such jurisdiction, in which the Bank has its principal office),
or (ii) shall impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by the Bank, or (iii) shall impose any other condition with
respect to this Agreement, or the Commitment, the Note, any Loan or any Letter
of Credit, and the result of any of the foregoing is to increase the cost to the
Bank of making, funding or maintaining any Eurodollar Rate Loan or any Letter of
Credit or to reduce the amount of any sum receivable by the Bank thereon, then
the Company shall pay to the Bank, from time to time, upon request by the Bank
additional amounts sufficient to compensate the Bank for such increased cost or
reduced sum receivable to the extent, in the case of any Eurodollar Rate Loan,
the Bank is not compensated therefor in the computation of the interest rate
applicable to such Eurodollar Rate Loan. A statement as to the amount of such
increased cost or reduced sum receivable, prepared in good faith
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and in reasonable detail by the Bank and submitted by the Bank to the Company,
shall be conclusive and binding for all purposes absent manifest error in
computation.
(b) In the event that any applicable law, treaty or
other international agreement, rule or regulation (whether domestic or foreign)
now or hereafter in effect and whether or not presently applicable to the Bank,
or any interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by the
Bank with any guideline, request or directive of any such authority (whether or
not having the force of law), including any risk-based capital guidelines,
affects or would affect the amount of capital required or expected to be
maintained by the Bank (or any corporation controlling the Bank) and the Bank
determines that the amount of such capital is increased by or based upon the
existence of the Bank's obligations hereunder and such increase has the effect
of reducing the rate of return on the Bank's (or such controlling corporation's)
capital as a consequence of such obligations hereunder to a level below that
which the Bank (or such controlling corporation) could have achieved but for
such circumstances (taking into consideration its policies with respect to
capital adequacy), then the Company shall pay to the Bank from time to time,
upon request by the Bank, additional amounts sufficient to compensate such Bank
(or such controlling corporation) for any increase in the amount of capital and
reduced rate of return which the Bank reasonably determines to be allocable to
the existence of the Bank's obligations hereunder. A statement as to the amount
of such compensation, prepared in good faith and in reasonable detail by the
Bank and submitted by such Bank to the Company, shall be conclusive and binding
for all purposes absent manifest error in computation. The Bank may, at its
option, specify that such amounts be paid by way of an increase in the
commitment fees payable by the Company pursuant to Section 2.3(a).
(c) Notwithstanding anything herein to the contrary,
the Bank shall be entitled to compensation under this Section 3.7 for any
increased cost or reduced rate of return only for the period from and after date
that is no more than 30 days prior to the date the Bank notifies the Company, or
the Company otherwise learns, of the circumstances giving rise to such increased
cost or reduced rate of return.
3.8 Illegality and Impossibility. In the event that any
applicable law, treaty or other international agreement, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to the Bank, or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by the Bank with any guideline, request or
directive of such authority (whether or not having the force of law), including
without limitation exchange controls, shall make it unlawful or impossible for
the Bank to maintain any Loan under this Agreement, the Company shall upon
receipt of notice thereof from the Bank repay in full the then outstanding
principal amount of each Loan so affected, together with all accrued interest
thereon to the date of payment and all amounts owing to the Bank under Section
3.9, (a) on the last day of the then-current Interest Period applicable to the
Loan if the Bank may lawfully continue to maintain the Loan to that day, or (b)
immediately if the Bank may not continue to maintain the Loan to that day.
3.9 Indemnification. If the Company makes any payment of
principal with respect to any Eurodollar Rate Loan on any other date than the
last day of an Interest Period
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applicable thereto (whether pursuant to Section 3.8, Section 6.2 or otherwise),
or if the Company fails to borrow any Eurodollar Rate Loan after notice has been
given to the Bank in accordance with Section 2.4, or if the Company fails to
make any payment of principal or interest in respect of a Eurodollar Rate Loan
when due, the Company shall reimburse the Bank on demand for any resulting loss
or expense incurred by the Bank, including without limitation any loss incurred
in obtaining, liquidating or employing deposits from third parties, whether or
not the Bank shall have funded or committed to fund the Loan. A statement as to
the amount of such loss or expense, prepared in good faith and in reasonable
detail by the Bank and submitted by the Bank to the Company, shall be conclusive
and binding for all purposes absent manifest error in computation. Calculation
of all amounts payable to the Bank under this Section 3.9 shall be made as
though the Bank shall have actually funded or committed to fund the relevant
Eurodollar Rate Loan through the purchase of an underlying deposit in an amount
equal to the amount of the Loan in the relevant market and having a maturity
comparable to the related Interest Period and, through the transfer of such
deposit to a domestic office of the Bank in the United States; provided,
however, that the Bank may fund any Eurodollar Rate Loan in any manner it sees
fit and the foregoing assumption shall be utilized only for the purpose of
calculating amounts payable under this Section 3.9.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Bank that:
4.1 Corporate Existence and Power. Each of the Company and the
Guarantors is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation or organization, and is
duly qualified to do business, and is in good standing, in all additional
jurisdictions where such qualification is necessary under applicable law. Each
of the Company and the Guarantors has all requisite corporate power to own or
lease the properties used in its business and to carry on its business as now
being conducted and as proposed to be conducted, and to execute and deliver the
Loan Documents to which it is a party and to engage in the transactions
contemplated thereby.
4.2 Corporate Authority. The execution, delivery and
performance by each of the Company and the Guarantors of the Loan Documents to
which it is a party have been duly authorized by all necessary corporate action
and are not in contravention of any law, rule or regulation, or any judgment,
decree, writ, injunction, order or award of any arbitrator, court or
governmental authority, or of the terms of the Company's or any Guarantor's
charter or by-laws, or of any contract or undertaking to which the Company or
any Guarantor is a party or by which the Company or any Guarantor or any of
their respective property may be bound or affected and will not result in the
imposition of any Lien on any of their property or of any of their respective
Subsidiaries' property except for Permitted Liens.
4.3 Binding Effect. This Agreement is, and the Note when
delivered hereunder will be, legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms. Each Security Document is, or upon its execution and
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delivery hereunder will be, a legal, valid and binding obligation of the Company
or the Guarantor party thereto, enforceable against the Company or such
Guarantor, as the case may be, in accordance with their respective terms.
4.4 Subsidiaries. Schedule 4.4 hereto correctly sets forth the
corporate name, jurisdiction of incorporation and ownership of each Subsidiary
of the Company and the Parent Guarantor. Each such Subsidiary and each
corporation becoming a Subsidiary of the Company or the Parent Guarantor after
the date hereof is and will be a corporation duly organized, valid existing and
in good standing under the laws of its jurisdiction of incorporation and is and
will be duly qualified to do business in each additional jurisdiction where such
qualification is or may be necessary under applicable law. Each Subsidiary of
the Company and the Parent Guarantor has and will have all requisite corporate
power to own or lease the property used in its business and to carry on its
business as now being conducted and as proposed to be conducted. All outstanding
shares of capital stock of each class of each Subsidiary of the Company and the
Parent Guarantor have been and will be validly issued and are and will be fully
paid and nonassessable and, except as disclosed in writing to the Bank from time
to time, are and will be owned, beneficially and of record, by the Company or
the Parent Guarantor, or another Subsidiary of the Company or the Parent
Guarantor, free and clear of any Liens.
4.5 Litigation. Except as described in Schedule 4.5 hereto,
there is no action, suit or proceeding pending or, to the best of the Company's
and the Guarantors' knowledge, threatened against or affecting the Parent
Guarantor or any of its Subsidiaries before or by any court, governmental
authority or arbitrator, which if adversely decided might have a Material
Adverse Effect and, to the best of the Company's and the Guarantors' knowledge,
there is no basis for any such action, suit or proceeding.
4.6 Financial Condition. The consolidated balance sheet of the
Company and its Subsidiaries and the consolidated statements of income, retained
earnings and cash flows of the Company and its Subsidiaries for the fiscal year
ended March 30, 2001 and reported on by PricewaterhouseCoopers, independent
certified public accountants, and the interim consolidated balance sheet and
interim consolidated statements of income, retained earnings and cash flows of
the Company and its Subsidiaries, as of or for the tenth interim fiscal period
of the Company ended on January 4, 2002, copies of which have been furnished to
the Bank, fairly present, and the financial statements of the Parent Guarantor
and its Subsidiaries delivered pursuant to Section 5.1(d) will fairly present,
the consolidated financial position of the Company or the Parent Guarantor, as
the case may be, and their respective Subsidiaries as at the respective dates
thereof, and the consolidated results of operations of the Company or the Parent
Guarantor, as the case may be, and their respective Subsidiaries for the
respective periods indicated, all in accordance with Generally Accepted
Accounting Principles consistently applied (subject, in the case of said interim
statements, to year-end audit adjustments). There has been no event or
development which has had or could reasonably be expected to have a Material
Adverse Effect since January 4, 2002. There is no material Contingent Liability
of the Parent Guarantor or any of its Subsidiaries that is not reflected in such
financial statements or in the notes thereto.
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4.7 Use of Advances. The Company will use the proceeds of the
Advances for working capital and its general corporate purposes. Neither the
Company nor any of the Guarantors extends or maintains, in the ordinary course
of business, credit for the purpose, whether immediate, incidental, or ultimate,
of buying or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Advance will be used for the purpose, whether immediate, incidental, or
ultimate, of buying or carrying any such margin stock or maintaining or
extending credit to others for such purpose.
4.8 Consents, Etc. Except for such consents, approvals,
authorizations, declarations, registrations or filings delivered by the Company
pursuant to Section 2.5(n), if any, each of which is in full force and effect,
no consent, approval or authorization of or declaration, registration or filing
with any governmental authority or any nongovernmental person or entity,
including without limitation any creditor, lessor or stockholder of the Company
or any of the Guarantors, is required on the part of the Company or any of the
Guarantors in connection with the execution, delivery and performance of this
Agreement, the Note, the Security Documents or the transactions contemplated
hereby or as a condition to the legality, validity or enforceability of this
Agreement, the Note or any Security Document.
4.9 Taxes. The Company and the Guarantors have filed all tax
returns (federal, state and local) required to be filed and have paid all taxes
shown thereon to be due, including interest and penalties, or have established
adequate financial reserves on their respective books and records for payment
thereof in accordance with Generally Accepted Accounting Principles. Neither the
Company nor any of the Guarantors knows of any actual or proposed material tax
assessment or any basis therefor, and no extension of time for the assessment of
any material deficiencies in any federal or state tax has been granted by the
Company or any such Guarantor.
4.10 Title to Properties. Except as otherwise disclosed in the
latest balance sheet delivered pursuant to Section 4.6 or 5.1(d) of this
Agreement, the Parent Guarantor or one or more of its Subsidiaries have good and
marketable fee simple title to all of the real property, and a valid and
indefeasible ownership interest in all of the other properties and assets
reflected in said balance sheet or subsequently acquired by the Parent Guarantor
or any such Subsidiary. All of such properties and assets are free and clear of
any Lien, except for Permitted Liens.
4.11 ERISA. The Parent Guarantor, its Subsidiaries, their
ERISA Affiliates and their respective Plans are in compliance in all material
respects with those provisions of ERISA and of the Code which are applicable
with respect to any Plan. No Prohibited Transaction and no Reportable Event has
occurred with respect to any such Plan. None of the Parent Guarantor, any of its
Subsidiaries, or any of their ERISA Affiliates is an employer with respect to
any Multiemployer Plan. The Parent Guarantor, its Subsidiaries, and their ERISA
Affiliates have met the minimum funding requirements under ERISA and the Code
with respect to each of their respective Plans, if any, and have not incurred
any liability to the PBGC or any Plan. The execution, delivery and performance
of this Agreement, the Note and the Guaranty Agreements does not constitute a
Prohibited Transaction. There is no material Unfunded Benefit Liability, with
respect to any Plan of the Parent Guarantor, its Subsidiaries, or their ERISA
Affiliates.
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4.12 Disclosure. No report or other information furnished in
writing by or on behalf of the Company or any Guarantor to the Bank in
connection with the negotiation or administration of the Loan Documents contains
any misstatement of fact or omits to state any fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which they were made. Neither this Agreement or the Note or any Security
Document, nor any other document, certificate, or report or statement or other
information furnished to the Bank by or on behalf of the Company or any
Guarantor in connection with the transactions contemplated hereby 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 not misleading in
light of the circumstances in which they were made. There is no fact known to
the Company or any Guarantor which has, or which in the future may have (so far
as the Company can now foresee) a Material Adverse Effect, which has not been
set forth in this Agreement or in the other documents, certificates, statements,
reports and other information furnished in writing to the Bank by or on behalf
of the Company or any Guarantor in connection with the transactions contemplated
hereby.
4.13 No Default. Except as set forth on Schedule 4.13, neither
the Company nor any of the Guarantors is in default or has received any written
notice of default under or with respect to any of its Contractual Obligations in
any respect which could have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
4.14 Common Enterprise. The Parent Guarantor, the Company and
the other Guarantors are engaged as an integrated group in the business of
providing child-care services; the integrated operation requires financing on
such a basis that credit supplied to the Company can be made available, directly
or indirectly, from time to time to various Guarantors, as required for the
continued successful operation of the integrated group as a whole; and that the
Guarantors have requested the Bank to lend and to make credit available to the
Company for the purpose of financing the integrated operations of the Parent
Guarantor, the Company and the other Guarantors, with the Company and all the
Guarantors expecting to derive benefit, direct or indirectly, from the loans and
other credit extended by the Bank to the Company, both in the Company's and each
Guarantor's separate capacity and as a member of the integrated group, inasmuch
as the successful operation and condition of the Company and each Guarantor is
dependent upon the continued successful performance of the functions of the
integrated group as a whole.
ARTICLE V.
COVENANTS
5.1 Affirmative Covenants. The Company covenants and agrees
that, until the Termination Date and thereafter until payment in full of the
principal of and accrued interest on the Note and the performance of all other
obligations of the Company under this Agreement, unless the Bank shall otherwise
consent in writing, the Parent Guarantor and the Company shall, and shall cause
each of the other Guarantors to:
(a) Preservation of Corporate Existence, Etc. Do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and its
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qualification as a foreign corporation in good standing in each jurisdiction in
which such qualification is necessary under applicable law, and the rights,
licenses, permits (including those required under Environmental Laws),
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its businesses; and defend all of the foregoing against all claims,
actions, demands, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority.
(b) Compliance with Laws, Etc. Comply in all material
respects with all applicable laws, rules, regulations and orders of any
governmental authority, whether federal, state, local or foreign (including
without limitation ERISA, the Code and Environmental Laws), in effect from time
to time; and pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income, revenues or
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise, which, if unpaid,
might give rise to Liens upon such properties or any portion thereof, except to
the extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings and with respect to which adequate
financial reserves have been established on the books and records of the Parent
Guarantor, the Company or such other Guarantor, as the case may be, in
accordance with Generally Accepted Accounting Principles.
(c) Maintenance of Properties; Insurance. Maintain,
preserve and protect all property that is material to the conduct of the
business of the Parent Guarantor, the Company or any of the other Guarantors and
keep such property in good repair, working order and condition and from time to
time make, or cause to be made all needful and proper repairs, renewals,
additions, improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted at all
times in accordance with customary and prudent business practices for similar
businesses; and maintain in full force and effect insurance with responsible and
reputable insurance companies or associations in such amounts, on such terms and
covering such risks, including fire and other risks insured against by extended
coverage, as is usually carried by companies engaged in similar businesses and
owning similar properties similarly situated and maintain in full force and
effect public liability insurance, insurance against claims for personal injury
or death or property damage occurring in connection with any of its activities
or any properties owned, occupied or controlled by it, in such amount as it
shall reasonably deem necessary, and maintain such other insurance as may be
required by law or as may be reasonably requested by the Bank for purposes of
assuring compliance with this Section 5.1(c).
(d) Reporting Requirements. Furnish to the Bank the
following:
(i) Promptly and in any event within three
Business Days after becoming aware of the occurrence of (A) any Default or Event
of Default, (B) the commencement of any material litigation against, by or
affecting the Parent Guarantor, the Company or any of the other Guarantors, and
any material developments therein, or (C) the Parent Guarantor, the Company or
any of the other Guarantors entering into any material contract or undertaking
that is not entered into in the ordinary course of business or (D) any
development in the business or affairs of the Parent Guarantor, the Company or
any of the other Guarantors which has resulted in or which is likely in the
reasonable judgment of the Parent Guarantor to result in a Material Adverse
Effect, a
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statement of the chief financial officer of the Parent Guarantor setting forth
details of each such Default or Event of Default or such litigation, material
contract or undertaking or development and the action which the Parent
Guarantor, the Company or such other Guarantor, as the case may be, has taken
and proposes to take with respect thereto;
(ii) As soon as available and in any event
within 30 days (or 60 days in the case only of the first fiscal period of each
fiscal year) after the end of each of the thirteen fiscal periods of each fiscal
year of the Parent Guarantor, the consolidated balance sheet of the Parent
Guarantor and its Subsidiaries as of the end of such fiscal period, and the
related consolidated statements of income, retained earnings and cash flows for
the period commencing at the end of the previous fiscal year and ending with the
end of such fiscal period, setting forth in each case in comparative form the
corresponding figures for the corresponding date or period of the preceding
fiscal year, all in reasonable detail and duly certified (subject to year-end
audit adjustments) by the chief financial officer of the Parent Guarantor as
having been prepared in accordance with Generally Accepted Accounting
Principles, together with a certificate of the chief financial officer of the
Parent Guarantor stating that no Default or Event of Default has occurred and is
continuing or, if a Default or Event of Default has occurred and is continuing,
a statement setting forth the details thereof and the action which the Parent
Guarantor or the Company has taken and proposes to take with respect thereto;
(iii) As soon as available and in any event
within 45 days after the end of each of the first three fiscal quarters of each
fiscal year of the Parent Guarantor, a certificate of the chief financial
officer of the Parent Guarantor stating that a computation (which computation
shall accompany such certificate and shall be in reasonable detail) showing
compliance with Section 5.2(a), (b), (c) and (d) hereof is in conformity with
the terms of this Agreement and showing the calculation of the Applicable
Margin;
(iv) As soon as available and in any event
within 135 days after the end of each fiscal year of the Parent Guarantor, a
copy of the consolidated balance sheet of the Parent Guarantor and its
Subsidiaries as of the end of such fiscal year and the related consolidated
statements of income, retained earnings and cash flows of the Parent Guarantor
and its Subsidiaries for such fiscal year, with a customary audit report of
PricewaterhouseCoopers, or other independent certified public accountants
selected by the Parent Guarantor and acceptable to the Bank, without
qualifications unacceptable to the Bank, together with a certificate of such
accountants stating (A) that they have reviewed this Agreement and stating
further whether, in the course of their review of such financial statements,
they have become aware of any Default or Event of Default and, if such a Default
or Event of Default exists and is continuing, a statement setting forth the
nature and status thereof, and (B) that a computation by the Parent Guarantor
(which computation shall accompany such certificate and shall be in reasonable
detail) showing compliance with Section 5.2(a), (b), (c) and (d) hereof is in
conformity with the terms of this Agreement and showing the calculation of the
Applicable Margin;
(v) Promptly after the sending or filing
thereof, copies of all reports, proxy statements and financial statements which
the Parent Guarantor, the Company or any
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of the Guarantors sends to or files with any of their respective security
holders or any securities exchange or the Securities and Exchange Commission or
any successor agency thereof;
(vi) Promptly and in any event within 10
calendar days after receiving or becoming aware thereof (A) a copy of any notice
of intent to terminate any Plan of the Company, any of the Guarantors, or any
ERISA Affiliate filed with the PBGC, (B) a statement of the chief financial
officer of the Parent Guarantor setting forth the details of any Reportable
Event with respect to any such Plan, (C) a copy of any notice that the Company,
any of the Guarantors, or any ERISA Affiliate may receive from the PBGC relating
to the intention of the PBGC to terminate any such Plan or to appoint a trustee
to administer any such Plan, or (D) a copy of any notice of failure to make a
required installment or other payment within the meaning of Section 412(n) of
the Code or Section 302(f) of ERISA with respect to any such Plan;
(vii) As soon as available and in any event
within 90 days after the end of each fiscal year of the Parent Guarantor,
updated financial projections for the Parent Guarantor and its Subsidiaries for
the next two fiscal years of the Parent Guarantor, which shall include, in each
case, for the first of such two fiscal years a balance sheet and statements of
income and cash flows, and for the second of such two fiscal years, only a
summary statement of income; and
(viii) Promptly, such other information
respecting the business, properties, operations or condition, financial or
otherwise, of the Parent Guarantor, the Company or any of the other Guarantors
as the Bank may from time to time reasonably request.
(e) Accounting; Access to Records, Books, Etc.
Maintain a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
accordance with Generally Accepted Accounting Principles and to comply with the
requirements of this Agreement and, at any reasonable time and from time to
time, permit the Bank or any agents or representatives thereof to examine and
make copies of and abstracts from the records and books of account of, and visit
the properties of, the Parent Guarantor, the Company and the other Guarantors,
and to discuss the affairs, finances and accounts of the Parent Guarantor, the
Company and the other Guarantors with their respective directors, officers,
employees and independent auditors, and by this provision the Company and the
Parent Guarantor authorize such persons to discuss such affairs, finances and
accounts with the Bank.
(f) Real Property Collateral.
(i) Identification of Real Property. Within
three (3) Business Days after the Effective Date, deliver to the Bank a schedule
setting forth all real property owned by the Company and each Guarantor, and all
other information reasonably required for the Bank to obtain appraisals of the
property to be mortgaged, certified as true and correct by a duly authorized
officer of the Company.
(ii) Environmental Investigation. Within ten
(10) Business Days after the Effective Date, deliver to the Bank the Bank's
standard form of environmental
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questionnaire duly completed with respect to each property owned or leased by
the Company and the Guarantors, together with such other information as the Bank
may deem necessary or desirable in order to complete its environmental
investigation with respect thereto.
(iii) Mortgage Documents. Within ninety (90)
calendar days after the Effective Date, deliver to the Bank, or cause to be
delivered to the Bank, the following:
(A) The Mortgages duly executed on
behalf of the Company and the Guarantors, as applicable, granting to the Bank
first-priority mortgage liens on real property owned by the Company and the
Guarantors with an aggregate Fair Market Value of not less than $15,000,000
(sites to be selected by the Bank in its sole discretion), together with:
(B) Evidence of the recordation,
filing and other action (including payment of any applicable taxes or fees) in
such jurisdictions as the Bank may deem necessary or appropriate with respect to
the Security Documents, including the filing of financing statements and similar
documents which the Bank may deem necessary or appropriate to create, preserve
or perfect the liens, security interests and other rights intended to be granted
to the Bank thereunder;
(C) Policies of mortgage title
insurance in form and amounts, and issued by an insurer, satisfactory to the
Bank, insuring the interest of the Bank under the Mortgage without standard
exceptions and without any special exceptions not acceptable to the Bank and
containing such further endorsements, affirmative coverage and other terms as
the Bank may reasonably request;
(D) Surveys of the property to be
subject to the Mortgages, made by a land surveyor licensed in the State in which
such property is located and acceptable to the Bank complying with the Minimum
Standard Detail Requirements for Land Title Surveys as adopted by the American
Title Association and the American Congress on Surveying and Mapping and showing
such details as the Bank may reasonably request, certified to the Bank and the
issuer of such mortgage title insurance policy in form reasonably acceptable to
the Bank;
(E) Evidence that the casualty and
other insurance required pursuant to the Mortgages is in full force and effect;
(F) The favorable written opinion
of counsel for the Company and the Guarantors as to such matters with respect to
the Mortgages as the Bank may reasonably request; provided that no opinions of
local counsel for the Company and the Guarantors with respect to the Mortgages
shall be required so long as the mortgaged properties are limited to California,
Georgia and Oklahoma;
(G) Environmental Certificates, or
confirmations thereof, duly executed on behalf of the Company and the
Guarantors; and
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(H) Copies of all governmental and
nongovernmental consents, approvals, authorizations, declarations, registrations
or filings, if any, required on the part of the Company or the Guarantors in
connection with the execution, delivery and performance of the Mortgages or as a
condition to the legality, validity or enforceability of the Mortgages,
certified as true and correct and in full force and effect as of the date of the
Mortgages by a duly authorized officer of the Company, or, if none is required,
a certificate of such officer to that effect.
(g) Additional Security and Collateral. Promptly (i)
execute and deliver and cause each Guarantor to execute and deliver, additional
Security Documents, within 30 days after request therefor by the Bank,
sufficient to grant to the Bank liens and security interests in any after
acquired property of the type described in Section 2.10, and (ii) cause each
person becoming a Subsidiary of the Company or any Guarantor from time to time
to execute and deliver to the Bank, within 30 days after such person becomes a
Subsidiary, a Guaranty Agreement and other Security Documents, together with
other related documents described in Section 2.5(l), sufficient to grant to the
Bank liens and security interests in all collateral of the type described in
Section 2.10 and documents of the type described in Section 2.5(g), (h) and (i)
with respect to such Subsidiary, an opinion of counsel for such Subsidiary with
respect to the matters covered by the opinion delivered pursuant to Section
2.5(m) with respect to the other Guarantors. The Company shall notify the Bank,
within 10 days after the occurrence thereof, of the acquisition of any property
by the Company or any Guarantor that is not subject to the existing Security
Documents, any person's becoming a Subsidiary of the Company or any Guarantor
and any other event or condition that may require additional action of any
nature in order to preserve the effectiveness and perfected status of the liens
and security interests of the Bank with respect to such property pursuant to the
Security Documents.
(h) Further Assurances. Will, and will cause each
Guarantor to, execute and deliver within 30 days after request therefor by the
Bank, all further instruments and documents and take all further action that may
be necessary or desirable, or that the Bank may request, in order to give effect
to, and to aid in the exercise and enforcement of the rights and remedies of the
Bank under, this Agreement, the Notes and the Security Documents. In addition,
the Company agrees to deliver to the Bank from time to time upon the acquisition
or creation of any Subsidiary not listed in Schedule 4.4 hereto supplements to
Schedule 4.4 such that such Schedule, together with such supplements, shall at
all times accurately reflect the information provided for thereon.
5.2 Negative Covenants. Until the Termination Date and
thereafter until payment in full of the principal of and accrued interest on the
Note and the performance of all other obligations of the Company under this
Agreement, the Company agrees that, unless the Bank shall otherwise consent in
writing the Company and the Parent Guarantor shall not, and shall not permit any
of the other Guarantors to do any of the following:
(a) Tangible Net Worth. Permit or suffer Consolidated
Tangible Net Worth of the Parent Guarantor and its Subsidiaries at any time to
be less than the sum of (i) $23,000,000, plus (ii) an amount equal to 50% of
Consolidated Cumulative Net Income of the Parent Guarantor and its Subsidiaries
for the period from the end of the Parent Guarantor's fiscal
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year ended on or about March 31, 2001 through the end of the then most recently
completed fiscal year of the Parent Guarantor.
(b) Total Debt to EBITDA. Permit or suffer the Total
Debt to EBITDA Ratio to be greater than (i) 3.00 to 1.00 at any time prior to
the end of the Parent Guarantor's fiscal quarter ending on or about Xxxxx 00,
0000, (xx) 2.75 to 1.00 as of the end of the Parent Guarantor's fiscal quarter
ending on or about March 31, 2003 or at any time thereafter prior to the end of
the Parent Guarantor's fiscal quarter ending on or about March 31, 2004, or
(iii) 2.50 to 1.00 as of the end of the Parent Guarantor's fiscal quarter ending
on or about March 31, 2004 or at any time thereafter.
(c) Debt Service Coverage Ratio. Permit or suffer the
Consolidated Debt Service Coverage Ratio of the Parent Guarantor and its
Subsidiaries to be less than 1.10 to 1.00 at any time, such ratio to be
determined as of the end of each fiscal quarter of the Parent Guarantor for the
period of four consecutive fiscal quarters of the Parent Guarantor then ended.
(d) EBITDA. Permit or suffer the Consolidated EBITDA
of the Parent Guarantor and its Subsidiaries to be less than (i) $5,000,000 for
the period of the first three fiscal quarters of the current fiscal year of the
Parent Guarantor or (ii) $5,500,000 for the fiscal year of the Parent Guarantor
ending on or about March 31, 2002.
(e) Indebtedness. Create, incur, assume or in any
manner become liable in respect of, or suffer to exist, any Indebtedness other
than:
(i) The Loans and other Indebtedness to the
Bank, the Bank's parent and its other Affiliates, including without limitation
Rate Management Transactions;
(ii) The Indebtedness described in Schedule
5.2(e) hereto, having the same terms as those existing on the date of this
Agreement, but no extension or renewal thereof shall be permitted; and
(iii) Other Indebtedness in aggregate
outstanding principal amount for the Parent Guarantor and its Subsidiaries,
including without limitation the Company, not exceeding $1,000,000 at any time.
(f) Liens. Create, incur or suffer to exist any Lien
on any of the assets, rights, revenues or property, real, personal or mixed,
tangible or intangible, whether now owned or hereafter acquired, of the Parent
Guarantor, the Company or any of the other Guarantors, other than:
(i) Liens for taxes not delinquent or for
taxes being contested in good faith by appropriate proceedings and as to which
adequate financial reserves have been established on its books and records in
accordance with Generally Accepted Accounting Principles;
(ii) Liens (other than any Lien imposed by
ERISA or any Environmental Law) created and maintained in the ordinary course of
business which are not
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material in the aggregate, and which would not have a Material Adverse Effect
and which constitute (A) pledges or deposits under worker's compensation laws,
unemployment insurance laws or similar legislation, (B) good faith deposits in
connection with bids, tenders, contracts or leases to which the Parent
Guarantor, the Company or any of the other Guarantors is a party for a purpose
other than borrowing money or obtaining credit, including rent security
deposits, (C) liens imposed by law, such as those of carriers, warehousemen and
mechanics, if payment of the obligation secured thereby is not yet due, (D)
Liens securing taxes, assessments or other governmental charges or levies not
yet subject to penalties for nonpayment, and (E) pledges or deposits to secure
public or statutory obligations of the Parent Guarantor, the Company or any of
the other Guarantors, or surety, customs or appeal bonds to which the Parent
Guarantor, the Company or any of the other Guarantors is a party;
(iii) Liens affecting real property which
constitute minor survey exceptions or defects or irregularities in title, 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 such real property,
provided that all of the foregoing, in the aggregate, do not at any time
materially detract from the value of said properties or materially impair their
use in the operation of the businesses of the Parent Guarantor, the Company or
any of the Guarantors;
(iv) Liens created pursuant to the Security
Documents and Liens expressly permitted by the Security Documents;
(v) Each Lien described in Schedule 5.2(f)
hereto may be suffered to exist upon the same terms as those existing on the
date hereof, but no extension or renewal thereof shall be permitted;
(vi) Any Lien created to secure payment of a
portion of the purchase price of, or existing at the time of acquisition of, any
tangible fixed asset acquired by the Parent Guarantor, the Company or any of the
other Guarantors may be created or suffered to exist upon such fixed asset if
the outstanding principal amount of the Indebtedness secured by such Lien does
not at any time exceed the purchase price paid by the Parent Guarantor, the
Company or such other Guarantor for such fixed asset and the aggregate principal
amount of all Indebtedness secured by such Liens does not exceed an amount
permitted under Section 5.2(e)(iii), taking into account all other Indebtedness
then outstanding that is permitted under Section 5.2(e)(iii), provided that such
Lien does not encumber any other asset at any time owned by the Parent
Guarantor, the Company or such other Guarantor, and provided, further, that not
more than one such Lien shall encumber such fixed asset at any one time; and
(vii) The interest or title of a lessor
under any lease otherwise permitted under this Agreement with respect to the
property subject to such lease to the extent performance of the obligations of
the Parent Guarantor, the Company or such other Guarantor thereunder are not
delinquent.
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(g) Merger; Acquisitions; Etc. Purchase or otherwise
acquire, whether in one or a series of transactions, all or a substantial
portion of the business assets, rights, revenues or property, real, personal or
mixed, tangible or intangible, of any person, or all or a substantial portion of
the capital stock of or other ownership interest in any other person (any of the
foregoing, an "Acquisition"); nor merge or consolidate or amalgamate with any
other person or take any other action having a similar effect, nor enter into
any joint venture or similar arrangement with any other person, provided that
the Company may make Acquisitions if each of the following conditions is
satisfied: (i) immediately before and after giving effect to such Acquisition,
no Default or Event of Default shall exist or shall have occurred and be
continuing and the representations and warranties contained in Article IV and in
the other Loan Documents shall be true and correct on and as of the date thereof
(both before and after such Acquisition is consummated) as if made on the date
such Acquisition is consummated, (ii) at least five Business Days' prior to the
consummation of such Acquisition, the Company shall have provided to the Bank a
certificate of the chief financial officer attaching pro forma computations
acceptable to the Bank to demonstrate compliance with all financial covenants
hereunder, each stating that such Acquisition complies with this Section 5.2(g),
all laws and regulations and that any other conditions under this Agreement
relating to such transaction have been satisfied, and such certificate shall
contain such other information and certifications as requested by the Bank and
be in form and substance satisfactory to the Bank, (iii) at least 10 Business
Days' prior to the consummation of such Acquisition, the Company shall have
delivered all acquisition documents and other agreements and documents relating
to such Acquisition, and the Bank shall have completed a satisfactory review
thereof and completed such other due diligence satisfactory to the Bank, (iv)
immediately before and after giving effect to such Acquisition, the pro forma
financial covenant in Section 5.2(b) is at least 0.5 below the level required
under Section 5.2(b), on a pro forma basis acceptable to the Bank, (v) both
before and after giving effect to such Acquisition, the Company was and will be
able to borrow at least $2,500,000 of additional Loans on a pro forma basis in
accordance with this Agreement, (vi) the Company shall, at least 10 Business
Days prior to the consummation of Acquisition, provide such other certificates
and documents as reasonably requested by the Bank, in form and substance
reasonably satisfactory to the Bank, (vii) the target of such Acquisition is in
the same line of business as the Company, (viii) the target of such Acquisition
is located in the United States of America, (ix) the board of directors (or
similar governing body) and the management of the target of such Acquisition has
approved such Acquisition and (x) the aggregate consideration paid or payable in
connection with all such Acquisitions permitted by this proviso, including
without limitation any Indebtedness assumed in connection therewith, all
guarantees or other liabilities incurred in connection therewith, and all
deferred payments and other direct or indirect in consideration in connection
therewith, shall not exceed $4,000,000 in aggregate amount.
(h) Disposition of Assets; Etc. Sell, lease, license,
transfer, assign or otherwise dispose of all or a substantial portion of its
business, assets, rights, revenues or property, real, personal or mixed,
tangible or intangible, whether in one or a series of transactions, other than
inventory sold in the ordinary course of business upon customary credit terms
and sales of scrap or obsolete material or equipment.
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(i) Nature of Business. Make any substantial change
in the nature of its business from that engaged in on the date of this Agreement
or engage in any other businesses other than those in which it is engaged on the
date of this Agreement.
(j) Investments, Loans and Advances. Purchase or
otherwise acquire any capital stock of or other ownership interest in, or debt
securities of or other evidences of Indebtedness of, any other person; nor make
any loan or advance of any of its funds or property or make any other extension
of credit to, or make any investment or acquire any interest whatsoever in, any
other person; nor incur any Contingent Liability; other than (i) extensions of
trade credit made in the ordinary course of business on customary credit terms
and commission, travel and similar advances made to officers and employees in
the ordinary course of business, (ii) commercial paper of any United States
issuer having the highest rating then given by Xxxxx'x Investors Service, Inc.,
or Standard & Poor's Corporation, direct obligations of and obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, or certificates of deposit of any commercial bank which is a member of
the Federal Reserve System and which has capital, surplus and undivided profit
(as shown on its most recently published statement of condition) aggregating not
less than $100,000,000, provided, however, that each of the foregoing
investments has a maturity date not later than 180 days after the acquisition
thereof by the Parent Guarantor, the Company or such other Guarantor, as the
case may be, (iii) those investments, loans, advances and other transactions
described in Schedule 5.2(j) hereto, having the same terms as existing on the
date of this Agreement, but no extension or renewal thereof shall be permitted,
and (iv) transactions permitted by Section 5.2(g), if any.
(k) Transactions with Affiliates. Enter into, become
a party to, or become liable in respect of, any contract or undertaking with any
Affiliate except in the ordinary course of business and on terms not less
favorable to the Parent Guarantor, the Company or such other Guarantor than
those which could be obtained if such contract or undertaking were an arms
length transaction with a person other than an Affiliate.
(l) Negative Pledge Limitation. Enter into any
agreement with any person other than the Bank pursuant hereto which prohibits or
limits the ability of the Parent Guarantor, the Company or such other Guarantor
to create, incur, assume or suffer to exist any Lien upon any of its assets,
rights, revenues or property, real, personal or mixed, tangible or intangible,
whether now owned or hereafter acquired.
(m) Inconsistent Agreements. Enter into any agreement
containing any provision which would be violated or breached by this Agreement
or any of the transactions contemplated hereby or by performance by the Parent
Guarantor, the Company or any such other Guarantor of its obligations in
connection therewith.
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ARTICLE VI.
DEFAULT
6.1 Events of Default. The occurrence of any one of the
following events or conditions shall be deemed an "Event of Default" hereunder
unless waived pursuant to Section 7.1:
(a) Nonpayment. (i) The Company shall fail to pay
when due any principal of the Note or any reimbursement obligation under Section
3.3 (whether by deemed disbursement of a Revolving Credit Loan or otherwise),
(ii) the Company shall fail to pay when due any interest on the Note and such
failure continues for a period of three Business Days, or (iii) the Company
shall fail to pay when due any fees or any other amount payable hereunder and
such failure continues for a period of five calendar days; or
(b) Misrepresentation. Any representation or warranty
made by the Company or any Guarantor in Article IV hereof or in any certificate,
report, financial statement or other document furnished by or on behalf of the
Company or any Guarantor in connection with this Agreement or any Security
Document shall prove to have been incorrect in any material respect when made or
deemed made; or
(c) Certain Covenants. The Company or any Guarantor
shall fail to perform or observe any term, covenant or agreement contained in
any provision of Article V hereof other than Sections 5.1(a), (b), (c) and (e);
or
(d) Other Defaults. The Company or any Guarantor
shall fail to perform or observe any other term, covenant or agreement contained
in this Agreement, including, without limitation, those contained in Sections
5.1(a), (b), (c) and (e), and any such failure shall remain unremedied for 15
calendar days after notice thereof shall have been given to the Company by the
Bank; or
(e) Cross Default. The Company or any Guarantor
defaults under any Rate Management Transaction; or the Company or any Guarantor
shall fail to pay any part of the principal of, the premium, if any, or the
interest on, or any other payment of money due under any of its Indebtedness
(other than Indebtedness hereunder), beyond any period of grace provided with
respect thereto, which individually or together with other such Indebtedness as
to which any such failure exists has an aggregate outstanding principal amount
in excess of $1,000,000; or if the Company or any Guarantor fails to perform or
observe any other term, covenant or agreement contained in, or if any other
event or condition occurs or exists under, any agreement, document or instrument
evidencing or securing any such Indebtedness having such aggregate outstanding
principal amount, or under which any such Indebtedness was incurred, issued or
created, beyond any period of grace, if any, provided with respect thereto if
the effect of such failure is either (i) to cause, or permit the holders of such
Indebtedness (or a trustee on behalf of such holders) to cause, any payment in
respect of such Indebtedness to become due prior to its due date or (ii) to
permit the holders of such Indebtedness (or a trustee on behalf of such holders)
to elect a majority of the board of directors of the Company or such Guarantor,
as the case may be; or
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(f) Judgments. One or more judgments or orders for
the payment of money in an aggregate amount of $2,000,000 shall be rendered
against the Company or any Guarantor, or any other judgment or order (whether or
not for the payment of money) shall be rendered against or shall affect the
Company or any Guarantor which causes or could cause a material adverse change
in the business, properties, operations or condition, financial or otherwise, of
the Company or any Guarantor, or which does or could have a material adverse
effect on the legality, validity or enforceability of this Agreement, the Note
or any Security Document, and either (i) such judgment or order shall have
remained unsatisfied and the Company or such Guarantor shall not have taken
action necessary to stay enforcement thereof by reason of pending appeal or
otherwise, prior to the expiration of the applicable period of limitations for
taking such action or, if such action shall have been taken, a final order
denying such stay shall have been rendered, or (ii) enforcement proceedings
shall have been commenced by any creditor upon any such judgment or order; or
(g) ERISA. (i) The occurrence of a Reportable Event
that results in or could result in liability of the Company, any of the
Guarantors or any of their ERISA Affiliates to the PBGC or to any Plan and such
Reportable Event is not corrected within thirty (30) days after the occurrence
thereof; or (ii) the occurrence of any Reportable Event which could constitute
grounds for termination of any Plan of the Company, any of the Guarantors or any
of their ERISA Affiliates by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer any such Plan and such
Reportable Event is not corrected within thirty (30) days after the occurrence
thereof; or (iii) the filing by the Company, any of the Guarantors or any of
their ERISA Affiliates of a notice of intent to terminate a Plan or the
institution of other proceedings to terminate a Plan; or (iv) the Company, any
of the Guarantors or any of their respective ERISA Affiliates shall fail to pay
when due any liability to the PBGC or to a Plan; or (v) the PBGC shall have
instituted proceedings to terminate, or to cause a trustee to be appointed to
administer, any Plan of the Company, any of the Guarantors or any of their ERISA
Affiliates; or (vi) any person engages in a Prohibited Transaction with respect
to any Plan which results in or could result in liability of the Company, any of
the Guarantors, any of their ERISA Affiliates, any Plan of the Company, any of
the Guarantors or any their ERISA Affiliates or any fiduciary of any such Plan;
or (vii) failure by the Company, any of the Guarantors or any of their ERISA
Affiliates to make a required installment or other payment to any Plan within
the meaning of Section 302(f) of ERISA or Section 412(n) of the Code that
results in or could result in liability of the Company, any of the Guarantors or
any of their ERISA Affiliates to the PBGC or any Plan; or (viii) the withdrawal
of the Company, any of the Guarantors or any of their ERISA Affiliates from a
Plan during a plan year in which it was a "substantial employer" as defined in
Section 4001(9a)(2) of ERISA; or (ix) the Company, any of the Guarantors or any
of their ERISA Affiliates becomes an employer with respect to any Multiemployer
Plan without the prior written consent of the Bank, and in the case of any of
the foregoing clauses (i) - (viii), such occurrence has or could reasonably be
expected to have a Material Adverse Effect; or
(h) Insolvency, Etc. The Company or any of the
Guarantors shall be dissolved or liquidated (or any judgment, order or decree
therefor shall be entered), or shall generally not pay its debts as they become
due, or shall admit in writing its inability to pay its debts
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generally, or shall make a general assignment for the benefit of creditors, or
shall institute, or there shall be instituted against the Company or any of the
Guarantors any proceeding or case seeking to adjudicate it a bankrupt or
insolvent or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief or protection of
debtors or seeking the entry of an order for relief, or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its assets, rights, revenues or property, and, if such
proceeding is instituted against the Company or such Guarantor and is being
contested by the Company or such Guarantor, as the case may be, in good faith by
appropriate proceedings, such proceeding shall remain undismissed or unstayed
for a period of 60 days; or the Company or any Guarantor shall take any action
(corporate or other) to authorize or further any of the actions described above
in this subsection; or
(i) Loan Documents. Any event of default described in
any Loan Document shall have occurred and be continuing, or any material
provision of any Loan Document shall at any time for any reason cease to be
valid and binding and enforceable against any obligor thereunder, or the
validity, binding effect or enforceability thereof shall be contested by any
person, or any obligor, shall deny that it has any or further liability or
obligation thereunder, or any Loan Document shall be terminated, invalidated or
set aside, or be declared ineffective or inoperative or in any way cease to give
or provide to the Bank the benefits purported to be created thereby; or
(j) Change-of-Control. Any Change-of-Control shall
occur; or
(k) Material Adverse Change. Any material adverse
change in the existing or prospective financial condition of the Company or any
Guarantor shall occur.
6.2 Remedies. (a) Upon the occurrence and during the
continuance of any Event of Default, the Bank may by notice to the Company (i)
terminate the Commitment or (ii) declare the outstanding principal of, and
accrued interest on, the Note, all unpaid reimbursement obligations in respect
of drawings under Letters of Credit and all other amounts owing under this
Agreement to be immediately due and payable, or (iii) demand immediate delivery
of cash collateral, and the Company agrees to deliver such cash collateral upon
demand, in an amount equal to the maximum amount that may be available to be
drawn at any time prior to the stated expiry of all outstanding Letters of
Credit, or any one or more of the foregoing, whereupon the Commitment shall
terminate forthwith and all such amounts, including such cash collateral, shall
become immediately due and payable, provided that in the case of any event or
condition described in Section 6.1(h) with respect to the Company, the
Commitment shall automatically terminate forthwith and all such amounts,
including such cash collateral, shall automatically become immediately due and
payable without notice; in all cases without demand, presentment, protest,
diligence, notice of dishonor or other formality, all of which are hereby
expressly waived. Such cash collateral delivered in respect of outstanding
Letters of Credit shall be deposited in a special cash collateral account to be
held by the Bank as collateral security for the payment and performance of the
Company's obligations under this Agreement to the Bank.
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(b) In addition to the remedies provided in Section
6.2(a), the Bank may exercise and enforce any and all other rights and remedies
available to it, whether arising under this Agreement or the Note or the other
Loan Documents or under applicable law, in any manner deemed appropriate by the
Bank, including suit in equity, action at law, or other appropriate proceedings,
whether for the specific performance (to the extent permitted by law) of any
covenant or agreement contained in this Agreement or in the Note or any other
Loan Document or in aid of the exercise of any power granted in this Agreement
or the Note or any other Loan Document.
(c) Upon the occurrence and during the continuance of
any Event of Default, the Bank may at any time and from time to time, without
notice to the Company (any requirement for such notice being expressly waived by
the Company) set off and apply against any and all of the obligations of the
Company now or hereafter existing under this Agreement, any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Bank to or for the credit or the
account of the Company and any property of the Company from time to time in
possession of the Bank, irrespective of whether or not the Bank shall have made
any demand hereunder and although such obligations may be contingent and
unmatured. The Company hereby grants to the Bank a lien on and security interest
in all such deposits, indebtedness and property as collateral security for the
payment and performance of the obligations of the Company under this Agreement.
The rights of the Bank under this Section 6.2(c) are in addition to other rights
and remedies (including, without limitation, other rights of setoff) which the
Bank may have.
ARTICLE VII.
MISCELLANEOUS
7.1. Amendments, Etc. No amendment, modification, termination
or waiver of any provision of this Agreement nor any consent to any departure
therefrom shall be effective unless the same shall be in writing and signed by
the Company and Bank. Any such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
7.2 Notices. (a) Except as otherwise provided in Section
7.2(c) hereof, all notices and other communications hereunder shall be in
writing and shall be delivered or sent to the Company at 00000 Xxxx 00 Xxxx
Xxxx, Xxxxx 000, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000, Attention: Chief Financial
Officer, Facsimile No. (000) 000-0000, Facsimile Confirmation No. (248)
442-3183, and to the Bank at 00000 Xxxxxxxxxxxx Xxxxxxx, XX0-0000, Xxxxxxxxxx,
Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxx, East Michigan Commercial Banking
Division, Facsimile No. (000) 000-0000, Facsimile Confirmation No. (248)
799-5849, or to such other address as may be designated by the Company or the
Bank by notice to the other party hereto. All notices and other communications
shall be deemed to have been given at the time of actual delivery thereof to
such address, or, unless sooner delivered, (i) if sent by certified or
registered mail, postage prepaid, to such address, on the third day after the
date of mailing, (ii) if sent by telex, upon receipt of the appropriate
answerback, or (iii) if sent by facsimile transmission, upon confirmation of
receipt by
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telephone at the number specified for confirmation, provided, however, that
notices to the Bank shall not be effective until received.
(b) Notices by the Company to the Bank with respect
to terminations or reductions of the Commitment pursuant to Section 2.2,
requests for Advances pursuant to Section 2.4, requests for continuations or
conversions of Loans pursuant to Section 2.7 and notices of prepayment pursuant
to Section 3.1 shall be irrevocable and binding on the Company.
(c) Any notice to be given by the Company to the Bank
pursuant to Sections 2.4, 2.7 or 3.1 and any notice to be given by the Bank
hereunder, may be given by telephone, and all such notices given by the Company
must be immediately confirmed in writing in the manner provided in Section
7.2(a). Any such notice given by telephone shall be deemed effective upon
receipt thereof by the party to whom such notice is to be given. The Company
shall indemnify and hold harmless the Bank from any and all losses, damages,
liabilities and claims arising from its good faith reliance on any such
telephone notice.
7.3 No Waiver By Conduct; Remedies Cumulative. No course of
dealing on the part of the Bank, nor any delay or failure on the part of the
Bank in exercising any right, power or privilege hereunder shall operate as a
waiver of such right, power or privilege or otherwise prejudice the Bank's
rights and remedies hereunder; nor shall any single or partial exercise thereof
preclude any further exercise thereof or the exercise of any other right, power
or privilege. No right or remedy conferred upon or reserved to the Bank under
this Agreement or the Note or any other Loan Document is intended to be
exclusive of any other right or remedy, and every right and remedy shall be
cumulative and in addition to every other right or remedy granted thereunder or
now or hereafter existing under any applicable law. Every right and remedy
granted by this Agreement or the Note or any other Loan Document or by
applicable law to the Bank may be exercised from time to time and as often as
may be deemed expedient by the Bank and, unless contrary to the express
provisions of this Agreement or the Note or such other Loan Document,
irrespective of the occurrence or continuance of any Default or Event of
Default.
7.4 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of the Company made herein
or in any certificate, report, financial statement or other document furnished
by or on behalf of the Company in connection with this Agreement shall be deemed
to be material and to have been relied upon by the Bank, notwithstanding any
investigation heretofore or hereafter made by the Bank or on the Bank's behalf,
and those covenants and agreements of the Company set forth in Section 3.7, 3.9
and 7.5 hereof shall survive the repayment in full of the Advances and the
termination of the Commitment.
7.5 Expenses; Indemnification. (a) The Company agrees to pay,
or reimburse the Bank for the payment of, on demand, (i) the reasonable fees and
expenses of counsel to the Bank, including without limitation the fees and
expenses of Xxxxxxxxx Xxxxxx PLLC, in connection with the preparation,
execution, delivery and administration of this Agreement, the Note and the other
Loan Documents, and in connection with advising the Bank as to its rights and
responsibilities with respect thereto, and in connection with any amendments,
waivers or consents in connection therewith, and (ii) all stamp and other taxes
and fees payable or determined to be payable in
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connection with the execution, delivery, filing or recording of this Agreement
or the Note or the other Loan Documents, or the consummation of the transactions
contemplated hereby, and any and all liabilities with respect to or resulting
from any delay in paying or omitting to pay such taxes or fees, and (iii) all
reasonable costs and expenses of the Bank (including reasonable fees and
expenses of counsel and whether incurred through negotiations, legal proceedings
or otherwise) in connection with any Default or Event of Default or the
enforcement of, or the exercise or preservation of any rights under, this
Agreement or the Note or in connection with any other Loan Document or any
refinancing or restructuring of the credit arrangements provided under this
Agreement, and (iv) all reasonable costs and expenses of the Bank (including
reasonable fees and expenses of counsel) in connection with any action or
proceeding relating to a court order, injunction or other process or decree
restraining or seeking to restrain the Bank from paying any amount under, or
otherwise relating in any way to, any Letter of Credit and any and all costs and
expenses which any of them may incur relative to any payment under any Letter of
Credit.
(b) The Company hereby indemnifies and agrees to hold
harmless the Bank, and its officers, directors, employees and agents, from and
against any and all claims, damages, losses, liabilities, costs or expenses of
any kind or nature whatsoever which the Bank or any such person may incur or
which may be claimed against any of them by reason of or in connection with any
Letter of Credit, and neither the Bank nor any of its officers, directors,
employees or agents shall be liable or responsible for: (i) the use which may be
made of any Letter of Credit or for any acts or omissions of any beneficiary in
connection therewith; (ii) the validity, sufficiency or genuineness of documents
or of any endorsement thereon, even if such documents should in fact prove to be
in any or all respects invalid, insufficient, fraudulent or forged; (iii)
payment by the Bank to the beneficiary under any Letter of Credit against
presentation of documents which do not comply with the terms of any Letter of
Credit, including failure of any documents to bear any reference or adequate
reference to such Letter of Credit; (iv) any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit; or (v) any other event or
circumstance whatsoever arising in connection with any Letter of Credit;
provided, however, that the Company shall not be required to indemnify the Bank
and such other persons, and the Bank shall be liable to the Company to the
extent, but only to the extent, of any direct, as opposed to consequential or
incidental, damages suffered by the Company which were caused by (A) the Bank's
wrongful dishonor of any Letter of Credit after the presentation to it by the
beneficiary thereunder of a draft or other demand for payment and other
documentation strictly complying with the terms and conditions of such Letter of
Credit, or (B) the Bank's payment to the beneficiary under any Letter of Credit
against presentation of documents which do not comply with the terms of the
Letter of Credit to the extent, but only to the extent, that such payment
constitutes gross negligence or willful misconduct of the Bank. It is understood
that in making any payment under a Letter of Credit, the Bank will rely on
documents presented to it under such Letter of Credit as to any and all matters
set forth therein without further investigation and regardless of any notice or
information to the contrary, and such reliance and payment against documents
presented under a Letter of Credit substantially complying with the terms
thereof shall not be deemed gross negligence or willful misconduct of the Bank
in connection with such payment. It is further acknowledged and agreed that the
Company may have rights against the beneficiary or others in connection with any
Letter of Credit with respect to which the Bank is alleged to be liable and it
shall be a precondition of the
-43-
assertion of any liability of the Bank under this Section that the Company shall
first have exhausted all remedies in respect of the alleged loss against such
beneficiary and any other parties obligated or liable in connection with such
Letter of Credit and any related transactions.
(c) The Company hereby indemnifies and agrees to hold
harmless the Bank, and its officers, directors, employees and agents, from and
against any and all claims, damages, losses, liabilities, costs or expenses of
any kind or nature whatsoever (including reasonable attorneys fees and
disbursements incurred in connection with any investigative, administrative or
judicial proceeding whether or not such person shall be designated as a party
thereto) which the Bank or any such person may incur or which may be claimed
against any of them by reason of or in connection with entering into this
Agreement or the transactions contemplated hereby, including without limitation
those arising under Environmental Laws; provided, however, that the Company
shall not be required to indemnify the Bank or such other person, to the extent,
but only to the extent, that such claim, damage, loss, liability, cost or
expense is attributable to the gross negligence or willful misconduct of the
Bank.
7.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, provided that the Company may not, without the prior
consent of the Bank, assign its rights or obligations hereunder or under the
Note and the Bank shall not be obligated to make any Advance hereunder to any
entity other than the Company.
7.7 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
7.8 Governing Law. This Agreement is a contract made under,
and shall be governed by and construed in accordance with, the law of the State
of Michigan applicable to contracts made and to be performed entirely within
such State and without giving effect to choice of law principles of such State.
Each of the Company and the Bank further agrees that any legal or equitable
action or proceeding with respect to this Agreement, the Note, the other Loan
Documents or the transactions contemplated hereby shall be brought in any court
of the State of Michigan, or in any court of the United States of America
sitting in Michigan, and the Company and the Bank each submits to and accepts
generally and unconditionally the jurisdiction of those courts with respect to
its person and property. The Company irrevocably consents to the service of
process in connection with any such action or proceeding by personal delivery to
the Company, or by the mailing thereof by registered or certified mail, postage
prepaid to the Company at its address for notices pursuant to Section 7.2.
Nothing in this paragraph shall affect the right of the Bank to serve process in
any other manner permitted by law or limit the right of the Bank to bring any
such action or proceeding against the Company or its property in the courts of
any other jurisdiction. The Company and the Bank each irrevocably waives any
objection to the laying of venue of any such action or proceeding in the above
described courts.
-44-
7.9 Table of Contents and Headings. The table of contents and
the headings of the various subdivisions hereof are for the convenience of
reference only and shall in no way modify any of the terms or provisions hereof.
7.10 Construction of Certain Provisions. If any provision of
this Agreement refers to any action to be taken by any person, or which such
person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such person, whether or not
expressly specified in such provision.
7.11 Integration and Severability. This Agreement, the Note
and the other Loan Documents embody the entire agreement and understanding
between the Company and the Bank, and supersede all prior agreements and
understandings, relating to the subject matter hereof. In case any one or more
of the obligations of the Company under this Agreement, the Note or the other
Loan Documents shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining obligations of the
Company shall not in any way be affected or impaired thereby, and such
invalidity, illegality or unenforceability in one jurisdiction shall not affect
the validity, legality or enforceability of the obligations of the Company under
this Agreement, the Note or the other Loan Documents in any other jurisdiction.
7.12 Independence of Covenants. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any such covenant, the fact that it would be permitted by an
exception to, or would be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or such condition exists.
7.13 Interest Rate Limitation. Notwithstanding any provisions
of this Agreement or the Note, in no event shall the amount of interest paid or
agreed to be paid by the Company exceed an amount computed at the highest rate
of interest permissible under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Agreement or the Note or any
other Loan Document at the time performance of such provision shall be due shall
involve exceeding the interest rate limitation validly prescribed by law which a
court of competent jurisdiction may deem applicable hereto, then, ipso facto,
the obligations to be fulfilled shall be reduced to an amount computed at the
highest rate of interest permissible under applicable law. If for any reason
whatsoever the Bank shall ever receive as interest an amount which would be
deemed unlawful under such applicable law, the amount shall be automatically
applied to the payment of principal of the Advances outstanding hereunder
(whether or not then due and payable) and not to the payment of interest, or
shall be refunded to the Company if such principal and all other obligations of
the Company to the Bank have been paid in full.
7.14 Information Sharing. The Bank may provide, without any
limitation whatsoever, any information or knowledge the Bank may have about the
Company, the Parent Guarantor or any of their respective Subsidiaries or any
matter relating to this Agreement and any related documents to the Bank's
parent, or any of its subsidiaries or affiliates or their successors, or to any
one or more purchasers or potential purchasers of any interest in this Agreement
or the Note or any related documents, and the Company waives any right to
privacy
-45-
the undersigned may have with respect to such matters. The Company agrees that
the Bank may at any time sell, assign or transfer one or more interests or
participations in all or any part of its rights or obligations in this
Agreement, the Note and the other Loan Documents to one or more purchasers
whether or not related to the Bank.
7.15 WAIVER OF JURY TRIAL. THE BANK AND THE COMPANY, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL
BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF ANY OF THEM. NEITHER THE BANK NOR THE COMPANY SHALL SEEK
TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH ACTION IN WHICH A JURY
TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED
IN ANY RESPECT OR RELINQUISHED BY ANY PARTY HERETO EXCEPT BY A WRITTEN
INSTRUMENT EXECUTED BY SUCH PARTY.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered on the 31st day of January, 2002,
which shall be the Effective Date of this Agreement, notwithstanding the day and
year first above written.
CHILDTIME CHILDCARE, INC.
By /s/ Xxxxxxx X. Xxxxx
--------------------
Its Chief Financial Officer
-----------------------
CHILDTIME LEARNING CENTERS, INC.*
By /s/ Xxxxxxx X. Xxxxx
--------------------
Its Chief Financial Officer
-----------------------
*Signing for the purpose of making the
representations and warranties set
forth in Article IV and agreeing to
abide by the covenants applicable to
it set forth in Sections 5.1 and 5.2
of this Agreement.
BANK ONE, MICHIGAN
By /s/ Xxxxxxx X. Xxxxx
--------------------
Its First Vice President
--------------------
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EXHIBIT A
ENVIRONMENTAL CERTIFICATE
================================================================================
In consideration of and in order to induce BANK ONE, MICHIGAN ("Bank") to loan
money, extend credit, or enter into certain other transactions from time to time
to or with CHILDTIME CHILDCARE, INC ("Borrower"), Borrower and Guarantor (if
signed by Guarantor below) make the representations, warranties and covenants
set forth in this Environmental Certificate (the "Certificate") to Bank with
respect to all property and activities of Borrower and Guarantor.
If there is more than one Borrower or Guarantor, the words "Borrower" and
"Guarantor" shall apply to each such party, individually and collectively.
1. DEFINITIONS.
A. "Environmental Law(s)" means any law, regulation, rule, policy,
ordinance or similar requirement which governs or protects the environment,
enacted from time to time by the United States, any foreign government, any
state, or any county, city or agency or subdivision of the United States or
foreign country or its political subdivisions.
B. "Hazardous Materials" means any material or substance: (1) which is or
becomes defined as a hazardous substance, pollutant, or contaminant,
pursuant to the Comprehensive Environmental Response Compensation and
Liability Act ("CERCLA") (42 USC ss. 9601 et. seq.) as amended and
regulations promulgated under it; (2) containing gasoline, oil, diesel fuel
or other petroleum products; (3) which is or becomes defined as hazardous
waste pursuant to the Resource Conservation and Recovery Act ("RCRA") (42
USC ss. 6901 et. seq.) as amended and regulations promulgated under it; (4)
containing polychlorinated biphenyls (PCBs); (5) containing asbestos; (6)
which is radioactive; (7) the presence of which requires investigation or
remediation under any Environmental Law; (8) which is or becomes defined or
identified as a hazardous waste, hazardous substance, hazardous or toxic
chemical, pollutant, contaminant, or biologically Hazardous Material under
any Environmental Law.
C. "Indebtedness" means all loans made or credit extended to Borrower by
Bank at any time.
D. "Property" means all tangible property now or hereafter owned, operated,
leased or used by Borrower or Guarantor, including but not limited to, land
(including soil, groundwater and surface water located on, in or under the
Property), buildings, equipment and inventory.
2. BORROWER'S REPRESENTATIONS AND WARRANTIES.
Except as set forth on the attached SCHEDULE A, to the best of their knowledge,
Borrower and Guarantor represent and warrant to Bank as follows:
-48-
A. REGULATORY COMPLIANCE; ENFORCEMENT; LITIGATION. (1) They are in
substantial compliance with all Environmental Laws; (2) they have never
received any written notice of any violations of any Environmental Law; (3)
no written demand, claim, suit, administrative action, or criminal action
whether brought by any government authority or private party, arising under
or relating to any Environmental Law is pending or threatened against the
Borrower or Guarantor, or with respect to the Property; and (4) they have
not used Hazardous Materials on or about the Property in any manner which
violates any Environmental Law governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal
of Hazardous Materials and to the best of their knowledge, no prior owner
of the Property or any existing or prior tenant or occupant has used
Hazardous Materials on or about the Property in any manner which violates
any Environmental Law governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal
of Hazardous Materials.
B. PERMITS AND LICENSES. All federal, state and local permits, licenses or
authorizations required by Environmental Law(s) for present use of the
Property or activities of the Borrower or Guarantor have been obtained, are
presently in effect and are listed on the attached SCHEDULE A. All federal,
state and local permits, licenses or authorizations required by
Environmental Law(s) for any permitted or licensed activities or uses that
are anticipated at the Property and for which permits/ licenses have been
sought but not yet received are also listed on the attached SCHEDULE A.
There is and has been substantial compliance with all such permits,
licenses or authorizations.
C. CONTAMINATION/RELEASE. There has not been in the past, nor are there
currently, any releases, spills, discharges nor other form of contamination
on the Property the aggregate cost of which to remediate exceeded or will
exceed $1,000,000.00, nor is there any accumulation, storage or disposal as
defined in RCRA, of Hazardous Materials on, under or about the Property
which violates any Environmental Law. The Property appears neither on the
National Priorities List (as defined under CERCLA) nor on any state listing
which identifies sites for remedial clean-up or investigatory actions.
There are no environmental liens on the Property.
D. FACILITIES AND PROGRAMS. The Property has adequate water supply, sewage
and waste disposal facilities or will have such facilities upon completion
of contemplated improvements. The appropriate operations and maintenance
programs, contingency and emergency plans for environmental hazards are in
place.
E. The answers set forth in the CUSTOMER ENVIRONMENTAL QUESTIONNAIRE (if
required to be completed) as provided to Bank are incorporated by reference
and such responses are accurate and complete in all material respects.
3. AFFIRMATIVE COVENANTS. Borrower and Guarantor shall:
A. Do all things necessary to assure that the representations, warranties
and covenants set forth in this certificate are met, and continue to be
accurate and correct, in all material respects.
B. Assure that all individuals or entities acting on their behalf comply
with the obligations under this Certificate.
-49-
C. Conduct periodic reviews of the use of the Property and the activities
on it to assure compliance with the obligations under this Certificate.
D. Promptly (i) notify Bank in writing of any occurrence, development or
claim, suit, administrative action, permit revocation or denial filed by or
against the Borrower or Guarantor that would cause any representation,
warranty or covenant set forth in this Certificate to be incorrect in any
material respect, and (ii) take steps reasonably necessary to mitigate the
effect of such occurrence, development or claim, suit or administrative
action.
E. Promptly provide Bank with all information, questionnaires, copies of:
environmental compliance reports, policies, handbooks, litigation audit
letters, government inspection reports and environmental assessment
reports, whenever prepared, that are requested by Bank in accordance with
Bank's environmental due diligence procedures.
F. Keep or cause the Property to be kept free of Hazardous Materials except
to the extent that such Hazardous Materials are stored and/or used in
compliance with all applicable Environmental Laws in all material respects;
and, without limiting the foregoing, will not cause or permit the Property
to be used to generate, manufacture, refine, transport, treat, store,
handle, dispose of, transfer, produce, or process Hazardous Materials,
except in compliance with all applicable Environmental Laws in all material
respects; and will not cause or permit, as a result of any intentional or
unintentional act or omission on the part of Borrower or Guarantor or any
tenant, subtenant or occupant, a release, spill, leak or emission of
Hazardous Materials on, under or about the Property or onto any other
contiguous property in any material violation of Environmental Laws.
G. Conduct and complete all investigations, environmental site assessments,
sampling, and testing, and all remedial and removal actions reasonably
necessary to clean up and remove all Hazardous Materials on, under, or
about the Property as required by all applicable Environmental Laws and in
accordance with the orders and directives of all federal, state and local
governmental authorities. Such testing, remedial and removal actions shall
include those required by federal and state regulations governing
underground storage tank systems.
Borrower and Guarantor shall demonstrate their compliance with this
requirement to the satisfaction of Bank. To the extent that written
documentation such as reports, studies, or sampling results from the
investigation(s) has been or is produced, Borrower and Guarantor shall
provide copies of such documentation to Bank. Borrower or Guarantor shall
demonstrate to Bank to its satisfaction that the value of any Property
pledged or mortgaged to Bank is not materially adversely affected by
releases, spills or discharges occurring subsequent to the initial
extension of credit. If Borrower or Guarantor fails to conduct an
environmental assessment to the satisfaction of Bank as required under this
Section 3.G., or fails to provide Bank with copies of the written
documentation referenced above, then Bank may at its option and at the
expense of Borrower or Guarantor conduct such assessment, without waiver of
its other rights and remedies.
Any such assessment conducted by Bank shall be conducted solely for the
benefit of and to protect the interests of Bank and shall not be relied
upon by Borrower or Guarantor or any third party for any purpose
whatsoever, including but not limited to Borrower's, Guarantor's or any
third party's obligation, if any, to conduct an independent environmental
investigation; provided that a copy of any such assessment shall be
promptly provided to Borrower or Guarantor upon request. By conducting any
such assessment, Bank does not assume any control over the environmental
affairs or operations of Borrower or Guarantor nor assume any obligation or
liability to Borrower or Guarantor or any third party; provided that the
foregoing shall not relieve the Bank from any liability for personal injury
or property damage to the extent caused by the Bank's or its agent's
conducting
-50-
any such assessment.
4. NEGATIVE COVENANT. Borrower and Guarantor shall not take any action or allow
the Property to be used in such a manner that any representation, warranty or
covenant set forth in this Certificate becomes inaccurate, incorrect or results
in noncompliance in any material respect.
5. DEFAULT AND REMEDIES. If any of the following events occur:
A. The Borrower or Guarantor makes any materially incorrect or misleading
representation, warranty or certification to Bank or provides materially
incorrect information to Bank in connection with this Certificate;
B. The Borrower or Guarantor defaults under the terms of this Certificate;
then, except to the extent this provision is expressly modified by language
in the loan documents referring to this Certificate, whether or not Bank
has made demand, the underlying credit facilities shall terminate and all
borrowings under them shall become due immediately at Bank's option upon
thirty (30) days' notice by Bank to the Borrower unless such default is
cured within such 30-day period.
6. RIGHT OF ENTRY. Borrower and Guarantor grant Bank, its employees, agents and
contractors the right to enter the Property for the purpose of conducting at the
expense of Borrower, an environmental site assessment, sampling and testing and
remedial, removal and other actions necessary to investigate or clean up and
remove Hazardous Materials on, under or about the Property in accordance with
Section 3.G. above, prior to or during any loan workout, liquidation of
collateral, mortgage foreclosure, expiration of a redemption period, abandonment
of the Property or any environmental litigation brought against Bank regarding
the Property. Bank shall notify Borrower or Guarantor prior to its entry and
shall use its best efforts to not disturb any ongoing operations on the
Property. Borrower or Guarantor at the request of Bank shall execute any
consultant contracts, waste manifests or notices necessary to effectuate the
terms of this section. Any expenditures by Bank for activities performed by Bank
in accordance with this section shall be considered an additional advance under
the loan or extension of credit.
7. INDEMNIFICATION. Subject to the limitations set forth below, Borrower and
Guarantor shall defend, indemnify and hold harmless Bank, its successors and
assigns, employees, agents, officers and directors, from and against any claims,
demands, penalties, fines, liabilities, settlements, damages, reasonable costs
or expenses, including, without limitation, reasonable attorney's and
consultant's fees, investigation and laboratory fees, court costs and litigation
expenses, known or unknown, contingent or otherwise, arising out of or in any
way related to (a) the presence, disposal, release or threatened release of any
Hazardous Materials on, over, under, from or affecting the Property or the soil,
water, vegetation, buildings, personal property, persons or animals; (b) any
personal injury (including wrongful death) or property damage (real or personal)
arising out of or related to such Hazardous Materials on the Property; (c) any
claim, demand, notice or lawsuit brought or threatened, settlement reached or
government order relating to such Hazardous Materials with respect to the
Property or regulated wetlands on the Property; and/or (d) any violation of
laws, orders, regulations, requirements or demands of government authorities,
which are based upon or in any way related to such Hazardous Materials used on
the Property or regulated wetlands on the Property. The indemnity obligations
under this paragraph are specifically limited as follows:
(i) Borrower and Guarantor shall have no indemnity obligations with respect
to Hazardous Materials that are first introduced, as evidenced by reliable
documentation, to the Property or any part of the Property subsequent to
the date that Borrower's and Guarantor's interest in and possession of the
Property or any part of the Property shall have ended or have been fully
terminated by foreclosure of any mortgage held by Bank or acceptance by
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Bank of a deed in lieu of foreclosure or other collateral liquidation
procedure; and
(ii) Borrower and Guarantor shall have no indemnity obligation with respect
to Hazardous Materials that are first introduced, as evidenced by reliable
documentation, to the Property solely by Bank, its successors or assigns;
and
(iii) Borrower and Guarantor shall have no indemnity obligation with
respect to any personal injury or property damage to the extent caused by
Bank's (or its agent's) conducting any environmental assessment, sampling,
testing or remedial or removal actions contemplated by Section 3.G. or
Section 6.
Borrower and Guarantor agree that in the event any mortgage held by Bank is
foreclosed or Borrower or Guarantor tender a deed in lieu of foreclosure,
Borrower and Guarantor shall deliver the Property to Bank free of any and all
Hazardous Materials which are then required to be removed (whether over time or
immediately) pursuant to applicable Environmental Laws affecting the Property.
Notwithstanding the provisions of Section 8 below, the provisions of this
Section 7 shall be in addition to any and all other obligations and liabilities
Borrower and Guarantor may have to Bank under the Indebtedness, any loan
document, and in common law, and shall survive (a) the loan closing (b) the
repayment of all sums due for the Indebtedness, (c) the satisfaction of all of
the other obligations of Borrower or Guarantor under any loan document, (d) the
discharge of any mortgage held by Bank, and (e) the foreclosure of any mortgage
held by Bank or acceptance of a deed in lieu of foreclosure. The indemnity
provisions of this Section shall only apply to any demand or action commenced
against (a) any owner or operator of the Property, or (b) Bank in which any
interest of Bank is threatened or any claim, demand, notice or action is made or
filed against Bank.
8. MISCELLANEOUS. Except as otherwise specifically provided in this certificate,
all of the representations, warranties and covenants set forth in the
certificate shall be continuing and shall survive the execution of the
certificate until all of the Indebtedness is fully paid to Bank and Borrower's
and Guarantor's obligations to Bank in connection with the Indebtedness are
fully performed.
To be signed by the Guarantor if the Property is titled or held in the name of
the Guarantor or operated by the Guarantor.
This Environmental Certificate is executed as of January 31, 2002.
BORROWER:
CHILDTIME CHILDCARE, INC.
-------------------------
By:
--------------------------------------------
Its:
--------------------------------------------
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GUARANTOR:
Childtime Learning Centers, Inc.
--------------------------------
By:
--------------------------------------------
Its:
--------------------------------------------
Childtime Childcare-PMC, Inc.
-----------------------------
By:
--------------------------------------------
Its:
--------------------------------------------
Childtime Childcare-Michigan, Inc.
----------------------------------
By:
--------------------------------------------
Its:
--------------------------------------------
-53-
SCHEDULE A
SCHEDULE OF EXCEPTIONS AND PERMITS
INITIALS: Bank ____________________ Borrower: ____________________
____________________
Guarantor: ____________________
____________________
____________________
-54-
EXHIBIT B
REVOLVING CREDIT NOTE
$17,500,000 January __, 0000
Xxxxxxx, Xxxxxxxx
FOR VALUE RECEIVED, CHILDTIME CHILDCARE, INC., an Illinois corporation
(the "Company"), hereby promises to pay to the order of BANK ONE, MICHIGAN, a
Michigan banking corporation f/k/a NBD Bank (the "Bank"), at the principal
banking office of the Bank in lawful money of the United States of America and
in immediately available funds, the principal sum of Seventeen Million Five
Hundred Thousand Dollars ($17,500,000), or such lesser amount as is recorded on
the schedule attached hereto, or in the books and records of the Bank, on the
Termination Date; and to pay interest on the unpaid principal balance hereof
from time to time outstanding, in like money and funds, for the period from the
date hereof until the Revolving Credit Loans evidenced hereby shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement
referred to below.
The Bank is hereby authorized by the Company to record on the schedule
attached to this Revolving Credit Note, or on its books and records, the date,
amount and type of each Revolving Credit Loan, the duration of the related
Interest Period (if applicable), the amount of each payment or prepayment of
principal thereon and the other information provided for on such schedule, which
schedule or such books and records, as the case may be, shall constitute prima
facie evidence of the information so recorded, provided, however, that any
failure by the Bank to record any such information shall not relieve the Company
of its obligation to repay the outstanding principal amount of such Revolving
Credit Loans, all accrued interest thereon and any amount payable with respect
thereto in accordance with the terms of this Revolving Credit Note and the
Credit Agreement.
The Company and each endorser or guarantor hereof waives demand,
presentment, protest, diligence, notice of dishonor and any other formality in
connection with this Revolving Credit Note. Should the indebtedness evidenced by
this Revolving Credit Note or any part thereof be collected in any proceeding or
be placed in the hands of attorneys for collection, the Company agrees to pay,
in addition to the principal, interest and other sums due and payable hereon,
all costs of collecting this Revolving Credit Note, including attorneys' fees
and expenses.
This Revolving Credit Note evidences one or more Revolving Credit Loans
made under the Amended and Restated Credit Agreement, dated as of January 31,
2002 (as it may be further amended or modified from time to time, the "Credit
Agreement"), by and between the Company and the Bank, to which reference is
hereby
-55-
made for a statement of the circumstances under which this Revolving Credit Note
is subject to prepayment and under which its due date may be accelerated and for
a description of the collateral and security securing this Revolving Credit
Note. Capitalized terms used but not defined in this Revolving Credit Note shall
have the respective meanings assigned to them in the Credit Agreement.
This Revolving Credit Note is issued in substitution and replacement
for the Revolving Credit Note in the principal amount of $10,000,000 dated July
21, 2000 previously issued by the Company to the Bank under the Credit Agreement
dated as of February 1, 1996, as amended by letter agreements dated as of April
1, 1999, May 18, 1999 and May 30, 2000, by a Third Amendment to Credit Agreement
dated as of December 6, 1999, by a Fourth Amendment to Credit Agreement dated as
of July 21, 2000 and by the Fifth Amendment to Credit Agreement and Temporary
Waiver dated as of November 26, 2001, which is now amended and restated by the
Credit Agreement (the "Existing Note"). This Revolving Credit Note shall
evidence, and the Company hereby promises to pay, in addition to the principal
hereof and all accrued interest thereon, all accrued but unpaid interest on the
Existing Note.
This Revolving Credit Note is made under, and shall be governed by and
construed in accordance with, the laws of the State of Michigan in the same
manner applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
CHILDTIME CHILDCARE, INC.
By:
-----------------------------------
Its:
------------------------------
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Schedule to Revolving Credit Note, dated
January __, 2002, made by Childtime Childcare, Inc.
in favor of Bank One, Michigan.
Principal
Amount
Principal Interest Paid, Principal
Transaction Amount of Interest Period (if Prepaid or Balance Notation
Date Loan Rate* applicable) Converted Outstanding Made by
----------- --------- -------- ----------- ---------- ----------- --------
-------------------------
* E - Eurodollar Rate
F - Floating Rate
-57-
EXHIBIT C
REQUEST FOR ADVANCE
Bank One, Michigan _____________, ____
00000 Xxxxxxxxxxxx Xxxxxxx
XX0-0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Childtime Childcare, Inc., an Illinois corporation (the "Company"),
hereby requests a [Revolving Credit Loan] [Letter of Credit Advance] pursuant to
Section 2.4 of the Amended and Restated Credit Agreement, dated as of January
31, 2002 (the "Credit Agreement"), between the Company and you, in the amount of
$__________, to be [made] [issued] on __________, _____, and to be evidenced by
the Company's Revolving Credit Note]. Capitalized terms used but not defined
herein shall have the respective meanings assigned to them in the Credit
Agreement.
[Such Loan shall be made as a __________ [insert either Eurodollar Rate
Loan or Floating Rate Loan] and the initial Interest Period, if such requested
Loan is a Eurodollar Rate Loan, shall be ____________ [insert permitted Interest
Period]].
[Such Letter of Credit Advance shall be made by issuance by the Bank of
its Letter of Credit for the account of the Company in the maximum amount of
$_____________ to and for the benefit of __________________ with a stated expiry
date of _______________, ____, and containing the further terms and conditions
set forth in the attached letter of credit application of the Bank.]
In support of this request, the Company hereby represents and warrants
to the Bank that:
1. The representations and warranties contained in Article IV of the
Credit Agreement are true and correct on and as of the date hereof, and will be
true and correct on the date such Advance is made (both before and after such
Advance is made), as if such representations and warranties were made on and as
of such dates.
2. No Event of Default, and no event or condition which might become
such an Event of Default with notice or with lapse of time, or both, has
occurred and is continuing or will exist on the date of such Advance is made
(whether before or after such Advance is made).
Acceptance of the proceeds of such Advance by the Company shall be deemed to be
a further representation and warranty that the representations and warranties
made herein are true and correct at the time such proceeds are disbursed.
CHILDTIME CHILDCARE, INC.
By____________________________________
Its_________________________________
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EXHIBIT D
REQUEST FOR CONTINUATION OR CONVERSION OF LOAN
Bank One, Michigan _____________, ____
00000 Xxxxxxxxxxxx Xxxxxxx
XX0-0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Childtime Childcare, Inc., an Illinois corporation (the "Company"),
hereby requests that $__________ of the principal amount of the Revolving Credit
Loan originally made on __________ __, ____, which Revolving Credit Loan is
currently a _________________ [insert type of Loan], be continued as or
converted to, as the case may be, a _________________ [insert type of Loan
requested] on _______________, _____. If such Revolving Credit Loan is requested
to be converted to a Eurodollar Rate Loan, the Company hereby elects an Interest
Period for such Revolving Credit Loan of _____________ [insert permitted
Interest Period].
Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Amended and Restated Credit Agreement, dated as
of January 31, 2002, between the Company and you.
CHILDTIME CHILDCARE, INC.
By:________________________
Its:______________________
-59-
