EXHIBIT 10.1
EXECUTION COPY
CREDIT AGREEMENT
AMONG
BALLY TOTAL FITNESS HOLDING CORPORATION,
as Borrower
The Several Banks and other Financial Institutions
Parties Hereto
THE CHASE MANHATTAN BANK,
as Agent
DEUTSCHE BANK ALEX. XXXXX,
as Documentation Agent
and
LASALLE BANK NATIONAL ASSOCIATION,
as Co-Agent
Dated as of November 18, 1997
As Amended and Restated
as of November 10, 1999
CHASE SECURITIES INC.,
as Lead Arranger and Sole Book Manager
TABLE OF CONTENTS
Page
ARTICLE I.DEFINITIONS AND ACCOUNTING TERMINOLOGY...............................1
1.01 Certain Definitions.................................................1
1.02 Financial Standards................................................29
1.03 Interpretation.....................................................30
ARTICLE II.THE CREDIT.........................................................30
2.01 The Revolving Credit...............................................30
2.02 Requests for Revolving Advances....................................31
2.03 The Term Loan Facility.............................................31
2.04 Requests for Term Advances.........................................32
2.05 Repayment of Term Advances.........................................32
2.06 Lending Branch and Evidence of Credit..............................32
2.07 Conversion and Continuation Options................................33
2.08 Computation of and Payment of Interest.............................34
2.09 Payment of Advances................................................35
2.10 Payments...........................................................35
2.11 Optional Termination or Reduction of Revolving
Credit Commitment Amount.........................................37
2.12 Optional Prepayments...............................................37
2.13 Mandatory Prepayments and Commitment Reductions....................38
2.14 Fees...............................................................38
2.15 Arrangement Compensation; Agency Fees..............................39
2.16 Taxes..............................................................40
2.17 Increased Costs; Illegality; Indemnity.............................41
2.18 Capital Adequacy...................................................43
2.19 Letters of Credit..................................................43
ARTICLE XXX.XXXXXXXX..........................................................51
3.01 Security...........................................................51
3.02 Collateral Documents...............................................52
3.03 Priority of Security Interest......................................52
3.04 New Guarantors.....................................................52
3.05 Real Property Matters..............................................52
3.06 Exceptions.........................................................53
3.07 Pledge of Capital Stock............................................53
ARTICLE IV.CONDITIONS PRECEDENT...............................................53
4.01 Conditions Precedent to Closing Date...............................53
4.02 Conditions Precedent to Each Advance and
Letter of Credit.................................................60
Page
ARTICLE V.REPRESENTATIONS AND WARRANTIES......................................60
5.01 Borrower's Existence...............................................60
5.02 Subsidiaries' Existence............................................61
5.03 Borrower's Powers..................................................61
5.04 Power of Officers..................................................61
5.05 Government Approvals...............................................61
5.06 Compliance With Laws...............................................61
5.07 Enforceability of Agreement........................................61
5.08 Title to Property..................................................62
5.09 Litigation.........................................................62
5.10 Events of Default..................................................62
5.11 Compliance with Margin Requirements................................62
5.12 Subsidiaries.......................................................62
5.13 Financial Information..............................................62
5.14 ERISA..............................................................63
5.15 Investment Company Act of 1940.....................................63
5.16 No Restrictions on Subsidiaries....................................63
5.17 Senior Indebtedness................................................64
5.18 Environmental Matters..............................................64
5.19 Collateral Documents...............................................64
5.20 Copyrights, Patents, Trademarks and Licenses, etc. ................65
5.21 Year 2000..........................................................66
5.22 Accuracy of Information, etc.......................................66
5.23 1997 Subordinated Notes............................................66
ARTICLE VI.AFFIRMATIVE COVENANTS..............................................67
6.01 Use of Proceeds and Letters of Credit..............................67
6.02 Notices............................................................67
6.03 Financial Statements, Reports, Etc. ...............................69
6.04 Further Assurances.................................................71
6.05 Existence, Etc. ...................................................71
6.06 Ownership of Stock of Subsidiaries.................................72
6.07 Payment of Obligations.............................................72
6.08 Compliance with Laws...............................................72
6.09 Insurance and Condemnation.........................................72
6.10 Adequate Books.....................................................75
6.11 ERISA..............................................................75
6.12 Interest Coverage..................................................75
6.13 Hazardous Materials................................................76
6.14 Total Leverage Ratio...............................................77
6.15 Senior Leverage Ratio..............................................77
6.16 Real Estate Taxes..................................................78
6.17 Additional Real Estate Collateral..................................78
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ARTICLE VII.NEGATIVE COVENANTS................................................79
7.01 Investments and Restricted Payments................................79
7.02 Other Obligations..................................................81
7.03 Other Security.....................................................82
7.04 Subordinated Debt..................................................82
7.05 Liquidation; Merger................................................83
7.06 [Reserved].........................................................84
7.07 Change in Business.................................................84
7.08 Disposal of Assets.................................................84
7.09 Limitation on Optional Payments and Modifications
of Debt Instruments and Receivables Program
Documents........................................................85
7.10 Limitation on Transactions with Affiliates.........................87
7.11 Limitation on Sales and Leasebacks.................................87
7.12 Limitation on Changes in Fiscal Year...............................88
7.13 Funding Corp.......................................................88
7.14 Unrestricted Subsidiaries..........................................88
7.15 Tax Allocation and Indemnity Agreement.............................89
7.16 Health & Tennis (UK) Limited.......................................89
ARTICLE XXXX.XXXXXX OF DEFAULT................................................89
8.01 Nonpayment.........................................................89
8.02 Representation or Warranty.........................................90
8.03 Judgments..........................................................90
8.04 Voluntary Bankruptcy...............................................90
8.05 Involuntary Bankruptcy.............................................90
8.06 Change of Control Event............................................90
8.07 Cross Default......................................................90
8.08 ERISA..............................................................90
8.09 Specific Defaults..................................................91
8.10 Guarantee and Collateral Agreement;
Impairment of Collateral Documents...............................91
8.11 Condemnation.......................................................92
8.12 Payout Event.......................................................92
8.13 Actual or Asserted Invalidity......................................92
8.14 Other Defaults.....................................................92
ARTICLE IX.MISCELLANEOUS......................................................93
9.01 Notices............................................................93
9.02 Successors and Assigns.............................................94
9.03 Lenders' Obligations Several.......................................94
9.04 Assignments; Participations........................................94
9.05 Delays and Waivers.................................................97
9.06 Costs and Expenses.................................................97
Page
9.07 Telephone Indemnity................................................98
9.08 Other Indemnity....................................................98
9.09 Choice of Law......................................................99
9.10 Personal Jurisdiction.............................................100
9.11 Service of Process................................................100
9.12 Waiver of Jury Trial..............................................100
9.13 Section Headings..................................................100
9.14 Severability......................................................100
9.15 Counterparts......................................................100
9.16 No Reliance by Lenders............................................101
9.17 Entire Agreement..................................................101
9.18 Confidentiality...................................................101
9.19 Receivables Program Savings Clause................................101
9.20 Existing Credit Agreement to Remain in Full Force
and Effect......................................................102
ARTICLE X.RELATION OF LENDERS................................................102
10.01 Agent and Collateral Agent; Enforcement of Guaranties............102
10.02 Pro Rata Sharing.................................................103
10.03 Set-off..........................................................103
10.04 Liability of Agent...............................................104
10.05 Reliance by Agent................................................105
10.06 Approvals; Amendments............................................105
10.07 Notice of Default................................................106
10.08 Credit Decision..................................................106
10.09 Lenders' Indemnity...............................................107
10.10 Agent as Lender..................................................107
10.11 Notice of Transfer...............................................107
10.12 Resignation of Agent.............................................108
10.13 Collateral Matters...............................................108
10.14 Collateral Agent.................................................111
10.15 Documentation Agent and Co-Agent.................................111
SCHEDULES
Schedule 1.01 Existing Liens
Schedule 1.01(b) List of Scandinavian Partnerships
Schedule 1.01(c) Unrestricted Subsidiaries
Schedule 2.19(b) Letters of Credit
Schedule 4.01(l) Initial Mortgaged Properties
Schedule 5.09 Litigation
Schedule 5.14 ERISA Matters
Schedule 5.16 Restrictions on Subsidiaries
Schedule 5.18 Environmental Matters
Schedule 5.20 Trademark Disputes
Schedule 6.02(a) Additional Disclosed Litigation
Schedule 6.17 Additional Mortgaged Properties
Schedule 7.02(b) Existing Debt
Schedule 7.09(a) Prepayable Debt
Schedule 9.01 Addresses for Notices
EXHIBITS
Exhibit A. Form of Guarantee and Collateral Agreement
Exhibit B. Form of Collateral Agency Agreement
Exhibit C. List of Commitment Percentages
Exhibit D. List of Subsidiaries
Exhibit E. Form of Operating Bank Guaranty
Exhibit F. List of Real Estate Documents
Exhibit G. [Reserved].
Exhibit H. Form of Revolving Note
Exhibit I. Form of Term Note
Exhibit J. Form of Opinions of Borrower's Counsel
Exhibit K. Form of Opinion of General Counsel
Exhibit L. [Reserved]
Exhibit M. Form of Assignment and Acceptance
CREDIT AGREEMENT
This Credit Agreement, dated as of November 18, 1997, as amended and
restated as of November 10, 1999 (the "Credit Agreement"), among BALLY TOTAL
FITNESS HOLDING CORPORATION, a Delaware corporation ("Borrower"), the banks and
other financial institutions named on the signature pages of this Agreement
(collectively, "Lenders" and individually, a "Lender"), THE CHASE MANHATTAN
BANK, as agent for Lenders (in such capacity, "Agent"), DEUTSCHE BANK ALEX.
XXXXX, as documentation agent (in such capacity, the "Documentation Agent"), and
LASALLE BANK NATIONAL ASSOCIATION, as co-agent (in such capacity, the
"Co-Agent"), is entered into with respect to the following:
1. The Borrower, certain of the Lenders and the Agent are parties to
the Credit Agreement dated as of November 18, 1997, as amended (the
"Existing Credit Agreement").
2. The Borrower has requested that the Existing Credit Agreement be
amended and restated (a) to increase the aggregate principal amount of the
Revolving Credit to $100,000,000, (b) to add a $75,000,000 term loan facility,
(c) to amend certain covenants and (d) otherwise to amend the Existing Credit
Agreement and restate it in its entirety as more fully set forth herein.
3. Certain parties to the Existing Credit Agreement and the other
Credit Parties (as herein defined) desire to continue in full force and effect
all of the indebtedness, guarantees, liens and security interests created under
the Existing Credit Agreement and all guarantee and collateral documents
delivered in connection therewith under this Agreement and the Credit Documents.
4. The Lenders and the Agent are willing to so amend and restate the
Existing Credit Agreement, and the Lenders not now parties to the Existing
Credit Agreement are willing to become parties hereto, but only on the terms and
subject to the conditions set forth herein;
In consideration of the premises and other valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree that on the Closing Date (as hereinafter defined) the Existing
Credit Agreement shall be amended and restated in its entirety as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMINOLOGY
1.01 Certain Definitions. In addition to the terms defined elsewhere
in this Agreement, the following terms have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Advance" means a Revolving Advance or a Term Advance.
"Affiliate" of any Person means any other Person directly or
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indirectly indirectly Controlling or Controlled by or under direct or
indirect common Control with such Person.
"Agreement" shall mean the Existing Credit Agreement, as amended and
restated by this Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.
"Applicable Margin" means, at any time
(a) with respect to Revolving Advances, the rate per annum based on
the Total Leverage Ratio of the Borrower, set forth in the following matrix
which shall apply to each Type of Revolving Advance, the Letter of Credit
fee payable pursuant to Section 2.14(a)(i) and the commitment fee payable
pursuant to Section 2.14(b), as applicable:
Total Reference Letter of
Leverage Eurodollar Rate Credit Commitment
Ratio Margin Margin Rate Fee
---------------- ---------- --------- --------- ----------
x > 3.00 3.00% 2.00% 2.00% .50%
-
2.00 < x < 3.00 2.75% 1.75% 1.75% .50%
-
x < 2.00 2.50% 1.50% 1.50% .375%
Changes in the Applicable Margin resulting from changes in the Total
Leverage Ratio shall become effective on the date (the "Adjustment Date")
on which financial statements are delivered to the Lenders pursuant to
Section 6.03 (but in any event not later than the 50th day after the end of
each of the first three quarterly periods of each fiscal year or the 105th
day after the end of each fiscal year, as the case may be) and shall remain
in effect until the next change to be effected pursuant to this paragraph.
Each determination of the Total Leverage Ratio pursuant to this definition
shall be made with respect to the period of four consecutive fiscal
quarters of the Borrower ending at the end of the period covered by the
relevant financial statements. For the period from the Closing Date to the
date financial statements are delivered pursuant to Section 6.03(b) with
respect to the fiscal year ending December 31, 1999, the Total Leverage
Ratio shall be presumed to be greater than 3:00 to 1 for purposes of this
definition; and
(b) (i) with respect to Term Advances which are Eurodollar Advances, a
rate per annum equal to 3.50% and (ii) with respect to Term Advances which
are Reference Rate Advances, a rate per annum equal to 2.50%.
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"Banking Day" means a day other than Saturday or Sunday on which (i)
banks are open for business in New York City and (ii) for any calculation,
determination or other matter with respect to Eurodollar Rate Advances,
dealings in foreign currencies and exchange between banks may be carried on
in London, England.
"Borrowing Date" means, with respect to each Advance, the date such
Advance is made.
"BTFC" means Bally Total Fitness Corporation, a Delaware corporation
(formerly named Health & Tennis Corporation of America).
"Capitalized Lease" means any lease which is or should be, in
accordance with GAAP, capitalized on the balance sheet of the lessee.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock or other equity interests whether now outstanding or issued
after the Closing Date.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities
of not more than 12 months from the date of acquisition, (ii) Dollar
denominated time deposits, certificates of deposit and bankers acceptances
of any Lender or any bank whose short-term commercial paper rating from
Standard & Poor's Ratings Group, a division of XxXxxx-Xxxx ("S&P"), is at
least A-1 or the equivalent thereof or from Xxxxx'x Investors Service, Inc.
("Xxxxx'x") is at least P-1 or the equivalent thereof (any such Lender, an
"Approved Lender"), with maturities of not more than 12 months from the
date of acquisition, (iii) repurchase obligations with a term of not more
than seven days for underlying securities of the type described in clause
(i) entered into with an Approved Lender, (iv) commercial paper issued by,
or guaranteed by, any Approved Lender or by the parent company of any
Approved Lender or commercial paper issued by, or guaranteed by, any
industrial or financial company with a short-term commercial paper rating
of at least A-1 or the equivalent thereof by S&P or at least P-1 or the
equivalent thereof by Moody's, or issued by, or guaranteed by, any
industrial company with a long term unsecured debt rating of at least A or
A2, or the equivalent of each thereof, from S&P or Moody's, respectively,
and in each case maturing within 12 months after the date of acquisition
and (v) any fund or funds making substantially all of their investments in
investments of the type described in clauses (i) through (iv) above.
"Change of Control Event" means, without limitation, (a) the
acquisition of ownership, directly or indirectly, beneficially or of
record, by any Person (other than Xxxxxx Xxxxxxxx or Xxx X. Xxxxxxx or
their respective estates or descendants) or group (within the meaning of
4
the Securities Exchange Act of 1934 and the rules of the Securities and
Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 30% of the aggregate ordinary voting power
represented by the issued and outstanding Capital Stock of the Borrower;
(b) occupation of a majority of the seats (other than vacant seats) on the
board of directors of the Borrower by Persons who were neither (i)
nominated by the board of directors of the Borrower nor (ii) appointed by
directors so nominated; or (c) the acquisition of direct or indirect
Control of the Borrower by any Person (other than Xxxxxx Xxxxxxxx or Xxx X.
Xxxxxxx or their respective estates or descendants) or group.
"Chase" means The Chase Manhattan Bank, a New York banking
corporation.
"Closing Date" means the date on which all of the conditions in
Section 4.01 are satisfied.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute.
"Collateral" means all real, personal and mixed property and interests
in property and proceeds thereof now owned or hereafter acquired by
Borrower or any Guarantor and their respective Subsidiaries in or upon
which a security interest, pledge, lien or mortgage is, or is purported to
be, granted to the Lenders or the Collateral Agent pursuant to the
Collateral Documents for the benefit of the Secured Creditors whether under
this Agreement or under any other documents, instruments or writings
executed by any such Persons in connection with Advances or other credit
extensions made hereunder and delivered to the Collateral Agent or the
Lenders.
"Collateral Agency Agreement" means the Collateral Agency Agreement
among the Collateral Agent and the Secured Creditors in the form of Exhibit
B hereto, as amended, supplemented or otherwise modified.
"Collateral Agent" means Chase or any successor agent thereto acting
as Collateral Agent for the Secured Creditors pursuant to the Collateral
Agency Agreement.
"Collateral Documents" means, collectively, (i) the Guarantee and
Collateral Agreement, the Collateral Agency Agreement, the Mortgages, the
Mortgage Amendments, the Operating Bank Guaranty and all other security
agreements, mortgages, deeds of trust, patent and trademark assignments,
certificates of title, lease assignments, guarantees and other agreements
between Borrower or any Guarantor and their respective Subsidiaries and any
5
of the Lenders or the Collateral Agent for the benefit of the Lenders or
the Secured Creditors, now or hereafter delivered to any of the Lenders or
the Collateral Agent pursuant to or in connection with the transactions
contemplated hereby, and all financing statements (or comparable documents)
now or hereafter filed in accordance with the Uniform Commercial Code (or
comparable law) against Borrower or any Guarantor or any Subsidiaries in
favor of any of the Lenders or the Collateral Agent for the benefit of the
Lenders or the Secured Creditors and (ii) any amendments, supplements,
modifications, renewals, replacements, consolidations, substitutions and
extensions of any of the foregoing.
"Commitment" means, as to any Lender, such Lender's Revolving Credit
Commitment, L/C Commitment and Term Loan Commitment; collectively, as to
all the Lenders, the "Commitments".
"Commitment Percentage" means, as to each Lender, its Revolving Credit
Commitment Percentage or Term Loan Commitment Percentage, as applicable.
"Commitment Reductions" shall mean the amount of the permanent
reductions of the Revolving Credit Commitment Amount resulting from the
application of Sections 2.11, 2.13 or 7.08 or any other provision contained
herein.
"Consolidated" or "consolidated" means (i) when used herein with
reference to financial statements, ratios, assets, liabilities, operating
accounts or operations of Borrower and its Subsidiaries, that any
calculations have been made by combining the assets and liabilities of
Borrower and its Subsidiaries after eliminating all intercompany items; and
(ii) when used herein with reference to a Subsidiary, a Subsidiary the
financial statements of which have been presented together with those of
Borrower.
"Consolidated Adjusted EBITDA" means GAAP EBITDA of the Borrower and
its Subsidiaries, calculated on a trailing 12-month basis in accordance
with GAAP as in effect from time to time, adding back (to the extent
deducted in calculating GAAP EBITDA) for all New Clubs, in the aggregate,
the actual GAAP EBITDA loss incurred by such New Clubs during a trailing
12-month period ending on the date of determination (the "New Clubs
Adjustment"); provided that such New Club Adjustment may not exceed
$3,000,000 during any such twelve (12) month period. For purposes of
calculating the Total Leverage Ratio and Senior Leverage Ratio, if the
Borrower or any Subsidiary has acquired any Person, line of business or
health and fitness club within any applicable trailing 12-month period,
Consolidated Adjusted EBITDA for such period shall be calculated on a pro
forma basis (and adjusted for immediately realizable cost savings) as if
such acquisition occurred on the first day of such period, as set forth in
a certificate of a duly authorized financial officer of the Borrower.
"Consolidated Interest Expense" means, for any period, the aggregate
6
amount of interest that, in accordance with GAAP, would be set forth
opposite the caption "interest expense" or any like caption on a
consolidated income statement of the Borrower and its Subsidiaries
(including, but not limited to, imputed interest on Capitalized Leases, all
commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing, the net costs
associated with hedging obligations, amortization of other financing fees
and expenses, the interest portion of any deferred payment obligation,
amortization of discount or premium, if any, and all other non-cash
interest expense (other than previously capitalized interest amortized to
cost of sales)) plus, without duplication, all interest accrued or paid by
the Borrower or any of its Subsidiaries under any Guaranty of Debt
(including a Guaranty of principal, interest or any combination thereof) of
any Person for such period, in each case determined on a consolidated basis
in accordance with GAAP.
"Consolidated Net Income" of the Borrower means, for any period, the
consolidated net income (or loss) of the Borrower and its Subsidiaries for
such period as determined in accordance with GAAP, adjusted, to the extent
included in calculating such net income (or loss), by excluding (i) all
extraordinary gains or losses (less all fees and expenses relating
thereto), (ii) the portion of net income (or loss) of the Borrower and its
Subsidiaries allocable to minority interests in unconsolidated Persons to
the extent that cash dividends or distributions have not actually been
received by the Borrower or one of its Subsidiaries, (iii) net income (or
loss) of any Person combined with the Borrower or any of its subsidiaries
on a "pooling of interests" basis attributable to any period prior to the
date of combination, (iv) any gain or loss, net of taxes, realized upon the
termination of any Plan, (v) any gains or losses (less all fees and
expenses relating thereto) in respect of dispositions of assets other than
in the ordinary course of business, and (vi) the net income of any
Subsidiary to the extent that the declaration of the dividends or similar
distributions by that Subsidiary of that income is not at the time
permitted, directly or indirectly, by operation of the terms of its charter
or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Total Debt" means for the Borrower for any period, the
sum (without duplication) of (i) all indebtedness of the Borrower and its
Subsidiaries for borrowed money (excluding up to $160,000,000 in the
aggregate of indebtedness under the Receivables Program Documents and
Receivables Financing Transactions, whether or not constituting Debt or
indebtedness under GAAP), including, without limitation, reimbursement
obligations with respect to letters of credit, whether or not matured or
whether or not such letters of credit have been drawn (excluding
reimbursement obligations to the extent that any letter of credit has been
cash collateralized on terms satisfactory to the issuer of such letter of
credit), (ii) all obligations of the Borrower and its Subsidiaries with
respect to Capitalized Leases determined in accordance with GAAP, (iii) all
Guarantees (without duplication of any amount of Debt included in another
7
clause of this definition) made by the Borrower and its Subsidiaries, (iv)
all obligations of the Borrower and its Subsidiaries representing the
deferred purchase price of real or personal property or of services (other
than current trade liabilities incurred in the ordinary course of business
and payable in accordance with customary practices), and (v) all
indebtedness arising under any Interest Expense Hedging Arrangement of the
Borrower and its Subsidiaries (excluding to the extent otherwise included
in (i), (a) any Interest Expense Hedging Arrangement with respect to the
Receivables Program, except for Interest Expense Hedging Arrangements with
respect to indebtedness in excess of $160,000,000 in the aggregate under
the Receivables Program and Receivables Financing Transactions and (b) up
to $25,000,000 of recourse indebtedness under the Credit Card Program
Agreement), in each case calculated on a consolidated basis.
"Contract Receivables" means, during any period of determination,
gross accounts receivable of Borrower and its Subsidiaries created from the
sale to customers, on an installment payment basis, of membership contracts
for the use of fitness or exercise centers, other than Receivables Program
Receivables.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative
thereto.
"Credit" means the credit available to Borrower under Article II
hereof.
"Credit Card Program Agreement" means the Credit Card Program
Agreement dated December 21, 1995 between the Borrower, Renaissance
Bankcard Services Inc. and Orchard Federal Savings Bank (or a substitute
agreement with a substitute provider), including the attachments thereto.
"Credit Agreement" has the meaning assigned in the recitals hereto.
"Credit Documents" means, collectively, this Agreement, the Notes and
the Collateral Documents.
"Credit Parties" means the Borrower and each of its Subsidiaries which
is a party to a Credit Document.
"Debt" means for any Person (i) all indebtedness of such Person for
borrowed money (including, without limitation, reimbursement and all other
obligations with respect to letters of credit, whether or not matured),
(ii) all obligations of such Person representing the deferred purchase
8
price of real or personal property or of services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (iii) the amount of all obligations
of such Person under Capitalized Leases determined in accordance with GAAP,
(iv) all indebtedness arising under any Interest Expense Hedging
Arrangement, and (v) without duplication of any amount of Debt included in
clause (i), (ii), (iii) or (iv) of this definition, all Guaranties made by
such Person. Notwithstanding the foregoing, "Debt" shall not include up to
$25,000,000 of recourse indebtedness under the Credit Card Program
Agreement.
"Default" shall mean an event which with the giving of notice, passage
of time or both would constitute an Event of Default.
"Demand Deposit Accounts" means the demand deposit accounts listed on
Annex 1 to the Operating Bank Guaranty maintained by Borrower and/or any of
its Subsidiaries with the respective Lenders identified on such Annex, and
other demand deposit accounts established by Borrower or any of its
Subsidiaries with any Lender after the date hereof which shall be promptly
identified by such Lender in writing to Agent, Borrower and the Guarantors.
"Designated Senior Indebtedness" means Designated Senior Indebtedness
of Borrower as defined in each of the 1997 Indenture and the 1998
Indenture.
"Dollars" and "$" mean United States dollars.
"Domestic Subsidiary" means any Subsidiary of the Borrower organized
under the laws of any jurisdiction within the United States.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means any corporation, trade or business that is,
along with Borrower, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Section 414 of
the Code or Section 4001 of ERISA.
"Eurocurrency Reserve Requirements" means, for any day as applied to a
Eurodollar Rate Advance, the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal
Reserve System or other governmental authority having jurisdiction with
respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
9
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Rate Advance, the rate per annum
determined on the basis of the rate for deposits in Dollars for a period
equal to such Interest Period commencing on the first day of such Interest
Period appearing on Page 3750 of the Dow Xxxxx Markets screen as of 11:00
A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750
of the Dow Xxxxx Markets screen (or otherwise on such screen), the
"Eurodollar Base Rate" shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as
may be selected by the Agent or, in the absence of such availability, by
reference to the rate at which the Agent is offered Dollar deposits at or
about 11:00 A.M., New York City time, two Banking Days prior to the
beginning of such Interest Period in the interbank eurodollar market where
its eurodollar and foreign currency and exchange operations are then being
conducted for delivery on the first day of such Interest Period for the
number of days comprised therein.
"Eurodollar Rate" means, with respect to each day during each Interest
Period pertaining to a Eurodollar Rate Advance, a rate per annum determined
for such day in accordance with the following formula (rounded upward to
the nearest 1/100th of 1%):
Eurodollar Base Rate
---------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Rate Advances" means Advances the rate of interest
applicable to which is based upon the Eurodollar Rate.
"Event of Default" means any event listed in Article VIII.
"Exchangeable Transferor Certificate" shall have the meaning
attributed to such term in the Pooling & Servicing Agreement.
"Existing Credit Agreement" has the meaning set forth in the recitals
hereto.
"Fair Market Value" means, with respect to any asset or property, the
sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period 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 Banking Day, for the next
10
preceding Banking Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Banking Day, the average of
the quotations for such day on such transactions received by the Agent from
three (3) Federal funds brokers of recognized standing selected by it.
"Finance Subsidiary" means (i) Funding Corp. and (ii) any wholly-owned
special purpose Subsidiary created by the Borrower whose sole activity is
engaging in Receivables Financing Transactions.
"Foreign Subsidiaries" means (x) Bally Matrix Fitness Centre Ltd., a
corporation organized under the laws of Ontario, Canada, and Health &
Tennis (UK) Limited, a corporation organized under the Companies Act of
England, and (y) any other Subsidiary of the Borrower organized under the
laws of any jurisdiction outside the United States of America, which is
created or acquired in accordance with the terms of this Agreement.
"Franchise Program" means a program under which the Borrower or its
Subsidiaries grant franchises to third parties which require franchisees,
among other things, to pay fees to the Borrower and/or its Subsidiaries,
make use of certain collection and administrative services of the Borrower
and its Subsidiaries and contribute to a national advertising program and
which entitle the franchisees, among other things, to receive training from
the Borrower and its Subsidiaries, to have nonexclusive licenses to use on
a limited basis certain service marks, trademarks and trade names and other
intellectual property of or licensed to the Borrower and its Subsidiaries,
and to sell memberships to use facilities of the franchisee and the
Borrower and its Subsidiaries. A Franchise Program may include the
conversion of certain facilities owned by the Borrower or its Subsidiaries
to franchised facilities, so long as such conversions are consummated on
terms and conditions permitted under this Agreement.
"Funding Corp." means H&T Receivable Funding Corporation, a Delaware
corporation and a wholly-owned Subsidiary of BTFC.
"GAAP" means generally accepted accounting principles in the United
States of America in effect from time to time.
"GAAP EBITDA" means with respect to the Borrower and its Subsidiaries
on a consolidated basis, without duplication, for any period of
determination, (i) Consolidated Net Income (loss), plus, to the extent
deducted in determining Consolidated Net Income (loss), (ii) provision for
taxes, (iii) Consolidated Interest Expense, and (iv) depreciation and
amortization, all calculated in accordance with GAAP.
11
"Guarantee and Collateral Agreement" means the Guarantee and
Collateral Agreement in the form of Exhibit A hereto, as amended,
supplemented or otherwise modified.
"Guarantors" means collectively, the Subsidiaries listed on Exhibit D
hereto (other than Unrestricted Subsidiaries, Foreign Subsidiaries, Lincoln
Indemnity Company and Finance Subsidiaries) and any other Subsidiary which
hereafter becomes a Guarantor pursuant to Section 3.04 (each individually a
"Guarantor").
"Guaranty" means, as applied to any Debt, (i) a guaranty (other than
by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all
of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the
payment or performance (or payment of damages in the event of
non-performance) of any part or all of such obligation, including, without
limiting the foregoing, the payment of amounts drawn under letters of
credit.
"H&T Master Trust" means the trust created by the Pooling & Servicing
Agreement.
"Hazardous Materials" means any (i) "hazardous substance" or "toxic
substances," as those terms are defined by the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. Section
9601 et seq. and the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1802, all as amended or hereafter amended; (ii) "hazardous waste",
as defined by the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 6901 et seq., as amended or hereafter amended; (iii)
pollutant or contaminant or hazardous, dangerous or toxic chemical,
material, or substance within the meaning of any other applicable federal,
state or local law, regulation, ordinance, or requirement (including
consent decrees and administrative orders) relating to protection of
health, safety or the environment, as amended or hereafter amended; (iv)
crude oil or any fraction thereof which is liquid at standard conditions of
temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square
inch absolute); (v) any radioactive material, including any source, special
nuclear or by-product material as defined at 42 U.S.C. Section 2011 et
seq., as amended or hereafter amended; (vi) asbestos or asbestos containing
material ("ACM") in any form or condition and (vii) polychlorinated
biphenyls ("PCBs") or substances or compounds containing PCBs.
"Hazardous Materials Claims" has the meaning ascribed to it in Section
6.02(f).
"Hazardous Materials Laws" means any federal, state or local statute,
regulation, ordinance or other legal requirement (including consent decrees
12
and administrative orders) relating to protection of health, safety or
environment, including but not limited to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601
et seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C.
Section 6901 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.;
the Clean Water Act, 33 U.S C. Section 1251 et seq.; the Occupational
Safety and Health Act ("OSHA"), 29 U.S.C. Section 651 et seq.; the Toxic
Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; any
similar state or local laws; any regulations promulgated pursuant to any of
the foregoing; and all of the foregoing as amended or hereafter amended.
"Intangible Asset" means any asset which is treated as an intangible
asset in conformity with GAAP, including, without limitation, leasehold
rights, franchise rights, non-compete agreements, goodwill, unamortized
debt discounts, patents, patent applications, trademarks, trade names,
copyrights and licenses.
"Interest Expense Hedging Arrangement" means an interest rate swap,
cap or collar agreement or similar arrangement entered into with the intent
of protecting the Borrower or a Guarantor against fluctuations in interest
rates or the exchange of notional interest obligations, either generally or
under specific contingencies.
"Interest Payment Date" means (a) as to any Reference Rate Advance,
the last Banking Day of each March, June, September and December, (b) as to
any Eurodollar Rate Advance having an Interest Period of three months or
less, the last day of such Interest Period, (c) as to any Eurodollar Rate
Advance having an Interest Period longer than three months, (i) each day
which is three months, or a whole multiple thereof, after the first day of
such Interest Period and (ii) the last day of such Interest Period and (d)
as to any Advance, in addition to any applicable dates under clauses (a),
(b) and (c) above, the date of any repayment or prepayment (except for any
prepayment pursuant to Section 2.12 of any Revolving Advance that is a
Reference Rate Advance) made in respect thereof.
"Interest Period" means with respect to any Eurodollar Rate Advance:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Rate Advance and ending one, two, three or six months thereafter, as
selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Rate
13
Advance and ending one, two, three or six months thereafter, as
selected by the Borrower by irrevocable notice to the Agent not less
than three Banking Days prior to the last day of the then current
Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Rate
Advance would otherwise end on a day that is not a Banking Day, such
Interest Period shall be extended to the next succeeding Banking Day
unless the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period
shall end on the immediately preceding Banking Day;
(2) any Interest Period for any Revolving Advance that would
otherwise extend beyond the Revolving Credit Termination Date shall
end on the Revolving Credit Termination Date;
(3) any Interest Period for any Term Advance that would otherwise
extend beyond the Term Loan Termination Date shall end on the Term
Loan Termination Date;
(4) any Interest Period pertaining to a Eurodollar Rate Advance
that begins on the last Banking Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Banking Day of a calendar month; and
(5) the Borrower shall select Interest Periods in such a way so
that no Eurodollar Rate Advances will be required to be repaid prior
to the last day of an Interest Period therefor.
"Investment" means any direct or indirect loans, advances, capital
contributions or transfers of assets, and any direct or indirect purchases
and other acquisitions of, or a beneficial interest in, any capital stock
or other securities; provided, however, that the allocation of corporate
overhead to Foreign Subsidiaries shall not constitute an "Investment". The
amount of any Investment not consisting of cash shall equal the Fair Market
Value of such Investment at the time it is made.
"Issuing Lender" means Chase and other Lenders having Revolving Credit
Commitments acceptable to the Agent and the Borrower.
"Lending Branch" means with respect to each Lender the branches or
offices specified on the signature pages hereto or such other of its
14
branches or offices as such Lender may from time to time designate in
writing to Agent and Borrower.
"Lenders" shall have the meaning set forth in the recitals hereto.
"Letter of Credit" means any letter of credit issued by an Issuing
Lender pursuant to Section 2.19.
"L/C Commitments" means the commitments of Lenders to issue or
participate in Letters of Credit and to make L/C Advances pursuant to
Section 2.19 in the aggregate maximum amount specified in Section
2.19(a)(i), as such amount may be reduced or terminated from time to time
hereunder.
"L/C Commitment Amount" means, at any time, means the difference
between (i) the lesser of (a) the Revolving Credit Commitment Amount at
such time and (b) $30,000,000 and (ii) any L/C Commitment Reductions.
"L/C Commitment Reductions" means the amount of the permanent
reductions of the L/C Commitment Amount resulting from the application of
Section 2.11, 2.13 or 7.08 or any other provision contained herein.
"Lien" means a mortgage, security interest, pledge, deed of trust,
encumbrance, lien, option, tax lien, mechanics' lien, materialmen's lien or
charge or encumbrance of any kind (including any conditional sale or other
title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code).
"Majority Lenders" means at any time Lenders holding more than 51% of
the sum of (i) the aggregate unpaid principal amount of the Term Loans then
outstanding and (ii) the Revolving Credit Commitments then in effect or, if
the Revolving Credit Commitments have been terminated, the Revolving
Advances and participating interests in Letters of Credit and unreimbursed
drawings in respect of Letters of Credit then outstanding.
"Margin Regulations" means Regulations T, U and X of the Board of
Governors of the Federal Reserve System, as amended from time to time.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as whole, (b) the
validity or enforceability of (i) this Agreement, any of the Notes or any
of the other Credit Documents or (ii) the rights or remedies of the Agent
and the Lenders hereunder or thereunder or (c) the ability of the Borrower
and its Subsidiaries taken as a whole to perform their respective
15
obligations under the Credit Documents.
"Mortgage Amendment" means each of the Amendments to Mortgages in the
form requested by the Agent, to be executed by Borrower, the Scandinavian
Partnerships or the various Guarantors in order to continue for the benefit
of the Collateral Agent, on behalf of the Secured Creditors, the Liens
created by the Mortgages delivered under the Existing Credit Agreement.
"Mortgages" means all fee mortgages, leasehold mortgages, assignments
of leases, mortgage deeds, deeds of trust, deeds to secure debt, security
agreements, and other similar instruments described on Exhibit F attached
hereto, executed or to be executed by Borrower, the Scandinavian
Partnerships or the various Guarantors which shall provide the Collateral
Agent, for the benefit of the Secured Creditors, a Lien on or other
interest in any portion of any real property in which Borrower or any
Guarantor owns an interest.
"Multiemployer Plan" has the meaning ascribed to it in Section 3(37)
of ERISA.
"Net Cash Proceeds" means (a) in connection with any incurrence of
Debt (except any incurrence of Debt permitted under Section 7.02 (excluding
Section 7.02(e), Section 7.09(c), Section 7.09(d) and Section 7.09(e)), the
cash proceeds received from such issuance or incurrence, net of attorneys'
fees, investment banking fees, accountants' fees, underwriting discounts
and commissions and other customary fees and expenses actually incurred in
connection therewith and (b) in connection with the sale, lease, assignment
or other disposition of any other asset (other than sales by the Borrower
or a Subsidiary of the Borrower of common stock (or common stock
equivalents) of the Borrower), cash proceeds (including any cash received
by way of deferred payments, purchase price adjustments or otherwise, but
only as and when so received) received by Borrower or any of its
Subsidiaries from the sale, lease, assignment or other disposition (but
excluding any such disposition permitted by Sections 7.08(a), (b), (c), (e)
or (f) or the proviso to Section 7.08(d), and excluding any such proceeds
to the extent they constitute Reinvestment Proceeds) of any asset or
property of such Person or any insurance or condemnation awards net of (i)
the reasonable and customary costs directly incurred in connection with
such transaction, (ii) taxes actually paid or in good faith estimated to be
payable as a result thereof and (iii) amounts applied to the repayment of
other Debt secured by a Permitted Lien on the asset disposed of. If in
determining "Net Cash Proceeds", amounts are deducted for estimated taxes
payable, and such amounts are not actually paid when due by Borrower in
cash in accordance with all applicable laws, then such deducted amounts
shall constitute "Net Cash Proceeds".
"New Clubs" means, with respect to any date, the collective reference
to each health and fitness club (i) owned and operated by the Borrower or
any Subsidiary and (ii) opened within 18-months prior to such date.
16
"New Ventures" means the collective reference to each Person (other
than Subsidiaries and Unrestricted Subsidiaries) in which the Borrower or
any Subsidiary makes its initial Investment after the date hereof.
"1998 Indenture" means that certain Indenture dated as of December 16,
1998 ("Original 1998 Indenture") between Borrower and U.S. Bank National
Association, as trustee (and any successor trustee thereto) (and any other
indenture, if any, entered into in connection with a registered exchange
offer as long as such other indenture is substantially identical to, and no
less favorable to the Lenders than, the Original 0000 Xxxxxxxxx) relating
to the 1998 Subordinated Notes and/or entered into by the Borrower in
connection with a registered exchange offer of the 1998 Subordinated Notes.
"1998 Subordinated Notes" has the meaning ascribed to it in the
definition of Subordinated Debt.
"1996-1 Certificates" means the certificates executed by Funding Corp.
and authenticated by the trustee under the Pooling & Servicing Agreement
representing interests in Series 1996-1 of the H&T Master Trust.
"1996-1 Supplement" means the Series 1996-1 Supplement, dated as of
December 16, 1996, by and among Funding Corp., BTFC and Chase Bank of
Texas, National Association (f/k/a Texas Commerce Bank National
Association), as trustee, supplementing the Pooling & Servicing Agreement,
as the same may be amended, supplemented or otherwise modified in
accordance with the terms of this Agreement.
"1997 Indenture" means that certain Indenture, dated as of October 7,
1997, between Borrower and First Trust National Association, as trustee
(and any successor trustee thereto) relating to the 1997 Subordinated
Notes.
"1997 Subordinated Notes" has the meaning ascribed to it in the
definition of Subordinated Debt.
"Notes" means the collective reference to the Revolving Credit Notes
and the Term Notes.
"Obligations" means all loans, advances, debts, liabilities,
obligations, covenants and duties owing to Agent, the Collateral Agent, any
Lender, any Issuing Lender or any of them or any of their respective
successors and assigns, of any kind or nature, present or future, arising
under this Agreement or under the Notes or under any Collateral Document or
under any Interest Expense Hedging Agreement with any Lender, whether or
not for the payment of money, whether arising by reason of an extension of
credit, opening or amendment of a letter of credit (or payment of any draft
drawn thereunder), loan, guaranty, indemnification, or in any other manner,
17
whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter
arising and however acquired. The term includes, without limitation, all
interest (whether or not such interest would be an allowed claim in a
bankruptcy or similar proceeding against the Borrower or any Guarantor),
charges, expenses, fees, reasonable attorneys' fees and disbursements and
paralegals' fees, and any other sums chargeable to Borrower or any
Guarantor under this Agreement or any other Collateral Document.
"Operating Bank Guaranty" means the Guaranty Agreement in the form of
Exhibit E hereto, as amended, supplemented or otherwise modified, pursuant
to which each of the Guarantors shall guaranty the payment of the Operating
Bank Obligations to the extent set forth therein.
"Operating Bank Obligations" means, collectively at any time, up to
Ten Million Dollars ($10,000,000) in the aggregate (including, without
limitation, principal, interest, fees, costs and expenses) of the
obligations of Borrower and/or any of its Subsidiaries to one or more of
the Operating Banks (including, without limitation, Chase in its individual
capacity) at such time under or by reason of any customary banking deposit
or disbursement transaction or service performed for Borrower or any of its
Subsidiaries in connection with the Demand Deposit Accounts.
"Operating Banks" means the Lenders listed on Annex 1 to the Operating
Bank Guaranty and other Lenders at which Borrower or any of its
Subsidiaries may from time to time establish Demand Deposit Accounts.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means any one or more of the following:
(i) Liens for taxes, assessments, governmental charges or levies
either not yet delinquent (or, if delinquent, in an aggregate amount
not in excess of $500,000) or the validity of which is being contested
in good faith in an appropriate manner diligently pursued and as to
which adequate reserves for the unpaid amount shall have been set
aside in conformity with GAAP;
(ii) Deposits or pledges to secure the payment of, or to secure
the Borrower's obligations with respect to letters of credit that
secure the payment of, workers' compensation, unemployment insurance
or social security or other retirement benefits or obligations
(exclusive of liens arising under ERISA), or to secure the performance
18
of bids, trade contracts, leases, public or statutory obligations,
surety or appeal bonds and other obligations of a like nature incurred
in the ordinary course of business;
(iii) Materialmen's, mechanics', landlords', workmen's,
repairmen's, employees' or other like liens arising in the ordinary
course of business to secure obligations not yet delinquent or being
contested in good faith and as to which adequate reserves for the
unpaid amount shall have been set aside in conformity with GAAP or as
to which adequate bonds shall have been obtained;
(iv) Purchase money liens, purchase money security interests,
mortgages or title retention arrangements upon or in any property
(real or personal) acquired or held by Borrower or its Subsidiaries in
the ordinary course of business to secure Debt (including, without
limitation, Capitalized Leases) permitted hereunder (provided that the
security agreement or conditional sales or other title retention
contract pursuant to which the Lien on such property is created shall
be entered into within 180 days after the purchase or substantial
completion of the construction of such property) and incurred solely
for the purpose of financing the acquisition of such property or
improvements upon such property, or renewals, extensions or
refinancing thereof; provided, that any renewal, extension or
refinancing thereof shall not consist of any capitalization of
interest on the original Debt and such Liens do not extend to any
property of Borrower or any Subsidiary other than the property
acquired or financed with the original purchase money Debt;
(v) Other Liens, so long as the aggregate amount of all such
other Liens does not exceed at any time an aggregate amount of Two
Million Dollars ($2,000,000);
(vi) Other non-monetary Liens which do not have a material
adverse effect on the value or use of the property subject to such
Liens;
(vii) Precautionary UCC filings executed by Borrower or any
Subsidiary, as lessee, in the ordinary course of business, on
equipment, leasehold improvements and furnishings;
(viii) Liens under the Collateral Documents;
(ix) Liens related to credit card processing agreements, so long
as the aggregate amount of such Liens does not exceed at any time an
aggregate amount of Five Million Dollars ($5,000,000);
19
(x) Other existing Liens listed on Schedule 1.01;
(xi) A Liens created after the Closing Date securing Debt of the
Borrower or any Subsidiary of the type described in clause (iii) of
the definition of "Debt", the incurrence of which Debt is in the
ordinary course of business of the Borrower or such Subsidiary, and
any renewals, extensions or refinancings of such Debt permitted
hereunder that do not consist of any capitalization of interest on the
original Debt, provided that such Liens shall not extend to or
encumber any property other than the property financed by such Debt;
(xii) Liens on the Collateral securing revolving credit
commitments, term loan commitments or letter of credit commitments
from other banks or financial institutions until the Term Loan
Termination Date permitted under Section 7.02(e); provided that Liens
are pari passu or subordinated to the Liens of the Collateral Agent
and the Lenders hereunder and under the Collateral Documents;
(xiii) (a) Liens on the Receivables Program Receivables created
pursuant to the Receivables Program Documents, and (b) Liens on the
Receivables Assets created pursuant to a Receivables Financing
Transaction;
(xiv) in addition to Liens permitted under clause (iv) above,
Liens on the capital stock and assets of a Subsidiary acquired after
the Closing Date so long as (a) such Liens do not cover or extend to
any other stock or assets of the Borrower and its Subsidiaries and (b)
the only obligations secured by such Liens are (1) purchase money
seller Debt incurred to finance the acquisition of such stock or
assets and existing Debt which was not created in contemplation of
such acquisition and is secured by a pledge of such stock and may also
be secured by a pledge of such assets (such existing Debt, "Assumed
Debt"), incurred or assumed in connection with an acquisition
permitted by Section 7.01(e) in an aggregate amount not to exceed (A)
$10,000,000 at any time outstanding prior to the first anniversary of
the Closing Date, (B) $15,000,000 at any time outstanding thereafter
prior to the second anniversary of the Closing Date and (C)
$20,000,000 at any time outstanding thereafter, and (2) existing Debt
assumed in connection with an acquisition permitted by Section 7.01(e)
which was not created in contemplation of such acquisition and is
secured by a pledge of such assets (but not a pledge of such stock).
"Person" means an individual, a corporation, a partnership, limited
20
liability company, a joint venture, an association, a trust or any other
entity or organization, including a governmental or political subdivision
or an agent or instrumentality thereof.
"Plan" means, at any date, any employee pension benefit plan (as
defined in Section 3(2) of ERISA) which is subject to Title IV of ERISA
(other than a Multiemployer Plan) and to which Borrower or any ERISA
Affiliate may have any liability, including any liability by reason of
having been a substantial employer within the meaning of Section 4063 of
ERISA at any time during the preceding five years, or by reason of being
deemed to be a contributing sponsor under Section 4069 of ERISA.
"Pooling & Servicing Agreement" means the Pooling & Servicing
Agreement, dated as of June 26, 1995, as amended and restated by the
Amended and Restated Pooling and Servicing Agreement dated as of December
16, 1996, among Funding Corp., BTFC, and Chase Bank of Texas, National
Association (f/k/a Texas Commerce Bank National Association), as trustee,
as the same may be amended, supplemented or otherwise modified in
accordance with the terms of this Agreement.
"Properties" means all real properties owned in fee by Borrower or its
Subsidiaries or the Scandinavian Partnerships and all real properties in
which Borrower or its Subsidiaries hold a leasehold interest.
"Purchase Agreement" means the Purchase Agreement, dated as of June
26, 1995, as amended and restated by the Amended and Restated Purchase
Agreement dated as of December 16, 1996, between Funding Corp. and BTFC, as
the same may be amended, supplemented or otherwise modified in accordance
with the terms of this Agreement.
"Receivables Assets" means property of BTFC and its Domestic
Subsidiaries of the type described in clauses (a), (b) and (c) of the
definition of "Receivables Program Receivables" sold in a Receivables
Financing Transaction; provided that any such property shall automatically
cease to constitute "Receivables Assets" if any such property is returned
to BTFC or a Subsidiary in accordance with such Receivables Financing
Transaction or is not subject to a Lien in connection with such Receivables
Financing Transaction.
"Receivables Financing Transaction" means any sale by BTFC or a
Domestic Subsidiary of Receivables Assets to a Finance Subsidiary intended
to be a true sale transaction and the corresponding sale or pledge of such
Receivables Assets (or an interest therein) by the Finance Subsidiary
(including increases in the Receivables Program Certificates); provided,
however that (i) the terms, conditions and structure (including the legal
and organizational structure of the Finance Subsidiary and the restrictions
imposed on its activities) of and the documentation incidental to any such
transactions must be reasonably acceptable to the Agent, (ii) the Borrower
21
and its Subsidiaries provide no credit support (other than customary
limited recourse based upon the collectibility of the Receivables Assets)
or collateral (other than the Receivables Assets), and (iii) the documents
governing any such transactions do not contain any cross-defaults or
cross-acceleration to Debt of the Borrower and its Subsidiaries (other than
any such provisions that are not more restrictive than those set forth in
the Receivables Program Documents). The Borrower shall deliver a
certificate to the Agent concurrently with the effectiveness of any
Receivables Financing Transaction certifying that such Receivables
Financing Transaction complies with the requirements of this Agreement.
"Receivables Program" means the program of sales of Receivables
Program Receivables from time to time by the Borrower and its Subsidiaries
to the H&T Master Trust pursuant to, and in accordance with the terms and
conditions of, the Receivables Program Documents.
"Receivables Program Certificates" means, collectively, the 1996-1
Certificates and all other certificates issued pursuant to the Pooling &
Servicing Agreement or any supplement thereto representing interests in any
series of the H&T Master Trust (other than any such certificate held by
Funding Corp. or any other Subsidiary of the Borrower), as the same may be
amended, supplemented or otherwise modified in accordance with the terms of
this Agreement.
"Receivables Program Documents" means, collectively, the Pooling &
Servicing Agreement, the 1996-1 Supplement, the 1996-1 Certificates, all
other supplements to the Pooling & Servicing Agreement (including, without
limitation, any supplement relating to any series of Refinancing
Certificates), all other Receivables Program Certificates, the Purchase
Agreement, all other purchase agreements with respect to Receivables
Program Receivables entered into in connection with the Pooling & Servicing
Agreement, and all other agreements entered into in connection with the
Receivables Program, including, without limitation, any servicing
agreements entered into with any servicer of the Receivables Program
Receivables, as any of the same may be amended, supplemented or otherwise
modified in accordance with the terms of this Agreement.
"Receivables Program Receivable" means all right, title and interest
transferred to the H&T Master Trust for the benefit of the holders of the
Receivable Program Certificates, pursuant to the Receivables Program
Documents, in (a) the right to payment of amounts in respect of the
membership fee (including any sales tax thereon) and finance charges
relating thereto under an agreement made by BTFC or another Subsidiary of
BTFC, in the form of a written retail installment sale contract, for
22
membership in and the right to use facilities at, and obtain services from,
one or more health clubs owned by BTFC or another Subsidiary of BTFC, (b)
prior to the release thereof pursuant to Section 2.2(b) of the Pooling &
Servicing Agreement from the Trust Property (as defined in the Pooling &
Servicing Agreement), all amounts paid from time to time pursuant to such
written retail installment sale contract in respect of monthly dues, nsf
fees, late payment fees, cancellation fees for relocation cancellations,
transfer fees to transfer a membership, lost membership card replacement
fees, or other payments not constituting Collections or Transferor
Collections (as defined in the Pooling & Servicing Agreement), and proceeds
thereof (including without limitation amounts held in accounts for the
benefit of the H&T Master Trust and investments of such amounts), and (c)
such written retail installment sale contract and any rights against the
originator or seller thereof under the Purchase Agreement or the other
purchase agreements included in the Receivables Program Documents, provided
that any such right, title or interest in any of the property identified in
the foregoing clauses (a), (b) or (c) of this definition shall
automatically cease to constitute "Receivables Program Receivables" at such
time as (I) each of the following conditions is satisfied: (i) all
Receivables Program Certificates are paid in full, (ii) the H&T Master
Trust is terminated pursuant to Section 12.1 of the Pooling & Servicing
Agreement and, pursuant to Section 12.4 of the Pooling & Servicing
Agreement, the Exchangeable Transferor Certificate is surrendered to the
trustee in connection with the reconveyance by the trustee to Funding Corp.
of all right, title and interest of the H&T Master Trust in the Receivables
Program Receivables and other property of the H&T Master Trust (except for
amounts held by the trustee pursuant to Section 12.3(b) of the Pooling &
Servicing Agreement), and (iii) in accordance with GAAP, the accounts
receivable constituting Receivables Program Receivables prior to such
reconveyance are upon such reconveyance properly included within Contract
Receivables on the consolidated balance sheet of the Borrower and its
consolidated Subsidiaries or (II) such right, title or interest is returned
to BTFC or a Subsidiary in accordance with the Receivables Program
Documents or is no longer subject to the Receivables Program Documents.
"Reference Rate" means, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a)
the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate
of interest per annum publicly announced from time to time by Chase as its
prime rate (the Prime Rate not being intended to be the lowest rate of
interest charged by the Chase in connection with extensions of credit to
debtors) in effect at its principal office in New York City (each change in
the Prime Rate to be effective on the date such change is publicly
announced); "Base CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which
is one and the denominator of which is one minus the C/D Reserve Percentage
and (b) the C/D Assessment Rate; "Three-Month Secondary CD Rate" shall
mean, for any day, the secondary market rate for three-month certificates
23
of deposit reported as being in effect on such day (or, if such day shall
not be a Business Day, the next preceding Business Day) by the Board of
Governors of the Federal Reserve System (the "Board") through the public
information telephone line of the Federal Reserve Bank of New York (which
rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following
such day), or, if such rate shall not be so reported on such day or such
next preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in New
York City received at approximately 10:00 A.M., New York City time, on such
day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from three New York City negotiable certificate
of deposit dealers of recognized standing selected by it; "C/D Assessment
Rate": for any day as applied to any Reference Rate Advance, the annual
assessment rate in effect on such day that is payable by a member of the
Bank Insurance Fund maintained by the Federal Deposit Insurance Corporation
(the "FDIC") classified as well-capitalized and within supervisory subgroup
"B" (or a comparable successor assessment risk classification) within the
meaning of 12 C.F.R. Section 327.4 (or any successor provision) to the FDIC
(or any successor) for the FDIC's (or such successor's) insuring time
deposits at offices of such institution in the United States; "C/D Reserve
Percentage": for any day as applied to any Reference Rate Advance, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve requirement
for a Depositary Institution (as defined in Regulation D of the Board as in
effect from time to time) in respect of new non-personal time deposits in
Dollars having a maturity of 30 days or more; and "Federal Funds Effective
Rate" shall mean, for any day, 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 on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for the day of such transactions received by the
Agent from three federal funds brokers of recognized standing selected by
it. If for any reason the Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to ascertain
the Base CD Rate or the Federal Funds Effective Rate, or both, for any
reason, including the inability or failure of the Agent to obtain
sufficient quotations in accordance with the terms thereof, the Reference
Rate shall be determined without regard to clause (b) or (c), or both, of
the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in
the Reference Rate due to a change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate shall be effective on
the effective day of such change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"Reference Rate Advance" means an Advance the rate of interest
24
applicable to which is based upon the Reference Rate.
"Refinancing Certificates" has the meaning ascribed to it in Section
7.09(d).
"Reinvestment Proceeds" means, at any time, all net proceeds of
dispositions of assets (other than sales by the Borrower or a Subsidiary of
the Borrower of common stock (or common stock equivalents) of the Borrower)
by Borrower and its Subsidiaries (but excluding any such dispositions
permitted by Sections 7.08(a), (b), (c), (e) or (f) or the proviso to
Section 7.08(d)), to the extent, without duplication, that (i) such net
proceeds have not yet been applied to the acquisition of properties and
other assets that replace the properties and assets that were the subject
of such disposition or properties and assets that will be used in the
businesses of the Borrower or its Subsidiaries existing on the Closing Date
(or in businesses reasonably related or complementary thereto) or to the
repayment of the Term Advances and permanent reduction of the Revolving
Credit Commitment Amount and the prepayment of the Revolving Advances and
cash collateralization of the Letters of Credit in accordance with Section
2.13(a), and with respect to which less than 360 days has elapsed since the
disposition giving rise to such proceeds, or (ii) an amount equal to or
greater than such net proceeds has been applied to the acquisition of
properties and other assets that (as determined by the board of directors
of the Borrower) replace the properties and assets that were the subject of
such disposition or properties and assets that will be used in the
businesses of the Borrower or its Subsidiaries existing on the Closing Date
(or in businesses reasonably related or complementary thereto) within 180
days prior to the disposition giving rise to such proceeds, provided that,
to the extent that the Borrower and its Subsidiaries receive in excess of
$10,000,000 of Net Cash Proceeds from dispositions (but excluding any such
dispositions permitted by Sections 7.08(a), (b), (c), (e) or (f) or the
proviso to Section 7.08(d)) in any fiscal year of the Borrower, such excess
shall not be Reinvestment Proceeds.
"Reinvestment Proceeds Amount" means, at any time, the aggregate
amount of Reinvestment Proceeds at such time.
"Related Fund" means, with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans and is
advised or managed by the same investment advisor as such Lender or by an
affiliate of such investment advisor.
"Reportable Event" shall be as defined in Section 4043 of ERISA.
"Restricted Payment" means with respect to any Person (a) any dividend
or other distribution of assets, properties, cash, rights, obligations or
securities, direct or indirect, on account of any shares of any class of
the capital stock or other equity interests of such Person; or (b) any
amount paid in redemption, retirement, repurchase, direct or indirect, of
25
(x) any shares of any class of capital stock or other equity interests or
(y) any warrants, options or other rights to acquire any shares of any
class of capital stock or other equity interests of such Person.
"Revolving Advance" means a borrowing under the Revolving Credit
pursuant to Section 2.01 or 2.19(c)(ii) hereof; collectively, the
"Revolving Advances".
"Revolving Credit" means the credit described in Section 2.01 hereof.
"Revolving Credit Commitment" has the meaning ascribed to it in
Section 2.01(a) hereof.
"Revolving Credit Commitment Amount" means $100,000,000 less any
Revolving Credit Commitment Reductions.
"Revolving Credit Commitment Percentage" means, as to each Lender, the
percentage set forth opposite such Lender's name under the column entitled
"Revolving Credit Commitment Percentage" on Exhibit C hereto or, if such
Lender shall have acquired or disposed of any interest in the Revolving
Credit pursuant to Section 9.04(a), on the applicable instrument of
assignment, which is the percentage equivalent of a fraction, the numerator
of which is such Lender's Revolving Credit Commitment and the denominator
of which is the Revolving Credit Commitment Amount (or, if the Revolving
Credit Commitments have been terminated, the sum of its outstanding
Revolving Advances, participating interests in Letters of Credit and
unreimbursed drawings in respect of Letters of Credit as a percentage of
the aggregate amount of outstanding Revolving Advances, participating
interests in Letters of Credit and unreimbursed drawings in respect of
Letters of Credit).
"Revolving Credit Commitment Period" means the period from and
including the date of this Agreement to but excluding the Revolving Credit
Termination Date.
"Revolving Credit Commitment Reductions" means the amount of the
permanent reductions of the Revolving Credit Commitment Amount resulting
from the application of Sections 2.11, 2.13 or 7.08 or any other provision
contained herein.
"Revolving Credit Termination Date" means the earliest to occur of
(a) the date the Revolving Credit Commitment Amount is terminated
26
by the Borrower pursuant to Section 2.11 or is otherwise terminated or
reduced to zero pursuant to the terms of this Agreement, provided that
all amounts payable under this Agreement in respect of the Revolving
Credit and the Revolving Credit Notes are fully repaid on or prior to
such date,
(b) the date the Revolving Credit hereunder is terminated or
accelerated pursuant to Article VIII, and
(c) November 8, 2002.
"Revolving Note" means the master promissory note of Borrower payable
to the order of a Lender in substantially the form of Exhibit H hereto; and
"Revolving Notes" means all of such Revolving Notes.
"Scandinavian Partnerships" means those certain partnerships listed on
Schedule 1.01(b) hereto.
"Secured Creditors" means, collectively, Chase and the Operating Banks
in their separate financial arrangements with Borrower, and the Agent, the
Collateral Agent, the Lenders and the Issuing Lenders, each in connection
with the Secured Obligations.
"Secured Obligations" means, collectively, the Obligations and the
Operating Bank Obligations.
"Senior Indebtedness" means Senior Indebtedness of Borrower as defined
in each of the 1997 Indenture and the 1998 Indenture.
"Senior Leverage Ratio" means at any time the ratio of (i)
Consolidated Total Debt less the aggregate principal amount of Subordinated
Debt at such time to (ii) Consolidated Adjusted EBITDA for the period of
four consecutive fiscal quarters of the Borrower most recently ended.
"Subordinated Debt" means (a) Borrower's 9-7/8% Senior Subordinated
Notes due 2007, issued under and pursuant to the 1997 Indenture ("1997
Subordinated Notes"), (b) Borrower's 9-7/8% Senior Subordinated Notes due
2007, issued under and pursuant to the 1998 Indenture (together with any of
Borrower's 9-7/8% Senior Subordinated Notes due 2007 issued under the 1998
Indenture in exchange therefor, the "1998 Subordinated Notes" and together
with the 1997 Subordinated Notes, the "Subordinated Notes"), and (c) any
other Debt of Borrower which is subordinated to the Debt created under this
Agreement and the Notes in a manner and containing terms and provisions
satisfactory to Majority Lenders.
"Subordinated Notes" has the meaning ascribed to it in the definition
of Subordinated Debt.
27
"Subsidiary" means any corporation, association or other business
entity of which a Person owns, directly or indirectly, more than fifty
percent (50%) of the voting securities thereof or which such Person
otherwise controls; provided that, other than for purposes of Sections 6.08
and 7.14, the definition of "Subsidiary" shall not include any Unrestricted
Subsidiary. Unless the reference is specifically otherwise, "Subsidiary"
shall refer to a Subsidiary of Borrower.
"Substantial Subsidiary" means any Subsidiary of Borrower with respect
to which (a) the aggregate book value of its assets, determined in
accordance with GAAP at such time, is greater than 1% of the aggregate book
value of the assets of Borrower and its Subsidiaries taken as a whole or
(b) the aggregate gross revenues of such Subsidiary, determined in
accordance with GAAP for the immediately preceding fiscal quarter, is
greater than 1% of the aggregate gross revenues of Borrower and its
Subsidiaries taken as a whole, for such period.
"Tax Allocation and Indemnity Agreement" means the Tax Allocation and
Indemnity Agreement, dated as of January 9, 1996, among Bally Entertainment
Corporation, a Delaware corporation, the Borrower and their respective
direct and indirect subsidiaries.
"Term Advance" means a borrowing under the Term Loan Facility pursuant
to Section 2.03 hereof; collectively, the "Term Loans".
"Term Loan Commitment" has the meaning ascribed to it in Section 2.03
hereof.
"Term Loan Commitment Amount" means $75,000,000, as such amount may be
reduced from time to time pursuant to this Agreement.
"Term Loan Commitment Percentage" means, as to each Lender, the
percentage set forth opposite such Lender's name under the column entitled
"Term Loan Commitment Percentage" on Exhibit C hereto or, if such Lender
shall have acquired or disposed of any amount of Term Loans pursuant to
Section 9.04(a), on the applicable instrument of assignment, which is the
percentage equivalent of a fraction, the numerator of which is such
Lender's Term Advances and the denominator of which is the aggregate Term
Advances then outstanding.
"Term Loan Facility" means the credit described in Section 2.03
hereof.
"Term Loan Termination Date" means the earliest to occur of (a) the
date the Term Advances are terminated or accelerated pursuant to Article
28
VII, and (b) November 10, 2004.
"Term Note" means the master promissory note of the Borrower payable
to the order of a Lender in substantially the form of Exhibit I hereto; and
"Term Notes" means all of such Term Notes.
"Termination Date" means the Revolving Credit Termination Date or the
Term Loan Termination Date, as applicable.
"Termination Event" means (i) the institution of steps by Borrower, an
ERISA Affiliate, PBGC or any other Person under Section 4041 or 4042, as
applicable, of ERISA to terminate a Plan, (ii) the occurrence of a
Reportable Event which is a basis under Section 4042 of ERISA for PBGC to
institute steps to terminate a Plan, (iii) the occurrence of a contribution
failure with respect to a Plan sufficient to give rise to a lien under
Section 302(f) of ERISA, (iv) the withdrawal by Borrower or any ERISA
Affiliate from a Plan as to which it is a substantial employer under
Sections 4062(e) and 4063 of ERISA or (v) the withdrawal by Borrower or any
ERISA Affiliate from a Multiemployer Plan under Section 4203 or 4205 of
ERISA.
"Total Leverage Ratio" means at any time the ratio of Consolidated
Total Debt at such time to Consolidated Adjusted EBITDA for the period of
four consecutive fiscal quarters of the Borrower most recently ended.
"Transferee" has the meaning ascribed to it in Section 9.04(c).
"Type" means, as to any Advance, its nature as a Reference Rate
Advance or a Eurodollar Rate Advance.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Borrower
that exists on the Closing Date and is so designated as an Unrestricted
Subsidiary on Schedule 1.01(c), (ii) any subsidiary of the Borrower that at
the time of determination shall be an Unrestricted Subsidiary (as
designated by the Board of Directors of the Borrower, as provided below),
and (iii) any subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any subsidiary of the Borrower (including any newly
acquired or newly formed subsidiary) to be an Unrestricted Subsidiary if
all of the following conditions apply: (a) neither the Borrower nor any of
its Subsidiaries provides credit support for Debt or other obligations of
such Unrestricted Subsidiary (including any undertaking, agreement or
instrument evidencing such Debt or obligations), (b) such Unrestricted
Subsidiary is not liable, directly or indirectly, with respect to any Debt
other than Unrestricted Subsidiary Indebtedness, (c) any Investment by the
Borrower in such Unrestricted Subsidiary made as a result of designating
such subsidiary an Unrestricted Subsidiary shall not violate the provisions
described under Section 7.01 and such Unrestricted Subsidiary is not party
to any agreement, contract, arrangement or understanding at such time with
29
the Borrower or any other Subsidiary of the Borrower unless the terms of
any such agreement, contract, arrangement or understanding are no less
favorable to the Borrower or such other Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of the Borrower
or, in the event such condition is not satisfied, the value of such
agreement, contract, arrangement or understanding to such Unrestricted
Subsidiary shall be deemed an Investment, and (d) such Unrestricted
Subsidiary does not own any Capital Stock in any Subsidiary of the Borrower
which is not simultaneously being designated an Unrestricted Subsidiary.
Any such designation by the Board of Directors shall be evidenced to the
Agent by filing with the Agent a resolution of the Board of Directors of
the Borrower giving effect to such designation and an officer's certificate
certifying that such designation complies with the foregoing conditions and
any Investment by the Borrower in such Unrestricted Subsidiary shall be
deemed the making of an Investment on the date of designation in an amount
equal to the greater of (1) the net book value of such Investment or (2)
the Fair Market Value of such Investment as determined in good faith by the
Board of Directors (and evidenced by a resolution of the Board of
Directors). The Board of Directors may designate any Unrestricted
Subsidiary as a Subsidiary; provided (i) that, if such Unrestricted
Subsidiary has any Debt, immediately after giving effect to such
designation, no Default or Event of Default would result, and (ii) that all
Debt of such Subsidiary shall be deemed to be incurred on the date such
Unrestricted Subsidiary becomes a Subsidiary.
"Unrestricted Subsidiary Indebtedness" of any Unrestricted Subsidiary
means Debt of such Unrestricted Subsidiary (a) as to which neither the
Borrower nor any Subsidiary is directly or indirectly liable (by virtue of
the Borrower or any such Subsidiary being the primary obligor on, guarantor
of, or otherwise liable in any respect to, such Debt), and (b) which, upon
the occurrence of a default with respect thereto, does not result in, or
permit any holder of any Debt of the Borrower or any Subsidiary to declare,
a default on such Debt of the Borrower or any Subsidiary or cause the
payment thereof to be accelerated or payable prior to its stated maturity.
1.02 Financial Standards. All accounting terms not expressly defined
herein shall be construed, except where the context otherwise requires or if it
has otherwise been indicated herein, in accordance with GAAP. If any changes in
accounting principles are hereafter occasioned by promulgation of rules,
regulations, pronouncements or opinions by or are otherwise required by the
Securities and Exchange Commission, the Financial Accounting Standards Board or
the American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions), and any of such changes result in a change in
the method of calculation, or affect the results of such calculation, of any of
the financial covenants and the definitions relating to such financial
covenants, then the parties hereto agree to enter into and diligently pursue
30
negotiations in order to amend such financial covenants or terms in accordance
with Section 10.06 hereof so as to equitably reflect such changes, with the
desired result that the criteria for evaluating Borrower's financial condition
and results of operations shall be the same after such changes as if such
changes had not been made.
1.03 Interpretation. References to Exhibits and Schedules are to those
to this Agreement, unless otherwise indicated. References to agreements and
other contractual instruments shall be deemed to include all exhibits and
appendices attached thereto and all amendments, supplements and other
modifications to such instruments, but only to the extent such amendments,
supplements and other modifications are not prohibited by the terms of this
Agreement; and references to Persons include their respective permitted
successors and assigns and, in the case of governmental authorities, Persons
succeeding to their respective functions and capacities.
ARTICLE II.
THE CREDIT
2.01 The Revolving Credit. (a) From time to time during the Revolving
Credit Commitment Period and subject to the terms and conditions of this
Agreement, each Lender severally agrees to lend to Borrower sums at any one time
outstanding not in excess of an aggregate amount equal to such Lender's
Revolving Credit Commitment Percentage of the Revolving Credit Commitment Amount
(as to each Lender; its "Revolving Credit Commitment") provided, that no Lender
shall make any Revolving Advance if, after giving effect to such Revolving
Advance, the aggregate outstanding principal amount of all Revolving Advances
plus the aggregate undrawn amount of all Letters of Credit then outstanding plus
the aggregate amount of all unreimbursed drawings under Letters of Credit would
exceed the Revolving Credit Commitment Amount. Each Lender's maximum obligation
under the Revolving Credit at any time is the amount derived by multiplying its
Revolving Credit Commitment Percentage by the Revolving Credit Commitment
Amount.
(b) The Revolving Credit is a revolving credit and Borrower may, prior
to the Revolving Credit Termination Date, borrow, repay and reborrow amounts
repaid up to the maximum amount available under Section 2.01(a), subject to the
reductions required by Section 2.13 hereof and the reductions permitted by
Section 2.11 hereof.
(c) The Revolving Credit may from time to time consist of (i)
Eurodollar Rate Advances, (ii) Reference Rate Advances or (iii) a combination
thereof, as determined by the Borrower and notified to the Agent in accordance
with Section 2.02, provided that no Advance shall be made as a Eurodollar Rate
Advance after the day that is one month prior to the Revolving Credit
Termination Date.
31
2.02 Requests for Revolving Advances. (a) Each Revolving Advance shall
be made upon the irrevocable request of Borrower received by Agent by 12:00 p.m.
noon, New York time, on the Borrowing Date therefor in the case of Reference
Rate Advances and three (3) Banking Days prior to the Borrowing Date therefor in
the case of Eurodollar Rate Advances, specifying: (i) the Borrowing Date for
such Revolving Advance, which shall be a Banking Day; (ii) the amount of such
Revolving Advance; (iii) whether the Revolving Advance is to be of Reference
Rate Advances, Eurodollar Rate Advances or a combination thereof; (iv) if the
Revolving Advance is to consist entirely or partly of Eurodollar Rate Advances,
the amount of such Eurodollar Rate Advances and the length of the initial
Interest Period therefor; and (v) the account of Borrower with Agent for the
deposit of the proceeds of such Revolving Advance.
(b) Each request for a Revolving Advance may be made in writing or by
telephone, provided, however, that any such telephonic request shall be
confirmed immediately by telecopier and also in writing delivered to Agent by
Borrower not more than three (3) Banking Days after the date such telephonic
request is made, provided, however, that telephonic requests shall be subject to
the indemnity provisions set forth in Section 9.07 hereof.
(c) Upon receipt of such borrowing request, Agent shall promptly
notify Lenders thereof.
(d) Each Reference Rate Advance hereunder shall be in the minimum
aggregate amount of One Million Dollars ($1,000,000) or in integral multiples of
Five Hundred Thousand Dollars ($500,000) in excess thereof (or, if the excess of
the Revolving Credit Commitments then in effect over the aggregate principal
amount of all Revolving Advances then outstanding is less than $1,000,000, such
lesser amount). Each Eurodollar Rate Advance shall be in the minimum aggregate
amount of Five Million Dollars ($5,000,000) or in integral multiples of One
Million Dollars ($1,000,000) in excess thereof.
(e) Each Revolving Advance shall be made on a pro rata basis by all
Lenders having Revolving Credit Commitments, and each Lender's portion of each
Revolving Advance shall be equal to its Revolving Credit Commitment Percentage
of such Revolving Advance.
2.03 The Term Loan Facility. (a) Subject to the terms and conditions
of this Agreement, each Lender severally agrees to make a term loan (a "Term
Advance") to the Borrower on the Closing Date in amount equal to such Lender's
Term Loan Commitment Percentage of the Term Loan Commitment Amount (as to each
Lender, its "Term Loan Commitment").
(b) The Term Advances may from time to time consist of (a) Eurodollar
Rate Advances, (b) Reference Rate Advances or (iii) a combination thereof, as
determined by the Borrower and notified to the Agent in accordance with Sections
2.04 and 2.06.
32
2.04 Requests for Term Advances. (a) Each Term Advance shall be made
upon the irrevocable request of the Borrower received by the Agent by 12:00 p.m.
noon, New York time, one (1) Banking Day prior to the Closing Date in the case
of Reference Rate Advances and three (3) Banking Days prior to the Closing Date
in the case of Eurodollar Rate Advances, specifying (i) the amount of such Term
Advances; (ii) whether the Term Advances are to be Reference Rate Advances,
Eurodollar Rate Advances or a combination thereof; (iii) if the Term Advances
are to consist entirely or partly of Eurodollar Rate Advances, the amount of
such Eurodollar Rate Advances, the length of the initial Interest Period
therefor; and (iv) the account of the Borrower with Agent for the deposit of the
proceeds of such Term Advances.
(b) Each request for Term Advances may be made in writing or by
telephone, provided, however, that any such telephonic request shall be
confirmed immediately by telecopier and also in writing delivered to Agent by
Borrower not more than three (3) Banking Days after the date such telephonic
request is made, provided, however, that telephonic requests shall be subject to
the indemnity provisions set forth in Section 9.07 hereof.
(c) Upon receipt of such borrowing request, the Agent shall promptly
notify Lenders thereof.
(d) Each Reference Rate Advance hereunder shall be in the minimum
aggregate amount of One Million Dollars ($1,000,000) or in integral multiples of
Five Hundred Thousand Dollars ($500,000) in excess thereof. Each Eurodollar Rate
Advance shall be in the minimum aggregate amount of Five Million Dollars
($5,000,000) or in integral multiples of One Million Dollars ($1,000,000) in
excess thereof.
(e) Each Term Advance shall be made on a pro rata basis by all Lenders
having Term Loan Commitments, and each Lender's portion of the Term Advances
shall be equal to its Term Loan Commitment Percentage of such Term Advances.
2.05 Repayment of Term Advances. The Term Advances of each Lender
shall mature in 20 consecutive quarterly installments on each March 31, June 30,
September 30 and December 31, commencing on March 31, 2000, each of which shall
equal such Lender's Term Loan Commitment Percentage multiplied by $250,000,
except for the twentieth installment which shall be payable on the Term Loan
Termination Date and shall equal such Lender's Term Loan Commitment Percentage
multiplied by $70,250,000.
2.06 Lending Branch and Evidence of Credit. (a) The Borrower shall
issue a Revolving Note and/or a Term Note, as the case may be, to each Lender on
the Closing Date representing such Lender's proportionate interests in the
Revolving Credit and the Term Loan Facility.
33
(b) Each Revolving Note and each Term Note (collectively, the "Notes")
shall be executed by Borrower, dated the Closing Date and provide for the
payment of interest and principal in accordance with the terms of this
Agreement. Each Lender shall record in its records, or at its option on the
schedule attached to its respective Notes, the date, amount and Type of each
Advance made by such Lender and each repayment thereof, each continuation
thereof, each conversion of all or a portion thereof to another Type and, in the
case of Eurodollar Rate Advances, the length of each Interest Period with
respect thereto. The aggregate unpaid principal amount so recorded shall
constitute prima facie evidence of the principal amount owing and unpaid on such
Notes absent manifest error. The failure so to record any such amount or any
error in so recording any such amount shall not, however, limit or otherwise
affect the obligations of Borrower hereunder or under any Note to repay the
principal amount of the Advances together with all interest accruing thereon and
fees accruing with respect thereto.
(c) Each Lender's proportionate interest in each Advance and each
payment to such Lender under this Agreement and the Notes shall be made for the
account of such Lender's Lending Branch.
2.07 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Rate Advances to Reference Rate Advances
by giving the Agent at least two Banking Days' prior irrevocable notice of such
election, provided that any such conversion of Eurodollar Rate Advances may only
be made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert Reference Rate Advances to Eurodollar
Rate Advances by giving the Agent at least three Banking Days' prior irrevocable
notice of such election. Any such notice of conversion to Eurodollar Rate
Advances shall specify the length of the initial Interest Period or Interest
Periods therefor. Upon receipt of any such notice the Agent shall promptly
notify each Lender thereof. All or any part of outstanding Eurodollar Rate
Advances or Reference Rate Advances may be converted as provided herein,
provided that (i) no Advance may be converted into a Eurodollar Rate Advance
when any Default or Event of Default has occurred and is continuing and the
Agent or the Majority Lenders have determined that such a conversion is not
appropriate, and (ii) no Advance may be converted into a Eurodollar Rate Advance
after the date that is one month prior to the relevant Termination Date.
(b) Any Eurodollar Rate Advances may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower's giving notice to the Agent, in accordance with the applicable
provisions of the term "Interest Period" set forth in Section 1.01, of the
length of the next Interest Period to be applicable to such Advance, provided
that no Eurodollar Rate Advance may be continued as such (i) when any Default or
Event of Default has occurred and is continuing and the Agent or the Majority
Lenders have determined that such a continuation of a Eurodollar Rate Advance is
not appropriate, or (ii) after the date that is one month prior to the
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Termination Date and provided, further, that if the Borrower shall fail to give
any required notice as described above in this paragraph or if such continuation
is not permitted pursuant to the preceding proviso such Advances shall be
automatically converted to Reference Rate Advances on the last day of such then
expiring Interest Period.
2.08 Computation of and Payment of Interest. (a) From and including
the relevant Borrowing Date to the payment in full of all Obligations, the
outstanding principal balance of each Advance hereunder, subject to Section
2.08(d) hereof, shall bear interest until paid in full at a rate per annum equal
to:
(i) with respect to Reference Rate Advances, at the Reference Rate for
each day plus the Applicable Margin; and
(ii) with respect to Eurodollar Rate Advances, for each day during an
Interest Period therefor, at the Eurodollar Rate for such day plus the
Applicable Margin;
(b) Interest on each Advance shall be paid in arrears on each Interest
Payment Date. Interest shall also be payable on the date of any prepayment of
Advances pursuant to Section 2.12 or 2.13 (except for any prepayment pursuant to
Section 2.12 of any Revolving Advance that is a Reference Rate Advance) for the
portion of the Advances so prepaid and upon payment (including prepayment) in
full thereof and, after the occurrence and during the continuance of any Event
of Default, interest shall be payable on demand.
(c) Interest on Reference Rate Advances calculated on the basis of the
Prime Rate shall be computed on the basis of a year of three hundred sixty-five
(365) or three hundred sixty-six (366) days, as the case may be; otherwise,
interest and fees payable hereunder shall be computed on the basis of a year of
three hundred sixty (360) days, in each case for actual days elapsed, including
the first day and excluding the last day.
(d) During the period (i) from and including the stated due date for
payment of any amount under this Agreement or the date of acceleration of any
amount pursuant to Article VIII which Borrower fails to pay on such due date or
date of acceleration and (ii) to but excluding the date on which such amount is
paid in full, Borrower shall, on demand and to the extent permitted by
applicable law, pay interest on such unpaid amount at a rate per annum equal to
(A) in the case of overdue principal of any Advance, the sum of the rate of
interest otherwise applicable to such unpaid amount plus two percent (2%) or (B)
in the case of any other overdue amount, the Reference Rate plus the Applicable
Margin plus 2%; provided, however, that upon the occurrence and during the
continuation of an Event of Default under Section 8.01(a), the entire principal
amount of the Advances outstanding hereunder and under the Notes shall bear
interest as provided in this Section 2.08(d). Interest under this Section
2.08(d) shall be computed on the basis of a three hundred sixty (360) day year
and actual days elapsed.
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(e) Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the Borrower
and the Lenders in the absence of manifest error. The Agent shall, at the
request of the Borrower, deliver to the Borrower a statement showing the
quotations used by the Agent in determining any interest rate pursuant to
Section 2.08(a).
(f) If prior to the first day of any Interest Period:
(i) the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Interest Period, or
(ii) the Agent shall have received notice from the Majority Lenders
that the Eurodollar Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Advances during such Interest Period,
then the Agent shall give telecopy or telephonic notice thereof to the Borrower
and the Lenders as soon as practicable thereafter. If such notice is given (x)
any Eurodollar Rate Advances requested to be made on the first day of such
Interest Period shall be made as Reference Rate Advances, (y) any Advances that
were to have been converted on the first day of such Interest Period to
Eurodollar Rate Advances shall be converted to or continued as Reference Rate
Advances and (z) any outstanding Eurodollar Rate Advances shall be converted, on
the first day of such requested Interest Period, to Reference Rate Advances.
Until such notice has been withdrawn by the Agent, no further Eurodollar Rate
Advances shall be made or continued as such, nor shall the Borrower have the
right to convert Advances to Eurodollar Rate Advances. The Agent shall give
telecopy or telephonic notice of such withdrawal to the Borrower and the Lenders
as soon as practicable thereafter.
2.09 Payment of Advances. Borrower shall repay the outstanding amount
of (a) all Revolving Advances on the Revolving Credit Termination Date and (b)
all Term Advances on the dates set forth in Section 2.05, or if earlier, on the
Term Loan Termination Date.
2.10 Payments. (a) Each payment to Borrower hereunder, and each
payment of principal, interest and other sums due from Borrower under this
Agreement shall be made in immediately available funds at Agent's address for
payments indicated on the signature page of this Agreement.
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(b) Each Lender agrees that upon receipt of notice from Agent, it will
make the funds which it is to advance hereunder available to Agent at Agent's
address for payments indicated on the signature page of this Agreement not later
than 1:00 p.m., New York time, on the date of disbursement, and Agent will
thereupon advance to Borrower the amount so received from Lenders.
(c) Payment of all sums under this Agreement shall be made by Borrower
to Agent for the account of Lenders, and the Agent shall promptly distribute to
each Lender its share of such payments by wire transfer of immediately available
funds. Each payment by Borrower shall be made without setoff, deduction or
counterclaim not later than 1:00 p.m., New York time, on the day such payment is
due. All sums received after such time shall be deemed received on the next
Banking Day and such extension of time shall be included in the computation of
payment of interest, fees or other sums, as the case may be.
(d) Unless Agent shall have been notified by telephone (confirmed in
writing), by any Lender prior to a Borrowing Date, that such Lender will not
make available to Agent the amount which would constitute its applicable
Commitment Percentage of the Advances to be made on such date, Agent may assume
that such Lender has made such amount available to Agent and, in reliance
thereon, may (but shall not be required to) make available to Borrower a
corresponding amount. If such Lender makes its applicable Commitment Percentage
of an Advance available to Agent after a borrowing date, such Lender shall pay
to Agent on demand an amount equal to the product of (i) the daily average
Federal Funds Rate from and including the borrowing date to but excluding the
date the applicable Commitment Percentage of such Advance was made available to
Agent (the "Out of Funds Period") multiplied by (ii) an amount equal to its
applicable Commitment Percentage of such Advance multiplied by (iii) the
quotient of the number of days in the Out of Funds Period divided by 365 or 366,
as the case may be. A certificate from Agent submitted to any Lender with
respect to any amounts owing under this paragraph (d) shall be conclusive in the
absence of manifest error. If any Lender's applicable Commitment Percentage of
an Advance is not in fact made available to Agent by such Lender within one (1)
Banking Day after a Borrowing Date, Agent shall be entitled to recover such
amount, with interest thereon at the rate per annum then applicable to the
Advances hereunder, on demand from Borrower, without prejudice to Agent's and
Borrower's rights against such defaulting Lender.
(e) Unless Agent shall have been notified by telephone (confirmed in
writing), by Borrower, prior to any date on which a payment is due hereunder,
that Borrower will not make the required payment on such date, Agent may assume
that Borrower will make such payment to Agent and, in reliance upon such
assumption, may (but shall not be required to) make available to each Lender the
amount due to it on such date. If such amount is not in fact paid to Agent by
Borrower within one (1) Banking Day after such payment is due, Agent shall be
entitled to recover from each Lender the amount paid to it by Agent, together
with interest thereon in the amount equal to the product of (i) the daily
37
average Federal Funds Rate from and including the payment date to but excluding
the date the payment was made available to Agent (the "Out of Funds Interval")
multiplied by (ii) an amount equal to the amount received by such Lender
multiplied by (iii) the quotient of the number of days in the Out of Funds
Interval divided by 365 or 366, as the case may be. A certificate from Agent
submitted to any Lender with respect to any amounts owing under this paragraph
(e) shall be conclusive in the absence of manifest error.
2.11 Optional Termination or Reduction of Revolving Credit Commitment
Amount. The Borrower shall have the right, upon not less than five Banking Days'
notice to the Agent, to terminate the Revolving Credit Commitments and the L/C
Commitments or, from time to time, to reduce the Revolving Credit Commitment
Amount. Any such reduction shall be in an amount equal to $2,000,000 or a whole
multiple thereof and shall reduce permanently the Revolving Credit Commitment
Amount then in effect; provided however, that the Revolving Credit Commitment
Amount may not at any time be reduced (after giving effect to any prepayments
made on the date of such reduction pursuant to Section 2.13(b)) below the sum of
(i) the principal amount of the outstanding Revolving Advances, (ii) the undrawn
amount of all outstanding Letters of Credit and (iii) the aggregate amount of
all unreimbursed drawings under Letters of Credit on the date of reduction or
termination. Any Revolving Credit Commitment Reduction pursuant to this Section
2.11 shall be permanent.
2.12 Optional Prepayments. Upon written notice (or telephone notice
confirmed promptly in writing) received by Agent not later than 12:00 noon, New
York City time, on the date thereof, Borrower may at any time prepay any
Reference Rate Advance in full or in part, without premium or penalty, in the
amount of One Million Dollars ($1,000,000) or an integral multiple of Five
Hundred Thousand Dollars ($500,000) in excess thereof (or, if the outstanding
principal amount of all Reference Rate Advances is less that $1,000,000, such
lesser amount). Upon written notice (or telephone notice confirmed promptly in
writing) received by Agent not later than 12:00 noon, New York time, received at
least three (3) Banking Days prior to the date of prepayment, which notice shall
specify the date and amount of prepayment and the amount of Eurodollar Rate
Advances being prepaid, Borrower may on the last day of any Interest Period with
respect thereto prepay any Eurodollar Rate Advance in full or in part, without
premium or penalty (other than costs required to be paid pursuant to Section
2.17(d)), in the amount of Five Million Dollars ($5,000,000) or an integral
multiple of One Million Dollars ($1,000,000) in excess thereof. Each such
prepayment of Revolving Advances made pursuant to this Section 2.12 may be
reborrowed subject to the terms and conditions of this Agreement. Prepayment of
Term Advances may not be reborrowed. Any prepayments of Revolving Advances or
Term Advances, as the case may be, made pursuant to this Section 2.12 shall be
applied first to Reference Rate Advances then outstanding and then to Eurodollar
Rate Advances then outstanding, subject to Section 2.17(d). Any prepayments of
Term Advances made pursuant to this Section 2.12 shall be applied to the
remaining installments in reverse chronological order.
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2.13 Mandatory Prepayments and Commitment Reductions. (a) Within ten
(10) days of the date of receipt by Borrower or any of its Subsidiaries of any
Net Cash Proceeds, Borrower shall make a mandatory prepayment, without premium
or penalty (other than costs required to be paid pursuant to Section 2.17(d)),
of, first, the Term Advances and, second, after payment in full of the Term
Advances, the outstanding Revolving Advances or, to the extent that at such time
no Revolving Advances are outstanding, shall cash collateralize any outstanding
Letters of Credit, in an amount equal to 100% of such Net Cash Proceeds. In the
event a mandatory prepayment of Revolving Advances or cash collateralization of
Letters of Credit is required to be made under this Section 2.13(a), the
Revolving Credit Commitment Amount shall be permanently reduced immediately by
the amount thereof.
(b) If at any time (A) the sum of the aggregate principal amount of
the outstanding Revolving Advances plus the aggregate undrawn amount of all
outstanding Letters of Credit plus the aggregate amount of all unreimbursed
drawings under Letters of Credit shall exceed (B) the Revolving Credit
Commitment Amount, Borrower shall, without demand or notice, prepay Revolving
Advances or cash collateralize or replace Letters of Credit in such amount as
may be necessary to eliminate such excess, and Borrower shall take such action
on the Banking Day on which Borrower learns or is notified of the excess, if
Borrower so learns or is so notified prior to 1:00 p.m. (New York City time) on
such day, and otherwise on the immediately succeeding Banking Day.
Notwithstanding any contrary provision contained herein, the prepayment of any
Advance or cash collateralization or replacement of any Letter of Credit
hereunder (including, without limitation, pursuant to this Section 2.13 or
Section 2.11) as a result of the prepayment of Term Advances or the termination
or permanent reduction of the Revolving Credit Commitment Amount or the L/C
Commitment Amount, shall be accompanied by the payment of accrued interest on
the amount prepaid to the date of payment.
(c) Any prepayments made pursuant to this Section 2.13 shall be
applied first to Reference Rate Advances to the extent then outstanding and then
to Eurodollar Rate Advances to the extent then outstanding, subject to Section
2.17(d). Any prepayments of the Term Advances made pursuant to this Section 2.13
shall be applied to the remaining installments in reverse chronological order.
2.14 Fees. Borrower shall pay to Agent for the ratable benefit of each
relevant Lender (except as otherwise provided):
(a) (i) in respect of each Letter of Credit, a commission on the
maximum amount available for drawing under such Letter of Credit,
calculated at the rate per annum equal to the Letter of Credit Rate (as set
forth under the definition of Applicable Margin in Section 1.01; provided
that for the period from the Closing Date to the date financial statements
are delivered pursuant to Section 6.03(b) with respect to the fiscal year
ending December 31, 1999, the Total Leverage Ratio shall be presumed to be
greater than 3:00 to 1 for purposes of calculating such commission) on the
39
face amount of such Letter of Credit, computed for the period from the date
such Letter of Credit is issued to the date upon which the next payment is
due under this subsection (and, thereafter, from the date of payment under
this subsection to the date upon which the next payment is due under this
subsection), and payable quarterly in arrears (calculated on the basis of a
three hundred sixty (360) day year for the actual days elapsed) on the last
Banking Day of each March, June, September and December after the issuance
of such Letter of Credit and on the Revolving Credit Termination Date;
(ii) a fronting fee in an amount equal to one-quarter percent (1/4%)
of the face amount of such Letter of Credit, computed for the period from
the date such Letter of Credit is issued to the date upon which the next
payment is due under this subsection (and, thereafter, from the date of
payment under this subsection to the date upon which the next payment is
due under this subsection), and payable quarterly in arrears (calculated on
the basis of a three hundred sixty (360) day year for the actual days
elapsed) on the last Banking Day of each March, June, September and
December after the issuance of such Letter of Credit and on the Revolving
Credit Termination Date; provided that such fee shall be for the Issuing
Lender's sole account; and
(iii) all customary and normal costs and expenses as are incurred or
charged by the Issuing Lender in negotiating, issuing, effecting payment
under, amending or otherwise administering any Letter of Credit, provided
that payment of such costs and expenses shall be for the Issuing Lender's
sole account; and
(b) a commitment fee at the rate per annum equal to the commitment fee
(as set forth in the definition of Applicable Margin in Section 1.01;
provided that for the period from the Closing Date to the date financial
statements are delivered pursuant to Section 6.03(b) with respect to the
fiscal year ending December 31, 1999, the Total Leverage Ratio shall be
presumed to be greater than 3:00 to 1 for purposes of calculating the
commitment fee) on the difference between (i) the average daily Revolving
Credit Commitment Amount, and (ii) the average daily principal amount of
the outstanding Revolving Advances, participating interests in Letters of
Credit and unreimbursed drawings in respect of Letters of Credit. The
commitment fees under this Section 2.14(b) shall be payable quarterly in
arrears (calculated on the basis of a three hundred sixty (360) day year
for the actual days elapsed) payable on the last Banking Day of each March,
June, September and December and on the Revolving Credit Termination Date.
2.15 Arrangement Compensation; Agency Fees. Borrower agrees to
compensate Chase, for Chase's sole use and benefit, for Chase's arrangement and
agency services in the amounts and at the times as may be from time to time
agreed in writing between Borrower and Chase.
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2.16 Taxes.
(a) All payments or reimbursements under this Agreement and any
instrument or agreement required hereunder shall be made 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,
(i) in the case of each Lender and Agent, taxes imposed on its net
income, and franchise taxes imposed on it, by the jurisdiction under the
laws of which such Lender or Agent (as the case may be) is organized or any
political subdivision thereof,
(ii) in the case of each Lender, taxes imposed on its net income, and
franchise taxes imposed on it, by the jurisdiction of such Lender's Lending
Branch or any political subdivision thereof, and
(iii) in the case of each Lender that is not a U.S. person as defined
in Section 7701(a)(30) of the Code ("Non-U.S. Lender"), United States
federal withholding taxes that are (x) attributable to such Bank's failure
to comply with the requirements of Section 2.16(d), (y) imposed on amounts
payable to such Lender at the time the Lender becomes a party to this
Agreement, or (z) imposed other than as a result of a change in treaty, law
or regulation or the application or interpretation thereof, except in the
case of (x) or (y), to the extent that such Bank's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such taxes.
(all such non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If Borrower or Agent
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to any Lender or Agent,
(i) the sum payable by Borrower shall be increased as may be necessary
so that after Borrower or Agent has made all required deductions (including
deductions applicable to additional sums payable under this Section 2.16)
such Lender or Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made,
(ii) Borrower or Agent shall make such deductions and
(iii) Borrower or Agent shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law.
(b) In addition, Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made by Borrower or by Agent hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement (hereinafter referred to as "Other Taxes").
41
(c) Borrower will indemnify each Lender and Agent for the full amount
of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.16) paid by
such Lender or Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be made within 30 days from the date such Lender or
Agent (as the case may be) makes written demand therefor. Any such demand shall
show in reasonable detail the amount payable and the calculations used to
determine such amount and shall provide reasonably acceptable evidence of
payment of such Tax or Other Tax.
(d) Each Non-U.S. Lender shall deliver to the Borrower and the Agent
two copies of either U.S. Internal Revenue Service Form W-8 BEN or Form W-8ECI,
or any subsequent versions thereof or successors thereto properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or a
reduced rate of, U.S. federal withholding tax on all payments by the Borrower
under this Agreement. Such forms shall be delivered by each Non-U.S. Lender on
or before the date it becomes a party to this Agreement. In addition, each
Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each
Non-U.S. Lender shall promptly notify the Borrower at any time it determines
that it is no longer in a position to provide any previously delivered
certificate to the Borrower (or any other form of certification adopted by the
U.S. taxing authorities for such purpose). Notwithstanding any other provision
of this Section 2.16(d), a Non-U.S. Lender shall not be required to deliver any
form pursuant to this Section 2.16(d) that such Non-U.S. Lender is not legally
able to deliver.
(e) Any Lender claiming any additional amounts payable pursuant to
this Section 2.16 shall use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Lending Branch if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts which may thereafter accrue
and would not, in the judgment of such Lender, be otherwise disadvantageous to
such Lender.
(f) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.16 shall survive the payment in full of principal and interest
under this Agreement and the Notes and all other Obligations under this
Agreement.
2.17 Increased Costs; Illegality; Indemnity. (a) Borrower shall
reimburse or compensate each Lender, upon demand by such Lender, for all costs
incurred, losses suffered (including lost profit) or payments made by such
Lender which are applied or allocated by such Lender to the Credit (all as
determined by such Lender in its sole and absolute discretion) by reason of:
(i) any Lender's being subject to any tax of any kind whatsoever with
42
respect to this Agreement, any Note or any Advance made by it, or change in
the basis of taxation of payments to such Lender in respect thereof (except
for taxes covered by Section 2.16 and changes in the rate of tax on the
overall net income of such Lender);
(ii) the imposition, modification or holding applicable of any
reserve, special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other acquisition
of funds by, any office of such Lender which is not otherwise included in
the determination of the Eurodollar Rate; or
(iii) compliance by such Lender with any direction, requirement or
request from any regulatory authority, whether or not having the force of
law.
(b) Any Lender seeking (i) reimbursement from Borrower for the costs
incurred, losses suffered or payments made as described in subsection (a) of
this Section 2.17, or (ii) payment from Borrower under Section 2.18 hereof, may
recover such sums from Borrower by delivering to Borrower a statement setting
forth the amount owed to such Lender and showing how such calculation was made,
signed by a duly authorized officer of such Lender, which statement shall be
conclusive evidence of the amount owed absent manifest error; provided, however,
that (A) reimbursement or payment under this subsection (b) shall not be
demanded by any Lender for the period prior to the Closing Date (other than
Lenders party to the Existing Credit Agreement; provided that no claim shall be
made by any Lender pursuant to the Existing Credit Agreement that arose during
the period prior to the closing date for the Existing Credit Agreement), and (B)
each Lender shall notify Borrower as promptly as practicable of any event
occurring after the date of this Agreement that would entitle such Lender to
reimbursement or payment under this subsection (b).
(c) Notwithstanding any other provision herein, if the adoption of or
any change in any requirement of law or in the interpretation or application
thereof shall make it unlawful for any Lender to make or maintain Eurodollar
Rate Advances as contemplated by this Agreement, (A) the commitment of such
Lender hereunder to make Eurodollar Rate Advances, continue Eurodollar Rate
Advances as such and convert Reference Rate Advances to Eurodollar Rate Advances
shall forthwith be cancelled and (B) such Lender's Advances then outstanding as
Eurodollar Rate Advances, if any, shall if required by law, be converted
automatically to Reference Rate Advances on the respective last days of the then
current Interest Periods with respect to such Advances or within such earlier
period as required by law. If any such conversion of a Eurodollar Rate Advance
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, the Borrower shall pay to such Lender such amounts, if
any, as may be required pursuant to paragraph (d) below.
43
(d) The Borrower agrees to indemnify each Lender and to hold each
Lender harmless from any loss or expense which such Lender may sustain or incur
as a consequence of (A) default by the Borrower in payment when due of the
principal amount of or interest on any Eurodollar Rate Advance, (B) default by
the Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Rate Advances after the Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, (C) default by the
Borrower in making any prepayment after the Borrower has given a notice thereof
in accordance with the provisions of this Agreement or (D) the making of a
prepayment of Eurodollar Rate Advances on a day which is not the last day of an
Interest Period with respect thereto, including, without limitation, in each
case, any such loss or expense arising from the reemployment of funds obtained
by it or from fees payable to terminate the deposits from which such funds were
obtained. A certificate as to any amounts payable pursuant to this Section
submitted to the Borrower by any Lender shall be conclusive in the absence of
manifest error. The covenants contained in Subsections (b) and (d) of this
Section 2.17 shall survive the termination of this Agreement and the payment of
the Notes and all other amounts payable hereunder.
2.18 Capital Adequacy. If any Lender shall have determined that, after
the date hereof, the adoption of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central Lender or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Lending Branch or
any corporation controlling such Lender) with any direction, requirement or
request regarding capital adequacy (whether or not having the force of law) of
any such authority, central Lender or comparable agency, affects or would affect
the amount of capital required or expected to be maintained by such Lender or
any corporation controlling such Lender and such Lender (taking into
consideration such Lender's policies with respect to capital adequacy and such
Lender's targeted return on capital) determines that the amount of such capital
is increased or required to be increased as a consequence of such Lender's
obligations under this Agreement, then, upon demand by such Lender, Borrower
shall immediately pay to such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender for such
increase.
2.19 Letters of Credit. (a) The Letters of Credit. (i) From time to
time during the Revolving Credit Commitment Period, each Issuing Lender agrees
on the terms and conditions set forth herein to issue Letters of Credit for the
account of the Borrower; provided, that no Issuing Lender shall issue any Letter
of Credit if after giving effect to such issuance, the aggregate undrawn amount
of all Letters of Credit then outstanding plus the aggregate amount of all
unreimbursed drawings under Letters of Credit would exceed the L/C Commitment
Amount; provided, further, that no Lender shall issue any Letters of Credit if,
after giving effect to such issuance, the sum of the aggregate undrawn amount of
all Letters of Credit then outstanding plus the aggregate outstanding principal
amount of all Revolving Advances plus the aggregate amount of unreimbursed
44
drawings under Letters of Credit would exceed the Revolving Credit Commitment
Amount; provided, further, that no Issuing Lender shall issue any Letters of
Credit subsequent to the date which is 30 days prior to the Revolving Credit
Termination Date.
(ii) No Issuing Lender shall be under any obligation to issue any
Letter of Credit if:
(A) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Issuing
Lender from issuing such Letter of Credit or any legal requirement
applicable to such Issuing Lender or any request or directive (whether or
not having the force of law) from any governmental authority with
jurisdiction over such Issuing Lender shall prohibit, or request that such
Issuing Lender refrain from the issuance of letters of credit generally or
such Letter of Credit in particular or shall impose upon such Issuing
Lender with respect to such Letter of Credit any restriction or reserve or
capital requirement (for which such Issuing Lender is not otherwise
compensated) not in effect on the Closing Date, or any unreimbursed loss,
cost or expense which was not applicable, in effect or known to such
Issuing Lender on the Closing Date and which such Issuing Lender in good
xxxxx xxxxx material to it; or
(B) such Issuing Lender has received notice from Agent, or from Agent
at the request of any Lender, on or prior to the Banking Day immediately
prior to the requested date of issuance of such Letter of Credit that one
or more of the conditions contained in Section 4.02 is not then satisfied;
or
(C) such requested Letter of Credit has an expiration date which is
after the earlier of (x) five Banking Days prior to the Revolving Credit
Termination Date and (y) one year after the date of issuance (subject to
automatic renewals on terms satisfactory to the Issuing Lenders).
(iii) Subject to Section 2.19(g), Letters of Credit with a one-year
tenor may be by their terms automatically renewable (such automatically
renewable Letters of Credit hereby referred to as "Renewable Letters of Credit")
for additional one-year periods (which shall in no event extend beyond the date
referred to in clause (x) of the preceding paragraph (a)(ii)(C)). The Issuing
Lender shall notify all beneficiaries of Renewable Letters of Credit that such
Letters of Credit shall not be renewed or extended unless the Agent and the
Issuing Lender shall have received the request from the Borrower required under
Section 2.19(g) and all conditions precedent to the issuance of Letters of
Credit set forth in Section 4.02 are satisfied at the time of such renewal or
extension (which time, for purposes of this Section and Section 4.02, shall be
deemed to be the time of such renewal or extension and not the expiry date of
such Letters of Credit).
45
(b) Issuance of Letters of Credit.
(i) Each Letter of Credit shall be issued upon the irrevocable written
request of Borrower, received by Agent and the Issuing Lender at least seven (7)
days (or such shorter time as Agent may agree in a particular instance) prior to
the proposed date of issuance. Each Letter of Credit outstanding under the
Existing Credit Agreement which survives the Closing Date shall be deemed to be
reissued under this Agreement on the Closing Date as set forth on Schedule
2.19(b).
(ii) Each request for issuance of a Letter of Credit shall be by
telecopy, confirmed immediately in writing, on the form specified by the Issuing
Lender as being its then customary form for letter of credit applications and
shall specify: (A) the proposed date of issuance (which shall be a Banking Day);
(B) the face amount of the Letter of Credit; (C) the date of expiration of the
Letter of Credit; (D) the purpose of such Letter of Credit, (E) the name and
address of the beneficiary thereof; (F) the documents to be presented by the
beneficiary of the Letter of Credit in case of any drawing thereunder; and (G)
the full text of any certificate to be presented by the beneficiary in case of
any drawing thereunder; provided that in the event that the form specified by
the Issuing Lender conflicts with any provisions of this Agreement, the
provisions in this Agreement shall govern.
(iii) No Letter of Credit shall be issued (or renewed or extended) if
such Letter of Credit would thereupon have an expiration date which is after the
date which is five Banking Days prior to the Revolving Credit Termination Date.
(iv) Unless an Issuing Lender has received notice on or before the
Banking Day immediately preceding the date such Issuing Lender is to issue a
requested Letter of Credit (A) from the Agent directing such Issuing Lender not
to issue such Letter of Credit because the amount specified in Section
2.19(a)(i) would be exceeded and/or (B) from any Lender that one or more
conditions specified in Section 4.02 are not then satisfied, then subject to the
terms and conditions of this Section 2.19 and provided that the applicable
conditions set forth in Section 4.02 hereof have been satisfied, such Issuing
Lender shall, on the requested date, issue a Letter of Credit for the account of
Borrower in accordance with the Issuing Lender's usual and customary business
practices. Prior to issuing any Letter of Credit, the Issuing Lender of such
Letter of Credit will consult with the Agent to confirm that the amount
specified in Section 2.19(a)(i) would not be exceeded, and that the conditions
specified in Section 4.02 have been satisfied.
(v) Promptly after issuance of each Letter of Credit, the Issuing
Lender shall deliver to Borrower and Agent a copy of such Letter of Credit.
Agent shall promptly deliver a copy thereof to each other Lender. Each Letter of
Credit shall provide that, except as otherwise determined in the sole discretion
of the Issuing Lender, payment thereunder shall not be made earlier than two (2)
46
business days after receipt of any requisite documents demanding such payment.
(vi) All Letters of Credit shall be issued only in Dollars.
(c) Participations, Drawings and Reimbursements.
(i) Immediately upon the issuance of each Letter of Credit, each
Lender (other than the Issuing Lender) shall be deemed to, and hereby agrees to,
have irrevocably purchased from the Issuing Lender a participation in such
Letter of Credit and each drawing thereunder in a percentage equal to the
Revolving Credit Commitment Percentage of such Lender.
(ii) The Borrower shall reimburse the Agent for the full amount of any
drawing under the Letter of Credit on the same date such drawing is honored by
the Issuing Lender. In the event Borrower shall fail to reimburse Agent for the
full amount of any drawing on the same date such drawing is honored by the
Issuing Lender under any Letter of Credit, the Issuing Lender shall promptly
notify Agent and Agent shall as promptly as possible notify each Lender thereof
and Borrower shall be deemed to have requested that a Reference Rate Advance be
made by the Lenders to be disbursed on the date of payment by the Issuing Lender
under such Letter of Credit, subject to the amount of the unutilized portion of
the Revolving Credit Commitment Amount on such date and subject to the
conditions set forth in Section 4.02. Any notice given by the Issuing Lender or
Agent pursuant hereto may be oral if immediately confirmed in writing (including
telecopy or telex); provided that the lack of such an immediate confirmation
shall not affect the conclusiveness and binding effect of such notice. The
proceeds of such Revolving Advances shall be paid to the Agent which will, in
turn, disburse such proceeds to the Issuing Lender as reimbursement for such
drawings. Notwithstanding the foregoing, if at any time an Event of Default
described in Section 8.05 or 8.06 has occurred and is continuing, such drawings
shall be reimbursed by the Lenders' purchasing pro rata participation interests
in such Letter of Credit in amounts equal to each Lender's Revolving Credit
Commitment Percentage of the relevant amounts drawn.
(iii) Any unreimbursed Letter of Credit drawing which shall not be
converted into a Revolving Advance pursuant to Section 2.19(c)(ii) in whole or
in part because such conversion would have caused the Revolving Credit
Commitment Amount to be exceeded or because of Borrower's failure to satisfy the
conditions set forth in Section 4.02, shall become due and payable upon the date
such drawing is paid by the Issuing Lender. Agent shall promptly notify Borrower
and Lenders of the occurrence of any unreimbursed drawing under a Letter of
Credit. Any such unreimbursed drawing shall bear interest at a rate per annum
equal to the Reference Rate plus the sum of the Applicable Margin and 2%.
(iv) Each Lender will, promptly upon receipt of notice of an
unreimbursed drawing under a Letter of Credit pursuant to Section 2.19(c)(iii),
make available to Agent for the account of the Issuing Lender an amount in
47
immediately available funds equal to its Revolving Credit Commitment Percentage
of the amount of the such unreimbursed drawing. If any Lender so notified shall
fail to make available to Agent for the account of the Issuing Lender the amount
of its Revolving Credit Commitment Percentage of any such unreimbursed drawing
on the date the relevant Letter of Credit drawing was honored by the Issuing
Lender (the "Participation Date"), then interest shall accrue on such Lender's
obligation to make such payment, (i) from the Participation Date to but not
including the second Banking Day after the Participation Date at a rate per
annum equal to the Federal Funds Rate, and (ii) from the second Banking Day
after the Participation Date at the same rate specified in Section 2.08(a) for
Reference Rate Advances. Agent will as promptly as practicable (but in no event
later than two (2) Banking Days after the occurrence thereof) give notice of the
occurrence of the Participation Date, but failure of Agent to give any such
notice on the Participation Date or in sufficient time to enable any Lender to
effect such payment on such date shall not relieve such Lender from its
obligations under this Section 2.19(c)(iv).
(v) The obligation of each Lender to provide Agent with such Lender's
Revolving Credit Commitment Percentage of the amount of any payment or
disbursement made by any Issuing Lender under any outstanding Letter of Credit
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which such Lender
may have or have had against such Issuing Lender (or any other Lender),
including, without limitation, any defense based on the failure of the demand
for payment under such Letter of Credit to conform to the terms of such Letter
of Credit or the legality, validity, regularity or enforceability of such Letter
of Credit or any defense based on the identity of the transferee of such Letter
of Credit or the sufficiency of the transfer if such Letter of Credit is
transferable; provided, however, that Lenders shall not be obligated to
reimburse such Issuing Lender for any wrongful payment or disbursement made
under any Letter of Credit as a result of acts or omissions constituting gross
negligence or willful misconduct on the part of such Issuing Lender or any of
its officers, employees or agents. Further, each Lender agrees to perform its
obligations under Section 2.19(c)(iv) despite the occurrence of a Default or an
Event of Default or any inability of Borrower to require such Lender to fulfill
its other obligations hereunder including, without limitation, any inability
resulting from the operation of Bankruptcy Code Section 365(c)(2) (11 U.S.C.
Section 365(c)(2)) or otherwise.
(d) Repayment of Participations.
(i) Upon and only upon receipt by Agent for the account of the Issuing
Lender of funds from Borrower,
(A) in reimbursement of any payment made under a Letter of Credit with
respect to which any Lender has theretofore paid Agent for the account of
the Issuing Lender for such Lender's participation in the Letter of Credit
pursuant to Section 2.19(c)(iv); or
48
(B) in payment of interest thereon;
Agent will pay to each Lender which has funded its participating
interest therein, in the same funds as those received by Agent for the
account of the Issuing Lender, such Lender's Revolving Credit
Commitment Percentage of such funds.
(ii) If Agent or the Issuing Lender is required at any time to return
to Borrower or to a trustee, receiver, liquidator, custodian or other similar
official any portion of the payments made by Borrower to Agent for the account
of the Issuing Lender pursuant to paragraph (i) in reimbursement of payment made
under the Letter of Credit or interest thereon, each Lender shall, on demand of
Agent, forthwith return to Agent or the Issuing Lender its Revolving Credit
Commitment Percentage of any amounts so returned by Agent or the Issuing Lender
plus interest thereon from the date such demand is made to but not including the
date such amounts are returned by such Lender to Agent or the Issuing Lender, at
a rate per annum equal to the Federal Funds Rate.
(e) Role of Issuing Lender. (i) Each Issuing Lender will exercise and
give the same care and attention to any Letter of Credit as it gives to its
other letters of credit and similar obligations.
(ii) Each Lender participating in a Letter of Credit agrees that, in
paying any drawing under any Letter of Credit, the Issuing Lender shall not have
any responsibility to obtain any document (other than the sight draft and
certificates required by the Letter of Credit) or to ascertain or inquire as to
the validity or accuracy of any such document or the authority of the Person
delivering any such document. Neither the Issuing Lender nor any of its
representatives, officers, employees or agents shall be liable to any Lender
for:
(A) any action taken or omitted in connection herewith at the request
or with the approval of the Majority Lenders;
(B) any action taken or omitted in the absence of gross negligence or
wilful misconduct; or
(C) the execution, effectiveness, genuineness, validity or
enforceability of any Letter of Credit or any other document contemplated
hereby or thereby.
(f) Obligations Absolute. The obligations of Borrower under this
Agreement and any other agreements or instrument relating to any Letter of
Credit to reimburse each Issuing Lender shall be unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement and
such other agreement or instrument under all circumstances, including, without
limitation, the following circumstances:
49
(A) any lack of validity or enforceability of this Agreement, any
Letter of Credit, or any other agreement or instrument relating thereto
(collectively, the "L/C Related Documents");
(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 Borrower in respect of any
Letter of Credit 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, set-off, defense or other right that
Borrower may have at any time against any beneficiary or any transferee of
any Letter of Credit (or any Person for whom any such beneficiary or any
such transferee may be acting), the Issuing Lender or any other Person,
whether in connection with this Agreement, the transactions contemplated
hereby or by the L/C Related Documents or any unrelated transaction;
(D) any statement and other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(E) any payment by the Issuing Lender under any Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of any Letter of Credit;
(F) any exchange, release or non-perfection of any Collateral, or any
release or amendment or waiver of or consent to departure from any
Collateral Document, for all or any of the obligations of Borrower in
respect of any Letter of Credit;
(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, Borrower or any Guarantor but excluding any action
constituting the Issuing Lender's gross negligence or willful misconduct;
or
(H) the occurrence of a Default or an Event of Default.
(g) Requests Regarding Renewals and Extensions of Renewable Letters of
Credit. The Borrower shall deliver to the Agent and the applicable Issuing
Lender, not earlier than thirty (30) days, and not later than fourteen (14)
days, before notice of non-renewal or non-extension is required under the
Renewable Letters of Credit issued by such Issuing Lender, a written request for
renewal or extension of each Renewable Letter of Credit which the Borrower
desires to renew or extend. Such request shall specify the required date for
notice by the Issuing Lender of non-renewal or non-extension under the Renewable
Letters of Credit and include a certification by the Borrower that as of the
50
date of such request, no Default or Event of Default shall have occurred and be
continuing and all of the representations and warranties contained in this
Agreement and the Collateral Documents are true and correct in all material
respects, except as to representations and warranties contained in Section 5.09
and which expressly relate to an earlier date and for changes which are
contemplated or permitted by this Agreement. No such request shall be made by
the Borrower which would cause the expiry date of such Renewable Letter of
Credit to extend beyond five Banking Days prior to the Revolving Credit
Termination Date. For purposes of this Section 2.19(g), valid delivery by the
Borrower of the required request shall be deemed to have occurred only upon
actual receipt of such notice by the Agent and the Issuing Lender. If the
Borrower fails to deliver such a notice within such period with respect to such
Renewable Letter of Credit, the Issuing Lender of such Renewable Letter of
Credit shall deliver appropriate notices of non-extension or non-renewal with
respect to such Renewable Letter of Credit.
(h) If any change in any requirement of law shall either (i) impose,
modify or deem or make applicable any reserve, special deposit, assessment or
similar requirement against Letters of Credit issued by any Issuing Lender or
against a Lender's participation in such Letter of Credit or (ii) impose on any
Issuing Lender or any Lender participating in such Letter of Credit (a
"Participating Lender") any other condition regarding this Agreement or any
Letter of Credit, and the result of any event referred to in clause (i) or (ii)
above shall be to increase the cost to such Issuing Lender of issuing or
maintaining any Letter of Credit, or to such Participating Lender of purchasing
or maintaining such participating interest in any Letter of Credit (which
increase in cost shall be the result of such Issuing Lender's, or Participating
Lender's, as the case may be, reasonable allocation of the aggregate of such
cost increases resulting from such events), then from time to time following
notice by such Issuing Lender (or such Participating Lender, as the case may be)
to the Borrower, the Borrower shall pay to such Person, as specified by such
Person, additional amounts which shall be sufficient to compensate such Person
for such increased cost, together with interest on each such amount from the
date demanded until payment in full thereof at a rate per annum equal to the
Reference Rate plus the Applicable Margin plus 2% per annum. A certificate
submitted by such Issuing Lender or Participating Lender to the Borrower
concurrently with any such demand by such Person, shall be conclusive, absent
manifest error, as to the amount thereof.
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ARTICLE III.
SECURITY
3.01 Security.
(a) As security for the prompt payment and performance of all Secured
Obligations of Borrower, Borrower has heretofore granted and assigned or shall
grant and assign, in accordance with the provisions of the Collateral Documents
applicable to Borrower, to the Collateral Agent for the benefit of the Secured
Creditors with respect to all of Borrower's Secured Obligations, all of its
right, title and interest in and to all of the Collateral. Additionally, all
Secured Obligations shall be guaranteed by each Guarantor under the Guarantee
and Collateral Agreement and the Operating Bank Guaranty, to the extent provided
therein, and the obligations of the Guarantors under the Guarantee and
Collateral Agreement shall be secured pursuant to the terms of the Collateral
Documents required to be executed and delivered by them hereunder. Upon the
effective date of the sale of all of the stock owned by Borrower or any
Subsidiary of, or the effective date of the sale of all of the assets of, any
Guarantor permitted hereunder, such Guarantor shall be released from all
obligations under the Guarantee and Collateral Agreement.
(b) Upon the application by the Borrower or any Subsidiary of any
Reinvestment Proceeds to the acquisition of any new property or assets, the
Borrower or such Subsidiary at its expense shall immediately cause such acquired
property or assets to become subject to Liens and security interests in favor of
the Collateral Agent to secure the Secured Obligations to the same extent, and
with the same priority, as the Liens and security interests which covered or
extended to the property or assets the disposition of which gave rise to such
Reinvestment Proceeds, provided, however, that if any portion of the gross
proceeds realized upon the disposition of such asset were applied to discharge
any Debt or other obligations secured by a Lien on such assets which was prior
to the Liens granted under the Collateral Documents, then there shall not be
permitted to be any Lien on the replacement property, other than Liens under the
Collateral Documents, except for Liens permitted pursuant to clause (iv) of the
definition of "Permitted Liens" in connection with the acquisition of such
replacement assets, provided that such Liens do not secure Debt or other
obligations in an amount in excess of the Debt or other obligations discharged
with respect to the asset disposed of (except for acquisitions of individual
items of replacement exercise equipment which may be subject to purchase money
financing on customary terms in accordance with the practices of the Borrower
and its Subsidiaries, and except that, with respect to dispositions of not more
than three health clubs after the Closing Date on which the Collateral Agent
held Liens of second priority, the Debt and other obligations secured by Liens
on the replacement property having priority over the Liens under the Collateral
Documents may exceed the amount of the Debt or other obligations with respect to
the assets disposed of by not more than (i) $3,000,000 with respect to any such
replacement property or (ii) $7,000,000 for all such replacement properties).
Upon any such acquisition, such acquired property or assets shall be deemed to
constitute Collateral for all purposes of this Agreement and the Collateral
Documents, any collateral documents executed and delivered by the Borrower or
any of its Subsidiaries to grant the liens and security interests required by
this Section shall be deemed to be Collateral Documents for all purposes of this
Agreement and the other Credit Documents, and any such application of
Reinvestment Proceeds and acquisition of such property or assets shall be deemed
a representation and warranty that, as of the date of such acquisition, all
52
representations and warranties contained in this Agreement and the Collateral
Documents applicable to such Collateral are true and correct in all material
respects.
3.02 Collateral Documents. The Borrower and certain of the Guarantors
have heretofore executed and delivered or will execute and deliver to the
Collateral Agent certain Collateral Documents, and the Borrower shall execute
and deliver to the Collateral Agent for the benefit of the Secured Creditors
(and shall cause each Guarantor to so execute and deliver) all such further
Collateral Documents and such other collateral documents as may be reasonably
requested by the Collateral Agent in order to perfect and protect Collateral
Agent's security interest in the Collateral granted pursuant to the Collateral
Documents, all in form and substance reasonably acceptable to the Collateral
Agent.
3.03 Priority of Security Interest. The lien and security interest of
the Collateral Agent in the Collateral shall, to the extent permissible by
applicable law, at all times, be and continue to be a first lien in all
jurisdictions, whether state, federal or foreign, subject to no other Lien of
any kind (except Permitted Liens).
3.04 New Guarantors. Borrower shall cause each Domestic Subsidiary
which is hereafter created or acquired (but in any event excluding (i) Lincoln
Indemnity Company, (ii) H&T Receivable Funding Corporation, (iii) any Finance
Subsidiary and (iv) any Subsidiary acquired after the Closing Date to the extent
such Subsidiary is not required to provide a security interest in its assets or
cause its capital stock to be pledged pursuant to Section 7.01(e) (but such
Subsidiary described in clause (iv) shall be required to become a Guarantor)) to
promptly execute and deliver a supplement or addendum to each of the Guarantee
and Collateral Agreement and the Operating Banks Guaranty, in form and substance
satisfactory to the Collateral Agent, pursuant to which such Subsidiary shall
become a party to such agreements as a Grantor (as defined in the Guarantee and
Collateral Agreement), together with such Collateral Documents and other
documents, instruments and opinions reasonably requested by Agent or the
Collateral Agent in order to perfect and protect the Collateral Agent's security
interest in the Collateral granted pursuant to such Collateral Documents, all in
form and substance reasonably satisfactory to Agent and the Collateral Agent.
3.05 Real Property Matters. As additional security for the Secured
Obligations, the Collateral Agent shall have received, with respect to each
parcel of real property secured by a Mortgage, (i) a Mortgage Amendment,
executed and delivered by a duly authorized officer of each party thereto; (ii)
an endorsement to each of the existing title insurance policies updating the
effective date and amending the description of the existing insured mortgage to
include the Mortgage Amendment; and (iii) a no-lien affidavit executed by the
president or other officer of each respective mortgagor, in form satisfactory to
the title company.
53
As additional security for the Secured Obligations, Borrower agrees
that in the event Borrower or any Guarantor acquires any real property or enters
into any lease for real property upon which Borrower or any Guarantor shall own
the improvements, then, from time to time, upon request of the Agent, Borrower
shall, or shall cause such Guarantor to, execute, deliver and record any new
mortgages, deeds of trust, leasehold mortgages and leasehold deeds of trust and
similar instruments, or amendments to any existing mortgages, deeds of trust,
leasehold mortgages and leasehold deeds of trust and similar instruments
(collectively, such existing and new instruments are called the "Real Property
Security Documents") encumbering such owned or ground-leased property (provided
that the lease permits the granting of such security interest in favor of
Collateral Agent; provided, however, that before entering into any said ground
lease, Borrower or such Guarantor shall request that the ground lessor agree to
permit such security interest in favor of the Collateral Agent in the provisions
of the ground lease), which Real Property Security Documents shall be
substantially in the same form as the Real Property Security Documents provided
on and/or in effect as of the date hereof. In connection with such hereafter
owned, leased or otherwise acquired real property, Borrower agrees to provide,
or cause the applicable Guarantor to provide, to the Collateral Agent (a)
surveys of said real property reasonably acceptable to Agent and (b) mortgagee
title insurance policies in form and amount reasonably acceptable to Agent
covering said real property.
3.06 Exceptions. Notwithstanding the foregoing, the Borrower and its
Subsidiaries shall not be required to (a) execute and deliver Real Property
Security Documents with respect to real property acquired after the Closing Date
that is subject to liens permitted by clause (iv) or (xiv) of the definition of
"Permitted Liens" or (b) cause any Subsidiary to provide a security interest in
its assets or cause its capital stock to be pledged to the extent not required
pursuant to Section 7.01(e).
3.07 Pledge of Capital Stock. Without limitation of the foregoing, the
Borrower and its Subsidiaries will pledge the capital stock, or partnership
interests, of any entity acquired after the Closing Date in accordance with
Section 7.01, subject to the provisions of Section 3.06.
ARTICLE IV.
CONDITIONS PRECEDENT
4.01 Conditions Precedent to Closing Date. This Agreement shall become
effective as of the Closing Date, subject to the conditions precedent that Agent
shall have received, for its account and the accounts of the respective lenders
party to the Existing Credit Agreement in accordance with their interests, on or
before the Closing Date, payment of all accrued and unpaid interest, fees,
expenses, breakage fees and related costs and expenses payable under the
Existing Credit Agreement in respect of the period prior to the Closing Date and
subject to the further conditions precedent that on or prior to the Closing
Date:
54
(a) Opinions of Counsel to Borrower, etc. There shall have been
delivered to Agent (with sufficient copies for distribution to all
Lenders), in form and substance satisfactory to Agent and its counsel, an
opinion, dated the Closing Date, of (i) Benesch, Friedlander, Xxxxxx &
Xxxxxxx LLP, counsel for Borrower and the Guarantors, substantially in the
form of Exhibit J-1 hereto and (ii) Winston & Xxxxxx, special counsel for
the Borrower and the Guarantors, substantially in the form of Exhibit J-2
hereto;
(b) Other Opinions. There shall have been delivered to Agent (with
sufficient copies for distribution to all Lenders), in form and substance
satisfactory to Agent and its counsel, an opinion, dated the Closing Date,
of Xxxx Gaan, Esq., or other acceptable in-house counsel, substantially in
the form of Exhibit K hereto;
(c) Borrower's Incorporation Papers. There shall have been delivered
to Agent (with sufficient copies for distribution to all Lenders), in form
and substance satisfactory to Agent and its counsel, a copy of Borrower's
certificate of incorporation, certified by the Secretary of State of
Delaware, as of a recent date, and a copy of the Borrower's by-laws,
certified by the Secretary or an Assistant Secretary of Borrower;
(d) Borrower's Corporate Resolution. There shall have been delivered
to Agent (with sufficient copies for distribution to all Lenders), in form
and substance satisfactory to Agent and its counsel, a copy of a resolution
or resolutions passed by the Board of Directors of Borrower, certified by
the Secretary or an Assistant Secretary of Borrower as being in full force
and effect on the Closing Date, authorizing the borrowing provided for
herein and the execution, delivery and performance of this Agreement, the
Notes, the Collateral Documents to which it is a party and any other
instrument or agreement required hereunder;
(e) Borrower's Incumbency Certificate. There shall have been delivered
to Agent (with sufficient copies for distribution to all Lenders), in form
and substance satisfactory to Agent and its counsel, a certificate, signed
by the Secretary or an Assistant Secretary of Borrower and dated the
Closing Date, as to the incumbency, and containing the specimen signature
or signatures (not photocopied), of the person or persons authorized to
execute and deliver this Agreement, the Notes, the Collateral Documents to
which it is a party and any other instrument or agreement required
hereunder on behalf of Borrower;
(f) Guarantors' Incorporation Papers. There shall have been delivered
to Agent (with sufficient copies for distribution to all Lenders), in form
and substance satisfactory to Agent and its counsel, with respect to each
Guarantor which has not previously delivered such documents to Agent, a
copy of each such Guarantor's certificate of incorporation or articles of
55
association and by-laws or partnership agreement, as the case may be,
certified by the Secretary or an Assistant Secretary of such Guarantor;
(g) Guarantors' Resolutions. There shall have been delivered to Agent
(with sufficient copies for distribution to all Lenders), with respect to
each Guarantor which has not previously delivered such documents to Agent,
in form and substance satisfactory to Agent and its counsel, a copy of a
resolution or resolutions passed by the Board of Directors (or similar
body) of each Guarantor (or, with respect to a Guarantor which is a
partnership, of such Guarantor's general partner), certified by the
Secretary or an Assistant Secretary of such Guarantor (or general partner)
as being in full force and effect on the Closing Date, authorizing the
execution, delivery and performance of the Collateral Documents to which it
is a party;
(h) Guarantors' Incumbency Certificates. There shall have been
delivered to Agent (with sufficient copies for distribution to all
Lenders), with respect to each Guarantor which has not previously delivered
such documents to Agent, in form and substance satisfactory to Agent and
its counsel, a certificate, signed by the Secretary or an Assistant
Secretary of each Guarantor (or, with respect to a Guarantor which is a
partnership, of such Guarantor's general partner) and dated the Closing
Date, as to the incumbency, and containing the specimen signature or
signatures (not photocopied), of the person or persons authorized to
execute and deliver the Collateral Documents to which it is a party on
behalf of such Guarantor (or on behalf of such general partner for such
Guarantor);
(i) Approvals and Consents. There shall have been delivered to Agent
(with sufficient copies for distribution to all Lenders), in form and
substance satisfactory to Agent and its counsel, certified copies of all
material approvals, consents, exemptions and other actions by, and notices
to and filings with, any governmental authority or any other Person and any
trustee or holder of any indebtedness or obligation of Borrower or of any
Guarantor which are required in connection with any transaction
contemplated hereby (other than landlords under leases and first mortgage
holders constituting Permitted Liens, but subject to Section 6.17), all of
which shall be in full force and effect;
(j) Agreement. There shall have been delivered to Agent (with
sufficient copies for distribution to all Lenders), in form and substance
satisfactory to Agent and its counsel, sufficient counterparts of this
Agreement, duly executed by an authorized officer of Borrower;
(k) Notes. There shall have been delivered to the Agent, for the
account of each Lender, an applicable Note, each with appropriate
56
insertions and completions and conforming to the requirements hereof and
executed by a duly authorized officer of the Borrower;
(l) Collateral Documents. There shall have been delivered to Agent
(with sufficient copies for distribution to all Lenders), in form and
substance satisfactory to Agent and its counsel, sufficient counterparts of
(i) a Confirmation and Consent, in form reasonably satisfactory to the
Agent, with respect to the Guarantee and Collateral Agreement, executed by
a duly authorized officer of each of the Borrower and the Guarantors, (ii)
Mortgages covering each of the Properties listed on Schedule 4.01(l),
executed by a duly authorized officer of each of the Borrower and each of
the Guarantors which holds an interest in the applicable Property and (iii)
the other Collateral Documents, executed by a duly authorized officer of
each of the Borrower and the Guarantors party to such Collateral Documents;
(m) Pledge of Shares. The Collateral Agent shall have received (x) (i)
the certificates representing the certificated shares of Funding Corp. and
each of the Guarantors listed on Exhibit D hereto and (ii) the certificates
representing 65% of the certificated shares of the Foreign Subsidiaries
owned directly by the Borrower or a Guarantor (other than Health & Tennis
U.K. Limited), which certificates are to be pledged pursuant to the
Guarantee and Collateral Agreement, together with (y) an undated stock
power for each such certificate executed in blank by a duly authorized
officer of the pledgor thereof;
(n) Acknowledgements. If requested by the Agent, there shall have been
delivered to Agent (with sufficient copies for distribution to all
Lenders), in form and substance satisfactory to Agent and its counsel,
sufficient counterparts of an amendment and/or acknowledgment from each
Person which executed a consent or acknowledgement in connection with the
Existing Credit Agreement and any other document or agreement identified by
the Agent (including landlord's consents and consents by other partners in
partnerships to the liens on certain interests in such partnerships created
by the Collateral Documents confirming that such consent or acknowledgement
remains effective after giving effect to the refinancing of the Existing
Credit Agreement by this Agreement, but excluding those consents and
acknowledgements specified in Exhibit L);
(o) Surveys. The Agent shall have received, and the Title Insurance
Company (defined below) shall have received, (A) an as-built survey of the
sites of the property covered by each Mortgage (including leasehold
mortgages) certified to the Agent and the Title Insurance Company in a
manner satisfactory to them, dated a date satisfactory to the Agent and the
Title Insurance Company by an independent professional licensed land
surveyor satisfactory to the Agent and the Title Insurance Company, and the
surveys on which they are based shall be made in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys jointly
established and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1992, and, without limiting
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the generality of the foregoing, there shall be surveyed and shown on such
maps, plats or surveys the following: (i) the locations on such sites of
all the buildings, structures and other improvements and the established
building setback lines; (ii) the lines of streets abutting the sites and
width thereof; (iii) all access and other easements appurtenant to the
sites or necessary or desirable to use the sites; (iv) all roadways, paths,
driveways, easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (v) any
encroachments on any adjoining property by the building structures and
improvements on the sites; and (vi) a legend relating to the survey, or (B)
in lieu of an as-built survey, the Borrower or its Subsidiaries shall have
delivered any affidavits or other documents required by the Title Insurance
Company to insure the state of facts set forth in a survey which was
previously included in a title insurance policy delivered by the Borrower
or a Subsidiary to the Agent. Surveys delivered to the Agent in connection
with the Existing Credit Agreement with respect to particular items of real
property may be deemed by the Agent sufficient to comply with this
paragraph (o) for such items.
(p) Title Insurance Policy. The Agent shall have received in respect
of each parcel covered by each Mortgage covering the real property set
forth on Schedule 4.01(l) a mortgagee's title policy (or policies) or
marked up unconditional binder for such insurance dated the Closing Date.
Each such policy shall (i) be in an amount satisfactory to the Agent; (ii)
be issued at ordinary rates; (iii) insure that the Mortgage insured thereby
creates a valid first Lien on such parcel free and clear of all defects and
encumbrances, except such as may be approved by the Agent; (iv) name the
Agent for the benefit of the Lenders as the insured thereunder; (v) be in
the form of ALTA Loan Policy - 1970 (Amended 10/17/70); (vi) contain such
endorsements and affirmative coverage as the Agent may request and (vii) be
issued by a title company (the "Title Insurance Company") satisfactory to
the Agent. The Agent shall have received evidence satisfactory to it that
all premiums in respect of each such policy, and all charges for mortgage
recording tax, if any, have been paid.
(q) Flood Insurance. If requested by the Agent, the Agent shall have
received (i) a policy of flood insurance which (A) covers any parcel of
improved real property which is encumbered by any Mortgage, (B) is written
in an amount not less than the outstanding principal amount of the
indebtedness secured by such Mortgage which is reasonably allocable to such
real property or the maximum limit of coverage made available with respect
to the particular type of property under the National Flood Insurance Act
of 1968, whichever is less, and (C) has a term ending not earlier than the
maturity of the indebtedness secured by such Mortgage and (ii) confirmation
that the Borrower has received the notice required pursuant to Section
208(e)(3) of Regulation H of the Board of Governors of the Federal Reserve
System.
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(r) Copies of Documents. The Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the
title policy or policies referred to in Section 4.01(p) and a copy,
certified by such parties as the Agent may deem appropriate, of all other
documents affecting the property covered by each Mortgage covering the real
property listed on Schedule 4.01(l).
(s) No Litigation. No litigation, inquiry, injunction or restraining
order shall be pending, entered or threatened (including any proposed
statute, rule or regulation) which, in the reasonable opinion of the
Majority Lenders, could have a Material Adverse Effect;
(t) No Material Adverse Change. There shall not have occurred since
December 31, 1998 any change or development, which in either case in the
opinion of the Majority Lenders could have a Material Adverse Effect;
(u) Filings. Any filings and other actions required to create and
perfect the appropriate security interests in all Collateral (including,
without limitation, the filing of duly executed financing statements on
Form UCC-1 in the jurisdictions set forth in Schedule 3 to the Guarantee
and Collateral Agreement and in any other jurisdiction, in the opinion of
the Agent, desirable to perfect the Liens on the Collateral) shall have
been duly made or taken (or, in the case of UCC-1s, executed and delivered
in proper form for filing), and all Collateral shall be free and clear of
other liens other than Permitted Liens.
(v) Good Standing Certificates. There shall have been delivered to
Agent (with sufficient copies for distribution to all Lenders), in form and
substance satisfactory to Agent and its counsel, good standing certificates
(or bring-down telexes or other evidence of good standing) for Borrower and
for each Guarantor from the Secretary of State of the state of
incorporation of each such Person and good standing certificates (or
similar authorization to conduct business as a foreign corporation) for
Borrower and each Guarantor from the Secretary of State of each state with
respect to which Borrower makes the representations contained in Sections
5.01 and 5.02 hereof;
(w) Payment of Fees and Expenses. The Agent shall have received, for
the account of the Lenders and for its own account, payment by Borrower of
all fees and expenses (including reasonable legal fees and expenses)
required to be paid hereunder, including without limitation, under Sections
2.09, 2.11 and 9.06, to the extent invoices therefor have been presented to
Borrower prior to the Closing Date;
(x) Officer's Certificate. There shall have been delivered to Agent
(with sufficient copies for distribution to all Lenders), in form and
substance satisfactory to Agent and its counsel, a certificate signed by a
Senior Vice President of Borrower, dated as of the Closing Date, certifying
that:
59
(i) the representations and warranties contained in Article V and
in each Collateral Document are true and correct in all material
respects on and as of such date, as though made on and as of such
date;
(ii) no event has occurred and is continuing, or would result
from the transactions provided for herein, which has or would
constitute an Event of Default; and
(iii) there has occurred since December 31, 1998, no development,
event or circumstance which has had or is reasonably likely to have a
Material Adverse Effect;
(y) Insurance Policies. There shall have been delivered to the Agent a
certificate evidencing the Borrower's insurance coverage in form and
substance reasonably satisfactory to the Agent;
(z) Projections. There shall have been delivered to Agent (with
sufficient copies for distribution to all Lenders), in form and substance
satisfactory to Agent and its counsel, the consolidated plan and financial
forecast for the then current and next succeeding five (5) fiscal years of
Borrower and its Subsidiaries, including, without limitation, (i) a
forecasted consolidated balance sheet and a consolidated statement of
income and cash flows of Borrower for each such fiscal year, and (ii)
forecasted consolidated statements of income and cash flows of Borrower for
each quarter of the first such fiscal year. Such plan and forecast for the
current fiscal year shall include a summary of significant assumptions. The
Lenders acknowledge that projections satisfying the condition in this
Section 4.01(z) have previously been delivered by the Borrower;
(aa) Senior Debt. The Borrower shall have delivered to the Agent a
certificate demonstrating in reasonable detail that the Borrower and the
other Credit Parties have the ability under the 1997 Indenture and the 0000
Xxxxxxxxx to incur the indebtedness and other Obligations under the Credit
Documents and that the Obligations constitute Senior Indebtedness (as
defined in the 1997 Indenture and the 1998 Indenture).
(bb) Reallocation. The Lenders shall have made such payments among
themselves and to the lenders under the Existing Credit Agreement, as
directed by the Agent, so that the Revolving Advances and Term Advances
outstanding on the Closing Date are held by the Lenders in accordance with
their respective applicable Commitment Percentages, and each Lender shall
be deemed to have transferred any interest transferred by it pursuant to
such reallocation free and clear of any Liens created by it.
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(cc) Other Evidence Agent May Require. There shall have been delivered
to Agent (with sufficient copies for distribution to all Lenders), in form
and substance satisfactory to Agent and its counsel, such other evidence or
documents as Agent may reasonably request consistent with the other terms
of this Agreement to establish the consummation of the transactions
contemplated hereby, the taking of all proceedings in connection herewith
and compliance with the conditions set forth in this Agreement.
4.02 Conditions Precedent to Each Advance and Letter of Credit. The
obligation of each Lender to make any Advance or to issue any Letter of Credit
(or to renew or extend any Letter of Credit) hereunder is subject to the
following conditions precedent:
(a) No Default or Event of Default has occurred and is continuing on
the date of each Advance or the date of issuance (or the date of renewal or
extension, as the case may be) of each Letter of Credit or would result
from the incurring of obligations by Borrower under this Agreement;
(b) The representations and warranties contained herein, in the
Collateral Documents and in any guaranty hereafter executed and delivered
by a new Guarantor pursuant to Section 3.04, shall be true and correct in
all material respects on the date of each Advance or the date of issuance
(or the date of renewal or extension, as the case may be) of each Letter of
Credit, except for the representations and warranties contained in Section
5.09 and except as to representations and warranties which expressly relate
to an earlier date and except for changes which are expressly permitted by
this Agreement; and
(c) there has occurred since the date hereof, no event, development or
circumstance which has had or is reasonably likely to have a Material
Adverse Effect.
Each borrowing by or credit extension to Borrower hereunder shall constitute a
representation and warranty by Borrower as of the date of each such borrowing or
credit extension that the conditions in Section 4.02 have been satisfied.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to each Lender that:
5.01 Borrower's Existence. Borrower is a corporation duly organized
and validly existing under the laws of the State of Delaware, and is in good
standing and properly licensed to conduct business in every jurisdiction in
which the nature of the business conducted by it makes such license and good
standing necessary and where failure to so comply would have a material adverse
61
effect on the consolidated financial condition or the business of Borrower and
its Subsidiaries.
5.02 Subsidiaries' Existence. Each Substantial Subsidiary is duly
organized and validly existing under the laws of the jurisdiction of its
formation, and is in good standing and properly licensed to conduct business in
the State in which its principal operations are located and in every
jurisdiction in which the nature of the business conducted by it makes such
compliance necessary and where failure to comply would have a material adverse
effect on the business of any such Subsidiary.
5.03 Borrower's Powers. The execution, delivery and performance of
this Agreement, the Notes, the other Credit Documents and any other instrument
or agreement required to be executed and delivered by Borrower hereunder are
within Borrower's corporate powers, have been duly authorized, and are not in
conflict with the terms of any charter, by-law or other organization papers of
Borrower, or any material instrument or agreement to which Borrower or any
Subsidiary is a party or by which Borrower or any Subsidiary is bound or
affected (including, but not limited to, the 1997 Indenture and the 0000
Xxxxxxxxx).
5.04 Power of Officers. The officers of Borrower executing this
Agreement, the Notes, the other Credit Documents and any other certificate,
instrument or agreement required to be delivered hereunder are duly authorized
to execute same.
5.05 Government Approvals. No approval, consent, exemption or other
action by, or notice to or filing with, any governmental authority is necessary
in connection with the execution, delivery, performance or enforcement of this
Agreement, the Notes, the other Credit Documents or any other instrument or
agreement required hereunder, except as may have been obtained and certified
copies of which have been delivered to Agent or except where the failure to so
comply would not reasonably be expected to have a Material Adverse Effect.
5.06 Compliance With Laws. There is no law, rule or regulation, nor is
there any judgment, decree or order of any court or governmental authority
binding on Borrower or any Subsidiary, which would be contravened by the
execution, delivery, performance or enforcement of this Agreement, the Notes,
the other Credit Documents or any instrument or agreement required hereunder,
except where the failure to so comply would not reasonably be expected to have a
Material Adverse Effect.
5.07 Enforceability of Agreement. Each of this Agreement, the Notes
and each of the other Credit Documents to which the Borrower or any of its
Subsidiaries is a party are legal, valid and binding agreements and obligations
of Borrower, or such Subsidiary, as the case may be, enforceable against
Borrower or such Subsidiary, as the case may be, in accordance with their
respective terms, and any other instrument or agreement required hereunder, when
62
executed and delivered, will be similarly legal, valid, binding and enforceable,
subject, in each case, to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and general equitable principles (whether
considered in a proceeding in equity or at law).
5.08 Title to Property. Borrower and its Subsidiaries have good title
to their respective personal properties and assets, and good and marketable
title to their respective real properties, free and clear of all Liens, except
for Permitted Liens on such properties and assets. The execution, delivery or
performance of this Agreement, the Notes, the other Credit Documents or any
instrument or agreement required hereunder will not result in the creation of
any Lien, other than in favor of the Secured Creditors pursuant to the
Collateral Documents.
5.09 Litigation. Except as disclosed on Schedule 5.09, there are no
suits, proceedings, claims or disputes pending or, to the knowledge of Borrower,
threatened against or affecting Borrower or any Subsidiary or their respective
property, which could reasonably be expected to have a Material Adverse Effect.
5.10 Events of Default. No event has occurred and is continuing or
would result from the incurring of obligations by Borrower under this Agreement
and the other Credit Documents which is a Default or an Event of Default.
5.11 Compliance with Margin Requirements. Borrower is not in violation
of any provision of Section 7 of the Securities Exchange Act of 1934 or any
Margin Regulation, nor will Borrower's activities cause it to violate such
provision or any Margin Regulation.
5.12 Subsidiaries. All of Borrower's Subsidiaries are listed on
Exhibit D hereto or on an amendment thereto delivered pursuant to Section
6.03(d) hereof.
5.13 Financial Information. The audited consolidated financial
statements of Borrower and its Subsidiaries for the fiscal year ending December
31, 1998 and the unaudited consolidated financial statements of the Borrower and
its subsidiaries for the fiscal quarter ending June 30, 1999 have been furnished
by Borrower to Lenders. Such financial statements have been prepared in
accordance with GAAP and practices consistently applied and accurately and
fairly present in all material respects the consolidated financial condition and
results of operations of the entities referred to therein as of such dates.
Since the date of the most recent audited financial statements referred to
above, there has been no change in Borrower's consolidated financial condition
or results of operations sufficient to impair Borrower's ability to repay the
Obligations in accordance with the terms hereof. Neither Borrower nor any
Subsidiary has any contingent obligations, liabilities for taxes or other
outstanding financial obligations which are material in the aggregate, except
those for which adequate reserves are established or as disclosed in such
statements or in the statements or reports delivered or to be delivered for the
63
period in which such obligations were incurred pursuant to Section 6.03.
5.14 ERISA. Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and any other applicable federal or
state law, and except as listed on Schedule 5.14 no event or condition is
occurring nor is there any present intent to cause any such event or condition
to occur with respect to any Plan or Multiemployer Plan with respect to which
Borrower would be under an obligation to furnish a report to Lenders in
accordance with Section 6.02(d) hereof and which, taking all such events or
conditions arising within the last twelve-month period, in the aggregate would
result in liability to Borrower or an ERISA Affiliate in excess of One Million
Dollars ($1,000,000). For purposes of this representation and warranty,
Borrower, or any ERISA Affiliate if not the Plan administrator, shall be deemed
to have knowledge of all facts attributable to the Plan administrator designated
pursuant to ERISA; provided, however, that the foregoing representation with
respect to Multiemployer Plans is made with respect to matters of which Borrower
or any ERISA Affiliate has actual knowledge. The aggregate withdrawal liability
under Section 4201 of ERISA which could be incurred by Borrower and each ERISA
Affiliate, collectively, upon a complete withdrawal, within the meaning of
Section 4203 of ERISA, from each and all Multiemployer Plans to which each is
contributing or has contributed within the past five calendar years, plus the
aggregate of the excess of benefit liabilities, within the meaning of Section
4001(a)(16) of ERISA, of each Plan upon termination of such Plan over the assets
of such Plan, does not exceed Five Million Dollars ($5,000,000).
5.15 Investment Company Act of 1940. Neither Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
5.16 No Restrictions on Subsidiaries. No Subsidiary is prohibited by
the terms of any agreement to which it is a party or by which it is bound or
affected from paying dividends to or making loans or advances to Borrower or any
Subsidiary directly controlling it, except (a) as disclosed in Schedule 5.16;
(b) restrictions imposed by this Agreement or any Collateral Agreement; (c)
customary non-assignment provisions restricting subletting or assignment of any
lease or assignment of any contract of any Subsidiary; customary net worth
provisions contained in leases and other agreements entered into by a Subsidiary
in the ordinary course of business; and customary provisions in instruments or
agreements relating to a Lien created, incurred or assumed in accordance with
this Agreement prohibiting the transfer of the property subject to such Lien, in
each case in existence on the Closing Date; (d) restrictions on Debt secured by
any Permitted Lien described in clauses (iv), (xii), (xiii) or (xiv) of the
definition of "Permitted Lien" limiting the right of such Subsidiaries to
dispose of the assets securing such Debt to the extent that the agreement
governing such Debt prohibits the transfer of such assets as a Restricted
Payment; (e) customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all or
64
substantially all of the capital stock or assets of such Subsidiary; and (f) any
restrictions pursuant to any agreement that extends, refinances, renews or
replaces any agreement containing any of the restrictions described in the
foregoing clauses (a) through (e), provided that the terms and conditions of any
such restrictions are not less favorable to the Lenders than those under or
pursuant to the agreement extended, refinanced, renewed or replaced.
5.17 Senior Indebtedness. All sums outstanding under this Agreement
and the Notes and all other monetary obligations of the Borrower under this
Agreement will constitute Senior Indebtedness and Designated Senior
Indebtedness.
5.18 Environmental Matters. As of the Closing Date:
(a) except as disclosed on Schedule 5.18, the property, assets and
operations of Borrower and the Subsidiaries and the Scandinavian
Partnerships comply in all material respects with all applicable Hazardous
Materials Laws and all governmental permits relating to the use and/or
operation thereof (except to the extent that failure to comply with such
Hazardous Materials Laws or applicable permits would not have a material
adverse effect on the business, operations, properties, assets or financial
condition of Borrower and its Subsidiaries taken as a whole);
(b) to the best knowledge of Borrower, after reasonable inquiry, (i)
none of the real property owned in fee, or the assets or operations of
Borrower and the Subsidiaries related thereto is the subject of federal or
state investigation mandating any remedial action, involving expenditures,
which is needed to respond to a release of any Hazardous Materials into the
environment, (ii) there are no underground storage tanks present on or
under the Properties owned in fee, and (iii) there are no pending or
threatened: (A) actions or proceedings from any governmental agency or any
other person or entity regarding the disposal of Hazardous Materials, or
regarding any Hazardous Materials Laws or evaluation, or (B) liens or
governmental actions, notices of violations, notices of noncompliance or
other proceedings of any kind relating to any of the Hazardous Materials
Laws with respect to the Properties; and
(c) neither Borrower nor any Subsidiary has any material liability
(material to the Borrower and its Subsidiaries taken as a whole) in
connection with any release of any Hazardous Materials into the
environment.
5.19 Collateral Documents. (a) The provisions of each of the
Collateral Documents (other than the Mortgages, subject to (b) below, and the
collateral assignments of tenant's rights in leases) are effective to create in
favor of the Collateral Agent, for the benefit of the Secured Creditors, a
legal, valid and enforceable security interest in all right, title and interest
of Borrower and its Subsidiaries in the Collateral described therein; and
financing statements have been filed (or, in the case of UCC-1 financing
statements delivered on the Closing Date, executed and delivered in the proper
65
form for filing) in the offices in all of the jurisdictions listed in the
schedules to the Guarantee and Collateral Agreement.
(b) Each Mortgage when delivered will be effective to grant to the
Collateral Agent for the benefit of the Secured Creditors, a legal, valid and
enforceable mortgage lien on all the right, title and interest of the mortgagor
under such Mortgage in the real property and fixtures described therein. When
each such Mortgage is duly recorded in the appropriate land records offices and
the mortgage recording fees and taxes in respect thereof are paid and compliance
is otherwise had with the formal requirements of state law applicable to the
recording of real estate mortgages generally, each such Mortgage shall
constitute a perfected mortgage lien on such mortgaged property, subject to the
encumbrances and exceptions to title set forth therein and except as noted in
the title policies and title endorsements thereto delivered to the Collateral
Agent and described in Exhibit F, and such Mortgage also creates a legal, valid,
enforceable and perfected first lien on, and security interest in, all right,
title and interest of Borrower or such Subsidiary under such Mortgage in all
fixtures which are covered by such Mortgage, subject to no other Liens, except
the encumbrances and exceptions to title set forth therein and except as noted
in the title policies and title endorsements thereto delivered to the Collateral
Agent and described in Exhibit F and Permitted Liens.
(c) The provisions of the Guarantee and Collateral Agreement, after
giving effect to (i) the delivery to the Collateral Agent of the certificates
representing the certificated shares of the capital stock and other equity
interests of the Subsidiaries described in the Guarantee and Collateral
Agreement (the "Pledged Stock") accompanied by appropriate undated stock powers
executed in blank, (ii) the registration of the Pledged Partnership Interests
(as defined in the Guarantee and Collateral Agreement and, together with the
Pledged Stock, the "Pledged Securities") pursuant to the forms attached as
exhibits to the Guarantee and Collateral Agreement and (iii) the filing of UCC-1
financing statements in the offices set forth on the schedules to such Guarantee
and Collateral Agreement, shall be effective to create, in favor of the
Collateral Agent, for the ratable benefit of the Secured Creditors, a fully
perfected first Lien on, and security interest in, all right, title and interest
of Borrower and the Guarantors in the "Collateral", as defined in the Guarantee
and Collateral Agreement (except for Permitted Liens), and the Pledged Stock has
been delivered, where applicable, to the Collateral Agent or its nominee.
5.20 Copyrights, Patents, Trademarks and Licenses, etc. Except as
disclosed in Schedule 5.20, Borrower and its Subsidiaries own or are licensed or
otherwise have the right to use all of the patents, trademarks, service marks,
trade names, copyrights and franchises that are reasonably necessary for the
operations of their respective businesses as currently conducted, without
conflict with the rights of any other Person with respect thereto and except
where the failure to be in compliance with this sentence would not have a
material adverse effect on Borrower or any Substantial Subsidiary. To the best
knowledge of Borrower, no slogan or other advertising device, product, process,
method, substance, part or other material now employed, or now contemplated to
66
be employed by Borrower or any of its Subsidiaries infringes upon any rights
obtained by any other Person, except where the failure to be in compliance with
this sentence would not have a material adverse effect on Borrower or any
Substantial Subsidiary, and no claim or litigation regarding any of the
foregoing is pending or threatened.
5.21 Year 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of the Borrower's computer systems
and equipment containing embedded microchips could not reasonably be expected to
result in a Default, Event of Default or a Material Adverse Effect. The costs to
Borrower and its Subsidiaries that have not been incurred as of the date hereof
for such reprogramming and testing and for the reasonably foreseeable
consequences to them of any improper functioning of other computer systems and
equipment containing embedded microchips due to the occurrence of the year 2000
could not reasonably be expected to result in a Default or Event of Default or
to have a Material Adverse Effect. Except for such of the reprogramming referred
to in the preceding sentences as may be necessary, the computer and management
information systems of the Borrower and its Subsidiaries are and, with ordinary
course upgrading and maintenance, will continue for the term of this Agreement
to be, sufficient to permit the Borrower to conduct its business without a
Material Adverse Effect.
5.22 Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Credit Document, the Confidential
Information Memorandum dated September 1999 or any other document, certificate
or statement furnished by or on behalf of any Credit Party to the Agent or the
Lenders, or any of them, for use in connection with the transactions
contemplated by this Agreement or the other Credit Documents, contained as of
the date such statement, information, document or certificate was so furnished
(or, in the case of the Confidential Information Memorandum, as of the date of
this Agreement), any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements contained herein or therein not
misleading. The projections and pro forma financial information contained in the
materials referenced above are based upon good faith estimates and assumptions
believed by management of the Borrower to be reasonable at the time made, it
being recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount.
5.23 1997 Subordinated Notes. On the Closing Date the outstanding
principal amount of the 1997 Subordinated Notes does not exceed $250,000.
67
ARTICLE VI.
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as the Credit shall remain
available, and until the full and final payment of all Obligations, it will, and
with respect to Sections 6.01, 6.04, 6.05, 6.06, 6.07, 6.08, 6.09, 6.10, 6.11,
6.14, 6.16, 6.17 and 6.18, it will cause each Subsidiary to, unless Majority
Lenders waive compliance in writing:
6.01 Use of Proceeds and Letters of Credit. Use (a) the proceeds of
the Advances solely (i) to refinance and continue indebtedness under the
Existing Credit Agreement, (ii) to finance expansions and investments permitted
hereunder and (iii) for working capital purposes in the ordinary course of
business; and (b) the Letters of Credit (i) to provide security as required
under applicable state consumer protection statutes and for utility deposits,
(ii) to provide credit support for insurance, construction bonds, rent deposits
and utility bonds, (iii) to secure the payment of workers' compensation benefits
and obligations, (iv) for the purposes described in clause (ii) of the
definition of "Permitted Liens" and to provide credit support for the
obligations described therein, and (v) for the general corporate purposes of the
Borrower and its Subsidiaries in the ordinary course of business. For purposes
of this Section 6.01, a "hostile takeover" of another entity or a "tender offer"
in furtherance of same is not a proper purpose.
6.02 Notices. Promptly, but within five (5) Banking Days, unless
otherwise provided below, give written notice to Agent of:
(a) except for matters previously disclosed on Schedule 5.09 and
Schedule 6.02(a) (unless there is a significant development with respect to
these matters), any litigation affecting Borrower or any Subsidiary, the
adverse determination of which could materially and adversely affect the
financial condition or business of Borrower and its Subsidiaries taken as a
whole, or where the amount Borrower or such Subsidiary expects to pay the
other parties to the litigation is more than Two Million Dollars
($2,000,000);
(b) (i) any dispute which may exist between Borrower or any Subsidiary
and any governmental regulatory body or law enforcement authority which has
not been previously disclosed and could have a material adverse effect on
its operations, and (ii) any lien for taxes (other than taxes unless such
taxes are due), assessments, governmental charges, or levies, in each case
in excess of One Million Dollars ($1,000,000), immediately upon the filing
thereof or the attachment thereof to any property of Borrower or any of its
Subsidiaries;
(c) any labor controversy resulting in or reasonably likely to result
in a strike against Borrower or any Subsidiary which could have a Material
Adverse Effect;
(d) the occurrence of a Reportable Event with respect to any Plan
68
which could result in the incurrence by Borrower or any ERISA Affiliate of
any liability, fine or penalty; the institution of any steps to terminate
any Plan (together with copies of any communication between the PBGC and
Borrower or any ERISA Affiliate related to such termination); the
institution of any steps to withdraw from any Plan, within the meaning of
Section 4062(e) or 4063 of ERISA, or any Multiemployer Plan, within the
meaning of Section 4203 or 4205 of ERISA; the incurrence of any material
increase in the contingent liability of Borrower or any ERISA Affiliate
with respect to any post-retirement welfare benefits; the failure of
Borrower or any other Person to make a required contribution to a Plan if
such failure is sufficient to give rise to a lien under Section 302(f) of
ERISA; or the adoption of an amendment to any Plan that pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA would require Borrower or an
ERISA Affiliate to provide security to the Plan in accordance with the
provisions of such Sections;
(e) any Default or Event of Default, specifying the nature and the
period of existence thereof and what action Borrower has taken or proposes
to take with respect thereto;
(f) upon, but in no event later than ten (10) days after, becoming
aware of (i) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened
against Borrower or any Subsidiary or any of their properties pursuant to
any applicable Hazardous Materials Laws which has the reasonable likelihood
of subjecting Borrower or any Subsidiary to environmental liability of Two
Million Dollars ($2,000,000) or more, (ii) all claims made or threatened by
any third party against Borrower or any Subsidiary with respect to or
because of its or their property relating to damage, responsibility,
contribution, cost recovery, compensation, loss or injury resulting from
any Hazardous Materials which has the reasonable likelihood of subjecting
Borrower or any Subsidiary to environmental liability of Two Million
Dollars ($2,000,000) or more (the matters set forth in clauses (i) and (ii)
above are hereinafter referred to as "Hazardous Materials Claims"), and
(iii) any environmental or similar condition on any real property adjoining
or in the vicinity of the property of Borrower or any Subsidiary that could
reasonably be anticipated to cause the property owned by Borrower or any
Subsidiary or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability or use of such property under any
Hazardous Materials Laws, together with copies of all inquiries, reports or
notices relating to the matters set forth in clauses (i), (ii) and (iii);
(g) following receipt by Borrower of a material notice from any holder
or representative of Subordinated Debt, a copy of such notice and,
concurrently with the sending of any notice by Borrower to the holder or
representative of any Subordinated Debt, a copy of such notice; and
(h) any other matter which has resulted or is reasonably likely to
result in a Material Adverse Effect.
69
6.03 Financial Statements, Reports, Etc. Deliver or cause to be
delivered to the Agent, with copies for each of the Lenders:
(a) As soon as available but no later than fifty (50) days after the
close of each of the first three fiscal quarters of each of Borrower's
fiscal years, Borrower's unaudited consolidated statement of income and
retained earnings as of the close of such quarter, its consolidated balance
sheet and statement of income and retained earnings for that portion of the
fiscal year ending with such quarter, and its unaudited consolidated
statement of cash flows for that portion of the fiscal year ending with
such quarter. Each of such financial statements shall be certified by a
responsible officer of Borrower as being prepared in accordance with GAAP;
provided, that the delivery to each Lender of a Form 10-Q Quarterly Report
of the Borrower within the time period set forth above shall satisfy the
Borrower's obligations pursuant to this paragraph (a);
(b) as soon as available but no later than one hundred five (105) days
after the close of each of its fiscal years, a copy of the unqualified,
audited financial statements of Borrower and such other audited financial
statements of Subsidiaries of Borrower that have been prepared (if any).
Such financial statements shall include at least the balance sheet of
Borrower as of the close of such year and statements of income and retained
earnings and of changes in financial position and cash flows for such year,
prepared (in the case of Borrower) on a consolidated basis, and such
consolidated financial statements shall be certified by Ernst & Young or by
other independent public accountants of national reputation selected by
Borrower and reasonably satisfactory to Lenders. The delivery to each
Lender of a Form 10-K Annual Report within the time period set forth above
shall satisfy the Borrower's obligations pursuant to the preceding portion
of this Section 6.03(b); provided that the consolidated financial
statements included in such Form 10-K shall be certified by Ernst & Young
or by other independent public accountants of national reputation selected
by Borrower and reasonably satisfactory to Lenders. The accountants'
certification (x) shall not be qualified or limited because of restricted
or limited examination by such accountants of any material portion of the
records of Borrower or any such Subsidiary for which audited financial
statements have been prepared and (y) shall not contain a "going concern"
or like qualification or exception. Such accountants for Borrower shall
state in a letter to Lenders that in the course of their examination such
accountants, without undertaking any special procedures for the purpose of
such certificate, have obtained no knowledge of the occurrence of any
condition, event or act which would constitute a Default or an Event of
Default, or, if such accountants shall have obtained knowledge of any such
violation, condition, event or act, they shall specify in such letter all
such violations, conditions, events and acts and the nature and status
thereof. If any of the materials required to be delivered pursuant to
paragraph (c) of this Section 6.03 are delivered in connection with the
delivery of the financial statements pursuant to this Section 6.03(b), the
Borrower shall not be required to deliver separately such statements
70
pursuant to such paragraph (c). Borrower shall promptly deliver to Agent a
copy of any management letters from such accountants to Borrower;
(c) promptly after filing with the Securities and Exchange Commission,
a copy of each Form 8-K Current Report, Form 10-K Annual Report, Form 10-Q
Quarterly Report and Form 11-K Annual Report, Annual Report to
Shareholders, Proxy Statement and Registration Statement of (i) Borrower
and (ii) Borrower's Subsidiaries;
(d) not later than forty (40) days after the end of each fiscal month
(other than the last month in each fiscal quarter), Borrower's unaudited
consolidated statement of income for that portion of the fiscal year ending
with such month, certified by a responsible officer of Borrower as being
complete and correct and fairly presenting its results of operations and
including a comparison to the same period for the prior fiscal year;
(e) not later than fifty (50) days after the close of each of the
first three (3) quarters of the fiscal year of Borrower nor later than one
hundred five (105) days after the close of each of the Borrower's fiscal
years, a quarterly certificate executed by any of the chief financial
officer, vice president, treasurer or controller of Borrower, stating that
such officer is familiar with this Agreement and the business and
operations of Borrower and (i) showing Borrower's compliance with Sections
6.12, 6.14, 6.15, 7.01, 7.02, 7.08 and 7.11 (ii) if Borrower or any
Subsidiary is not in compliance therewith, showing such failure to comply,
the amount thereof and explaining the reason therefor, (iii) specifying
changes during such quarter in the list of Subsidiaries previously
delivered by the Borrower to the Lenders, other than changes previously
reported to the Agent during such quarter, (iv) stating that Borrower has
performed all its obligations hereunder and under any judgment, decree or
order of any court or governmental authority binding on Borrower except as
may be contested in good faith upon advice of counsel and for the possible
payment of which adequate reserves are being maintained, (v) stating that
no event has occurred which constitutes a Default or an Event of Default,
or, if such event has occurred, the nature and status thereof and the steps
that Borrower is taking or has taken to cure the same and (vi) stating the
name and jurisdiction of organization of each Unrestricted Subsidiary
created during such quarter;
(f) commencing March 1, 2000, on such date and on the first day of
each March thereafter, projections which are similar in form and substance
to the projections delivered pursuant to Section 4.01(z);
(g) such other statements, lists of property and accounts, budgets,
71
forecasts or reports as Agent or any Lender may reasonably request;
(h) within 10 Banking Days after (i) the receipt of proceeds from a
disposition of assets which receipt causes the amount of Reinvestment
Proceeds not theretofore reinvested or applied to prepayment of Advances
and cash collateralization of Letters of Credit to exceed $5,000,000 or
(ii) the receipt of proceeds from the disposition of assets when the
Reinvestment Proceeds not theretofore reinvested or applied to prepayment
of Advances and cash collateralization of Letters of Credit exceeds
$5,000,000, a statement of a responsible officer of the Borrower certifying
the amount of such proceeds and the amount of Reinvestment Proceeds as of
such date of receipt;
(i) concurrently with the delivery thereof pursuant to the Receivables
Program Documents or a Receivables Financing Transaction, a copy of (A)
each Settlement Statement (as defined in the Pooling & Servicing Agreement)
delivered pursuant to Section 3.4 of the Pooling & Servicing Agreement (or
any comparable settlement statement delivered under a Receivables Financing
Transaction) and (B) upon the request of any Lender, through Agent, each
officer's certificate delivered pursuant to Section 3.5 of the Pooling &
Servicing Agreement (or any comparable certificates delivered under a
Receivables Financing Transaction), each independent accountant's report
and management letter delivered pursuant to Section 3.6 of the Pooling &
Servicing Agreement (or any comparable report or letter delivered under a
Receivables Financing Transaction) and such other information relating to
the Receivables Program or any Receivables Financing Transaction as shall
be requested by any Lender; and
(j) at each time financial statements of the Borrower are required to
be delivered pursuant to paragraph (a) or (b) above, copies of the combined
balance sheet of the Unrestricted Subsidiaries as of the close of the
applicable quarter or fiscal year and combined statements of income and
retained earnings of the Unrestricted Subsidiaries for the portion of the
fiscal year then ended, all set forth in a format which reconciles such
financial statements of the Unrestricted Subsidiaries to the corresponding
financial statements delivered pursuant to paragraphs (a) and (b).
6.04 Further Assurances. Borrower shall execute and deliver, or cause
to be executed and delivered, to Lenders, Agent or the Collateral Agent, such
documents and agreements, and shall take or cause to be taken such actions, as
Agent, the Collateral Agent or the Majority Lenders may, from time to time
reasonably request to carry out the terms and conditions of this Agreement and
all of the Collateral Documents.
6.05 Existence, Etc. Subject to Section 7.05, maintain and preserve
its existence and all rights, privileges and franchises now enjoyed and
necessary for use in its business, and keep all its properties material to its
operations consistent with industry practice in good working order and
condition.
72
6.06 Ownership of Stock of Subsidiaries. Subject to Sections
7.05 and 7.08, maintain at least the same ownership of the capital stock or
other equity interests of each of its Subsidiaries as in effect on the Closing
Date.
6.07 Payment of Obligations. Pay all material obligations, including
tax claims, when due, except such as may be diligently contested in good faith
and by appropriate proceedings or as to which a bona fide dispute may exist and
for which adequate reserves are being maintained.
6.08 Compliance with Laws. At all times comply with all laws, rules,
regulations, orders and directions of any governmental authority applicable to
or having jurisdiction over it or its business, the violation of which could
have a material adverse effect on its financial condition or continued
operation, or on the validity or enforceability of this Agreement, any of the
Notes or any of the other Credit Documents, or the rights or remedies of the
Agent and the Lenders hereunder or thereunder.
6.09 Insurance and Condemnation. Maintain at all times substantially
the same type of insurance coverage in respect of its properties and assets as
that maintained in respect thereof immediately prior to the execution of this
Agreement:
(a) in amounts not less than the amount of the coverage immediately
prior to the execution of this Agreement for all insurance other than that
described in clause (b) below including, without limitation, fire and
extended coverage insurance for the full and insurable replacement value of
all buildings and other improvements located on its properties and business
interruption and workmen's compensation insurance. All such insurance
(other than workmen's compensation insurance) relating to assets of
Borrower or its Subsidiaries shall name the Collateral Agent as loss payee
(and in the case of each item of real property on which the Collateral
Agent has a security interest, mortgage loss payee) and an additional
insured for the interests relating to the assets of Borrower and its
Subsidiaries, for the benefit of the Collateral Agent and each Lender, as
their interests may appear, and shall not be modified, reduced or cancelled
in the absence of thirty (30) days prior written notice to the Collateral
Agent. Borrower shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in excess of $2,000,000 for each such
casualty, whether or not covered by insurance. The Collateral Agent is
hereby authorized to collect all insurance proceeds directly. With respect
to insurance proceeds arising from loss, damage or other casualty to any of
the Collateral or any part thereof, such proceeds shall be applied as
hereinafter provided. Destruction or damage to any real or personal
property of Borrower or any Subsidiary which gives rise to insurance
proceeds shall be deemed to be a disposition of such property for purposes
of Section 7.08(d); provided, however, that if the total amount of the
proceeds from such casualty is reasonably expected to be less than
$5,000,000 and neither an Event of Default nor a Default shall have
73
occurred and be continuing, Borrower shall have the exclusive right to
negotiate a settlement regarding such proceeds with the applicable
insurance company and the Collateral Agent shall promptly forward such
proceeds to Borrower and the Borrower shall use such proceeds to pay for
the repair or replacement (it being agreed that a destroyed or damaged
fitness center may be replaced at any site within five miles of the site of
such fitness center) of the Collateral subject to such casualty; provided,
further, however, that if an Event of Default or a Default shall have
occurred and be continuing, or the proceeds of insurance from such casualty
are reasonably expected to be equal to or greater than $5,000,000, Borrower
shall not enter into any settlement agreement with the applicable insurance
company without the prior written consent of Agent, which consent shall not
be unreasonably withheld, and if a determination has been made by Borrower,
with the prior written consent of Agent, to utilize such proceeds to
replace or rebuild the Collateral affected by such casualty, the Collateral
Agent shall release such proceeds to Borrower from time to time during the
course of said reconstruction, repair or restoration, but not more often
than once each thirty (30) day interval, in accordance with the Collateral
Agent's customary practices for disbursements of construction loans,
including, without limitation, customary conditions precedent to
disbursement, provided that:
(i) at the time of any requested release of funds, no Event of
Default or Default shall have occurred and be continuing (to the
extent such Event of Default or Default is cured or waived, Borrower
may again request the release of such funds);
(ii) if at the time of any such request by Borrower the cost of
completing the repair, replacement or reconstruction, lien-free and
ready for use, is in excess of insurance proceeds and other sums then
in the Collateral Agent's hand pursuant to this Section 6.09, funds to
cover such excess shall either (x) be promptly deposited by Borrower
with the Collateral Agent and shall be disbursed under this Section
6.09 in the same manner as insurance proceeds or (y) to the extent
some or all of such amount is available to be borrowed pursuant to
Section 2.01(a) hereof, Borrower may, in lieu of the deposit set forth
in subsection (x) above, elect to borrow such amounts as an Advance in
accordance with the terms of Article II hereof when and as needed to
complete the repair;
(iii) costs of administering this disbursement procedure shall be
paid by Borrower out of funds on deposit with the Collateral Agent or
otherwise;
(iv) when repair, replacement or reconstruction has been
completed and paid for, all insurance proceeds then remaining in the
74
Collateral Agent's hands shall be applied to the payment of the
Obligations in accordance with Section 7.08(d) and Section 2.13(a);
(v) the Collateral Agent shall be satisfied that, upon release of
such proceeds, it shall have for the ratable benefit of the Secured
Creditors, a first priority perfected security interest on all
property acquired (or to be acquired), but subject to Permitted Liens,
with such proceeds; and
(vi) each release of funds shall be conditioned upon receipt by
Agent of such documentation as Agent may reasonably require such as
bills of sale, other evidences of ownership by the Borrower (or a
Subsidiary) of property acquired with such proceeds, completion
certificates, waivers of mechanic's liens, etc.
The Collateral Agent shall, pending disbursement or application of
funds in accordance with the terms of this Section 6.09, hold any insurance
proceeds (and other funds deposited with it pursuant to clause (ii) above)
deposited with it in an interest bearing account as to which the Collateral
Agent shall not be liable in any respect to Borrower for any investment
results. Interest thereon shall be held and disposed of in the same manner
as other monies held by the Collateral Agent under this Section 6.09. On
each anniversary date of this Agreement, Borrower shall provide Agent with
a summary of each insurance policy satisfactory to Agent reflecting the
insurance coverage required under this Section 6.09 (together with complete
copies of any insurance policies which Agent may request promptly after
such request but not later than six months after such request). In the
event of foreclosure of any mortgage or deed of trust in favor of
Collateral Agent encumbering the Properties or transfer of title to the
Properties in lieu of foreclosure, all right, title and interest of
Borrower in and to any insurance policies then in force with respect to the
Properties (other than liability policies of Borrower) shall pass to the
purchaser, grantee or assignee. In the event of any taking of any portion
of any of the Properties by condemnation, seizure or appropriation by any
governmental authority which does not constitute an Event of Default
hereunder, all awards or proceeds on account of said taking shall be
collected and applied in the same manner and shall be subject to the same
conditions precedent to the disbursement thereof as applicable to insurance
proceeds under this Section 6.09. Notwithstanding the foregoing, the rights
of the Agent and the Lenders under this paragraph (a) with respect to
property and casualty insurance proceeds relating to loss, destruction or
damage, or a taking of, real property (x) leased by the Borrower or any of
its Subsidiaries or (y) which is subject to a mortgage lien which is prior
to the lien of any Mortgage in favor of the Collateral Agent thereon, and
for which in either case the Collateral Agent is named as loss payee, shall
be subordinate to the rights, if any, of the owner of such real property or
the holder of such prior mortgage lien to the extent such owner or holder
is also named as loss payee; and
75
(b) in an amount not less than One Hundred Million Dollars
($100,000,000) for general liability coverage, including both bodily injury
and property damage, on a per occurrence basis (the "Minimum Liability
Coverage"), provided, however, that the Minimum Liability Coverage may be
reduced from time to time to a coverage limit of not less than Twenty-Five
Million Dollars ($25,000,000) on a per occurrence basis (the "Lowered
Coverage") if, within thirty (30) days prior to the expiration of any
Minimum Liability Coverage policy, and thereafter within thirty (30) days
after the end of each fiscal year of Borrower until the Minimum Liability
Coverage is reinstated, Borrower delivers to Agent a certificate signed by
the chief operating officer of Borrower stating that Borrower has obtained
a lesser amount of coverage, setting forth the amount thereof, and that
Borrower was unable to obtain Minimum Liability Coverage and was able to
obtain general liability coverage only in the amount set forth in the
Borrower's certificate; provided, further, however, that the Lowered
Coverage may be reduced from time to time to a coverage limit of not less
than Twenty-Five Million Dollars ($25,000,000) on a "claims made" basis if,
within thirty (30) days prior to the expiration of any Lowered Coverage
policy and thereafter within thirty (30) days after the end of each fiscal
year of Borrower until the Minimum Liability Coverage is reinstated,
Borrower delivers to Agent a certificate signed by the chief operating
officer of Borrower stating that Borrower has obtained a lesser amount of
coverage, setting forth the amount thereof, and that Borrower was unable to
obtain Minimum Liability Coverage or Lowered Coverage and was able to
obtain general liability coverage only in the amount set forth in the
Borrower's certificate.
6.10 Adequate Books. Maintain adequate books, accounts and records in
accordance with GAAP, and at any reasonable time upon reasonable notice, during
normal business hours, permit employees or agents of each Lender at any
reasonable time to inspect its properties and examine or audit its books,
accounts and records and make copies and memoranda thereof.
6.11 ERISA. Make prompt payment contributions required to meet the
minimum funding standards of ERISA (including any funding waivers granted
thereunder) or as required pursuant to a collective bargaining agreement and to
maintain, and cause each of its ERISA Affiliates to maintain, each employee
benefit plan (as defined in Section 3(3) of ERISA) as to which it may have any
liability in material compliance with all applicable requirements of law and
regulations.
6.12 Interest Coverage. At the end of any fiscal quarter of the
Borrower set forth below, maintain a ratio of (i) Consolidated Adjusted EBITDA
to (ii) Consolidated Interest Expense, for any period of four consecutive fiscal
quarters of the Borrower then ended, commencing with such period ending December
31, 1999, equal to or greater than the following:
76
Quarter Ending Minimum Required
-------------------------------------------- ----------------
December 31, 1999 through September 30, 2000 2.00x
December 31, 2000 through September 30, 2001 2.20x
December 31, 2001 and thereafter 2.50x
6.13 Hazardous Materials. (a) Conduct, and cause each Subsidiary to
conduct, its operations and keep and maintain its property in compliance with
all Hazardous Materials Laws (except to the extent that failure to comply with
such Hazardous Materials Laws would not have a material adverse effect on the
business, operations, properties, assets or financial condition of Borrower and
its Subsidiaries taken as a whole).
(b) Conduct, and cause to be conducted, the ongoing operations of
Borrower and its Subsidiaries in a manner that will not give rise to the
imposition of liability, or require expenditures, under or in connection with
any Hazardous Materials Law (except for any liabilities or expenditure which, in
the aggregate, would not have a material adverse effect on the business,
operations, properties, assets or financial condition of Borrower and its
Subsidiaries taken as a whole.
(c) Agent and its agents and representatives shall have the right at
any reasonable time to enter and visit the property (whether owned or leased) of
Borrower or any of its Subsidiaries for the purpose of observing such property.
Agent is under no duty, however, to visit or observe any such property, and any
such acts by Agent shall be solely for the purposes of protecting Lenders'
security and preserving Lenders' rights under the Collateral Documents. No site
visit or observation by Agent shall result in a waiver of any default of
Borrower or any Subsidiary or impose any liability on Agent or Lenders. In no
event shall any site visit or observation by Agent be a representation that
Hazardous Materials are or are not present in, on, or under such property, or
that there has been or shall be compliance with any Hazardous Materials Laws.
Neither the Borrower nor any other party is entitled to rely on any site visit
or observation by Agent. Agent owes no duty to inform Borrower or any other
party of any Hazardous Materials or any other adverse condition affecting any
such property. Agent shall not be obligated to disclose to Borrower or any other
party any report or findings made as a result of, or in connection with, any
site visit or observation by Agent. In each instance, Agent shall give Borrower
reasonable notice before entering any such property. Agent shall make reasonable
efforts to avoid interfering with the use of any such property in exercising any
rights provided in this Section 6.13.
(d) At the Collateral Agent's reasonable request, which the Collateral
77
Agent may make at all reasonable times and from time to time, Borrower shall
cause Phase I environmental audits of the Properties on which the Collateral
Agent has Liens to be conducted by technical consultants acceptable to the
Collateral Agent and detailed written reports thereof to be furnished to the
Collateral Agent, for its benefit, all in a form acceptable to the Collateral
Agent, provided that no more than one such audit may be required for any
property unless at any time the Collateral Agent reasonably determines that a
material change in the environmental condition of such property may have
occurred. In the event said Phase I environmental audits disclose any
environmental condition of any of the Properties which could cause a material
violation of the Hazardous Materials Laws, Borrower shall cause a Phase II
environmental audit of the applicable Property to be conducted by said technical
consultant acceptable to the Collateral Agent and a detailed written report
thereof to be furnished to the Collateral Agent. Borrower shall take all
reasonable remedial measures indicated in said Phase II environmental audit
necessary to be in compliance with law. If Borrower fails to obtain said Phase I
or Phase II environmental audits as aforesaid, the Collateral Agent may, but
shall not be obligated to, cause said Phase I or Phase II environmental audits
to be conducted at Borrower's sole cost.
(e) Borrower hereby acknowledges that nothing in this Section is
either intended to or actually does give Collateral Agent or the Lenders control
of Borrower's or its Subsidiaries' or the Scandinavian Partnerships' Properties
or business or any of its or their business decisions.
6.14 Total Leverage Ratio. Maintain the Total Leverage Ratio at the
end of each fiscal quarter of the Borrower set forth below at a level not to
exceed the level set forth opposite such period:
Quarter Ending Maximum Allowed
-------------------------------------------- ---------------
December 31, 1999 through September 30, 2000 3.75x
December 31, 2000 through September 30, 2001 3.50x
December 31, 2001 through September 30, 2002 3.25x
December 31, 2002 and thereafter 3.00x
6.15 Senior Leverage Ratio. Maintain the Senior Leverage Ratio at the
end of each fiscal quarter of the Borrower set forth below at a level not to
exceed the level set forth opposite such period:
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Quarter Ending Maximum Allowed
-------------------------------------------- ---------------
December 31, 1999 through September 30, 2000 2.00x
December 31, 2000 through September 30, 2001 1.75x
December 31, 2001 and thereafter 1.50x
6.16 Real Estate Taxes. Borrower shall pay and discharge, and shall
cause its Subsidiaries and the Scandinavian Partnerships to pay and discharge,
as and when due and payable, before any penalty attaches, all charges,
impositions, levies, assessments and taxes (whether general, special or
otherwise), water charges, sewer service charges and all other municipal or
governmental charges, impositions, levies, assessments and taxes of any kind or
nature that may be at any time levied, assessed or imposed upon or against any
real property owned in fee by any Subsidiary or the Scandinavian Partnerships or
in which any Subsidiary has a leasehold interest (but only to the extent
Borrower or any Subsidiary is required to pay such taxes in accordance with the
terms of the lease), and shall promptly deliver to Collateral Agent upon
Collateral Agent's request therefor, duplicate receipts evidencing payment
thereof prior to delinquency. Notwithstanding anything to the contrary in the
foregoing, Borrower may contest any tax imposed, assessed, levied or due with
respect to or from said real property, by instituting and diligently and in good
faith prosecuting by appropriate judicial proceedings the validity or amount of
a tax, charge, imposition or assessment (said tax, charge, imposition or
assessment being hereinafter referred to in this Section as "impositions") if
(i) the contest or decision relating thereto will not and cannot result in the
forfeiture of said real property or the Subsidiary's leasehold interest therein
prior to or pending resolution of such contest and the invalidity, forfeiture,
loss of priority or unenforceability of Collateral Agent's mortgage lien on said
real property or the Subsidiary's leasehold interest therein will not and cannot
result from such contest or failure to pay such impositions, (ii) no Event of
Default shall exist hereunder, and (iii) prior to commencement and during the
duration of such proceeding, Borrower shall maintain adequate reserves on
account of the failure to pay such imposition and/or the contest of the amount
and/or validity thereof in accordance with GAAP. Upon resolution of such
contest, Borrower shall promptly pay the impositions then due. If, at any time
during the continuance of the contest described in the preceding sentence, said
real property or the Subsidiary's leasehold interest therein is, in Collateral
Agent's reasonable determination, in imminent danger of being forfeited, lost or
rendered invalid or unenforceable, then, in any of said events, Borrower shall,
at Collateral Agent's demand, use the aforesaid reserve to pay such impositions
and if such reserve is insufficient to pay in full the required payment,
Borrower promptly shall pay the amount of such insufficiency.
6.17 Additional Real Estate Collateral. Within 60 days of the date
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hereof, Borrower and the Subsidiaries shall have met each of the requirements
set forth in Sections 4.01(o)-(r) in connection with the real property set forth
on Schedule 6.17.
ARTICLE VII.
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as the Credit shall remain
available, and until full and final payment of all Obligations, it will not, and
with respect to Sections 7.01, 7.02, 7.03, 7.04, 7.05, 7.07, 7.08, 7.09, 7.10,
7.11, 7.13, 7.14 and 7.16, it will not permit any Subsidiary to, unless Majority
Lenders waive compliance in writing:
7.01 Investments and Restricted Payments. Except as otherwise
permitted herein, make any Investments in any Person or any Restricted Payments
except:
(a) Borrower or any Subsidiary may make Investments in any Guarantor
or in the Borrower;
(b) Any Subsidiary may make Restricted Payments to Borrower or any
Guarantor;
(c) Borrower may make Investments in Cash Equivalents;
(d) Investments may be made in the ordinary course of business related
to employees, such as payments in respect of relocation, travel advances,
and loans to employees to exercise stock options, all of which Investments
do not exceed in the aggregate at any one time One Million Dollars
($1,000,000);
(e) Borrower or any Subsidiary may acquire on a friendly basis at
least 51% of each class of capital stock, or partnership interests, of any
fitness center located in the United States, provided that such fitness
center shall immediately become a Guarantor and shall comply with Section
3.04 hereof. As used in this Section 7.01(e), "fitness center" means any
corporation or partnership whose business is comparable to any of the
businesses currently operated by Borrower or any of its Subsidiaries (other
than a finance company). Notwithstanding the foregoing, the Borrower and
its Subsidiaries may finance all or part of the purchase price of any such
fitness center by the issuance of purchase money seller Debt or the
assumption of Assumed Debt subject to the following: (i) up to 30% of the
purchase price (including the assumption of any existing Debt) of any such
acquisition may consist of purchase money seller Debt and Assumed Debt, and
such seller Debt and Assumed Debt may be secured as permitted by clause
(xiv) of the definition of "Permitted Liens", (ii) any other seller Debt
and assumed Debt issued to finance such acquisition shall be unsecured and
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shall be subordinated to prior payment of the Obligations on terms
satisfactory to the Agent and (iii) the Borrower and its Subsidiaries shall
not be required to provide a security interest in the assets or pledge the
capital stock of such fitness center (but such fitness center shall be
required to become a Guarantor) pursuant to Article III or the Credit
Documents if such provision of a security interest or such pledge is
prohibited by the seller Debt or Assumed Debt referred to in clause (i)
(the Borrower agreeing that it shall use reasonable efforts to cause such
seller Debt and Assumed Debt to be unsecured and to permit the capital
stock and assets of such Subsidiary to be pledged to secure the
Obligations);
(f) Borrower and its Subsidiaries may make mandatory Investments in
Funding Corp., and Funding Corp. may make required Investments in the H&T
Master Trust and BTFC, in each case pursuant to and in accordance with the
Receivables Program Documents;
(g) Borrower and its Subsidiaries may make mandatory Investments in
Finance Subsidiaries, and Finance Subsidiaries may make related required
Investments, in each case pursuant to a Receivables Financing Transactions
and as long as such Investments are substantially comparable to those
required by the Receivables Program Documents;
(h) Investments by the Borrower and its Subsidiaries in New Ventures,
Foreign Subsidiaries, Lincoln Indemnity Company, non-Consolidated
Subsidiaries, Unrestricted Subsidiaries and Finance Subsidiaries (i)
existing on the Closing Date and (ii) made after the date hereof; provided
that the aggregate amount of such Investments made after the Closing Date
(valued at the time of the making thereof, and after taking into account
any return after the Closing Date from dividends, distributions and
repayments in respect of such Investments) does not exceed, at any one time
outstanding, $25,000,000 (plus any dividends, distributions and repayments
in respect of Investments existing on the Closing Date); provided further
that with respect to Investments in Finance Subsidiaries, the only amount
of such Investment to be considered in determining the $25,000,000 limit
set forth above are those amounts in excess of the amounts allowed by
paragraph (f) and paragraph (g) of this Section 7.01; provided further that
the cumulative outstanding Investment in any Subsidiary on the date that
such Subsidiary is converted to an Unrestricted Subsidiary in accordance
with the terms hereof shall be deemed an Investment made on such conversion
date in an Unrestricted Subsidiary for purposes of determining compliance
with this Section 7.01(h);
(i) Investments to the extent funded by common stock of the Borrower
or the proceeds thereof; and
(j) Investments consisting of cash reserves established, in the
ordinary course of the Borrower's and its Subsidiaries' business and
consistent with past practice, pursuant to the Credit Card Program
Agreement.
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7.02 Other Obligations. Except as provided in this Agreement, create,
incur, assume or permit to exist any Debt, or create, incur or enter into any
Guaranty of any Debt of any other Person, other than:
(a) the Secured Obligations;
(b) Any Debt existing on the Closing Date listed on Schedule 7.02(b)
hereto, and any renewal, extension or refinancing of any purchase money
Debt listed on such Schedule (and identified as such on such Schedule) that
does not consist of any capitalization of interest on the original Debt;
provided, that the principal amount of such renewal, extension or
refinancing Debt (the "Refinancing Debt") shall not exceed the principal
amount of the original Debt listed on such Schedule, the maturity date of
each installment or principal of such Refinancing Debt shall not be earlier
than the maturity date of the corresponding installment of the original
Debt, and the Liens securing the Refinancing Debt constitute "Permitted
Liens" under clause (iv) of the definition of such term;
(c) Standby letters of credit obtained in the ordinary course of
business;
(d) Debt of Borrower to any of its Subsidiaries and of any Guarantor
to Borrower or any other Guarantor;
(e) Debt under revolving credit commitments, term loan commitments or
letter of credit commitments made available by banks or other financial
institutions otherwise than under this Agreement to the extent that the
Revolving Credit Commitments shall have been permanently reduced and the
Term Loan Commitments shall have been prepaid by the amount of such
revolving credit commitments, term loan commitments or letter of credit
commitments on the date such revolving credit commitments, term loan
commitments or letter of credit commitments are incurred and the terms of
such revolving credit commitments, term loan commitments or letter of
credit commitments are reasonably satisfactory to the Majority Lenders in
all material respects;
(f) additional Debt (including Guarantees of Debt permitted under
paragraph (g) of Section 7.02 to the extent such Guarantee would be in
excess of the amount permitted by paragraph (g) hereof) incurred or assumed
by the Borrower and its Subsidiaries in an aggregate principal amount not
to exceed $10,000,000; provided that (i) such Debt is not secured by any
property constituting Collateral under the Collateral Documents (except to
the extent that such Debt may be secured by Liens described under clause
(iv) or (xiv) of the definition of "Permitted Liens"), (ii) any unsecured
purchase money seller Debt is subordinated to the Obligations on terms
reasonably satisfactory to the Agent unless such seller Debt is not
required to be subordinated pursuant to Section 7.01(e) and (iii) before
and after giving effect to the incurrence of such Debt, no Default or Event
of Default shall have occurred and be continuing and provided, further,
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that Guarantees of such Debt shall not be considered Debt for the purposes
of this paragraph (f) of this Section 7.02;
(g) Guarantees of Debt permitted under paragraph (b) of this Section
7.02 in an aggregate amount not to exceed $7,000,000;
(h) Debt incurred as an Investment permitted by Section 7.01;
(i) without duplication of Debt permitted by Section 7.02(b) above,
Debt of the Borrower consisting of the 1997 Subordinated Notes and the 1998
Subordinated Notes; and
(j) other Debt of the Borrower and its Subsidiaries (including any
increases in the Receivables Program Documents and Receivables Financing
Transactions above $160,000,000 in the aggregate) as long as, immediately
after giving effect to the incurrence of such Debt and the use of the
proceeds thereof, the Borrower would be in compliance on a pro forma basis
with Sections 6.12, 6.14 and 6.15 as of the most recently ended fiscal
quarter, each subsequent fiscal quarter and through the Term Loan
Termination Date as if such Debt was incurred on the first day of the
relevant measurement period; provided that (i) such Debt is not secured by
any property constituting Collateral under the Collateral Documents (except
to the extent that such Debt may be secured by Liens described under clause
(iv), clause (xiii)(b) or clause (xiv) of the definition of "Permitted
Liens"), (ii) any unsecured purchase money seller Debt and any unsecured
assumed Debt is subordinated to the Obligations on terms reasonably
satisfactory to the Agent unless such seller Debt or assumed Debt is not
required to be subordinated pursuant to Section 7.01(e) and (iii) before
and after giving effect to the incurrence of such Debt, no Default or Event
of Default shall have occurred and be continuing and provided, further,
that Guarantees of such Debt shall not be considered Debt for the purposes
of this paragraph (j) of this Section 7.02.
Notwithstanding the foregoing, the Borrower will not permit any Subsidiary or
Unrestricted Subsidiary to Guaranty or provide credit support for any
Subordinated Debt.
7.03 Other Security. Other than as expressly permitted under Section
7.08, create, assume or suffer to exist any Lien on any of its or its
Subsidiaries' property, real or personal or mixed (including without limitation,
any leasehold interests), whether now owned or hereafter acquired, except
Permitted Liens and licenses of intellectual property pursuant to a Franchise
Program.
7.04 Subordinated Debt. (a) Pay interest, principal, or premium on any
Subordinated Debt (other than the Subordinated Notes) if at the time of such
payment or proposed payment there has occurred and is continuing under this
Agreement, or if as a result of any such payment or proposed payment there would
occur, a Default or an Event of Default;
83
(b) Pay interest, principal or premium on the 1997 Subordinated Notes
in violation of Article Thirteen of the 1997 Indenture, or make any payment
thereunder or with respect to any other Subordinated Debt to any holder or the
trustee named therein prior to one (1) Banking Day preceding the times set forth
therein for the payment of same, or make any payment, purchase or redemption of
the 1997 Subordinated Notes pursuant to Article Four, Five, Ten, Eleven, Twelve
or Thirteen of the 1997 Indenture or deliver any notice to the trustee under the
Indenture or the holders of the 1997 Subordinated Notes of its intention to make
any such payment, purchase or redemption, or make any "Company Request" under
Section 12.1 of the 1997 Indenture;
(c) Amend or waive any provision of the 1997 Indenture, the 1998
Indenture, the Subordinated Notes or any other agreement relating to
Subordinated Debt without first obtaining the consent of Majority Lenders;
(d) Prepay, redeem, defease, purchase or repurchase all or any part of
any Subordinated Debt including, but not limited to, the Subordinated Notes
(other than as permitted by Section 7.09(a) hereof), or take any action to
effect the foregoing without first obtaining the consent of Majority Lenders; or
(e) Pay interest, principal or premium on the 1998 Subordinated Notes
in violation of Article Thirteen (or the comparable provisions of a successor
indenture) of the 1998 Indenture, or make any payment thereunder to any holder
or the trustee named therein prior to one (1) Banking Day preceding the times
set forth therein for the payment of same, or make any payment, purchase or
redemption of the 1998 Subordinated Notes pursuant to Article Four, Five, Ten,
Eleven, Twelve or Thirteen (or the comparable provisions of a successor
indenture) of the 1998 Indenture or deliver any notice to the trustee under the
1998 Indenture or the holders of the 1998 Subordinated Notes of its intention to
make any such payment, purchase or redemption, or make any "Company Request"
under Section 12.1 (or the comparable provisions of a successor indenture) of
the 1998 Indenture.
(f) Notwithstanding the provisions of Section 7.04 and Section 7.09,
the Borrower may purchase or redeem the 1997 Subordinated Notes at an aggregate
price not in excess of $350,000 or, upon the dates the redemption prices
provided in the 1997 Indenture are applicable, such redemption prices plus
accrued interest; provided that immediately after giving effect thereto, no
Default or Event of Default shall have resulted.
7.05 Liquidation; Merger. Liquidate or dissolve, or enter into any
consolidation, merger, partnership, joint venture or other combination, or sell,
lease or dispose of its business or assets as a whole or in an amount which
constitutes a substantial portion thereof; provided, however, that (a) any
Subsidiary may merge into, consolidate with or transfer its business or assets
to Borrower or any other Subsidiary (so long as such acquiring Subsidiary is a
Guarantor) pro rata, to the extent owned by Borrower or such Subsidiary, (b)
Borrower may merge with any other corporation so long as Borrower is the
surviving corporation and no Default or Event of Default would exist under this
Agreement after giving effect to such merger, (c) any Subsidiary may liquidate
84
or dissolve if upon such liquidation or dissolution all or substantially all of
the business or assets of such Subsidiary are distributed to Borrower or any
other Subsidiary (so long as such transferee Subsidiary is also a Guarantor) pro
rata, to the extent owned by Borrower or such Subsidiary, and (d) in the event
that a Subsidiary has distributed its business or assets to Borrower or any
Subsidiary pursuant to Section 7.05(c), neither Borrower nor any Subsidiary
shall be required to preserve any right, license, or franchise of such
Subsidiary or the corporate existence of such Subsidiary if the Board of
Directors of Borrower or the Subsidiary to which the business or assets of such
Subsidiary were distributed shall determine that the preservation thereof is no
longer desirable and that the loss thereof is not adverse in any material
respect to Lenders.
7.06 [Reserved]
7.07 Change in Business. Engage in any business activities or
operations substantially and materially different from or unrelated to business
activities existing on the Closing Date; provided, however, that this Section
7.07 shall not prohibit the Borrower or its Subsidiaries from managing non-owned
fitness centers or providing payment, processing and collection services for
non-owned fitness centers, or from commencing and operating a Franchise Program,
or from operating a captive insurance company.
7.08 Disposal of Assets. Dispose of any accounts receivable, any fixed
or capital assets (including, without limitation, the entering into of any sale
and leaseback agreement covering any of its fixed or capital assets), any
Capital Stock of Subsidiaries or any Intangible Assets, or enter into any
license, franchise or sublease arrangements; provided, however, that:
(a) dispositions of assets among and between Borrower and the
Guarantors shall not be prohibited hereunder;
(b) (i) the Borrower and its Subsidiaries may dispose of the
Receivables Program Receivables on the terms and subject to the conditions
set forth in the Receivables Program Documents, provided that none of such
Receivables Program Receivables may be so disposed of for the purpose of
supporting any series of Receivables Program Certificates other than the
1996-1 Certificates or other Receivables Program Certificates permitted
under this Agreement without the prior consent of the Majority Lenders; and
(ii) the Borrower and its Subsidiaries may dispose of Receivables Assets
pursuant to a Receivables Financing Transaction;
(c) to the extent the Borrower or any Subsidiary may at any time be a
party to the Credit Card Program Agreement, licensing arrangements
contemplated by the Credit Card Program Agreement shall not be prohibited
under this Section 7.08;
85
(d) Borrower or any Subsidiary may dispose of accounts receivable,
fixed or capital assets (including, but not limited to (i) disposition of
any interest in the Exchangeable Transferor Certificate (including, but not
limited to, any such disposition in connection with any issuance of any
additional series of Receivables Program Certificates permitted under this
Agreement) and (ii) dispositions by sale and leaseback agreements covering
fixed or capital assets), capital stock or Intangible Assets, or enter into
any license, franchise or sublease arrangement (other than pursuant to a
Franchise Program), so long as the proceeds of such disposition, to the
extent the same constitutes Reinvestment Proceeds, shall be applied to the
acquisition of properties and other assets that (as determined by the board
of directors of the Borrower) replace the properties and assets that were
the subject of such disposition or properties and assets that will be used
in the businesses of the Borrower or its Subsidiaries existing on the
Closing Date (or in businesses reasonably related or complementary
thereto), and otherwise the proceeds of such disposition shall be applied
to the prepayment of the Term Advances, the permanent reduction of the
Revolving Credit Commitment Amount and L/C Commitment Amount, and the
prepayment of the Revolving Advances and the cash collateralization of the
Letters of Credit, as set forth in Section 2.13; provided, however, that
(i) Borrower or any Subsidiary may dispose of surplus or obsolete equipment
or fixtures in the ordinary course of business, and up to Two Million Five
Hundred Thousand Dollars ($2,500,000) per year of the proceeds of such
dispositions shall not be subject to the requirements of this Section
7.08(d) and (ii) Borrower and its Subsidiaries may license certain rights
with respect to its trade name or other intellectual property pursuant to
franchising arrangements permitted by Section 7.08(e) and the proceeds of
such license and franchise activities shall not be subject to the
requirements of this Section 7.08(d);
(e) Borrower and its Subsidiaries may license certain rights with
respect to its trade name and other intellectual property (i) to
franchisees for the operation of health clubs pursuant to a Franchise
Program and (ii) for other purposes intended to generate proceeds to the
Borrower; and
(f) Borrower and its Subsidiaries may sell assets (and related
liabilities) consisting of health and fitness clubs to Persons which
simultaneously become franchisees pursuant to a Franchise Program; provided
that (i) such assets are sold at their net fair market value (taking into
account the amount of such liabilities) and (ii) the aggregate net cash
proceeds arising from such sales since the Closing Date does not exceed
$5,000,000.
For purposes of this Section 7.08, dispositions of assets shall not include
sales by the Borrower or any Subsidiary of the Borrower of common stock (or
common stock equivalents) of the Borrower.
7.09 Limitation on Optional Payments and Modifications of Debt
86
Instruments and Receivables Program Documents. Without limitation of any
obligation under any other Section of this Article VII:
(a) make any optional payment or prepayment on or redemption or
purchase or defeasance of any Debt or make or set aside any sinking fund
payments with respect to any Debt (other than the Advances and
reimbursement obligations in respect of any Letter of Credit); provided,
however, Borrower or its Subsidiaries may prepay or make optional payments
on any purchase money Debt or Capitalized Leases where the Agent, for the
benefit of the Lenders, is granted a Lien in the relevant asset of the
Borrower or its Subsidiary, as the case may be, in the amount of such
prepayment or optional payment; provided further, however, the Borrower
shall be permitted to redeem or prepay (i) the Subordinated Notes from the
proceeds of a public offering of the Borrower's common stock after the
Closing Date, to the extent permitted by the "equity clawback" provision
set forth in Section 11.1(b) of the 1997 Indenture and the 0000 Xxxxxxxxx
and (ii) Debt existing on the Closing Date and identified on Schedule
7.09(a); or
(b) amend, modify or change in any material respect, or consent or
agree to any such amendment, modification or change to, any of the terms of
any such Debt (other than any such amendment, modification or change to the
terms of any Debt which would extend the maturity or reduce the amount of
any payment of principal thereof or which would reduce the rate or extend
the date for payment of interest thereon); or
(c) amend, modify or change, or consent or agree to any amendment,
modification or change to the Receivables Program Documents which would
affect the amortization of the Receivables Program Certificates thereunder,
the collateral thereunder, the sale of Receivables Program Receivables at a
discount, or the interest rate (it being agreed that the effective interest
rate on the Receivable Program Certificates may be increased in connection
with any increase in the aggregate principal amount of the Receivables
Program Certificates as set forth in the proviso below as long as the
Borrower certifies in writing to the Agent prior to the effect of such
increase that, after giving effect thereto, the Borrower will be in
compliance on a pro forma basis with Sections 6.12, 6.14 and 6.15 through
the Term Loan Termination Date) applicable to the Receivables Program
Certificates or the Exchangeable Transferor Certificate (other than any
such amendment, modification or change which would extend the maturity or
reduce the amount of payment of principal on the affected Receivables
Program Certificates or which would reduce the rate or extend the time of
payment of any interest thereon, or would not increase any amount of
scheduled amortization for any period prior to the Revolving Credit
Termination Date); provided that the aggregate principal amount of the
Receivable Program Certificates can be increased if (i) such increase is in
connection with a corresponding increase in the amount of Receivable
Program Receivables sold in the Receivables Program and (ii) the terms
governing such additional Receivable Program Certificates are substantially
87
similar to, or no less favorable to the Borrower and its Subsidiaries than,
the existing Receivable Program Certificates (it being agreed that the
effective interest rate on the Receivable Program Certificates may be
increased in connection with any such increase as long as the Borrower
certifies in writing to the Agent prior to the effect of such increase
that, after giving effect thereto, the Borrower will be in compliance on a
pro forma basis with Sections 6.12, 6.14 and 6.15 through the Term Loan
Termination Date); or
(d) permit any series of Receivables Program Certificates to be issued
other than the 1996-1 Certificates or as contemplated by the proviso to the
preceding paragraph (c), except that a series of Receivables Program
Certificates may be issued to replace or refinance the 1996-1 Certificates
in whole or in part (such new series of Receivables Program Certificates, a
"Refinancing Series" and such new Receivables Program Certificates,
"Refinancing Certificates") if such Refinancing Series contains no material
covenants and no Payout Events not applicable to the 1996-1 Certificates
and each of the covenants and defaults contained in the supplement creating
such replacement series are not materially more burdensome or restrictive
than those covenants contained in the 1996-1 Supplement (it being agreed
that the effective interest rate on the Refinancing Certificates may be
increased in connection with any such replacement or refinancing as long as
the Borrower certifies in writing to the Agent prior to the effect of such
replacement or refinancing that, after giving effect thereto, the Borrower
will be in compliance on a pro forma basis with Sections 6.12, 6.14 and
6.15 through the Term Loan Termination Date); or
(e) notwithstanding the foregoing paragraphs (c) and (d), the Borrower
and its Subsidiaries may enter into Receivables Financing Transactions and
may effect a Receivables Financing Transaction by (i) amending, modifying
or changing the Receivables Program Documents and (ii) issuing other series
of Receivables Financing Certificates.
7.10 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate (other
than a Subsidiary) unless such transaction is (a) otherwise permitted under this
Agreement, and (b) upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate.
7.11 Limitation on Sales and Leasebacks. Enter into arrangements
providing for the leasing by the Borrower or any Subsidiary of real or personal
property which has been or is to be sold or transferred by the Borrower or such
Subsidiary to a third person on the security of such property or rental
obligations of the Borrower or such Subsidiary if the net proceeds from sale or
88
transfer with respect to such arrangements exceed, in the aggregate,
$10,000,000.
7.12 Limitation on Changes in Fiscal Year. Permit the fiscal year of
the Borrower to end on a day other than December 31.
7.13 Funding Corp.; Finance Subsidiaries. (a) Permit Funding Corp. to
(i) assume, guarantee or otherwise become liable in any manner with respect to
any Debt other than Debt arising under the Purchase Agreement, (ii) consolidate
or merge with any Person, (iii) purchase or acquire any business or property
other than receipt or purchase of Receivables Program Receivables under the
Purchase Agreement for transfer to the H&T Master Trust under the Pooling &
Servicing Agreement, (iv) make any Investment in any Person other than
Investments in the H&T Master Trust and BTFC pursuant to the Receivables Program
Documents, (v) conduct any business other than the transactions required to be
performed by it under the Receivables Program Documents, or (vi) create, assume
or suffer to exist any Lien on any of its property (including, without
limitation, any Released Amounts (as defined in the Pooling & Servicing
Agreement)), whether now owned or hereafter acquired, except Liens pursuant to,
and in accordance with the terms of, the Receivables Program Documents.
(b) Fail to cause the management, business and affairs of Funding
Corp. to be conducted in a manner as required by the Receivables Program
Documents and consistent with the assumptions set forth in the opinion of
Winston & Xxxxxx delivered in connection with the Pooling & Servicing Agreement
relating to the issue of whether Funding Corp. would be substantively
consolidated with BTFC in a bankruptcy of BTFC.
(c) Permit any Finance Subsidiary to (i) assume, guarantee or
otherwise become liable in any manner with respect to any Debt other than Debt
arising under a Receivables Financing Transaction, (ii) consolidate or merge
with any Person, (iii) purchase or acquire any business or property other than
receipt or purchase of Receivables Assets in a Receivables Financing
Transaction, (iv) conduct any business other than the transactions to be
performed by it in a Receivables Financing Transaction or (v) create, assume or
suffer to exist any Lien on any of its property, whether now owed or hereafter
created, except Liens pursuant to and in accordance with the terms of a
Receivables Financing Transaction; and in connection therewith, the Borrower
shall provide a legal opinion from counsel to Borrower that such Finance
Subsidiary shall not be substantively consolidated with Borrower or its
Subsidiaries.
(d) Fail to cause the management, business and affairs of each Finance
Subsidiary to be conducted in such a way as to maintain the separate corporate
existence of each Finance Subsidiary.
7.14 Unrestricted Subsidiaries. (a) Create or otherwise designate any
Subsidiary as an Unrestricted Subsidiary unless the terms set forth in the
definition of Unrestricted Subsidiary are complied with respect to such
Subsidiary and no Default or Event of Default then exists (unless the creation
or designation of the Unrestricted Subsidiary would cure the Default or Event of
Default) or would result from the designation, creation and operation of such
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Unrestricted Subsidiary.
(b) Without the prior written consent of the Majority Lenders, change
the characterization of a Subsidiary from a Subsidiary to an Unrestricted
Subsidiary or an Unrestricted Subsidiary to a Subsidiary; provided however, the
prior written consent of the Majority Lenders shall not be required if (A) no
Default or Event of Default shall have occurred and be continuing at such time
or would result therefrom, (B) after giving effect to such re-characterization,
each of the representations and warranties made by in the Borrower in or
pursuant to this Agreement or the Collateral Documents shall be true and correct
in all material respects as of the date of such re-characterization, (C) if
re-characterized as a Subsidiary, such Subsidiary shall have complied with the
provisions of Article III as if it were a new Subsidiary and (D) the Borrower
provides the Agent five Banking Days advance written notice of its intent to
re-characterize such Subsidiary.
(c) Permit any Unrestricted Subsidiary to fail to comply with the
requirements set forth in the definition of "Unrestricted Subsidiary."
7.15 Tax Allocation and Indemnity Agreement. Amend, modify or change,
or consent or agree to any amendment, modification or change to the Tax
Allocation and Indemnity Agreement in any manner which is materially adverse to
the Lenders.
7.16 Health & Tennis (UK) Limited. For so long as Health & Tennis (UK)
Limited is a Subsidiary, permit Health & Tennis (UK) Limited to own assets with
a value in excess of $100,000 unless, prior to owning such assets, 65% of the
Capital Stock of Health & Tennis (UK) Limited is pledged to the Collateral Agent
for the benefit of the Lenders and the Operating Banks pursuant to documentation
reasonably acceptable to the Collateral Agent.
ARTICLE VIII.
EVENTS OF DEFAULT
If one or more of the following events (herein called "Events of
Default") shall occur and be continuing:
8.01 Nonpayment. (a) Borrower shall fail to pay, when due, any portion
of principal or interest due hereunder or under the Notes in accordance with the
terms hereof or thereof; or
(b) Borrower shall fail to pay, when due, any fees, commissions or any
other sum due hereunder in accordance with the terms hereof.
8.02 Representation or Warranty. Any representation or warranty made
by Borrower or any Subsidiary herein or in any other Credit Document or in any
agreement, instrument or certificate executed or delivered to Lenders, Agent or
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the Collateral Agent pursuant hereto or in connection with any transaction
contemplated here shall prove to have been false or misleading in any material
respect when made or when deemed to have been made;
8.03 Judgments. There shall be entered against Borrower or any of its
Subsidiaries one or more judgments (or any judgment against an ERISA Affiliate,
if such judgment is in favor of a Multiemployer Plan) in excess of Two Million
Dollars ($2,000,000) in the aggregate at any one time outstanding excluding
those judgments (i) that have been outstanding less than thirty (30) calendar
days from the entry thereof, (ii) for not more than Five Million Dollars
($5,000,000) during the time which a stay of enforcement of such judgment is in
effect by reason of a pending appeal or otherwise or (iii) for and to the extent
which Borrower or such Subsidiary is insured and with respect to which the
insurer has admitted liability in writing.
8.04 Voluntary Bankruptcy. Borrower or any Guarantor shall fail to
pay, or admit in writing its inability to pay, its debts generally as they come
due, or shall file any petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law, or any other law or laws for the
relief of, or relating to, debtors, or Borrower or any Guarantor shall take any
corporate action to authorize, or in furtherance of, any of the foregoing.
8.05 Involuntary Bankruptcy. Involuntary petition shall be filed under
any bankruptcy statute against Borrower or any Guarantor, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar
official) shall be appointed to take possession, custody or control of the
properties of Borrower or any Guarantor, unless such petition or appointment is
set aside or withdrawn or ceases to be in effect within sixty (60) days from the
date of said filing or appointment.
8.06 Change of Control Event. A Change of Control Event shall occur.
8.07 Cross Default. Any breach or default shall occur with respect to
any Debt or any operating lease agreement in excess of Five Million Dollars
($5,000,000) (except with respect to Debt under this Agreement) individually or
in the aggregate, under which Borrower or any of its Subsidiaries may be
obligated as borrower or guarantor, if such breach or default consists of the
failure to pay any such indebtedness when due whether by acceleration or
otherwise (and remains uncured or continues beyond any applicable grace period)
or if such breach or default results in or permits (or, with the passage of
time, the giving of notice or both, may permit) the acceleration of any such
indebtedness of or the termination of any commitment to lend to Borrower or any
such Subsidiary.
8.08 ERISA. (a) The occurrence of a Termination Event with respect to
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one or more Plans and/or one or more Multiemployer Plans if Borrower's maximum
liability (as measured, (A) in the case of a Termination Event described in
clauses (i) through (iii) of the definition of "Termination Event", by the
amount by which plan assets are insufficient to satisfy benefit liabilities upon
termination under ERISA with respect to each Plan as to which such Termination
Event has occurred, (B) in the case of a Termination Event described in clause
(iv) of said definition, by the withdrawal liability under Section 4063 of ERISA
with respect to each Plan as to which such Termination Event has occurred, and
(C) in the case of a Termination Event described in clause (v) of the definition
of "Termination Event", by the excess, if any of (i) the aggregate of annual
contributions due or paid during a plan year plus payments and interest due or
paid pursuant to Section 4219 of ERISA during the same plan year, with respect
to each Multiemployer Plan as to which a Termination Event has occurred, over
(ii) the annual contribution amount due or paid for such Multiemployer Plan for
the plan year preceding the plan year in which such Termination Event occurred)
which could arise upon the occurrence of all such Termination Events that occur
within a twelve consecutive month period exceeds One Million Dollars
($1,000,000); or
(b) The aggregate withdrawal liability which could be incurred under
Section 4201 of ERISA of Borrower and all ERISA Affiliates, collectively, upon a
complete withdrawal, within the meaning of Section 4203 of ERISA, from each and
all Multiemployer Plans to which each is or has contributed within the past five
calendar years, plus the aggregate of the excess of benefit liabilities, within
the meaning of Section 4001(a)(16) of ERISA, of each Plan upon termination of
such Plan over the assets of such Plan, exceeds Five Million Dollars
($5,000,000).
8.09 Specific Defaults. (i) Borrower shall fail duly and promptly to
perform or observe any term or provision specified in any of Sections 6.01,
6.02(e), 6.05, 6.06, 6.12, 6.13, 6.14 or 6.15 or Article VII hereof or (ii)
Borrower shall fail to perform or observe any term or provision specified in
Section 6.09 and shall not remedy such failure to perform or observe any term or
provision specified in such Section 6.09 within 10 calendar days.
8.10 Guarantee and Collateral Agreement; Impairment of Collateral
Documents. (a) Any breach or default shall occur under the Guarantee and
Collateral Agreement or the Guarantee and Collateral Agreement shall be revoked
by, or become ineffective as to, the Borrower or any Guarantor; provided,
however, that any merger, liquidation, consolidation or transfer of any
Guarantor with any other Guarantor or Borrower in accordance with Section
7.05(c) or Section 7.05(d) shall not constitute an Event of Default under this
Agreement;
(b) (i) any provision of any Collateral Document (other than the
collateral assignments of tenant's rights in leases) necessary for the practical
realization of the substantial benefits thereof shall for any reason cease to be
valid and binding on or enforceable against Borrower or any Subsidiary or
Borrower or any Subsidiary shall so state in writing or bring an action to limit
its obligations or liabilities thereunder; or
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(ii) any of the Collateral Documents shall for any reason (other than
pursuant to the terms thereof) cease to create a valid security interest in the
Collateral purported to be covered thereby or such security interest shall for
any reason cease to be a perfected security interest having the priority
purported to be created by such Collateral Document (other than by or as a
result of any action by the Collateral Agent).
8.11 Condemnation. Any governmental authority shall condemn, seize or
appropriate any property of Borrower or any Subsidiary if the fair market value
of the property prior to being condemned, seized or taken is equal to or greater
than Five Million Dollars ($5,000,000) and if such governmental authority fails
to compensate such entity for such taking within one (1) year after such entity
loses quiet enjoyment of such property due to such taking in an amount at least
equal to the fair market value as a going concern of the property taken.
8.12 Payout Event. A "Payout Event" (as defined in the Pooling &
Servicing Agreement or in the 1996-1 Supplement to the Pooling & Servicing
Agreement including the occurrence of a Series 0000-0 Xxx-Xxx-Xxxxx under
Section 7 thereof, or any future supplement to the Pooling and Servicing
Agreement) shall have occurred with respect to the 1996-1 Certificates or any
other Receivables Program Certificates, whether or not the occurrence or
continuance of such Payout Event has been waived; or a payout event or similar
event (however characterized) shall have occurred with respect to any
Receivables Financing Transaction entitling the lenders or purchasers thereunder
to stop lending against or purchasing Receivables Assets.
8.13 Actual or Asserted Invalidity. (i) This Agreement, any Note, any
Collateral Document or any instrument or certificate executed or delivered to
Lenders, the Agent or the Collateral Agent pursuant to this Agreement or in
connection with any transaction contemplated herewith shall cease, for any
reason (other than solely as a result of any action or inaction on the part of
the Agent or any of the Lenders), to be in full force and effect, or the
Borrower or any of its Affiliates shall so assert or (ii) any Lien created
thereby or subordination provision therein shall cease to be enforceable and of
the same effect and priority purported to be created thereby as a result of any
action or inaction on the part of the Borrower or any of its Affiliates.
8.14 Other Defaults. Borrower or any Subsidiary shall breach, or
default under, any term, condition, provision, covenant, representation or
warranty contained in this Agreement not specifically referred to in this
Article or in any Collateral Document, if such breach or default shall continue
for thirty (30) days after notice from Agent as required by Majority Lenders;
THEN:
(a) In the case of an Event of Default other than one referred to in
Section 8.04 or 8.05 of this Article VIII, upon request of Majority Lenders
to Agent, any obligation on the part of Lenders to make or continue the
Credit or any obligation on the part of any Issuing Lender to issue or
amend any Letter of Credit shall terminate and, at the further option of
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Majority Lenders, Agent shall declare all sums of principal and interest
outstanding on the Credit and all other sums outstanding under or in
respect of this Agreement and the Notes immediately due and payable,
without notice of default, presentment or demand for payment, protest or
notice of nonpayment or dishonor, or other notices or demands of any kind
or character (other than as stated in any of the foregoing sections of this
Article VIII), all of which are hereby expressly waived by Borrower; and
(b) in the case of an Event of Default referred to in Section 8.04 or
8.05 of this Article VIII, Lenders' obligations to make or continue the
Credit and the Issuing Lenders' obligations to issue or amend any Letter of
Credit shall be automatically cancelled and all sums of principal and
interest on the Credit and all other sums outstanding under or in respect
of this Agreement and the Notes shall automatically become immediately due
and payable without notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor, all of which are hereby
expressly waived by Borrower.
Agent shall promptly advise Borrower of any declaration under clause (a), above,
but failure to do so shall not impair the effectiveness of such declaration.
Additionally, upon the occurrence of any Event of Default, Agent, at the request
of the Majority Lenders, shall require Borrower to deposit immediately with
Agent cash collateral pursuant to documentation reasonably acceptable to the
Agent, for application against drawings under any Letter of Credit issued for
Borrower's account hereunder, in an amount equal to the undrawn amount of such
Letter of Credit. Any amount so deposited that is not applied to satisfy
drawings under such Letter of Credit will be repaid with interest (at Agent's
applicable certificate of deposit rate in effect on the date of such deposit) to
Borrower, provided that Lenders have received all other amounts due to them
under this Agreement and the Notes. Borrower shall not make (or declare) any
Restricted Payments otherwise permitted under Section 7.01 if a Default or an
Event of Default has occurred and is continuing on the date of such payment (or
declaration), or would result from such payment (or declaration).
ARTICLE IX.
MISCELLANEOUS
9.01 Notices. Except as otherwise provided herein, any notice required
hereunder shall be in writing, and shall be deemed to have been validly served,
given or delivered (i) four (4) Banking Days following deposit in the United
States mails, with proper postage prepaid, and addressed to the party to be
notified; (ii) upon delivery thereof if delivered by hand to the party to be
notified; (iii) on the Banking Day after delivery to a reputable overnight
courier, with all charges prepaid, and addressed to the party to be notified; or
(iv) upon acknowledgment of receipt thereof if transmitted by telecopy to a
valid telecopier number for the party to be notified; in each case such
notification shall be addressed to Borrower at:
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Bally Total Fitness Holding Corporation
0000 Xxxx Xxxx Xxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telecopy: 000-000-0000
Phone: 000-000-0000
and shall be addressed to Agent at:
The Chase Manhattan Bank
00 X. XxXxxxx Xxxxxx - 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopy: 000-000-0000
Phone: 000-000-0000
With a copy to:
Chase Manhattan Bank Agency Services
Xxx Xxxxx Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopy: 000-000-0000
Phone: 000-000-0000
and with respect to the other parties hereto, as set forth on Schedule 9.01
hereof, or to such other address as each party may designate for itself by like
notice. Notices to Agent shall not be effective until received by Agent.
9.02 Successors and Assigns. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however, that Borrower shall not assign this Agreement or any of the
rights of Borrower hereunder without the prior written consent of each Lender.
Any purported assignment in contravention of the foregoing shall be null and
void.
9.03 Lenders' Obligations Several. The obligations of each Lender
under this Agreement are several. Neither Agent, Collateral Agent nor any Lender
shall be liable for the failure of any other Lender to perform its obligations
under this Agreement.
9.04 Assignments; Participations. (a) Any Lender (each an "Assignor")
may, with the consent of Agent, each Issuing Lender to whom obligations are owed
in respect of Letters of Credit issued by it and (unless a Default or Event of
Default has occurred and is continuing) Borrower, which consent of Agent, such
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Issuing Lenders and the Borrower shall not be unreasonably withheld or delayed,
at any time assign and delegate to one or more banks or other entities and may,
with notice to Borrower, Agent and each Issuing Lender but without the consent
of Borrower, Agent or such Issuing Lenders, assign to any of its Affiliates, a
Related Fund or any other Lender (each an "Assignee"), all or any part of the
Advances, the Term Loan Commitment, Revolving Credit Commitment (including the
L/C Commitment), any Letter of Credit participations, reimbursement obligations
in respect of any Letter of Credit or any other rights or obligations of such
Lender hereunder; provided, however, that such assignment must be in a minimum
amount (unless otherwise agreed in writing by the Borrower, Agent and each
Issuing Lender) of One Million Dollars ($1,000,000) (or, if less, the full
amount of such Assignor's Advances, Letter of Credit Participations,
reimbursement obligations in respect of any Letter of Credit or any other rights
and obligations of such Lender hereunder); provided, further, that any
assignment of Term Advances or the Term Loan Commitment shall not require the
notification of, or consent of, such Issuing Lenders; provided, further, that
(i) Borrower shall not be required to pay any increased costs or taxes pursuant
to Section 2.16 or 2.17 by reason of any such assignment; (ii) Borrower and
Agent shall be entitled to continue to deal solely and directly with such
Assignor in connection with the interests so assigned to the Assignee until
written notice of such assignment, together with payment instructions, addresses
and related information with respect to the Assignee shall have been given to
Borrower, Agent and each Issuing Lender by such Assignor and the Assignee; and
(iii) such Assignor shall not be released from its obligations hereunder with
respect to the assigned portion of any such rights or obligations until the
Assignee shall have delivered to Borrower and Agent an agreement to be bound by
the terms and conditions of this Agreement, which agreement shall be
substantially in the form of Exhibit M (an "Assignment and Acceptance"), and the
Assignor shall have paid a processing fee to Agent in the amount of Two Thousand
Dollars $2,000, and thereupon shall be released from its obligations with
respect to the assigned portion.
(b) Any Lender may, without the consent of Agent, any other Lender to
whom obligations are owed in respect of Letters of Credit issued by it or
Borrower, at any time sell to one or more Lenders or other entities (a
"Participant") participating interests in any Advances, any Term Loan
Commitment, any Revolving Credit Commitment, any Letter of Credit participations
or any reimbursement obligations of such Lender in respect of any Letter of
Credit hereunder; provided, however, that such participation shall not increase
the amount payable by Borrower in respect of taxes pursuant to Section 2.16 and,
provided further that (i) such Lender's obligations under this Agreement shall
remain unchanged; (ii) such Lender shall remain solely responsible for the
performance of its obligations hereunder; (iii) Borrower and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement; (iv) no Lender shall
transfer, grant or assign any participation under which the Participant shall
have rights to approve any amendment or waiver of this Agreement except to the
extent such amendment or waiver would (A) extend the Revolving Credit
Termination Date beyond November 8, 2002 or the Term Loan Termination Date
beyond November 10, 2004, or the scheduled date for the payment of any
installment of principal or interest of the Advances in which such Participant
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is participating, (B) reduce the amount of any scheduled installment of
principal of the Advances hereunder in which such Participant is participating,
(C) reduce the interest rate applicable to Advances hereunder in which such
Participant is participating or (D) reduce any fees or commissions payable
hereunder in which such Participant is participating; and (v) such Lender shall
require its Participants to comply with the provisions of Section 10.03(b). In
the case of any such participation, the Participant shall not have any rights
under this Agreement or any of the other documents in connection herewith and
all amounts payable by Borrower hereunder shall be determined as if such Lender
had not sold such participation, except that Borrower agrees that if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement and the Notes to
the same extent as if the amount of its participating interest were owing
directly to it as a lender under this Agreement. The Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.16, 2.17 and 2.18
with respect to its participation in the Commitments and the Advances and
Letters of Credit outstanding from time to time as if it was a Lender; provided
that, in the case of Sections 2.16, 2.17 and 2.18, such Participant shall have
complied with the requirements of said Section and provided, further, that no
Participant shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Borrower authorizes each Lender to disclose to any Participant or
Assignee (each, a "Transferee") and any prospective Transferee such financial
and other information in such Lender's possession concerning Borrower or its
Subsidiaries which has been delivered to Lenders pursuant to this Agreement or
which has been delivered to Lenders by Borrower in connection with Lenders'
credit evaluation of Borrower prior to entering into this Agreement.
(d) Nothing herein shall prohibit any Lender from pledging or
assigning any Note in accordance with applicable law, including to any Federal
Reserve Bank.
(e) The Agent shall, on behalf of the Borrower, maintain at its
address referred to in Section 9.01 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of the names
and addresses of the Lenders and the Commitments of, and the principal amount of
the Advances owing to, each Lender from time to time. The entries in the
Register shall constitute prima facie evidence of the foregoing information, in
the absence of manifest error, and the Borrower, each other Credit Party, the
Agent and the Lenders shall treat each Person whose name is recorded in the
Register as the owner of the Advances and any Notes evidencing the Advances
recorded therein for all purposes of this Agreement. Any assignment of any
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Advance, whether or not evidenced by a Note, shall be effective only upon
appropriate entries with respect thereto being made in the Register (and each
Note shall expressly so provide). Any assignment or transfer of all or part of
an Advance evidenced by a Note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Note evidencing such
Advance, accompanied by a duly executed Assignment and Acceptance, and thereupon
one or more new Notes shall be issued to the designated Assignee.
(f) Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by this
Section 9.04, together with payment to the Agent of the registration and
processing fee referred to in paragraph (a) of this Section 9.04, the Agent
shall (i) promptly accept such Assignment and Acceptance and (ii) record the
information contained therein in the Register on the effective date determined
pursuant thereto.
9.05 Delays and Waivers. No delay or omission by Agent, Collateral
Agent, Arranger or Lenders to exercise any right under this Agreement, the
Collateral Documents or any instrument or agreement contemplated hereunder or
thereunder shall impair any such right, nor shall it be construed to be a waiver
thereof. No waiver of any single breach or default under this Agreement shall be
deemed a waiver of any other breach or default. Any waiver, consent or approval
under this Agreement must be in writing to be effective.
9.06 Costs and Expenses. Borrower agrees:
(a) to pay or reimburse Agent, the Collateral Agent, the Arranger and
the Issuing Lenders on demand for all reasonable out-of-pocket costs and
expenses incurred by them in connection with the development, preparation,
delivery, administration and execution of, and any amendment, supplement or
modification to, this Agreement, any Collateral Document and any other
documents or instruments prepared in connection herewith or therewith, the
consummation of the transactions contemplated hereby and thereby, and the
consummation of the transactions to occur on the Closing Date, including,
without limitation, (i) the reasonable fees and out-of-pocket expenses of
outside and local counsel and special tax counsel to Agent and the
Collateral Agent (and the allocated cost of Agent's staff counsel) with
respect thereto and (ii) the reasonable fees and out-of-pocket expenses of
Agent's outside accounting consultant;
(b) to pay or reimburse each Lender, the Collateral Agent, the Agent,
the Arranger and the Issuing Lenders on demand for all reasonable costs and
expenses incurred by any of them in connection with the enforcement or
preservation of any rights under this Agreement, the Notes, any Collateral
Document, and any other documents or instruments prepared in connection
herewith or therewith and in connection with any refinancing or
restructuring of the Credit in the nature of a "work-out", including,
without limitation, reasonable fees and out-of-pocket expenses of outside
and local counsel (and the allocated cost of staff counsel) to Agent, the
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Collateral Agent and to each of the several Lenders; and
(c) to pay or reimburse Agent, the Arranger or the Collateral Agent on
demand for all reasonable appraisal, accounting, audit, search, recordation
and filing fees, incurred or sustained by them in connection with the
matters referred to under paragraphs (a) and (b) above.
9.07 Telephone Indemnity. Borrower shall protect Lenders and Agent and
hold them harmless from and not liable for any and all loss, damage, claim or
expense (including, without limitation, reasonable attorneys' fees and the
allocated costs of any Lender's in-house legal counsel) incurred by Agent or
Lenders in connection with or in relation to any act or any failure to act upon
telephone instructions received by Lenders or Agent from Borrower or any Person
who has identified himself as an authorized officer of Borrower, whether or not
the instructions are actually given by an authorized officer of Borrower.
9.08 Other Indemnity. (a) Borrower agrees to indemnify and hold
harmless Agent, the Collateral Agent, each Lender and each of their respective
officers, directors, agents and employees from and against any and all claims,
damages, liabilities, costs and expenses (including, without limitation,
reasonable fees, expenses and disbursements of counsel) which may be incurred by
or asserted against Agent, the Collateral Agent, any Lender, any Issuing Lender
or any such other indemnified Person in connection with or arising out of any
investigation, litigation or proceeding related to this Agreement, the Advances,
the Term Loan Commitments, the Revolving Credit Commitments, the Letters of
Credit, the use of proceeds of the Advances or Letters of Credit or the
negotiation and preparation of documentation in connection herewith or
therewith, whether or not Agent, the Collateral Agent, any Issuing Lender or
such Lender is a party thereto; provided, however, that Borrower shall not be
required to indemnify any such indemnified Person from or against any portion of
such claims, damages, liabilities or expenses arising out of gross negligence or
willful misconduct of such indemnified Person. The foregoing indemnification
shall be binding on the Borrower forever, and shall survive repayment of the
Obligations and the release of any liens under the Collateral Documents.
(b) Borrower hereby agrees to indemnify, defend and hold harmless
Agent, the Collateral Agent, the Issuing Lenders and each Lender, and each of
their respective officers, directors, employees and agents, from and against any
and all claims, losses, liabilities, damages and expenses (including, without
limitation, reasonable attorneys' fees), which may be incurred by or asserted
against Agent, the Collateral Agent, the Issuing Lenders or any Lender or any
such indemnified Person in connection with or arising out of any investigation,
litigation or proceeding, or any action taken by any Person, with respect to any
Hazardous Materials Claim arising out of or related to any of the Properties
which are subject to a Lien in favor of the Collateral Agent as contemplated
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hereunder (including, without limitation, any Hazardous Materials Claim arising
out of or relating to any (i) release of Hazardous Materials on, upon, under or
into any such Properties or (ii) damage to real or personal property or natural
resources and/or harm or injury to Persons alleged to have resulted from such
release of Hazardous Materials on, upon or into any such Properties); provided,
however, that Borrower shall not be required to indemnify, defend or hold
harmless any such indemnified Person from or against any portion of such loss,
liability, damage or expense arising out of the gross negligence or willful
misconduct of such indemnified Person. The foregoing indemnification is the
personal obligation of Borrower, binding on Borrower forever, and shall survive
repayment of the Obligations and release of record of the mortgages or deeds of
trust in favor of Collateral Agent encumbering the Properties and any transfer
of the Properties by foreclosure or by deed in lieu of foreclosure. The
foregoing indemnification shall not be affected or negated by any exculpatory
clause that may be contained in any of the Collateral Documents. It is expressly
understood and agreed that to the extent that Collateral Agent and/or Lenders
are strictly liable under any such law, regulation, ordinance or requirement,
Borrower's obligation to Collateral Agent and Lenders under this indemnity shall
likewise be without regard to fault on the part of Borrower or its Subsidiaries
with respect to the violation or condition which results in liability to
Collateral Agent and/or Lenders; provided, however, that Borrower shall not be
required to indemnify, defend or hold harmless any such indemnified Person from
or against any portion of such loss, liability, damage or expense arising after
the Collateral Agent shall have foreclosed or otherwise taken possession of such
property which is caused by any action or inaction of the Collateral Agent after
such time.
(c) Agent, the Collateral Agent and each Lender agree that in the
event that any such investigation, litigation or proceeding is asserted or
threatened in writing or instituted against it or any of its officers,
directors, agents, and employees, or any remedial, removal or response action is
requested of it or any of its officers, directors, agents and employees, for
which Agent, the Collateral Agent or any Lender may desire indemnity or defense
hereunder, Agent, the Collateral Agent or such Lender shall promptly notify
Borrower in writing.
(d) Borrower at the request of Agent, the Collateral Agent or any
Lender, shall have the obligation to defend against such investigation,
litigation or proceeding or requested remedial, removal or response action, and
Agent, in any event, may participate in the defense thereof with legal counsel
of Agent's choice if Agent asserts defenses that raise potential conflicts of
interest with Borrower. No action taken by legal counsel chosen by Agent or any
Lender in defending against any such investigation, litigation or proceeding or
requested remedial, removal or response action shall vitiate or in any way
impair Borrower's obligation and duty hereunder to indemnify and hold harmless
Agent, the Collateral Agent and each Lender (unless such action is grossly
negligent).
9.09 Choice of Law. EXCEPT FOR COLLATERAL DOCUMENTS GOVERNED BY THE
LAWS OF ANOTHER STATE OR COUNTRY, AGENT, COLLATERAL AGENT AND LENDERS AND
BORROWER AGREE THAT ANY DISPUTE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
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INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
AGREEMENT, THE NOTES AND ALL OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH,
AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
9.10 Personal Jurisdiction. AGENT, COLLATERAL AGENT AND LENDERS MAY
ENFORCE ANY CLAIM ARISING UNDER THIS AGREEMENT, THE NOTES, OR ANY COLLATERAL
DOCUMENT IN ANY STATE OR FEDERAL COURT HAVING SUBJECT MATTER JURISDICTION AND
LOCATED IN CHICAGO, ILLINOIS OR NEW YORK, NEW YORK. FOR THE PURPOSE OF ANY
ACTION OR PROCEEDING INSTITUTED WITH RESPECT TO ANY SUCH CLAIM, BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS.
9.11 Service of Process. THE PARTIES HERETO IRREVOCABLY CONSENT TO THE
SERVICE OF PROCESS OF ANY OF THE AFORESAID COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS PROVIDED HEREIN NOT LESS THAN FIVE
(5) DAYS AFTER THE APPLICABLE SUMMONS IS ISSUED AND SHALL BECOME EFFECTIVE UPON
MAILING. NOTHING CONTAINED IN THIS SECTION 9.11 SHALL AFFECT THE RIGHT OF AGENT,
COLLATERAL AGENT, ANY LENDER OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST BORROWER OR ANY GUARANTOR IN ANY OTHER JURISDICTION.
9.12 Waiver of Jury Trial. EACH OF AGENT, COLLATERAL AGENT, LENDERS
AND BORROWER WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN AGENT,
LENDERS AND BORROWER ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT.
INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
9.13 Section Headings. Section headings are for reference only, and
shall not affect the interpretation or meaning of any provision of this
Agreement.
9.14 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
9.15 Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
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parties hereto on separate counterparts (provided that Borrower shall execute
each counterpart), each of which, when so executed, shall be deemed an original,
but all such counterparts shall constitute but one and the same agreement.
9.16 No Reliance by Lenders. Lenders hereby acknowledge that they have
not, in good faith, relied upon any margin stock (as defined in Regulation U of
the Board of Governors of the Federal Reserve System) as collateral in extending
or maintaining the loans under this Agreement.
9.17 Entire Agreement. This Agreement, any writing referred to in
Section 2.15 and any agreement, document or instrument attached hereto or
referred to herein (i) integrate all the terms and conditions mentioned herein
or incidental hereto, (ii) supersede all oral negotiations and prior writings in
respect to the subject matter hereof, and (iii) are intended by the parties as
the final expression of the agreement with respect to the terms and conditions
set forth in this Agreement and any such agreement, document or instrument
(including such letter agreement) and as the complete and exclusive statement of
the terms agreed to by the parties.
9.18 Confidentiality. Each Lender and Agent agree to keep information
obtained by it pursuant hereto and the other Collateral Documents confidential
in accordance with such Lender's or Agent's, as the case may be, customary
practices and agrees that it will only use such information in connection with
the transactions contemplated by this Agreement and not disclose any of such
information other than (i) to such Lender's or Agent's, as the case may be,
employees, representatives, agents or affiliates who are advised of the
confidential nature of such information, (ii) to the extent such information
presently is or hereafter becomes available to such Lender or Agent, as the case
may be, on a non-confidential basis from a source other than Borrower or such
information that is in the public domain at the time of disclosure, (iii) to the
extent disclosure is required by law, regulation, subpoena or judicial order or
process (which requirement or order shall be promptly notified to Borrower
unless such notice is legally prohibited) or requested or required by bank
regulators or auditors or any administrative body or commission to whose
jurisdiction such Lender or Agent, as the case may be, may be subject, (iv) to
assignees or participants or potential assignees or participants who agree to be
bound by the provisions of this Section 9.18, (v) to the extent required in
connection with any litigation between Borrower and/or any Guarantor and any
Lender or Agent, (vi) following an Event of Default, in connection with the sale
or other realization on any Collateral under any Collateral Document, or (vii)
with Borrower's prior written consent.
9.19 Receivables Program Savings Clause. Notwithstanding anything to
the contrary contained herein, in the event that any action taken by the
Borrower, any Guarantor or any Subsidiary (including Funding Corp.), which is
contemplated and permitted under the Receivables Program Documents, would
violate one or more provisions of this Agreement or any Collateral Document,
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then such violation shall not constitute or give rise to a Default or Event of
Default hereunder or thereunder, provided that such action is permitted or
contemplated by one or more other provisions of this Agreement or the Collateral
Documents.
9.20 Existing Credit Agreement to Remain in Full Force and Effect.
This Agreement shall be deemed to be an amendment to and restatement of the
Existing Credit Agreement and the Existing Credit Agreement as amended and
restated hereby shall remain in full force and effect and is hereby ratified and
confirmed in all respects. All references to the Existing Credit Agreement in
any other agreement or document shall, on and after the Closing Date, be deemed
to refer to the Existing Credit Agreement as amended and restated hereby, and
all references to "Bank" or "Banks" in any other agreement or document shall, on
and after the Closing Date, be deemed to be references to "Lender" and
"Lenders", respectively. The Borrower agrees, acknowledges and affirms that (i)
each of the Collateral Documents to which it is a party shall remain in full
force and effect and shall constitute security for all extensions of credit
pursuant to the Existing Credit Agreement as amended and restated hereby and
(ii) any reference to the Existing Credit Agreement appearing in any such
Collateral Document shall on and after the Closing Date be deemed to refer to
the Existing Credit Agreement as amended and restated hereby.
ARTICLE X.
RELATION OF LENDERS
10.01 Agent and Collateral Agent; Enforcement of Guaranties. (a) Each
Lender hereby irrevocably appoints, designates and authorizes Agent to take such
action on its behalf under the provisions of this Agreement and each other
instrument or agreement contemplated hereunder and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or such other instrument or agreement, together with such powers as
are reasonably incidental thereto. Each Lender agrees that no Lender shall have
the right individually to enforce the Guarantee and Collateral Agreement or the
Mortgages and hereby appoints Agent to act upon the direction of the Majority
Lenders to enforce each such Agreement. Chase and the Operating Banks agree that
none of such Lenders shall take any action to enforce the Operating Bank
Guaranty, respectively, until Agent has commenced to enforce the Guarantee and
Collateral Agreement upon the direction of the Majority Lenders pursuant to the
preceding sentence. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in such other instrument or agreement, Agent
shall not have any duties or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any such other instrument or
agreement or otherwise exist against the Agent. Agent may execute any of its
duties under this Agreement by or through agents, employees or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. Agent shall not be responsible for the negligence or misconduct of
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any agent or attorney-in-fact that it selects with reasonable care.
(b) Each Lender hereby authorizes the Collateral Agent to enter into
the Collateral Documents to which it is a party and to take all action
contemplated by the Collateral Agency Agreement; provided that the Collateral
Agent shall not enter into or consent to any amendment, modification,
termination or waiver of any provision contained in any Collateral Document or
take any action thereunder without the direction of Agent. Agent shall not
direct the Collateral Agent to enter into or consent to any amendment,
modification, termination or waiver of any provision of any Collateral Document
or direct the Collateral Agent to take any action thereunder without the prior
consent of the Majority Lenders. Each Lender agrees that no Lender shall have
any right individually to seek or to enforce or to realize upon the security
granted to the Collateral Agent under the Collateral Documents, it being
understood and agreed that such rights and remedies may be exercised by the
Collateral Agent for the benefit of all of the Secured Creditors upon the terms
of the Collateral Documents and the Collateral Agency Agreement.
10.02 Pro Rata Sharing. All principal, interest and fee payments on
the Revolving Credit (other than sums under Sections 2.14(a)(ii), 2.14(a)(iii)
and 2.15) shall be divided pro rata among Lenders according to their respective
Revolving Credit Commitment Percentages, and all principal interest and fee
payments on the Term Loan Facility (other than sums under Sections 2.14(a)(ii),
2.14(a)(iii) and 2.15) shall be divided pro rata among Lenders according to
their respective outstanding Term Advances. All sums realized under the
Guarantee and Collateral Agreement (or any guaranty executed and delivered
pursuant to Section 3.04) and all proceeds of Collateral distributed to Lenders
under the Collateral Agency Agreement (subject to Section 10.13(f)) shall be
divided pro rata among Lenders.
10.03 Set-off. (a) Subject to the rights of the Secured Creditors with
respect to any Collateral and in addition to any Liens granted by Borrower or
any of its Subsidiaries to the Collateral Agent and any rights now or hereafter
granted under applicable law and not by way of limitation of any such Lien or
rights, upon the occurrence and during the continuance of an Event of Default,
each Secured Creditor is hereby authorized by Borrower at any time and from time
to time with the prior consent of the Agent, without notice to Borrower, or to
any other Person (any such notice being hereby expressly waived) to set-off all
deposits of Borrower and any other Debt at any time held or owing by such
Secured Creditor to or for the credit of Borrower against and on account of the
Secured Obligations owing to such Secured Creditor irrespective of whether or
not Agent or such Secured Creditor shall have made demand under this Agreement
or any Collateral Document and although the Secured Obligations may be
unmatured. Each of the Lenders agrees that it shall not, without the express
consent of Agent, set-off against the Obligations or any other amounts owing to
such Lender any accounts of Borrower now or hereafter maintained with such
Lender. Each Lender further agrees that it shall not, unless specifically
requested to do so by Agent, take or cause to be taken any action, including,
without limitation, the commencement of any legal or equitable proceedings, to
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foreclose any Lien on, or otherwise enforce any security interest in, any of the
Collateral for the purpose of which is, or could be, to give such Lender any
preference or priority against any other Secured Creditor with respect to the
Collateral.
(b) If at any time or times any Lender shall receive by payment,
foreclosure, set-off or otherwise, any proceeds of any Collateral or any
payments with respect to the Secured Obligations arising under, or relating to,
this Agreement or the Collateral Documents, except for any such proceeds or
payments received by such Lender or any Issuing Lender from Agent pursuant to
the terms of this Agreement or the Collateral Agency Agreement, such Lender
shall promptly purchase, without recourse or warranty, an undivided interest and
participation in the Secured Obligations owed to the other Lenders (or, after an
Event of Default, the other Secured Creditors) so that such excess payment
received shall be applied ratably as among Lenders in accordance with their
respective Commitment Percentages; (or, after an Event of Default, among the
Secured Creditors as provided for in the Collateral Agency Agreement); provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
Notwithstanding any contrary provision contained herein, the proceeds of any
drawing under any Letter of Credit issued hereunder in favor of Chase in its
individual capacity (without affecting Chase's obligation to purchase a
participation in any such Letter of Credit in accordance with Section
2.19(c)(i)) shall be for Chase's sole benefit.
(c) Each Secured Creditor other than in its capacity as a Lender shall
be entitled to any rights conferred upon it under this Agreement or any of the
Collateral Documents only on the condition and understanding that it shall be
bound by the terms of this Section 10.03 to the same extent as Lenders.
10.04 Liability of Agent. Neither Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement (except for its or such Person's own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recital, statement, representation or warranty made by
Borrower or any Subsidiary or any officer thereof contained in this Agreement or
in any other instrument or agreement contemplated hereunder or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
instrument or agreement contemplated hereunder or for the value of any
Collateral or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other instrument or agreement contemplated
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hereunder or for any failure of Borrower or any Subsidiary to perform its
obligations hereunder or thereunder. Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any
of agreements contained in, or conditions of, this Agreement or any other
instrument or agreement contemplated hereunder, or to inspect the properties,
books or records of Borrower or any Subsidiary.
10.05 Reliance by Agent. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telecopy, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including counsel to Borrower
or any Guarantor), independent accountants and other experts selected by Agent.
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other instruction or agreement contemplated hereunder
unless it shall first receive such advice or concurrence of the Majority Lenders
as it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other instrument or agreement contemplated
hereunder in accordance with a request or consent of the Majority Lenders and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all Lenders.
10.06 Approvals; Amendments. This Agreement and the Collateral
Documents may be amended or waived only upon the prior express written consent
of Borrower or Guarantors, as the case may be, party thereto and the Majority
Lenders. Upon any occasion requiring or permitting an approval, consent, waiver,
election or other action on the part of Majority Lenders, action shall be taken
by Agent for and on behalf or for the benefit of all Lenders upon the direction
of Majority Lenders, and any such action shall be binding on all Lenders;
provided, however, that unless all Lenders agree in writing, no amendment,
modification, consent or waiver shall be effective which:
(a) increases the amount of the Credit or the amount of the Term Loan
Commitment or Revolving Credit Commitment or L/C Commitment of any Lender,
(b) reduces interest, principal, commissions or fees owing hereunder,
(c) extends the scheduled date on which any sum is due hereunder,
(d) releases any Guarantor from its obligations under the Guarantee
and Collateral Agreement or, subject to the proviso in Section 8.13(a),
releases any material portion of the Collateral (except (i) in connection
with dispositions thereof permitted under this Agreement, (ii) as permitted
by subsection 10.13(b), (iii) any Guarantor may be released from its
obligations under the Credit Documents if all of the Capital Stock of, or
substantially all of the assets of, such Guarantor are disposed of in a
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transaction permitted by this Agreement or (iv) as otherwise expressly
permitted by this Agreement),
(e) changes the definition of "Majority Lenders",
(f) amends or waives the provisions of Sections 2.19(a)(ii)(C) or this
Section 10.6, or
(g) changes the definition of "Interest Period".
10.07 Notice of Default. Agent shall not be deemed to have knowledge
or notice of the occurrence of any Event of Default, except with respect to
defaults in the payment of principal, interest, commissions and fees payable to
Agent hereunder for the account of Lenders, unless Agent shall have received
notice from a Lender or Borrower referring to this Agreement, describing such
Event of Default and stating that such notice is a "notice of default". In the
event that Agent receives such a notice, Agent shall give prompt notice thereof
to Lenders. Agent shall take such action with respect to such Event of Default
as shall be requested by the Majority Lenders in accordance with Article VIII;
provided, however, that unless and until Agent shall have received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Event of Default as it shall deem
advisable in the best interests of Lenders.
10.08 Credit Decision. Each Lender expressly acknowledges that neither
Agent nor any other Lender nor any of their Affiliates nor any officer,
director, employee, agent or attorney-in-fact of any of them has made any
representation or warranty to it and that no act by Agent or any other Lender
hereafter taken, including any review of the affairs of Borrower and its
Subsidiaries and their Affiliates, shall be deemed to constitute any
representation or warranty by Agent or any other Lender to such Lender. Each
Lender represents to Agent and to each other Lender that it has, independently
and without reliance upon Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrower and Guarantors and made its own
decision to enter into this Agreement and extend credit to Borrower hereunder
(without reliance on the Agent or any other Lender). Each Lender also represents
that it will, independently and without reliance upon Agent or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrower and Guarantors (without reliance on the Agent or
any other Lender). Except for notices, reports and other documents expressly
required to be furnished to Lenders by Agent hereunder, Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of Borrower or any Guarantor which may
come into the possession of Agent or any of its officers, directors, employees,
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agents, attorneys-in-fact or Affiliates.
10.09 Lenders' Indemnity. Each Lender agrees to indemnify Agent (to
the extent not reimbursed by or on behalf of Borrower and without limiting the
obligation of Borrower to do so), ratably, according to the sum of (i) its
Revolving Credit Commitments (or, if the Revolving Credit Commitments have been
terminated, the sum of its outstanding Revolving Advances, participating
interests in Letters of Credit and unreimbursed drawings in respect of Letters
of Credit) and (ii) its outstanding Term Advances, determined in effect on the
date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Advances shall have been paid in full, ratably in accordance
with such sum immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind whatsoever which may at any time
(including at any time following the repayment of the Advances or the Letters of
Credit) be imposed on, incurred by or asserted against Agent in any way relating
to or arising out of this Agreement or any document contemplated by or referred
to herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by Agent under or in connection with any of the
foregoing; provided however, that no Lender shall be liable for the payment to
Agent of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from Agent's gross negligence or willful misconduct. Without limitation
of the foregoing, each Lender agrees to reimburse Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including reasonable fees and
expenses of counsel and the allocated cost of in-house counsel) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any Collateral Document, or any document
contemplated by or referred to herein to the extent that Agent is not reimbursed
for such expenses by or on behalf of Borrower.
10.10 Agent as Lender. Chase shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
Agent; and the term "Lenders" shall include Chase in its individual capacity.
Chase and its subsidiaries and affiliates may accept deposits from, lend money
to, act as agent or trustee for other lenders to, and generally engage in any
kind of banking, trust or other business with Borrower or any of its
Subsidiaries or Affiliates as if it were not Agent.
10.11 Notice of Transfer. Subject to Section 9.04(a), Agent may deem
and treat a Lender party to this Agreement as the owner of such Lender's portion
of the Credit for all purposes hereof unless and until a written notice of the
assignment or transfer thereof executed by such Lender shall have been received
by Agent.
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10.12 Resignation of Agent. Agent may resign at any time by giving
written notice to Lenders and Borrower. Upon any such resignation, Majority
Lenders shall have the right to appoint a successor Agent (which shall be either
a Lender or a commercial bank with capital and surplus in excess of One Hundred
Million Dollars ($100,000,000) and which successor Agent, unless a Default or an
Event of Default has occurred and is continuing, shall be reasonably acceptable
to Borrower). If no successor Agent shall have accepted such appointment within
thirty (30) days after the retiring Agent's giving of notice of resignation, the
retiring Agent may, on behalf of Lenders, appoint a successor Agent. Upon the
acceptance by the successor Agent of its appointment hereunder, the successor
Agent shall succeed to and become vested with all the rights and obligations of
the retiring Agent, and the retiring Agent shall be discharged from its
obligations under this Agreement. The provisions of this Article X and Sections
9.06, 9.07 and 9.08 shall inure to the benefit of the retiring Agent as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
10.13 Collateral Matters. (a) Agent may from time to time, before or
after the occurrence of an Event of Default, make such disbursements and
advances to the Collateral Agent ("Agent Advances") which Agent, in its sole
discretion, deems necessary or desirable to preserve or protect the Collateral
or any portion thereof, to enhance the likelihood or maximize the amount of
repayment of the Obligations or to pay any other amount chargeable to Borrower
or any Guarantor pursuant to the terms of this Agreement or any Collateral
Document, including, without limitation, costs, fees and expenses as described
in Section 9.06; provided, however, that the Agent Advances shall not exceed One
Hundred Thousand Dollars ($100,000) without the prior written consent of
Majority Lenders. The Agent Advances shall be repayable on demand and be secured
by the Collateral. The Agent Advances shall not constitute Advances but shall
otherwise constitute Obligations hereunder. Agent shall notify each Lender in
writing of each such Agent Advance, which notice shall include a description of
the purpose of such Agent Advance. Without limitation to its obligations
pursuant to Section 10.09, each Lender agrees that it shall make available to
Agent, upon Agent's demand, in immediately available funds, the amount equal to
such Lender's Commitment Percentage of each such Agent Advance. If such funds
are not made available to Agent by such Lender within one (1) Banking Day after
Agent's demand therefor, Agent will be entitled to recover any such amount from
such Lender together with interest thereon at the Federal Funds Rate for each
day during the period commencing the date of such demand and ending on the date
such amount is received.
(b) Lenders hereby irrevocably authorize Agent, at its option and in
its discretion, to direct the Collateral Agent to release or subordinate on
terms satisfactory to the Collateral Agent any Lien granted to or held by the
Collateral Agent upon any Collateral (i) upon termination of the Revolving
Credit Commitments and Term Loan Commitments and indefeasible payment in full
and satisfaction of all of the Obligations; or (ii) constituting property being
sold or disposed of if the sale or disposition is permitted hereunder (including
with respect to Receivables Assets); or (iii) constituting property in which
neither Borrower nor any Guarantor owned an interest at the time the Lien was
granted or at any time thereafter; or (iv) constituting property leased to
Borrower or any Guarantor; or (v) if approved, authorized or ratified in writing
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by the Majority Lenders; or (vi) subject to a Permitted Lien; or (vii) not owned
by the Borrower or any Guarantor. Upon request by Agent at any time, Lenders
will confirm in writing Agent's authority to so direct the release of particular
types or items of Collateral pursuant to this Section 10.13(b). The Lenders
hereby irrevocably authorize Agent, at its option and discretion (1) to direct
the Collateral Agent to release and subordinate, on terms satisfactory to the
Collateral Agent, Liens on Collateral which is also subject to Permitted Liens,
(2) to execute any release, subordination or acknowledgement documents requested
by the Borrower in order to effect any release or subordination described in
this paragraph (b) and (3) to execute acknowledgements with respect to leases to
the effect that the Property subject to such leases is not subject to the Liens
created by the Credit Documents or Collateral. This paragraph (b) is intended as
an authorization by the Lenders to permit the Agent and the Collateral Agent to
take the actions described herein and neither the Borrower nor any of its
Subsidiaries or any other Person shall be entitled to the benefits hereof.
(c) Without in any manner limiting Agent's authority to act without
any specific or further authorization or consent by the Majority Lenders (as set
forth in Section 10.13(b) above), each Lender agrees to confirm in writing, upon
request by Borrower, the authority to direct the release of Collateral conferred
upon the Agent under clauses (i) through (v) of Section 10.13(b) above. So long
as no Event of Default is then continuing, upon receipt by Agent of confirmation
from the Majority Lenders of its authority to direct the release of any
particular item or types of Collateral, and upon at least five (5) Banking Days'
prior written request by Borrower, Agent shall (and is hereby irrevocably
authorized by Lenders to) direct the Collateral Agent to execute such documents
as may be necessary to evidence the release of the Liens granted to the
Collateral Agent for the benefit of the Secured Creditors herein or pursuant
hereto upon such Collateral; provided, however, that (i) Agent shall not be
required to direct the Collateral Agent to execute any such document on terms
which, in Agent's opinion, would expose Agent or the Collateral Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect or impair the Obligations or any Liens upon
(or obligations of Borrower in respect of) all interests retained by Borrower,
including (without limitation) the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
(d) Neither Agent nor Collateral Agent shall have any obligation
whatsoever to any Lender to assure that the Collateral exists or is owned by
Borrower or is cared for, protected or insured or has been encumbered or that
the Liens granted to the Collateral Agent pursuant to any Collateral Document
have been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent or Collateral Agent in this Section 10.13 or in any of the
Collateral Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, Agent may act in any
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manner it may deem appropriate, in its sole discretion, given Agent's own
interest in the Collateral as one of the Lenders and that Agent shall have no
duty or liability whatsoever to any Lender (except as specifically provided in
this Agreement and the Collateral Documents).
EACH LENDER FURTHER ACKNOWLEDGES AND AGREES THAT AGENT SHALL NOT BE
RESPONSIBLE FOR, AND SHALL HAVE NO LIABILITY OR OBLIGATION WITH RESPECT TO, THE
VALIDITY, EFFECTIVENESS, GENUINENESS, ENFORCEABILITY OR SUFFICIENCY OF THIS
AGREEMENT, THE NOTES, THE COLLATERAL DOCUMENTS, ANY OTHER INSTRUMENT OR
AGREEMENT CONTEMPLATED HEREUNDER OR THEREUNDER, ANY ACTION TAKEN OR NOT TAKEN OR
ANY DECISION MADE BY ANY PERSON (OTHER THAN AGENT) WITH RESPECT TO ANY THEREOF
OR WITH RESPECT TO THE COLLATERAL, THE FAILURE OF THE BORROWER OR ANY SUBSIDIARY
TO PERFORM ITS OBLIGATIONS HEREUNDER OR THEREUNDER, ANY MISREPRESENTATION BY
BORROWER OR ANY SUBSIDIARY HEREUNDER OR THEREUNDER, OR THE VALUE OF ANY
COLLATERAL OR THE CREATION, ATTACHMENT, PERFECTION OR PRIORITY OF ANY SECURITY
INTEREST OR LIEN PURPORTED TO BE CREATED BY THE COLLATERAL DOCUMENTS, THIS
AGREEMENT OR SUCH OTHER INSTRUMENTS OR AGREEMENTS AND THAT AGENT, AS COLLATERAL
AGENT AND AGENT, HAS UNDERTAKEN NO INDEPENDENT REVIEW OR ANALYSIS WITH RESPECT
TO ANY OF THE FOREGOING.
(e) The benefit of the Collateral Documents and of the provisions of
this Agreement relating to the Collateral shall extend to and be available in
respect of the Secured Obligations (as defined in the Collateral Agency
Agreement) solely on the condition and understanding, as among Agent and
Lenders, that (i) the Secured Obligations shall be entitled to the benefit of
the Collateral to the extent expressly set forth in the Collateral Documents,
and to such extent the Collateral Agent shall hold, and have the right and power
to act with respect to, the Collateral on behalf of and as agent for the holders
of the Secured Obligations; but Agent in its separate capacity as agent
hereunder is acting solely as agent for the Lenders and shall have no separate
fiduciary duty, duty of loyalty, duty of care, duty of disclosure or other
obligations whatsoever to any holder of Secured Obligations; and (ii) all
matters, acts and omissions relating in any manner to the Collateral, or the
omission, creation, perfection, priority, abandonment or release of any Lien,
shall be governed solely by the provisions of this Agreement and the Collateral
Documents, and no separate Lien, right, power or remedy shall arise or exist in
favor of any Lender under any separate instrument or agreement or in respect of
any Secured Obligations; and (iii) each Lender shall be bound by all actions
taken or omitted, in accordance with the provisions of this Agreement or the
Collateral Documents, by the Collateral Agent, at the direction of Agent on
behalf of the Lenders; and (iv) no holder of Secured Obligations shall exercise
any right of setoff, bank's lien or similar right except as expressly provided
in Section 10.03.
(f) Any Collateral proceeds received by Agent from the Collateral
Agent pursuant to Section 3(b) of the Collateral Agency Agreement shall be
applied and paid to the Obligations as follows (unless Agent and Majority
111
Lenders otherwise agree):
First: To Agent and the Collateral Agent in an amount equal to all
costs and expenses incurred in connection with performing their respective
duties hereunder and under the Collateral Documents, including, without
limitation, those related to or in connection with the administration of
this Agreement or the enforcement of their respective rights under the
Collateral Documents;
Second: To any accrued and unpaid interest outstanding hereunder or
under the Notes;
Third: To the unpaid principal of the outstanding Advances and to
Agent for deposit as cash collateral, for application against drawings
under any Letters of Credit, up to an amount equal to the undrawn amount of
such Letters of Credit;
Fourth: To any accrued and unpaid fees, commissions or other sums
payable pursuant to this Agreement; and
Fifth: Any surplus then remaining shall be paid to Borrower or its
successors or assigns, or to whomever may be lawfully entitled to receive
the same, or as a court of competent jurisdiction may direct.
10.14 Collateral Agent. The Collateral Agent shall be entitled to the
standards of care, indemnities and other rights set forth in this Article Ten as
are set forth for the Agent, mutatis mutandis, except as may be expressly
provided otherwise hereunder, or in the Collateral Documents.
10.15 Documentation Agent and Co-Agent. Neither the Documentation
Agent nor the Co-Agent shall have any rights, duties or responsibilities
hereunder in its capacity as such.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.
BALLY TOTAL FITNESS HOLDING CORPORATION
By:_________________________________
Name:
Title:
112
113
THE CHASE MANHATTAN BANK,
as Agent and as a Lender
By:________________________________
Name:
Title:
114
XXX XXXXXX PRIME RATE INCOME TRUST,
as Lender
By: XXX XXXXXX INVESTMENT ADVISORY
CORP.
By:________________________________
Name:
Title:
115
XXX XXXXXX SENIOR FLOATING RATE
FUND,
as Lender
By: XXX XXXXXX INVESTMENT ADVISORY
CORP.
By:________________________________
Name:
Title:
116
XXX XXXXXX SENIOR INCOME TRUST, as
Lender
By: XXX XXXXXX INVESTMENT ADVISORY
CORP.
By:________________________________
Name:
Title:
117
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE INC., as Lender
By:________________________________
Name:
Title:
118
XXXXXX FINANCIAL, INC., as Lender
By:________________________________
Name:
Title:
119
ARES III CLO LTD., as Lender
By: ARES CLO MANAGEMENT, LLC
By:________________________________
Name: Xxxxx X. Xxxxx
Title: Vice President
120
XXXXX FARGO BANK N.A., as Lender
By:________________________________
Name:
Title:
121
LASALLE BANK NATIONAL ASSOCIATION,
as Lender
By:________________________________
Name:
Title:
122
BANKERS TRUST COMPANY, as Lender
By:________________________________
Name:
Title:
123
BANK ONE, NA (CHICAGO MAIN OFFICE), as
Lender
By:________________________________
Name:
Title:
000
XXX XXXX XX XXXX XXXXXX, as Lender
By:________________________________
Name:
Title:
125
PNC BANK, N.A., as Lender
By:________________________________
Name:
Title:
126
SOCIETE GENERALE, as Lender
By:________________________________
Name:
Title:
127
FLOATING RATE PORTFOLIO, as Lender
By: INVESCO SENIOR SECURED
MANAGEMENT INC. as Attorney in Fact
By:________________________________
Name:
Title:
128
NUVEEN SENIOR INCOME FUND, as Lender
By:________________________________
Name:
Title:
