EXECUTION COPY
EX-10.12
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CREDIT AGREEMENT
dated as of
May 11, 1998
among
LA PETITE ACADEMY, INC.,
as Borrower
LPA HOLDING CORP.,
as Parent
The Lenders Party Hereto,
NATIONSBANK, N.A.,
as Administrative Agent, Documentation Agent
and Collateral Agent
and
THE CHASE MANHATTAN BANK,
as Syndication Agent
---------------------------
CHASE SECURITIES INC.,
as Arranger
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
SECTION 1.01. Defined Terms.................................................2
SECTION 1.02. Classification of Loans and Borrowings.......................22
SECTION 1.03. Terms Generally..............................................23
SECTION 1.04. Accounting Terms; GAAP.......................................23
ARTICLE II
The Credits
SECTION 2.01. Commitments..................................................23
SECTION 2.02. Loans and Borrowings.........................................23
SECTION 2.03. Requests for Borrowings......................................24
SECTION 2.04. Swingline Loans..............................................25
SECTION 2.05. Letters of Credit............................................26
SECTION 2.06. Funding of Borrowings........................................29
SECTION 2.07. Interest Elections...........................................29
SECTION 2.08. Termination and Reduction of Commitments.....................30
SECTION 2.09. Repayment of Loans, Evidence of Debt.........................31
SECTION 2.10. Amortization of Term Loans...................................32
SECTION 2.11. Prepayment of Loans..........................................33
SECTION 2.12. Fees.........................................................34
SECTION 2.13. Interest.....................................................35
SECTION 2.14. Alternate Rate of Interest...................................35
SECTION 2.15. Increased Costs..............................................36
SECTION 2.16. Break Funding Payments.......................................36
SECTION 2.17. Taxes........................................................37
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs..38
SECTION 2.19. Mitigation Obligations; Replacement of Lenders...............39
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers.........................................40
SECTION 3.02. Authorization; Enforceability................................40
SECTION 3.03. Governmental Approvals; No Conflicts.........................40
SECTION 3.04. Financial Condition; No Material Adverse Change..............41
SECTION 3.05. Properties...................................................41
SECTION 3.06. Litigation and Environmental Matters.........................42
SECTION 3.07. Compliance with Laws and Agreements..........................42
SECTION 3.08. Investment and Holding Company Status........................42
SECTION 3.09. Taxes........................................................42
SECTION 3.10. ERISA........................................................43
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SECTION 3.11. Disclosure...................................................43
SECTION 3.12. Subsidiaries.................................................43
SECTION 3.13. Insurance....................................................43
SECTION 3.14. Labor Matters................................................43
SECTION 3.15. Solvency.....................................................44
SECTION 3.16. Security Documents...........................................44
SECTION 3.17. Federal Reserve Regulations..................................44
SECTION 3.18. Year 2000 Compliance.........................................45
ARTICLE IV
Conditions
SECTION 4.01. Effective Date...............................................45
SECTION 4.02. Each Credit Event............................................48
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other Information...................49
SECTION 5.02. Notices of Material Events...................................50
SECTION 5.03. Information Regarding Collateral.............................50
SECTION 5.04. Existence; Conduct of Business...............................51
SECTION 5.05. Payment of Obligations.......................................51
SECTION 5.06. Maintenance of Properties....................................51
SECTION 5.07. Insurance....................................................51
SECTION 5.08. Casualty and Condemnation....................................51
SECTION 5.09. Books and Records; Inspection and Audit Rights...............52
SECTION 5.10. Compliance with Laws.........................................52
SECTION 5.11. Use of Proceeds and Letters of Credit........................52
SECTION 5.12. Additional Subsidiaries......................................52
SECTION 5.13. Further Assurances...........................................52
SECTION 5.14. Real Estate..................................................53
SECTION 5.15. Existing Convertible Debentures..............................53
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness; Certain Equity Securities......................53
SECTION 6.02. Liens........................................................55
SECTION 6.03. Fundamental Changes..........................................56
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions....56
SECTION 6.05. Asset Sales..................................................58
SECTION 6.06. Sale and Lease-Back Transactions.............................58
SECTION 6.07. Hedging Agreements...........................................59
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness........59
SECTION 6.09. Transactions with Affiliates.................................60
SECTION 6.10. Restrictive Agreements.......................................60
SECTION 6.11. Amendment of Material Documents..............................61
SECTION 6.12. Capital Expenditures.........................................61
SECTION 6.13. Leverage Ratio...............................................62
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SECTION 6.14. Consolidated Fixed Charge Coverage Ratio.....................62
SECTION 6.15. Minimum Consolidated EBITDA..................................62
SECTION 6.16. Changes in Fiscal Periods....................................62
ARTICLE VII
Events of Default ...........................................62
ARTICLE VIII
The Administrative Agent.....................................65
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices......................................................66
SECTION 9.02. Waivers; Amendments..........................................67
SECTION 9.03. Expenses; Indemnity; Damage Waiver...........................68
SECTION 9.04. Successors and Assigns.......................................69
SECTION 9.05. Survival.....................................................71
SECTION 9.06. Counterparts; Integration; Effectiveness.....................71
SECTION 9.07. Severability.................................................72
SECTION 9.08. Right of Set-off.............................................72
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process...72
SECTION 9.10. Waiver of Jury Trial.........................................72
SECTION 9.11. Headings.....................................................73
SECTION 9.12. Confidentiality..............................................73
SECTION 9.13. Interest Rate Limitation.....................................73
SCHEDULES:
Schedule 1.01(a) -- Mortgaged Properties
Schedule 2.01 -- Commitments
Schedule 3.05 -- Properties
Schedule 3.06 -- Disclosed Matters
Schedule 3.07 -- Compliance with Laws and Agreements
Schedule 3.12 -- Subsidiaries
Schedule 3.13 -- Insurance
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.09 -- Transactions with Affiliates
Schedule 6.10 -- Existing Restrictions
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Opinion of Borrower's Counsel
Exhibit C -- Form of Opinion of Local Counsel
Exhibit D -- Form of Parent Guarantee Agreement
Exhibit E -- Form of Subsidiary Guarantee Agreement
Exhibit F -- Form of Indemnity, Subrogation and Contribution Agreement
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Exhibit G -- Form of Pledge Agreement
Exhibit H -- Form of Security Agreement
CREDIT AGREEMENT dated as of May 11, 1998,
among LA PETITE ACADEMY, INC. (the "Borrower"), a
Delaware corporation, LPA HOLDING CORP. ("Holdings"),
a Delaware corporation, the Lenders party hereto,
NATIONSBANK, N.A., as Administrative Agent (such term
and each other capitalized term used but not defined
herein having the meaning provided in Article I),
Documentation Agent and Collateral Agent, and THE
CHASE MANHATTAN BANK, as Syndication Agent.
Pursuant to an Agreement and Plan of Merger (the "Merger Agreement") dated
as of March 17, 1998, between (a) LPA Investment LLC ("Investor"), a Delaware
limited liability company owned, through its affiliate, CB Capital Investors,
L.P., by Chase Capital Partners ("Sponsor") and certain other investors (such
investors, together with Sponsor, the "Investor Group"), and (b) Holdings, LPA
Acquisition Corp. ("Sub"), a Delaware corporation that is a wholly owned
subsidiary of Investor, will be merged (the "Merger") with and into Holdings,
with Holdings being the surviving corporation in the Merger.
In connection with the Merger, (a) the Investor Group will contribute,
directly or indirectly, an aggregate amount of not less than $110,000,000 (less
the amount of Roll-Over Equity (as defined below)) in cash (the "Equity
Contribution") to Sub in exchange for the issuance (i) to Investor of all the
outstanding capital stock of Sub and (ii) to the Investor Group of the Preferred
Stock, (b) the holders of shares of Common Stock that are outstanding
immediately prior to the Merger, subject to clause (d) of this paragraph, will
be entitled to receive in the Merger an aggregate amount not to exceed (i)
$283,000,000 in cash less (ii) amounts payable in connection with the
Transactions described in clauses (c) and (e) of this paragraph and (iii)
subject to certain other adjustments, (c) each of (i) the options to purchase
shares of Common Stock (the "Options"), subject to clause (d) of this paragraph,
and (ii) the shares of Existing Holdings Preferred Stock that are outstanding
immediately prior to the Merger will be canceled and each holder thereof will be
entitled to receive cash in an amount determined in accordance with the terms of
the Merger Agreement, (d) Vestar Capital Partners, Inc., directly or indirectly,
together with existing management of the Borrower, will continue to hold
sufficient Common Stock and Options to result in the Transactions being treated
as a recapitalization for accounting purposes ("Roll-Over Equity"), (e) the
Borrower will (i) defease all its issued and outstanding 12.125% Subordinated
Exchange Debentures due 2003 (the "Existing Exchange Debentures"), (ii) defease
all its issued and outstanding 95/8% Senior Secured Notes due 2001 (the
"Existing Senior Notes") in an aggregate principal amount of $85,000,000, (iii)
repurchase or redeem all its issued and outstanding Convertible Debentures due
2011 (the "Existing Convertible Debentures") in an aggregate principal amount of
approximately $900,000 and (iv) repay all amounts outstanding, if any, under the
Amended and Restated Credit Agreement among the Borrower, the lenders named
therein and Bankers Trust Company, as administrative agent, and Mercantile Bank,
as co-agent (the "Existing Credit Agreement"), (f) the Borrower will obtain
Loans hereunder, (g) the Borrower will issue not less than $145,000,000 in
aggregate principal amount of its Senior Unsecured Notes in a public offering or
in a Rule 144A or other private placement and (h) fees and expenses incurred in
connection with the Transactions that are the responsibility of Holdings or the
Borrower in an aggregate amount not to exceed $16,500,000 will be paid (the
"Transaction Costs"). The transactions described in this paragraph, together
with the Merger, are collectively referred to herein as the "Transactions".
The Borrower has requested (a) the Lenders to extend credit in the form of
Term Loans to the Borrower on the Effective Date in an aggregate principal
amount of $40,000,000, (b) the Lenders to extend credit in the form of Revolving
Loans to the Borrower at any time and from time to time prior to the Maturity
Date, in an aggregate principal amount at any time outstanding not in excess of
the difference between $25,000,000 and the Revolving Exposure at such time, (c)
the Issuing Bank to issue Letters of Credit at any time and from time to time
prior
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to the Maturity Date, in an aggregate stated amount at any time outstanding not
in excess of the lesser of (i) $10,000,000 and (ii) the difference between
$25,000,000 and the Revolving Exposure at such time and (d) the Swingline Lender
to make Swingline Loans to the Borrower at any time and from time to time prior
to the Maturity Date, in an aggregate principal amount at any time outstanding
not in excess of the lesser of (i) $5,000,000 and (ii) the difference between
$25,000,000 and the Revolving Exposure at such time.
The proceeds of the Term Facility will be used, together with (a) initial
borrowings under the Revolving Facility not to exceed $2,000,000, (b) the net
proceeds of the issuance of the Senior Unsecured Notes and (c) the proceeds from
the Equity Contribution, solely (i) to pay the cash consideration payable in
accordance with the Merger Agreement (including the cash consideration payable
to holders of Options and Existing Holdings Preferred Stock), (ii) to defease
the Existing Exchange Debentures (including the payment of any premiums in
connection therewith), (iii) to defease the Existing Senior Notes (including the
payment of any premiums in connection therewith), (iv) to repurchase or redeem
the Existing Convertible Debentures (including the payment of any premiums in
connection therewith), (v) to repay all principal, interest, fees and other
amounts, if any, outstanding under the Existing Credit Agreement and (vi) to pay
the Transaction Costs. The proceeds of loans under the Revolving Facility (other
than as set forth above) will be used by the Borrower for general corporate
purposes. Letters of Credit and Swingline Loans will be used by the Borrower for
general corporate purposes.
The Lenders and the Swingline Lender are willing to extend such credit to
the Borrower and the Issuing Bank is willing to issue Letters of Credit for the
account of the Borrower, in each case on the terms and subject to the conditions
set forth herein. Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"Academy" means any facility primarily providing for the education, care or
development of children, or part of such facility (including related office
buildings, parking lots or other related real property), now or hereafter owned,
leased or operated by the Borrower or any of its Subsidiaries, in each case
including the land on which such facility is located, all buildings and other
improvements thereon, including leasehold improvements, all fixtures, furniture,
equipment, inventory and other tangible personal property located in or used in
connection with such facility and all accounts receivable and other intangible
personal property (other than motor vehicles) related to the ownership, lease or
operation of such facility, all whether now existing or hereafter acquired.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.
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"Administrative Agent" means NationsBank, N.A. in its capacity as
Administrative Agent with respect to this Agreement and any successor appointed
pursuant hereto.
"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agents" means the collective reference to the Administrative Agent, the
Documentation Agent, the Collateral Agent and the Syndication Agent.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively,
without notice to the Borrower.
"Applicable Percentage" means, with respect to any Revolving Lender, the
percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"Applicable Rate" means, for any day with respect to any ABR Loan or
Eurodollar Loan, or with respect to the commitment fees payable hereunder, as
the case may be, the applicable rate per annum set forth below under the caption
"ABR Spread", "Eurodollar Spread" or "Commitment Fee Rate", as the case may be,
based upon the Leverage Ratio as of the relevant determination date, provided
that until the delivery to the Administrative Agent of Holdings' consolidated
financial statements for the first full fiscal quarter ending after the
Effective Date, the "Applicable Rate" shall be the applicable rate per annum set
forth below in Category 1:
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ABR Eurodollar Commitment Fee
Leverage Ratio: Spread Spread Rate
--------------- ------ ------ ----
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Category 1
Greater than or equal to
5.25 to 1.00 2.25% 3.25% 0.500%
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Category 2
Greater than or equal to
5.00 to 1.00 and
less than 5.25 to 1.00 2.00% 3.00% 0.500%
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Category 3
Greater than or equal to
4.25 to 1.00 and
less than 5.00 to 1.00 1.75% 2.75% 0.500%
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ABR Eurodollar Commitment Fee
Leverage Ratio: Spread Spread Rate
--------------- ------ ------ ----
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Category 4
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Less than 4.25 to 1.00 1.50% 2.50% 0.375%
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For purposes of the foregoing, (a) the Leverage Ratio shall be determined
as of the end of each fiscal quarter of Holdings' fiscal year based upon
Holdings' consolidated financial statements delivered pursuant to Section
5.01(a) or (b) and (b) each change in the Applicable Rate resulting from a
change in the Leverage Ratio shall be effective during the period commencing on
and including the date of delivery to the Administrative Agent of such
consolidated financial statements indicating such change and ending on the date
immediately preceding the effective date of the next such change, provided that
the Leverage Ratio shall be deemed to be in Category 1 (i) at any time that an
Event of Default has occurred and is continuing or (ii) if the Borrower fails to
deliver the consolidated financial statements required to be delivered by it
pursuant to Section 5.01(a) or (b), during the period from the expiration of the
time for delivery thereof until such consolidated financial statements are
delivered.
"Applicable Rate Determination Date" has the meaning assigned to such term
in the definition of the term "Applicable Rate".
"Assessment Rate" means, for any day, the annual assessment rate in effect
on such day that is payable by a member of the Bank Insurance Fund classified as
"well-capitalized" and within supervisory subgroup "B" (or a comparable
successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation for insurance
by such Corporation of time deposits made in dollars at the offices of such
member in the United States, provided that if, as a result of any change in any
law, rule or regulation, it is no longer possible to determine the Assessment
Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall
be determined by the Administrative Agent to be representative of the cost of
such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America.
"Borrower" has the meaning assigned to such term in the introductory
paragraph of this Agreement.
"Borrowing" means (a) Loans of the same Class and Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect, or (b) a Swingline Loan.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City or Charlotte, North Carolina are
authorized or
5
required by law to remain closed, provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Capital Expenditures" means, for any period, without duplication, (a) the
additions to property, plant and equipment and other capital expenditures of the
Borrower and its consolidated Subsidiaries that are (or would be) set forth in a
consolidated statement of cash flows of the Borrower for such period prepared in
accordance with GAAP and (b) Capital Lease Obligations (other than any Capital
Lease Obligation resulting from a Permitted New Academy Sale Leaseback) incurred
by the Borrower and its consolidated Subsidiaries during such period, provided
that the term "Capital Expenditures" shall not include, for purposes of Section
6.12 and 6.14, expenditures set forth in clauses (i) through (iv) below, and for
purposes of the definition of the term "Excess Cash Flow", expenditures set
forth in clauses (i) and (ii) below: (i) expenditures made in connection with
the repair, replacement or restoration of assets (A) to the extent financed from
insurance proceeds paid on account of the loss of or damage to the assets being
repaired, replaced or restored or (B) with awards of compensation arising from
the taking by eminent domain or condemnation of the assets being replaced, (ii)
expenditures in connection with the reinvestment of Net Proceeds of any asset
sale within eighteen months after receipt thereof as contemplated by the
definition of the term "Net Proceeds", (iii) expenditures that constitute a
Permitted Acquisition and (iv) expenditures made in connection with the
construction of any Academy if the Borrower or any of its Subsidiaries intends
to consummate a Permitted New Academy Sale Leaseback with respect to such
Academy within twelve months after receipt of the Certificate of Occupancy with
respect thereto, provided that, with respect to this clause (iv), (A) if the
Borrower or any of its Subsidiaries fails to consummate a Permitted New Academy
Sale Leaseback with respect to such Academy within such twelve-month period, the
entire amount of such expenditures shall be deemed to be a Capital Expenditure
as of the expiration of such twelve-month period and (B) if the amount of such
expenditures exceeds the Net Proceeds of such Permitted New Academy Sale
Leaseback, the entire amount of such excess shall be deemed to be a Capital
Expenditure as of the date of receipt of such Net Proceeds.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. ss. 9601 et seq.
"Certificate of Designations" means the Certificate of Designations,
Preferences and Rights of the Preferred Stock, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with Section
6.11.
"Change of Control" means an event or series of events by which
(a) prior to any initial public offering of equity interests in Holdings:
(i) Investor or an entity controlled by Sponsor or Investor ceases to
be the "beneficial owner" (as defined in Rule 13d-3 and 13d-5 under the
Securities Exchange Act), directly or indirectly, of at least 40% (or 33%
if the reduction below 40% is attributable solely to dilution as a result
of the issuance of stock in connection with a Permitted Acquisition) of the
capital stock or other equity interests of Holdings ordinarily having the
right to vote at an election of directors;
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(ii) Holdings ceases to be the "beneficial owner" (as defined in Rule
13d-3 and 13d-5 under the Securities Exchange Act), directly or indirectly,
of 100% of the combined voting power of the capital stock or other equity
interests of the Borrower ordinarily having the right to vote at an
election of directors;
(iii) Investor or an entity controlled by Sponsor or Investor,
together with members of management of Holdings and its subsidiaries, cease
to be the "beneficial owner" (as defined in Rule 13d-3 and 13d-5 under the
Securities Exchange Act), directly or indirectly, of at least 51% of the
capital stock or other equity interests of Holdings ordinarily having the
right to vote at an election of directors;
(iv) any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act) becomes the "beneficial owner" (as
defined in Rule 13d-3 and 13d-5 under the Securities Exchange Act, except
that for purposes of this clause (iv), such person or group shall be deemed
to have "beneficial ownership" of all shares that it has the right to
acquire whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of an equal percentage or greater
percentage of the capital stock or other equity interests of Holdings
ordinarily having the right to vote at an election of directors than that
percentage beneficially owned by Investor or an entity controlled by
Sponsor or Investor;
(v) Continuing Directors shall not constitute a majority of the Board
of Directors of Holdings; or
(vi) there shall occur a Change of Control (as defined in the Senior
Unsecured Notes Indenture); and
(b) after any initial public offering of equity interests in Holdings:
(i) Investor or an entity controlled by Sponsor or Investor ceases to
be the "beneficial owner" (as defined in Rule 13d-3 and 13d-5 under the
Securities Exchange Act), directly or indirectly, of at least 30% (or 25%
if the reduction below 30% is attributable solely to dilution as a result
of the issuance of stock in connection with a Permitted Acquisition) of the
capital stock or other equity interests of Holdings ordinarily having the
right to vote at an election of directors;
(ii) Holdings ceases to be the "beneficial owner" (as defined in Rule
13d-3 and 13d-5 under the Securities Exchange Act), directly or indirectly,
of 100% of the combined voting power of the capital stock or other equity
interests of Investor ordinarily having the right to vote at an election of
managers;
(iii) Investor or an entity controlled by Sponsor or Investor,
together with members of management of Holdings and its Subsidiaries, cease
to be the "beneficial owner" (as defined in Rule 13d-3 and 13d-5 under the
Securities Exchange Act), directly or indirectly, of at least 35% on a
fully diluted basis of the capital stock or other equity interests of
Holdings ordinarily having the right to vote at an election of directors;
(iv) any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act) becomes the "beneficial owner" (as
defined in Rule 13d-3 and 13d-5 under the Securities Exchange Act, except
that for purposes of this clause (iv), such person or group shall be deemed
to have "beneficial ownership" of all shares that it has the right to
acquire whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of an equal or greater percentage
of the capital stock or other equity interests of Holdings ordinarily
having the right to vote
7
at an election of directors than that percentage beneficially owned by
Investor or an entity controlled by Sponsor or Investor;
(v) Continuing Directors shall not constitute a majority of the Board
of Directors of Holdings; or
(vi) there shall occur a Change of Control (as defined in the Senior
Unsecured Notes Indenture).
"Charges" has the meaning assigned to such term in Section 9.13.
"Change in Law" means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender or the Issuing Bank
(or, for purposes of Section 2.15(b), by any lending office of such Lender or by
such Lender's or the Issuing Bank's holding company, if any)
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term
Loans or Swingline Loans and, when used in reference to any Commitment, refers
to whether such Commitment is a Revolving Commitment or Term Commitment.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means any and all "Collateral" as defined in any applicable
Security Document.
"Collateral Agent" means the "Collateral Agent" as defined in the Security
Agreement.
"Commitment" means a Revolving Commitment or Term Commitment, or any
combination thereof (as the context requires).
"Common Stock" means common stock, par value $0.01 per share, of Holdings.
"Consolidated EBITDA" means, for any period, Consolidated Net Income for
such period, plus, without duplication and to the extent deducted from revenues
in determining Consolidated Net Income for such period, the sum of (a) the
aggregate amount of Consolidated Interest Expense for such period, (b) the
aggregate amount of letter of credit fees paid during such period, (c) the
aggregate amount of income tax expense for such period, (d) all amounts
attributable to depreciation, amortization and other non-cash charges or losses
for such period, (e) non-cash expenses resulting from the grant of stock options
to any director, officer or employee or Holdings, the Borrower or any Subsidiary
pursuant to a written plan or agreement, (f) all amounts attributable to
compensation expense related to transaction bonuses incurred in connection with
the Merger, (g) all expenses relating to cash payments made in respect of the
termination of outstanding options in connection with the Transactions, (h) all
amounts attributable to the management and board fees of Vestar Partners and (i)
all extraordinary charges (including expenses related to the management
conference held in September 1997 in an aggregate amount not to exceed
$1,200,000) during such period, and minus, without duplication and to the extent
added to revenues in determining Consolidated Net Income for such period, all
extraordinary gains during such period, all as determined on a consolidated
basis with respect to Holdings, the Borrower and the Subsidiaries in accordance
with GAAP.
8
"Consolidated EBITDAR" means, for any period, the sum of Consolidated
EBITDA for such period and Consolidated Lease Expense for such period.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
period, the ratio of (a) Consolidated EBITDAR for such period to (b)
Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" means, with respect to any period, the sum
(without duplication) of (a) Consolidated Lease Expense (excluding interest
expense, if any, associated with Capital Lease Obligations) for such period, (b)
Consolidated Interest Expense for such period, (c) scheduled principal payments
of Indebtedness made by the Borrower or any Subsidiary to any person other than
the Borrower or any wholly owned Subsidiary of the Borrower during such period,
(d) Capital Expenditures (excluding Capital Expenditures to the extent financed
by third parties) and (e) cash dividends paid by Holdings during such period
(less the amount of any Indebtedness incurred by Holdings or any of its
subsidiaries to fund such dividends) on the Preferred Stock after the fifth
anniversary of the Effective Date as permitted under this Agreement.
"Consolidated Interest Expense" means, for any period, (a) the interest
expense, both expensed and capitalized (including the interest component in
respect of Capital Lease Obligations), accrued by Holdings, the Borrower and the
Subsidiaries during such period and payable in cash (b) net of interest income,
in each case determined on a consolidated basis in accordance with GAAP.
"Consolidated Lease Expense" means, for any period, all payment obligations
of Holdings, the Borrower and the Subsidiaries during such period under
agreements for the lease, hire or use of any real or personal property,
including Capital Lease Obligations and obligations in the nature of operating
leases (including the interest expense, if any, associated therewith), as
determined on a consolidated basis for Holdings, the Borrower and the
Subsidiaries in accordance with GAAP.
"Consolidated Net Income" means, for any period, net income or loss of
Holdings, the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, provided that there shall be
excluded from such net income or loss the income of any Person in which any
other Person (other than the Borrower or any of the Subsidiaries or any director
holding qualifying shares in compliance with applicable law) has a majority
interest, except to the extent of the amount of dividends or other distributions
actually paid to Holdings, the Borrower or any of the Subsidiaries by such
Person during such period.
"Continuing Director" shall mean, at any date, an individual (a) who, as at
such date, has been a member of such Board of Directors for at least the 12
preceding months, (b) who has been nominated to be a member of such Board of
Directors, directly or indirectly, by Sponsor or Persons nominated by Sponsor,
(c) who has been nominated to be a member of such Board of Directors by a
majority of the other Continuing Directors then in office or (d) who has been
nominated to be a member of such Board of Directors pursuant to the terms of the
Stockholders Agreement.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms "Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any event or condition that constitutes an Event of Default
or that upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
9
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"Documentation Agent" means NationsBank, N.A. in its capacity as
Documentation Agent with respect to this Agreement and any successor appointed
pursuant hereto.
"dollars" or "$" refers to lawful money of the United States of America.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Effective Date Academy" means any Academy owned, leased or operated by the
Borrower or any of its Subsidiaries on the Effective Date excluding Academies
for which construction is in progress or for which construction has been
completed but operation has not otherwise commenced as of the Effective Date.
"Environmental Laws" means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by or with any Governmental Authority, relating in
any way to the environment, preservation or reclamation of natural resources,
handling, treatment, storage, disposal, Release or threatened Release of any
Hazardous Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, natural resource damage, costs of
environmental remediation, administrative oversight costs, fines, penalties or
indemnities), of Holdings, the Borrower or any Subsidiary directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"Equity Contribution" has the meaning assigned to such term in the preamble
of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice,
or the receipt by any Multiemployer Plan from the Borrower or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article VII.
"Excess Cash Flow" means, for any period, the sum (without duplication) of:
(a) the Consolidated Net Income for such period, adjusted to exclude
any gains or losses attributable to Prepayment Events or dispositions that
would constitute Prepayment Events but for clauses (a)(i) through (a)(iii)
and clause (b) of the definition of the term "Prepayment Event"; plus
(b) depreciation, amortization and other non-cash charges or losses
deducted in determining such consolidated net income (or loss) for such
period; plus
(c) the sum of (i) the amount, if any, by which Net Working Capital
decreased during such period plus (ii) the amount, if any, by which the
consolidated deferred revenues of Holdings and its consolidated
subsidiaries (not recorded as a current liability) increased during such
period plus (iii) the aggregate principal amount of Capital Lease
Obligations and other Indebtedness incurred during such period to finance
Capital Expenditures and Permitted Acquisitions, to the extent that
mandatory principal payments in respect of such Indebtedness would not be
excluded from clause (f) below when made, plus (iv) the aggregate Net
Proceeds during such period attributable to Permitted New Academy Sale
Leasebacks, except to the extent that such Net Proceeds relate to
expenditures made prior to the last day of the Holdings' 1998 fiscal year
in respect of the Academies that are the subject of such Permitted New
Academy Sale Leasebacks; minus
(d) the sum of (i) any non-cash income or gains included in
determining such consolidated net income (or loss) for such period plus
(ii) the amount, if any, by which Net Working Capital increased during such
period plus (iii) the amount, if any, by which the consolidated deferred
revenues of Holdings and its consolidated subsidiaries (not recorded as a
current liability) decreased during such period; minus
(e) Capital Expenditures for such period; minus
(f) the aggregate principal amount of Indebtedness repaid or prepaid
by Holdings and its consolidated subsidiaries during such period, excluding
(i) Indebtedness in respect of Revolving Loans and Letters of Credit, (ii)
Term Loans prepaid pursuant to Section 2.11(b) or (c), (iii) repayments or
prepayments of Indebtedness financed by incurring other Indebtedness, to
the extent that mandatory principal payments in respect of such other
Indebtedness would, pursuant to this clause (f), be deducted in determining
Excess Cash Flow when made and (iv) Indebtedness referred to in clauses
(iv) and (v) of Section 6.01(a) and Indebtedness (other than term
Indebtedness) referred to in clause (viii) of Section 6.01(a).
"Excluded Taxes" means, with respect to the Administrative Agent, the
Swingline Lender, any Lender, the Issuing Bank or any other recipient of any
payment to be
11
made by or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income or net capital by the
United States of America, or by the jurisdiction (or any political subdivision
thereof or taxing authority therein) under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located (provided, however,
that no Lender shall be deemed to be located in any jurisdiction solely as a
result of taking any action related to this loan), (b) any branch profits taxes
imposed by the United States of America or any similar tax imposed by any other
jurisdiction described in clause (a) above and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.19(b)), any withholding tax (i) that is in effect and would apply to
amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement (or designates a new lending office), except to the
extent that such Foreign Lender (or its assignor, if any) would have been
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the Borrower with respect to any withholding tax
pursuant to Section 2.17(a) or (ii) that is attributable to such Foreign
Lender's failure to comply with Section 2.17(e).
"Existing Convertible Debentures" has the meaning assigned to such term in
the preamble of this Agreement.
"Existing Credit Agreement" has the meaning assigned to such term in the
preamble of this Agreement.
"Existing Exchange Debentures" has the meaning assigned to such term in the
preamble of the Agreement.
"Existing Holdings Preferred Stock" means the Series A Cumulative
Redeemable Preferred Stock, par value $0.01 per share, of Holdings.
"Existing Senior Notes" has the meaning assigned to such term in the
preamble of this Agreement.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized under the laws
of a jurisdiction other than the United States of America or any State thereof
or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United States
of America.
12
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation, provided that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business.
"Guarantee Agreements" means, collectively, the Parent Guarantee Agreement
and the Subsidiary Guarantee Agreement.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law, including any material listed as a hazardous substance under
Section 101(14) of CERCLA.
"Hedging Agreement" means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
"Holdings" has the meaning assigned to such term in the introductory
paragraph of this Agreement.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (d) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding current accounts payable incurred in the ordinary course of
business), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (i) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
13
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnity, Subrogation and Contribution Agreement" means the Indemnity,
Subrogation and Contribution Agreement, substantially in the form of Exhibit F,
among Holdings, the Borrower, the Subsidiary Loan Parties and the Administrative
Agent.
"Information Memorandum" means the Confidential Information Memorandum
dated April 1998 relating to the Borrower and the Transactions.
"Interest Election Request" means a request by the Borrower to convert or
continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.07.
"Interest Payment Date" means (a) with respect to any ABR Loan (other than
a Swingline Loan), the last day of each May, August, November and February, (b)
with respect to any Eurodollar Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect, provided that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.
"Investor" has the meaning assigned to such term in the preamble of this
Agreement.
"Investor Group" has the meaning assigned to such term in the preamble of
this Agreement.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as the
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.05(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"Joint Venture" means, as to a Person, any corporation, partnership or
other legal entity or arrangement in which such Person has any direct or
indirect equity interest and that is not a subsidiary of such Person.
"LC Availability Period" means the period from and including the Effective
Date to but excluding the earlier of (a) the date that is five Business Days
prior to the Maturity Date and (b) the date of termination of the Revolving
Commitments.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
14
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01 and any other Person
that shall have become a party hereto pursuant to an Assignment and Acceptance,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lender.
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement.
"Leverage Ratio" means, with respect to any period, the ratio of (a) Total
Debt as of the last day of such period to (b) Consolidated EBITDA for the
four-fiscal-quarter period ending on the last day of such period, all determined
on a consolidated basis in accordance with GAAP.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period (and if the Administrative Agent shall not have a London office,
then the principal London office of the Syndication Agent).
"Lien" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor under
any conditional sale agreement, capital lease or title retention agreement (or
any financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement, the Letters of Credit, the Guarantee
Agreements, the Indemnity, Subrogation and Contribution Agreement and the
Security Documents.
"Loan Parties" means Holdings, the Borrower and the Subsidiary Loan
Parties.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Management Agreement" means a financial advisory agreement between the
Borrower and Chase Capital Partners (or any of its Affiliates) providing for
customary expense reimbursement and such other terms as are reasonably
acceptable to the Agents.
"Margin Stock" has the meaning assigned to such term in Regulation U.
15
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, properties, assets, liabilities or financial condition of
Holdings, the Borrower and the Subsidiaries taken as a whole, (b) the ability of
the Loan Parties to perform any material obligations under any Loan Document or
(c) the rights of or benefits available to the Lenders under any Loan Document.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of Holdings, the Borrower and the Subsidiaries in an
aggregate principal amount exceeding $2,500,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of Holdings,
the Borrower or any Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that Holdings, the Borrower or such Subsidiary would be required to pay if such
Hedging Agreement were terminated at such time.
"Maturity Date" means May 11, 2005.
"Maximum Rate" has the meaning assigned to such term in Section 9.13.
"Merger" has the meaning assigned to such term in the preamble of this
agreement
"Merger Agreement" has the meaning assigned to such term in the preamble of
this Agreement.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Mortgage" means a mortgage, deed of trust, assignment of leases and rents,
leasehold mortgage or other security document granting a Lien on any Mortgaged
Property to secure the Obligations. Each Mortgage shall be satisfactory in form
and substance to the Collateral Agent.
"Mortgaged Property" means, initially, each parcel of real property and the
improvements thereto owned by a Loan Party and identified on Schedule 1.01(a),
and includes each other parcel of real property and improvements thereto with
respect to which a Mortgage is granted pursuant to Section 5.12 or 5.13.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any event, (a) the cash proceeds
received in respect of such event, including (i) any cash (other than amounts
representing interest) received in respect of any non-cash proceeds, but only as
and when received, (ii) in the case of a casualty, insurance proceeds, and (iii)
in the case of a condemnation or similar event, condemnation awards and similar
payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket
expenses paid by Holdings, the Borrower and the Subsidiaries to third parties in
connection with such event, (ii) in the case of a sale, transfer or other
disposition of an asset (including pursuant to a Sale Leaseback or a casualty or
other insured damage or condemnation or similar proceeding), the amount of all
payments required to be made by Holdings, the Borrower and the Subsidiaries as a
result of such event to repay Indebtedness (other than Loans) secured by such
asset or otherwise subject to mandatory prepayment as a result of such event
(including in order to obtain consent required therefor), and (iii) the amount
of all taxes paid (or reasonably estimated to be payable) by Holdings, the
Borrower and the Subsidiaries, and the amount of any reserves established by
Holdings, the Borrower and the Subsidiaries to fund contingent liabilities
reasonably estimated to be payable, and that are directly attributable to such
16
event (as determined reasonably and in good faith by the chief financial officer
of the Borrower); provided, however, that with respect to any sale, transfer or
other disposition of an asset (including, subject to Section 6.06(b)(iii),
pursuant to a Permitted Existing Academy Sale Leaseback or, subject to Section
5.08, a casualty or other insured damage or condemnation or similar proceeding),
if the Borrower shall deliver a certificate (a "Reinvestment Certificate") of a
Financial Officer to the Administrative Agent at the time of such sale, transfer
or other disposition setting forth the Borrower's intent to use the proceeds of
such sale, transfer or other disposition to fund expenditures for other assets
to be used in the same line of business or in a Related Business prior to the
date that is 18 months after receipt of such proceeds and no Default or Event of
Default shall have occurred and shall be continuing at the time of such
certificate or at the proposed time of the application of such proceeds, such
proceeds shall not constitute Net Proceeds except to the extent not so used at
the end of such 18-month period, at which time such proceeds shall be deemed to
be Net Proceeds.
"Net Working Capital" means, at any date, (a) the consolidated current
assets of Holdings and its consolidated subsidiaries as of such date (excluding
cash and Permitted Investments) minus (b) the consolidated current liabilities
of Holdings and its consolidated subsidiaries as of such date (excluding current
liabilities in respect of checks issued but not yet paid and Indebtedness). Net
Working Capital at any date may be a positive or negative number. Net Working
Capital increases when it becomes more positive or less negative and decreases
when it becomes less positive or more negative.
"Obligations" has the meaning assigned to such term in the Security
Agreement.
"Options" has the meaning assigned to such term in the preamble of this
Agreement.
"Other Taxes" means any and all current or future recording, stamp,
documentary, excise, transfer, sales or property or similar taxes, charges or
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"Parent Guarantee Agreement" means the Parent Guarantee Agreement,
substantially in the form of Exhibit D, made by Holdings in favor of the
Collateral Agent for the benefit of the Secured Parties.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" means a certificate in the form of Annex 1 to the
Security Agreement or any other form approved by the Collateral Agent.
"Permitted Acquisition" means the acquisition, by merger or otherwise, by
the Borrower or any Subsidiary of assets located in the United States or capital
stock or other equity interests so long as (a) immediately after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing or
would result therefrom, (b) all transactions related thereto shall be
consummated in accordance in all material respects with applicable laws, (c) in
the case of any acquisition of capital stock of other equity interests in any
Person, such acquisition is an acquisition of 100% of the capital stock or other
equity interests of such Person, (d) in case of an acquisition of assets, such
assets (other than assets to be retired or disposed of) are to be used, and in
the case of an acquisition of capital stock or other equity interests, the
Person so acquired is engaged, in the same line of business or a Related
Business, (e) the Borrower shall be in compliance, on a pro forma basis after
giving effect to such acquisition (including any cost savings to the extent
approved by the Required Lenders and Indebtedness assumed or permitted to exist
in connection with such acquisition), with the covenants set forth
17
in Sections 6.13, 6.14 and 6.15, and shall deliver to the Administrative Agent a
certificate of a Financial Officer of the Borrower to such effect and (f)
simultaneously with any such acquisition, the Administrative Agent for the
benefit of the Secured Parties shall be granted a first-priority security
interest in all real and personal property (including capital stock and other
securities or interests but excluding leasehold interests), subject to customary
and reasonable exceptions and permitted encumbrances) acquired by the Borrower
as part as such acquisition, and the Borrower shall, and shall cause any
applicable Subsidiary to, execute any documents (including supplements to the
Subsidiary Guarantee Agreement, the Security Agreement, the Pledge Agreement and
the Indemnity, Subrogation and Contribution Agreement, if applicable), financing
statements, agreements and instruments, and take all action (including filing
financing statements and obtaining and providing consents, title insurance,
surveys and legal opinions) that may be required under applicable law or as the
Administrative Agent may request, in order to grant, preserve, protect and
perfect such security interest; provided, however, that the aggregate amount
paid (including any Indebtedness assumed in connection therewith) in connection
with (i) any such Permitted Acquisition shall not exceed $10,000,000 and (ii)
all such Permitted Acquisitions shall not exceed $30,000,000 during the term of
this Agreement.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes or other governmental charges that
are not yet due or are being contested in compliance with Section 5.05;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of
business and securing obligations that are not overdue by more than 60 days
or are being contested in compliance with Section 5.05;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII;
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any Subsidiary;
(g) any interest of a landlord in or to property of the tenant imposed
by law, arising in the ordinary course of business and securing lease
obligations that are not overdue by more than 60 days or are being
contested in compliance with Section 5.05, or any possessory rights of a
lessee to the leased property under the provisions of any lease permitted
by the terms of this Agreement; and
(h) Liens of a collection bank arising in the ordinary course of
business under ss. 4-208 of the Uniform Commercial Code in effect in the
relevant jurisdiction,
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
18
"Permitted Existing Academy Sale Leaseback" means any Sale Leaseback
consummated by the Borrower or any of its Subsidiaries after the Effective Date
with respect to one or more Effective Date Academies, provided that (a) such
Sale Leaseback is consummated for fair value as determined at the time of
consummation in good faith by the Board of Directors of the Borrower and (b) the
proceeds of such Permitted Existing Academy Sale Leaseback are reinvested or
applied to the prepayment of Term Loans as required by this Agreement.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof that
has a combined capital and surplus and undivided profits of not less than
$500,000,000;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in clause
(c) above; and
(e) shares of funds registered under the Investment Company Act of
1940, as amended, that have assets of at least $500,000,000 and invest
substantially all their assets in obligations described in clauses (a)
through (d) above to the extent that such shares are rated by Moody's or
S&P in one of the two highest rating categories assigned by such agency for
shares of such nature.
"Permitted New Academy Sale Leaseback" means any Sale Leaseback consummated
by the Borrower or any of its Subsidiaries after the Effective Date with respect
to one or more Academies that is not an Effective Date Academy, provided that
(a) such Sale Leaseback is consummated for fair value as determined at the time
of consummation in good faith by the Board of Directors of the Borrower and (b)
the proceeds of such Permitted New Academy Sale Leaseback are applied to the
repayment of Revolving Loans as required by Section 6.06.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" means the Pledge Agreement, substantially in the form of
Exhibit G, among Holdings, the Borrower, the Subsidiary Loan Parties and the
Collateral Agent for the benefit of the Secured Parties.
19
"Preferred Stock" means the Series A Redeemable Preferred Stock, par value
$.01 per share, of Holdings.
"Prepayment Event" means:
(a) any sale, transfer or other disposition (including pursuant to a
Permitted Existing Academy Sale Leaseback but excluding pursuant to a
Permitted New Academy Sale Leaseback) of any property or asset of Holdings,
the Borrower or any Subsidiary, other than (i) dispositions described in
clauses (a) and (b) of Section 6.05, (ii) dispositions to which clause (b)
of this definition applies and (iii) other dispositions resulting in
aggregate Net Proceeds not exceeding $250,000 during any fiscal year of the
Borrower;
(b) subject to Section 5.08, any casualty or other insured damage to,
or any taking under power of eminent domain or by condemnation or similar
proceeding of, any property or asset of Holdings, the Borrower or any
Subsidiary, other than casualties, insured damage or takings resulting in
aggregate Net Proceeds not exceeding $250,000 during any fiscal year of the
Borrower;
(c) the issuance by Holdings, the Borrower or any Subsidiary of any
equity securities, or the receipt by Holdings, the Borrower or any
Subsidiary of any capital contribution, other than (i) any such issuance of
equity securities by or to, or receipt of any such capital contribution
from, Holdings, the Borrower or a Subsidiary for the sole purpose of
financing a Permitted Acquisition (including any issuance to one or more
sellers in a Permitted Acquisition) or Capital Expenditures, (ii) the
issuance of equity securities of Holdings to employees of the Borrower or
any of the Subsidiaries in their capacity as such pursuant to employee
benefit plans, employment agreements or other written employment-related
arrangements or (iii) the purchase of equity securities of a Subsidiary, or
the contribution of capital to a Subsidiary, by the Borrower from funds
obtained in a manner not otherwise constituting a Prepayment Event; and
(d) the incurrence by Holdings, the Borrower or any Subsidiary of any
Indebtedness, other than Indebtedness permitted by Section 6.01(a).
"Prime Rate" means the rate of interest per annum publicly announced from
time to time by the Administrative Agent as its prime rate in effect at its
principal office in Charlotte, North Carolina; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced
as being effective.
"Register" has the meaning set forth in Section 9.04.
"Regulation T" means Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Reinvestment Certificate" has the meaning set forth in the definition of
the term "Net Proceeds".
"Reinvestment Temporary Repayment" has the meaning set forth in Section
2.11(f).
20
"Related Business" means any business providing goods or services related
to childhood education, care or development.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Release" has the meaning set forth in Section 101(22) of CERCLA.
"Required Lenders" means, at any time, Lenders having Revolving Exposures,
Term Loans and unused Commitments representing more than 50% of the sum of the
total Revolving Exposures, outstanding Term Loans and unused Commitments at such
time.
"Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any shares of any class of
capital stock of Holdings, the Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancelation or termination of any such shares of capital stock of
Holdings, the Borrower or any Subsidiary or any option, warrant or other right
to acquire any such shares of capital stock of Holdings, the Borrower or any
Subsidiary.
"Revolving Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Revolving Commitments.
"Revolving Commitment" means, with respect to each Lender, the commitment,
if any, of such Lender to make Revolving Loans and to acquire participations in
Letters of Credit and Swingline Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount of
each Lender's Revolving Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders' Revolving Commitments is $25,000,000.
"Revolving Exposure" means, with respect to any Lender at any time, the sum
of the outstanding principal amount of such Lender's Revolving Loans and its LC
Exposure and Swingline Exposure at such time.
"Revolving Lender" means a Lender with a Revolving Commitment or, if the
Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"Revolving Loan" means a Loan made pursuant to clause (b) of Section 2.01.
"Roll-Over Equity" has the meaning assigned to such term in the preamble of
this Agreement.
"S&P" means Standard & Poor's Rating Service.
"Sale Leaseback" means any arrangement, directly or indirectly, with any
Person pursuant to which the Borrower or any of its Subsidiaries sells or
transfers any property, real or personal, used or useful in its business,
whether now owned or hereafter acquired, and thereafter rents or leases such
property or other property that it intends to use for substantially the same
purpose or purposes as the property being sold or transferred.
21
"Secured Parties" has the meaning assigned to such term in the Security
Agreement.
"Security Agreement" means the Security Agreement, substantially in the
form of Exhibit H, among Holdings, the Borrower, the Subsidiary Loan Parties and
the Collateral Agent for the benefit of the Secured Parties.
"Security Documents" means the Security Agreement, the Pledge Agreement,
the Mortgages and each other security agreement, mortgage or other instrument or
document executed and delivered pursuant to Section 5.12 or 5.13 to secure any
of the Obligations.
"Senior Unsecured Notes" means the 10% Senior Unsecured Notes due 2008
issued on the Effective Date by the Borrower and Holdings, as joint and several
obligors, in accordance with Section 4.01(l) (and shall include any
substantially identical senior unsecured notes of the Borrower in the same
aggregate principal amount issued after the Effective Date in exchange therefor
pursuant to a registered exchange offer or shelf registration statement in
accordance with the Senior Unsecured Notes Indenture).
"Senior Unsecured Notes Indenture" means the indenture to be entered into
by Holdings, the Borrower and the Borrower's existing Subsidiary in connection
with the issuance of the Senior Unsecured Notes, together with all instruments
and other agreements entered into by Holdings, the Borrower and such Subsidiary
in connection therewith, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with Section 6.11.
"Sponsor" has the meaning assigned to such term in the preamble of this
Agreement.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Stockholders Agreement" means the Stockholders Agreement dated as of May
11, 1998, among Holdings, the Investor and the other stockholders of Holdings
named therein.
"Sub" has the meaning assigned to such term in the preamble of this
Agreement.
"subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the
22
equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
"Subsidiary Guarantee Agreement" means the Subsidiary Guarantee Agreement,
substantially in the form of Exhibit E, made by the Subsidiary Loan Parties in
favor of the Collateral Agent for the benefit of the Secured Parties.
"Subsidiary Loan Party" means any Subsidiary other than a Foreign
Subsidiary that, if it were to Guarantee the Obligations, would result in
adverse tax consequences to Holdings or the Borrower.
"Swingline Exposure" means, at any time, the aggregate principal amount of
all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.
"Swingline Lender" means The Chase Manhattan Bank or any of its Affiliates,
in its capacity as lender of Swingline Loans hereunder.
"Swingline Loan" means a Loan made pursuant to Section 2.04.
"Syndication Agent" means The Chase Manhattan Bank in its capacity as
Syndication Agent with respect to this Agreement.
"Taxes" means any and all current or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Term Commitment" means, with respect to each Lender, the commitment, if
any, of such Lender to make a Term Loan hereunder on the Effective Date,
expressed as an amount representing the maximum principal amount of the Term
Loan to be made by such Lender hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.08 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
9.04. The initial amount of each Lender's Term Commitment is set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Term Commitment, as applicable. The initial aggregate
amount of the Lenders' Term Commitments is $40,000,000.
"Term Loans" means Loans made pursuant to clause (a) of Section 2.01.
"Three-Month Secondary CD Rate" means, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day is not a Business Day, the next preceding Business Day) by
the Board through the public information telephone line of the Federal Reserve
Bank of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day) or, if such rate is not so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
23
"Total Debt" means, as of any date of determination, without duplication,
(a) the aggregate principal amount of Indebtedness of Holdings, the Borrower and
the Subsidiaries as of such date, determined on a consolidated basis in
accordance with GAAP (other than (i) Indebtedness of the type referred to in
clause (h) of the definition of the term "Indebtedness", except to the extent of
any unreimbursed drawings thereunder and Indebtedness of the type referred to in
Section 6.01(a)(x), and (ii) the aggregate principal amount of Revolving Loans
and Swingline Loans outstanding as of such date), plus (b) the average daily
principal amount of Revolving Loans and Swingline Loans outstanding during the
four-fiscal-quarter period immediately preceding such date.
"Term Lender" means a Lender with a Term Commitment or an outstanding Term
Loan.
"Transaction Costs" has the meaning assigned to such term in the preamble
of this Agreement.
"Transactions" has the meaning assigned to such term in the preamble of
this Agreement.
"Type", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving
Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a
"Eurodollar Revolving Loan"). Borrowings also may be classified and referred to
by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar
Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time, provided
that, if the Borrower notifies the
24
Administrative Agent that the Borrower requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or in the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees (a) to make a Term Loan to the Borrower on the
Effective Date in a principal amount not exceeding its Term Commitment, and (b)
to make Revolving Loans to the Borrower from time to time during the Revolving
Availability Period in an aggregate principal amount that will not result in
such Lender's Revolving Exposure exceeding such Lender's Revolving Commitment.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Revolving Loans. Amounts
repaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than a Swingline
Loan) shall be made as part of a Borrowing consisting of Loans of the same Class
and Type made by the Lenders ratably in accordance with their respective
Commitments of the applicable Class. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder, provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender's failure to make Loans as
required.
(b) Subject to Section 2.14, each Revolving Borrowing and Term Borrowing
shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith. Notwithstanding anything to the contrary
contained herein, all Borrowings made on the Effective Date shall be ABR
Borrowings. Each Swingline Loan shall be an ABR Loan. Each Lender at its option
may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan, provided that any exercise of such
option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $2,000,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $100,000 and not less than $2,000,000, provided that
an ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Revolving Commitments or that is required to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e). Each Swingline Loan shall be in an amount that is an integral multiple
of $50,000 and not less than $250,000. Borrowings of more than one Type and
Class may be outstanding at the same time, provided that there shall not at any
time be more than a total of eight Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.
25
SECTION 2.03. Requests for Borrowings. To request a Revolving Borrowing or
Term Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00
a.m., New York City time, one Business Day before the date of the proposed
Borrowing, provided that any such notice of an ABR Revolving Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., New York City time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving Borrowing or
Term Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) subject to the second sentence of Section 2.02(b), whether such
Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period"; and
(vi) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.06.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall
be deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Swingline Loans. (a) Subject to the terms and conditions set
forth herein, the Swingline Lender agrees to make Swingline Loans to the
Borrower from time to time during the Revolving Availability Period, in an
aggregate principal amount at any time outstanding that will not result in (i)
the aggregate principal amount of outstanding Swingline Loans exceeding
$5,000,000 or (ii) the sum of the total Revolving Exposures exceeding the total
Revolving Commitments, provided that the Swingline Lender shall not be required
to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Swingline Loans.
(b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent and the Swingline Lender of such request by telephone
(confirmed by telecopy), not later than 12:00 noon, New York City time, on the
day of a proposed Swingline Loan. Each such notice shall be irrevocable and
shall specify the requested date (which shall be a Business Day) and amount of
the requested Swingline Loan. The Swingline Lender shall make each Swingline
Loan available to the Borrower by means of a credit to the general deposit
account of the Borrower with the Swingline Lender (or, in the case of a
Swingline Loan made to finance the
26
reimbursement of an LC Disbursement as provided in Section 2.06(e), by
remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the
requested date of such Swingline Loan.
(c) The Swingline Lender may by written notice given to the Administrative
Agent not later than 10:00 a.m., New York City time on any Business Day require
the Revolving Lenders to acquire participations on such Business Day in all or a
portion of the Swingline Loans outstanding. Such notice shall specify the
aggregate amount of Swingline Loans in which Revolving Lenders will participate.
Promptly upon receipt of such notice, the Administrative Agent will give notice
thereof to each Revolving Lender, specifying in such notice such Lender's
Applicable Percentage of such Swingline Loan or Loans. Each Revolving Lender
hereby absolutely and unconditionally agrees, upon receipt of notice as provided
above, to pay to the Administrative Agent, for the account of the Swingline
Lender, such Lender's Applicable Percentage of such Swingline Loan or Loans.
Each Revolving Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Loans pursuant to this paragraph is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever. Each Revolving
Lender shall comply with its obligation under this paragraph by wire transfer of
immediately available funds, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the Swingline Lender the amounts so
received by it from the Revolving Lenders. The Administrative Agent shall notify
the Borrower of any participations in any Swingline Loan acquired pursuant to
this paragraph, and thereafter payments in respect of such Swingline Loan shall
be made to the Administrative Agent and not to the Swingline Lender. Any amounts
received by the Swingline Lender from the Borrower (or other party on behalf of
the Borrower) in respect of a Swingline Loan after receipt by the Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear. The
purchase of participations in a Swingline Loan pursuant to this paragraph shall
not relieve the Borrower of any default in the payment thereof.
SECTION 2.05. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the LC Availability Period. In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any form
of letter of credit application or other agreement submitted by the Borrower to,
or entered into by the Borrower with, the Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuing Bank, the Borrower also shall submit a
letter of credit
27
application on the Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the LC
Exposure shall not exceed $10,000,000 and (ii) the total Revolving Exposures
shall not exceed the total Revolving Commitments.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby
grants to each Revolving Lender, and each Revolving Lender hereby acquires from
the Issuing Bank, a participation in such Letter of Credit equal to such
Lender's Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Lender acknowledges and agrees that its obligation
to acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 12:00 noon, New York City time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 12:00 noon, New York City time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 10:00
a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt, provided that
the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.03 or 2.04 that such payment be financed
with an ABR Revolving Borrowing or Swingline Loan in an equivalent amount and,
to the extent so financed, the Borrower's obligation to make such payment shall
be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline
Loan. If the Borrower fails to make such payment when due, the Administrative
Agent shall notify each Revolving Lender of the applicable LC Disbursement, the
payment then due from the Borrower in respect thereof and such Lender's
Applicable Percentage thereof. Promptly following receipt of such notice, each
Revolving Lender shall pay to the Administrative Agent its Applicable Percentage
of the payment then due from the Borrower, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from the Revolving Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Revolving Lenders have made payments pursuant to
this paragraph to reimburse the Issuing Bank, then to such Lenders
28
and the Issuing Bank as their interests may appear. Any payment made by a
Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for
any LC Disbursement (other than the funding of ABR Revolving Loans or a
Swingline Loan as contemplated above) shall not constitute a Loan and shall not
relieve the Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of set-off against, the Borrower's obligations hereunder. None
of the Administrative Agent, the Lenders, the Issuing Bank or any of their
Related Parties shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank, provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented that appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder, provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement,
then, unless the Borrower shall reimburse such LC Disbursement in full on the
date such LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC Disbursement is made
to but excluding the date that the Borrower reimburses such LC Disbursement, at
the rate per annum then applicable to ABR Revolving Loans, provided that, if the
Borrower fails to reimburse such LC Disbursement when due
29
pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at
any time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to 105% of the LC Exposure as of
such date plus any accrued and unpaid interest thereon, provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (h) or (i) of Article VII. Each such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments (if requested by the
Borrower) shall be made at the option and sole discretion of the Administrative
Agent and at the Borrower's risk and expense, such deposits shall not bear
interest. Interest or profits, if any, on such investments shall accumulate in
such account. Moneys in such account shall be applied by the Administrative
Agent to reimburse the Issuing Bank for LC Disbursements for which it has not
been reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated (but
subject to the consent of Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure), be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.
SECTION 2.06. Funding of Borrowings. (a) Each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders, provided that Swingline Loans shall be made as provided
in Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to
30
an account designated by the Borrower in the applicable Borrowing Request,
provided that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e) shall be remitted by the
Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing and Term
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the Borrower
may elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion
shall be considered a separate Borrowing. This Section shall not apply to
Swingline Borrowings, which may not be converted or continued.
(b) To make an election pursuant to this Section, the Borrower shall notify
the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02 and paragraph (f) of this
Section:
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing
(in which case the information to be specified pursuant to clauses (iii)
and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
31
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Borrower, then, so long as an Event of
Default is continuing (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
(f) A Borrowing of any Class may not be converted to or continued as a
Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal amount of outstanding Eurodollar Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date plus
the aggregate principal amount of outstanding ABR Borrowings of such Class would
be less than the aggregate principal amount of Loans of such Class required to
be repaid on such scheduled repayment date.
SECTION 2.08. Termination and Reduction of Commitments. (a) Unless
previously terminated, (i) the Term Commitments shall terminate at 5:00 p.m.,
New York City time, on the Effective Date and (ii) the Revolving Commitments
shall terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce,
the Commitments of any Class, provided that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $2,000,000 and (ii) the Borrower shall not
terminate or reduce the Revolving Commitments if, after giving effect to any
concurrent prepayment of the Revolving Loans in accordance with Section 2.11,
the sum of the Revolving Exposures would exceed the total Revolving Commitments.
(c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at least
three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable, provided that a notice of termination of
the Revolving Commitments delivered by the Borrower may state that such notice
is conditioned upon the effectiveness of other credit facilities, an initial
public offering of equity interests in Holdings or the Borrower or a sale of all
or substantially all the assets or capital stock of the Borrower or Holdings
(whether by merger or otherwise), in which case such notice may be revoked by
the Borrower (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Commitments of any Class
32
shall be permanent. Each reduction of the Commitments of any Class shall be made
ratably among the Lenders in accordance with their respective Commitments of
such Class.
SECTION 2.09. Repayment of Loans, Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay (i) to the Administrative Agent for the account
of each Lender the then unpaid principal amount of each Revolving Loan of such
Lender on the Maturity Date, (ii) to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Term Loan of such Lender as
provided in Section 2.10 and (iii) to the Swingline Lender the then unpaid
principal amount of each Swingline Loan on the earlier of the Maturity Date and
the first date after such Swingline Loan is made that is the 15th or last day of
a calendar month and is at least two Business Days after such Swingline Loan is
made, provided that on each date that a Revolving Borrowing is made, the
Borrower shall repay all Swingline Loans then outstanding.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b)
or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein, provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it be evidenced
by a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a customary form reasonably satisfactory to the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest thereon
shall at all times (including after assignment pursuant to Section 9.04) be
represented by one or more promissory notes in such form payable to the order of
the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).
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SECTION 2.10. Amortization of Term Loans. (a) Subject to adjustment
pursuant to paragraph (c) of this Section, the Borrower shall repay Term
Borrowings on the last day of each month set forth below in the aggregate
principal amount set forth opposite such month:
Date Amount
---- ------
November 1998 $250,000
February 1999 250,000
May 1999 250,000
August 1999 250,000
November 1999 250,000
February 2000 250,000
May 2000 250,000
August 2000 250,000
November 2000 250,000
February 2001 250,000
May 2001 250,000
August 2001 250,000
November 2001 250,000
February 2002 250,000
May 2002 250,000
August 2002 250,000
November 2002 250,000
February 2003 250,000
May 2003 250,000
August 2003 250,000
November 2003 2,500,000
February 2004 2,500,000
May 2004 2,500,000
August 2004 2,500,000
November 2004 5,000,000
February 2005 5,000,000
Maturity Date 15,000,000
(b) To the extent not previously paid, all Term Loans shall be due and
payable on the Maturity Date.
(c) If the initial aggregate amount of the Lenders' Term Commitments
exceeds the aggregate principal amount of Term Loans that are made on the
Effective Date, then the scheduled repayments of Term Borrowings to be made
pursuant to this Section shall be reduced ratably by an aggregate amount equal
to such excess. Any prepayment of a Term Borrowing shall be applied to reduce
the subsequent scheduled repayments of the Term Borrowings to be made pursuant
to this Section ratably.
(d) Prior to any repayment of any Term Borrowings hereunder, the Borrower
shall select the Borrowing or Borrowings to be repaid and shall notify the
Administrative Agent by telephone (confirmed by telecopy) of such selection not
later than 11:00 a.m., New York City time, three Business Days before the
scheduled date of such repayment, provided that each
34
repayment of Term Borrowings shall be applied to repay any outstanding ABR
Borrowings before any Eurodollar Borrowings. Each repayment of a Borrowing shall
be applied ratably to the Loans included in the repaid Borrowing. Repayments of
Term Borrowings shall be accompanied by accrued interest on the amount repaid.
SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part,
subject to the requirements of this Section.
(b) Subject to the provisions of Section 5.08(b), in the event and on each
occasion that any Net Proceeds are received by or on behalf of Holdings, the
Borrower or any Subsidiary in respect of any Prepayment Event, the Borrower
shall, promptly after such Net Proceeds are received, prepay Term Borrowings in
an aggregate amount equal to 100% of such Net Proceeds.
(c) Following the end of each fiscal year of the Borrower, commencing with
the fiscal year ending August 1999, the Borrower shall prepay Term Borrowings in
an aggregate amount equal to 75% of Excess Cash Flow for such fiscal year,
provided that such percentage shall be reduced from 75% to 50% in respect of any
fiscal year if the Leverage Ratio following the end of such fiscal year is less
than 4.00 to 1.00. Each prepayment pursuant to this paragraph shall be made on
or before the date that is three days after the date on which financial
statements are delivered pursuant to Section 5.01 with respect to the fiscal
year for which Excess Cash Flow is being calculated (and in any event within 100
days after the end of such fiscal year).
(d) Prior to any optional or mandatory prepayment of Borrowings hereunder,
the Borrower shall select the Borrowing or Borrowings to be prepaid and shall
specify such selection in the notice of such prepayment pursuant to paragraph
(e) of this Section, provided that each prepayment shall be applied to prepay
ABR Borrowings before any Eurodollar Borrowings.
(e) The Borrower shall notify the Administrative Agent (and, in the case of
prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by
telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before the date of prepayment, (ii) in the case of prepayment of
an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business
Day before the date of prepayment or (iii) in the case of prepayment of a
Swingline Loan, not later than 12:00 noon, New York City time, on the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date, the principal amount of each Borrowing or portion thereof to be
prepaid and, in the case of a mandatory prepayment, a reasonably detailed
calculation of the amount of such prepayment, provided that, if a notice of
optional prepayment is given in connection with a conditional notice of
termination of the Revolving Commitments as contemplated by Section 2.08, then
such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.08. Promptly following receipt of any such
notice (other than a notice relating solely to Swingline Loans), the
Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.02, except as necessary to apply fully the required amount of a
mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to
the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.13.
(f) In the event the Borrower specifies in the applicable Reinvestment
Certificate that the Borrower will apply the Net Proceeds of any asset sale or
other disposition to the temporary repayment of Revolving Loans pursuant to this
Section 2.11(f), the Borrower shall apply such Net Proceeds to the repayment of
Revolving Loans as provided in this Section, without giving effect to any
minimum repayment amounts set forth herein. Any such repayment
35
is referred to herein as a "Reinvestment Temporary Repayment" (it being
understood that such term shall not include any prepayment of Revolving Loans
with Net Proceeds from a Permitted New Academy Sale Leaseback). The Borrower may
from time to time reborrow all or a portion of the amount repaid pursuant to any
Reinvestment Temporary Repayment if (i) such borrowing complies with all the
procedures for a Revolving Borrowing set forth in Section 2.03 and (ii) promptly
upon the receipt of the proceeds of such Revolving Borrowing, the Borrower (A)
reinvests such proceeds in accordance with the terms of the proviso in the
definition of the term "Net Proceeds" or (B) applies such proceeds to the
prepayment of Term Loans as provided in Section 2.11(b). So long as any portion
of any Reinvestment Temporary Repayment has not been reborrowed, the Borrower
shall not be entitled to borrow, and no Lender shall be entitled to make,
Revolving Loans or Swingline Loans if after giving effect thereto the aggregate
Revolving Exposure at such time would exceed an amount equal to (i) the
aggregate amount of the Revolving Commitments at such time minus (ii) the
aggregate amount of all Reinvestment Temporary Repayments that have not been
reborrowed at such time.
SECTION 2.12. Fees. (a) The Borrower agrees to pay to the Administrative
Agent for the account of each Revolving Lender a commitment fee, which shall
accrue at the Applicable Rate on the average daily unused amount of the
Revolving Commitment of such Lender during the period from and including the
Effective Date to but excluding the date on which such Revolving Commitment
terminates. Accrued commitment fees shall be payable in arrears on the last day
of May, August, November and February of each year and on the date on which the
Revolving Commitments terminate, commencing on the first such date to occur
after the date hereof. All commitment fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
commitment fees with respect to Revolving Commitments, a Revolving Commitment of
a Lender shall be deemed to be used to the extent of the outstanding Revolving
Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender
shall be disregarded for such purpose).
(b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate as interest on Eurodollar Revolving Loans on the average daily amount of
such Lender's LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender's
Revolving Commitment terminates and the date on which such Lender ceases to have
any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue
at the rate of 1/4 of 1% per annum on the average daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Revolving Commitments and
the date on which there ceases to be any LC Exposure, as well as the Issuing
Bank's standard fees with respect to the issuance, amendment, renewal or
extension of any Letter of Credit or processing of drawings thereunder. Accrued
participation fees and fronting fees shall be payable on the last day of May,
August, November and February of each year, commencing on the first such date to
occur after the Effective Date, provided that all such fees shall be payable on
the date on which the Revolving Commitments terminate and any such fees accruing
after the date on which the Revolving Commitments terminate shall be payable on
demand. Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
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(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
(including each Swingline Loan) shall bear interest at the Alternate Base Rate
plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at
the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus
the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on any
Loan or any fee or other amount payable by the Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Revolving Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments, provided that (A) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand, (B) in the
event of any repayment or prepayment of any Loan (other than a prepayment of an
ABR Revolving Loan prior to the end of the Revolving Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (C) in the event of any conversion
of any Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360
days, except that interest computed by reference to the Alternate Base Rate at
times when the Alternate Base Rate is based on the Prime Rate shall be computed
on the basis of a year of 365 days (or 366 days in a leap year), and in each
case shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable Alternate Base Rate or Adjusted
LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
37
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.15. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans
made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank in respect thereof (whether of principal, interest or otherwise),
then the Borrower will pay to such Lender or the Issuing Bank, as the case may
be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or the Issuing Bank's capital or on the capital of
such Lender's or the Issuing Bank's holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit held
by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's or the Issuing Bank's policies and the policies
of such Lender's or the Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation, provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 180 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; and, provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 180-day period referred to above shall be extended to include the
period of retroactive effect thereof.
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SECTION 2.16. Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Revolving Loan or Term Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.11(e) and is revoked in accordance therewith), or (d) the
assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.19, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense incurred by such Lender attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest that would have accrued on the
principal amount of such Loan had such event not occurred, at the Adjusted LIBO
Rate that would have been applicable to such Loan, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of
interest that would accrue on such principal amount for such period at the
interest rate that such Lender would bid were it to bid, at the commencement of
such period, for dollar deposits of a comparable amount and period from other
banks in the Eurodollar market. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
SECTION 2.17. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes, provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each Lender and
the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder or under
any other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive
absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
such Governmental
39
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.
(e) Each Foreign Lender, and any Issuing Bank that is not a "United States
person" within the meaning of Section 7701(a)(30) of the Code (together with the
Foreign Lenders, the "Non-U.S. Lenders"), shall deliver to the Borrower (with a
copy to the Administrative Agent) two copies of either United States Internal
Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender
claiming exemption from U.S. Federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest", a Form W-8,
or any subsequent versions thereof or successors thereto (and, if such Non-U.S.
Lender delivers a Form W-8, a certificate representing that such Non-U.S. Lender
is not a bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Borrower and is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or
reduced rate of, U.S. Federal withholding tax on payments by the Borrower under
this Agreement or any other Loan Document. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement or
designates a new lending office. In addition, each Non-U.S. Lender shall deliver
such forms (i) promptly upon the obsolescence, expiration or invalidity of any
form previously delivered by such Non-U.S. Lender or (ii) upon the Borrower's
reasonable request after the occurrence of any event requiring the delivery of
Form 1001 or Form 4224 (or successor forms) in addition to or in replacement of
the forms previously delivered. Notwithstanding any other provision of this
Section 2.17, a Non-U.S. Lender shall not be required to deliver any form
pursuant to this Section 2.17(e) that such Non-U.S. Lender is not legally able
to deliver.
(f) If the Administrative Agent or a Lender (or transferee) determines, in
its sole discretion, that it has received a refund of any Taxes or Other Taxes
as to which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.17, it shall pay
over such refund to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 2.17 with
respect to the Taxes or Other Taxes giving rise of such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender (or
transferee) and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, however, that the
Borrower, upon the request of the Administrative Agent or such Lender (or
transferee), agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender (or transferee) in the
event the Administrative Agent or such Lender (or transferee) is required to
repay such refund to such Governmental Authority. Nothing contained in this
Section 2.17(f) shall require the Administrative Agent or any Lender to make
available its tax returns (or any other information relating to its taxes which
it deems confidential) to the Borrower or any other Person.
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) The Borrower shall make each payment required to be made by it hereunder or
under any other Loan Document (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 12:00 noon, New York City time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices set forth in Section
9.01 except payments to be made directly to the Issuing Bank or Swingline Lender
as expressly provided herein and except that payments pursuant to Sections 2.15,
2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and
payments pursuant to other Loan Documents shall be made to the Persons specified
40
therein. The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment under any Loan Document shall be due
on a day that is not a Business Day, the date for payment shall be extended to
the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Revolving Loans, Term Loans or participations in LC Disbursements or
Swingline Loans or any other payment due hereunder resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its
Revolving Loans, Term Loans and participations in LC Disbursements and Swingline
Loans and accrued interest thereon than the proportion received by any other
Lender, then the Lender receiving such greater proportion shall purchase (for
cash at face value) participations in the Revolving Loans, Term Loans and
participations in LC Disbursements and Swingline Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans, Term Loans and
participations in LC Disbursements and Swingline Loans, provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the Issuing Bank, as the
case may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
41
(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.18(d) or 9.03(c), then
the Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any
Lender requests compensation under Section 2.15, or if the Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.17, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the reasonable judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment), provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Commitment is being assigned, the Issuing Bank and Swingline
Lender), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and participations in LC Disbursements and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.15 or payments required to be made pursuant to Section 2.17, such
assignment will result in a material reduction in such compensation or payments.
A Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
ARTICLE III
Representations and Warranties
Each of Holdings and the Borrower represents and warrants to the Lenders
that:
SECTION 3.01. Organization; Powers. Each of Holdings, the Borrower and the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions to be entered
into by each Loan Party are within such Loan Party's corporate powers and have
been duly
42
authorized by all necessary corporate and, if required, stockholder action. This
Agreement has been duly executed and delivered by each of Holdings and the
Borrower and constitutes, and each other Loan Document to which any Loan Party
is to be a party, when executed and delivered by such Loan Party, will
constitute, a legal, valid and binding obligation of Holdings, the Borrower or
such Loan Party (as the case may be), enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect or, if not obtained or made, would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect and except filings necessary to perfect Liens created under the
Loan Documents, (b) will not violate any applicable law or regulation or the
charter, by-laws or other organizational documents of Holdings, the Borrower or
any of the Subsidiaries or any order of any Governmental Authority, except, with
respect to any violation of applicable law or regulation or any order of any
Governmental Authority, to the extent any such violation would not, individually
or in the aggregate, be reasonably likely to have a Material Adverse Effect, (c)
will not violate or result in a default under any indenture, agreement or other
instrument binding upon Holdings, the Borrower or any of the Subsidiaries or its
assets, or give rise to a right thereunder to require any payment to be made by
Holdings, the Borrower or any of the Subsidiaries, except to the extent any such
violation, default or right would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect, and (d) will not result in
the creation or imposition of any Lien (other than any Lien expressly permitted
by Section 6.02) on any asset of Holdings, the Borrower or any of the
Subsidiaries, except Liens created under the Loan Documents.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and statement of income, stockholders equity and cash flows (i) as of and for
the year ending August 30, 1997, reported on by Deloitte & Touche LLP,
independent public accountants, and (ii) as of and for the period and the
portion of the fiscal year ending March 14, 1998, certified by its chief
financial officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Borrower and its consolidated Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii) above.
(b) The Borrower has heretofore furnished to the Lenders its pro forma
consolidated balance sheet as of March 14, 1998, prepared giving effect to the
Transactions as if the Transactions had occurred on such date. Such pro forma
consolidated balance sheet (i) has been prepared in good faith based on the same
assumptions used to prepare the pro forma financial statements included in the
Offering Memorandum for the Senior Unsecured Notes (which assumptions are
believed by Holdings and the Borrower to be reasonable), (ii) is based on the
best information available to Holdings and the Borrower after due inquiry, (iii)
accurately reflects all adjustments necessary to give effect to the Transactions
and (iv) presents fairly, in all material respects, the pro forma financial
position of the Borrower and its consolidated Subsidiaries as of March 14, 1998
as if the Transactions had occurred on such date.
(c) Except as disclosed in the financial statements referred to above or
the notes thereto or in the Information Memorandum and except for the Disclosed
Matters, after giving effect to the Transactions, none of Holdings, the Borrower
or any of the Subsidiaries has, as of the Effective Date, any contingent
liabilities, unusual long-term commitments or unrealized losses that could
reasonably be expected to have a Material Adverse Effect.
43
(d) Since August 30, 1997, there has not occurred any event, condition or
circumstance that has had or could reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.05. Properties. (a) Each of Holdings, the Borrower and the
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties), except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each of the Borrower and the Subsidiaries has complied with all
material obligations under all leases to which it is a party and that are
material to the Borrower and the Subsidiaries taken as a whole and all such
leases are in full force and effect. Each of the Borrower and the Subsidiaries
enjoys peaceful and undisturbed possession under all such material leases in
which a Borrower or a Subsidiary is a lessee.
(c) Each of Holdings, the Borrower and the Subsidiaries owns, or is
licensed or otherwise permitted to use, all trademarks, trade names, copyrights,
patents and other intellectual property material to its business, and the use
thereof by Holdings, the Borrower and the Subsidiaries does not infringe upon
the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
(d) Schedule 3.05 sets forth the address of each real property that is
owned or leased by the Borrower or any of the Subsidiaries as of the Effective
Date after giving effect to the Transactions.
(e) As of the Effective Date, neither Holdings, the Borrower nor any of the
Subsidiaries has received notice of, or has knowledge of, any pending or
contemplated condemnation proceeding affecting any Mortgaged Property or any
sale or disposition thereof in lieu of condemnation. Neither any Mortgaged
Property nor any interest therein is subject to any right of first refusal,
option or other contractual right to purchase such Mortgaged Property or
interest therein.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Holdings or the Borrower,
threatened against or affecting Holdings, the Borrower or any of the
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve any of the Loan Documents or
the Transactions.
(b) Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect, none of Holdings, the Borrower or any of
the Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or caused there to be a reasonable likelihood of, a Material
Adverse Effect.
SECTION 3.07. Compliance with Laws and Agreements. Except as set forth in
Schedule 3.07, each of Holdings, the Borrower and each of the Subsidiaries is in
compliance
44
with all laws, regulations and orders of any Governmental Authority applicable
to it or its property and all indentures, agreements and other instruments
binding upon it or its property, except where the failure to do so, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect. No Default has occurred and is continuing.
SECTION 3.08. Investment and Holding Company Status. None of Holdings, the
Borrower or any of the Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of Holdings, the Borrower and each of the
Subsidiaries has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes required
to have been paid by it, except (a) any Taxes that are being contested in good
faith by appropriate proceedings and for which Holdings, the Borrower or such
Subsidiary, as applicable, has set aside on its books adequate reserves or (b)
to the extent that the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $500,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed the fair market value of the assets of all such
underfunded Plans by an amount that would be reasonably likely to result in a
Material Adverse Effect.
SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which Holdings,
the Borrower or any of the Subsidiaries is subject, and all other matters known
to any of them, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of any Loan Party to the Agents or
any Lender in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or thereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
provided that, with respect to projected financial information, Holdings and the
Borrower represent only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.
SECTION 3.12. Subsidiaries. Holdings does not have any subsidiaries other
than the Borrower and the Subsidiaries. Schedule 3.12 sets forth the name of,
and the ownership interest of the Borrower in, each Subsidiary and identifies
each Subsidiary that is a Subsidiary Loan Party, in each case as of the
Effective Date.
SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all
insurance maintained by or on behalf of the Borrower and the Subsidiaries as of
the Effective Date. As of the Effective Date, all premiums in respect of such
insurance that are due and payable have been paid.
45
SECTION 3.14. Labor Matters. As of the Effective Date, there are no
strikes, lockouts or slowdowns against Holdings, the Borrower or any Subsidiary
pending or, to the knowledge of Holdings or the Borrower, threatened. The hours
worked by and payments made to employees of Holdings, the Borrower and the
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters,
except where any such violations, individually or in the aggregate, would not be
reasonably likely to result in a Material Adverse Effect. All material payments
due from Holdings, the Borrower or any Subsidiary, or for which any claim may be
made against Holdings, the Borrower or any Subsidiary, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of Holdings, the Borrower or such
Subsidiary. The consummation of the Transactions will not give rise to any right
of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which Holdings, the Borrower or any
Subsidiary is bound.
SECTION 3.15. Solvency. Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party, at a fair valuation, will exceed its debts and liabilities,
unsecured, contingent or otherwise; (b) the present fair saleable value of the
property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
unsecured, contingent or otherwise, as such debts and other liabilities become
absolute and matured; (c) each Loan Party will be able to pay its debts and
liabilities, unsecured, contingent or otherwise, as such debts and liabilities
become absolute and matured; and (d) each Loan Party will not have unreasonably
small capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted following the
Effective Date.
SECTION 3.16. Security Documents. (a) The Pledge Agreement is effective to
create in favor of the Collateral Agent, for the ratable benefit of the Secured
Parties, a legal, valid and enforceable security interest in the Collateral (as
defined in the Pledge Agreement) and, when the Collateral is delivered to the
Collateral Agent or financing statements are filed (covering certificated
securities), the Pledge Agreement shall constitute a fully perfected first
priority Lien on, and security interest in, all right, title and interest of the
pledgor thereunder in such Collateral, in each case prior and superior in right
to any other person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified on Schedule 6 to the Perfection Certificate, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in such Collateral
(other than the Intellectual Property (as defined in the Security Agreement), in
each case prior and superior in right to any other person, other than with
respect to Liens expressly permitted by Section 6.02.
(c) When the Security Agreement is filed in the United States Patent and
Trademark Office and the United States Copyright Office, the Security Agreement
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in the Intellectual Property (as defined
in the Security Agreement) in which a security interest may be perfected by
filing, recording or registering a security agreement, financing statement or
analogous document in the United States Patent and Trademark Office or the
United States Copyright Office, as applicable, in each case prior and superior
in right to any other person other than Liens expressly permitted by Section
6.02 (it being understood that subsequent recordings in the United States Patent
and Trademark Office and the United States Copyright Office may be necessary to
perfect a Lien on registered trademarks, trademark applications and copyrights
acquired by the Loan Parties after the date hereof).
46
(d) The Mortgages are effective to create, subject to the exceptions listed
in each title insurance policy covering such Mortgage, in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable Lien on all of the Loan Parties' right, title and interest in
and to the Mortgaged Properties thereunder and the proceeds thereof, and when
the Mortgages are filed in the appropriate offices, the Mortgages shall
constitute a Lien on, and security interest in, all right, title and interest of
the Loan Parties in such Mortgaged Properties and the proceeds thereof, in each
case prior and superior in right to any other person, other than with respect to
the rights of persons pursuant to Liens expressly permitted by Section 6.02.
SECTION 3.17. Federal Reserve Regulations. (a) Neither Holdings, the
Borrower nor any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of the Regulations of the Board, including Regulation T, U
or X.
SECTION 3.18. Year 2000 Compliance. To the best of Holdings' and the
Borrower's knowledge, any reprogramming required to permit the proper
functioning, in and following the year 2000, of (a) the computer systems of the
Borrower and its Subsidiaries and (b) equipment containing embedded microchips
(including systems and equipment supplied by others or with which systems of the
Borrower and its Subsidiaries interface) and the testing of all such systems and
equipment, as so reprogrammed, will be completed in all material respects by
August 31, 1999. To the best of Holdings' and the Borrower's knowledge, the cost
to the Borrower and its Subsidiaries of such reprogramming and testing and of
the reasonably foreseeable consequences of year 2000 to the Borrower and its
Subsidiaries (including reprogramming errors and the failure of others' systems
or equipment) will not result in a Default or a Material Adverse Effect.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans,
of the Swingline Lender to make Swingline Loans and of the Issuing Bank to issue
Letters of Credit hereunder shall not become effective until the date on which
each of the following conditions is satisfied (or waived in accordance with
Section 9.02):
(a) The Agents (or their counsel) shall have received from each party
hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Agents (which may
include telecopy transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement.
(b) The Agents shall have received a favorable written opinion
(addressed to the Agents and the Lenders and dated the Effective Date) of
each of (i) X'Xxxxxxxx Graev & Karabell, LLP, counsel for the Borrower,
substantially in the form of Exhibit B, and (ii) local counsel in each
jurisdiction where a Mortgaged Property is located, substantially in the
form of Exhibit C, and, in the case of each such opinion required by this
paragraph, covering such other matters relating to the Loan Parties, the
Loan Documents or the Transactions as the Required Lenders shall reasonably
request. The Borrower hereby requests such counsel to deliver such
opinions.
47
(c) The Agents shall have received such documents and certificates as
the Agents or their counsel may reasonably request relating to the
organization, existence and good standing of each Loan Party, the
authorization of the Transactions and any other legal matters relating to
the Loan Parties, the Loan Documents or the Transactions, all in form and
substance satisfactory to the Agents and their counsel.
(d) The Agents shall have received a certificate, dated the Effective
Date and signed by the President, a Vice President or a Financial Officer
of the Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.
(e) The Agents shall have received all fees and other amounts due and
payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by any Loan Party hereunder or under any other
Loan Document.
(f) The Agents shall have received counterparts of the Pledge
Agreement signed on behalf of Holdings, the Borrower and each Subsidiary
Loan Party thereto, and the Collateral Agent shall have received stock
certificates representing all the outstanding shares of capital stock of
the Borrower and each Subsidiary or Joint Venture owned by or on behalf of
any Loan Party as of the Effective Date after giving effect to the
Transactions (except that stock certificates representing shares of common
stock of a Foreign Subsidiary may be limited to 65% of the outstanding
shares of common stock of such Foreign Subsidiary), promissory notes
evidencing all intercompany Indebtedness owed to any Loan Party by the
Borrower or any Subsidiary as of the Effective Date after giving effect to
the Transactions and stock powers and instruments of transfer, endorsed in
blank, with respect to such stock certificates and promissory notes.
(g) The Agents shall have received counterparts of the Security
Agreement signed on behalf of Holdings, the Borrower and each Subsidiary
Loan Party, together with the following:
(i) all documents and instruments, including Uniform Commercial
Code financing statements, required by law or reasonably requested by
the Agents to be filed, registered or recorded to create or perfect
the Liens intended to be created under the Security Agreement; and
(ii) a completed Perfection Certificate dated the Effective Date
and signed by an executive officer or Financial Officer of the
Borrower, together with all attachments contemplated thereby,
including the results of a search of the Uniform Commercial Code (or
equivalent) filings made with respect to the Loan Parties in the
jurisdictions contemplated by the Perfection Certificate and copies of
the financing statements (or similar documents) disclosed by such
search and evidence reasonably satisfactory to the Agents that the
Liens indicated by such financing statements (or similar documents)
are permitted by Section 6.02 or have been released.
(h) Subject to Section 5.14, the Agents shall have received (i)
counterparts of a Mortgage with respect to each Mortgaged Property signed
on behalf of the record owner of such Mortgaged Property, (ii) a policy or
policies of title insurance issued by a nationally recognized title
insurance company, insuring the Lien of each such Mortgage as a valid first
Lien on the Mortgaged Property described therein, free of any other Liens
except as permitted by Section 6.02, in form and substance reasonably
acceptable to the Collateral Agent, together with such endorsements,
coinsurance and reinsurance as the Collateral Agent or the Required Lenders
may reasonably request, (iii) such surveys as
48
may be required pursuant to such Mortgages or as the Administrative Agent
or the Required Lenders may reasonably request, (iv) a copy of the original
permanent certificate or temporary certificate of occupancy as the same may
have been amended or issued from time to time, covering each improvement
located upon the Mortgaged Properties, that were required to have been
issued by the appropriate Governmental Authority for such improvement and
(v) written confirmation from the applicable zoning commission or other
appropriate Governmental Authority stating that with respect to each
Mortgaged Property its current use complies with existing land use and
zoning ordinances, regulations and restrictions applicable to such
Mortgaged Property.
(i) The Administrative Agent shall have received (i) counterparts of
the Parent Guarantee Agreement signed on behalf of Holdings, (ii)
counterparts of the Subsidiary Guarantee Agreement signed on behalf of each
Subsidiary Loan Party and (iii) counterparts of the Indemnity, Subrogation
and Contribution Agreement signed on behalf of Holdings, the Borrower and
each Subsidiary Loan Party.
(j) The Administrative Agent shall have received evidence satisfactory
to it that the insurance required by Section 5.07 is in effect.
(k) The Merger and the other Transactions shall be consummated
simultaneously with the closing under the Loans in accordance with
applicable law, the Merger Agreement and all other related documentation
(in each case without giving effect to any amendment or waiver not approved
by the Agent) and on terms substantially consistent with those set forth in
the preamble of this Agreement, and the Agent shall be satisfied that the
Transaction Costs shall not exceed $16,500,000.
(l) The Borrower shall have received not less than $145,000,000 in
gross cash proceeds from the issuance of the Senior Unsecured Notes. The
terms and conditions of the Senior Unsecured Notes (including terms and
conditions relating to the interest rate, fees, amortization, maturity,
covenants, events of default and remedies) and the provisions of the Senior
Unsecured Notes Indenture shall be satisfactory to the Agents.
(m) After giving effect to the Transactions and the other transactions
contemplated hereby, Holdings, the Borrower and the Subsidiaries shall have
outstanding no Indebtedness or preferred stock other than (i) the Loans,
(ii) the Senior Unsecured Notes, (iii) the Preferred Stock, (iv) subject to
Section 5.15, the Existing Convertible Debentures and (v) the Indebtedness
set forth on Schedule 6.01 or otherwise permitted pursuant to Section
6.01(a). The Agents shall also have received duly executed documentation
reasonably satisfactory to the Agents evidencing or necessary to (i)(A)
defease the Existing Exchange Debentures, (B) defease the Existing Senior
Notes and (C) repay all amounts outstanding under the Existing Credit
Agreement and (ii) terminate all related agreements, guarantees and
security interests, as applicable, granted in connection therewith.
(n) The Lenders shall be reasonably satisfied as to the amount and
nature of any Environmental Liabilities to which Holdings, the Borrower and
the Subsidiaries may be subject, and the plans of Holdings, the Borrower or
such Subsidiary with respect thereto, after giving effect to the
Transactions and the consummation of the other transactions contemplated
hereby.
(o) There shall be no litigation or administrative proceeding that has
had or is reasonably likely to have a Material Adverse Effect.
(p) The Lenders shall have received a solvency letter, in form and
substance and from an independent valuation firm reasonably satisfactory to
the Agents, together with
49
such other evidence reasonably requested by the Lenders, confirming the
solvency of Holdings, the Borrower and the Subsidiaries on a consolidated
basis after giving effect to the Transactions and the other transactions
contemplated hereby.
(q) The consummation of the Transactions and the other transactions
contemplated hereby shall not (a) violate any applicable material law,
statute, rule or regulation or (b) violate or result in a Default under any
material agreement of Holdings, the Borrower or any Subsidiary, and the
Agents shall have received one or more legal opinions to such effect,
satisfactory to the Agents, from counsel to the Borrower satisfactory to
the Agents.
(r) All requisite material Governmental Authorities and third parties
shall have approved or consented to the Transactions and the other
transactions contemplated hereby to the extent required, and there shall be
no governmental or judicial action, actual or threatened, that could
reasonably be expected to restrain, prevent or impose burdensome conditions
on the Transactions or the other transactions contemplated hereby.
(s) The Lenders shall have received a certificate of a Financial
Officer of the Borrower with respect to the Consolidated EBITDA of the
Borrower (to be calculated based on the financial statements of the
Borrower that have been prepared in accordance with generally accepted
accounting principles and adjusted to give effect to the adjustments set
forth in the Offering Memorandum for the Senior Unsecured Notes) for the
52-week period ending March 14, 1998, and such Consolidated EBITDA shall
not be less than $32,580,000.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans, of the Swingline
Lender to make Swingline Loans and of the Issuing Bank to issue Letters of
Credit hereunder shall not become effective unless each of the foregoing
conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 3:00
p.m., New York City time, on May 15, 1998 (and, in the event such conditions are
not so satisfied or waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, of the Swingline Lender to make a
Swingline Loan on the occasion of any Swingline Borrowing and of the Issuing
Bank to issue, amend, renew or extend any Letter of Credit, is subject to the
satisfaction of the following conditions:
(a) The representations and warranties of each Loan Party set forth in
the Loan Documents qualified as to materiality shall be true and correct
and those not so qualified shall be true and correct in all material
respects on and as of the date of such Borrowing or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable,
except to the extent such representations and warranties expressly relate
to an earlier date in which case such representations and warranties shall
be true and correct as of such earlier date.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be continuing.
(c) To the extent the proceeds of such Borrowing will be used to
finance expenditures relating to property, plant and equipment, after
giving effect to such Borrowing, there shall be at least $5,000,000 of
unused Revolving Commitments, provided that, for purposes of this clause
(c), the amount of unused Revolving
50
Commitments shall be deemed to include amounts that will be due to the
Borrower at the closing of any Sale Leaseback relating to Academies under
construction at such time if the Borrower has entered into a written
agreement with respect to such Sale Leaseback at such time.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by Holdings
and the Borrower on the date thereof as to the matters specified in paragraphs
(a) and (b) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, each of Holdings and the Borrower
covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. Each of Holdings
and the Borrower will furnish to the Administrative Agent and each Lender:
(a) within 100 days after the end of each fiscal year of Holdings, its
audited consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on by Deloitte & Touche LLP or other independent
public accountants of recognized national standing (without a "going
concern" or like qualification or exception and without any qualification
or exception as to the scope of such audit) to the effect that such
consolidated financial statements present fairly in all material respects
the financial condition and results of operations of Holdings and its
consolidated subsidiaries on a consolidated basis in accordance with GAAP
consistently applied;
(b) within 50 days after the end of each of the first three fiscal
quarters of each fiscal year of Holdings, its consolidated balance sheet
and related statements of operations, stockholders' equity and cash flows
as of the end of and for such fiscal quarter and the then elapsed portion
of the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all certified by
one of its Financial Officers as presenting fairly in all material respects
the financial condition and results of operations of Holdings and its
consolidated subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;
(c) within 30 days after the end of each of the four-week fiscal
periods ending on a date other than the last day of a fiscal quarter of
Holdings, its consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows as of the end of and for
such fiscal month and the then elapsed portion of the fiscal year, all
certified by one of its Financial Officers as presenting in all material
respects the financial condition and results of operations of Holdings and
its consolidated subsidiaries on a consolidated basis in accordance with
GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes;
(d) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of Holdings
(i) certifying as to whether a
51
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto,
(ii) setting forth reasonably detailed calculations demonstrating
compliance with Sections 6.12, 6.13, 6.14 and 6.15 and (iii) stating
whether any change in GAAP or in the application thereof has occurred since
the date of the Borrower's audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying the effect of
such change on the financial statements accompanying such certificate;
(e) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any Default
(which certificate may be limited to the extent required by accounting
rules or guidelines);
(f) at least 15 days following the commencement of each fiscal year of
the Borrower, a detailed consolidated budget for such fiscal year
(including a projected consolidated balance sheet and related projected
statements of operations and cash flow as of the end of and for such fiscal
year) and, promptly when available, the final version of such budget and
any significant revisions thereto;
(g) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings, the Borrower or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, as
the case may be; and
(h) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of
Holdings, the Borrower or any Subsidiary, or compliance with the terms of
any Loan Document, as the Agents or any Lender may reasonably request.
SECTION 5.02. Notices of Material Events. Holdings and the Borrower will
furnish to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or, to the
knowledge of an executive officer of Holdings or the Borrower, affecting
Holdings, the Borrower or any Affiliate thereof that could reasonably be
expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to
result in liability of Holdings, the Borrower and the Subsidiaries in an
aggregate amount exceeding $1,000,000; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
52
SECTION 5.03. Information Regarding Collateral. (a) The Borrower will
furnish to the Administrative Agent prompt written notice of any change (i) in
any Loan Party's corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
with an aggregate book value in excess of $250,000 is located (including the
establishment of any such new office or facility), (iii) in any Loan Party's
identity or corporate structure or (iv) in any Loan Party's Federal Taxpayer
Identification Number. Each of Holdings and the Borrower agrees not to effect or
permit any change referred to in the preceding sentence unless all filings have
been made under the Uniform Commercial Code or otherwise that are required in
order for the Administrative Agent to continue at all times following such
change to have a valid, legal and perfected security interest in all the
Collateral. The Borrower also agrees promptly to notify the Administrative Agent
if Collateral with a fair market value in excess of $250,000 is damaged in any
material respect or destroyed.
(b) Each year, at the time of delivery of annual financial statements with
respect to the preceding fiscal year pursuant to clause (a) of Section 5.01, the
Borrower shall deliver to the Administrative Agent a certificate of a Financial
Officer of the Borrower (i) setting forth the information required pursuant to
the Perfection Certificate or confirming that there has been no change in such
information since the date of the Perfection Certificate delivered on the
Effective Date or the date of the most recent certificate delivered pursuant to
this Section. Each certificate delivered pursuant to this Section 5.03(b) shall
identify in the format of Schedule II, III, IV or V of the Security Agreement,
all registered Intellectual Property of any Loan Party in existence on the date
thereof and not then listed on such Schedules or previously so identified.
SECTION 5.04. Existence; Conduct of Business. Each of Holdings and the
Borrower will, and will cause each of the Subsidiaries to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
business, provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.03.
SECTION 5.05. Payment of Obligations. Each of Holdings and the Borrower
will, and will cause each of the Subsidiaries to, pay (a) all material Taxes and
other charges of any Governmental Authority imposed on it or any of its
properties or assets or in respect of any of its franchises, business, income or
property before any material penalty or interest accrues thereon and (b) all
claims (including claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or may become a Lien
(other than a Lien permitted under Section 6.02) upon any of the property or
assets of Holdings, the Borrower or any of its Subsidiaries, prior to the time
when any penalty or fine shall be incurred with respect thereto, except where
(i) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (ii) Holdings, the Borrower or such Subsidiary has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP, (iii) such contest effectively suspends collection of the contested
obligation and the enforcement of any Lien securing such obligation and (iv) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 5.06. Maintenance of Properties. Each of Holdings and the Borrower
will, and will cause each of the Subsidiaries to, keep and maintain all property
material to the conduct of its business in reasonable working order and
condition, ordinary wear and tear excepted.
SECTION 5.07. Insurance. (a) Each of Holdings and the Borrower will, and
will cause each of the Subsidiaries to, at all times maintain in full force and
effect, with
53
financially sound and reputable insurance companies (i) adequate insurance for
its insurable properties, all to such extent and against such risks, including
fire, casualty and other risks insured against by extended coverage, as is
customary with companies of the same or similar size in the same or similar
businesses operating in the same or similar locations, (ii) such other insurance
as is required pursuant to the terms of any Security Document and (iii)
liability and other insurance in at least such amounts and against at least such
risks as are usually insured against by companies in the same or similar
businesses, and in each case, will furnish to the Lenders, upon written request
from the Administrative Agent, information presented in reasonable detail as to
the insurance so carried.
SECTION 5.08. Casualty and Condemnation. (a) The Borrower will furnish to
the Administrative Agent and the Lenders prompt written notice of any casualty
or other insured damage to any portion of any Collateral with a fair market
value in excess of $250,000 or the commencement of any action or proceeding for
the taking of any Collateral or any part thereof or interest therein under power
of eminent domain or by condemnation or similar proceeding.
(b) If any event described in paragraph (a) of this Section results in Net
Proceeds (whether in the form of insurance proceeds, condemnation award or
otherwise), the Administrative Agent is authorized to collect such Net Proceeds
and, if received by Holdings, the Borrower or any Subsidiary, such Net Proceeds
shall be paid over to the Administrative Agent, provided that (i) if the
aggregate Net Proceeds in respect of such event (other than proceeds of business
income insurance) are less than $250,000, such Net Proceeds shall be paid over
to the Borrower unless a Default has occurred and is continuing, and (ii) all
proceeds of business income insurance shall be paid over to the Borrower unless
a Default has occurred and is continuing. All such Net Proceeds retained by or
paid over to the Administrative Agent shall be held by the Administrative Agent
and released from time to time to pay the costs of repairing, restoring or
replacing the affected property or funding expenditures for assets in the same
business or any Related Business, in each case in accordance with the terms of
the applicable Security Document, subject to the provisions of the applicable
Security Document regarding application of such Net Proceeds during a Default.
(c) If any Net Proceeds retained by or paid over to the Administrative
Agent as provided above continue to be held by the Administrative Agent on the
date that is 18 months after the receipt of such Net Proceeds, then such Net
Proceeds shall be applied to prepay Term Borrowings as provided in Section
2.11(b).
SECTION 5.09. Books and Records; Inspection and Audit Rights. Each of
Holdings and the Borrower will, and will cause each of the Subsidiaries to, keep
proper books of record and account in which full, true and correct entries in
all material respects are made of all dealings and transactions in relation to
its business and activities. Each of Holdings and the Borrower will, and will
cause each of the Subsidiaries to, permit any representatives designated by the
Agents or any Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
SECTION 5.10. Compliance with Laws. Each of Holdings and the Borrower will,
and will cause each of the Subsidiaries to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.11. Use of Proceeds and Letters of Credit. The proceeds of the
Loans and each Letter of Credit will be used only for the purposes set forth in
the preamble of this Agreement. No part of the proceeds of any Loan will be
used, whether directly or indirectly,
54
for any purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X.
SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary is
formed or acquired after the Effective Date, the Borrower will notify the
Administrative Agent and the Lenders thereof and (a) if such Subsidiary is a
Subsidiary Loan Party, the Borrower will cause such Subsidiary to become a party
to the Subsidiary Guarantee Agreement, the Indemnity, Subrogation and
Contribution Agreement and each applicable Security Document in the manner
provided therein within three Business Days after such Subsidiary is formed or
acquired and promptly take such actions to create and perfect Liens on such
Subsidiary's assets to secure the Obligations as the Administrative Agent or the
Required Lenders shall reasonably request and (b) if any shares of capital stock
or Indebtedness of such Subsidiary are owned by or on behalf of any Loan Party,
the Borrower will cause such shares and promissory notes evidencing such
Indebtedness to be pledged pursuant to the Pledge Agreement within three
Business Days after such Subsidiary is formed or acquired (except that, if such
Subsidiary is a Foreign Subsidiary, shares of common stock of such Subsidiary to
be pledged pursuant to the Pledge Agreement may be limited to 65% of the
outstanding shares of common stock of such Subsidiary).
SECTION 5.13. Further Assurances. (a) Each of Holdings and the Borrower
will, and will cause each Subsidiary Loan Party to, execute any and all further
documents, financing statements, agreements and instruments, and take all such
further actions (including the filing and recording of financing statements,
fixture filings, mortgages, deeds of trust and other documents), that may be
required under any applicable law, or which the Administrative Agent or the
Required Lenders may reasonably request, to effectuate the transactions
contemplated by the Loan Documents or to grant, preserve, protect or perfect the
Liens created or intended to be created by the Security Documents or the
validity or priority of any such Lien, all at the expense of the Loan Parties.
Holdings and the Borrower also agree to provide to the Administrative Agent,
from time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created or
intended to be created by the Security Documents.
(b) If any material assets (including any real property or improvements
thereto (other than any individual real property or improvements with a fair
market value not in excess of $250,000, provided that the aggregate fair market
value of all real property or improvements excluded pursuant to this
parenthetical shall in no event exceed $250,000 in the aggregate) or any
interest therein other than leasehold interests in real property) are acquired
by Holdings, the Borrower or any Subsidiary Loan Party after the Effective Date
(other than assets constituting Collateral under the Security Agreement that
become subject to the Lien of the Security Agreement upon acquisition thereof),
the Borrower will notify the Administrative Agent and the Lenders thereof, and,
if requested by the Administrative Agent or the Required Lenders, the Borrower
will cause such assets to be subjected to a Lien securing the Obligations and
will take, and cause the Subsidiary Loan Parties to take, such actions as shall
be necessary or reasonably requested by the Administrative Agent to grant and
perfect such Liens, including actions described in paragraph (a) of this
Section, all at the expense of the Loan Parties.
SECTION 5.14. Real Estate. Within 90 days following the Effective Date, the
Borrower shall deliver to the Collateral Agent, with respect to each of the
properties identified on Schedule 1.01(a) as "post-closing properties", the
items set forth in Section 4.01(h)(i) through (h)(v).
SECTION 5.15. Existing Convertible Debentures. Within 90 days following the
Effective Date, the Borrower shall repurchase or redeem all its issued and
outstanding Existing Convertible Debentures.
55
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all LC Disbursements shall
have been reimbursed, each of Holdings and the Borrower covenants and agrees
with the Lenders that:
SECTION 6.01. Indebtedness; Certain Equity Securities. (a) The Borrower
will not, and will not permit any Subsidiary to, create, incur, assume or permit
to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) the Senior Unsecured Notes and the Guarantees thereof;
(iii) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof
or result in an earlier final maturity date or decreased weighted average
life thereof;
(iv) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary, provided that
Indebtedness of any Subsidiary that is not a Loan Party to the Borrower or
any Subsidiary Loan Party shall be subject to Section 6.04;
(v) Guarantees by the Borrower of Indebtedness of any Subsidiary and
by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary,
provided that Guarantees by the Borrower or any Subsidiary Loan Party of
Indebtedness of any Subsidiary that is not a Loan Party shall be subject to
Section 6.04;
(vi) Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition, construction or improvement of any fixed or
capital assets, including Capital Lease Obligations and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by
a Lien on any such assets prior to the acquisition thereof, and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof or result in an earlier final maturity
date or decreased weighted average life thereof, provided that (A) such
Indebtedness is incurred prior to or within 12 months after such
acquisition or the completion of such construction or improvement and (B)
the aggregate principal amount of Indebtedness permitted by this clause
(vi) shall not exceed $5,000,000 at any time outstanding;
(vii) Indebtedness of any Person that becomes a Subsidiary after the
date hereof and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof, provided that (A) such
Indebtedness exists at the time such Person becomes a Subsidiary and is not
created in contemplation of or in connection with such Person becoming a
Subsidiary and (B) the aggregate principal amount of Indebtedness permitted
by this clause (vii) shall not exceed $5,000,000 at any time outstanding;
(viii) unsecured Indebtedness not otherwise permitted hereunder in an
aggregate principal amount not exceeding $5,000,000 at any time
outstanding;
56
(ix) Indebtedness under Hedging Agreements entered into in accordance
with Section 6.07;
(x) Indebtedness with respect to surety, appeal and performance bonds
obtained by Holdings, the Borrower or any of its Subsidiaries in the
ordinary course of business;
(xi) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within two Business Days of its incurrence;
(xii) unsecured subordinated Indebtedness of the Borrower or any
Subsidiary assumed or incurred in connection with any Permitted
Acquisition, provided that (A) the subordination provisions of such
Indebtedness are reasonably satisfactory in all respects to the Agents, (B)
the terms of such Indebtedness shall not provide for any maturity,
amortization, sinking fund payment, mandatory redemption or other required
repayment or repurchase of such Indebtedness (other than any required offer
to repay or repurchase (x) with asset sale proceeds pursuant to customary
arrangements providing that the Borrower or such Subsidiary, as the case
may be, may (in lieu of making such offer) repay Indebtedness under this
Agreement or (y) pursuant to "change of control" provisions that are no
more restrictive than the analogous provisions contained in this
Agreement), in each case prior to the Maturity Date (C) the covenants and
events of default relating to such Indebtedness shall be no more
restrictive than those contained in this Agreement and (D) the aggregate
principal amount of such Indebtedness shall not exceed $10,000,000 in the
aggregate at any time outstanding;
(xiii) Capital Lease Obligations entered into in connection with
Permitted Existing Academy Sale Leasebacks; and
(xiv) Indebtedness arising from agreements of the Borrower or any
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with
the disposition of any business, assets or any Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or Subsidiary for the purpose of financing
such acquisition; provided, however, that (A) such Indebtedness is not
reflected on the balance sheet of the Borrower or any Subsidiary (provided
that contingent obligations referred to in a footnote to financial
statements and not otherwise reflected on the balance sheet will be deemed
not to be reflected on such balance sheet for purposes of this clause (A))
and (B) the maximum assumable liability in respect of all such Indebtedness
shall at no time exceed the gross proceeds, including noncash proceeds (the
fair market value of such noncash proceeds being measured at the time it is
received and without giving effect to any subsequent changes in value),
actually received by the Borrower and its Subsidiaries in connection with
such disposition.
(b) Holdings will not create, incur, assume or permit to exist any
Indebtedness except Indebtedness created under the Loan Documents.
(c) Neither Holdings nor the Borrower will, nor will they permit any
Subsidiary to, issue any preferred stock (other than the Preferred Stock)
or be or become liable in respect of any obligation (contingent or
otherwise) to purchase, redeem, retire, acquire or make any other payment
in respect of any shares of capital stock of Holdings, the Borrower or any
Subsidiary or any option, warrant or other right to acquire any such shares
of capital stock.
57
SECTION 6.02. Liens. (a) The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02,
provided that (A) such Lien shall not apply to any other property or asset
of the Borrower or any Subsidiary except assets then being financed solely
by the same financing source and (B) except as permitted under clause (D)
of clause (v) of this Section, such Lien shall secure only those
obligations that it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;
(iv) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date
hereof prior to the time such Person becomes a Subsidiary, provided that
(A) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, as the case may be, (B)
such Lien shall not apply to any other property or assets of the Borrower
or any Subsidiary except assets then being financed solely by the same
financing source and (C) except as permitted under clause (D) of clause (v)
of this Section, such Lien shall secure only those obligations that it
secures on the date of such acquisition or the date such Person becomes a
Subsidiary, as the case may be and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof;
(v) Liens on fixed or capital assets acquired, constructed or improved
by the Borrower or any Subsidiary and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof,
provided that (A) such security interests secure Indebtedness permitted by
clause (vi) of Section 6.01(a), (B) such security interests and the
Indebtedness secured thereby are incurred prior to or within 12 months
after such acquisition or the completion of such construction or
improvement, (C) the Indebtedness secured thereby does not exceed 100% of
the cost of acquiring, constructing or improving such fixed or capital
assets and other fixed or capital assets then being financed solely by the
same financing source and (D) such security interests shall not apply to
any other property or assets of the Borrower or any Subsidiary except
assets then being financed solely by the same financing source;
(vi) Liens (other than those permitted by paragraphs (i) through (v)
above) securing liabilities permitted hereunder in an aggregate amount not
exceeding $1,000,000 at any time outstanding; and
(vii) licenses of intellectual property rights granted in the ordinary
course of business and not interfering in any material respect with the
conduct of the business.
(b) Holdings will not create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect
thereof, except Liens created under any of the Security Documents and Permitted
Encumbrances.
SECTION 6.03. Fundamental Changes. (a) Holdings and the Borrower will not
and will not permit any Subsidiary to, merge into or consolidate with any other
Person, or permit
58
any other Person to merge into or consolidate with it, or liquidate or dissolve,
except that, if at the time thereof and immediately after giving effect thereto
no Default shall have occurred and be continuing (i) any Subsidiary may merge
into the Borrower in a transaction in which the Borrower is the surviving
corporation, (ii) any Subsidiary may merge into any Subsidiary Loan Party in a
transaction in which the surviving entity is a Subsidiary Loan Party, (iii) any
Subsidiary that is not a Loan Party may merge into any Subsidiary that is not a
Loan Party, (iv) any Subsidiary may merge into any other Person that becomes a
Subsidiary Loan Party in connection with a Permitted Acquisition and (v) any
Subsidiary may liquidate or dissolve if the Borrower determines in good faith
that such liquidation or dissolution is in the best interests of the Borrower
and is not materially disadvantageous to the Lenders, provided that any such
merger involving a Person that is not a wholly owned Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by Section
6.04.
(b) Holdings will not engage in any business or activity other than the
ownership of all the outstanding shares of capital stock of the Borrower and
activities incidental thereto. Holdings will not own or acquire any assets
(other than shares of capital stock of the Borrower, cash and Permitted
Investments) or incur any liabilities (other than liabilities under the Loan
Documents, liabilities under certain employment agreements and other written
employment arrangements, liabilities under the Preferred Stock, liabilities
imposed by law, including tax liabilities, and other liabilities incidental to
its existence and permitted business and activities).
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions.
(a) The Borrower will not, and will not permit any of the Subsidiaries to,
purchase, hold or acquire (including pursuant to any merger with any Person that
was not a wholly owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except, subject to clause (b)
hereof:
(i) Permitted Investments;
(ii) Permitted Acquisitions;
(iii) investments existing on the date hereof and set forth on
Schedule 6.04, to the extent such investments would not be permitted under
any other clause of this Section;
(iv) investments by the Borrower in the capital stock of the
Subsidiaries, provided that (A) any such shares of capital stock shall be
pledged pursuant to the Pledge Agreement (subject to the limitations
applicable to common stock of a Foreign Subsidiary referred to in Section
5.12) and (B) the amount of investments by the Borrower in Subsidiaries
that are not Loan Parties shall not exceed $1,000,000 in the aggregate at
any time outstanding;
(v) loans or advances made by the Borrower to any Subsidiary and made
by any Subsidiary to the Borrower or any other Subsidiary, provided that
(A) any such loans and advances made by a Loan Party shall be evidenced by
a promissory note pledged pursuant to the Pledge Agreement and (B) the
amount of all such loans and advances by Loan Parties to Subsidiaries that
are not Loan Parties shall not exceed $1,000,000 in the aggregate at any
time outstanding;
(vi) Guarantees constituting Indebtedness permitted by Section 6.01,
provided that the amount of Indebtedness that is (A) outstanding with
respect to Subsidiaries that
59
are not Loan Parties and (B) Guaranteed by any Loan Party shall not exceed
$1,000,000 in the aggregate at any time outstanding;
(vii) loans to employees of the Borrower and the Subsidiaries in their
capacity as such, in an aggregate principal amount not to exceed $1,000,000
at any time outstanding except that loans to employees for the purpose of
acquiring capital stock of Holdings the Net Proceeds of which capital stock
is contributed to the capital of the Borrower or used to acquire capital
stock of the Borrower shall not be subject to such limit;
(viii) Hedging Agreements permitted under Section 6.07;
(ix) investments in Joint Ventures in an aggregate amount not to
exceed $2,000,000 at any time outstanding;
(x) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(xi) extensions of trade credit in the ordinary course of business;
(xii) investments constituting non-cash proceeds of any sale, transfer
or other disposition permitted by Section 6.05;
(xiii) investments of any Person existing at the time such Person
becomes a Subsidiary or at the time such Person merges or consolidates with
the Borrower or any of its Subsidiaries, in either case in compliance with
the terms of this Agreement, provided that such investments were not made
by such Person in connection with, or in anticipation or contemplation of,
such Person becoming a Subsidiary or such merger or consolidation;
(xiv) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business; and
(xv) other investments in an aggregate amount not to exceed $1,000,000
at any time outstanding.
(b) Notwithstanding anything to the contrary contained in this Agreement,
the Borrower will not, and will not permit any of the Subsidiaries to, make any
investments (by way of any loan, guarantee, capital contribution to, or purchase
of stock, bonds, notes or other securities of or any assets constituting a
business unit of, any Person or otherwise) outside the business of the Borrower
as conducted on the Effective Date in an aggregate amount in excess of
$5,000,000 during the term of this Agreement.
SECTION 6.05. Asset Sales. The Borrower will not, and will not permit any
of the Subsidiaries to, sell, transfer, lease or otherwise dispose of any asset,
including any capital stock (other than any such sale, transfer, lease or other
disposition resulting from any casualty or condemnation of any assets of the
Borrower or any of its Subsidiaries), nor will the Borrower permit any of it
Subsidiaries to issue any additional shares of its capital stock or other
ownership interest in such Subsidiary, except:
(a) sales of inventory, used or surplus tangible personal property and
Permitted Investments in the ordinary course of business;
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(b) sales, transfers and dispositions to the Borrower or a Subsidiary,
provided that any such sales, transfers or dispositions involving a
Subsidiary that is not a Loan Party shall be made in compliance with
Section 6.09;
(c) any Sale Leaseback permitted pursuant to Section 6.06; and
(d) sales, transfers and dispositions of assets (other than capital
stock of a Subsidiary) that are not permitted by any other clause of this
Section, provided that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in reliance upon this clause (d) shall
not exceed $5,000,000 during any fiscal year of the Borrower,
provided that (i) all sales, transfers, leases and other dispositions permitted
hereby shall be made for fair value and, subject to clause (ii) hereof, for
consideration at least 80% of which is cash, and (ii) notwithstanding the
foregoing, the Borrower shall be permitted to sell, transfer or otherwise
dispose of any Academy for consideration consisting, in whole or in part, of a
note or notes not to exceed $500,000 for any such Academy and an aggregate
amount not to exceed $5,000,000 for all notes at any time outstanding, provided
that in the case of this clause (ii), (A) the Borrower has made a good faith
effort to comply with the requirements of clause (i) hereof and (B) any such
notes are pledged to the Collateral Agent in accordance with the terms of this
Agreement and the Pledge Agreement.
SECTION 6.06. Sale and Lease-Back Transactions. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any Sale Leaseback other
than (a) any Permitted New Academy Sale Leaseback, provided that the Borrower
shall, promptly after the Net Proceeds with respect to such Permitted New
Academy Sale Leaseback are received, repay outstanding Revolving Loans in an
aggregate amount equal to such Net Proceeds (it being understood that the
Borrower may retain the amount by which such Net Proceeds exceed the amount of
outstanding Revolving Loans), and (b) any Permitted Existing Academy Sale
Leaseback, provided that (i) the aggregate fair value of Academies subject to
all transactions to which this clause (b) applies shall not exceed on a
cumulative basis during the term of this Agreement $30,000,000, (ii) the first
$500,000 of aggregate Net Proceeds of any such Permitted Existing Academy Sale
Leaseback shall be reinvested as contemplated by the definition of the term "Net
Proceeds" or applied to prepay Term Loans as required by this Agreement and
(iii) all Net Proceeds after the first $500,000 of aggregate Net Proceeds shall
be applied to prepay Term Loans as required by this Agreement (it being
understood that such Net Proceeds may not be so reinvested).
SECTION 6.07. Hedging Agreements. The Borrower will not, and will not
permit any of the Subsidiaries to, enter into any Hedging Agreement, other than
Hedging Agreements entered into in the ordinary course of business to hedge or
mitigate risks to which the Borrower or any Subsidiary is exposed in the conduct
of its business or the management of its liabilities.
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness. (a)
Holdings and the Borrower will not, and will not permit any Subsidiary to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, except (i) Holdings may declare and pay dividends with respect to its
capital stock payable solely in additional shares of its capital stock, (ii) the
Borrower may repurchase or acquire shares of, or options to purchase shares of,
its common stock from employees, former employees, directors or former directors
of the Borrower or any of its Subsidiaries (or permitted transferees of such
employees, former employees, directors or former directors) pursuant to the
terms of the agreements (including employment agreements) or plans (or
amendments thereto) approved by the Board of Directors of the Borrower under
which such individuals purchase or sell or are granted the option to purchase or
sell, shares of such common stock, provided that the aggregate amount of such
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repurchases shall not exceed $250,000 in any fiscal year of the Borrower and
(iii) Subsidiaries may declare and pay dividends ratably with respect to their
capital stock. Notwithstanding the foregoing, the Borrower may make Restricted
Payments to Holdings (but with respect to clauses (ii), (iv) and (v) below, only
if no Default or Event of Default has occurred and is continuing or would be
continuing after giving effect to such Restricted Payment):
(i) the proceeds of which shall be applied by Holdings directly to pay
out-of-pocket expenses, for administrative, legal and accounting services
provided by third parties that are reasonable and customary and incurred in
the ordinary course of business for such professional services, or to pay
franchise fees and similar costs; provided, however, any such
administrative expenses shall not exceed an aggregate amount of $500,000
per fiscal year;
(ii) payments, the proceeds of which will be used to repurchase the
capital stock of Holdings owned by former employees of the Borrower and its
Subsidiaries or their assigns, estates and heirs, at a price not in excess
of fair market value determined in good faith by the Board of Directors of
Holdings or the Borrower, in an aggregate amount not in excess of
$1,500,000 per annum, net of the proceeds received by Holdings as a result
of any resales of any such capital stock or other securities plus any
unused amounts from any immediately preceding fiscal year, provided that
the aggregate amount of all such payments shall not exceed $5,000,000
during the term of this Agreement, net of the proceeds received by Holdings
as a result of any resales of any such capital stock or other securities;
(iii) payments, the proceeds of which will be used to pay taxes of
Holdings, the Borrower and the Subsidiaries as part of a consolidated,
combined or unitary tax filing group;
(iv) payments, the proceeds of which will be used to pay fees to
Sponsor in accordance with the terms of the Management Agreement; and
(v) at any time after the fifth anniversary of the Effective Date, the
proceeds of which shall be applied by Holdings to pay in cash scheduled
dividends on the Preferred Stock in accordance with its terms, provided
that such Restricted Payments shall not exceed in any quarterly period the
amounts scheduled with respect to the Preferred Stock for such quarter.
(b) Holdings and the Borrower will not, and will not permit any Subsidiary
to, make or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash securities or other property) of or in respect of
principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancelation or termination of any Indebtedness, except:
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest and principal payments as
and when due in respect of any Indebtedness permitted pursuant to Section
6.01(a);
(iii) refinancings of Indebtedness to the extent permitted by Section
6.01; and
(iv) payment of secured Indebtedness that becomes due as a result of
any transfer not prohibited by this Agreement of the property or assets
securing such Indebtedness.
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SECTION 6.09. Transactions with Affiliates. Holdings and the Borrower will
not, and will not permit any Subsidiary to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions in the ordinary course of business that are
at prices and on terms and conditions not less favorable to the Borrower or such
Subsidiary than could be obtained on an arm's-length basis from unrelated third
parties (as determined in good faith by a majority of the disinterested members
of the Board of Directors of Holdings or the Borrower, as the case may be), (b)
transactions between or among the Borrower and the Subsidiary Loan Parties not
involving any other Affiliate, (c) any Restricted Payment permitted by Section
6.08, (d) reasonable fees and compensation paid to, and indemnity provided on
behalf of, officers, directors, employees, consultants or agents of Holdings,
the Borrower or any Subsidiary as determined in good faith by the Board of
Directors of Holdings or the Borrower and (e) any transactions undertaken
pursuant to any contractual obligations in existence on the Effective Date (as
in effect on the Effective Date) and set forth on Schedule 6.09.
SECTION 6.10. Restrictive Agreements. Holdings and the Borrower will not,
and will not permit any Subsidiary to, directly or indirectly, enter into, incur
or permit to exist any agreement or other arrangement that prohibits, restricts
or imposes any condition upon (a) the ability of Holdings, the Borrower or any
Subsidiary to create, incur or permit to exist any Lien upon any of its property
or assets, or (b) the ability of any Subsidiary to pay dividends or other
distributions with respect to any shares of its capital stock or to make or
repay loans or advances to the Borrower or any other Subsidiary or to Guarantee
Indebtedness of the Borrower or any other Subsidiary, provided that (i) the
foregoing shall not apply to restrictions and conditions imposed by law or by
any Loan Document, (ii) the foregoing shall not apply to restrictions and
conditions existing on the date hereof identified on Schedule 6.10 (but shall
apply to any extension or renewal of, or any amendment or modification expanding
the scope of, any such restriction or condition), (iii) the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating
to the sale of a Subsidiary or any property or assets of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause
(a) of the foregoing shall not apply to restrictions or conditions imposed by
any agreement relating to secured Indebtedness permitted by this Agreement if
such restrictions or conditions apply only to the property or assets securing
such Indebtedness and (v) clause (a) of the foregoing shall not apply to
customary provisions in leases, licenses and similar contracts restricting the
subletting, assignment or transfer thereof, or any property or asset the subject
thereof.
SECTION 6.11. Amendment of Material Documents. (a) Holdings and the
Borrower will not, and will not permit any Subsidiary to, amend, modify or waive
any of its rights under (i) their respective certificates of incorporation,
by-laws or other organizational documents, (ii) the Management Agreement, (iii)
the Merger Agreement, (iv) the Certificate of Designations, (v) the Senior
Unsecured Notes or the Senior Unsecured Notes Indenture or (vi) the Stockholders
Agreement, in each case other than amendments, modifications or waivers that
would not reasonably be expected to adversely affect the interests of the
Lenders.
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SECTION 6.12. Capital Expenditures. (a) The Borrower will not permit the
aggregate amount of Capital Expenditures made by the Borrower and the
Subsidiaries in any fiscal year to exceed the amount set forth below opposite
such year:
Fiscal Year Ending Amount
------------------ ------
1998 $15,000,000
1999 $17,000,000
2000 $20,000,000
2001 $20,000,000
2002 $22,000,000
2003 $26,000,000
2004 $26,000,000
2005 $25,000,000
(b) Notwithstanding the foregoing, in the event that the amount of Capital
Expenditures permitted to be made by the Borrower and its Subsidiaries pursuant
to clause (a) in any fiscal year is greater than the amount of Capital
Expenditures made by the Borrower and its Subsidiaries during such fiscal year,
75% of such excess may be carried forward and utilized in the immediately
succeeding fiscal year (it being understood and agreed that (i) no amount may be
carried forward beyond the year immediately succeeding the fiscal year in which
it arose and (ii) no portion of the carry-forward amount available in any fiscal
year may be used until the entire amount of Capital Expenditures permitted to be
made in such fiscal year (without giving effect to such carry-forward amount)
shall have been made).
SECTION 6.13. Leverage Ratio. The Borrower will not permit the Leverage
Ratio for any fiscal quarter ending during any period set forth below to be in
excess of the ratio set forth below opposite such period:
Period Ratio
------ -----
June 1998 through June 1999 6.50 to 1.00
August 1999 through December 1999 6.25 to 1.00
March 2000 through June 2000 6.00 to 1.00
August 2000 through December 2000 5.75 to 1.00
March 2001 through August 2001 5.50 to 1.00
December 2001 5.25 to 1.00
March 2002 through June 2002 5.00 to 1.00
August 2002 through December 2002 4.75 to 1.00
March 2003 through June 2003 4.50 to 1.00
August 2003 through December 2003 4.00 to 1.00
March 2004 through June 2004 3.75 to 1.00
August 2004 through December 2004 3.50 to 1.00
March 2005 through Maturity Date 3.00 to 1.00
SECTION 6.14. Consolidated Fixed Charge Coverage Ratio. The Borrower will
not permit the Consolidated Fixed Charge Coverage Ratio for any
four-fiscal-quarter period ending during any period set forth below to be less
than the ratio set forth below opposite such period:
Period Ratio
------ -----
December 1998 through August 2001 1.00 to 1.00
December 2001 through June 2003 1.05 to 1.00
August 2003 through Maturity Date 1.10 to 1.00
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SECTION 6.15. Minimum Consolidated EBITDA. The Borrower will not permit
Consolidated EBITDA for any four-fiscal-quarter period ending during any period
set forth below to be less than the amount set forth below opposite such period:
Period Amount
------ ------
June 1998 through August 1998 $29,000,000
December 1998 through March 2000 $30,000,000
June 2000 through August 2000 $31,000,000
December 2000 through August 2001 $33,000,000
December 2001 through August 2002 $35,000,000
December 2002 through August 2003 $37,000,000
December 2003 through June 2004 $41,000,000
August 2004 through Maturity Date $45,000,000
SECTION 6.16. Changes in Fiscal Periods . Each of Holdings and the Borrower
will not, and will not permit any Subsidiary to, change its fiscal year or its
method of determining fiscal quarters without the prior written approval of the
Agents.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and
as the same shall become due and payable, and such failure shall continue
unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of Holdings, the Borrower or any Subsidiary in or in connection with any
Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, shall prove to
have been incorrect, or in the case of any representation or warranty not
qualified as to materiality, incorrect in any material respect, when made
or deemed made;
(d) Holdings or the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.04 (with
respect to the existence of Holdings or the Borrower) or 5.11 or in Article
VI;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after written notice
thereof from the Administrative Agent to the Borrower (which notice will be
given at the request of any Lender);
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(f) Holdings, the Borrower or any Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall become due
and payable, including any applicable grace period;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity, provided that this clause (g)
shall not apply to secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of, or casualty or condemnation affecting, the
property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of Holdings, the Borrower or any Subsidiary or its debts,
or of a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for Holdings, the Borrower or
any Subsidiary or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for 60 days or
an order or decree approving or ordering any of the foregoing shall be
entered;
(i) Holdings, the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or petition described in clause (h)
of this Article, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for Holdings, the Borrower or any Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) Holdings, the Borrower or any Subsidiary shall become unable,
admit in writing its inability or fail generally to pay its debts as they
become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $1,000,000 shall be rendered against Holdings, the
Borrower, any Subsidiary or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor to attach or levy upon any assets of Holdings,
the Borrower or any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the reasonable opinion
of the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in liability of
Holdings, the Borrower or any Subsidiary or any combination thereof in an
aggregate amount exceeding (i) $500,000 in any year or (ii) $1,000,000 for
all periods;
(m) any Lien purported to be created under any Security Document shall
cease to be, or shall be asserted by any Loan Party not to be, a valid and
perfected Lien on any
66
Collateral with a fair market value in excess of $500,000, with the
priority required by the applicable Security Document, except (i) as a
result of the sale or other disposition of the applicable Collateral in a
transaction permitted under the Loan Documents or (ii) as a result of the
Administrative Agent's failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it under
the Pledge Agreement; or
(n) a Change of Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower; and in case of any
event with respect to the Borrower described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
The Administrative Agent
Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with Holdings, the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations except
those expressly set forth in the Loan Documents. Without limiting the generality
of the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 9.02), and (c) except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to Holdings, the Borrower or any of the Subsidiaries
that is communicated
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to or obtained by the bank serving as Administrative Agent or any of its
Affiliates in any capacity. The Administrative Agent shall not be liable for any
action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02) or in the absence
of its own gross negligence or wilful misconduct. The Administrative Agent shall
not be deemed to have knowledge of any Default unless and until written notice
thereof is given to the Administrative Agent by Holdings, the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (a) any statement, warranty or representation
made in or in connection with any Loan Document, (b) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (c) the performance or observance of any of the covenants, agreements
or other terms or conditions set forth in any Loan Document, (d) the validity,
enforceability, effectiveness or genuineness of any Loan Document or any other
agreement, instrument or document or (e) the satisfaction of any condition set
forth in Article IV or elsewhere in any Loan Document, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and exercise
its rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of each
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor the Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, with the consent of the
Borrower (such consent not to be unreasonably withheld), to appoint a successor.
If no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent
may, on behalf of the Lenders and the Issuing Bank, appoint a successor
Administrative Agent that shall be a bank with an office in New York, New York,
or an Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
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Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to Holdings or the Borrower, to it at 14 Corporate Xxxxx, 0000
Xxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxxx Xxxx, XX 00000, Attention of Xxxxxxx
X. Xxxx (Telecopy No. 913-345-9601) with a copy to Chase Capital Partners,
000 Xxxxxxx Xxxxxx - 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention of Xxxxxxx
X. Xxxxxx (Telecopy No. 212-622-3101);
(b) if to the Administrative Agent, the Documentation Agent or the
Collateral Agent, to NationsBank, N.A., 000 Xxxx Xxxxxx, 00xx Xxxxx,
Xxxxxx, Xxxxx 00000, Attention of Credit Services (Telecopy No.
214-508-2515) with a copy to Xxxxx Xxxxxxxx, NationsBank, N.A., 00 Xxxx
00xx Xxxxxx, 0xx Xxxxx, Xxxxxx Xxxx, XX 00000 (Telecopy No. 816-979-7426);
(c) if to the Issuing Bank, to Chase Bank of Texas, N.A., 0000 Xxxx
Xxxxxx - 0xx Xxxxx, Xxxxxx, Xxxxx 00000, Attention of Xxxxxx Xxxxxx
(Telecopy No. 214-965-2044) with a copy to Xxx Xxxxx Xxxxxxx (Telecopy No.
214-965-2997);
(d) if to the Swingline Lender, to Chase Bank of Texas, N.A., 0000
Xxxx Xxxxxx - 0xx Xxxxx, Xxxxxx, Xxxxx 00000, Attention of Xxxxxx Xxxxxx
(Telecopy No. 214-965-2044) with a copy to Xxx Xxxxx Xxxxxxx (Telecopy No.
214-965-2997); and
(e) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by any Agent,
the Issuing Bank, the Swingline Lender or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Agents, the Issuing Bank, the
Swingline Lender and the Lenders hereunder and under the other Loan Documents
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of any Loan Document or consent to
any departure by any Loan Party therefrom shall
69
in any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
any Agent, any Lender, the Swingline Lender or the Issuing Bank may have had
notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except, in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by
Holdings, the Borrower and the Required Lenders or, in the case of any other
Loan Document, pursuant to an agreement or agreements in writing entered into by
the Administrative Agent and the Syndication Agent (or, if applicable, the
Collateral Agent) and the Loan Party or Loan Parties that are parties thereto,
in each case with the consent of the Required Lenders, provided that no such
agreement shall (i) increase the Commitment of any Lender without the written
consent of such Lender, (ii) reduce the principal amount of any Loan or LC
Disbursement or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any interest thereon, or any fees payable hereunder, or reduce
the amount of, waive or excuse any such payment, or postpone the scheduled date
of expiration of any Commitment, without the written consent of each Lender
affected thereby, (iv) change Section 2.18(b) or (c) in a manner that would
alter the pro rata sharing of payments required thereby, without the written
consent of each Lender, (v) change any of the provisions of this Section or the
definition of the term "Required Lenders" or any other provision of any Loan
Document specifying the number or percentage of Lenders (or Lenders of any
Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender of such Class, as the case may be), (vi) release
Holdings or any Subsidiary Loan Party from its Guarantee under the applicable
Guarantee Agreement (except as expressly provided in such Guarantee Agreement),
or limit its liability in respect of such Guarantee, without the written consent
of each Lender, (vii) waive any mandatory prepayment hereunder, without the
written consent of Lenders holding a majority in interest of the outstanding
Loans and unused Commitments of each Class; (viii) release all or any
substantial portion of the Collateral from the Liens of the Security Documents,
without the written consent of each Lender, except for any Collateral sold or
otherwise transferred in accordance with the terms of this Agreement, or (ix)
change any provisions of any Loan Document in a manner that by its terms
adversely affects the rights in respect of payments due to Lenders holding Loans
of any Class differently than those holding Loans of any other Class, without
the written consent of Lenders holding a majority in interest of the outstanding
Loans and unused Commitments of each affected Class, and provided further that
(A) no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent, the Collateral Agent, the Syndication Agent,
the Swingline Lender or the Issuing Bank without the prior written consent of
the Administrative Agent, the Collateral Agent, the Syndication Agent, the
Swingline Lender or the Issuing Bank, as the case may be, and (B) any waiver,
amendment or modification of this Agreement that by its terms affects the rights
or duties under this Agreement of the Revolving Lenders (but not the Term
Lenders) or the Term Lenders (but not the Revolving Lenders) may be effected by
an agreement or agreements in writing entered into by Holdings, the Borrower and
the requisite percentage in interest of the affected Class of Lenders that would
be required to consent thereto under this Section if such Class of Lenders were
the only Class of Lenders hereunder at the time.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses incurred by the Administrative
Agent, the Collateral Agent, the Documentation Agent, the Syndication Agent and
their respective Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Agents, in connection with the syndication of
the credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions contemplated hereby
or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by the Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder, and
(iii) all out-of-pocket expenses incurred by the Administrative Agent, the
Collateral Agent, the Documentation Agent, the Syndication Agent, the Issuing
Bank, the Swingline Lender or any Lender, including the reasonable fees, charges
and disbursements of any counsel for the Administrative Agent, the Collateral
Agent, the Documentation Agent, the Syndication Agent, the Issuing Bank, the
Swingline Lender or any Lender, in connection with the enforcement or protection
of its rights in connection with the Loan Documents, including its rights under
this Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.
(b) The Borrower shall indemnify the Administrative Agent, the Collateral
Agent, the Documentation Agent, the Syndication Agent, the Issuing Bank, the
Swingline Lender and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of any
Loan Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective obligations
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by the Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any Mortgaged Property or any other property currently or formerly
owned or operated by Holdings, the Borrower or any of the Subsidiaries, or any
Environmental Liability related in any way to Holdings, the Borrower or any of
the Subsidiaries or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto, provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses resulted from the gross negligence or wilful misconduct of such
Indemnitee or any Affiliate of such Indemnitee (or of any officer, director,
employee, advisor or agent of such Indemnitee) or any of such Indemnitee's
Affiliates or to the extent such damages constitute special, indirect or
consequential damages (as opposed to direct or actual damages).
(c) To the extent that the Borrower fails to pay any amount required to be
paid by it to the Administrative Agent, the Collateral Agent, the Documentation
Agent, the Syndication Agent, the Issuing Bank or the Swingline Lender under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent, the Syndication Agent, the Collateral Agent, the Issuing
Bank or the Swingline Lender, as the case may be, such Lender's pro rata share
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount, provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent, the
Collateral Agent, the Documentation Agent, the Syndication Agent, the Issuing
Bank or the Swingline Lender in its capacity as such. For purposes hereof, a
Lender's "pro rata share" shall be determined based upon its share of the sum of
the total Revolving Exposures, outstanding Term Loans and unused Commitments at
the time.
(d) To the extent permitted by applicable law, Holdings and the Borrower
shall not assert, and each hereby waives, any claim against any Indemnitee, on
any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages)
70
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that each of Holdings
and the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by Holdings or the Borrower without such
consent shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Collateral Agent, the Documentation Agent, the
Syndication Agent, the Issuing Bank, the Swingline Lender and the Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it), provided that (i) except in
the case of an assignment to a Lender or an Affiliate of a Lender, each of the
Borrower and the Administrative Agent (and, in the case of an assignment of all
or a portion of a Revolving Commitment or any Lender's obligations in respect of
its LC Exposure or Swingline Exposure, the Issuing Bank and the Swingline
Lender) must give their prior written consent to such assignment (which consent
shall not be unreasonably withheld or delayed), (ii) except in the case of an
assignment to a Lender or an Affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitment or Loans, the
amount of the Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent) shall not be less
than $5,000,000 unless each of the Borrower and the Administrative Agent
otherwise consent, (iii) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and obligations
under this Agreement, except that this clause (iii) shall not be construed to
prohibit the assignment of a proportionate part of all the assigning Lender's
rights and obligations in respect of one Class of Commitments or Loans, (iv) the
parties to each assignment shall execute and deliver to the Administrative Agent
an Assignment and Acceptance, together with a processing and recordation fee of
$3,500, and (v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire, and provided further that
any consent of the Borrower otherwise required under this paragraph shall not be
required if an Event of Default under clause (h) or (i) of Article VII has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
71
(c) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices in Charlotte, North Carolina a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and Holdings, the Borrower, the Administrative
Agent, the Issuing Bank, the Swingline Lender and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary. The Register shall be available for inspection by the Borrower,
the Issuing Bank, the Swingline Lender and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, the assignee's completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Acceptance
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the Administrative
Agent, the Issuing Bank or the Swingline Lender, sell participations to one or
more banks or other entities (a "Participant") in all or a portion of such
Lender's rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it), provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Lender shall be solely responsible for any
withholding taxes or any filing or reporting requirements relating to such
Participant and (iv) Holdings, the Borrower, the Administrative Agent, the
Issuing Bank, the Swingline Lender and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents, provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso (other than clause (viii) thereof) to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.18(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.15, 2.16 or 2.17 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless this restriction is waived by the Borrower and the aggregate amount
payable to any Participant and the applicable Lender pursuant any such Section
shall not exceed the amount that the applicable Lender would have been entitled
to receive with respect to such participation had such participation not been
sold to such Participant.
(g) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including any
73
pledge or assignment to secure obligations to a Federal Reserve Bank, and this
Section shall not apply to any such pledge or assignment of a security interest,
provided that no such pledge or assignment of a security interest shall release
a Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instru ments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that any Agent, the Issuing Bank, the
Swingline Lender or any Lender may have had notice or knowledge of any Default
or incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent or the Syndication Agent constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating to
the subject matter hereof. Except as provided in Section 4.01, this Agreement
shall become effective when it shall have been executed by the Administrative
Agent and the Syndication Agent and when the Administrative Agent shall have
received counterparts hereof that, when taken together, bear the signatures of
each of the other parties hereto, and thereafter shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Set-off. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
against any of and all the obligations of the Borrower now or hereafter existing
under this Agreement held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff) that
such Lender may have.
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SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
(b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, the Issuing Bank, the Swingline
Lender or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against Holdings, the
Borrower or its properties in the courts of any jurisdiction.
(c) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in paragraph (b) of this
Section. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 9.01. Nothing in this Agreement or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
SECTION 9.10. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Agents, the Issuing Bank, the
Swingline Lender and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors, and to any direct or indirect
contractual counterparty in swap agreements or to such contractual
counterparty's professional advisor (it being understood that the Persons to
whom such disclosure
75
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, provided that, to the
extent reasonably practicable and not prohibited by applicable laws or
regulations or by any judicial or administrative order, such Person will provide
the Borrower with prior notice of such disclosure, (d) to any other party to
this Agreement, (e) in connection with the exercise of any remedies hereunder or
any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement, (g) with
the consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to any Agent, the Issuing Bank, the Swingline Lender or any
Lender on a nonconfidential basis from a source other than Holdings or the
Borrower. For the purposes of this Section, the term "Information" means all
information received from Holdings or the Borrower relating to Holdings or the
Borrower or its business, other than any such information that is available to
any Agent, the Issuing Bank, the Swingline Lender or any Lender on a
nonconfidential basis prior to disclosure by Holdings or the Borrower. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts that are treated as interest on such
Loan under applicable law (collectively, the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") that may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
LPA HOLDING CORP.,
by
-------------------------
Name:
Title:
76
LA PETITE ACADEMY, INC.,
by
-------------------------
Name:
Title:
NATIONSBANK, N.A., individually and as
Administrative Agent, Documentation Agent
and Collateral Agent,
by
-------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
individually and as Syndication Agent,
the Issuing Bank and the Swingline
Lender,
by
---------------------------
Name:
Title:
