Exhibit 10.4
COPY AS EXECUTED WITH
EXHIBITS X, X, X,X AND L AS
SEPARATELY EXECUTED
$225,000,000
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December 19, 1997
Among
24 HOUR FITNESS, INC.
as Borrower
and
FITNESS HOLDINGS, INC.
as Parent Guarantor
and
THE RESTATEMENT LENDERS, THE EXISTING ISSUING BANK
AND THE SWING LINE BANK NAMED HEREIN
as Restatement Lenders, Existing Issuing Bank and
Swing Line Bank
and
BANQUE NATIONALE DE PARIS
as Administrative Agent and Syndication Agent
and
BANKERS TRUST COMPANY
as Documentation Agent
and
LASALLE NATIONAL BANK AND XXXXX FARGO BANK, N.A.
as Co-Agents
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS..................................2
SECTION 1.01. Certain Defined Terms....................................2
SECTION 1.02. Computation Of Time Periods.............................26
SECTION 1.03. Accounting Terms........................................26
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT.....26
SECTION 2.01. The Advances...........................................26
SECTION 2.02. Making the Advances....................................28
SECTION 2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit......................................30
SECTION 2.04. Repayment of Advances..................................32
SECTION 2.05. Termination or Reduction of the Commitments............34
SECTION 2.06 Prepayments............................................35
SECTION 2.07. Interest...............................................37
SECTION 2.08. Fees...................................................38
SECTION 2.09. Conversion of Advances.................................39
SECTION 2.10. Increased Costs, Etc...................................39
SECTION 2.11. Payments and Computations..............................41
SECTION 2.12. Taxes..................................................42
SECTION 2.13. Sharing of Payments, Etc...............................44
SECTION 2.14. Use of Proceeds........................................45
ARTICLE III CONDITIONS OF LENDING..........................................45
SECTION 3.01. Conditions Precedent to the Third Amendment and
Restatement.............................................45
SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance.....50
SECTION 3.03. Determinations Under Section 3.01.......................50
ARTICLE IV REPRESENTATIONS AND WARRANTIES..................................51
SECTION 4.01. Representations and Warranties of the Borrower..........51
ARTICLE V COVENANTS OF THE BORROWER........................................56
SECTION 5.01. Affirmative Covenants...................................57
SECTION 5.02. Negative Covenants.....................................60
SECTION 5.03. Reporting Requirements..................................68
SECTION 5.04. Financial Covenants.....................................71
(i)
ARTICLE VI EVENTS OF DEFAULT...............................................72
SECTION 6.01. Events of Default.......................................73
SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default................................................75
ARTICLE VII THE AGENTS.....................................................76
SECTION 7.01. Authorization and Action...............................76
SECTION 7.02. Agents Reliance, Etc...................................76
SECTION 7.03. Each Agent and Affiliates..............................77
SECTION 7.04. Lender Party Credit Decision...........................77
SECTION 7.05. Indemnification........................................77
SECTION 7.06. Successor Agents.......................................79
ARTICLE VIII MISCELLANEOUS.................................................80
SECTION 8.01. Amendments, Etc........................................80
SECTION 8.02. Notices, Etc...........................................80
SECTION 8.03. No Waiver; Remedies....................................81
SECTION 8.04. Costs and Expenses.....................................81
SECTION 8.05. Right of Setoff........................................83
SECTION 8.06. Binding Effect.........................................83
SECTION 8.07. Assignments and Participations.........................83
SECTION 8.08. Execution in Counterparts..............................86
SECTION 8.09. No Liability of the Issuing Bank.......................86
SECTION 8.10. Confidentiality........................................86
SECTION 8.11. Jurisdiction, Etc......................................87
SECTION 8.12. Governing Law..........................................87
SECTION 8.13. Waiver of Jury Trial...................................88
(ii)
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 19,
1997 among 24 HOUR FITNESS, INC., a California corporation (the "Borrower"),
FITNESS HOLDINGS, INC., a Delaware corporation (the "Parent Guarantor"), the
banks, financial institutions and other institutional lenders listed on the
signature pages hereof as the Restatement Lenders (the "Restatement Lenders"),
BANQUE NATIONALE DE PARIS ("BNP"), as the existing issuing bank hereunder (the
"Existing Issuing Bank"), as swing line bank (the "Swing Line Bank"), as
syndication agent (the "Syndication Agent") and as administrative agent
(together with any successor appointed pursuant to Article VII, the
"Administrative Agent") for the Lender Parties (as hereinafter defined), BANKERS
TRUST COMPANY, as documentation agent (the "Documentation Agent") for the
Lenders, and LASALLE NATIONAL BANK AND XXXXX FARGO BANK, N.A., as co-agents (the
"Co-Agents") for the Lenders.
PRELIMINARY STATEMENTS:
(1) The Borrower is a wholly owned subsidiary of the Parent
Guarantor. The Borrower entered into a Credit Agreement dated as of December 29,
1994, as amended and restated on June 30, 1995 and on March 14, 1997 (as further
amended, supplemented or otherwise modified through the date hereof, the
"Existing Credit Agreement"), with BNP, as Lender, Initial Issuing Bank and
Agent thereunder, and the other lenders party thereto (together with BNP, the
"Existing Lenders") in order to provide financing for the acquisition and
development of Health Club Facilities (as hereinafter defined), and to provide
working capital for the Borrower and its Subsidiaries (as hereinafter defined).
(2) The Borrower has requested that the Existing Lenders further
amend and restate the Existing Credit Agreement so that, immediately upon the
Third Restatement Date (as hereinafter defined), the Lender Parties would
advance to the Borrower and its Subsidiaries an aggregate amount of up to
$225,000,000.
(3) The Existing Lenders party to the Existing Credit Agreement and
the Borrower have agreed to further amend and restate the Existing Credit
Agreement in order to allow such Existing Lenders to assign a portion of their
Commitments (as defined in the Existing Credit Agreement) to the Restatement
Lenders hereunder and to increase their Term Commitment under the Existing
Credit Agreement in order to refinance the Term Facility (as defined in the
Existing Credit Agreement), and allow the Borrower to pay transaction fees and
expenses and that, from time to time, the Lender Parties would lend to the
Borrower and issue Letters of Credit (as hereinafter defined) for the benefit of
the Borrower to provide working capital for the Borrower and its Subsidiaries,
to provide financing for the acquisition and development of Health Club
Facilities and for other purposes as provided herein. The Lender Parties have
indicated their willingness to agree to lend such amounts on the terms and
conditions of this Agreement.
(4) Simultaneously with the execution hereof, the Existing Lenders
that are not Restatement Lenders have entered into an Assignment and Agreement,
in the form of Exhibit L attached hereto dated as of the date hereof (the
"Assignment Agreement"), with the Restatement Lenders hereunder pursuant to
which such Existing Lenders have agreed to sell and assign to the Restatement
Lenders, and the Restatement Lenders have agreed to purchase and assume, as of
the Third Restatement Date, all of such Existing Lenders' rights and obligations
under the Existing Credit Agreement on the terms set forth in the Assignment
Agreement. After giving effect to such sale and assignment as of the Third
Restatement Date, the Commitments (as hereinafter defined) of, and the amount of
Advances (as hereinafter defined) owing to, each of the Restatement Lenders will
be as set forth on Schedule I.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Adjusted EBITDA" means, for any Rolling Period, the sum of (a)
Consolidated EBITDA of the Parent Guarantor and its Subsidiaries (b) with
respect to any Health Club Investment which constitutes an acquisition of
a Health Club Facility, EBITDA of such Health Club Facility for such
Rolling Period or such shorter period, as appropriate, ending on the last
day of the month immediately preceding the date of the consummation of
such Health Club Investment if the Lender Parties shall have received
financial information of such Health Club Facility with an audit or a
review report by a nationally recognized accounting firm acceptable to the
Administrative Agent, provided, however, that, with respect to any Health
Club Investment consisting of an acquisition of a Health Club Facility
with an aggregate acquisition purchase price (including the amount of any
indebtedness refinanced or assumed, any earnout or similar Obligation in
connection therewith, and all fees and expenses related thereto) which
represents less than 5 % of the Consolidated assets of the Parent
Guarantor and its Subsidiaries immediately before giving effect to such
Health Club Investment, such audit or review report shall only be required
at the request of the Administrative Agent and (c) Pro Forma Adjustments.
"Administrative Agent" has the meaning specified in the recital
of parties to this Agreement.
"Administrative Agent's Account" means the account of the
Administrative Agent maintained by the Administrative Agent at the Federal
Reserve Bank of New York, 00 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, ABA
No. 000000000, for further credit to Account No. 75042070103, or such
other account maintained by the
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Administrative Agent and designated by the Administrative Agent in a
written notice to the Lender Parties and the Borrower.
"Advance" means a Term A Advance, a Term B Advance, a Working
Capital Advance, a Swing Line Advance or a Letter of Credit Advance.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 5 % or more of the
Voting Stock of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
Voting Stock, by contract or otherwise.
"Agents" means each of the Administrative Agent, the Syndication
Agent, the Documentation Agent and the Co-Agents, together, in each case,
with any successor or successors of any thereof appointed pursuant to
Article VII hereof.
"Applicable Lending Office" means, with respect to each Lender
Party, such Lender Party's Domestic Lending Office, in the case of a Base
Rate Advance, and such Lender Party's Eurodollar Lending Office, in the
case of a Eurodollar Rate Advance.
"Applicable Margin" means a percentage per annum determined by
reference to the Leverage Ratio as set forth below:
Leverage Ratio Term A Facility and Term B Facility
Working Capital Facility
Base Rate Base Rate
Advances/Eurodollar Advances/Eurodollar
Rate Advances Rate Advances
Level I
less than 2.00:1.00 0.50%/2.00% 1.00%/2.50%
Level II
2.00:1.00 or greater 0.75%/2.25% 1.25%/2.75%
but
less than 2.75:1.00
Level III
2.75:1.00 or greater
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but
less than 3.50:1.00 1.00%/2.50% 1.50%/3.00%
Level IV
3.50:1.00 or greater 1.25%/2.75% 1.75%/3.25%
The Applicable Margin shall be determined by reference to the Leverage
Ratio in effect from time to time; provided, however, that (a) the
Applicable Margin shall be at Level IV for the period commencing on the
Third Restatement Date until the quarter ending September 30, 1998, (b) no
change in the Applicable Margin shall be effective until three Business
Days after the date on which the Administrative Agent receives financial
statements pursuant to Section 5.03(c) or (d), as the case may be, and a
certificate of the chief financial officer of the Borrower demonstrating
such Ratio, and (c) notwithstanding anything herein to the contrary, the
Applicable Margin shall be at Level IV upon the occurrence and during the
continuance of an Event of Default.
"Appropriate Lender" means, at any time, with respect to (a) the
Term A Facility, the Term B Facility or the Working Capital Facility, a
Lender Party that has a Commitment with respect to such Facility at such
time, (b) the Letter of Credit Facility, (i) the Issuing Bank and (ii) if
the other Working Capital Lenders have made Letter of Credit Advances
pursuant to Section 2.03(c) that are outstanding at such time, each such
other Working Capital Lender and (c) the Swing Line Facility, (i) the
Swing Line Bank and (ii) if the other Working Capital Lenders have made
Swing Line Advances pursuant to Section 2.02(b) that are outstanding at
such time, each such other Working Capital Lender.
"Assignment Agreement" has the meaning specified in the
preliminary statements to this Agreement.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender Party and an Eligible Assignee, and accepted by
the Administrative Agent, in accordance with Section 8.07 and in
substantially the form of Exhibit C hereto.
"Available Amount" of any Letter of Credit means, at any time, the
maximum amount available to be drawn under such Letter of Credit at such
time (assuming compliance at such time with all conditions to drawing).
"Base Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to the
higher of:
(a) the rate of interest announced publicly by BNP in New York
City from time to time as its prime rate (and such term shall not be
construed to be its best or most favorable rate); and
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(b) 1/2 of 1% per annum above the Federal Funds Rate.
"Base Rate Advance" means an Advance that bears interest as provided
in Section 2.07(a)(i).
"BNP" has the meaning specified in the recital of parties to this
Agreement.
"Borrower" has the meaning specified in the recital of parties to
this Agreement.
"Borrower's Account" means the account of the Borrower maintained by
the Borrower with BNP at its office at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Account No. 20183500107, or such other account as may be agreed to
between the Borrower and the Administrative Agent.
"Borrowing" means a Term A Borrowing, a Term B Borrowing, a
Working Capital Borrowing or a Swing Line Borrowing.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in New York City and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.
"Capital Expenditures" means, for any Person for any period, the sum
of, without duplication, (a) all expenditures made, directly or
indirectly, by such Person or any of its Subsidiaries during such period
for equipment, fixed assets, real property or improvements, or for
replacements or substitutions therefor or additions thereto, that have
been or should be, in accordance with GAAP, reflected as additions to
property, plant or equipment on a Consolidated balance sheet of such
Person and (b) the aggregate principal amount of all Debt (including
Obligations under Capitalized Leases) assumed or incurred in connection
with any such expenditures.
"Capitalized Leases" means all leases that have been or should be,
in accordance with GAAP, recorded as capitalized leases.
"Cash Equivalents" means any of the following, to the extent owned
by the Borrower or any of its Subsidiaries free and clear of all Liens,
other than Liens created under the Collateral Documents, and having a
maturity of not greater than 90 days from the date of acquisition thereof:
(a) readily marketable direct obligations of the Government of
the United States or any agency or instrumentality thereof or
obligations unconditionally guaranteed by the full faith and credit
of the Government of the United States;
(b) insured certificates of deposit of or time deposits with
any commercial bank that is a Lender Party or a member of the
Federal Reserve
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System, issues (or the parent of which issues) commercial paper
rated as described in clause (c), is organized under the laws of the
United States or any State thereof and has combined capital and
$1 billion; or
(c) commercial paper in an aggregate amount of no more than
$100,000 per issuer outstanding at any time, issued by any
corporation organized under the laws of any State of the United
States and rated at least "Prime- 1" (or the then equivalent grade)
by Xxxxx'x Investors Service, Inc. or "A- 1 (or the then equivalent
grade) by Standard & Poor's Ratings Group.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency.
"Co-Agents" has the meaning set forth in the recital of parties
to this Agreement.
"Collateral" means all "Collateral" referred to in the Collateral
Documents and all other property that is or is intended to be subject to
any Lien in favor of the Administrative Agent for the benefit of the
Secured Parties.
"Collateral Documents" means the Security Agreement, the Trademark,
Copyright and Patent Security Agreement and any other agreement, document
or instrument that creates or purports to create a Lien in favor of the
Administrative Agent for the benefit of the Secured Parties, including,
without limitation, any financing statements.
"Commitment" means a Term A Commitment, a Term B Commitment, a
Working Capital Commitment or a Letter of Credit Commitment.
"Confidential Information" means information that any Loan Party or
any of its Subsidiaries furnishes to the Administrative Agent or any
Lender Party on a confidential basis, but does not include any such
information that is or becomes generally available to the public or that
is or becomes available to the Administrative Agent or such Lender Party
from a source other than any Loan Party or any of its Subsidiaries
(including Foreign Subsidiaries).
"Consolidated" refers, with respect to any Person, to the
consolidation of accounts of such Person and its Subsidiaries in
accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Parent Guarantor who (i) was a
member of such Board of Directors on the date hereof or (ii) is nominated
for election or elected to such Board of Directors with the affirmative
vote of the MDC Investors.
"Conversion", "Convert" and "Converted" each refer to a conversion
of Advances of one Type into Advances of the other Type pursuant to
Section 2.09 or 2.10.
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"Debt" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all Obligations of
such Person for the deferred purchase price of property or services, (c)
all Obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments, (d) all Obligations of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (e) all
Obligations of such Person as lessee under Capitalized Leases, (f) all
Obligations, contingent or otherwise, of such Person under acceptance,
letter of credit or similar facilities, (g) all Obligations of such Person
to purchase, redeem, retire, defease or otherwise make any payment in
respect of any capital stock of or other ownership or profit interest in
such Person or any other Person, or any warrants, rights or options to
acquire such capital stock, valued, in the case of Redeemable Preferred
Stock, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, (h) all net Obligations of
such Person in respect of Hedge Agreements, (i) all Debt of others
referred to in clauses (a) through (h) above guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly
or indirectly by such Person through an agreement (i) to pay or purchase
such Debt or to advance or supply funds for the payment or purchase of
such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property,
or to purchase or sell services, primarily for the purpose of enabling the
debtor to make payment of such Debt or to assure the holder of such Debt
against loss, (iii) to supply finds to or in any other manner invest in
the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are
rendered) or (iv) otherwise to assure a creditor against loss, and (j) all
Debt referred to in clauses (a) through (i) above of another Person
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on property
(including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for
the payment of such Debt.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"Documentation Agent" has the meaning set forth in the recital of
parties to this Agreement.
"Domestic Lending Office" means, with respect to any Lender Party,
the office of such Lender Party specified as its "Domestic Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender Party, as the case may be, or such
other office of such Lender Party as such Lender Party may from time to
time specify to the Borrower and the Administrative Agent.
"Earnout Notes" means each of (a) the 9 % promissory notes of the
Borrower dated December 31, 1995 in an aggregate principal amount of
$1,579,639.97 as of the
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Third Restatement Date, maturing November 20, 1998 and (b) the 9%
promissory notes of the Borrower dated December 31, 1996 in an aggregate
principal amount of $6,540,186.00 as of the third Restatement Date,
maturing April 15, 1999.
"Earnout I Subordination Agreement" has the meaning specified in
Section 3.01(f)(xi).
"Earnout II Subordination Agreement" has the meaning specified in
Section 3.01(f)(xi).
"EBITDA" means, for any Person, for any period, (a) net income (or
net loss) adjusted to include only the cash impact of deferred revenue and
related deferred costs, deferred rental expense, deferred compensation and
pre-opening store costs plus
(b) the sum of (i) Interest Expense, (ii) income tax expense, (iii)
depreciation expense, (iv) amortization expense, (v) extraordinary or
unusual losses deducted in calculating net income (or net loss), and (vi)
any noncash charges relating to pensions, stock options, stock
appreciation rights and other equity-based incentive plans less
(c) the sum of (i) interest income, (ii) extraordinary or unusual
gains added in calculating net income (or net loss), (iii) any cash
payments (to the extent not included in net income) made in respect of any
earnouts or similar Obligations in connection with the acquisition of any
Health Club Facility
in each case determined in accordance with GAAP for such Person for such period;
provided, however, that for the purposes of calculating EBITDA the following
shall be excluded therefrom (x) such portion of any non-wholly owned
Subsidiary's or Affiliates EBITDA that is attributable to interests not owned by
such person or any of its wholly owned Subsidiaries and that under GAAP would be
otherwise included in calculating EBITDA, (y) the portion of any Subsidiary's or
Affiliate's EBITDA that under GAAP would be otherwise included in calculating
EBITDA to the extent that the declaration of dividends or similar distributions
by that Subsidiary or Affiliate of that EBITDA is restricted by contract or
operation of law (other than by this Agreement), and (z) EBITDA of any Foreign
Subsidiary that under GAAP would be otherwise included in calculating EBITDA,
except to the extent of cash dividends or distributions paid to such person or
any of its wholly owned Subsidiaries; and provided, further, that the EBITDA or
cash dividends or distributions, as the case may be, of all Foreign Subsidiaries
and Affiliates shall not be recognized to the extent such aggregate amount
exceeds 10% of the EBITDA of such Person.
"Eligible Assignee" means (a) with respect to any Facility (other
than the Letter of Credit Facility), (i) a Lender; (ii) an Affiliate of a
Lender; (iii) a Related Fund of a Lender; (iv) a commercial bank organized
under the laws of the United States, or any State thereof, and having a
combined capital and surplus of at least $500,000,000; (v) a savings and
loan association or savings bank organized under the laws of the United
States, or any State thereof, and having a combined capital and surplus of
at least
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$500,000,000; (vi) a commercial bank organized under the laws of any other
country that is a member of the OECD or has concluded special lending
arrangements with the International Monetary Fund associated with its
General Arrangements to Borrow, or a political subdivision of any such
country, and having a combined capital and surplus of at least
$500,000,000, so long as such bank is acting through a branch or agency
located in the United States; (vii) a finance company, insurance company
or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing
or otherwise investing in commercial loans in the ordinary course of its
business and having a combined capital and surplus of at least
$500,000,000; and (viii) any other Person approved by the Administrative
Agent and the Borrower, such approval not to be unreasonably withheld or
delayed; and (b) with respect to the Letter of Credit Facility, a Person
that is an Eligible Assignee under subclause (iv) or (vi) of clause (a) of
this definition and is approved by the Administrative Agent and the
Borrower, such approval not to be unreasonably withheld or delayed;
provided, however, that neither any Loan Party nor an Affiliate of any
Loan Party shall qualify as an Eligible Assignee under this definition.
"Environmental Action" means any administrative, regulatory or
judicial action, suit, demand, demand letter, claim, notice of
non-compliance or violation, notice of liability or potential liability,
investigation, proceeding, consent order or consent agreement relating in
any way to any Environmental Law, any Environmental Permit or any
Hazardous Material or arising from alleged injury or threat to health,
safety or the environment, including, without limitation, (a) by any
governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions or damages and (b) by any governmental
or regulatory authority or third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, decree, or judicial or agency interpretation, policy or
guidance relating to pollution or protection of the environment, health,
safety or natural resources, including without limitation, those relating
to the use, handling, transportation, treatment, storage, disposal,
release or discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental
Law.
"Equipment" has the meaning specified in the Security Agreement.
"Equity Investors" means the MDC Investors and the management
investors listed on Schedule II hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
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"ERISA Affiliate" of any Person means any other Person that for
purposes of Title IV of ERISA is a member of such Person's controlled
group, or under common control with such Person, within the meaning of
Section 414(b) or (c) of the Internal Revenue Code.
"ERISA Event" with respect to any Person means (a) (i) the
occurrence of a reportable event, within the meaning of Section 4043 of
ERISA, with respect to any Plan of such Person or any of its ERISA
Affiliates unless the 30-day notice requirement with respect to such event
has been waived by the PBGC; (ii) the requirements of subsection (1) of
Section 4043(b) of ERISA (without regard to subsection (2) of such
Section) are met with respect to a contributing sponsor, as defined in
Section 4001(a)(13) of ERISA, of a Plan, and an event described in
paragraph (9), (10), (11), (12) or (13) of Section 4043 (c) of ERISA is
reasonably expected to occur with respect to such Plan within the
following 30 days; (b) the application for a minimum funding waiver with
respect to a Plan; (c) the provision by the administrator of any Plan of
such Person or any of its ERISA Affiliates of a notice of intent to
terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred to in Section
4041(e) of ERISA); (d) the cessation of operations at a facility of such
Person or any of its ERISA Affiliates in the circumstances described in
Section 4062(e) of ERISA that could reasonably be expected to result in a
material liability to such Person or any of its ERISA Affiliates pursuant
to Section 4062, 4063 or 4064 of ERISA; (e) the withdrawal by such Person
or any of its ERISA Affiliates from a Multiple Employer Plan during a plan
year for which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA, that could reasonably be expected to result in a
material liability to such Person or any of its ERISA Affiliates pursuant
to Section 4062, 4063 or 4064 of ERISA; (f) the conditions for imposition
of a lien under Section 302(f) of ERISA shall have been met with respect
to any Plan; (g) the adoption of an amendment to a Plan of such Person or
any of its ERISA Affiliates requiring the provision of security to such
Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC
of proceedings to terminate a Plan of such Person or any of its ERISA
Affiliates pursuant to Section 4042 of ERISA that constitutes grounds for
the termination of, or the appointment of a trustee to administer, such
Plan.
"Eurocurrency Liabilities" has the meaning specified in Regulation D
of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Eurodollar Lending Office" means, with respect to any Lender Party,
the office of such Lender Party specified as its "Eurodollar Lending
Office" opposite its name on Schedule I hereto or in the Assignment and
Acceptance pursuant to which it became a Lender Party (or, if no such
office is specified, its Domestic Lending Office), or such other office of
such Lender Party as such Lender Party may from time to time specify to
the Borrower and the Administrative Agent.
"Eurodollar Rate" means, for any Interest Period for all Eurodollar
Rate Advances comprising part of the same Borrowing, an interest rate per
annum equal to the rate per
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annum obtained by dividing (a) the average of the respective rates per
annum (rounded upward to the next whole multiple of 1/1 6th of 1%) posted
by each of the principal London offices of banks posting rates as
displayed on the Telerate screen, page 3750 or such other page as may
replace such page on such service for the purpose of displaying the London
interbank offered rate of major banks for deposits in U.S. Dollars, at
approximately 11:00 A.M. (London time) two Business Days before the first
day of such Interest Period for deposits in an amount substantially equal
to BNP's Eurodollar Rate Advance comprising part of such Borrowing to be
outstanding during such Interest Period (or, if BNP shall not have such a
Eurodollar Rate Advance, $1,000,000) and for a period equal to such
Interest Period by (b) a percentage equal to 100% minus the Eurodollar
Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest as
provided in Section 2.07(a)(ii).
"Eurodollar Rate Reserve Percentage" for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing means the
reserve percentage applicable two Business Days before the first day of
such Interest Period under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New York
City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate
on Eurodollar Rate Advances is determined) having a term equal to such
Interest Period.
Events of Default" has the meaning specified in Section 6.01;
provided, however, that, for purposes of any Subordinated Debt and any
Seller Debt, "Events of Default" shall also include the occurrence of a
Material Adverse Change.
"Existing Credit Agreement" has the meaning specified in the
preliminary statements to this Agreement.
"Existing Debt" means Debt of the Loan Parties and their
Subsidiaries immediately prior to the Third Restatement Date.
"Existing Issuing Bank" has the meaning specified in the recital
of parties to this Agreement.
"Existing Lenders" has the meaning specified in the first
preliminary statement of this Agreement.
"Existing Letters of Credit" has the meaning specified in Section
2.01(d).
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"Extraordinary Receipt" means any cash received by or paid to or for
the account of any Person not in the ordinary course of business,
including, without limitation, pension plan reversions, proceeds of
insurance (other than proceeds of business interruption insurance to the
extent such proceeds constitute compensation for lost earnings),
condemnation awards (and payments in lieu thereof) and indemnity payments;
provided, however, that an Extraordinary Receipt shall not include cash
receipts received from proceeds of insurance to the extent that such
receipts are in respect of loss or damage to equipment, fixed assets or
real property and are applied to (i) replace or repair such equipment,
fixed assets or real property no later than 12 months after the occurrence
of the event giving rise to such receipt, or (ii) reimburse such Person
for expenditures incurred to replace or repair such equipment, fixed
assets or real property where such expenditures were incurred no later
than 12 months after the occurrence of the event giving rise to such
receipt or such receipts constitute reimbursement for expenditures
incurred within such period in respect thereof.
"Facility" means the Term A Facility, the Term B Facility, the
Working Capital Facility, the Swing Line Facility or the Letter of Credit
Facility.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period (i) to the rate
published by the Telerate service on page five of its daily report as the
"New York Offered Rate" as of 10:00 A.M. (New York City time) for such day
(or, if such day is not a Business Day, for the immediately preceding
Business Day) or (ii) if the Telerate service shall cease to publish or
otherwise shall not publish such rates for any day that is a Business Day,
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
that is a Business Day, the average of the quotations for such day for
such transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"FFHLP" means Family Fitness Holdings Limited Partnership, a
California limited partnership.
"FFHLP Subordinated Notes" means the 9% promissory notes of the
Borrower dated June 30, 1995 in the aggregate principal amount of
$10,100,000 maturing January 1, 2002.
"FFHLP Subordination Agreement" has the meaning specified in
Section 3.01(f)(xi).
"Final Maturity Date" means the earlier of December 31, 2004 and the
date of termination in whole of the Term A Commitments, the Term B
Commitments, the Letter of Credit Commitments and the Working Capital
Commitments pursuant to Section 2.05 or 6.01.
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"Fiscal Quarter" means a fiscal quarter of the Parent Guarantor
ending on each March 31, June 30, September 30 and December 31 in any
calendar year.
"Fixed Charge Coverage Ratio" means, with respect to any Person for
any period, the ratio of (a) Consolidated EBITDA for such Person and its
Subsidiaries for such period to (b) the sum of (i) Interest Expense paid
in cash of such Person and its Subsidiaries for such period, (ii)
regularly scheduled principal payments of Funded Debt of such Person and
its Subsidiaries made during such period and (iii) income taxes of such
Person and its Subsidiaries that have been paid in cash during such
period.
"Foreign Subsidiary" means any Subsidiary of the Borrower that is
not a U.S. Subsidiary.
"Funded Debt" means all Debt of the Parent Guarantor and any of its
Subsidiaries that by its terms matures more than one year after the date
of creation or matures within one year from such date but is renewable or
extendible, at the option of the Parent Guarantor or any of its
Subsidiaries, to a date more than one year after such date or arises under
a revolving credit or similar agreement that obligates the lender or
lenders to extend credit during a period of or more than one year after
such date (including, without limitation, all amounts of Funded Debt of
the Parent Guarantor and any of its Subsidiaries required to be paid or
prepaid within one year after the date of determination), other than the
Subordinated Debt, any intercompany debt and any earnout or similar
Obligation in connection with the acquisition of any Health Club Facility.
"GAAP" has the meaning specified in Section 1.03.
"Gamma Fund LLC" means the Gamma Fund LLC, a California limited
liability company.
"Guaranty Supplement" has the meaning specified in the Subsidiary
Guaranty.
"Hazardous Materials" means (a) petroleum or petroleum products,
radioactive materials, asbestos-containing materials and radon gas and (b)
any other chemicals, materials or substances designated, classified or
regulated as being "hazardous" or "toxic" or words of similar import under
any Environmental Law.
"Health Club Facility" means a fitness center or health/athletic
club of the type currently operated by the Borrower, or any of its
components related to, and located on or adjacent to the premises of, such
fitness center or health/athletic club, including' without limitation, the
corporate office thereof, cardiovascular and weight training, aerobic
classes, sports and rehabilitation therapy and therapeutic massage.
"Health Club Investment" means any purchase or other acquisition of
all of the capital stock or other ownership or profit interest, warrants,
rights, options, obligations or other securities of, or any other
investment in, any Health Club Facility or any Capital Expenditure in
connection with any Health Club Facility or any other expenditure for any
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other asset or property (tangible or intangible) in connection with the
purchase or development of any Health Club Facility.
"Hedge Agreements" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements.
"Hedge Banks" has the meaning specified in the Security Agreement.
"Holdings Account" means the account of the Parent Guarantor
maintained by the Parent Guarantor with BNP at its office at 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Account No. 20194800122, or such other
account as may be agreed to between the Parent Guarantor and the
Administrative Agent.
"Holdings Guaranty" has the meaning specified in Section
3.01(f)(x).
"Holdings Notes" means the promissory notes of the Parent Guarantor
in favor of the Borrower as described in Schedule IV hereto.
"Holdings Pledge Agreement" has the meaning specified in Section
3.01(f)(ix).
"Holdings Subordination Agreement" has the meaning specified in
Section 3.01(f)(xi).
"Indemnified Costs" has the meaning specified in Section 7.05(a).
"Indemnified Party" has the meaning specified in Section 8.04(b).
"Insufficiency" means, with respect to any Plan, the amount, if any,
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of
ERISA.
"Intercompany Subordination Agreement" has the meaning specified
in Section 5.02(b)(i)(F).
"Interest Coverage Ratio" means, with respect to any Person for any
period, the ratio of (a) Consolidated EBITDA of such Person and its
Subsidiaries for such period to (b) Interest Expense paid in cash of such
Person and its Subsidiaries for such period.
"Interest Expense" means, with respect to any Person for any period,
the amount of interest expense (including the interest component on
obligations under Capitalized Leases), whether paid or accrued, on all
Debt of such Person and its Subsidiaries for such period, including,
without limitation and without duplication, (a) interest expense in
respect of Debt resulting from Advances, (b) commissions, discounts and
other fees and charges payable in connection with letters of credit
(including, without limitation, any Letters of Credit), (c) any net
payment payable in connection with Hedge Agreements less any net credits
received in connection with Hedge Agreements and (d) all other noncash
interest but excluding amortization with regard to deferred financing
fees.
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"Interest Period" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such
Eurodollar Rate Advance or the date of the Conversion of any Base Rate
Advance into such Eurodollar Rate Advance and ending on the last day of
the period selected by the Borrower pursuant to the provisions below and,
thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three or six
months, as the Borrower may, upon notice received by the Administrative
Agent not later than 1:00 P.M. (New York City time) on the third Business
Day prior to the first day of such Interest Period, select; provided,
however, that:
(a) the Borrower may not select any Interest Period with respect to
any Eurodollar Rate Advance under a Facility that ends after any principal
repayment installment date for such Facility unless, after giving effect
to such selection, the aggregate principal amount of Base Rate Advances
and of Eurodollar Rate Advances having Interest Periods that end on or
prior to such principal repayment installment date for such Facility shall
be at least equal to the aggregate principal amount of Advances under such
Facility due and payable on or prior to such date;
(b) Interest Periods commencing on the same date for Eurodollar Rate
Advances comprising part of the same Borrowing shall be of the same
duration;
(c) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business Day,
provided, however, that, if such extension would cause the last day of
such Interest Period to occur in the next following calendar month, the
last day of such Interest Period shall occur on the immediately preceding
Business Day; and
(d) whenever the first day of any Interest Period occurs on a day of
an initial calendar month for which there is no numerically corresponding
day in the calendar month that succeeds such initial calendar month by the
number of months equal to the number of months in such Interest Period,
such Interest Period shall end on the last Business Day of such succeeding
calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Inventory" has the meaning specified in the Security Agreement.
"Investment" in any Person means any loan or advance to such Person,
any purchase or other acquisition of any capital stock or other ownership
or profit interest, warrants, rights, options, obligations or other
securities of such Person, any capital contribution to such Person or any
other investment in such Person, including, without
-15-
limitation, any arrangement pursuant to which the investor incurs Debt of
the types referred to in clause (i) or (j) of the definition of "Debt" in
respect of such Person.
"Issuing Bank" means the Existing Issuing Bank and each Eligible
Assignee that becomes an issuer of Letters of Credit hereunder pursuant to
Section 8.07.
"L/C Cash Collateral Account" has the meaning specified in the
Security Agreement.
"L/C Related Documents" has the meaning specified in Section
2.04(d)(ii)(A).
"Lender Party" means any Lender, the Swing Line B ank or the
Issuing Bank.
"Lenders" means the Restatement Lenders and each Person that shall
become a Lender hereunder pursuant to Section 8.07.
"Letter of Credit Advance" means an advance made by the Issuing Bank
or any Working Capital Lender pursuant to Section 2.03(c).
"Letter of Credit Agreement" has the meaning specified in Section
2.03(a).
"Letter of Credit Commitment" means, with respect to the Issuing
Bank at any time, the amount set forth opposite the Issuing Bank's name on
Schedule I hereto under the caption "Letter of Credit Commitment" or, if
the Issuing Bank has entered into an Assignment and Acceptance, set forth
for the Issuing Bank in the Register maintained by the Administrative
Agent pursuant to Section 8.07(e) as the Issuing Bank's "Letter of Credit
Commitment", as such amount may be reduced at or prior to such time
pursuant to Section 2.05.
"Letter of Credit Facility" means, at any time, an amount equal to
the aggregate amount of the Issuing Bank's Letter of Credit Commitment at
such time.
"Letters of Credit" has the meaning specified in Section 2.01(d).
"Leverage Ratio" means, with respect to any Person for any Rolling
Period, the ratio of (a) Funded Debt of such Person and its Subsidiaries
as of the last day for such Rolling Period to (b) Consolidated Adjusted
EBITDA of such Person and its Subsidiaries for such Rolling Period.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on
title to real property.
"Loan Documents" means this Agreement, the Notes, the Holdings
Guaranty, the Subsidiary Guaranty, the Holdings Pledge Agreement, the
Collateral Documents, each
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Letter of Credit Agreement and each other agreement evidencing the payment
of obligations secured by the Collateral Documents.
"Loan Parties" means the Parent Guarantor, the Borrower and each
Subsidiary Guarantor.
"Management Option Plan" means the 1994 Stock Option and Stock Award
Plan of the Parent Guarantor as amended from time to time.
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Loan Parties and their Subsidiaries, taken
as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Loan Parties and their Subsidiaries, taken
as a whole, (b) the rights and remedies of the Administrative Agent or any
Lender Party under any Loan Document or any Related Document or (c) the
ability of any Loan Party to perform its Obligations under any Loan
Document or any Related Document to which it is or is to be a party.
"MDC" means XxXxxx De Leeuw & Co.
"MDC III" means XxXxxx De Leeuw & Co. III, L.P., a California
limited partnership.
"MDC Asia" means XxXxxx De Leeuw & Co. III (Asia), L.P., a Bermuda
limited partnership.
"MDC Europe" means XxXxxx De Leeuw & Co. III (Europe), L.P., a
Bermuda limited partnership.
"MDC Investors" means the Gamma Fund LLC, MDC III, MDC Asia, MDC
Europe and any other partnership with the same controlling general partner
as any of the above.
"MDC Management Agreement" means the Management Agreement dated
December 29, 1994, as amended through the date hereof, between certain
Affiliates of MDC and the Parent Guarantor as further amended from time to
time (as permitted by Section 5.02(k)).
"Monthly Rolling Period" means, with respect to any month, the
consecutive 12-month period ending on the last day of such month.
"Multiemployer Plan" of any Person means a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, to which such Person or any of its
ERISA Affiliates is
-17-
making or accruing an obligation to make contributions, or has within any
of the preceding five plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" of any Person means a single employer plan,
as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of such Person or any of its ERISA Affiliates and at least one
Person other than such Person and its ERISA Affiliates or (b) was so
maintained and in respect of which such Person or any of its ERISA
Affiliates could have liability under Section 4064 or 4069 of ERISA in the
event such plan has been or were to be terminated.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer
or other disposition of any asset or the incurrence or issuance of any
Debt or capital stock or other ownership or profit interest, any
securities convertible into or exchangeable for capital stock or other
ownership or profit interest or any warrants, rights, options or other
securities to acquire capital stock or other ownership or profit interest
by any Person, or any Extraordinary Receipt received by or paid to or for
the account of any Person, the aggregate amount of cash received from time
to time (whether as initial consideration or through payment or
disposition of deferred consideration) by or on behalf of such Person in
connection with such transaction after deducting therefrom only (a)
reasonable and customary registration fees, brokerage commissions,
underwriting fees and discounts, legal fees, finder's fees and other
similar fees and commissions, (b) the amount of taxes payable in
connection with or as a result of such transaction and (c) any repayments
by such Person of Debt to the extent such Debt is secured by a Lien on the
property that is the subject of such sale, lease, transfer or other
disposition, in each case to the extent, but only to the extent, that the
amounts so deducted are, at the time of receipt of such cash, actually
paid to a Person that is not an Affiliate of such Person or any Loan Party
or any Affiliate of such Loan Party (other than MDC or an Affiliate of MDC
to the extent that such fees are reasonable and customary for similar
transactions for such sale, lease, transfer or other disposition) and are
properly attributable to such transaction or to the asset that is the
subject thereof.
"Note" means a Term A Note, a Term B Note or a Working Capital Note.
"Notice of Borrowing" has the meaning specified in Section
2.02(a).
"Notice of Issuance" has the meaning specified in Section 2.03(a).
"Notice of Swing Line Borrowing" has the meaning specified in
Section 2.02(b).
"NPL" means the National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended.
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or
not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent,
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matured, disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not such claim is discharged, stayed or otherwise affected by
any proceeding referred to in Section 6.01(f). Without limiting the
generality of the foregoing, the Obligations of the Loan Parties under the
Loan Documents include (a) the obligation to pay principal, interest,
Letter of Credit commission, premiums, charges, expenses, fees, reasonable
attorneys' fees and disbursements, indemnities and other amounts payable
by any Loan Party under any Loan Document and (b) the obligation of any
Loan Party to reimburse any amount in respect of any of the foregoing that
any Lender Party, in its sole discretion, may elect to pay or advance on
behalf of such Loan Party.
"OECD" means the Organization for Economic Cooperation and
Development.
"Open Year" has the meaning specified in Section 4.01(y).
"Other Taxes" has the meaning specified in Section 2.12(b).
"Parent Guarantor" has the meaning specified in the recital of
parties to this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall
have been commenced: (a) Liens for taxes, assessments and governmental
charges or levies to the extent not required to be paid under Section
5.01(b) hereof; (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar
Liens arising in the ordinary course of business securing obligations that
(i) are not overdue for a period of more than 30 days and (ii) either
individually or when aggregated with all other Permitted Liens outstanding
on any date of determination, do not materially affect the use or value of
the property to which they relate; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to
secure public or statutory obligations; and (d) easements, rights of way
and other encumbrances on title to real property that do not render title
to the property encumbered thereby unmarketable or materially adversely
affect the use of such property for its present purposes.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Preferred Stock" means, with respect to any corporation, capital
stock issued by such corporation that is entitled to a preference or
priority over any other capital stock
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issued by such corporation upon any distribution of such corporation's
assets, whether by dividend or upon liquidation.
"Prepayment Amount" has the meaning specified in Section
5.03(a)(ii).
"Prepayment Date" has the meaning specified in Section
5.03(a)(ii).
"Prepayment Notice" has the meaning specified in Section
5.03(a)(ii).
"Pro Forma Adjustments" means (i) any adjustments certified by the
chief financial officer of the Parent Guarantor, that would, in the
reasonable determination of the Parent Guarantor satisfy the requirements
of Rule 11-02(a) of Regulation S-X of the Securities Act of 1933, as
amended as if included in a registration statement filed with the
Securities and Exchange Commission and (ii) any other operating expense
reductions reasonably expected to result from any acquisition of stock or
assets of a Health Club Facility, if such expected reductions are (1) set
forth in reasonable detail in a plan approved by and set forth in
resolutions adopted by the Board of Directors of the Parent Guarantor, and
(2) limited to operating expenses specified in such plan (and, if any
reductions are set forth in a range, the lowest amount of such range) that
would otherwise have resulted in the payment of cash within twelve months
after the date of consummation of such transaction, net of any operating
expenses (other than extraordinary items, non-recurring or temporary
charges and other similar one-time expenses) reasonably expected to be
incurred to implement such plan, and that are to be paid in cash during
such twelve-month period, certified by the chief financial officer of the
Parent Guarantor.
"Pro Rata Share" of any amount means, with respect to any Working
Capital Lender, Term A Lender, or Term B Lender at any time, the product
of such amount times a fraction the numerator of which is the amount of
such Working Capital Lender's Working Capital Commitment, Term A Lender's
Term A Commitment, or Term B Lender's Term B Commitment, as the case may
be, at such time and the denominator of which is the Working Capital
Facility, the Term A Facility or the Term B Facility, respectively, at
such time.
"Quarterly Rolling Period" means, with respect to any Fiscal
Quarter, the consecutive period of four Fiscal Quarters ending on the last
day of such Fiscal Quarter.
"Redeemable" means, with respect to any capital stock or other
ownership or profit interest, Debt or other right or Obligation, any such
capital stock, ownership interest, Debt, right or Obligation that (a) the
issuer has undertaken to redeem at a fixed or determinable date or dates,
whether by operation of a sinking fund or otherwise, or upon the
occurrence of a condition not solely within the control of the issuer or
(b) is redeemable at the option of the holder.
"Register" has the meaning specified in Section 8.07(e).
-20-
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Related Documents" means the MDC Management Agreement, the Tax
Sharing Agreement, the Holdings Notes, the Holdings Subordination
Agreement, the FFHLP Subordinated Note, the FFHLP Subordination Agreement,
the Earnout Notes, the Earnout I Subordination Agreement, the Earnout II
Subordination Agreement, the Texas Note, the Texas Subordination
Agreement, any Intercompany Subordination Agreement, any Seller Debt
Document and any Seller Subordination Agreement.
"Related Fund" means, with respect to any Lender that is a fund that
invests in loans, any other fund that invests in loans and is managed by
the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
"Required Lenders" means Lenders at any time owed or holding at
least 51 % of the sum of (a) the aggregate principal amount of the
Advances outstanding at such time, (b) the aggregate Available Amount of
all Letters of Credit outstanding at such time, (c) the aggregate unused
Commitments under the Term A Facilities and Term B Facilities at such time
and (d) the aggregate Unused Working Capital Commitments at such time. For
purposes of this definition, the aggregate principal amount of the Swing
Line Advances owing to the Swing Line Bank and of Letter of Credit
Advances owing to the Issuing Bank and the Available Amount of each Letter
of Credit shall be considered to be owed to the Working Capital Lenders
ratably in accordance with their respective Working Capital Commitments.
"Restatement Lenders" has the meaning specified in the recital of
parties to this Agreement.
"Restricted Capex_Period" means the consecutive 12-month period
commencing (A) the date immediately following the end of the last day of
the later of any two Quarterly Rolling Periods ending in any single
12-month period prior to January 1, 2001 during which the Leverage Ratio
exceeds the level specified in Section 5.02(e)(v)(A), or (B) January 1,
2001. For the purposes of clause (A), such Restricted Capex Period shall
end on the date immediately following the end of the last day of the later
of any two consecutive Quarterly Rolling Periods during which the Leverage
Ratio is equal to or less than the level specified in Section
5.02(e)(v)(A). Notwithstanding anything to the contrary contained in this
definition, a new Restricted Capex Period shall commence on the date
immediately following the end of the last day of the most recently ended
Restricted Capex Period (in the case of clause (A), a new Restricted Capex
Period will occur if the Leverage Ratio shall exceed the level specified
in Section 5.02(e)(v)(A) during either one of the last two Quarterly
Rolling Periods of such recently ended Restricted Capex Period).
"Rolling Period" means a Monthly Rolling Period or a Quarterly
Rolling Period, as the case may be.
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"Secured Obligations" has the meaning specified in the Security
Agreement.
"Secured Parties" means the Agents, the Lender Parties, the Hedge
Banks and the other Persons the Obligations owing to which are or are
purported to be secured by the Collateral under the terms of the
Collateral Documents.
"Security Agreement" has the meaning set forth in Section
3.01(f)(viii).
"Seller Debt" means Debt permitted under Section 5.02(b)(i)(B).
"Seller Debt Documents" means any agreement, instrument or other
document evidencing Seller Debt.
"Seller Subordination Agreement" has the meaning specified in
Section 5.02(b)(i)(B).
"Single Employer Plan" of any Person means a single employer plan,
as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of such Person or any of its ERISA Affiliates and no Person
other than such Person and its ERISA Affiliates or (b) was so maintained
and in respect of which such Person or any of its ERISA Affiliates could
have liability under Section 4069 of ERISA in the event such plan has been
or were to be terminated.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of
such Person is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person, (b) the
present fair salable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay such debts and liabilities
as they mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute an unreasonably small
capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Standby Letter of Credit" means any Letter of Credit issued under
the Letter of Credit Facility, other than a Trade Letter of Credit.
"Subordinated Debt" means the Earnout Notes, the FFHLP Subordinated
Notes, and the Texas Note.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which)
50% or more of (a) the issued and outstanding capital stock having
ordinary voting power to elect a majority of
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the Board of Directors of such corporation (irrespective of whether at the
time capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency), (b)
the interest in the capital or profits of such limited liability company,
partnership or joint venture or (c) the beneficial interest in such trust
or estate, is at the time directly or indirectly owned or controlled by
such Person, by such Person and one or more of its other Subsidiaries, or
by one or more of such Person's other Subsidiaries; provided, however,
that for the purposes of this Agreement, all references to "Subsidiary" or
"Subsidiaries" shall exclude a Foreign Subsidiary or Foreign Subsidiaries,
as the case may be, unless otherwise specifically noted.
"Subsidiary Guarantor" means any Subsidiary of the Borrower that
shall have executed and delivered a Subsidiary Guaranty pursuant to
Sections 5.01(m) or 5.01(o).
"Subsidiary Guaranty" has the meaning specified in Section
5.01(o).
"Surviving Debt" has the meaning specified in Section 3.01(d).
"Swing Line Advance" means an advance made by (a) the Swing Line
Bank pursuant to Section 2.01(e) or (b) any Working Capital Lender
pursuant to Section 2.02(b).
"Swing Line Bank" has the meaning set forth in the recital of
parties to this Agreement.
"Swing Line Borrowing" means a borrowing consisting of a Swing Line
Advance made by the Swing Line Bank.
"Swing Line Facility" has the meaning specified in Section
2.01(e).
"Syndication Agent" has the meaning set forth in the recital of
parties to this Agreement.
"Tax Sharing Agreement" means the Tax Sharing Agreement dated as of
December 29, 1994 among the Borrower, the Parent Guarantor and NorCal FIT
Corp., a California corporation, as amended, supplemented or otherwise
modified from time to time in accordance with its terms, to the extent
permitted in accordance with the Loan Documents.
"Taxes" has the meaning specified in Section 2.12(a).
"Term A Advance" has the meaning specified in Section 2.01(a).
"Term A Borrowing" means a borrowing consisting of simultaneous Term
A Advances of the same Type made by the Term A Lenders.
"Term A Commitment" means, with respect to any Term A Lender at any
time, the amount set forth opposite such Term A Lender's name on Schedule
I hereto under the
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caption "Term A Commitment" or, if such Term A Lender has entered into one
or more Assignments and Acceptances, the aggregate amount set forth for
such Term A Lender in the Register maintained by the Administrative Agent
pursuant to Section 8.07(e) as such Term A Lender's "Term A Commitment",
as such amount may be reduced at or prior to such time pursuant to Section
2.05.
"Term A Facility" means, at any time, the aggregate amount of the
Term A Lenders' Term A Commitments at such time.
"Term A Lender" means any Lender that has a Term A Commitment.
"Term A Notes" means promissory notes of the Borrower payable to the
order of any Lender, in substantially the form of Exhibit A- I hereto,
evidencing the indebtedness of the Borrower to such Lender resulting from
the Term A Advance made by such Lender.
"Term Advance" means a Term A Advance or a Term B Advance.
"Term B Advance" has the meaning specified in Section 2.01(b).
"Term B Borrowing" means a borrowing consisting of simultaneous Term
B Advances of the same Type made by the Term B Lenders.
"Term B Commitment" means, with respect to any Term B Lender at any
time, the amount set forth opposite such Term B Lender's name on Schedule
I hereto under the caption "Term B Commitment" or, if such Term B Lender
has entered into one or more Assignments and Acceptances, the aggregate
amount set forth for such Term B Lender in the Register maintained by the
Administrative Agent pursuant to Section 8.07(e) as such Term B Lender's
"Term B Commitment", as such amount may be reduced at or prior to such
time pursuant to Section 2.05.
"Term B Facility" means, at any time, the aggregate amount of the
Term B Lenders' Term B Commitments at such time.
"Term B Lender" means any Lender that has a Term B Commitment.
"Term B Notes" means promissory notes of the Borrower payable to the
order of any Lender, in substantially the form of Exhibit A-2 hereto,
evidencing the indebtedness of the Borrower to such Lender resulting from
the Term B Advance made by such Lender.
"Termination Date" means the earlier of (a) December 31, 2002 and
(b) the date of termination in whole of the Term A Commitments, the Term B
Commitments, the Letter of Credit Commitments and the Working Capital
Commitments pursuant to Section 2.05 or 6.01.
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"Texas Note" means the 9% promissory note of the Borrower dated
October 24, 1996 in favor of Landhigh Investments, Inc. in the principal
amount of $4,600,000 maturing on September 30, 2001.
"Texas Subordination Agreement" has the meaning specified in
Section 3.01(f)(xi).
"Third Restatement Date" has the meaning specified in Section
3.01.
"Trade Letter of Credit" means any Letter of Credit that is issued
under the Letter of Credit Facility for the benefit of a supplier of
Inventory to the Borrower or any of its Subsidiaries to effect payment for
such Inventory, the conditions to drawing under which include the
presentation to the Issuing Bank of negotiable bills of lading, invoices
and related documents sufficient, in the judgment of the Issuing Bank, to
create a valid and perfected lien or security interest on such Inventory.
"Trademark, Copyright and Patent Security Agreement" has the
meaning specified in Section 5.01(m).
"Type" refers to the distinction between Advances bearing interest
at the Base Rate and Advances bearing interest at the Eurodollar Rate.
"Unused Working Capital Commitment" means, with respect to any
Working Capital Lender at any time, (a) such Lender's Working Capital
Commitment at such time less (b) the sum of (i) the aggregate principal
amount of all Working Capital Advances, Swing Line Advances and all Letter
of Credit Advances made by such Lender and outstanding at such time and
(ii) such Lender's Pro Rata Share of (A) the aggregate Available Amount of
all Letters of Credit outstanding at such time, (B) to the extent not
included in clause (b)(i) of this definition, the aggregate principal
amount of all Letter of Credit Advances made by the Issuing Bank pursuant
to Section 2.03(c) and outstanding at such time and (C) to the extent not
included in clause (b)(1) of this definition, the aggregate principal
amount of all Swing Line Advances made by the Swing Line Bank pursuant to
Section 2.02(b) and outstanding at such time.
"U.S. Subsidiary" means any Subsidiary of the Borrower organized
under the laws of any State of the United States and that has
substantially all of its assets located in the United States.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, if the right so to vote has been suspended by the happening of
such a contingency.
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"Welfare Plan" means a welfare plan as defined in Section 3(l) of
ERISA, that is maintained for employees of any Loan Party or in respect of
which any Loan Party could have a liability.
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
"Working Capital Advance" has the meaning specified in Section
2.01(c).
"Working Capital Borrowing" means a borrowing consisting of
simultaneous Working Capital Advances of the same Type made by the Working
Capital Lenders.
"Working Capital Commitment" means, with respect to any Working
Capital Lender at any time, the amount set forth opposite such Lender's
name on Schedule I hereto under the caption "Working Capital Commitment"
or, if such Lender has entered into one or more Assignment and
Acceptances, set forth for such Lender in the Register maintained by the
Administrative Agent pursuant to Section 8.07(e) as such Lender's "Working
Capital Commitment", as such amount may be reduced at or prior to such
time pursuant to Section 2.05.
"Working Capital Facility" means, at any time, the aggregate amount
of the Working Capital Lenders' Working Capital Commitments at such time.
"Working Capital Lender" means any Lender that has a Working
Capital Commitment.
"Working Capital Note" means a promissory note of the Borrower
payable to the order of any Working Capital Lender, in substantially the
form of Exhibit A-3 hereto, evidencing the aggregate indebtedness of the
Borrower to such Lender resulting from the Working Capital Advances made
by such Lender.
SECTION 1.02. Computation Of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(f) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances. (a) The Term A Advances. Each Term A
Lender severally agrees, on the terms and conditions hereinafter set forth, to
make a single
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advance (a "Term A Advance") to the Borrower on any Business Day during the
period from the date hereof until December 31, 1997 in an amount not to exceed
such Lender's Term A Conunitment at such time. The Term A Borrowing shall
consist of Term A Advances made simultaneously by the Term A Lenders ratably
according to their Term A Commitments. Amounts borrowed under this Section
2.01(a) and repaid or prepaid may not be reborrowed.
(b) The Term B Advances. Each Term B Lender severally agrees, on the
terms and conditions hereinafter set forth, to purchase and assume on the Third
Restatement Date an undivided interest in the "Term Advances" and "Term
Commitments" (as such terms are defined in the Existing Credit Agreement) of the
Existing Lenders under the Existing Credit Agreement as set forth on Schedule I
to the Assignment Agreement in an amount equal to such Restatement Lender's
ratable share thereof as set forth in such Schedule 1. Such purchase shall be
made by such payment, on such notice, and otherwise on such terms, as are
provided under this Agreement and the Assignment Agreement as though such
purchase were a Borrowing hereunder. The "Term Advances" under the Existing
Credit Agreement, together with all accrued interest and fees on each such
"Advance", so purchased shall be redesignated Term B Advances hereunder. In
furtherance of the foregoing, each Restatement Lender hereby authorizes and
directs the Administrative Agent to accept the Assignment Agreement on behalf of
such Restatement Lender. In addition to the "Term Advances" purchased by the
Restatement Lenders pursuant to this Section 2.01(b), each Term B Lender
severally agrees, on the terms and conditions hereinafter set forth, to make a
single advance (a "Term B Advance") to the Borrower on the Third Restatement
Date in an amount equal to the amount by which such Term B Lender's Term B
Commitment exceeds the "Term Advances" purchased by such Term B Lender pursuant
to this Section 2.01(b) on the Third Restatement Date. The Term B Borrowing
shall consist of Term B Advances made simultaneously by the Term B Lenders
ratably according to their Term B Commitments. Amounts borrowed under this
Section 2.01(b) and repaid or prepaid may not be reborrowed.
(c) The Working Capital Advances. Each Working Capital Lender
severally agrees, on the terms and conditions hereinafter set forth, to purchase
and assume on the Third Restatement Date an undivided interest in the Working
Capital Advances and Working Capital Commitments (as such terms are defined in
the Existing Credit Agreement) of the Existing Lenders under the Existing Credit
Agreement as set forth on Schedule I to the Assignment Agreement in an amount
equal to such Restatement Lender's ratable share thereof as set forth in such
Schedule I. Such purchase shall be made by such payment, on such notice, and
otherwise on such terms, as are provided under this Agreement and the Assignment
Agreement as though such purchase were a Borrowing hereunder. The "Working
Capital Advances" under the Existing Credit Agreement, together with all accrued
interest and fees on each such "Advance", so purchased shall be redesignated
Working Capital Advances hereunder. In furtherance of the foregoing, each
Restatement Lender hereby authorizes and directs the Administrative Agent to
accept the Assignment Agreement on behalf of such Restatement Lender. In
addition to the "Working Capital Advances" purchased by the Restatement Lenders
pursuant to this Section 2.01(c), each Working Capital Lender severally agrees,
on the terms and conditions hereinafter set forth, to make advances (each, a
"Working Capital Advance") to the Borrower from time to time on any Business Day
during the period from the Third Restatement Date until the
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Termination Date in an amount for each such Advance not to exceed such Lender's
Unused Working Capital Commitment on such Business Day. Each Working Capital
Borrowing shall be in an aggregate amount of $2,000,000 or an integral multiple
of $100,000 in excess thereof and shall consist of Working Capital Advances made
simultaneously by the Working Capital Lenders ratably according to their Working
Capital Commitments. Within the limits of each Working Capital Lender's Unused
Working Capital Commitment in effect from time to time, the Borrower may borrow
under this Section 2.01(c), prepay pursuant to Section 2.06(a) and reborrow
under this Section 2.01(c).
(d) Letters of Credit. Pursuant to the Existing Credit Agreement,
the Existing Issuing Bank has issued Letters of Credit (such Letters of Credit
as are outstanding on the Third Restatement Date under the Existing Credit
Agreement and set forth on Schedule III being the "Existing Letters of Credit")
for the account of the Borrower. Effective as of the Third Restatement Date,
each Existing Letter of Credit shall be deemed to be a Letter of Credit under
this Agreement and each Existing Lender will be deemed to have sold and
transferred an undivided interest and participation in respect of the Existing
Letters of Credit and each Working Capital Lender will be deemed to have
purchased and received, without further action on the part of any party, an
undivided interest and participation in such Existing Letters of Credit, based
upon such Working Capital Lender's Pro Rata Share of its Working Capital
Commitment under this Agreement. Any such interest and participation so
purchased shall automatically become an undivided interest and participation in
such Letter of Credit. In addition, the Borrower may request the Issuing Bank,
on the terms and conditions hereinafter set forth, to issue, and the Issuing
Bank may, if in its sole discretion it elects to do so, issue, additional
letters of credit (the "Letters of Credit") for the account of the Borrower from
time to time on any Business Day during the period from the Third Restatement
Date until 60 days before the Termination Date (i) providing that the aggregate
Available Amount under all outstanding Letters of Credit shall not exceed
$5,000,000 at any one time and (ii) in an Available Amount for each such Letter
of Credit not to exceed the lesser of (x) the Letter of Credit Facility at such
time and (y) the Unused Working Capital Commitments of the Working Capital
Lenders at such time. No Letter of Credit shall have an expiration date
(including all rights of the Borrower or the beneficiary to require renewal)
later than the earlier of 60 days before the Termination Date and (A) in the
case of a Standby Letter of Credit, one year after the date of issuance thereof,
but may by its terms be renewable annually with the consent of the Issuing Bank
and the Administrative Agent, and (B) in the case of a Trade Letter of Credit,
60 days after the date of issuance thereof. So long as the Issuing Bank, in its
sole discretion, elects to issue Letters of Credit, the Borrower may request the
issuance of Letters of Credit under this Section 2.01(d), repay any Letter of
Credit Advances resulting from drawings thereunder pursuant to Section 2.03(c)
and request the issuance of additional Letters of Credit under this Section
2.01(d).
(e) The Swing Line Advances. The Borrower may request the Swing Line
Bank to make, and the Swing Line Bank may, if in its sole discretion it elects
to do so, make, on the terms and conditions hereinafter set forth, SwingLine
Advances to the Borrower from time to time on any Business Day during the period
from the Third Restatement Date until the Termination Date (i) in an aggregate
amount not to exceed at any time outstanding $3,000,000 (the "Swing Line
Facility") and (ii) in an amount for each such Swing Line Borrowing not to
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exceed the aggregate of the Unused Working Capital Commitments of the Working
Capital Lenders at such time. No Swing Line Advance shall be used for the
purpose of funding the payment of principal of any other Swing Line Advance.
Each Swing Line Borrowing shall be in an amount of $250,000 or an integral
multiple of $100,000 in excess thereof and shall be made as a Base Rate Advance.
Within the limits of the Swing Line Facility and within the limits referred to
in clause (ii) above, so long as the Swing Line Bank, in its sole discretion,
elects to make Swing Line Advances, the Borrower may borrow under this Section
2.01(e), repay pursuant to Section 2.04(c) or prepay pursuant to Section 2.06(a)
and reborrow under this Section 2.01(e).
SECTION 2.02. Making the Advances. (a) Except as otherwise provided
in Section 2.02(b) or 2.03, each Borrowing shall be made on notice, given not
later than 1:00 P.M. (New York City time) on the third Business Day prior to the
date of the proposed Borrowing in the case of a Borrowing consisting of
Eurodollar Rate Advances or on the first Business Day prior to the date of the
proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances,
by the Borrower to the Administrative Agent, which shall give to each
Appropriate Lender prompt notice thereof. Each such notice of a Borrowing (a
"Notice of Borrowing") shall be in substantially the form of Exhibit B hereto,
specifying therein the requested (i) date of such Borrowing, (ii) Facility under
which such Borrowing is to be made, (iii) Type of Advances comprising such
Borrowing, (iv) aggregate amount of such Borrowing and (v) in the case of a
Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for
each such Advance. Each Appropriate Lender shall, before 1:00 P.M. (New York
City time) on the date of such Borrowing, make available for the account of its
Applicable Lending Office to the Administrative Agent at the Administrative
Agent's Account, in same day funds, such Lender's ratable portion of such
Borrowing in accordance with the respective Commitments under the applicable
Facility of such Lender and the other Appropriate Lenders. After the
Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such finds available to the Borrower by crediting the Borrower's Account;
provided, however, that, in the case of any Working Capital Borrowing, the
Administrative Agent shall first make a portion of such funds equal to the
aggregate principal amount of any Swing Line Advances made by the Swing Line
Bank and Letter of Credit Advances made by the Issuing Bank and by any other
Working Capital Lender and outstanding on the date of such Working Capital
Borrowing, plus interest accrued and unpaid thereon to and as of such date,
available to the Swing Line Bank or the Issuing Bank, as the case may be, and
such other Working Capital Lenders for repayment of such Swing Line Advances and
Letter of Credit Advances.
(b) Each Swing Line Borrowing shall be made on notice, given not
later than 1:00 P.M. (New York City time) on the date of the proposed Swing Line
Borrowing, by the Borrower to the Swing Line Bank and the Administrative Agent.
Each such notice of a Swing Line Borrowing (a "Notice of Swing Line Borrowing")
shall be in writing in substantially the form of Exhibit B hereto, specifying
therein the requested (i) date of such Borrowing, (ii) amount of such Borrowing
and (iii) maturity of such Borrowing (which maturity shall be no later than the
seventh day after the requested date of such Borrowing). If, in its sole
discretion, it elects to make the requested Swing Line Advance, the Swing Line
Bank will make the amount thereof available to the Administrative Agent at the
Administrative Agent's Account, in same day funds.
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After the Administrative Agent's receipt of such funds and upon fulfillment of
the applicable conditions set forth in Article III, the Administrative Agent
will make such funds available to the Borrower by crediting the Borrower's
Account. Upon written demand by the Swing Line Bank with an outstanding Swing
Line Advance, with a copy of such demand to the Administrative Agent, each other
Working Capital Lender shall purchase from the Swing Line Bank, and the Swing
Line Bank shall sell and assign to each such other Working Capital Lender, such
other Lender's Pro Rata Share of such outstanding Swing Line Advance as of the
date of such demand, by making available for the account of its Applicable
Lending Office to the Administrative Agent for the account of the Swing Line
Bank, by deposit to the Administrative Agent's Account, in same day finds, an
amount equal to the portion of the outstanding principal amount of the Swing
Line Advance to be purchased by such Lender. The Borrower hereby agrees to each
such sale and assignment. Each Working Capital Lender agrees to purchase its Pro
Rata Share of an outstanding Swing Line Advance on (i) the Business Day on which
demand therefor is made by the Swing Line Bank that made such Advance, provided
that notice of such demand is given not later than 1:00 P.M. (New York City
time) on such Business Day or (ii) the first Business Day next succeeding such
demand if notice of such demand is given after such time. Upon any such
assignment by the Swing Line Bank to any other Working Capital Lender of a
portion of a Swing Line Advance, the Swing Line Bank represents and warrants to
such other Lender that the Swing Line Bank is the legal and beneficial owner of
such interest being assigned by it, but makes no other representation or
warranty and assumes no responsibility with respect to such Swing Line Advance,
the Loan Documents or any Loan Party. If and to the extent that any Working
Capital Lender shall not have so made the amount of such Swing Line Advance
available to the Administrative Agent, such Working Capital Lender agrees to pay
to the Administrative Agent forthwith on demand such amount together with
interest thereon, for each day from the date of demand by the Swing Line Bank
until the date such amount is paid to the Administrative Agent, at the Federal
Funds Rate. If such Lender shall pay to the Administrative Agent such amount for
the account of the Swing Line Bank on any Business Day, such amount so paid in
respect of principal shall constitute a Swing Line Advance made by such Lender
on such Business Day for purposes of this Agreement, and the outstanding
principal amount of the Swing Line Advance made by the Swing Line Bank shall be
reduced by such amount on such Business Day.
(c) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for
(x) the period from the Third Restatement Date to the earlier of (A) 90 days
from such date and (B) the completion of syndication of the Facilities (as shall
be specified by the Administrative Agent in a written notice to the Borrower) or
(y) for any Borrowing if the aggregate amount of such Borrowing is less than
$2,000,000 or (z) if the obligation of the Appropriate Lenders to make
Eurodollar Rate Advances shall then be suspended pursuant to Section 2.09 or
Section 2.10 and (ii) with respect to Borrowings consisting of Eurodollar Rate
Advances, the Term A Advance, the Term B Advance and the Working Capital
Advances may not be outstanding as part of more than eight separate Borrowings.
(d) Each Notice of Borrowing and Notice of Swing Line Borrowing
shall be irrevocable and binding on the Borrower. In the case of any Borrowing
that the related Notice of
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Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower
shall indemnify each Appropriate Lender against any loss, cost or expense
incurred by such Lender as a result of any failure to fulfill on or before the
date specified in such Notice of Borrowing the applicable conditions set forth
in Article III, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Advance to be made by such Lender as part of such Borrowing when such Advance,
as a result of such failure, is not made on such date.
(e) Unless the Administrative Agent shall have received notice from
an Appropriate Lender prior to the date of any Borrowing under a Facility under
which such Lender has a Commitment that such Lender will not make available to
the Administrative Agent such Lender's ratable portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
Section 2.02(a) or (b) and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Lender shall not have so made such ratable
portion available to the Administrative Agent, such Lender and the Borrower
severally agree to repay or pay to the Administrative Agent forthwith on demand
such corresponding amount and to pay interest thereon, for each day from the
date such amount is made available to the Borrower until the date such amount is
repaid or paid to the Administrative Agent, at (i) in the case of the Borrower,
the interest rate applicable at such time under Section 2.07 to Advances
comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds
Rate. If such Lender shall pay to the Administrative Agent such corresponding
amount, such amount so paid in respect of principal shall constitute such
Lender's Advance as part of such Borrowing for all purposes.
(f) The failure of any Lender to make the Advance to be made by it
as part of any Borrowing shall not relieve any other Lender of its obligation,
if any, hereunder to make its Advance on the date of such Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on the date of any Borrowing.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be
issued upon notice, given not later than 1:00 P.M. (New York City time) on the
fifth Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank, which shall give to the
Administrative Agent prompt notice thereof. Each such notice of issuance of a
Letter of Credit (a "Notice of Issuance") shall specify therein the requested
(i) date of such issuance (which shall be a Business Day), (ii) Available Amount
of such Letter of Credit, (iii) expiration date of such Letter of Credit, (iv)
name and address of the beneficiary of such Letter of Credit and (v) form of
such Letter of Credit, and shall be accompanied by such application and
agreement for a letter of credit as the Issuing Bank may specify to the Borrower
for use in connection with such requested Letter of Credit (a "Letter of Credit
Agreement"). If (A) the requested form of such Letter of Credit is acceptable to
the Issuing Bank in its sole discretion and it has not received notice of
objection to such issuance from Lenders holding at least 60% of the
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Working Capital Commitments and (B) in its sole discretion, the Issuing Bank
elects to issue the requested Letter of Credit, the Issuing Bank will, upon
fulfillment of the applicable conditions set forth in Article III, make such
Letter of Credit available to the Borrower at its office referred to in Section
8.02 or as otherwise agreed with the Borrower in connection with such issuance.
In the event and to the extent that the provisions of any Letter of Credit
Agreement shall conflict with this Agreement, the provisions of this Agreement
shall govern.
(b) Letter of Credit Reports. The Issuing Bank shall furnish (i) to
the Administrative Agent on the first Business Day of each week a written report
summarizing issuance and expiration dates of Letters of Credit issued during the
previous week and drawings during such week under all Letters of Credit, (ii) to
each Working Capital Lender on the first Business Day of each calendar quarter a
written report summarizing issuance and expiration dates of Letters of Credit
issued during the preceding calendar quarter and drawings during such calendar
quarter under all Letters of Credit and (iii) to the Administrative Agent and
each Working Capital Lender on the first Business Day of each calendar quarter a
written report setting forth the average daily aggregate Available Amount during
the preceding calendar quarter of all Letters of Credit.
(c) Drawing and Reimbursement. The payment by the Issuing Bank of a
draft drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of a Letter of Credit Advance, which
shall be a Base Rate Advance, in the amount of such draft. In the event of any
drawing under a Letter of Credit, the Issuing Bank shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each
Working Capital Lender, and each Working Capital Lender shall purchase from the
Issuing Bank, and the Issuing Bank shall sell and assign to each such Working
Capital Lender, such Lender's Pro Rata Share of such outstanding Letter of
Credit Advance as of the date of such purchase, by making available for the
account of its Applicable Lending Office to the Administrative Agent for the
account of the Issuing Bank, by deposit to the Administrative Agent's Account,
in same day funds, an amount equal to the portion of the outstanding principal
amount of such Letter of Credit Advance to be purchased by such Lender. Promptly
after receipt thereof, the Administrative Agent shall transfer such funds to the
Issuing Bank. The Borrower hereby agrees to each such sale and assignment. Each
Working Capital Lender agrees to purchase its Pro Rata Share of an outstanding
Letter of Credit Advance on (i) the Business Day on which notice of the drawing
under the related Letter of Credit is given by the Issuing Bank, provided such
notice is given not later than 1:00 P.M. (New York City time) on such Business
Day or (ii) the first Business Day next succeeding such demand if such notice is
given after such time. Upon any such assignment by the Issuing Bank to any
Working Capital Lender of a portion of a Letter of Credit Advance, the Issuing
Bank represents and warrants to such Lender that the Issuing Bank is the legal
and beneficial owner of such interest being assigned by it, free and clear of
any liens, but makes no other representation or warranty and assumes no
responsibility with respect to such Letter of Credit Advance, the Loan Documents
or any Loan Party. If and to the extent that any Working Capital Lender shall
not have so made the amount of such Letter of Credit Advance available to the
Administrative Agent, such Working Capital Lender agrees to pay to the
Administrative Agent forthwith on demand such amount together with interest
thereon, for each day from the date of demand by the Issuing Bank until the date
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such amount is paid to the Administrative Agent, at the Federal Funds Rate for
its account or the account of the Issuing Bank, as applicable. If such Lender
shall pay to the Administrative Agent such amount for the account of the Issuing
Bank on any Business Day, such amount so paid in respect of principal shall
constitute a Letter of Credit Advance made by such Lender on such Business Day
for purposes of this Agreement, and the outstanding principal amount of the
Letter of Credit Advance made by the Issuing Bank shall be reduced by such
amount on such Business Day.
(d) Failure to Make Letter of Credit Advances. The failure of any
Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.
SECTION 2.04. Repayment of Advances. (a) Term Advances. The Borrower
shall repay to the Administrative Agent for the ratable account of the Term A
Lenders and the Term B Lenders the aggregate outstanding principal amount of the
Term A Advances and the Term B Advances, respectively, on the following dates in
the amounts indicated (which amounts shall otherwise be reduced as a result of
the application of prepayments in accordance with the order of priority set
forth in Section 2.06):
Term B
Date Term A Facility Facility
---- --------------- --------
March 31, 1999 $2,500,000 ______
June 30, 1999 $2,500,000 ______
September 30, 1999 $2,500,000 ______
December 31, 1999 $2,500,000 ______
March 31, 2000 $3,000,000 $312,500
June 30, 2000 $3,000,000 $312,500
September 30, 2000 $3,000,000 $312,500
December 31, 2000 $3,000,000 $312,500
March 31, 2001 $3,000,000 $312,500
June 30, 2001 $3,000,000 $312,500
September 30, 2001 $3,000,000 $312,500
December 31, 2001 $3,000,000 $312,500
March 31, 2002 $4,000,000 $312,500
June 30, 2002 $4,000,000 $312,500
September 30, 2002 $4,000,000 $312,500
December 31, 2002 $4,000,000 $312,500
March 31, 2003 ______ $312,500
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June 30, 2003 ______ $312,500
September 30, 2003 ______ $312,500
December 31, 2003 ______ $312,500
March 31, 2004 ______ $312,500
June 30, 2004 ______ $312,500
September 30, 2004 ______ $312,500
December 31, 2004 ______ $119,062,500
provided, however, that the final principal repayment installment of the Term A
Facility and the Term B Facility, respectively, shall be, in any event and in
each case, in an amount equal to the aggregate outstanding principal amount of
the Term A Advances and the Term B Advances, respectively, then outstanding.
(b) Working Capital Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Working Capital Lenders on
the Termination Date the aggregate outstanding principal amount of the Working
Capital Advances then outstanding.
(c) Swing Line Advances. The Borrower shall repay to the
Administrative Agent for the account of the Swing Line Bank and each other
Working Capital Lender that has made a Swing Line Advance the outstanding
principal amount of each Swing Line Advance made by each of them on the earlier
of the maturity date specified in the applicable Notice of Swing Line Borrowing
(which maturity shall be no later than the seventh day after the requested date
of such Borrowing) and the Termination Date.
(d) Letter of Credit Advances. (i) The Borrower shall repay to the
Administrative Agent for the account of the Issuing Bank and each other Working
Capital Lender that has made a Letter of Credit Advance on the earlier of the
Termination Date and one Business Day after demand the outstanding principal
amount of each Letter of Credit Advance made by each of them.
(ii) The Obligations of the Borrower under this Agreement, any
Letter of Credit Agreement and any other agreement or instrument relating to any
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, such Letter of Credit
Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances:
(A) any lack of validity or enforceability of any Loan Document, any
Letter of Credit Agreement, any Letter of Credit or any other agreement or
instrument relating thereto (this Agreement and all of the other foregoing
being, collectively, the "L/C Related Documents");
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(B) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower in respect of
any L/C Related Document or any other amendment or waiver of or any
consent to departure from all or any of the L/C Related Documents;
(C) the existence of any claim, setoff, defense or other right that
the Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with the transactions contemplated by
the L/C Related Documents or any unrelated transaction;
(D) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(E) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit;
(F) any exchange, release or nonperfection of any Collateral or
other collateral, or any release or amendment or waiver of or consent to
departure from the Holdings Guaranty or any other guaranty, for all or any
of the Obligations of the Borrower in respect of the L/C Related
Documents; or
(G) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a guarantor.
SECTION 2.05. Termination or Reduction of the Commitments. (a)
Optional. The Borrower may, upon at least three Business Days' notice to the
Administrative Agent, terminate in whole or reduce in part the unused portions
of the Term A Commitments, the Term B Commitments and the Unused Working Capital
Commitments; provided, however, that each partial reduction of a Facility (i)
shall be in an aggregate amount of $1,000,000 or an integral multiple of
$100,000 in excess thereof and (ii) shall be made ratably among the Appropriate
Lenders in accordance with their Commitments with respect to such Facility.
(b) Mandatory. The Working Capital Facility shall be automatically
and permanently reduced on the date on which any prepayment is required to be
made pursuant to Section 2.06(b)(i) by the amount of such prepayment.
SECTION 2.06 Prepayments. (a) Optional. The Borrower may, upon at
least one Business Day's notice in the case of Base Rate Advances and three
Business Days' notice in the case of Eurodollar Rate Advances, in each case to
the Administrative Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrower shall, prepay
the outstanding principal amount of the Advances comprising part of the same
Borrowing in whole or ratably in part pursuant to such notice, together with
accrued
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interest to the date of such prepayment on such aggregate principal amount
prepaid unless, with respect to such accrued interest, such prepayment is with
respect to a Base Rate Advance that is a Working Capital Advance; provided that
(i) each partial prepayment (other than prepayments of Swing Line Advances)
shall be in an aggregate principal amount of $2,000,000 or an integral multiple
of $100,000 in excess thereof (or, with respect to Swing Line Advances, shall be
in an aggregate principal amount of $250,000 or an integral multiple of $100,000
in excess thereof) and (ii) if any prepayment of a Eurodollar Rate Advance shall
be made other than on the last day of an Interest Period therefor, the Borrower
shall also pay any amounts owing pursuant to Section 8.04(c). Each such
prepayment of any Term Advances shall be applied subject to subsection (c)
below, ratably to the Term A Facility and the Term B Facility and, in each case,
ratably to the principal installments thereof.
(b) Mandatory. (i) The Borrower shall, on the date of receipt of the
Net Cash Proceeds by any Loan Party or any of its Subsidiaries from (A) the
sale, lease, transfer or other. disposition of any assets of the Borrower or any
of its Subsidiaries (other than any sale, lease, transfer or other disposition
otherwise permitted under Section 5.02(d)), (B) the incurrence or issuance by
any Loan Party or any of its Subsidiaries of any Debt (other than any Debt
permitted, issued or incurred under Section 5.02(b)), (C) an Extraordinary
Receipt and (D) the sale or issuance by any Loan Party or any of its
Subsidiaries of any capital stock or other ownership or profit interest, any
securities convertible into or exchangeable for capital stock or other ownership
or profit interest or any warrants, rights or options to acquire capital stock
or other ownership or profit interest (other than (x) options and warrants
existing on the Third Restatement Date and any options issued pursuant to the
Management Option Plan, or in each case, any shares of common stock issued in
exchange therefor, (y) proceeds received from the issuance of new shares of the
Parent Guarantor's capital stock, which proceeds are solely used to purchase,
redeem, retire, defease or otherwise acquire shares of the Parent Guarantor's
capital stock then outstanding, provided that such new shares shall contain
equal or inferior voting powers, designations, preferences and rights, and (z)
proceeds received from the issuance of new shares of the Parent Guarantor's
capital stock to any employee of any Loan Party in an aggregate amount, together
with all other proceeds received pursuant to this clause (z), not to exceed
$1,000,000), prepay an aggregate principal amount of the Advances comprising
part of the same Borrowings equal to the amount of such Net Cash Proceeds;
provided, however, that, with respect to an initial public offering of the
common stock of any Loan Party, such prepayment amount shall be an amount equal
to the Net Cash Proceeds of such initial public offering less $15,000,000. Each
such prepayment shall be applied as follows:
first, subject to subsection (c) below, ratably to the Term A
Facility and the Term B Facility and, in each case, ratably to the
principal installments thereof, and
second, to the extent that no Term Advances remain outstanding,
permanently to reduce the Working Capital Facility as set forth in Section
2.06(b)(iv).
(ii) The Borrower shall, on each Business Day, prepay an aggregate
principal amount of the Working Capital Advances comprising part of the same
Borrowings, the Letter of Credit Advances and the Swing Line Advances equal to
the amount by which (A) the sum of the
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aggregate principal amount of (1) the Working Capital Advances, (2) the Letter
of Credit Advances and (3) the Swing Line Advances then outstanding plus the
aggregate Available Amount of all Letters of Credit then outstanding exceeds (B)
the Working Capital Facility on such Business Day.
(iii) The Borrower shall, on each Business Day, pay to the
Administrative Agent for deposit in the L/C Cash Collateral Account an amount
sufficient to cause the aggregate amount on deposit in such Account to at least
equal the amount by which the aggregate Available Amount of all Letters of
Credit then outstanding exceeds the Working Capital Facility on such Business
Day.
(iv) Prepayments of the Working Capital Facility made pursuant to
clause (i) and (ii) above shall be first applied to prepay Letter of Credit
Advances then outstanding until such Advances are paid in full, second applied
to prepay Swing Line Advances then outstanding until such Advances are paid in
full, third applied to prepay Working Capital Advances then outstanding
comprising part of the same Borrowings until such Advances are paid in full and
fourth deposited in the L/C Cash Collateral Account to cash collateralize 100%
of the Available Amount of the Letters of Credit then outstanding; and, in the
case of prepayments of the Working Capital Facility required pursuant to clause
(i) above, the amount remaining (if any) after the prepayment in full of the
Advances then outstanding and the 100% cash collateralization of the aggregate
Available Amount of Letters of Credit then outstanding may be retained by the
Borrower and the Working Capital Facility shall be permanently reduced as set
forth in Section 2.05(b). Upon the drawing of any Letter of Credit for which
funds are on deposit in the L/C Cash Collateral Account, such funds shall be
applied to reimburse the Issuing Bank or Working Capital Lenders, as applicable.
(v) All prepayments under this subsection (b) shall be made together
with accrued interest to the date of such prepayment on the principal amount
prepaid and, in the event of any such prepayment of a Eurodollar Rate Advance
other than on the last day of an Interest Period therefor, the Borrower shall
also make any payments required by Section 8.04(c).
(c) Term B Opt-Out. With respect to any prepayment of the Term
Advances, the Administrative Agent shall ratably pay the Term A Lenders and Term
B Lenders; provided, however, that any Term B Lender, at its option, may elect
not to accept such prepayment, in which event the provisions of the next
sentence shall apply. Any Term B Lender may elect not to accept its ratable
share of the prepayment referred to in any Prepayment Notice, by notice given to
the Administrative Agent not later than 1:00 P.M. (New York City time) on the
first Business Day prior to the scheduled Prepayment Date (such Term B Lender
being a "Declining Lender"). On the Prepayment Date an amount equal to that
portion of the Prepayment Amount available to prepay Term B Lenders (less any
amounts that would otherwise be payable to the Declining Lenders) shall be
applied to prepay Term B Advances owing to Term B Lenders other than Declining
Lenders and any amounts that would otherwise have been applied to prepay Term B
Advances owing to Declining Lenders shall instead be applied ratably to prepay
the remaining Term Advances as provided in Sections 2.06(a) and (b); provided,
further, that on prepayment in full of Term Advances owing to Term A Lenders and
Term B Lenders other than Declining
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Lenders, the remainder of any Prepayment Amount shall be applied ratably to
prepay Term B Advances owing to Declining Lenders.
SECTION 2.07. Interest. (a) Scheduled Interest. The Borrower shall
pay interest on the unpaid principal amount of each Advance owing to each Lender
from the date of such Advance until such principal amount shall be paid in full,
at the following rates per annum:
(i) Base Rate Advances. During such periods as such Advance is a
Base Rate Advance, a rate per annum equal at all times to the sum of (A)
the Base Rate in effect from time to time plus (B) the Applicable Margin,
in effect from time to time, payable in arrears quarterly on the last
Business Day of each March, June, September and December during such
periods, commencing March 31, 1998, on the date such Base Rate Advance
shall be Converted, on the date of any prepayment of Base Rate Advances
pursuant to Section 2.06(b), on the Termination Date and, except with
respect to a Working Capital Advance, on the date of any prepayment
pursuant to Section 2.06(a) and on the Final Maturity Date.
(ii) Eurodollar Rate Advances. During such periods as such Advance
is a Eurodollar Rate Advance, a rate per annum equal at all times during
each Interest Period for such Advance to the sum of (A) the Eurodollar
Rate for such Interest Period for such Advance plus (B) the Applicable
Margin in effect from time to time during such Interest Period, payable in
arrears on the last day of such Interest Period and, if such Interest
Period has a duration of more than three months, on each day that occurs
during such Interest Period every three months from the first day of such
Interest Period and on the date such Eurodollar Rate Advance shall be
Converted or paid in full.
(b) Default Interest. Upon the occurrence and during the continuance
of a Default under Section 6.01(c) with respect to any covenant contained in
Section 5.04 or under Section 6.01(a), the Borrower shall pay interest on (i)
the unpaid principal amount of each Advance owing to each Lender, payable in
arrears on the dates referred to in clause (a)(i) or (a)(ii) above and on
demand, at a rate per annum equal at all times to 2% per annum above the rate
per annum required to be paid on such Advance pursuant to clause (a)(i) or
(a)(ii) above and (ii) to the fullest extent permitted by law, the amount of any
interest, fee or other amount payable hereunder that is not paid when due, from
the date such amount shall be due until such amount shall be paid in full,
payable in arrears on the date such amount shall be paid in full and on demand,
at a rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on Base Rate Advances pursuant to clause (a)(i) above.
(c) Notice of Interest Rate. Promptly after receipt of a Notice of
Borrowing pursuant to Section 2.02(a) or any change in the Applicable Margin,
the Administrative Agent shall give notice to the Borrower and each Appropriate
Lender of the applicable interest rate determined by the Administrative Agent
for purposes of clause (a)(i) or (a)(ii) above.
SECTION 2.08. Fees. (a) Commitment Fee. The Borrower shall pay to
the Administrative Agent for the account of the Lenders a commitment fee on the
average daily Unused Working Capital Commitment of such Lender from the date
hereof in the case of each Restatement Lender and from the effective date
specified in the Assignment and Acceptance
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pursuant to which it became a Lender in the case of each other Lender until the
Termination Date at a rate per annum equal, as of any date, to a percentage
determined by reference to the Leverage Ratio as set forth below, in each case
payable in arrears quarterly on the last Business Day of each March, June,
September and December, commencing March 31, 1998, and on the Termination Date:
Leverage Ratio Commitment Fee
-------------- --------------
Level I
2.75: 1.00 or greater 0.500%
Level II
less than 2.75: 1.00 0.375%
The commitment fee shall be determined by reference to the Leverage Ratio in
effect from time to time; provided, however, that (a) the commitment fee shall
be at Level I for the period commencing on the Third Restatement Date until the
quarter ending September 30, 1998, (b) no change in the commitment fee shall be
effective until three Business Days after the date on which the Administrative
Agent receives financial statements pursuant to Section 5.03(c) or (d), as the
case may be, and a certificate of the chief financial officer of the Borrower
demonstrating such Ratio, and (c) notwithstanding anything herein to the
contrary, the commitment fee shall be at Level I upon the occurrence and during
the continuance of an Event of Default.
(b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to the
Administrative Agent for the account of each Working Capital Lender a commission
on such Lender's Pro Rata Share of the average daily aggregate Available Amount
of all Letters of Credit outstanding from time to time at a rate per annum equal
to the Applicable Margin for Eurodollar Rate Advances in effect from time to
time payable in arrears quarterly on the last Business Day of each March, June,
September and December, commencing March 31, 1998, and on the Termination Date.
(ii) The Borrower shall pay to the Issuing Bank, for its own
account, such commissions, issuance fees, fronting fees, transfer fees and other
fees and charges in connection with the issuance or administration of each
Letter of Credit as the Borrower and the Issuing Bank shall agree.
(c) Agents' Fees. The Borrower shall pay to each of the Agents for
its respective account such fees as may from time to time be agreed between the
Borrower and such Agents.
SECTION 2.09. Conversion of Advances. (a) Optional. The Borrower may
on any Business Day, upon notice given to the Administrative Agent not later
than 1:00 P.M. (New York City time) on the third Business Day prior to the date
of the proposed Conversion and subject to the provisions of Sections 2.07 and
2.10, Convert all or any portion of the Advances of one Type comprising the same
Borrowing into Advances of the other Type; provided, however,
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that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be
made only on the last day of an Interest Period for such Eurodollar Rate
Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances
shall be in an amount not less than the minimum amount specified in Section
2.02(c), no Conversion of any Advances shall result in more separate Borrowings
than permitted under Section 2.02(c) and each Conversion of the Advances
comprising part of the same Borrowing under any Facility shall be made ratably
among the Appropriate Lenders in accordance with their Commitments under such
Facility. Each such notice of Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Advances to
be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the
duration of the initial Interest Period for such Advances. Each notice of
Conversion shall be irrevocable and binding on the Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $2,000,000, such
Advances shall automatically Convert into Base Rate Advances.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Appropriate
Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance.
(iii) Upon the occurrence and during the continuance of any Event of
Default, (x) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(y) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended.
SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
in either case after the date hereof, there shall be any increase in the cost to
any Lender Party of agreeing to make or of making, funding or maintaining
Eurodollar Rate Advances or of agreeing to issue or of issuing or maintaining
Letters of Credit or of agreeing to make or of making or maintaining Letter of
Credit Advances (including such increased costs arising from changes in the
basis of taxation, other than increased costs in respect of (i) taxes or other
taxes, which shall be governed by Section 2.12, and (ii) taxes expressly
excluded from the definition of "Taxes" herein), then the Borrower shall from
time to time, upon demand by such Lender Party (with a copy of such demand to
the Administrative Agent), pay to the Administrative Agent for the account of
such Lender Party additional amounts sufficient to compensate such Lender Party
for such increased cost. A certificate as to the amount of such increased cost,
submitted to the Borrower by such Lender Party, shall be conclusive and binding
for all purposes, absent manifest error.
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(b) If any Lender Party determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender Party or any corporation controlling such Lender Party and that the
amount of such capital is increased by or based upon the existence of such
Lender Party's commitment to lend or agreement to issue Letters of Credit
hereunder and other commitments of such type or the issuance or maintenance of
the Letters of Credit (or similar contingent obligations), then, upon demand by
such Lender Party (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to the Administrative Agent for the account of such Lender
Party, from time to time as specified by such Lender Party, additional amounts
sufficient to compensate such Lender Party in the light of such circumstances,
to the extent that such Lender Party reasonably determines such increase in
capital to be allocable to the existence of such Lender Party's commitment to
lend or agreement to issue Letters of Credit hereunder or to the issuance or
maintenance of any Letters of Credit. A certificate as to such amounts submitted
to the Borrower by such Lender Party shall be conclusive and binding for all
purposes, absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances under any
Facility, Lenders owed at least 60 % of the then aggregate unpaid principal
amount thereof notify the Administrative Agent that the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Lenders of making, finding or maintaining their Eurodollar Rate Advances for
such Interest Period, the Administrative Agent shall forthwith so notify the
Borrower and the Appropriate Lenders, whereupon (i) each such Eurodollar Rate
Advance under any Facility will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the
obligation of the Appropriate Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall
notify the Borrower that such Lenders have determined that the circumstances
causing such suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to find or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) each Eurodollar Rate Advance under each
Facility under which such Lender has a Commitment will automatically, upon such
demand, Convert into a Base Rate Advance and (ii) the obligation of the
Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Borrower that such Lender has determined that the circumstances causing such
suspension no longer exist.
(e) Any Lender claiming any additional compensation under any of the
provisions of this Section 2.10 shall use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Applicable Lending Office if the making of such change would
avoid the need for or reduce the amount of any such additional
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compensation which may thereafter accrue or, in the case of Section 2.10(c) or
2.10(d), would allow such Lender to continue to find or to maintain Eurodollar
Rate Advances and, in any such case, would not, in the sole judgment of such
Lender, be disadvantageous to such Lender.
SECTION 2.11. Payments and Computations. (a) The Borrower shall make
each payment hereunder and under the Notes, irrespective of any right of
counterclaim or setoff, not later than 1:00 P.M. (New York City time) on the day
when due in U.S. dollars to the Administrative Agent at the Administrative
Agent's Account in same day funds. The Administrative Agent will promptly
thereafter cause like funds to be distributed (i) if such payment by the
Borrower is in respect of principal, interest, commitment fees or any other
Obligation then payable hereunder and under the Notes to more than one Lender
Party, to such Lender Parties for the account of their respective Applicable
Lending Offices ratably in accordance with the amounts of such respective
Obligations then payable to such Lender Parties and (ii) if such payment by the
Borrower is in respect of any Obligation then payable hereunder to one Lender
Party, to such Lender Party for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement. Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 8.07(e), from and after
the effective date of such Assignment and Acceptance, the Administrative Agent
shall make all payments hereunder and under the Notes in respect of the interest
assigned thereby to the Lender Party assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) If the Administrative Agent receives finds for application to
the Obligations under the Loan Documents under circumstances for which the Loan
Documents do not specify the Advances or the Facility to which, or the manner in
which, such funds are to be applied, the Administrative Agent may, but shall not
be obligated to, elect to distribute such finds to each Lender Party ratably in
accordance with such Lender Party's proportionate share of the principal amount
of all outstanding Advances and the Available Amount of all Letters of Credit
then outstanding, in repayment or prepayment of such of the outstanding Advances
or other Obligations owed to such Lender Party, as the Administrative Agent
shall direct and with prior notice thereof to the Borrower.
(c) The Borrower hereby authorizes each Lender Party, if and to the
extent payment owed to such Lender Party is not made when due hereunder or, in
the case of a Lender, under the Note held by such Lender, with notice thereof to
the Borrower, to charge from time to time against any or all of the Borrower's
accounts with such Lender Party any amount so due.
(d) All computations of interest, fees and Letter of Credit
commissions shall be made by the Administrative Agent on the basis of a year of
360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest,
fees or commissions are payable. Each determination by the Administrative Agent
of an interest rate, fee or commission hereunder shall be conclusive and binding
for all purposes, absent manifest error.
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(e) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or fees, as the case
may be; provided, however, that, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(f) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to any Lender Party
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender
Party, on such due date an amount equal to the amount then due such Lender
Party. If and to the extent the Borrower shall not have so made such payment in
full to the Administrative Agent, each such Lender Party shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
Party, together with interest thereon, for each day from the date such amount is
distributed to such Lender Party until the date such Lender Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 2.12. Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.11,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding in the case of each Lender Party and the Agents,
overall net income taxes that are imposed by the United States and overall
franchise taxes and net income taxes that are imposed on such Lender Party or
the Agents by the state or foreign jurisdiction under the laws of which such
Lender Party or the Agents (as the case may be) is organized or any political
subdivision thereof and, in the case of each Lender Party, franchise taxes and
net income taxes that are imposed on such Lender Party by the state or foreign
jurisdiction of such Lender Party's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under any Note to any Lender Party or the
Agents, (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.12) such Lender Party or the Agents (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 taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or the
Notes (hereinafter referred to as "Other Taxes").
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(c) The Borrower shall indemnify each Lender Party and the Agents
for the full amount of Taxes and Other Taxes, and for the full amount of net
income taxes imposed by (i) the United States, (ii) any jurisdiction in which
any Agent or any Lender Party is organized, (iii) the jurisdiction of any Lender
Party's Applicable Lending Office and (iv) any political subdivision of (i)
through (iii) above on amounts payable under this Section 2.12, paid by such
Lender Party or such Agent (as the case may be) and any liability (including
penalties, additions to tax, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from the date
such Lender Party or such Agent (as the case may be) makes written demand
therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Administrative Agent, at its address referred to
in Section 8.02, the original receipt of payment thereof or a certified copy of
such receipt. In the case of any payment hereunder or under the Notes by or on
behalf of the Borrower through an account or branch outside the United States or
on behalf of the Borrower by a payor that is not a United States person, if the
Borrower determines that no Taxes are payable in respect thereof, the Borrower
shall furnish, or shall cause such payor to furnish, to the Administrative
Agent, at such address, an opinion of counsel acceptable to the Administrative
Agent stating that such payment is exempt from Taxes. For purposes of this
subsection (d) and subsection (e), the terms "United States" and "United States
person" shall have the meanings specified in Section 7701 of the Internal
Revenue Code.
(e) Each Lender Party organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of this Agreement in the case of each Restatement Lender or Existing
Issuing Bank, as the case may be, and on the date of the Assignment and
Acceptance pursuant to which it became a Lender Party in the case of each other
Lender Party, and from time to time thereafter if requested in writing by the
Borrower or the Administrative Agent (but only so long thereafter as such Lender
Party remains lawfully able to do so), provide the Administrative Agent and the
Borrower with two accurate and complete original signed copies of Internal
Revenue Service Form 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such Lender Party is
exempt from withholding tax on payments under this Agreement or the Notes or in
the case of a Lender that is claiming an exemption from United States
withholding tax under Section 871(h) or 881(c) of the Internal Revenue Code with
respect to payments of "portfolio interest", two accurate and complete signed
original Forms W-8 (or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is exempt from or is entitled to a reduced
rate of United States withholding tax on payments under this Agreement or the
Notes) and, if such Lender delivers such Forms W-8 (or successor form), two
signed certificates that such Lender is not (1) a "bank" for purposes of Section
881(c) of the Internal Revenue Code, (2) is not a 10% shareholder (within the
meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the Borrower
and (3) is not a controlled foreign corporation related to the Borrower (within
the meaning of Section 864(d)(4) of the Internal Revenue Code). If the form
provided by a Lender Party at the time such Lender Party first becomes a party
to this Agreement indicates a United States interest withholding tax rate in
excess of zero, withholding tax at such rate shall be considered excluded from
Taxes unless and until such Lender Party provides the appropriate form
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall
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be considered excluded from Taxes for periods governed by such form; provided,
however, that, if at the date of the Assignment and Acceptance pursuant to which
a Lender Party assignee becomes a party to this Agreement, the Lender Party
assignor was entitled to payments under subsection (a) in respect of United
States withholding tax with respect to interest paid at such date, then, to such
extent, the term "Taxes" shall include (in addition to withholding taxes that
may be imposed in the future or other amounts otherwise includable in Taxes)
United States withholding tax, if any, applicable with respect to the Lender
Party assignee on such date.
(f) For any period with respect to which a Lender Party has failed
to provide the Borrower with the appropriate form described in subsection (e)
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (e)), such Lender Party shall not be entitled
to indemnification under subsection (a) or (c) with respect to Taxes imposed by
the United States; provided, however, that should a Lender Party become subject
to Taxes because of its failure to deliver a form required hereunder, the
Borrower shall take such steps as such Lender Party shall reasonably request to
assist such Lender Party to recover such Taxes.
(g) If any Lender Party determines, in its sole discretion, that it
has actually and finally realized in a year in which a payment under the Loan
Documents is made or in any subsequent year, by reason of a refund, deduction or
credit of any Taxes paid or reimbursed by the Borrower pursuant to subsection
(a) or (c) above in respect of payments under the Loan Documents, a current
monetary benefit that it would otherwise not have obtained, and that would
result in the total payments under this Section 2.12 exceeding the amount needed
to make such Lender Party whole, such Lender Party shall pay to the Borrower,
with reasonable promptness following the date on which it actually realizes such
benefit, an amount equal to the lesser of the amount of such benefit or the
amount of such excess, in each case net of all out-of-pocket expenses in
securing such refund, deduction or credit.
(h) Any Lender Party claiming any additional amounts payable
pursuant to this Section 2.12 shall use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to file any certificate
or document requested by the Borrower or to change the jurisdiction of its
Applicable Lending Office if the making of such filing or change would avoid the
need for or reduce the amount of any such additional amounts which may
thereafter accrue and would not, in the sole judgment of such Lender, be
disadvantageous to such Lender Party.
SECTION 2.13. Sharing of Payments, Etc. If any Lender Party shall
obtain at any time any payment (whether voluntary, involuntary, through the
exercise of any right of setoff, or otherwise) (a) on account of Obligations due
and payable to such Lender Party hereunder and under the Notes at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations due and payable to such Lender Party at such time to (ii) the
aggregate amount of the Obligations due and payable to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations due and payable to all Lender Parties hereunder and under the Notes
at such time obtained by all the Lender Parties at such time or (b) on account
of Obligations owing (but not due and payable) to
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such Lender Party hereunder and under the Notes at such time in excess of its
ratable share (according to the proportion of (i) the amount of such Obligations
owing to such Lender Party at such time to (ii) the aggregate amount of the
Obligations owing (but not due and payable) to all Lender Parties hereunder and
under the Notes at such time) of payments on account of the Obligations owing
(but not due and payable) to all of the Lender Parties hereunder and under the
Notes at such time obtained by all the Lender Parties at such time, such Lender
Party shall forthwith purchase from the other Lenders Parties such
participations in the Obligations due and payable or owing to them, as the case
may be, as shall be necessary to cause such purchasing Lender Party to share the
excess payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender Party, such purchase from each other Lender Party shall be rescinded and
such other Lender Party shall repay to the purchasing Lender Party the purchase
price to the extent of such Lender Party's ratable share (according to the
proportion of (A) the purchase price paid to such Lender Party to (B) the
aggregate purchase price paid to all of the Lender Parties) of such recovery
together with an amount equal to such Lender Party's ratable share (according to
the proportion of (1) the amount of such other Lender Party's required repayment
to (2) the total amount so recovered from the purchasing Lender Party) of any
interest or other amount paid or payable by the purchasing Lender Party in
respect of the total amount so recovered. The Borrower agrees that any Lender
Party so purchasing a participation from another Lender Party pursuant to this
Section 2.13 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of setoff) with respect to such
participation as fully as if such Lender Party were the direct creditor of the
Borrower in the amount of such participation.
SECTION 2.14. Use of Proceeds. The proceeds of the Advances and
issuance of Letters of Credit shall be available (and the Borrower agrees that
it shall use such proceeds) solely (a) to refinance the facilities under the
Existing Credit Agreement, (b) to fund dividend payments to the shareholders of
the Parent Guarantor, (c) to pay transaction fees and expenses in connection
with the foregoing and the other transactions contemplated hereby, (d) to
provide financing for the acquisition and development of Health Club Facilities
and (e) to provide working capital and letter of credit support for the Borrower
and its Subsidiaries.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Third Amendment and
Restatement. The third amendment and restatement of the Existing Credit
Agreement pursuant hereto shall become effective on and as of the date which
shall occur on or prior to December 31, 1997 on which each of the following
conditions precedent shall have been satisfied (the "Third Restatement Date"):
(a) The Lender Parties shall be satisfied with the corporate and
legal structure and capitalization of each Loan Party and each of their
Subsidiaries, including the terms and conditions of the charter, bylaws
and each class of capital stock of each Loan Party
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and each such Subsidiary and of each agreement or instrument relating to
such structure or capitalization.
(b) The Lender Parties shall be satisfied with the terms and
conditions of the Loan Documents and the Related Documents.
(c) All governmental and third party consents and approvals
necessary in connection with this Agreement shall have been obtained
(without the imposition of any conditions other than those that are
reasonably acceptable to the Administrative Agent) and shall remain in
effect, and all applicable waiting periods shall have expired without any
action being taken by any competent authority and no law or regulation
shall be applicable, in the reasonable judgment of the Administrative
Agent, that restrains, prevents or imposes adverse conditions upon this
Agreement or any related transactions.
(d) The Lender Parties shall be satisfied that all Existing Debt,
other than Debt identified on Schedule 3.01(d) hereto (the "Surviving
Debt"), has been prepaid, redeemed or defeased in full or otherwise
satisfied and extinguished and that all such Surviving Debt shall be on
terms and conditions satisfactory to the Lender Parties.
(e) There shall exist no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of its Subsidiaries pending or
threatened before any court, governmental agency or arbitrator that (i)
could reasonably be expected to have a Material Adverse Effect or (ii)
purports to affect the legality, validity or enforceability of this
Agreement, any Note, any other Loan Document, any Related Document or the
consummation of the transactions contemplated hereby and thereby.
(f) The Administrative Agent shall have received on or before the
Third Restatement Date the following, each dated such day (unless
otherwise specified), in form and substance satisfactory to the Lender
Parties (unless otherwise specified) and (except for the Notes) in
sufficient copies for each Lender Party:
(i) The Notes payable to the order of the Lenders.
(ii) Certified copies of the resolutions of the Board of
Directors of the Borrower and each other Loan Party approving this
Agreement, the Notes, each other Loan Document to which it is or is
to be a party, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect to
this Agreement, the Notes and each other Loan Document.
(iii) A copy of the charter of the Borrower and each other
Loan Party and each amendment thereto, certified (as of a date
reasonably near the Third Restatement Date) by the Secretary of
State of the jurisdiction of its incorporation as being a true and
correct copy thereof.
(iv) A copy of a certificate of the Secretary of State of the
jurisdiction of its incorporation, dated reasonably near the Third
Restatement Date, listing the
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charter of the Borrower and each other Loan Party, and each
amendment thereto on file in his office and certifying that (A) such
amendments are the only amendments to the Borrower's or such other
Loan Party's charter on file in his office and (B) the Borrower or
such other Loan Party is duly incorporated and in good standing
under the laws of the state of the jurisdiction of its
incorporation.
(v) A telegram from the Secretary of State of the State of
Delaware certifying that the Parent Guarantor is duly incorporated
and in good standing under the laws of such State on the Third
Restatement Date.
(vi) A certificate of the Borrower and each other Loan Party,
signed on behalf of the Borrower and each other Loan Party by its
President and its Secretary or any Assistant Secretary, dated the
Third Restatement Date (the statements made in which certificate
shall be true on and as of the Third Restatement Date), certifying
as to (A) the absence of any amendments to the charter of the
Borrower or such other Loan Party since the date of the Secretary of
State's certificate referred to in Section 3.01(f)(iv), (B) a true
and correct copy of the bylaws of the Borrower or such other Loan
Party as in effect on the Third Restatement Date, (C) the due
incorporation and good standing of the Borrower or such other Loan
Party as a corporation organized under the laws of the jurisdiction
of its incorporation, and the absence of any proceeding for the
dissolution or liquidation of the Borrower or such other Loan Party,
(D) the truth of the representations and warranties contained in the
Loan Documents as though made on and as of the Third Restatement
Date and (E) the absence of any event occurring and continuing, or
resulting from the initial Borrowing, that constitutes a Default.
(vii) A certificate of the Secretary or an Assistant Secretary
of each Loan Party certifying the names and true signatures of the
officers of such Loan Party authorized to sign each Loan Document to
which it is, or is to be, a party and the other documents to be
delivered hereunder or thereunder.
(viii) An amended and restated security agreement in
substantially the form of Exhibit D hereto (as further amended,
supplemented or otherwise modified from time to time in accordance
with its terms, the "Security Agreement"), duly executed by the
Borrower, and such further consents or amendments, if any, as the
Administrative Agent may request thereto, together with:
(A) certificates representing additional Pledged Shares,
if any, referred to therein accompanied by undated stock
powers executed in blank and instruments evidencing additional
Pledged Debt, if any, referred to therein and endorsed in
blank,
(B) acknowledgment copies or stamped receipt copies of
proper additional financing statements, if any, duly filed on
or before the Third
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Restatement Date under the Uniform Commercial Code of all
jurisdictions that the Administrative Agent may deem necessary
or desirable in order to maintain the perfection and priority
of the Liens created under the Collateral Documents, covering
the Collateral described in the Security Agreement,
(C) completed requests for information, dated on or
before the Third Restatement Date, listing all effective
financing statements filed in the jurisdictions referred to in
clause (B) above that name the Borrower or such Subsidiaries
as debtor, together with copies of such financing statements,
(D) evidence of the insurance required by the terms of
the Security Agreement,
(E) copies of additional Assigned Agreements, if any,
referred to in the Security Agreement, together with a consent
to such assignment, in substantially the form of Exhibit B to
the Security Agreement, duly executed by each party to any
such Assigned Agreements other than the Borrower or such
Subsidiary,
(F) evidence that all other action that the
Administrative Agent or any Restatement Lender may deem
necessary or desirable in order to maintain the perfection and
priority of the Liens created under the Security Agreement has
been taken, including delivery of Blocked Account Letters in
form and substance satisfactory to the Administrative Agent.
(ix) An amended and restated pledge agreement in substantially
the form of Exhibit E hereto (as further amended, supplemented or
otherwise modified from time to time, the "Holdings Pledge
Agreement"), duly executed by the Parent Guarantor together with all
other certificates, instruments and evidence that the Administrative
Agent may deem necessary or desirable in order to perfect and
protect the liens and security interests created thereunder.
(x) An amended and restated guaranty in substantially the form
of Exhibit F hereto (as further amended, supplemented or otherwise
modified from time to time, the "Holdings Guaranty"), duly executed
by the Parent Guarantor.
(xi) Such further consents or amendments, if any, as the
Administrative Agent may request with respect to (A) the
subordination agreement dated as of June 30, 1995 (the "FFHLP
Subordination Agreement") between FFHLP and the Borrower, duly
executed by the parties thereto, (B) the subordination agreement
dated as of June 30, 1995 (the "Holdings Subordination Agreement")
between the Parent Guarantor and the Borrower, duly executed by the
parties thereto, (C) the subordination agreement dated as of
December 31, 1995 (the "Earnout I Subordination Agreement") between
FFHLP and the Borrower, duly executed by
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the parties thereto, (D) the subordination agreement dated as of
December 31, 1996 (the "Earnout II Subordination Agreement") between
FFHLP and the Borrower, duly executed by the parties thereto and (E)
the subordination agreement dated October 24, 1996 (the "Texas
Subordination Agreement") between Landhigh Investments, Inc. and the
Borrower, duly executed by the parties thereto.
(xii) Forecasts prepared by management of the Parent Guarantor
of balance sheets, income statements and cash flow statements on an
annual basis for each year through December 31, 2001, in form and
substance satisfactory to the Administrative Agent.
(xiii) Confirmation of insurance naming the Administrative
Agent as insured and loss payee with such responsible and reputable
insurance companies or associations, and in such amounts and
covering such risks as is satisfactory to the Lender Parties.
(xiv) A certificate of the Secretary or an Assistant Secretary
of the Borrower certifying that attached thereto is a true, complete
and correct copy of each of the Related Documents, duly executed by
the parties thereto and which Related Documents are in form and
substance satisfactory to the Lender Parties, together with all
agreements, instruments and other documents delivered in connection
therewith.
(xv) A certificate in substantially the form of Exhibit G
attesting to the Solvency of the Parent Guarantor and its
Subsidiaries taken as a whole after giving effect to the
transactions contemplated hereby, from its chief financial officer.
(xvi) Favorable opinions of White & Case, counsel for the
Borrower, in substantially the form of Exhibits H-1 and H-2 hereto
and as to such other matters as any Lender Party through the
Administrative Agent may reasonably request.
(xvii) A favorable opinion of Shearman & Sterling, counsel for
the Administrative Agent, in form and substance satisfactory to the
Administrative Agent.
(g) All reasonable accrued fees and expenses of the Agents and the Lender
Parties (including upfront fees to the Lender Parties and the reasonable accrued
fees and expenses of counsel to the Administrative Agent) shall have been paid
including, without limitation, all accrued interest and fees under the Existing
Credit Agreement through the Third Restatement Date.
(h) Before giving effect to this Agreement and the transactions
contemplated hereby there shall have occurred no Material Adverse Change since
December 31, 1996.
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(i) The Assignment Agreement shall be in full force and effect and shall
not have been terminated and, pursuant thereto, the Commitments and Advances
(each as defined in the Existing Credit Agreement) of each Existing Lender shall
have been sold and assigned to the Restatement Lenders hereunder on the terms
and in the amounts set forth in the Assignment Agreement.
SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance.
The obligation of each Appropriate Lender to make an Advance (other than a
Letter of Credit Advance made by the Issuing Bank or a Working Capital Lender
pursuant to Section 2.03(c) and a Swing Line Advance made by the Swing Line Bank
or a Working Capital Lender pursuant to Section 2.02(b)) on the occasion of each
Borrowing (including on the Third Restatement Date), and the obligation of the
Issuing Bank to issue a Letter of Credit (including the initial issuance) and
the right of the Borrower to request a Swing Line Borrowing, shall be subject to
the further conditions precedent that on the date of such Borrowing or issuance
(a) the following statements shall be true (and each of the giving of the
applicable Notice of Borrowing, Notice of Swing Line Borrowing or Notice of
Issuance and the acceptance by the Borrower of the proceeds of such Borrowing or
of such Letter of Credit shall constitute a representation and warranty by the
Borrower that both on the date of such notice and on the date of such Borrowing
or issuance such statements are true):
(i) the representations and warranties contained in each Loan
Document are correct on and as of such date, before and after giving
effect to such Borrowing or issuance and to the application of the
proceeds therefrom, as though made on and as of such date, other than any
such representations or warranties that, by their terms, refer to a
specific date other than the date of such Borrowing or issuance, in which
case as of such specific date; and
(ii) no event has occurred and is continuing, or would result from
such Borrowing or issuance or from the application of the proceeds
therefrom, that constitutes a Default;
and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Appropriate Lender or the Issuing Bank through the
Administrative Agent may reasonably request.
SECTION 3.03. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the Third Restatement Date specifying its objection thereto and
such Lender Party shall not have made available to the Administrative Agent such
Lender Party's ratable portion of the Borrowing being made on the Third
Restatement Date.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:
(a) Each Loan Party (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so qualify or be
licensed, except where the failure to so qualify or be licensed would not
have a Material Adverse Effect and (iii) has all requisite corporate power
and authority (including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its properties
and to carry on its business as now conducted and as proposed to be
conducted. All of the outstanding capital stock of the Borrower has been
validly issued, is fully paid and nonassessable and is owned by the Parent
Guarantor free and clear of all Liens, except those created under the
Collateral Documents.
(b) Set forth on Schedule 4.01(b) hereto is a complete and accurate
list of all Subsidiaries (including Foreign Subsidiaries) of each Loan
Party, showing as of the Third Restatement Date (as to each such
Subsidiary) the jurisdiction of its incorporation, the number of shares of
each class of capital stock authorized, and the number outstanding on the
Third Restatement Date, and the percentage of the outstanding shares of
each such class owned (directly or indirectly) by such Loan Party and the
number of shares covered by all outstanding options, warrants, rights of
conversion or purchase and similar rights at the Third Restatement Date.
All of the outstanding capital stock of all Subsidiaries of each Loan
Party has been validly issued, is fully paid and nonassessable and is
owned by such Loan Party or one or more of its Subsidiaries free and clear
of all Liens, except those created under the Loan Documents. Each such
Subsidiary (i) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation,
(ii) is duly qualified and in good standing as a foreign corporation in
each other jurisdiction in which it owns or leases property or in which
the conduct of its business requires it to so qualify or be licensed,
except where the failure to so qualify or be licensed would not have a
Material Adverse Effect and (iii) has all requisite corporate power and
authority (including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its properties
and to carry on its business as now conducted and as proposed to be
conducted.
(c) The execution, delivery and performance by each Loan Party of
this Agreement, the Notes, each other Loan Document and each Related
Document to which it is or is to be a party, and the consummation of the
transactions contemplated hereby and thereby, are within such Loan Party's
corporate powers, have been duly authorized by all necessary corporate
action, and do not (i) contravene such Loan Party's charter or bylaws,
(ii) violate any law (including, without limitation, the Securities
Exchange Act of
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1934 and the Racketeer Influenced and Corrupt Organizations Chapter of the
Organized Crime Control Act of 1970), rule, regulation (including, without
limitation, Regulation X of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination or
award, (iii) conflict with or result in the breach of, or constitute a
default under, any material contract, loan agreement, indenture, mortgage,
deed of trust, lease or other instrument binding on or affecting any Loan
Party, any of its Subsidiaries or any of their properties or (iv) except
for the Liens created under the Loan Documents, result in or require the
creation or imposition of any Lien upon or with respect to any of the
properties of any Loan Party or any of its Subsidiaries. No Loan Party or
any of its Subsidiaries is in violation of any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or in
breach of any such contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument, the violation or breach of which could
have a Material Adverse Effect.
(d) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body or any
other third party is required for (i) the due execution, delivery,
recordation, filing or performance by any Loan Party of this Agreement,
the Notes, any other Loan Document or any Related Document to which it is
or is to be a party, or for the consummation of the transactions
contemplated hereby and thereby, (ii) the grant by any Loan Party of the
Liens granted by it pursuant to the Loan Documents, (iii) the perfection
or maintenance of the Liens created by the Loan Documents (including the
first priority nature thereof) or (iv) the exercise by any Agent or any
Lender Party of its rights under the Loan Documents or the remedies in
respect of the Collateral pursuant to the Collateral Documents, except for
the filings made pursuant to the Security Agreement, all of which have
been duly obtained, taken, given or made and are in full force and effect
or will be taken or made immediately following the Third Restatement Date.
All applicable waiting periods in connection with the transactions
contemplated hereby and thereby have expired without any action having
been taken by any competent authority restraining, preventing or imposing
materially adverse conditions upon the rights of the Loan Parties or their
Subsidiaries freely to transfer or otherwise dispose of, or to create any
Lien on, any properties now owned or hereafter acquired by any of them.
(e) This Agreement has been, and each of the Notes, each other Loan
Document and each Related Document when delivered hereunder will have
been, duly executed and delivered by each Loan Party party thereto. This
Agreement is, and each of the Notes, each other Loan Document and each
Related Document when delivered hereunder will be, the legal, valid and
binding obligation of each Loan Party party thereto, enforceable against
such Loan Party in accordance with its terms.
(f) The Consolidated balance sheet of the Parent Guarantor and its
Subsidiaries as at December 31, 1996, and the related Consolidated
statements of income and cash flows of the Parent Guarantor and its
Subsidiaries for the fiscal year then ended, accompanied by the report of
Deloitte & Touche LLP, independent public accountants, and the
Consolidated balance sheet of the Parent Guarantor and its Subsidiaries as
at
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September 30, 1997, and the related Consolidated statements of income and
cash flows of the Parent Guarantor and its Subsidiaries for the nine
months then ended, duly certified by the chief financial officer of the
Parent Guarantor, copies of which have been furnished to each Lender
Party, fairly present in all material respects, subject to the possible
revenue recognition policy adjustments referred to in Schedule 4.01(f)
and, in the case of said balance sheet as at September 30, 1997, and said
statements of income and cash flows for the nine months then ended, to
year-end audit adjustments, the Consolidated financial position of the
Parent Guarantor and its Subsidiaries as at such dates and the
Consolidated results of the operations of the Parent Guarantor and its
Subsidiaries for the periods ended on such dates, respectively, all in
accordance with generally accepted accounting principles applied on a
consistent basis; and since December 31, 1996, there has been no Material
Adverse Change.
(g) The Consolidated forecasted balance sheets, income statements
and cash flows statements of the Parent Guarantor and its Subsidiaries
delivered to the Lender Parties pursuant to Section 3.01(f)(xii) or
5.03(e) were prepared in good faith on the basis of the assumptions stated
therein, which assumptions were reasonable in the light of conditions
existing at the time of delivery of such forecasts, and represented, at
the time of delivery, the Parent Guarantor's best estimate of its future
Consolidated financial performance.
(h) None of the information, exhibits or reports furnished by or on
behalf of any Loan Party to any Agent or any Lender Party in connection
with the negotiation of the Loan Documents or pursuant to the terms of the
Loan Documents when taken as a whole contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made therein not misleading.
(i) There is no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of its Subsidiaries, including
any Environmental Action, pending or threatened before any court,
governmental agency or arbitrator that (i) could reasonably be expected to
have a Material Adverse Effect or (ii) purports to affect the legality,
validity or enforceability of this Agreement, any Note, any other Loan
Document or any Related Document or the consummation of the transactions
contemplated hereby and thereby.
(j) No proceeds of any Advance or drawings under any Letter of
Credit will be used to acquire any equity security of a class that is
registered pursuant to Section 12 of the Securities Exchange Act of 1934.
(k) The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying Margin Stock, and no proceeds of
any Advance or drawings under any Letter of Credit will be used to
purchase or carry any Margin Stock or to extend credit to others for the
purpose of purchasing or carrying any Margin Stock.
(l) Following application of the proceeds of each Advance or drawing
under each Letter of Credit, not more than 25% of the value of the assets
(either of the
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Borrower only or of the Borrower and its Subsidiaries on a Consolidated
basis), subject to the provisions of Section 5.02(a) or 5.02(d) or subject
to any restriction contained in any agreement or instrument between the
Borrower and any Lender Party or any Affiliate of any Lender Party
relating to Debt and within the scope of Section 6.01(e) will be Margin
Stock.
(m) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Plan of any Loan Party or any of its ERISA Affiliates
that has resulted in or is reasonably likely to result in a Material
Adverse Effect.
(n) Schedule B (Actuarial Information) to the most recently
completed annual report (Form 5500 Series) for each Plan of any Loan Party
or any of its ERISA Affiliates, if any, copies of which have been filed
with the Internal Revenue Service and furnished to the Administrative
Agent and each Lender Party, is complete and accurate and fairly presents
the funding status of such Plan, and since the date of such Schedule B
there has been no change in such funding status which could reasonably be
expected to result in a Material Adverse Effect.
(o) Neither any Loan Party nor any of its ERISA Affiliates has
incurred or is reasonably expected to incur any Withdrawal Liability to
any Multiemployer Plan which could reasonably be expected to result in a
Material Adverse Effect.
(p) Neither any Loan Party nor any of its ERISA Affiliates has been
notified by the sponsor of a Multiemployer Plan of any Loan Party or any
of its ERISA Affiliates that such Multiemployer Plan is in reorganization
or has been terminated, within the meaning of Title IV of ERISA, and to
the best knowledge of such Loan Party no such Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated, within
the meaning of Title IV of ERISA.
(q) The aggregate annualized cost (including, without limitation,
the cost of insurance premiums) with respect to post-retirement benefits
under Welfare Plans (other than as provided in Section 601 of ERISA) for
which the Loan Parties and their Subsidiaries are liable could not
reasonably be likely to result in a Material Adverse Effect.
(r) Neither the business nor the properties of any Loan Party or any
of its Subsidiaries are affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo,
act of God or of the public enemy or other casualty that could have a
Material Adverse Effect.
(s) The operations of each Loan Party and each of its Subsidiaries
and, to the best of its knowledge, the properties of such Loan Party or
such Subsidiary comply in all material respects with all Environmental
Laws, all necessary Environmental Permits have been obtained and are in
effect for the operations and, to the best of its knowledge, the
properties of each Loan Party and its Subsidiaries are in compliance in
all material respects with all such Environmental Permits, and no
circumstances exist that could (i)
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form the basis of an Environmental Action against any Loan Party or any of
its Subsidiaries or, to the best of its knowledge, any of their properties
that could have a Material Adverse Effect or (ii) to the best of its
knowledge, cause any such property to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental Law.
(t) None of the properties currently or formerly owned or operated
by any Loan Party or any of its Subsidiaries is listed or proposed for
listing on the NPL or on the CERCLIS or any analogous foreign, state or
local list or is adjacent to any such property; and no underground storage
tanks, as such term is defined 42 U.S.C. ss. 6991, are located on any
property currently or formerly owned or operated by any Loan Party or any
of its Subsidiaries or, to the best of its knowledge, on any adjoining
property; and no Hazardous Materials have been released, discharged or
disposed of on any property currently or formerly owned or operated by any
Loan Party or any of its Subsidiaries.
(u) Neither any Loan Party nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Materials
to any location that is listed or proposed for listing on the NPL or on
the CERCLIS or any analogous foreign, state or local list, and all
Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, any property currently or formerly owned or
operated by any Loan Party or any of its Subsidiaries have been disposed
of in a manner not reasonably expected to result in material liability to
any Loan Party or any of its Subsidiaries.
(v) Neither any Loan Party nor any of its Subsidiaries is a party to
any indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or corporate restriction that could
have a Material Adverse Effect.
(w) The Collateral Documents create a valid and perfected first
priority security interest (subject only to Permitted Liens) in all
material respects in the Collateral taken as a whole, which security
interest secures the payment of the Secured Obligations, and all filings
and other actions necessary or desirable to perfect and protect such
security interest have been duly taken. The Loan Parties are the legal and
beneficial owners of the Collateral free and clear of any Lien, except for
the liens and security interests created or permitted under the Loan
Documents.
(x) Each Loan Party and each of its Subsidiaries has filed, has
caused to be filed or has been included in all material tax returns
(Federal, state, local and foreign) required to be filed and has paid all
taxes shown thereon to be due, together with applicable interest and
penalties.
(y) Set forth on Schedule 4.01(y) hereto is a complete and accurate
list, as of the Third Restatement Date, of each taxable year of each Loan
Party and each of its Subsidiaries for which Federal income tax returns
have been filed and for which the expiration of the applicable statute of
limitations for assessment or collection has not occurred by reason of
extension or otherwise (an "Open Year").
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(z) Except as set forth on Schedule 4.01(z) hereto, as of the Third
Restatement Date, no adjustment to the Federal income tax liability of any
Loan Party or any of its Subsidiaries has been proposed by the Internal
Revenue Service with respect to Open Years. Except as set forth on
Schedule 4.01(z) hereto, no issues have been raised by the Internal
Revenue Service in respect of Open Years that, in the aggregate, could
have a Material Adverse Effect.
(aa) As of the Third Restatement Date, except as set forth on
Schedule 4.01(z) hereto and for which adequate reserves have been taken in
accordance with GAAP, no adjustment to the state, local and foreign tax
liability of any Loan Party or its Subsidiaries has been proposed by any
state, local or foreign taxing authority with respect to any taxable
period for which the applicable statute of limitations has not expired. No
issues have been raised by such taxing authorities that, in the aggregate,
could have a Material Adverse Effect.
(bb) Each Loan Party is, individually and together with its
Subsidiaries, Solvent.
(cc) Immediately following the Third Restatement Date, there shall
be no Existing Debt (other than Surviving Debt).
(dd) Set forth on Schedule 3.01(d) hereto is a complete and accurate
list of all Surviving Debt, showing as of the Third Restatement Date the
principal amount outstanding thereunder.
(ee) Except as set forth in Schedule 4.01(ee), no Loan Party or any
of its Subsidiaries owns, as of the Third Restatement Date, any real
property.
(ff) Set forth in Schedule 4.01(ff) hereto is a complete and
accurate list of all leases of real property under which any Loan Party or
any of its Subsidiaries is the lessee, showing as of the Third Restatement
Date the street address, county or other relevant jurisdiction, state,
lessor, lessee, expiration date and annual rental cost thereof. Each such
lease is the legal, valid and binding obligation of the lessor thereof,
enforceable in accordance with its terms.
(gg) Set forth on Schedule 4.01(gg) hereto is a complete and
accurate list of all Investments held by any Loan Party or any of its
Subsidiaries, showing as of the Third Restatement Date the amount, obligor
or issuer and maturity, if any, thereof.
(hh) Neither any Loan Party nor any of its Subsidiaries is an
"investment company", or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended. Neither the
making of any Advances, nor the issuance of any Letter of Credit, nor the
application of the proceeds or repayment thereof by the Borrower, nor the
consummation of the other transactions contemplated hereby, will violate
any provision
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of such Act or any rule, regulation or order of the Securities and
Exchange Commission thereunder.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain
unpaid, any Letter of Credit shall be outstanding, any Hedge Agreement with any
Hedge Bank shall be in effect or any Lender Party shall have any Commitment
hereunder, the Borrower will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, compliance with
ERISA and the Racketeer Influenced and Corrupt Organizations Chapter of
the Organized Crime Control Act of 1970, except, in any case where the
failure to do so could not be reasonably expected to have a Material
Adverse Effect.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property and (ii) all lawful claims that, if
unpaid, might by law become a Lien upon its property; provided, however,
that neither the Borrower nor any of its Subsidiaries shall be required to
pay or discharge any such tax, assessment, charge or claim that is being
contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained, unless and until any Lien
resulting therefrom attaches to its property and becomes enforceable
against its other creditors.
(c) Compliance with Environmental Laws. Comply, and cause each of
its Subsidiaries and all lessees and other Persons operating or occupying
its properties to comply, in all material respects, with all applicable
Environmental Laws and Environmental Permits; obtain and renew, and cause
each of its Subsidiaries to obtain and renew, all Environmental Permits
necessary for its operations and properties; and conduct, and cause each
of its Subsidiaries to conduct, any investigation, study, sampling and
testing, and undertake any cleanup, removal, remedial or other action
necessary to remove and clean up all Hazardous Materials from any of its
properties, in accordance with the requirements of all Environmental Laws;
provided, however, that neither the Borrower nor any of its Subsidiaries
shall be required to undertake any such cleanup, removal, remedial or
other action to the extent that its obligation to do so is being contested
in good faith and by proper proceedings and appropriate reserves are being
maintained with respect to such circumstances.
(d) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in
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similar businesses and owning similar properties in the same general areas
in which the Borrower or such Subsidiary operates.
(e) Preservation of Corporate Existence, Etc. Preserve and maintain,
and cause each of its Subsidiaries to preserve and maintain, its corporate
or legal existence, rights (charter and statutory), permits, licenses,
approvals, privileges and franchises; provided, however, that the Borrower
or any of its Subsidiaries may consummate any merger or consolidation
permitted under Section 5.02(c).
(f) Visitation Rights. At any reasonable time and from time to time,
upon prior notice to the Borrower, permit the Administrative Agent or any
Lender Party or any agents or representatives thereof, to examine and make
copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrower and any of its Subsidiaries, and to
discuss the affairs, finances and accounts of the Borrower and any of its
Subsidiaries with any of their officers or directors and with their
independent certified public accountants; provided, however, that a
representative of MDC shall have the opportunity to accompany the
Administrative Agent, such Lender Party or such agent or representative
during any such visit.
(g) Preparation of Environmental Reports. At the reasonable request
of the Administrative Agent from time to time, provide to the Lender
Parties within 60 days after such request, at the expense of the Borrower,
an environmental site assessment report for any of its or its
Subsidiaries' properties described in such request, prepared by an
environmental consulting firm acceptable to the Administrative Agent,
indicating the presence or absence of Hazardous Materials and the
estimated cost of any compliance, removal or remedial action in connection
with any Hazardous Materials on such properties; without limiting the
generality of the foregoing, if the Administrative Agent determines at any
time that a risk that could reasonably be expected to have a Material
Adverse Effect exists and that any such report will not be provided within
the time referred to above, the Administrative Agent may retain an
environmental consulting firm to prepare such report at the expense of the
Borrower, and the Borrower hereby grants and agrees to cause any
Subsidiary that owns or operates any property described in such request to
grant at the time of such request, to the Administrative Agent, the Lender
Parties, such firm and any agents or representatives thereof, an
irrevocable nonexclusive license, subject to the rights of tenants, to
enter onto their respective properties to undertake such an assessment.
(h) Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct
entries shall be made of all material financial transactions and the
assets and business of the Borrower and each such Subsidiary in accordance
with generally accepted accounting principles in effect from time to time.
(i) Maintenance of Properties, Etc. Maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, on a basis consistent
with current practices, all
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of its material properties in good working order and condition, ordinary
wear and tear excepted.
(j) Compliance with Terms of Leaseholds. Make all payments (except
such payments diligently contested in good faith) and otherwise perform
all material obligations in respect of all leases of real property to
which any Loan Party or any of its Subsidiaries is a party except, in any
case, where the failure to do so, either individually or in the aggregate,
could not be reasonably expected to have a Material Adverse Effect.
(k) Performance of Related Documents. Perform and observe in all
material respects all of the terms and provisions of each Related Document
to be performed or observed by it, maintain each such Related Document in
full force and effect, enforce such Related Document in accordance with
its terms, take all such action to such end as may be from time to time
reasonably requested by the Administrative Agent and, upon such request of
the Administrative Agent, make to each other party to each such Related
Document such demands and requests for information and reports or for
action as the Borrower is entitled to make under such Related Document.
(l) Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under the
Loan Documents with any of their Affiliates on terms that are fair and
reasonable and no less favorable to the Borrower or such Subsidiary than
it would obtain in a comparable arm's-length transaction with a Person not
an Affiliate other than the transactions set forth on Schedule 5.01(l)
hereto.
(m) Covenant to Give Security. Upon the request of the
Administrative Agent (i) following the occurrence and during the
continuance of an Event of Default, and at the expense of the Borrower,
(A) within ten days after such request, furnish to the Administrative
Agent a description of the real and personal properties of the Borrower
and its Subsidiaries in detail satisfactory to the Administrative Agent,
(B) within 15 days after such request, duly execute and deliver to the
Administrative Agent mortgages, pledges, assignments and other security
agreements, as specified by and in form and substance satisfactory to the
Administrative Agent, securing payment of all the Obligations of the
Borrower under the Loan Documents and constituting Liens on all such
properties, (C) within 30 days after such request, take whatever action
(including, without limitation, the recording of mortgages, the filing of
Uniform Commercial Code financing statements, the giving of notices and
the endorsement of notices on title documents) as may be necessary or
advisable in the opinion of the Administrative Agent to vest in the
Administrative Agent (or in any representative of the Administrative Agent
designated by it) valid and subsisting Liens on the properties purported
to be subject to the security agreements delivered pursuant to this
Section 5.01(m), enforceable against all third parties in accordance with
their terms and (D) within 60 days after such request, deliver to the
Administrative Agent a signed copy of a favorable opinion of counsel for
the Borrower, addressed to the Administrative Agent and acceptable to the
Administrative Agent, as to the matters contained in clauses (A), (B) and
(C) above, as to such security agreements being legal, valid and binding
obligations of the Borrower and
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its Subsidiaries enforceable in accordance with their terms and as to such
other matters as the Administrative Agent may reasonably request, and (ii)
at any time and from time to time, promptly execute and deliver any and
all further instruments and documents and take all such other action as
the Administrative Agent may deem desirable in order to obtain or to
preserve the full benefits of the Liens created under the Loan Documents,
including, without limitation, (A) the execution and delivery of trust,
trust deeds or mortgages with respect to any real property acquired by any
Loan Party or any of its Subsidiaries, (B) a trademark, copyright and
patent security agreement (as amended, supplemented or otherwise modified
from time to time, the "Trademark, Copyright and Patent Security
Agreement") in form and substance satisfactory to the Administrative
Agent, duly executed by each Loan Party and its Subsidiaries, (C) a
security agreement supplement in the form of Exhibit A to the Security
Agreement, duly executed by each Subsidiary of the Borrower, (D) a
Subsidiary Guaranty or Guaranty Supplement, as the case may be, duly
executed by each Subsidiary of the Borrower and (E) using reasonable
efforts to obtain consents and other agreements of lessors of real
property and other third parties, and estoppel letters and other
confirmations with respect to any real property of any Loan Party or any
of its Subsidiaries, in each case in form and substance satisfactory to
the Administrative Agent.
(n) Interest Rate Hedging. Enter into on or prior to March 31, 1998,
and maintain at all times thereafter, interest rate Hedge Agreements with
Persons acceptable to the Administrative Agent, covering a notional amount
of not less than $100,000,000 and providing for such Persons to make
payments thereunder for a period of no less than two years from the Third
Restatement Date to the extent increases in interest are greater than 2%
above the Eurodollar Rate in effect on the Third Restatement Date for an
Interest Period of three months.
(o) Additional Loan Parties. Cause any newly organized or acquired
Subsidiary of the Borrower (other than any Subsidiary organized or located
outside of the United States) to execute and deliver to the Administrative
Agent as promptly as practicable and in any event within 15 days after the
organization or acquisition of such Subsidiary (i) a security agreement
supplement in the form of Exhibit A to the Security Agreement, (ii) a
subsidiary guaranty in form and substance satisfactory to the
Administrative Agent (as amended, supplemented or otherwise modified from
time to time, the "Subsidiary Guaranty") or a Guaranty Supplement (as
defined in the Subsidiary Guaranty), as the case may be, and (iii) from
time to time such other documents, agreements, certificates or instruments
as the Administrative Agent may reasonably request, in each case in form
and substance reasonably satisfactory to the Administrative Agent, and to
take all such other actions that may be necessary or that the
Administrative Agent may deem reasonably desirable in order to perfect and
protect any pledge, assignment or security interest granted by such
security agreement (granting a security interest in the receivables,
inventory, deposit accounts, equipment, intellectual property and other
assets of such Subsidiary) to the Administrative Agent for the benefit of
the Lender Parties or to enable the Administrative Agent to exercise and
enforce its rights and remedies thereunder.
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SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding, any Hedge Agreement
with any Hedge Bank shall be in effect or any Lender Party shall have any
Commitment hereunder, the Borrower will not, at any time:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any
Lien on or with respect to any of its properties of any character
(including, without limitation, accounts) whether now owned or hereafter
acquired, or sign, file or suffer to exist, or permit any of its
Subsidiaries to sign, file or suffer to exist, under the Uniform
Commercial Code of any jurisdiction, a financing statement that names the
Borrower or any of its Subsidiaries as debtor, or sign or suffer to exist,
or permit any of its Subsidiaries to sign or suffer to exist, any security
agreement authorizing any secured party thereunder to file such financing
statement, or assign, or permit any of its Subsidiaries to assign, any
accounts or other right to receive income, excluding, however, from the
operation of the foregoing restrictions, the following:
(i) Liens created under the Loan Documents;
(ii) Permitted Liens;
(iii) Liens securing Debt in connection with the construction
of a Health Club Facility as permitted by Section 5.02(b)(iii)(E);
(iv) purchase money Liens upon or in any real property or
equipment acquired or held by the Borrower or any of its
Subsidiaries in the ordinary course of business to secure the
purchase price of such real property or equipment or to secure Debt
incurred solely for the purpose of financing the acquisition of any
such real property or equipment to be subject to such Liens, or
Liens existing on any such real property or equipment at the time of
its acquisition (other than any such Liens created in contemplation
of such acquisition that do not secure the purchase price), or
extensions, renewals or replacements of any of the foregoing for the
same or a lesser amount; provided, however, that no such Lien shall
extend to or cover any property other than the property being
acquired and no such extension, renewal or replacement shall extend
to or cover any property not theretofore subject to the Lien being
extended, renewed or replaced;
(v) Liens arising in connection with Capitalized Leases,
provided that no such Lien shall extend to or cover any Collateral;
(vi) any interest or title of a lessor and any restriction or
encumbrance to which the interest or title of such lessor may be
subject that is incurred in the ordinary course of business; and
(vii) bankers' liens and rights of setoff with respect to
customary depository arrangements entered into in the ordinary
course of business.
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(b) Debt. Create, incur, assume or suffer to exist, or permit any of its
Subsidiaries to create, incur, assume or suffer to exist, any Debt other than:
(i) in the case of the Borrower,
(A) Debt under the Loan Documents;
(B) unsecured Debt incurred solely in connection with the
acquisition of a Health Club Facility, the aggregate principal
amount of which shall not exceed the cash purchase price of such
acquisition plus the amount of any fees and expenses incurred solely
in connection with such acquisition; provided that such Debt (1) is
issued to the seller or sellers of such Health Club Facilities, (2)
is subordinate to the Debt under the Loan Documents and such seller
or sellers and the Borrower shall have executed and delivered to the
Administrative Agent a subordination agreement, in substantially the
form of Exhibit I hereto (a "Seller Subordination Agreement"), (3)
has no scheduled principal amortization prior to the date which is
six months after the Final Maturity Date, (4) provides that interest
shall not exceed a rate of interest of 14 % per annum, of which cash
interest shall not exceed a rate of interest per annum equal to the
Base Rate in effect from time to time plus 2 % per annum (but in no
event shall such cash interest exceed 12 % per annum), (5) shall
provide that interest payments thereunder shall be made no more
frequently than semi-annually and (6) provided further that, (x) as
of the end of the most recently ended Monthly Rolling Period prior
to the incurrence of such Debt and calculated immediately before and
after giving effect to the incurrence of such Debt, the Parent
Guarantor shall be in compliance with the Leverage Ratio set forth
in Section 5.02(e)(v)(A) and the Administrative Agent shall have
received a certificate of the chief financial officer of the Parent
Guarantor, together with a schedule of computations used by the
Parent Guarantor in determining such compliance, certifying such
compliance, and (y) no Default shall have occurred and be continuing
immediately before and after giving effect thereto;
(C) Debt in respect of Hedge Agreements with one or more Hedge
Banks in a notional amount of not more than $125,000,000;
(D) Debt incurred in respect of an earnout or similar
Obligation in connection with the acquisition of any Health Club
Facility;
(E) the Surviving Debt; and
(F) Debt owed to any Subsidiary of the Borrower; provided,
however, that such obligation (1) is subject to an intercompany
subordination agreement in substantially the form of Exhibit K
hereto (an "Intercompany Subordination Agreement"), duly executed by
the Borrower and each such Subsidiary and (2) is evidenced by a
promissory note in form and substance satisfactory to the
Administrative Agent, which note shall be pledged under the terms of
the
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Collateral Documents to the Administrative Agent, on behalf of the
Secured Parties, immediately upon its creation;
(ii) in the case of any of its Subsidiaries,
(A) Debt under the Subsidiary Guaranty; and
(B) Debt owed to the Borrower by any Subsidiary of the
Borrower so long as such Debt is evidenced by a promissory note in
form and substance satisfactory to the Administrative Agent, which
note shall be pledged under the terms of the Collateral Documents to
the Administrative Agent, on behalf of the Secured Parties,
immediately upon creation;
(iii) in the case of the Borrower and any of its Subsidiaries,
(A) Debt secured by Liens permitted by Section 5.02(a)(iv) and
(v) and solely covering the acquisition of fitness equipment;
(B) Debt secured by Liens permitted under Sections 5.02(a)(iv)
and (v) (other than Debt incurred under Section 5.02(b)(iii)(A)) in
an aggregate amount not to exceed $2,000,000 at any time outstanding
and the amortization of which shall not exceed $300,000 during any
12-month period;
(C) trade payables incurred in the ordinary course of business
of the Borrower or such Subsidiary not overdue by more than 60 days
or that are being diligently contested by the Borrower or such
Subsidiary in good faith;
(D) endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
business; and
(E) other Debt in an aggregate amount not to exceed $5,000,000
at any time outstanding.
(c) Mergers, Etc. Merge into or consolidate with any Person or permit any
Person to merge into it, or permit any of its Subsidiaries to do so, except that
(i) any Subsidiary of the Borrower may merge into or consolidate with any other
Subsidiary of the Borrower so long as, in the case of any such merger or
consolidation, the Person formed by or surviving such merger or consolidation
shall be a wholly owned Subsidiary of the Borrower and (ii) any Subsidiary of
the Borrower may merge into the Borrower; provided, however, that, in each case,
immediately after giving effect thereto, no event or condition shall have
occurred and be continuing that constitutes a Default and, in the case of any
such merger to which the Borrower is a party, the Borrower is the surviving
corporation.
(d) Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose of,
or permit any of its Subsidiaries to sell, lease, transfer or otherwise dispose
of, any assets, or
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grant any option or other right to purchase, lease or otherwise acquire any
Collateral, except (i) sales of Inventory or Equipment in the ordinary course of
its business; (ii) sales or other dispositions in a transaction authorized by
Section 5.02(c); (iii) the sale and leaseback of real property or land for the
sole purpose of acquiring Health Club Facilities; and (iv) sales of assets not
otherwise permitted under this Section 5.02(d) for cash and for fair value in an
aggregate amount not to exceed $1,000,000 in any fiscal year.
(e) Investments in Other Persons. Make or hold, or permit any of its
Subsidiaries to make or hold, any Investment in any Person other than:
(i) Investments existing on the Third Restatement Date and set
forth on Schedule 4.01(gg) hereto;
(ii) Investments (A) by the Borrower and its Subsidiaries in
Cash Equivalents provided that, to the extent such Investments in
Cash Equivalents exceed $1,000,000 in aggregate principal amount at
any time outstanding, the Administrative Agent may request, for the
benefit of the Secured Parties, a valid perfected first priority
security interest in such Cash Equivalents, and the Borrower shall
take all such action as the Administrative Agent may deem necessary
or desirable to perfect and protect such security interest and (B)
by the Borrower in Hedge Agreements permitted to be maintained by
Section 5.02(b)(i)(C);
(iii) Investments consisting of travel advances, employee
relocation advances and other advances to employees made in the
ordinary course of business not to exceed $750,000 at any time
outstanding;
(iv) the Investment by the Borrower in Debt of the Parent
Guarantor (A) evidenced by the Holdings Notes or (B) to advance
money to the Parent Guarantor for the purposes permitted by Section
5.02(f);
(v) Investments by the Borrower or any Subsidiary of the
Borrower constituting Health Club Investments; provided that:
(A) (1) with respect to any Health Club Investment
constituting an acquisition of a Health Club Facility, in the event
the aggregate acquisition purchase price (including the amount of
any indebtedness refinanced or assumed, any earnout or similar
Obligation in connection therewith, and all fees and expenses
related thereto) represents 10% or more of the Consolidated assets
of the Parent Guarantor and its Subsidiaries immediately before
giving effect to such Health Club Investment, the Leverage Ratio as
of the end of the most recently-ended Monthly Rolling Period prior
to the date of such acquisition and calculated immediately before
and after giving effect to such event, shall be not more than the
ratio set forth below for such Monthly Rolling Period and the
Administrative Agent shall have received a certificate of the chief
financial officer of the Parent Guarantor certifying such
compliance, together with a schedule in form
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satisfactory to the Administrative Agent of the computations used by
the Parent Guarantor in determining compliance therewith:
Rolling Period
Ending In the Leverage
Fiscal Year Ending Ratio
------------------ -----
December 31, 1997 4.50
December 31, 1998 4.50
December 31, 1999 4.25
December 31, 2000 3.75
(2) with respect to any Health Club Investment constituting an
acquisition of a Health Club Facility, in the event the aggregate
acquisition purchase price (including the amount of any indebtedness
refinanced or assumed, any earnout or similar Obligation in
connection therewith, and all fees and expenses related thereto)
represents 5 % or more of the Consolidated assets of the Parent
Guarantor and its Subsidiaries immediately prior to giving effect to
such Health Club Investment, such Health Club Facility shall have
maintained a positive EBITDA during the most recent period of 12
consecutive months ended immediately prior to the date of its
acquisition (such EBITDA may include Pro Forma Adjustments), and (3)
with respect to any such Health Club Investment constituting the
acquisition of a Health Club Facility, the aggregate acquisition
purchase price (including the amount of any indebtedness refinanced
or assumed, any earnout or similar Obligation in connection
therewith, and all fees and expenses related thereto) shall not
exceed, for any single transaction or a series of related
transactions, 15 % of the Consolidated assets of the Parent
Guarantor and its Subsidiaries immediately prior to giving effect to
such Health Club Investment, unless such Health Club Investment
shall have been approved in writing by the Required Lenders; and
(B) with respect to Health Club Investments during any
Restricted Capex Period the aggregate amount of such Health Club
Investments (the "Restricted Capex Amount") shall not exceed an
amount equal to the product of $75,000 multiplied by the number of
Health Club Facilities operated by the Borrower and its Subsidiaries
at the beginning of such Restricted Capex Period; provided, however,
that if a Restricted Capex Period begins after January 1, 2000 such
Restricted Capex Period shall end on December 31, 2000 and such
Restricted Capex Amount shall be reduced to an amount equal to the
product of (x) such Restricted Capex Amount multiplied by (y) a
quotient equal to the number of days in such Restricted Capex Period
divided by 360;
(vi) Investments by the Borrower in connection with a Health Club
Investment in any wholly owned Subsidiary of the Borrower which is or
becomes a Subsidiary Guarantor;
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(vii) Investments in any Person in an amount not to exceed in the
aggregate $10,000,000 (including intercompany Debt issued by any Foreign
Subsidiary to the Borrower or any of its wholly owned Subsidiaries) at any
time outstanding shall have occurred and be continuing at the time of such
Investment; and
(viii) other Investments in any Person in the United States in an
amount not to exceed $3,000,000 in the aggregate at any time outstanding.
(f) Dividends, Etc. Declare or pay any dividends, purchase, redeem,
retire, defease or otherwise acquire for value any of its capital stock or any
warrants, rights or options to acquire such capital stock, now or hereafter
outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital stock, warrants, rights, options, obligations or
securities to its stockholders as such or issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, or permit any of its
Subsidiaries to do any of the foregoing or permit any of its Subsidiaries to
purchase, redeem, retire, defease or otherwise acquire for value any capital
stock of the Borrower or any warrants, rights or options to acquire such capital
stock or to issue or sell any capital stock or any warrants, rights or options
to acquire such capital stock, except that:
(i) the Borrower may make distributions to the Parent Guarantor in
order to permit the Parent Guarantor (A) to pay out-of-pocket expenses
incurred in the ordinary course of business, (B) to make interest payments
in accordance with the terms of the Holdings Notes and the other Debt of
the Parent Guarantor described in Section 5.02(e)(iv) above so long as
such interest payment is made concurrently with the distribution to the
Parent Guarantor and is made by deposit to the Holdings Account, (C) to
pay Xxxx X. Xxxxxxx amounts owing to him under the terms of his
employment, (D) to pay Xxxxxxx X. Xxxxxxx amounts owing to him under the
terms of his employment, (E) to pay fees and expenses in accordance with
the terms of the MDC Management Agreement, (F) to make a $40,000,000
dividend payment to its shareholders on the Third Restatement Date and (G)
to pay any tax liability of the Parent Guarantor which has become due and
payable;
(ii) any Subsidiary of the Borrower may declare and pay dividends or
distributions in cash to the Borrower or to any Subsidiary of the
Borrower; and
(iii) shall have occurred and be continuing, (A) the Borrower may
make distributions to the Parent Guarantor in order to permit the Parent
Guarantor to repurchase shares of capital stock or options therefor of
employees or former employees of the Parent Guarantor or any of its
Subsidiaries, which distributions shall not exceed $1,000,000 in the
aggregate in any 12-month period and (B) at any time following the
delivery of the financial statements pursuant to Section 5.03(d) for the
fiscal year ending December 31, 1997, the Borrower may make distributions
to the Parent Guarantor to permit the Parent Guarantor to repurchase
additional shares of capital stock or options therefor of employees or
former employees of the Parent Guarantor or any of its Subsidiaries,
provided that both before and after giving effect to each such
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distribution, the Leverage Ratio at the end of the most recently-ended
Monthly Rolling Period prior to such distribution shall not exceed 4.25:
1.00 in fiscal year 1998, 3.75: 1.00 in fiscal year 1999, 3.25: 1.00 in
fiscal year 2000, 2.50:1 in fiscal year 2001, 2.25:1 in fiscal year 2002,
2.00:1 in fiscal year 2003, and 1.00:1 in fiscal year 2004 and the
Administrative Agent shall have received a certificate of the chief
financial officer of the Parent Guarantor, together with a schedule of
computations used by the Parent Guarantor in determining such compliance,
certifying such compliance;
(g) Change in Nature of Business. Make, or permit any of its Subsidiaries
to make, any material change in the nature of its business as carried on at the
Third Restatement Date.
(h) Charter Amendments. Amend, or permit any of its Subsidiaries to amend,
its certificate of incorporation or bylaws if such amendment could impair the
interests or rights of the Administrative Agent or the Lender Parties in any
manner.
(i) Accounting Changes. Make or permit, or permit any of its Subsidiaries
to make or permit, any change in (i) accounting policies or reporting practices,
except as required by the Securities and Exchange Commission or generally
accepted accounting principles, including the possible revenue recognition
adjustments referred to in Schedule 4.01(f) or (ii) its fiscal year.
(j) Prepayments, Etc. of Debt. (i) Prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner, or make
any payment in violation of any subordination terms of, any Debt, other than (A)
the prepayment of the Advances in accordance with the terms of this Agreement or
of any Debt payable to the Borrower, and (B) required prepayments or redemptions
of Surviving Debt in accordance with the terms thereof or as otherwise permitted
by Section 5.02(b) (other than with respect to any earnout or similar Obligation
in connection with the acquisition of any Health Club Facility, the Subordinated
Debt or any Seller Debt) or (ii) amend, modify or change in any manner any term
or condition of any Surviving Debt which amendment, modification or change could
adversely affect the interests or rights of any Agent or the Lender Parties, or
permit any of its Subsidiaries to do any of the foregoing.
(k) Amendment, Etc. of Related Documents. Cancel or terminate any Related
Document or consent to or accept any cancellation or termination thereof, amend,
modify or change in any manner any term or condition of any Related Document or
give any consent, waiver or approval thereunder, waive any default under or any
breach of any term or condition of any Related Document, agree in any manner to
any other amendment, modification or change of any term or condition of any
Related Document or take any other action in connection with any Related
Document that would impair the value of the interest or rights of the Borrower
thereunder or that would impair the rights or interests of any Agent or any
Lender Party, or permit any of its Subsidiaries to do any of the foregoing.
(l) Negative Pledge. Enter into or suffer to exist, or permit any of its
Subsidiaries to enter into or suffer to exist, any agreement prohibiting or
conditioning the creation or assumption of any Lien upon any of its property or
assets other than any such agreement in favor of the
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Secured Parties, except with regard to the specific assets referred to in
Sections 5.02(a)(iii), (iv) and (v).
(m) Partnerships. Become a general partner in any general or limited
partnership, or permit any of its Subsidiaries to do so.
(n) Speculative Transactions. Engage, or permit any of its Subsidiaries to
engage, in any transaction involving commodity options or futures contracts or
any similar speculative transactions (including, without limitation, take-or-pay
contracts) except for Hedge Agreements permitted under Section 5.02(b)(i)(C).
(o) Debt of Foreign Subsidiaries. Permit any Foreign Subsidiary to create,
incur, assume or suffer to exist, any Debt, other than (i) Debt that is
non-recourse to the Borrower and its Subsidiaries and (ii) Debt owed to the
Borrower or any of its Subsidiaries so long as such Debt is evidenced by a
promissory note in form and substance satisfactory to the Administrative Agent,
which note shall be pledged under the terms of the Collateral Documents to the
Administrative Agent, on behalf of the Secured Parties.
SECTION 5.03. Reporting Requirements. So long as any Advance shall remain
unpaid, any Letter of Credit shall be outstanding, any Hedge Agreement with any
Hedge Bank shall be in effect or any Lender Party shall have any Commitment
hereunder, the Borrower will furnish to the Lender Parties:
(a) Default and Prepayment Notices. (i) Promptly after the Borrower
has knowledge of the occurrence of any Default which is continuing, a
statement of the chief financial officer of the Borrower setting forth
details of such Default and the action that the Borrower has taken and
proposes to take with respect thereto, and (ii) as soon as possible and in
any event no later than 1:00 P.M. (New York City time) at least three
Business Days before any prepayment of Term Advances is to be made by the
Borrower pursuant to Section 2.06 (the "Prepayment Date"), written notice
of the principal amount of such prepayment (the "Prepayment Amount") and
the applicable Prepayment Date. Each such notice (a "Prepayment Notice")
shall be by telex or telecopier or otherwise as provided in Section 8.02.
(b) Monthly Financials. As soon as available and in any event within
30 days after the end of each month, a Consolidated balance sheet of the
Parent Guarantor and its Subsidiaries as of the end of such month and
Consolidated statement of income and cash flows of the Parent Guarantor
and its Subsidiaries for the period commencing at the end of the previous
month and ending with the end of such month and commencing with the end of
the previous fiscal year and ending with the end of such month, setting
forth in each case in comparative form the corresponding figures for the
corresponding period of the preceding year, all in reasonable detail and
duly certified (subject to year-end audit adjustments) by the chief
financial officer of the Parent Guarantor as having been prepared in
accordance with GAAP, together with (i) a certificate of said officer
stating that no Default has occurred and is continuing or, if a Default
has occurred and is continuing, a statement as to the nature thereof and
the action that the Parent Guarantor or
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Borrower has taken and proposes to take with respect thereto and (ii) in
the event of any change from GAAP in the generally accepted accounting
principles used in the preparation of such financial statements, a
statement of reconciliation conforming such financial statements to GAAP.
(c) Quarterly Financials. As soon as available and in any event
within 45 days after the end of each of the first three quarters of each
fiscal year of the Parent Guarantor, a Consolidated balance sheet of the
Parent Guarantor and its Subsidiaries as of the end of such quarter and
Consolidated statement of income and cash flows of the Parent Guarantor
and its Subsidiaries for the period commencing at the end of the previous
fiscal quarter and ending with the end of such quarter and commencing with
the end of the previous fiscal year and ending with the end of such
quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, all in
reasonable detail and duly certified (subject to year-end audit
adjustments) by the chief financial officer of the Parent Guarantor as
having been prepared in accordance with GAAP, together with (i) a
certificate of said officer stating that no Default has occurred and is
continuing or, if a Default has occurred and is continuing, a statement as
to the nature thereof and the action that the Parent Guarantor or Borrower
has taken and proposes to take with respect thereto, (ii) in the event of
any change from GAAP in the generally accepted accounting principles used
in the preparation of such financial statements, a statement of
reconciliation conforming such financial statements to GAAP and (iii) a
schedule in form satisfactory to the Administrative Agent of the
computations used by the Parent Guarantor in determining compliance with
the covenants contained in Sections 5.02(e)(v) and 5.04.
(d) Annual Financials. As soon as available and in any event within
90 days after the end of each fiscal year of the Parent Guarantor, a copy
of the annual audit report for such year for the Parent Guarantor and its
Subsidiaries, including therein a Consolidated balance sheet of the Parent
Guarantor and its Subsidiaries as of the end of such fiscal year and
Consolidated statement of income and cash flows of the Parent Guarantor
and its Subsidiaries for such fiscal year, in each case accompanied by the
unqualified opinion of Deloitte & Touche LLP or other independent public
accountants of recognized standing acceptable to the Required Lenders,
together with (i) a separate report on compliance with contractual
provisions related to audited financial statements of such accounting firm
to the Lender Parties stating that in the course of the regular audit of
the financial statements of the Parent Guarantor and its Subsidiaries,
which audit was conducted by such accounting firm in accordance with
generally accepted auditing standards, such accounting firm has obtained
no knowledge that, with respect to financial and accounting matters
pursuant to Sections 5.04(b) and (c) as of the date of their audit, a
Default has occurred and is continuing or, if such accounting firm is
aware that a Default has occurred and is continuing, a statement as to the
nature thereof, (ii) a schedule prepared by the chief financial officer of
the Parent Guarantor in form satisfactory to the Administrative Agent of
the computations used by the Parent Guarantor in determining, as of the
end of such fiscal year, compliance with the covenants contained in
Sections 5.02(e)(v) and 5.04, (iii) a certificate of the chief financial
officer of the Parent Guarantor
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stating that no Default has occurred and is continuing or, if a Default
has occurred and is continuing, a statement as to the nature thereof and
the action that the Parent Guarantor or Borrower has taken and proposes to
take with respect thereto and (iv) in the event of any change from GAAP in
the generally accepted accounting principles used in the preparation of
such financial statements, a statement of reconciliation conforming such
financial statements to GAAP.
(e) Annual Forecasts. As soon as available and in any event no later
than 15 days after the end of each fiscal year of the Parent Guarantor,
forecasts prepared by management of the Parent Guarantor, in form
satisfactory to the Administrative Agent, of balance sheets, income
statements and cash flow statements on a monthly basis for such fiscal
year and on an annual basis for the shorter period of (i) the four fiscal
years thereafter, and (ii) each fiscal year thereafter until the Final
Maturity Date.
(f) ERISA Events. Promptly and in any event within 20 Business Days
after any Loan Party or any of its ERISA Affiliates knows or has reason to
know that any ERISA Event with respect to any Loan Party or any of its
ERISA Affiliates has occurred, a statement of the chief financial officer
of the Borrower describing such ERISA Event and the action, if any, that
such Loan Party or such ERISA Affiliate has taken and proposes to take
with respect thereto.
(g) Plan Terminations. Promptly and in any event within 20 Business
Days after receipt thereof by any Loan Party or any of its ERISA
Affiliates, copies of each notice from the PBGC stating its intention to
terminate any Plan of any Loan Party or any of its ERISA Affiliates or to
have a trustee appointed to administer any such Plan in either case
pursuant to Section 4042 of ERISA.
(h) Plan Annual Reports. Promptly and in any event within 20
Business Days after a request by the Administrative Agent or any Lender,
copies of each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) most recently filed with the Internal Revenue Service
with respect to each Plan of each Loan Party or any of its ERISA
Affiliates.
(i) Multiemployer Plan Notices. Promptly and in any event within
five Business Days after receipt thereof by any Loan Party or any of its
ERISA Affiliates from the sponsor of a Multiemployer Plan of any Loan
Party or any of its ERISA Affiliates, copies of each notice concerning (i)
the imposition of Withdrawal Liability by any such Multiemployer Plan,
(ii) the reorganization or termination, within the meaning of Title IV of
ERISA, of any such Multiemployer Plan or (iii) the amount (if such amount
is known by the Borrower) of liability incurred, or that may be incurred,
by such Loan Party or any of its ERISA Affiliates in connection with any
event described in clause (i) or (ii).
(j) Litigation. Promptly after the commencement thereof, notice of
all actions, suits, investigations, litigation and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign,
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affecting any Loan Party or any of its Subsidiaries or any of their
properties of the type described in Section 4.01(i).
(k) Securities Reports. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports
that any Loan Party or any of its Subsidiaries sends to its stockholders,
and copies of all regular, periodic and special reports, and all
registration statements, that any Loan Party or any of its Subsidiaries
files with the Securities and Exchange Commission or any governmental
authority that may be substituted therefor, or with any national
securities exchange.
(l) Creditor Reports. Promptly after the furnishing thereof, copies
of any statement or report furnished to any other holder of the securities
of any Loan Party or of any of its Subsidiaries pursuant to the terms of
any indenture, loan or credit or similar agreement and not otherwise
required to be furnished to the Lender Parties pursuant to any other
clause of this Section 5.03.
(m) Agreement Notices. Promptly upon receipt thereof, copies of all
material notices, requests and other documents received by any Loan Party
or any of its Subsidiaries under or pursuant to any Related Document or
indenture, loan or credit or similar agreement, and copies of any
amendment, modification or waiver of any provision of any Related Document
or indenture, loan or credit or similar agreement and, from time to time
upon request by the Administrative Agent, such information and reports
regarding the Related Documents as the Administrative Agent or any Lender
Party through the Administrative Agent may reasonably request.
(n) Revenue Agent Reports. Within 10 days after receipt, copies of
all Revenue Agent Reports (Internal Revenue Service Form 886), or other
written proposals of the Internal Revenue Service, that propose, determine
or otherwise set forth positive adjustments to the Federal income tax
liability of the affiliated group (within the meaning of Section
1504(a)(1) of the Internal Revenue Code) of which the Borrower is a member
aggregating $200,000 or more.
(o) Environmental Conditions. Promptly after having actual knowledge
thereof, notice of any condition or occurrence on any property of any Loan
Party or any of its Subsidiaries that results in a material noncompliance
by any Loan Party or any of its Subsidiaries with any Environmental Law or
Environmental Permit or could (i) form the basis of an Environmental
Action against any Loan Party or any of its Subsidiaries or such property
that could have a Material Adverse Effect or (ii) cause any such property
to be subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law.
(p) Real Property. As soon as available and in any event within 60
days after the end of each fiscal year, a report identifying all owned or
leased real property disposed of or no longer used by the Borrower or any
of its Subsidiaries during such fiscal year, a list and description
(including the street address, county or other relevant jurisdiction,
state, record owner, book value thereof and, in the case of leases of
property, lessor,
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lessee, expiration date and annual rental cost thereof) of all real
property acquired or leased during such fiscal year and such other
information as may be requested by the Administrative Agent with respect
thereto.
(q) Other Information. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party or any of its Subsidiaries
(including Foreign Subsidiaries) as any Lender Party (through the
Administrative Agent) may from time to time reasonably request.
SECTION 5.04. Financial Covenants. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding, any Hedge Agreement
with any Hedge Bank shall be in effect or any Lender Party shall have any
Commitment hereunder, the Parent Guarantor will:
(a) Leverage Ratio. Maintain on a Consolidated basis for itself and
its Subsidiaries a Leverage Ratio for each Quarterly Rolling Period set
forth below of not more than the amount set forth below for such Rolling
Period:
Quarterly Rolling Period Ending In Ratio
---------------------------------- -----
Initial Extension of Credit to
December 31, 1997 4.75:1.00
January 1, 1998 to December 31, 1998 4.75:1.00
January 1, 1999 to December 31, 1999 4.50:1.00
January 1, 2000 to December 31, 2000 4.00:1.00
January 1, 2001 to December 31, 2001 3.50:1.00
January 1, 2002 to December 31, 2002 3.25:1.00
January 1, 2003 to December 31, 2003 3.00:1.00
January 1, 2004 to December 31, 2004 2.00:1.00
(b) Interest Coverage Ratio. Maintain on a Consolidated basis for
itself and its Subsidiaries an Interest Coverage Ratio for each Quarterly
Rolling Period set forth below of not less than the amount set forth below
for such Rolling Period:
Quarterly Rolling Period Ending In Ratio
---------------------------------- -----
Initial Extension of Credit to
December 31, 1997 2.25
January 1, 1998 to December 31, 1998 2.25
January 1, 1999 to December 31, 1999 2.50
January 1, 2000 to December 31, 2000 2.75
January 1, 2001 to December 31, 2001 3.00
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January 1, 2002 to December 31, 2002 3.25
January 1, 2003 to December 31, 2003 3.50
January 1, 2004 to December 31, 2004 3.75
(c) Fixed Charge Coverage Ratio. Maintain on a Consolidated basis
for itself and its Subsidiaries a Fixed Charge Coverage Ratio for each
Quarterly Rolling Period hereinafter of not less than 1.75:1.00.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of, or interest on,
any Advance, or any Loan Party shall fail to make any other payment under
any Loan Document, in each case when the same becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or any of
its officers) under or in connection with any Loan Document shall prove to
have been incorrect in any material respect when made; or
(c) the Borrower shall fall to perform or observe any term, covenant
or agreement contained in Section 2.14, 5.01(b), 5.01(d), 5.01(e),
5.01(f), 5.01(g), 5.01(h), 5.01(j), 5.01(l), 5.01(m), 5.01(n), 5.01(o),
5.02, 5.03 or 5.04; or
(d) any Loan Party shall fail to perform any other term, covenant or
agreement contained in any Loan Document on its part to be performed or
observed if such failure shall remain unremedied for 15 days after such
Loan Party has actual knowledge thereof; or
(e) any Loan Party or any of its Subsidiaries shall fall to pay any
principal of, premium or interest on or any other amount payable in
respect of any Debt that is outstanding in a principal or notional amount
of at least $1,000,000 in the aggregate (but excluding Debt outstanding
hereunder) of such Loan Party or such Subsidiary (as the case may be),
when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise); or any other
event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity
of such Debt or otherwise to cause, or to permit the holder thereof to
cause, such Debt to mature; or any such Debt shall be declared to be due
and payable or required to be prepaid or redeemed (other than by a
regularly scheduled required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease
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such Debt shall be required to be made, in each case prior to the stated
maturity thereof; or
(f) any Loan Party or any of its Subsidiaries shall generally not
pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against any Loan Party or any of its Subsidiaries seeking to adjudicate it
a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property and,
in the case of any such proceeding instituted against it (but not
instituted by it) that is being diligently contested by it in good faith,
either such proceeding shall remain undismissed or unstayed for a period
of 30 days or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official
for, it or any substantial part of its property) shall occur; or any Loan
Party or any of its Subsidiaries shall take any corporate action to
authorize any of the actions set forth above in this subsection (f); or
(g) any one or more judgments or orders for the payment of money
that, either individually or in the aggregate, exceed $1,000,000 shall be
rendered against any Loan Party or any of its Subsidiaries and either (i)
enforcement proceedings shall have been commenced by any creditor upon
such judgment or order or (ii) there shall be any period of 10 consecutive
days during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or
(h) any nonmonetary judgment or order shall be rendered against any
Loan Party or any of its Subsidiaries that could be reasonably likely to
have a Material Adverse Effect, and there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
or
(i) any material provision of any Loan Document after delivery
thereof pursuant to Section 3.01, 5.01(m) or 5.01(o) shall for any reason
cease to be valid and binding on or enforceable against any Loan Party to
it, or any such Loan Party shall so state in writing; or
(j) any Collateral Document after delivery thereof pursuant to
Sections 3.01, 5.01(m) or 5.01(o) shall for any reason (other than
pursuant to the terms thereof) cease to create a valid and perfected first
priority lien on and security interest in any material Collateral
purported to be covered thereby; or
(k) (i) any Person or two or more Persons acting in concert other
than the Equity Investors shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of
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1934), directly or indirectly, of Voting Stock of the Parent Guarantor (or
other securities convertible into such Voting Stock) representing 35 % or
more of the combined voting power of all Voting Stock of the Parent
Guarantor; or (ii) the MDC Investors shall for any reason own, directly or
indirectly, in the aggregate a lesser percentage of the combined voting
power of all Voting Stock of the Parent Guarantor than any other holder of
such Voting Stock of the Parent Guarantor; or (iii) the first day on which
a majority of the members of the Board of Directors of the Parent
Guarantor are not Continuing Directors; or (iv) any Person or two or more
Persons acting in concert other than the Equity Investors shall have
acquired by contract or otherwise, or shall have entered into a contract
or arrangement that, upon consummation, will result in its or their
acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of the Parent
Guarantor; or
(l) any ERISA Event shall have occurred with respect to a Plan of
any Loan Party or any of its ERISA Affiliates and such ERISA Event could
reasonably be expected to have a Material Adverse Effect; or
(m) any Loan Party or any of its ERISA Affiliates shall have been
notified by the sponsor of a Multiemployer Plan of any Loan Party or any
of its ERISA Affiliates that it has incurred Withdrawal Liability to such
Multiemployer Plan in an amount that could reasonably be expected to have
a Material Adverse Effect; or
(n) any Loan Party or any of its ERISA Affiliates shall have been
notified by the sponsor of a Multiemployer Plan of any Loan Party or any
of its ERISA Affiliates that such Multiemployer Plan is in reorganization
or is being terminated, within the meaning of Title IV of ERISA, and as a
result of such reorganization or termination the aggregate annual
contributions of the Loan Parties and their ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being terminated
have been or will be increased by an amount that could reasonably be
expected to have a Material Adverse Effect;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the obligation of each Appropriate Lender to make Advances (other than
Letter of Credit Advances by the Issuing Bank or a Working Capital Lender
pursuant to Section 2.03(c) and Swing Line Advances by the Swing Line Bank or a
Working Capital Lender pursuant to Section 2.02(b)) and of the Issuing Bank to
issue Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Required Lenders (A) by notice to the Borrower, declare the Notes, all interest
thereon and all other amounts payable under this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower, and (B) by notice to each party
required under the terms of any agreement in support of which a Standby Letter
of Credit is issued, request that all Obligations under such agreement be
declared to be due and payable; provided, however, that, in
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the event of an actual or deemed entry of an order for relief with respect to
any Loan Party or any of its Subsidiaries under the Federal Bankruptcy Code, (x)
the obligation of each Lender to make Advances (other than Letter of Credit
Advances by the Issuing Bank or a Working Capital Lender pursuant to Section
2.03(c) and Swing Line Advances by the Swing Line Bank or a Working Capital
Lender pursuant to Section 2.02(b)) and of the Issuing Bank to issue Letters of
Credit shall automatically be terminated and (y) the Notes, all such interest
and all such other amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default. If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, and upon the request of the Required Lenders, shall,
irrespective of whether it is taking any of the actions described in Section
6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such
demand the Borrower will, pay to the Administrative Agent on behalf of the
Lender Parties in same day funds at the Administrative Agent's office designated
in such demand, for deposit in the L/C Cash Collateral Account, an amount equal
to the aggregate Available Amount of all Letters of Credit then outstanding. If
at any time the Administrative Agent determines that any funds held in the L/C
Cash Collateral Account are subject to any right or claim of any Person other
than the Administrative Agent and the Lender Parties or that the total amount of
such funds is less than the aggregate Available Amount of all Letters of Credit,
the Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held in the L/C
Cash Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held in the
L/C Cash Collateral Account that the Administrative Agent determines to be free
and clear of any such right and claim.
ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action. Each Lender Party (in its
capacities as a Lender and, to the extent applicable, the Issuing Bank, the
Swing Line Bank and a potential Hedge Bank) hereby appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement and the other Loan Documents as
are delegated to the Administrative Agent by the terms hereof and thereof,
together with such powers and discretion as are reasonably incidental thereto.
As to any matters not expressly provided for by the Loan Documents (including,
without limitation, enforcement or collection of the Notes), the Administrative
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding upon all Lender Parties and all
holders of Notes; provided, however, that the Administrative Agent shall not be
required to take any action that exposes the Administrative Agent to personal
liability or that is contrary to this
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Agreement or applicable law. The Administrative Agent agrees to give to each
Lender Party prompt notice of each notice given to it by the Borrower pursuant
to the terms of this Agreement.
SECTION 7.02. Agents' Reliance, Etc. None of the Agents nor any of
their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with the Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, each Agent:
(a) may treat the payee of any Note as the holder thereof until the
Administrative Agent receives and accepts an Assignment and Acceptance entered
into by the Lender that is the payee of such Note, as assignor, and an Eligible
Assignee, as assignee, as provided in Section 8.07; (b) may consult with legal
counsel (including counsel for any Loan Party), independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (c) makes no warranty or representation to any
Lender Party and shall not be responsible to any Lender Party for any
statements, warranties or representations (whether written or oral) made in or
in connection with the Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of any Loan Document on the part of any Loan Party or to inspect
the property (including the books and records) of any Loan Party; (e) shall not
be responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; (f) shall incur no liability under or in
respect of any Loan Document by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telegram, telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or parties;
and (g) shall incur no liability as a result of any determination whether the
transactions contemplated by the Loan Documents constitute a "highly leveraged
transaction" within the meaning of the interpretations issued by the Comptroller
of the Currency, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.
SECTION 7.03. Each Agent and Affiliates. With respect to its
Commitments, the Advances made by it and the Notes issued to it, each Agent
shall have the same rights and powers under the Loan Documents as any other
Lender Party and may exercise the same as though it were not an Agent; and the
term "Lender Party" or "Lender Parties" shall, unless otherwise expressly
indicated, include each Agent in its individual capacity. Each of the Agents and
its respective affiliates may accept deposits from, lend money to, act as
trustee under indentures of, accept investment banking engagements from and
generally engage in any kind of business with, any Loan Party, any of its
Subsidiaries (including Foreign Subsidiaries) and any Person who may do business
with or own securities of any Loan Party or any such Subsidiary (including
Foreign Subsidiaries), all as if such Agent were not an Agent and without any
duty to account therefor to the Lender Parties.
SECTION 7.04. Lender Party Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon any Agent or
any other Lender Party and based on the financial statements referred to in
Section 4.01 and such other documents and
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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 any Agent or any other Lender
Party and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement.
SECTION 7.05. Indemnification. (a) Each Lender Party severally
agrees to indemnify each Agent (to the extent not promptly reimbursed by the
Borrower) from and against such Lender Party's ratable share (determined as
provided below) of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (including, without limitation, reasonable fees and
expenses of counsel) that may be imposed on, incurred by, or asserted against
such Agent in any way relating to or arising out of the Loan Documents or any
action taken or omitted by such Agent under the Loan Documents (collectively,
the "Indemnified Costs"); provided, however, that no Lender Party shall be
liable for any portion of such Indemnified Costs resulting from such Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender Party agrees to reimburse each Agent promptly upon demand for its
ratable share of any costs and expenses (including, without limitation, fees and
expenses of counsel) payable by the Borrower under Section 8.04, to the extent
that such Agent is not promptly reimbursed for such costs and expenses by the
Borrower. For purposes of this Section 7.05(a), the Lender Parties' respective
ratable shares of any amount shall be determined, at any time, according to the
sum of (i) the aggregate principal amount of the Advances outstanding at such
time and owing to the respective Lender Parties, (ii) their respective Pro Rata
Shares of the aggregate Available Amount of all Letters of Credit outstanding at
such time, (iii) the aggregate unused portions of their Term A Commitments and
Term B Commitments at such time and (iv) their respective Unused Working Capital
Commitments at such time, provided that the aggregate principal amount of Swing
Line Advances owing to any Swing Line Bank and of Letter of Credit Advances
owing to any Issuing Bank shall be considered to be owed to the Working Capital
Lenders ratably in accordance with their respective Working Capital Commitments.
In the case of any investigation, litigation or proceeding giving rise to any
Indemnified Costs, this Section 7.05 applies whether any such investigation,
litigation or proceeding is brought by any Agent, any Lender, any other Lender
Party or a third party. The failure of any Lender Party to reimburse any Agent
promptly upon demand for its ratable share of any amount required to be paid by
the Lender Parties to such Agent as provided herein shall not relieve any other
Lender Party of its obligation hereunder to reimburse such Agent for its ratable
share of such amount, but no Lender Party shall be responsible for the failure
of any other Lender Party to reimburse such Agent for such other Lender Party's
ratable share of such amount. Without prejudice to the survival of any other
agreement of any Lender Party hereunder, the agreement and obligations of each
Lender Party contained in this Section 7.05(a) shall survive the payment in full
of principal, interest and all other amounts payable hereunder and under the
other Loan Documents.
(b) Each Lender Party severally agrees to indemnify the Issuing Bank (to
the extent not promptly reimbursed by the Borrower) from and against such Lender
Party's ratable share (determined as provided below) of any and all liabilities,
obligations, losses, damages, penalties, actions, judgements, suits, costs,
expenses or disbursements of any kind or nature whatsoever
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that may be imposed on, incurred by, or asserted against the Issuing Bank in any
way relating to or arising out of the Loan Documents or any action taken or
omitted by the Issuing Bank under the Loan Documents; provided, however, that no
Lender Party shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgements, suits, costs, expenses or
disbursements resulting from the Issuing Bank's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender Party agrees to
reimburse the Issuing Bank promptly upon demand for its ratable share of any
costs and expenses (including, without limitation, fees and expenses of counsel)
payable by the Borrower under Section 8.04, to the extent that the Issuing Bank
is not promptly reimbursed for such costs and expenses by the Borrower. For
purposes of this Section 7.05(b), the Lender Parties' respective ratable shares
of any amount shall be determined, at any time, according to the sum of (i) the
aggregate principal amount of the Advances outstanding at such time and owing to
the respective Lender Parties, (ii) their respective Pro Rata Shares of the
aggregate Available Amount of all Letters of Credit outstanding at such time,
(iii) the aggregate unused portions of their respective Term A Commitments and
Term B Commitments at such time plus (iv) their respective Unused Working
Capital Commitments at such time; provided that the aggregate principal amount
of Swing Line Advances owing to any Swing Line Bank and of Letter of Credit
Advances owing to any Issuing Bank shall be considered to be owed to the Working
Capital Lenders ratably in accordance with their respective Working Capital
Commitments. In the case of any investigation, litigation or proceeding giving
rise to any Indemnified Costs, this Section 7.05 applies whether any such
investigation, litigation or proceeding is brought by any Agent, any Lender, any
other Lender Party or a third party. The failure of any Lender Party to
reimburse the Issuing Bank promptly upon demand for its ratable share of any
amount required to be paid by the Lender Parties to the Issuing Bank as provided
herein shall not relieve any other Lender Party of its obligation hereunder to
reimburse the Issuing Bank for its ratable share of such amount, but no Lender
Party shall be responsible for the failure of any other Lender Party to
reimburse the Issuing Bank for such other Lender Party's ratable share of such
amount. Without prejudice to the survival of any other agreement of any Lender
Party hereunder, the agreement and obligations of each Lender Party contained in
this Section 7.05(b) shall survive the payment in full of principal, interest
and all other amounts payable hereunder and under the other Loan Documents.
SECTION 7.06. Successor Agents. (a) The Administrative Agent may
resign as to any or all of the Facilities at any time by giving written notice
thereof to the Lender Parties and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Administrative
Agent as to such of the Facilities as to which such Agent has resigned. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lender Parties, appoint a
successor Administrative Agent, which shall be a commercial bank organized under
the laws of the United States or of any State thereof and having a combined
capital and surplus of at least $250,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent as to all of the Facilities and upon the execution and filing or recording
of such financing statements, or amendments thereto, and such amendments or
supplements to any mortgages, and such other instruments or notices, as may be
necessary or desirable, or as the Required Lenders may request,
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in order to continue the perfection of the Liens granted or purported to be
granted by the Collateral Documents, such successor Administrative Agent shall
succeed to and become vested with all the rights, powers, discretion, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under the Loan
Documents. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent as to less than all of the
Facilities and upon the execution and filing or recording of such financing
statements, or amendments thereto, and such amendments or supplements to any
mortgages, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Administrative Agent shall succeed to and by all the
rights, powers, discretion, privileges and duties of the retiring Administrative
Agent as to such Facilities, other than with respect to funds transfers and
other similar aspects of the administration of Borrowings under such Facilities,
issuances of Letters of Credit (notwithstanding any resignation as
Administrative Agent with respect to the Letter of Credit Facility) and payments
by the Borrower in respect of such Facilities, and the retiring Administrative
Agent shall be discharged from its duties and obligations under this Agreement
as to such Facilities, other than as aforesaid. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent as to all
of the Facilities, the provisions of this Article VII shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative
Agent as to any Facilities under this Agreement.
(b) Any Agent other than the Administrative Agent may resign at any time
by giving written notice thereof to the Lenders and the Borrower and none of
such Agents shall have any duties or obligations under this Agreement or the
other Loan Documents in their capacities as such agents.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes or any other Loan Document, nor consent
to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed (or, in the case of the
Collateral Documents, consented to) by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that (a) no amendment,
waiver or consent shall, unless in writing and signed by all of the Lenders, do
any of the following at any time: (i) waive any of the conditions specified in
Section 3.01 or, in the case of the Third Restatement Date, 3.02, (ii) change
the percentage of (x) the Commitments, (y) the aggregate unpaid principal amount
of the Advances or (z) the aggregate Available Amount of outstanding Letters of
Credit or the number of Lenders that shall be required for the Lenders or any of
them to take any action hereunder, (iii) reduce or limit the obligations of the
Parent Guarantor under Section 1 of the Holdings Guaranty or otherwise limit the
Parent Guarantor's liability with respect to the Obligations owing to the Agents
and the Lender Parties, (iv) release all or substantially all of the
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Collateral and (v) amend this Section 8.01 and (b) no amendment, waiver or
consent shall, unless in writing and signed by the Required Lenders and each
Lender that has a Commitment under the Facility affected by such amendment,
waiver or consent, (i) increase the Commitments of such Lender or subject such
Lender to any additional obligations, (ii) reduce the principal of, or interest
on, the Notes held by such Lender or any fees or other amounts payable hereunder
to such Lender, (iii) postpone any date fixed for any payment of principal of,
or interest on, the Notes held by such Lender or any fees or other amounts
payable hereunder to such Lender or (iv) change the order of application of any
prepayment set forth in Section 2.06 in any manner that materially affects such
Lender; provided further that no amendment, waiver or consent shall, unless in
writing and signed by the Swing Line Bank or the Issuing Bank, as the case may
be, in addition to the Lenders required above to take such action, affect the
rights or obligations of the Swing Line Bank or of the Issuing Bank, as the case
may be, under this Agreement; and provided further that no amendment, waiver or
consent shall, unless in writing and signed by the Administrative Agent in
addition to the Lenders required above to take such action, affect the rights or
duties of the Agents under this Agreement.
SECTION 8.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered,
if to the Borrower, at its address at 0000 Xxxxxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xx. Xxxxxxx X. Xxxxxxx, telecopier number: (510)
416-7398 with a copy to XxXxxx De Leeuw & Co., 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xx. Xxxxx X. Xxxx, telecopier number: (212)
355-6283, with a copy to White & Case, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxx, Esq., telecopier number: (212)
354-8113; if to any Lender Party that is listed on the signature pages hereto,
at its Domestic Lending Office specified opposite its name on Schedule I hereto;
if to any other Lender Party, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender Party; and if to
any Agent, c/o the Administrative Agent at its address at 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xx. Xxxxxxx X. Xxxxxxxxx, Vice President,
telecopier number: (000) 000-0000; or, as to each party, at such other address
as shall be designated by such party in a written notice to the other parties.
All such notices and communications shall, when mailed, telegraphed, telecopied
or telexed, be effective when deposited in the mails, delivered to the telegraph
company, transmitted by telecopier or confirmed by telex answerback,
respectively, except that notices and communications to the Administrative Agent
pursuant to Article II, III or VII shall not be effective until received by such
Agent. Delivery by telecopier of an executed counterpart of any amendment or
waiver of any provision of this Agreement or the Notes or of any Exhibit hereto
to be executed and delivered hereunder shall be effective as delivery of a
manually executed counterpart thereof.
SECTION 8.03. No Waiver; Remedies. No failure on the part of any
Lender Party or the Administrative Agent to exercise, and no delay in
exercising, any right hereunder or under any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
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SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay on
demand (i) all reasonable costs and expenses of the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents (including, without limitation,
(A) all due diligence, collateral review, syndication, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the reasonable fees and expenses of counsel
for the Administrative Agent with respect thereto, with respect to advising the
Administrative Agent as to its rights and responsibilities, or the perfection,
protection or preservation of rights or interests, under the Loan Documents,
with respect to negotiations with any Loan Party or with other creditors of any
Loan Party or any of its Subsidiaries (including Foreign Subsidiaries) arising
out of any Default or any events or circumstances that may give rise to a
Default and with respect to presenting claims in or otherwise participating in
or monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors' rights generally and any proceeding ancillary thereto) and (ii) all
costs and expenses of the Agents and the Lender Parties in connection with the
enforcement of the Loan Documents, whether in any action, suit or litigation,
any bankruptcy, insolvency or other similar proceeding affecting creditors'
rights generally or otherwise (including, without limitation, the reasonable
fees and expenses of counsel for the Agents and each Lender Party with respect
thereto).
(b) The Borrower agrees to indemnify and hold harmless the Agents, each
Lender Party and each of their Affiliates and their officers, directors,
employees, agents and advisors (each, an "Indemnified Party") from and against
any and all Indemnified costs that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with
or by reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with (i) the Facilities, the actual or proposed use of the proceeds
of the Advances, or the Letters of Credit, the Loan Documents, or any of the
transactions contemplated hereby or thereby, including, without limitation, any
acquisition or proposed acquisition (including, without limitation, any
transactions contemplated hereby and thereby) by the Borrower of any Health Club
Facility or (ii) the actual or alleged presence of Hazardous Materials on any
property of or operated by any Loan Party or any of its Subsidiaries (including
Foreign Subsidiaries) or any Environmental Action relating in any way to any
Loan Party or any of its Subsidiaries (including Foreign Subsidiaries), in each
case whether or not such investigation, litigation or proceeding is brought by
any Loan Party, its directors, shareholders or creditors or an Indemnified Party
or any Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated, except to the extent such
Indemnified costs are found in a final, non appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. The Borrower also agrees not to assert any
claim against any Agent, any Lender Party or any of their Affiliates, or any of
their respective officers, directors, employees, attorneys and agents, on any
theory of liability, for special, indirect, consequential or punitive damages
arising out of or otherwise relating to the Facilities or any of the
transactions contemplated herein or in any other Loan Document or the actual or
proposed use of the proceeds of the Advances or the Letters of Credit.
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(c) If any payment of principal of, or Conversion of, any Eurodollar Rate
Advance is made by the Borrower to or for the account of a Lender Party other
than on the last day of the Interest Period for such Advance, as a result of a
payment or Conversion pursuant to Sections 2.06, 2.09(b)(i) or 2.10(d),
acceleration of the maturity of the Notes pursuant to Section 6.01 or for any
other reason, the Borrower shall, upon demand by such Lender Party (with a copy
of such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender Party any amounts required to compensate such Lender
for any additional losses, costs or expenses that it may reasonably incur as a
result of such payment, including, without limitation, any loss (including loss
of anticipated profits), cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by any Lender Party to fund
or maintain such Advance.
(d) If any Loan Party fails to pay when due any costs, expenses or other
amounts payable by it under any Loan Document, including, without limitation,
fees and expenses of counsel and indemnities, such amount may be paid on behalf
of such Loan Party by the Administrative Agent or any Lender Party, in its sole
discretion.
(e) Without prejudice to the survival of any other agreement of any Loan
Party hereunder or under any other Loan Document, the agreements and obligations
of the Borrower contained in Sections 2.10 and 2.12 and this Section 8.04 shall
survive the payment in full of principal, interest and all other amounts payable
hereunder and under any of the other Loan Documents.
SECTION 8.05. Right of Setoff. Upon (a) the occurrence and during
the continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or such
Affiliate to or for the credit or the account of the Borrower against any and
all of the Obligations of the Borrower now or hereafter existing under this
Agreement and the Note or Notes (if any) held by such Lender Party irrespective
of whether such Lender Party shall have made any demand under this Agreement or
such Note or Notes and although such obligations may be unmatured. Each Lender
Party agrees promptly to notify the Borrower after any such setoff and
application; provided, however, that the failure to give such notice shall not
affect the validity of such setoff and application. The rights of each Lender
Party and its Affiliates under this Section 8.05 are in addition to other rights
and remedies (including, without limitation, other rights of setoff) that such
Lender Party and its respective Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, the Administrative Agent, each
Restatement Lender, the Existing Issuing Bank and the Swing Line Bank and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Agents and each Lender Party and their respective
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successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender Parties.
SECTION 8.07. Assignments and Participations. (a) Each Lender may
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment or Commitments, the Advances owing to it and the Note
or Notes held by it); provided, however, that (i) each such assignment shall be
of a uniform, and not a varying, percentage of all rights and obligations under
and in respect of one or more Facilities, (ii) except in the case of an
assignment to a Person that, immediately prior to such assignment, was a Lender
or an assignment of all of a Lender's rights and obligations under this
Agreement, the amount of the Commitment of the assigning Lender being assigned
pursuant to each such assignment (determined as of the date of the Assignment
and Acceptance with respect to such assignment) shall in no event be less than
$5,000,000 and shall be in an integral multiple of $500,000, (iii) each such
assignment shall be to an Eligible Assignee, and (iv) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Note or Notes subject to such assignment and a processing and
recordation fee of $2,000.
(b) The Issuing Bank may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under the undrawn portion of the Letter of
Credit Facility at any time.
(c) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender or Issuing Bank, as the
case may be, hereunder and (y) the Lender or Issuing Bank assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's or Issuing Bank's rights and obligations under this Agreement, such
Lender or Issuing Bank shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance, the Lender
Party assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of Lien created or purported to be created under or in connection with,
this Agreement or any other Loan Document or any other instrument or document
furnished pursuant hereto or thereto; (ii) such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any other Loan Party or the performance
or observance by any Loan Party of any of its obligations under any Loan
Document or any other instrument or
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document furnished pursuant hereto or thereto; (iii) such assignee confirms that
it has received a copy of this Agreement, together with copies of the financial
statements referred to in Section 4.01 and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon any Agent, such assigning Lender Party
or any other Lender Party and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement or any other Loan Document as
are delegated to the Administrative Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender or Issuing Bank, as the case may be.
(e) The Administrative Agent shall maintain at its address referred to in
Section 8.02 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lender Parties and the Commitment under each Facility of, and principal amount
of the Advances owing under each Facility to, each Lender Party from time to
time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent and the Lender Parties may treat each Person whose name is
recorded in the Register as a Lender Party hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender Party at any reasonable time and from time to time upon reasonable prior
notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes subject
to such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit C
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Borrower. In the case of any assignment by a Lender, within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent in exchange for the surrendered
Note or Notes a new Note to the order of such Eligible Assignee in an amount
equal to the Commitment assumed by it under a Facility pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Commitment
hereunder under such Facility, a new Note to the order of the assigning Lender
in an amount equal to the Commitment retained by it hereunder. Such new Note or
Notes shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A-1, or A-2 hereto, as the case may be.
(g) Each Lender Party may sell participations in or to all or a portion of
its rights and obligations under this Agreement (including, without limitation,
all or a portion of its Commitments, the Advances owing to it and the Note or
Notes (if any) held by it) to any Person
-86-
other than any Loan Party or any of its Subsidiaries (including Foreign
Subsidiaries) or Affiliates; provided, however, that (i) such Lender Party's
obligations under this Agreement (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender Party shall remain the holder of any such Note for all
purposes of this Agreement, and (iv) the Borrower, the Administrative Agent and
the other Lender Parties shall continue to deal solely and directly with such
Lender in connection with such Lender Party's rights and obligations under this
Agreement and (v) no participant under any such participation shall have any
right to approve any amendment or waiver of any provision of any Loan Document,
or any consent to any departure by any Loan Party therefrom, except to the
extent that such amendment, waiver or consent would reduce the principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, postpone any date fixed for
any payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation, or release all or substantially all of the Collateral.
(h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
Party by or on behalf of the Borrower; provided, however, that, prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential Information
received by it from such Lender Party.
(i) Notwithstanding any other provision set forth in this Agreement, any
Lender Party may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it and the Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System, and any Lender Party that is a fund may at any time without the
consent of the Administrative Agent and Borrower pledge all or any portion of
its interest and rights under this Agreement (including, without limitation, the
Advances owing to it and the Note or Notes held by it) to its trustee in support
of its obligations to such trustee.
(j) The Borrower and each Lender Party agree that, at the request of the
Administrative Agent, the Borrower or such Lender will re-execute this Agreement
to reflect the assignments that have been effected in accordance with this
Section 8.07.
SECTION 8.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
-87-
SECTION 8.09. No Liability of the Issuing Bank. The Borrower assumes
all risks of the acts or omissions of any beneficiary or transferee of any
Letter of Credit with respect to its use of such Letter of Credit. Neither the
Issuing Bank nor any of its officers or directors shall be liable or responsible
for: (a) the use that may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
Borrower shall have a claim against the Issuing Bank, and the Issuing Bank shall
be liable to the Borrower, to the extent of any direct, but not consequential,
damages suffered by the Borrower that the Borrower proves were caused by (i) the
Issuing Bank's willful misconduct or gross negligence in determining whether
documents presented under any Letter of Credit comply with the terms of the
Letter of Credit or (ii) the Issuing Bank's willful failure to make lawful
payment under a Letter of Credit after the presentation to it of a draft and
certificates strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
SECTION 8.10. Confidentiality. Neither the Administrative Agent nor
any Lender Party shall disclose any Confidential Information to any Person
without the consent of the Borrower, other than (a) to the Administrative
Agent's or such Lender Party's Affiliates and their officers, directors,
employees, agents and advisors and to actual or prospective Eligible Assignees
and participants, and then only on a confidential basis, or to any direct or
indirect contractual counterparties in swap agreements or such contractual
counterparties' professional advisors provided that such contractual
counterparty or professional advisor to such contractual counterparty agrees in
writing to keep such information confidential to the same extent required of the
Lenders hereunder, (b) as required by any law, rule or regulation or judicial
process and (c) as requested or required by any state, federal or foreign
authority or examiner regulating banks or banking.
SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is or is to be a party,
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 any such New
York State court 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 shall affect any right that any party may otherwise have to commence
or participate in any action, suit or
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proceeding relating to this Agreement or any of the other Loan Documents to
which it is or is to be a party, or otherwise to proceed against such party in
the court of any other jurisdiction.
(b) Each of the parties hereto 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 of the other Loan
Documents to which it is or is to be a party in any New York State or federal
court. 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.
(c) The Borrower irrevocably consents to the service of any and all
process in any such action, suit or proceedings address set forth in Section
8.02, or by any other method permitted by law. The Borrower 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.
(d) To the extent that the Borrower has or hereafter may acquire immunity
from jurisdiction of any court or from any legal process (whether through
service of notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the Borrower
hereby irrevocably waives such immunity in respect of its Obligations under this
Agreement, the Notes, any other Loan Document and any Secured Hedge Agreement to
which it is or is to be a party.
SECTION 8.12. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 8.13. Waiver of Jury Trial. Each of the Borrower, the Agents
and the Lender Parties irrevocably waives all right to trial by jury to the
fullest extent permitted by law in any action, proceeding or counterclaim
(whether based on contract, tort or otherwise) arising out of or relating to any
of the Loan Documents, the Advances or the transactions contemplated hereby or
thereby or the actions of any Agent or any Lender Party in the negotiation,
administration, performance or enforcement hereof or thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
24 HOUR FITNESS, INC.
By:
--------------------------
Name:
Title:
-89-
FITNESS HOLDINGS, INC.
By:
--------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as Administrative Agent, Issuing Bank,
Swing Line Bank and Lender
By:
--------------------------
Name:
Title:
By:
--------------------------
Name:
Title:
BANKERS TRUST COMPANY
as Documentation Agent
By:
--------------------------
Name:
Title:
LASALLE NATIONAL BANK
as Co-Agent
By:
--------------------------
Name:
Title:
XXXXX FARGO BANK, N.A.
as Co-Agent
-90-
By:
--------------------------
Name:
Title:
-91-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
24 HOUR FITNESS, INC.
By:
--------------------------
Name:
Title:
FITNESS HOLDINGS, INC.
By:
--------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as Administrative Agent, Issuing Bank,
Swing Line Bank and Lender
By:
--------------------------
Name:
Title:
BANKERS TRUST COMPANY
as Documentation Agent
By:
--------------------------
Name:
Title:
LASALLE NATIONAL BANK
as Co-Agent
By:
--------------------------
Name:
Title:
-92-
XXXXX FARGO BANK, N.A.
as Co-Agent
By:
--------------------------
Name:
Title:
-93-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
24 HOUR FITNESS, INC.
By:
--------------------------
Name:
Title:
FITNESS HOLDINGS, INC.
By:
--------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as Administrative Agent, Issuing Bank,
Swing Line Bank and Lender
By:
--------------------------
Name:
Title:
BANKERS TRUST COMPANY
as Documentation Agent
By:
--------------------------
Name:
Title:
LASALLE NATIONAL BANK
as Co-Agent
By:
--------------------------
Name:
Title:
-94-
XXXXX FARGO BANK, N.A.
as Co-Agent
By:
--------------------------
Name:
Title:
-95-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
24 HOUR FITNESS, INC.
By:
--------------------------
Name:
Title:
FITNESS HOLDINGS, INC.
By:
--------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as Administrative Agent, Issuing Bank,
Swing Line Bank and Lender
By:
--------------------------
Name:
Title:
BANKERS TRUST COMPANY
as Documentation Agent
By:
--------------------------
Name:
Title:
LASALLE NATIONAL BANK
as Co-Agent
By:
--------------------------
Name:
Title:
-96-
XXXXX FARGO BANK, N.A.
as Co-Agent
By:
--------------------------
Name:
Title:
-97-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
24 HOUR FITNESS, INC.
By:
--------------------------
Name:
Title:
FITNESS HOLDINGS, INC.
By:
--------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as Administrative Agent, Issuing Bank,
Swing Line Bank and Lender
By:
--------------------------
Name:
Title:
BANKERS TRUST COMPANY
as Documentation Agent
By:
--------------------------
Name:
Title:
LASALLE NATIONAL BANK
as Co-Agent
By:
--------------------------
Name:
Title:
-98-
XXXXX FARGO BANK, N.A.
as Co-Agent
By:
--------------------------
Name:
Title:
-00-
XXXXXX XXXXXXXXX XX XXXXX
By:
--------------------------
Name:
Title:
By:
--------------------------
Name:
Title:
-100-
BANKERS TRUST COMPANY
By:
--------------------------
Name:
Title:
-101-
LASALLE NATIONAL BANK
By:
--------------------------
Name:
Title:
-102-
XXXXX FARGO BANK, N.A.
By:
--------------------------
Name:
Title:
-103-
THE ING CAPITAL SENIOR SECURED
HIGH INCOME FUND, L.P.
By:
--------------------------
Name:
Title:
-104-
ARCHIMEDES FUNDING, L.L.C.
By: ING Capital Advisors Incorporated,
as Collateral Manager
By:
--------------------------
Name:
Title: Vice President &
Portfolio Manager
-105-
KZH - CRESCENT CORPORATION
By:
--------------------------
Name:
Title: Authorized Agent
-106-
Crescent/Mach I Partners, L.P.,
by: TCW Asset Management Company, its
Investment Manager
By:
--------------------------
Name:
Title:
-107-
PILGRIM AMERICA PRIME RATE
By:
--------------------------
Name:
Title:
FIRST SOURCE FINANCIAL, LLP
By First Source Financial, Inc.
its Agent Manager
By:
--------------------------
Name:
Title:
-108-
SCHEDULES
Schedule I Commitments and Applicable Lending Offices
Schedule 11 Equity Investors
Schedule III Existing Letters of Credit
Schedule IV Holdings Notes
Schedule 3.01(d) Surviving Debt
Schedule 4.01(b) Subsidiaries
Schedule 4.01(f) Possible Revenue Recognition Policy Adjustments
Schedule 4.01(y) Open Years
Schedule 4.01(z) Tax Adjustments, Etc.
Schedule 4.01(ee) Owned Real Properties
Schedule 4.01(ff) Leased Properties
Schedule 4.01(gg) Investments
Schedule 5.01(l) Transactions with Affiliates
EXHIBITS
Exhibit A-1 Form of Term A Note
Exhibit A-2 Form of Term B Note
Exhibit A-3 Form of Working Capital Note
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Security Agreement
Exhibit E Form of Holdings Pledge Agreement
Exhibit F Form of Holdings Guaranty
Exhibit G Form of Solvency Certificate
Exhibit H-1 Form of Opinion of Borrower's Counsel (New York)
Exhibit H-2 Form of Opinion of Borrower's Counsel (California)
Exhibit I Form of Seller Subordination Agreement
Exhibit J Form of Subsidiary Guaranty
Exhibit K Form of Intercompany Subordination Agreement
Exhibit L Form of Assignment Agreement
