1
Exhibit 4.16
AMENDED AND RESTATED
CREDIT AGREEMENT
by and among
EDUCATION MANAGEMENT CORPORATION
as the Borrower
THE BANKS PARTY HERETO
as the Banks
and
PNC BANK, NATIONAL ASSOCIATION
as the Agent
March 16, 1995
BF 22789.22
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TABLE OF CONTENTS
PAGE
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INDEX OF EXHIBITS .......................................................... v
INDEX OF SCHEDULES ......................................................... vi
ARTICLE I. DEFINITIONS ................................................. 1
1.1 Defined Terms ............................................... 1
1.2 GAAP Definitions ............................................ 23
1.3 Other Definitional Conventions .............................. 23
1.4 Headings .................................................... 23
ARTICLE II. THE CREDIT .................................................. 24
2.1 The Term Loan ............................................... 24
2.2 Revolving Credit Loans ...................................... 27
2.3 Letters of Credit ........................................... 30
2.4 Certain Provisions Relating to Interest Rates ............... 35
2.5 Yield Protection and Reimbursement .......................... 42
2.6 Capital Adequacy ............................................ 44
2.7 Closing Fee ................................................. 45
2.8 Lending Offices ............................................. 45
2.9 Time, Place and Manner of Payments .......................... 45
2.10 Payment from Accounts Maintained by the Borrower ............ 45
2.11 Substitution of a Bank ...................................... 46
ARTICLE III. SET-OFF AND SECURITY INTERESTS .............................. 46
3.1 Set-Off...................................................... 46
3.2 Security Agreements ......................................... 46
3.3 Pledge Agreements ........................................... 46
ARTICLE IV. REPRESENTATIONS AND WARRANTIES .............................. 47
4.1 Existence ................................................... 47
4.2 Authority ................................................... 47
4.3 Capitalization .............................................. 48
4.4 Existence of ESOP ........................................... 48
4.5 Validity and Enforceability ................................. 48
4.6 No Conflict ................................................. 48
4.7 Consents .................................................... 49
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4.8 Litigation .................................................. 49
4.9 Compliance with Applicable Laws, etc. ....................... 49
4.10 Financial Statements ........................................ 49
4.11 Environmental Matters ....................................... 49
4.12 Deferred Compensation Plans ................................. 50
4.13 Title to Properties ......................................... 50
4.14 Intellectual Property ....................................... 50
4.15 Tax Returns and Payments .................................... 51
4.16 Material Adverse Change ..................................... 51
4.17 Solvency .................................................... 51
4.18 Leveraged Securities ........................................ 51
4.19 Securities Acquisition Loans ................................ 51
4.20 Senior Debt Status .......................................... 51
4.21 Escrow Agreement and Stockholders Contribution and
Repayment Agreement ....................................... 51
4.22 Investment Company Act ...................................... 52
4.23 Public Utility Holding Company Act .......................... 52
4.24 Disclosure .................................................. 52
ARTICLE V. AFFIRMATIVE COVENANTS ....................................... 52
5.1 Use of Proceeds ............................................. 52
5.2 Furnishing Information ...................................... 52
5.3 Preservation of Existence ................................... 56
5.4 Payment of Taxes and Fees ................................... 57
5.5 Notice of Change of Business ................................ 57
5.6 Intentionally Omitted ....................................... 57
5.7 Preservation of Existence and Qualification of ESOP ......... 57
5.8 Hazard and Casualty Insurance ............................... 57
5.9 Good Repair ................................................. 57
5.10 Corporate Records ........................................... 58
5.11 Inspection of Records and Properties ........................ 58
5.12 Continued Ownership of Borrower and Subsidiaries ............ 58
5.13 Compliance with Laws ........................................ 58
5.14 Further Assurances .......................................... 59
ARTICLE VI. NEGATIVE COVENANTS .......................................... 59
6.1 Maintenance of Consolidated Net Worth ....................... 59
6.2 Maintenance of Interest Coverage Ratio ...................... 60
6.3 Intentionally Omitted ....................................... 60
6.4 Maintenance of Leverage Ratio ............................... 60
6.5 Disposal of Assets .......................................... 60
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6.6 Permitted Capital Expenditures ............................ 61
6.7 Intentionally Omitted ..................................... 61
6.8 Permitted Indebtedness .................................... 61
6.9 Permitted Encumbrances .................................... 63
6.10 Restriction of Operating Leases ........................... 64
6.11 Advance of Funds and Investments .......................... 64
6.12 Dividend and Redemption Restrictions ...................... 65
6.13 Merger .................................................... 66
6.14 Regulations G, X, T and U Compliance ...................... 67
6.15 Subordination ............................................. 67
6.16 Alteration of Various Agreements .......................... 67
6.17 Cohort Default Rates ...................................... 68
6.18 Permitted Acquisitions .................................... 68
6.19 Change Fiscal Year ........................................ 68
6.20 Change of Business ........................................ 68
ARTICLE VII. CONDITIONS PRECEDENT ...................................... 68
7.1 All Revolving Credit Disbursements and all
Letters of Credit ......................................... 68
7.2 Conditions Precedent to the Term Loans, the Initial
Revolving Credit Disbursement and the Issuance of the
Initial Letter of Credit .................................. 69
ARTICLE VIII. EVENTS OF DEFAULT ......................................... 72
8.1 Payment Default ........................................... 72
8.2 Cross Defaults ............................................ 72
8.3 Insolvency ................................................ 72
8.4 Dissolution ............................................... 73
8.5 Adverse Judgments ......................................... 73
8.6 Failure to Comply with Certain Covenants .................. 73
8.7 Failure to Comply With Other Covenants .................... 73
8.8 Misrepresentation ......................................... 73
8.9 Consequences of an Event of Default ....................... 74
ARTICLE IX. AGREEMENT AMONG BANKS ..................................... 74
9.1 Appointment and Grant of Authority ........................ 74
9.2 Non-Reliance on Agent ..................................... 75
9.3 Responsibility of Agent and Other Matter .................. 75
9.4 Action on Instructions .................................... 76
9.5 Action in Event of Default ................................ 76
9.6 Indemnification ........................................... 76
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9.7 Agent's Rights as a Bank .................................. 77
9.8 Advances by Agent.......................................... 77
9.9 Payment to Banks .......................................... 78
9.10 Pro Rata Sharing .......................................... 78
9.11 Successor Agent ........................................... 78
ARTICLE X. MISCELLANEOUS ............................................. 79
10.1 Amendments and Waivers .................................... 79
10.2 Notices ................................................... 80
10.3 Holiday Payments .......................................... 81
10.4 Tax Withholding ........................................... 81
10.5 Survival .................................................. 82
10.6 Costs ..................................................... 82
10.7 Certain Taxes ............................................. 83
10.8 Successors, Assigns and Participations .................... 83
10.9 Confidentiality ........................................... 85
10.10 Indemnification ........................................... 85
10.11 Integration ............................................... 86
10.12 Severability .............................................. 86
10.13 APPLICABLE LAW ............................................ 87
10.14 CONSENT TO JURISDICTION ................................... 87
10.15 Counterparts .............................................. 87
10.16 Amendment and Restatement ................................. 88
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INDEX OF EXHIBITS
PRINCIPAL
EXHIBIT DESIGNATION EXHIBIT NAME SECTION REFERENCE
------------------- ------------ --------------------
Exhibit "A" Form of Amended and Restated Term Note 2.1
Exhibit "B" Form of Revolving Credit Note 2.2
Exhibit "C" Form of Request for Revolving Credit Loan 2.2
Exhibit "D" Form of Amended and Restated Security Agreement 3.2
Exhibit "E" Form of Amended and Restated 3.2
Subsidiary Security Agreement
Exhibit "F" Form of Amended and Restated Pledge Agreement 3.3
Exhibit "G-1" Form of Amended and Restated 3.3
Subsidiary Pledge Agreement - (AII)
Exhibit "G-2" Form of Amended and Restated 3.3
Subsidiary Pledge Agreement - (NCG)
Exhibit "G-3" Form of Subsidiary Pledge 3.3
Agreement (New Active Subsidiaries)
Exhibit "H" Form of Compliance Certificate 5.2d
Exhibit "I" Form of Opinion of Counsel to Borrower 7.2r
Exhibit "J" Form of Assignment and Assumption Agreement 10.8
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INDEX OF SCHEDULES
1.1 Management Stockholders
4.1 Active Subsidiaries
4.3 Ownership of Stock; Rights or Options
4.8 Litigation
4.11 Environmental Matters
4.12 Deferred Compensation Plans
4.14 Intellectual Property
5.12 Subsidiaries
6.8a Permitted Existing Indebtedness of the Borrower
6.8b Permitted Existing Indebtedness of Subsidiaries
6.9 Permitted Existing Encumbrances
6.10 Existing Operating Leases
6.16 Proposed Amendments to Management Repurchase Agreements
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AMENDED AND RESTATED
CREDIT AGREEMENT
This Amended and Restated Credit Agreement dated as of March 16, 1995 by
and among EDUCATION MANAGEMENT CORPORATION, as the borrower (the "Borrower"),
the FINANCIAL INSTITUTIONS listed on the signature pages hereto and each other
financial institution which, from time to time, becomes a party hereto in
accordance with Section 10.8 (individually, a "Bank" and collectively the
"Banks"), PNC BANK, NATIONAL ASSOCIATION, as the Issuing Bank (the "Issuing
Bank") and PNC BANK, NATIONAL ASSOCIATION, as the Agent for the Banks and the
Issuing Bank (the "Agent"), amends and restates in its entirety the 1989 Credit
Agreement.
WITNESSETH:
WHEREAS, EMC Holdings, Inc. (the predecessor by merger to the Borrower),
the 1989 Banks and Pittsburgh National Bank (now known as PNC Bank, National
Association) entered into the 1989 Credit Agreement pursuant to which the 1989
Banks made available a credit facility consisting of a revolving credit
commitment in an aggregate principal amount not to exceed $16,000,000 and term
loans in an aggregate principal amount not to exceed $36,175,000;
WHEREAS, the Borrower has requested that the Banks, the Issuing Bank and
the Agent amend and restate the 1989 Credit Agreement (i) to increase the
aggregate principal amount of the revolving credit commitment to $50,000,000
from $16,000,000; (ii) to provide the issuance on behalf of the Borrower of
letters of credit in the aggregate stated amount not to exceed $8,000,000; and
(iii) to revise certain other covenants and conditions set forth in the 1989
Credit Agreement;
WHEREAS, the Term Loan Banks are willing to purchase from the 1989 Banks
the term loans outstanding under the 1989 Credit Agreement; and
WHEREAS, the Banks, the Issuing Bank and the Agent are willing to amend
and restate the 1989 Credit Agreement and to make available to the Borrower the
aforementioned credit facilities, all upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of mutual promises contained herein and
other valuable consideration and with the intent to be legally bound hereby,
the parties hereto agree as follows:
ARTICLE I. DEFINITIONS.
1.1 Defined Terms. As used herein, the following terms shall have the meaning
specified unless the context otherwise requires:
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"Account" shall mean any account, as that term is defined in the UCC, of
any Person, whether now owned or hereafter created or acquired.
"Account Debtor" shall mean any Person who is or may become obligated to
any second Person under, with respect to, or on account of, an Account.
"Accredited Subsidiary" means each Subsidiary which is accredited or
approved, as applicable, by the Accrediting Commission of Career Schools and
Colleges of Technology, the National Association of Trade and Technical
Schools, the American Bar Association, the Southern Association of Colleges and
Schools or any other similar Person which accredits, certifies, or otherwise
approves secondary, proprietary post-secondary vocational or career training
schools.
"Active Subsidiary" means (i) each Subsidiary of the Borrower shown on
Schedule 4.1 hereof as being an Active Subsidiary as of the Closing Date and
(ii) each other Subsidiary of the Borrower which at any time in the future (A)
becomes an Accredited Subsidiary and (B) has either (1) assets of $50,000 or
more or (2) revenues of $100,000 or more in any Fiscal Year.
"Adjusted ESOP Tax-Exempt Factor" shall have the meaning ascribed to it in
Subsection 2.4d hereof.
"Adjustment" shall have the meaning ascribed to it in Subsection 2.4d
hereof.
"Affiliate" means, as to any Person, any second Person which, directly or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person. For purposes of this definition,
the terms "control", "controlled by", and "under common control with" shall
mean the possession of the power to direct or cause the direction of the
management and policies of any Person, whether through the ownership of shares,
by contract or otherwise.
"Agent" means PNC Bank, National Association, or any successor agent, in
its capacity as the administrative agent for the Banks and the Issuing Bank
under this Credit Agreement and the other Loan Documents.
"Agent's Fee" means the fee payable to the Agent, for its own account, as
described in that certain letter dated December 7, 1994 between the Borrower
and the Agent.
"AII" means Art Institutes International, Inc., a corporation organized
and existing under the laws of the Commonwealth of Pennsylvania.
"Allocated Shares" means the shares of Employer Securities which have been
acquired with the proceeds of the ESOP Pass Through Loan and have been
allocated by the Trustee to individual accounts of the participants under the
ESOP.
"Amended and Restated Pledge Agreement" means the pledge agreement
executed by the Borrower substantially in the form of Exhibit "F" hereto
pursuant to which
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the Borrower grants to the Agent, for the benefit of the Banks and the Issuing
Bank, a first lien and prior security interest in all of the issued and
outstanding capital stock of all Active Subsidiaries owned directly by the
Borrower and all extensions, renewals, amendments, modifications, replacements
and restatements thereof and thereto.
"Amended and Restated Security Agreement" means the security agreement
executed by the Borrower substantially in the form of Exhibit "D" hereto
pursuant to which the Borrower grants to the Agent, for the benefit of the
Banks and the Issuing Bank, a first lien and prior security interest (except
for Permitted Encumbrances) in the Collateral owned by the Borrower and all
extensions, renewals, amendments, modifications, substitutions, replacements
and restatements thereto and thereof.
"Amended and Restated Subsidiary Pledge Agreement" means a pledge
agreement executed by either AII or NCG substantially in the form of either
Exhibit "G-1" or Exhibit "G-2" hereto pursuant to which such Active Subsidiary
grants to the Agent, for the benefit of the Banks and the Issuing Bank, a first
lien and prior security interest in all of the issued and outstanding capital
stock of its Active Subsidiaries and all extensions, renewals, amendments,
modifications, substitutions, replacements and restatements thereof and
thereto.
"Amended and Restated Subsidiary Security Agreement" means the security
agreement executed by AII substantially in the form of Exhibit "E" hereto
pursuant to which AII grants to the Agent, for the benefit of the Banks and the
Issuing Bank, a first lien and priority security interest (except for Permitted
Encumbrances) in the Collateral owned by AII and all extensions, renewals,
amendments, modifications, replacements and restatements thereof and thereto.
"Amended and Restated Term Note" means any one or all of the promissory
notes of the Borrower evidencing Bank Indebtedness of the Borrower hereunder
with respect to the Term Loans, which notes shall be substantially in the form
of Exhibit "A" to this Credit Agreement, and all extensions, renewals,
amendments, modifications, substitutions, replacements and restatements thereto
or thereof.
"Annual Report" means the annual report/return filed by the Borrower with
respect to the ESOP in accordance with the provisions of Section 103 of ERISA.
"Applicable Base Rate Margin" shall have the meaning ascribed to it in
Subsection 2.4b hereof.
"Applicable Eurodollar Rate Margin" shall have the meaning ascribed to it
in Subsection 2.4b hereof.
"Art Institute" means any of the following Persons: Art Institute of
Pittsburgh (a division of AII), Art Institute of Atlanta, Inc., Art Institute
of Dallas, Inc., Art Institute of Fort Lauderdale, Inc., Art Institute of
Houston, Inc., Art Institute of Philadelphia, Inc., Art Institute of
Seattle, Inc., The Colorado Institute of Art, Inc. and any other Active
Subsidiary operating an art institute.
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"Article" means an article of this Credit Agreement unless another
document is specifically referenced.
"Assignment and Assumption Agreement" means an Assignment and Assumption
Agreement substantially in the form of Exhibit "J" hereto by and among a
Purchasing Bank, a Transferor Bank and the Agent, on behalf of itself and the
remaining Banks, and consented to by the Borrower.
"Authorized Officer" means Chairman, Chief Executive Officer, President,
Chief Financial Officer or Treasurer of any Person. The Agent, the Banks and
the Issuing Bank shall be entitled to rely on the incumbency certificates
delivered pursuant to Section 7.2 for the initial designation of each
Authorized Officer of the Borrower or any other Loan Party. Additions or
deletions to the list of Authorized Officers may be made by the Borrower or any
other Loan Party, at any time, by delivering to the Agent, for redelivery to
the Banks and the Issuing Bank, a revised fully-executed incumbency certificate
for the Borrower or such other Loan Party.
"Availability Period" shall mean the period from and including the Closing
Date to but excluding the Repayment Date.
"Bank" means any Revolving Credit Bank, Term Loan Bank or, unless the
context clearly requires otherwise, the Issuing Bank, together with their
respective successors and assigns.
"Bank Indebtedness" means the liability of the Borrower, as of any date of
determination, without duplication, to pay the Commitment Fee, the Agent's Fee,
the Letter of Credit Fees, the Issuance Fee, the outstanding principal amount
of the Revolving Credit Loans and the Term Loans, any draws upon any Letter of
Credit, interest thereon, any other amounts due pursuant to Article II hereof
and all reasonable out-of-pocket expenses incurred by the Banks or the Agent in
connection with the preparation, negotiation, administration, enforcement of
this Credit Agreement, the Revolving Credit Notes, the Amended and Restated
Term Notes, the other Loan Documents, the transactions contemplated thereby, or
the protection of the Agents', the Banks' or the Issuing Bank's rights under
any of the foregoing described instruments (including but not limited to the
reasonable fees and expenses of counsel) to the extent such expenses are the
responsibility of the Borrower pursuant to this Credit Agreement.
"Base Rate" means, as of any date of determination, a rate of interest per
annum equal to the higher of (i) the Agent's Prime Rate, as of such date of
determination, or (ii) the sum of (A) the Federal Funds Rate, as of such date
of determination, plus (B) one-half of one percent (1/2%). Such interest rate
shall change automatically from time to time, effective as of the effective
date of each change in the Prime Rate or the Federal Funds Rate.
"Base Rate Loan" means any Loan which bears, or is to bear, interest under
the Base Rate Option.
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"Base Rate Option" means the interest rate option described in item (i) of
Subsection 2.4b hereof.
"Benefit Arrangement" means an "employee benefit plan" within the meaning
of Section 3(3) of ERISA, which is not a Plan or a Multiemployer Plan and which
is mentioned, or otherwise contributed to, by any Person for the benefit of
employees of such Person or an ERISA Affiliate thereof.
"Borrower" means Education Management Corporation, a corporation organized
and existing under the laws of the Commonwealth of Pennsylvania and having its
principal office at 000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxxxx
00000.
"Business Day" means (i) with respect to any borrowing or payment on,
renewal of or conversion to a Eurodollar Rate Loan, any day other than (a) a
Saturday or Sunday, (b) a day on which commercial banks in Pittsburgh,
Pennsylvania and Cleveland, Ohio are required or authorized by law to close and
(c) a day on which dealings are not carried on in the London interbank market
and (ii) for all other purposes, any day other than (a) a Saturday or Sunday or
(b) a day on which commercial banks in Pittsburgh, Pennsylvania and Cleveland,
Ohio are required or authorized by law to close.
"Capital Expenditures" means, for any period, on a Consolidated basis, all
amounts debited to the fixed asset accounts on the balance sheet of any Person
during such period (or required to be so debited in accordance with GAAP) in
respect to the acquisition, construction, improvement, replacement or
betterment of land, buildings, machinery, equipment or any other fixed asset
that has a useful life of more than one year.
"Capitalized Lease" means, as to any Person, any lease of tangible or
intangible property (whether real, personal or mixed) by such Person as the
lessee under which the obligations of the lessee would be included in
determining total liabilities as shown on the liability side of a balance sheet
of such Person in accordance with GAAP.
"Capitalized Lease Expenditures" means, as to any Person and for any
period, on a Consolidated basis, such amounts debited to the fixed asset
accounts on the balance sheet of such Person during such period in question (or
required to be so debited in accordance with GAAP) in respect of the
Capitalized Leased Obligations.
"Capitalized Lease Obligations" means, as to any Person and as of any date
of determination, the principal amount of liability of such Person reflecting
the aggregate discounted value of all future payments due under all Capitalized
Leases calculated in accordance with GAAP including, but not limited to
Statement of Financial Accounting Standards No. 13.
"Cash Flow from Operations" means, for any period, on a Consolidated basis,
(i) the sum of (A) Consolidated Net Income, (B) all non-cash charges deducted in
arriving at Consolidated Net Income, (C) interest expense of the Borrower and
its Subsidiaries, (D) income tax expense (current and deferred) of the Borrower
and its Subsidiaries, (E) ESOP contributions made by the Borrower, (F) purchase
price premium amortization and (G) any
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extraordinary items deducted in arriving at Consolidated Net Income minus (ii)
the sum of (A) non-cash credits to Consolidated Net Income and (B) the proceeds
paid to the Borrower from life insurance policies maintained on the life of any
employee of the Borrower or any of its Subsidiaries.
"Chattel Paper" shall mean chattel paper, as that term is defined in the
UCC, of any Person whether now owned or existing or hereafter created or
acquired.
"Closing" means the execution of this Credit Agreement and the issuance of
the Revolving Credit Notes and the Amended and Restated Term Notes, all to be
held at the offices of Xxxxxx Xxxxxxxxx, P.C. in Pittsburgh, Pennsylvania.
"Closing Date" means March 16, 1995 or such later date as is mutually
agreeable to the parties hereto.
"Closing Fee" means the fees described in Section 2.7 hereof.
"Code" means the Internal Revenue Code of 1986, as the same may be amended
from time to time and the regulations and rulings promulgated thereunder,
together with any successor legislation thereto.
"Cohort Default Rate" shall have the meaning ascribed thereto by the DOE
in Title 34, Chapter VI, Part 668, Subpart B, Section 17 of the Code of Federal
Regulations (34 C.F.R. Section 668.17), as the same may be amended from time
to time.
"Collateral" means the Accounts, Chattel Paper, Documents, Equipment,
Fixtures, General Intangibles, Goods, Instruments, Inventory and Money of the
Borrower and AII (excluding the Accounts, Chattel Paper, Documents, Equipment,
Fixtures, General Intangibles, Goods, Instruments, Inventory and Money owned or
used by the Art Institute of Pittsburgh) whether now owned or hereafter
acquired or created, and all rights, titles and interests in and to and
relating to all such property, and all products thereof and proceeds derived
therefrom including, without limitation, proceeds of casualty insurance on such
Collateral.
"Commitment Amount" means, with respect to each Revolving Credit Bank, the
dollar amount set forth for such Revolving Credit Bank under the caption
"Revolving Credit Commitment" on the signature page to this Credit Agreement
signed by such Revolving Credit Bank or in any Assignment and Assumption
Agreement executed by such Revolving Credit Bank, whether in the capacity as a
Purchasing Bank or a Transferor Bank.
"Commitment Fee" means the commitment fee described in Subsection 2.2h of
this Credit Agreement.
"Commitment Percentage" means, with respect to each Revolving Credit Bank,
the percentage amount set forth for such Revolving Credit Bank under the
caption "Percentage Amount" on the signature page to this Credit Agreement
signed by such
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Revolving Credit Bank or in any Assignment and Assumption Agreement executed by
such Revolving Credit Bank, whether in the capacity as a Purchasing Bank or a
Transferor Bank.
"Compliance Certificate" means a compliance certificate substantially in
the form of Exhibit "H" hereto which shall be delivered by the Borrower to the
Agent and to each Bank in accordance with Subsection 5.2d hereof.
"Consolidated" means the consolidation of the accounts of any two or more
Persons in accordance with GAAP.
"Consolidated Cash Interest" means, as to any Person and for any period,
on a Consolidated basis, the sum of all cash interest due and payable with
regard to Indebtedness for Borrowed Money for such period.
"Consolidated HEBIT" means, for any period the HEBIT of the Borrower and
its Subsidiaries, on a Consolidated basis.
"Consolidated Net Income" means, for any period, on a Consolidated basis,
the net income of the Borrower and its Subsidiaries determined in accordance
with GAAP consistently applied.
"Consolidated Net Worth" means, as at any date of determination, on a
Consolidated basis, an amount equal to the stockholders' equity (without giving
effect to any repurchases made or Indebtedness for Borrowed Money incurred in
connection with satisfying the Borrower's Repurchase Obligations and excluding
any non-cash extraordinary items) in the Borrower and its Subsidiaries,
determined in accordance with GAAP consistently applied.
"Contamination" means the presence in soil, groundwater or surface water
of Hazardous Substances in sufficient quantity or concentration to require
investigation, corrective action or remediation under any Environmental Law.
"Controlled Group" means, as to any Person, (i) a controlled group of
corporations as defined in Section 1563 of the Code or (ii) a group of trades
or businesses under common control as defined in Section 414(c) of the Code of
which such Person is a part or may become a part.
"Corporate Tax Rate" means the maximum statutory rate in effect under the
first sentence of Section 11(b) of the Code.
"Credit Agreement" means this Amended and Restated Credit Agreement
together with the exhibits and schedules hereto and hereof and all extensions,
renewals, amendments, modifications, restatements and replacements hereof and
hereto.
"Credit Facility" means the credit facility consisting of the Revolving
Credit Commitment in the aggregate amount of $50,000,000.00 and the Term Loans
in the original aggregate principal amount of $9,205,650.00.
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"Default" means an event, condition, act or omission to act which
constitutes a default in the performance or observance of any covenant,
agreement or provision of any Loan Document, which event, condition, act or
omission to act would become or constitute an Event of Default with the passage
of time, the giving of notice or both, and without subsequent cure within any
applicable period of time.
"Disbursement" means the one or more advances of proceeds to the Borrower
made pursuant to Sections 2.1 and 2.2 hereof.
"Document" means any document, as that term is defined in the UCC, of any
Person, whether now owned or hereafter acquired or created.
"DOE" means the United States Department of Education or as the context may
require, the United States Secretary of Education, or any successor thereto.
"DOL" means the United States Department of Labor or as the context may
require, the United States Secretary of Labor, or any successor thereto.
"Dollars" or "$" means the legal tender of the United States of America.
"Employer Securities" means common stock or convertible preferred stock of
the Borrower which constitutes "qualifying employer securities" under Section
409(l) of the Code.
"Encumbrance" means any encumbrance, mortgage, lien (statutory or other),
charge, pledge, hypothecation, security interest, assignment, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement and any Capitalized Lease having substantially the
same economic effect as any of the foregoing) in, upon or against any asset of
any Person, whether or not voluntarily given.
"Environmental Claim" means any claim, suit, notice, order, demand or
other communication made by any Person, including the Borrower, with respect to
the Borrower, any of its Subsidiaries or any of their respective properties,
whether owned or leased, that: (i) asserts a violation of any Environmental
Law; (ii) asserts a liability under any Environmental Law; (iii) orders an
investigation, corrective action, remediation or other response under any
Environmental Law; (iv) alleges personal injury or property damage resulting
from Hazardous Substances; or (v) alleges that there is or may be
Contamination.
"Environmental Law" means any and all statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental restrictions issued,
promulgated or granted by any Governmental Person relating to the environment
or the release of any materials into the environment.
"Equipment" shall mean all equipment, as that term is defined in the UCC,
of any Person whether now owned or hereafter acquired.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as the
same may be amended, from time to time, and the rulings and regulations
promulgated thereunder, together with any successor legislation thereto.
"ERISA Affiliate" means, as of any date of determination and as to any
Person, any member of a Controlled Group of which such Person is a member, and
any trade or business (whether or not incorporated) under common control with
such Person, and all other entities which, together with such Person, are or
were treated as a single employer under Section 414 of the Code (which shall
include any Subsidiary of such Person).
"Escrow Agreement" means the Escrow and Pledge Agreement dated as of
October 25, 1989 by and among the Borrower, those stockholders of the Borrower
signatory thereto, Xxxxxxx and C. Xxxxxx Xxxxxxx as stockholder agents, the
Agent, on behalf of the 1989 Banks, and PNC Bank, National Association
(formerly Pittsburgh National Bank) as escrow agent thereunder.
"ESOP" means the Education Management Corporation Employee Stock Ownership
Plan.
"ESOP Pass Through Loan" means the proceeds of the Term Loans which are
reloaned by the Borrower to the ESOP Trust.
"ESOP Tax-Exempt Factor" means eighty-four and six-tenths percent (84.6%).
"ESOP Trust Note" means the promissory note of the Trustee in the original
principal amount of $36,175,000 and all extensions, renewals, amendments,
modifications, substitutions and replacements thereof or thereto.
"ESOP Trust" means the Education Management Corporation Employee Stock
Ownership Trust established pursuant to the Agreement of Trust dated as of July
10, 1989 by and between the Borrower and Marine Midland Bank, N.A., as Trustee,
as the same may be amended.
"Eurodollar Rate" means, with respect to each Eurodollar Rate Loan, the
rate of interest per annum with respect to any Interest Period obtained by the
Agent by dividing (the resulting quotient rounded upward to the nearest 1/100th
of 1% per annum) (i) the rate of interest determined by the Agent in accordance
with its usual procedures (which determination shall be conclusive, absent
manifest error) to be the average of the London interbank offered rates listed
on the "LIBO" page of the Reuters Monitor Money Rate Service (or an appropriate
successor thereto or, if Reuters or its successor ceases to provide such
quotes, a comparable replacement as determined by the Agent) at 11:00 A.M.
(London, England time) two (2) Business Days prior to the first day of each
Interest Period for an amount comparable to the Eurodollar Rate Loan for such
Interest Period and having a borrowing date and a maturity comparable to such
Interest Period by (ii) a number (expressed as a decimal) equal to (A) 1.00
minus (B) the Eurodollar Reserve Percentage, if any. The Eurodollar Rate
described above may also be expressed by the following formula:
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Average of London interbank offered rates listed on
Eurodollar Rate = "LIBO" page of Reuters Monitor Money Rate Service
---------------------------------------------------
[ 1.00 - Eurodollar Reserve Percentage ]
"Eurodollar Rate Loans" means any of the Loans bearing interest at a rate
determined on the basis of the Eurodollar Rate.
"Eurodollar Rate Option" means the interest rate option described in item
(ii) of Subsection 2.4b hereof.
"Eurodollar Reserve Percentage" means, for any Interest Period, that
percentage (expressed as a decimal), as calculated by the Agent, which is in
effect on the first day of such Interest Period, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirements (including without limitation supplemental,
marginal or emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as "Eurocurrency Liabilities") of a member bank
in such system in an amount comparable to the Eurodollar Rate Loan for such
Interest Period and for a duration comparable to such Interest Period.
"Exclusion Percentage" means, as of any time, the percentage of interest
(expressed as a decimal) received by a "qualified lender" with respect to the
Term Notes that would be excludable from the gross income of such "qualified
lender" pursuant to Section 133 of the Code.
"Event of Default" means any event described in Article VIII of this
Credit Agreement.
"Exempt Loan" means a loan which satisfies the requirements set forth in
Section 4975(d)(3) of the Code and Section 408(b)(3) of ERISA.
"Existing Letter of Credit" means that certain Irrevocable Standby Letter
of Credit No. A-301813 dated December 27, 1990 in the original stated amount of
$1,500,000, issued by PNC Bank under the 1989 Credit Agreement, as the same is
from time to time in effect. As of the Closing Date, the stated amount of the
Existing Letter of Credit is $300,000.
"Extension Request" shall have the meaning ascribed to it in Subsection
2.2f hereof.
"FDIC" means the Federal Deposit Insurance Corporation or any Person
succeeding to its functions.
"Federal Funds Rate" means, for any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any
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18
day which is a Business Day, the average of the quotations at approximately
10:00 A.M. (Pittsburgh, Pennsylvania time) on such day on such transactions
received by the Agent from three (3) Federal funds brokers of recognized
standing selected by the Agent in its sole discretion.
"Fiscal Quarter" shall mean each three-month fiscal period of the Borrower
beginning respectively on each successive January 1, April 1, July 1 and
October 1 during the term hereof and ending on the immediately succeeding March
31, June 30, September 30 and December 31.
"Fiscal Year" shall mean each annual fiscal period of the Borrower
beginning July 1 and ending on the immediately succeeding June 30.
"Fixtures" means any fixture, as that term is defined in the UCC, of any
Person, located on or attached to any real property, whether now owned or
hereafter acquired.
"GAAP" shall mean generally accepted United States accounting principles
which shall include, but not be limited to, the official interpretations
thereof as defined by the Financial Accounting Standards Board, its
predecessors and its successors.
"General Intangible" means any general intangible, as that term is defined
in the UCC, of any Person, whether now owned or hereafter acquired, together
with any intangible personal property of the Person of every kind and nature
(other than accounts receivable, Chattel Paper, Documents and Instruments)
including, without limitation, choses in action, causes in action, corporate or
other business records, inventions, designs, patent applications, trademarks,
trade names, trade secrets, goodwill, copyrights, registrations, licenses,
franchises, tax refund claims, computer programs, insurance payments and any
guarantee claims.
"Goods" means all goods, as that term is defined in the UCC, of any
Person, whether now owned or hereafter acquired.
"Government Acts" shall have the meaning ascribed to it in Subsection 2.3g
hereof.
"Governmental Person" means the government of the United States or the
government of any state or locality therein, any political subdivision or any
governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, body or entity, or other regulatory bureau,
authority, body or entity of the United States or any state or locality
therein, including the FDIC, the Comptroller of the Currency or the Board of
Governors of the Federal Reserve System, any central bank or any comparable
authority.
"Governmental Rule" means any law, statute, rule, regulation, ordinance,
order, judgment, guideline or decision of any Governmental Person (including,
without limitation, Governmental Acts).
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"Guarantee" means, as to any Person, any obligation, direct or indirect,
by which such Person undertakes to guaranty, assume or remain liable for the
payment or performance of another Person's obligations, including but not
limited to (i) endorsements of negotiable instruments, (ii) discounts with
recourse, (iii) agreements to pay or perform upon a second Person's failure to
pay or perform, (iv) remaining liable on obligations assumed by a second
Person, (v) agreements to maintain the capital, working capital, solvency or
general financial condition of a second Person and (vi) agreements for the
purchase or other acquisition of products, materials, supplies or services, if
in any case payment therefor is to be made regardless of the non-delivery of
such products, materials or supplies or the non-furnishing of such services.
"Hazardous Substances" means any (i) hazardous, toxic or polluting
substances or wastes as defined by any Environmental Law; (ii) petroleum
products; or (iii) other substances determined to be hazardous in any law
currently in effect or hereafter enacted.
"Indebtedness for Borrowed Money" as applied to any Person means the
liabilities of such Person for money borrowed or credit received (other than
trade accounts payable incurred in the ordinary course of business), direct or
contingent, whether evidenced by a bond, note, debenture, Capitalized Lease
Obligation, deferred purchase price arrangement, title retention device,
reimbursement agreement, Guarantee (including the amount of any guarantee
obligations arising under any student loan programs), book entry or otherwise.
"Indemnified Party" shall have the meaning ascribed to it in Section 10.10
hereof.
"Instrument" means any instrument, as that term is defined in the UCC, of
any Person, whether now owned or existing or hereafter created or acquired.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
October 25, 1989 by and among the 1989 Banks, PNC Bank, National Association
(formerly Pittsburgh National Bank), in its capacity as agent under the 1989
Credit Agreement, NML and NUFICP, as amended by that certain First Amendment to
Intercreditor Agreement to be executed contemporaneously with this Credit
Agreement.
"Interest Coverage Ratio" means the ratio of (a) Cash Flow from Operations
for the four (4) most recently completed Fiscal Quarters to (b) Consolidated
Cash Interest for the same fiscal period.
"Interest Income Exclusion" shall have the meaning ascribed to it in
Subsection 2.4d.
"Interest Period" means any individual Interest Period of one (1), two
(2), three (3), six (6) months or nine (9) months (if available) selected by
the Borrower pursuant to the terms and conditions of Subsection 2.4d(i) hereof,
commencing on the borrowing date, conversion date or renewal date of a
Eurodollar Rate Loan to which such period shall apply.
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"Inventory" means any inventory, as that term is defined in the UCC, of
any Person, whether now owned or existing or hereafter created or acquired.
"IRS" means the United States Internal Revenue Service or, as the context
may require, the United States Department of Treasury, or any successor
thereto.
"Issuance Fee" means the fee described in item (ii) of Subsection 2.3e
hereof.
"Issuing Bank" means PNC Bank, in its capacity as the issuer of the
Letters of Credit hereunder for the account of the Borrower.
"Key Man Life Insurance" means life insurance naming the Borrower as the
beneficiary on the life of Xxxxxxx.
"Xxxxxxx" means Xxxxxx X. Xxxxxxx.
"Lending Office" means, as to any Bank, its office located at the address
set forth in its administrative questionnaire as its "Lending Office" or such
other office as such Bank may thereafter designate as its "Lending Office" by
notice to the Borrower and the Agent.
"Letter of Credit" means any stand-by letter of credit issued by the
Issuing Bank pursuant to Section 2.3 hereof and the other terms and provisions
hereof, for the account of the Borrower (including but not limited to the
Existing Letter of Credit), as any such letter of credit may from time to time
be amended, modified, renewed, extended, supplemented or replaced.
"Letter of Credit Exposure" means, at any date of determination, with
respect to each Revolving Credit Bank, such Revolving Credit Bank's pro rata
share of the Stated Amount of any Letter of Credit then in effect.
"Letter of Credit Fees" means the fees described in item (i) of Subsection
2.3e hereof.
"Leverage Ratio" means the ratio of (i) Total Indebtedness to (ii) Cash
Flow from Operations for the four (4) most recently completed Fiscal Quarters.
"Leveraged Securities" means the Employer Securities purchased with the
proceeds of the ESOP Pass Through Loan.
"Loan" means any Revolving Credit Loan or Term Loan.
"Loan Documents" means this Credit Agreement, the Notes, each of the
Security Documents and each Compliance Certificate, each Request for Revolving
Credit Loan and any application or agreement for Letter of Credit.
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21
"Loan Party" means the Borrower or any Active Subsidiary party to any of
the Loan Documents.
"Management Exchange Agreement" means any of the separate Exchange and
Repurchase Agreements dated October 25, 1989 by and between certain of the
Management Stockholders and the Borrower, together with each amendment or
modification thereof permitted pursuant to Section 6.16 hereof.
"Management Repurchase Agreement" means any of the Management Exchange
Agreements, the RBK Exchange and Repurchase Agreement or the Subscription and
Repurchase Agreements.
"Management Stockholders" means the persons listed on Schedule 1.1
attached hereto.
"Margin Stock" shall mean "margin stock" as defined in Regulation U.
"Marginal Rate" means, with respect to any Term Loan Bank, the maximum
incremental percentage federal tax rate (expressed as a decimal) applicable to
the taxable income of such Term Loan Bank.
"Material Adverse Change" means any circumstance or event which (i) has,
or could reasonably be expected to have, a material adverse effect upon the
validity or enforceability of this Credit Agreement or any of the other Loan
Documents, (ii) is, or could reasonably be expected to be, adverse to the
business, properties, assets, financial condition or results of operations of
the Borrower and its Subsidiaries, taken as a whole, and which impairs
materially, or could reasonably be expected to impair materially, the ability
of the Loan Parties to duly and punctually pay or perform their respective
obligations under the Loan Documents or (iii) impairs materially, or could
reasonably be expected to impair materially, the ability of the Agent or the
Banks, to the extent permitted, to enforce the Agent's or the Banks' legal
remedies pursuant to this Credit Agreement and the other Loan Documents.
"Material Adverse Effect" means an effect that results in or causes or has
a reasonable likelihood of resulting in or causing a Material Adverse Change.
"Maturity Date" means September 30, 1996.
"Xxxxxxx Xxxxx Interfunding, Inc." means Xxxxxxx Xxxxx Interfunding, Inc.,
a corporation organized and existing under the laws of the State of Delaware.
"Money" means all money, as that term is defined in the UCC, of any
Person, whether now owned or hereafter acquired.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which any Person is making or accruing an obligation to
make
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contributions or has within any of the preceding five (5) plan years made or
accrued an obligation to make contributions.
"NCG" means The National Center Group, Inc., a corporation organized and
existing under the laws of the State of Georgia.
"Net Offering Proceeds" means, with respect to any equity offerings by the
Borrower, the proceeds of any such offering actually received by the Borrower
after deducting therefrom any reasonable costs and fees payable in connection
therewith.
"Net Proceeds" means, with respect to the sale, assignment, lease,
sublease, transfer or other disposition of any of the assets of the Borrower or
its Subsidiaries, in any transaction or series of coordinated transactions, the
net after-tax proceeds of any such transaction after (i) taking into account
any adjustments for basis, gain or other adjustment recognized under the Code
and (ii) deducting therefrom any reasonable closing costs paid by the Borrower
or such Subsidiary in connection therewith.
"Net Purchase Price" means, with respect to the redemption of shares from
a Management Stockholder pursuant to any Management Repurchase Agreement, the
price paid for such purchase.
"NML" means Northwestern Mutual Life Insurance Company, an insurance
company organized and existing under the laws of the State of Delaware.
"Note" means any or all of the Revolving Credit Notes and the Amended and
Restated Term Notes.
"NUFICP" means National Union Fire Insurance Company of Pittsburgh, PA, a
corporation organized and existing under the laws of the Commonwealth of
Pennsylvania.
"Operating HEBIT" means, as to any Art Institute as of any date of
determination, the sum of such Art Institute's (i) net revenue minus (ii) its
operating expenses (exclusive of any ESOP contribution expense, interest
expense, income tax expense, purchase price premium amortization and central
services staff expense), all for the four (4) most recently completed Fiscal
Quarters, as determined in accordance with GAAP, consistently applied.
"Option" means either the Base Rate Option or the Eurodollar Rate Option.
"Participant" shall mean (i) any financial institution or other Person
which is listed in Section 133(a) of the Code and which purchases an individual
interest in all or any part of the Term Loans, any particular segment of any
Portion thereof or (ii) any financial institution or other Person which
purchases an individual interest in all or any part of the Revolving Credit
Loans or any particular segment of any Portion thereof.
"Participation" means any sale, made in accordance with the provisions of
Subsection 10.8d, by any Bank to any Participant of an undivided interest in
all or a part of,
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such Bank's Revolving Credit Commitment and Revolving Credit Loans, if any, or
such Bank's Term Loans.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions.
"Permitted Acquisitions" means any acquisition by the Borrower or any of
its Subsidiaries of the assets or stock of a second Person which complies with
each of the following conditions: (i) such second Person is engaged in the
education or training business (whether profit or non-profit); (ii) such
acquisition will result in voting control of such second Person; (iii) such
acquisition is not hostile in nature (as determined in the sole discretion of
the Banks); (iv) the Borrower shall demonstrate, on a pro forma basis and to
the reasonable satisfaction of the Banks, that no Default or Event of Default
shall occur as a result of such acquisition; and (v) following the acquisition,
the Revolving Credit Commitment in effect as of such date exceeds the Revolving
Credit Loans and Letters of Credit outstanding as of such date by an amount
greater than or equal to $20,000,000 and the Borrower can borrow such amount
without violating any covenant set forth in Section 6.1, 6.2 or 6.4 hereof;
provided, however, at any time during the period from and including June 25 to
and including July 7, the requirement that the Borrower maintain availability
under the Revolving Credit Commitment of greater than or equal to $20,000,000
shall be reduced by any amount borrowed by the Borrower and held in general
operating accounts of the Borrower or any Active Subsidiary.
"Permitted Capital Expenditures" shall mean those Capital Expenditures
allowed pursuant to Section 6.6 hereof.
"Permitted Encumbrances" shall mean those Encumbrances allowed pursuant to
Section 6.9 hereof.
"Permitted Owners" means with respect to the RBK Exchange and Repurchase
Agreement, (i) during Xxxxxxx'x life; Xxxxxxx, his spouse, parents, issue or a
trust the beneficiaries of which are Xxxxxxx, his estate, spouse, parents
and/or his issue and (ii) after Xxxxxxx'x death; his executors, administrators,
testamentary trustees, legatees or beneficiaries.
"Person" means any individual, partnership, corporation, trust, joint
venture or unincorporated organization and any government or any agency,
political subdivision or department thereof.
"Plan" shall mean any "single employer plan" within the meaning of Section
4001(a)(15) of ERISA established and maintained by the Borrower or any ERISA
Affiliate.
"Plan Documents" means the written evidence of the establishment and
maintenance of the ESOP and the ESOP Trust.
"PNC Bank" means PNC Bank, National Association together with its
successors and assigns.
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"Portion" means, at any time, the aggregate principal amount of the
Revolving Credit Loans or the Term Loans outstanding hereunder which bears
interest at a specific interest rate for a specific Interest Period pursuant to
a request for borrowing or a notice of interest rate election.
"Prime Rate" means the interest rate per annum publicly announced from
time to time by the Agent as its prime rate, which rate may not be the lowest
interest rate then being charged commercial borrowers by the Agent.
"Prohibited ESOP Payment" means any prepayment of the Term Loans, in whole
or in part, under Subsections 2.1f(ii)(A) or (B) with respect to which the
Borrower may not make a corresponding payment or contribution to or other
funding of the ESOP without (x) adversely affecting the right of any Term Loan
Bank to exclude from federal gross income any interest paid or to be received
on any Term Loan; (y) resulting in the imposition of an excise tax on the
Borrower pursuant to Section 4972 of the Code; or (z) resulting in the
disqualification of the ESOP.
"Prohibited Transaction" shall mean any one or more of the prohibited
transactions defined under Section 406 of ERISA or Section 4975 of the Code and
which is not exempt as a statutory, individual or class exemption under Section
408 of ERISA or Section 4975 of the Code.
"Proprietary Information" means all non-public information about the
Borrower or any of its Subsidiaries which has been furnished by the Borrower or
any of its Subsidiaries, whether furnished before or after the Closing Date,
and regardless of the manner in which it is furnished.
"Purchasing Bank" means a Bank which becomes a party to this Credit
Agreement by executing an Assignment and Assumption Agreement.
"RBK Exchange and Repurchase Agreement" means the Exchange and Repurchase
Agreement dated October 25, 1989 by and between Xxxxxxx and the Borrower
together with each amendment or modification thereof permitted pursuant to
Section 6.16 hereof.
"Register" shall have the meaning ascribed to it in Subsection 10.8c
hereof.
"Regulation D" means Regulation D promulgated by the Board of Governors of
the Federal Reserve System (12 C.F.R. Part 204 et seq.), from time to time in
effect and as may hereafter be amended and shall include any successor or other
regulation or official interpretation thereof issued by said Board of
Governors.
"Regulation G" means Regulation G promulgated by the Board of Governors of
the Federal Reserve System (12 C.F.R. Part 207 et seq.), from time to time in
effect and as may hereafter be amended and shall include any successor or other
regulation or official interpretation thereof issued by said Board of Governors.
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"Regulation T" means Regulation T promulgated by the Board of Governors of
the Federal Reserve System (12 C.F.R. Part 220 et seq.), from time to time in
effect and as may hereafter be amended and shall include any successor or other
regulation or official interpretation thereof issued by said Board of
Governors.
"Regulation U" means Regulation U promulgated by the Board of Governors of
the Federal Reserve System (12 C.F.R. Part 221 et seq.), from time to time in
effect and as may hereafter be amended and shall include any successor or other
regulation or official interpretation thereof issued by said Board of
Governors.
"Regulation X" means Regulation X promulgated by the Board of Governors
of the Federal Reserve System (12 C.F.R. Part 224 et seq.), from time to time
in effect and as may hereafter be amended and shall include any successor or
other regulation or official interpretation thereof issued by said Board of
Governors.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of
Hazardous Substances into the environment.
"Repayment Date" means March 16, 2000 or such later date as is ultimately
determined in accordance with Subsection 2.2f hereof.
"Reportable Event" means any one or more events defined in Section 4043(b)
of ERISA for which the thirty (30) day notice period has not been waived by the
PBGC.
"Repurchase Obligation" means (i) an obligation of the Borrower, under
applicable law and/or the ESOP, to repurchase shares from, or otherwise
compensate a beneficiary or participant employee of the ESOP in relation to the
shares beneficially owned by such beneficiary or participant employee as a
result of the death, disability, retirement or termination of employment of
such person and (ii) any diversification requirement imposed by applicable law,
relating to any participant employee.
"Request for Revolving Credit Loan" means any written request for a
revolving credit loan executed by the Borrower and delivered to the Agent
substantially in the form of Exhibit "C" to this Credit Agreement.
"Required Banks" means, as of any date of determination, the holders of at
least sixty-six and two-thirds percent (66-2/3%) of the (x) aggregate principal
amount of the Term Loans and (y) the aggregate Revolving Credit Commitment.
"Revolving Credit Bank" means any financial institution listed on the
signature pages to this Credit Agreement as having a Commitment Amount and each
other financial institution which, from time to time, becomes a party to this
Credit Agreement in accordance with Subsection 10.8b hereof and purchases a
Commitment Amount.
"Revolving Credit Commitment" shall have the meaning assigned to it in
Subsection 2.2a as the same may be reduced pursuant to Subsection 2.2e hereof.
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"Revolving Credit Disbursement" means the several Revolving Credit Loans
made simultaneously by each Revolving Credit Bank under the Revolving Credit
Commitment.
"Revolving Credit Loan" means each loan of funds by a Revolving Credit
Bank of its Commitment Percentage as described in Section 2.2 hereof.
"Revolving Credit Loan Account" means the bookkeeping account established
by each Revolving Credit Bank in the name of the Borrower pursuant to
Subsection 2.2j hereof.
"Revolving Credit Note" means any one or all of the promissory notes of
the Borrower evidencing Bank Indebtedness of the Borrower hereunder with
respect to the Revolving Credit Loans, which Revolving Credit Notes shall be
substantially in the form of Exhibit "B" to this Credit Agreement, and all
extensions, renewals, amendments, modifications, restatements or replacements
thereto or thereof.
"Section" means a numbered section of this Credit Agreement, unless
another document is specifically referenced.
"Securities Acquisition Loan" means a securities acquisition loan within
the meaning of Section 133(b)(1) of the Code.
"Security Documents" means the Amended and Restated Security Agreement,
the Amended and Restated Pledge Agreement, the Amended and Restated Subsidiary
Security Agreement, each Amended and Restated Subsidiary Pledge Agreement, each
Subsidiary Pledge Agreement, the Intercreditor Agreement, and all extensions,
renewals, amendments, modifications, restatements and replacements thereto and
thereof.
"Senior Subordinated Collateral Documents" means the Senior Subordinated
Pledge Agreement and the Senior Subordinated Subsidiary Pledge Agreements and
all extensions, renewals, amendments, modifications, restatements and
replacements thereto and thereof.
"Senior Subordinated Debt" means all Indebtedness for Borrowed Money
outstanding from time to time pursuant to the Senior Subordinated Note Purchase
Agreements, the Senior Subordinated Notes and the Senior Subordinated
Collateral Documents.
"Senior Subordinated Notes" means the 13.25% Senior Subordinated Notes due
December 30, 1999 in an aggregate principal amount of $25,000,000 issued
pursuant to the Senior Subordinated Note Purchase Agreements, and all
extensions, renewals, amendments, modifications, substitutions or replacements
thereto or thereof.
"Senior Subordinated Note Purchase Agreements" means the separate Note
Purchase Agreements dated as of October 25, 1989 between the Borrower and each
of NML
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and NUFICP and all extensions, renewals, amendments, modifications,
restatements or replacements thereto or thereof.
"Senior Subordinated Pledge Agreement" means the pledge agreement dated as
of October 25, 1989 by and among the Borrower, NML and NUFICP and all
extensions, renewals, amendments, modifications, restatements or replacements
thereto or thereof.
"Senior Subordinated Subsidiary Pledge Agreement" means a subsidiary
pledge agreement substantially in the form of Exhibit "E-2" to the Senior
Subordinated Note Purchase Agreements by and among an Active Subsidiary, the
holders of the Senior Subordinated Debt and all extensions, renewals,
amendments, modifications, substitutions or replacements thereto or thereof.
"Stated Amount" means the amount available to the beneficiary of any
Letter of Credit for drawing thereunder as such amount is reduced in accordance
with the provisions of such Letter of Credit.
"Stockholder Agreement" means the Stockholder Agreement dated as of
October 25, 1989 by and among the Management Stockholders, the Borrower, the
Trustee, Xxxxxxx Xxxxx Interfunding, Inc. and the other parties specified
therein.
"Stockholders Contribution and Repayment Agreement" means the Stockholders
Contribution and Repayment Agreement dated as of October 25, 1989 among the
Borrower, Xxxxxxx and C. Xxxxxx Xxxxxxx as stockholders' agents and the
stockholders signatory thereto and all extensions, renewals, amendments,
modifications, substitutions or replacements thereto or thereof.
"Subscription and Repurchase Agreement" means any of the separate
Subscription and Repurchase Agreements dated as of various dates by and between
certain of the Management Stockholders and the Borrower together with each
amendment or modification thereof permitted pursuant to Section 6.16 hereof.
"Subsection" means a numbered subsection of this Credit Agreement, unless
another document is specifically referenced.
"Subsidiary" means any corporation of which at least a majority of the
outstanding stock having by the terms thereof ordinary voting power to elect a
majority of the Board of Directors of such corporation is at the time directly
or indirectly owned or controlled by the Borrower or by one or more of its
Subsidiaries.
"Subsidiary Pledge Agreement" means a pledge agreement executed by any
Subsidiary (other than AII or NCG) who owns any capital stock of an Active
Subsidiary substantially in the form of Exhibit "G-3" hereto pursuant to which
such Subsidiary grants to the Agent, for the benefit of the Banks and the
Issuing Bank, a first lien and prior security interest in all of the issued and
outstanding capital stock of any such Active Subsidiary and all extensions,
renewals, amendments, modifications, substitutions, replacements and
restatements thereof and thereto.
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"Tax Assumptions" shall have the meaning ascribed to it in Subsection 2.4d
hereof.
"Teach-Out Obligations" means those certain obligations of any Person
under various state laws to provide for the completion of any enrolled
student's education in the event of the closing of a school.
"Term Loan" means a term loan described in Section 2.1 hereof.
"Term Loan Account" means the bookkeeping account established by each Term
Loan Bank in the name of the Borrower pursuant to Subsection 2.1g hereof.
"Term Loan Amount" means, as to each Term Loan Bank, the dollar amount set
forth for such Term Loan Bank, opposite such Term Loan Bank's name under the
caption "Term Loan Amount" on the signature page to this Credit Agreement
signed by such Term Loan Bank or in the most recent Assignment and Assumption
Agreement executed by such Term Loan Bank, whether in the capacity as a
Purchasing Bank or a Transferor Bank.
"Term Loan Bank" means any financial institution listed on the signature
pages to this Credit Agreement as having a Term Loan Amount and each other
financial institution which, from time to time, becomes a party to this Credit
Agreement in accordance with Subsection 10.8b hereof and purchases a Term Loan
Amount.
"Term Loan Percentage" means, with respect to each Term Loan Bank, the
percentage set forth for such Term Loan Bank, opposite such Term Loan Bank's
name under the caption "Term Loan Percentage" on the signature page to this
Credit Agreement signed by such Bank or in any Assignment and Assumption
Agreement executed by such Term Loan Bank, whether in the capacity as a
Purchasing Bank or a Transferor Bank.
"Termination Event" means (i) a Reportable Event with respect to a Plan or
an event described in Section 4062(e) of ERISA with respect to a Plan, (ii) the
withdrawal of the Borrower or any ERISA Affiliate from a Plan during a plan
year in which the Borrower or any such ERISA Affiliate was a "substantial
employer" as such term is defined in Section 4001(a)(2) of ERISA and the
incurrence of liability to the PBGC under Section 4063 of ERISA, (iii) the
incurrence of liability by the Borrower or any such ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Plan, (iv) the distribution of
a notice of intent to terminate a Plan pursuant to Section 4041(a)(2) of ERISA
or the treatment of a Plan amendment as a termination under Section 4041 of
ERISA, or (v) the institution of proceedings to terminate a Plan by the PBGC
under Section 4042 of ERISA.
"Termination Proceeding" means, with respect to any Plan, any termination
proceeding under Section 4042 of ERISA or any successor section of ERISA.
"Total Indebtedness" means, as of the end of any Fiscal Quarter, on a
Consolidated basis without duplication (including but not limited to any
duplication reflecting Guarantees of the Borrower or any Subsidiary permitted by
Subsection 6.8a(v) or Subsection 6.8b(ii) hereof), the difference between (a)
Indebtedness for Borrowed Money of the
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Borrower and its Subsidiaries, as of such date, and (b) all cash and cash
equivalents held by the Borrower and its Subsidiaries including without
limitation the cash balance as at the end of such Fiscal Quarter held by the
Agent in cash collateral, escrow, direct loan, reserve, electronic funds
transfer, trust or other restricted accounts (exclusive of any such accounts
which do not appear on the Borrower's or such Subsidiary's balance sheet) on
behalf of the Borrower or any of its Subsidiaries.
"Transfer Effective Date" means for each Assignment and Assumption
Agreement, the date upon which such Assignment and Assumption Agreement is
effective.
"Transferor Bank" means a selling Bank pursuant to an Assignment and
Assumption Agreement.
"Trustee" means Marine Midland Bank, as Trustee of the Education
Management Corporation Employee Stock Ownership Plan and Trust and any
successor thereto.
"UCC" means the Uniform Commercial Code as now adopted and from time to
time amended in the Commonwealth of Pennsylvania or any other jurisdiction
which controls the perfection of a security interest in favor of the Agent, for
the benefit of the Banks, in any of the Collateral.
"Unallocated Shares" means those shares of Employer Securities (and any
stock dividends or stock splits related thereto) which have been acquired with
the proceeds of the ESOP Pass Through Loan and which have not been allocated by
the Trustee to individual accounts of participants under the ESOP.
"Unfunded Benefit Liabilities" means with respect to any Plan, the amounts
described in Section 4001(a)(18) of ERISA.
"Unreimbursed Amount" shall have the meaning assigned to it in Subsection
2.3c hereof.
"Warrants" means the common stock purchase warrants to purchase an
aggregate of 5,956,079 shares of the Borrower's Class B common stock, $.0001
par value, issued pursuant to the Senior Subordinated Note Purchase Agreements.
"Withdrawal Liability" means "withdrawal liability" as defined by the
provisions of Part 1 of Subtitle E to Title IV of ERISA.
"1989 Banks" means PNC Bank, National Association (formerly Pittsburgh
National Bank), National Westminster Bank and National City Bank.
"1989 Closing Date" means October 25, 1989.
"1989 Credit Agreement" means that certain Credit Agreement dated as of
October 25, 1989 by and among EMC Holdings, Inc. (as the predecessor-by-merger
to the
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Borrower), the several banks party thereto and Pittsburgh National Bank (now
known as PNC Bank, National Association), in its capacity as agent thereunder,
as amended or modified by that certain First Amendment to Credit Agreement
dated as of April 14, 1990, that certain Second Amendment to Credit Agreement
dated as of December 27, 1990, that certain Third Amendment to Credit
Agreement, Assumption Agreement and Partial Release dated as of April 30, 1993,
that certain letter agreement dated June 29, 1992 and that certain Fourth
Amendment to Credit Agreement dated as of December 30, 1993.
"1989 Term Notes" means those certain promissory notes which evidence the
1989 Term Loans.
"1989 Term Loans" means the term loans made to EMC Holdings, Inc. by the
1989 Banks pursuant to the 1989 Credit Agreement in the aggregate original
principal amount of $36,175,000.00.
1.2 GAAP Definitions. Accounting terms used in this Credit Agreement but not
defined herein shall have the meanings ascribed to them under GAAP in effect at
the time of the execution of this Credit Agreement and shall not include the
cumulative effect of accounting changes or accounting principles.
1.3 Other Definitional Conventions.
(i) All terms defined in this Credit Agreement shall have the
above-defined meanings when used in this Credit Agreement, the Revolving Credit
Notes, the Term Notes, the other Loan Documents, exhibits, schedules,
appendices or any other document or certificate executed or delivered in
connection with this Credit Agreement, unless the context thereof shall
otherwise clearly require.
(ii) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Credit Agreement shall refer to this Credit Agreement
as a whole and not to any particular provision of this Credit Agreement, and
Section and Subsection references are to this Credit Agreement unless otherwise
specified.
(iii) All terms defined in this Credit Agreement in the singular shall
have comparable meanings when used in plural, and vice versa, unless otherwise
specified.
(iv) The word "or" as used herein shall mean and connote non-exclusive
alternative, unless expressly stated or the context clearly requires otherwise.
1.4 Headings. The headings of the Sections and Subsections of this Credit
Agreement are inserted for convenience only and shall not be deemed to
constitute a part hereof.
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ARTICLE II. THE CREDIT.
2.1 The Term Loan.
2.1a Amount of the Term Loan. Pursuant to the terms and conditions of the 1989
Credit Agreement, the 1989 Banks made available to the Borrower on the 1989
Closing Date the 1989 Term Loans in the aggregate principal amount of
THIRTY-SIX MILLION ONE HUNDRED SEVENTY-FIVE THOUSAND and NO/100 DOLLARS
($36,175,000). As of the Closing Date, the aggregate outstanding principal
amount of the 1989 Term Loans is $9,205,650.00. Subject to the terms and
conditions hereof and relying upon the representations and warranties herein
set forth, each of the Term Loan Banks, severally, agrees to purchase from the
1989 Banks the 1989 Term Loans and the 1989 Term Notes evidencing the
indebtedness thereunder.
2.1b Term Notes. The obligation of the Borrower to repay the Term Loans
hereunder shall be evidenced by the Amended and Restated Term Notes
substantially in the form of Exhibit "A" attached hereto dated as of the
Closing Date with one such Amended and Restated Term Note being made payable to
each Term Loan Bank which is an initial signatory hereto in the amount of that
Bank's Term Loan Amount. The Amended and Restated Term Notes are an amendment
and restatement, and not a novation, of the 1989 Term Notes and are executed
and delivered, inter alia, in connection with the sale and assignment by the
1989 Banks of the 1989 Term Loans to the Term Loan Banks hereunder. Promptly
following the completion of such sale and assignment by the 1989 Banks and the
execution and delivery of the Amended and Restated Term Notes, the 1989 Term
Notes shall be marked "Cancelled by Substitution" and delivered by the Agent to
the Borrower.
2.1c Purchase of the 1989 Term Loans. The sale and assignment of the 1989 Term
Loans shall occur simultaneously with the execution of this Credit Agreement.
If the Borrower elects to have all or any Portion of the Term Loans initially
bear interest at the Eurodollar Rate Option, the Borrower shall provide the
Agent with irrevocable written notice thereof two (2) Business Days prior to
the Closing Date otherwise the Term Loans shall initially bear interest at the
Base Rate Option. Each Bank shall make its Term Loan Amount available to the
Agent in immediately available funds at the principal office of the Agent prior
to 12:00 Noon (Pittsburgh, Pennsylvania time) on the Closing Date. The
aggregate Term Loan Amounts shall be utilized by the Agent to purchase, on
behalf of the Term Loan Banks, the 1989 Term Loans from the 1989 Banks.
2.1d Repayment of the Term Loans. The Term Loans shall be repaid in seven (7)
quarterly installments of principal, all in accordance with the following
schedule:
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Aggregate Quarterly
Payment Numbers Principal Payment
--------------- -------------------
1-3 $1,750,000
4-6 $1,181,250
7 $411,900
Installments 1 through 6 shall be payable on the last day of each March, June,
September and December during the term hereof with the first (1st) such
installment being due and payable on March 31, 1995 and the sixth (6th) such
installment being due and payable on June 30, 1996. The seventh (7th) and
final installment shall be due and payable on September 30, 1996 in an amount
equal to the then outstanding aggregate principal balance of the Amended and
Restated Term Notes.
2.1e Interest. The Amended and Restated Term Notes shall bear interest from
the date thereof until payment in full as set forth in Section 2.4 hereof.
2.1f Prepayment of Term Loans.
(i) Voluntary Prepayments. The Borrower shall have the right at its
option to prepay any Portion of the Term Loans, in whole or in part, at any
time. Each such prepayment shall be applied to the principal installments of
the Term Loans in the order of their stated maturities. Each partial
prepayment shall be in the aggregate amount of $1,000,000 or more. The
Borrower shall give the Agent not less than three (3) Business Days' prior
written notice of each voluntary prepayment specifying the aggregate principal
amount to be prepaid and the date of prepayment. Notice of prepayment having
been given as aforesaid, the principal amount specified in such notice shall
become due and payable on the prepayment date.
(ii) Mandatory Prepayments.
(A) Mandatory Prepayments By Reason of a Prohibited Transaction. In the
event that the purchase of Employer Securities by the ESOP Trust from the
Borrower or any shareholder is held to be a Prohibited Transaction by the IRS,
the DOL or a court of competent jurisdiction, the Borrower shall prepay the
Term Loans by an amount which equals the amount the Borrower or such selling
shareholder is required to repay with respect to the Unallocated Shares to the
ESOP Trust in order that the sale of Employer Securities is no longer deemed to
be a Prohibited Transaction; provided, however, that nothing in this Subsection
2.1f(ii)(A) shall prevent the Borrower or such selling shareholder, at its
election, from appealing in good faith any holding that the purchase of
Employer Securities is a Prohibited Transaction and, provided that the Borrower
proceeds within a reasonable time to prosecute such appeal, no mandatory
prepayment shall be required hereunder until the earlier of (I) receipt of a
final adverse determination as to a Prohibited Transaction from which no appeal
may be taken or (II) abandonment of such appeal by the Borrower or such selling
shareholder. Any mandatory prepayment pursuant to this Subsection 2.1f(ii)(A)
shall be due
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and payable within thirty (30) days of the repayment to the ESOP Trust by the
Borrower or such selling shareholder and shall be applied to the principal
installments of the Term Loans in the inverse order of their stated maturities.
(B) Mandatory Prepayments by Reason of the Sale of Leveraged Securities.
The Borrower shall make mandatory prepayments of the total outstanding
aggregate principal amount of the Term Loans upon a sale of all or
substantially all of the Leveraged Securities. Any mandatory prepayments
pursuant to this Subsection 2.1f(ii)(B) shall be due and payable within five
(5) days of the receipt of the proceeds of such sale and accompanied by any
amounts due pursuant to Subsection 2.5(ii) hereof.
(C) Mandatory Prepayments Exceeding Contribution Amounts. All mandatory
prepayments pursuant to Subsection 2.1f(ii)(A) and (B) hereof shall be applied
as stated therein; provided, however, that any mandatory prepayments which
would constitute a Prohibited ESOP Payment shall not be prepaid at that time,
but shall be held by the Agent in escrow for the benefit of the Term Loan Banks
and the Borrower. The determination of the existence of a Prohibited ESOP
Payment shall be made initially by the Borrower and, upon the request of any
Bank, shall be accompanied by an opinion of counsel to the Borrower, which
opinion of counsel shall be reasonably acceptable to the Banks. Interest on
all amounts held in escrow will accrue at a market rate. Such funds held in
escrow (except for any interest earned thereon) shall be applied by the Agent
in prepayment of the outstanding aggregate principal amount of the Term Loans,
in accord with their classification under Subsections 2.1f(ii)(A) or (B)
hereof, as soon as such prepayment would not result in a Prohibited ESOP
Payment. At such time, the Agent shall credit the Borrower's account with the
Agent in an amount equal to the interest earned on such funds held in escrow.
(D) Application of Mandatory Prepayments. All mandatory prepayments
pursuant to this Subsection 2.1f(ii) shall be applied, first, to the principal
installments of the Term Loans which are Base Rate Loans; and second, to the
principal installments of the Term Loans which are Eurodollar Rate Loans;
provided, however, that mandatory prepayments of Eurodollar Rate Loans prior to
the end of the then applicable Interest Periods shall be held in escrow by the
Agent, for the benefit of the Term Loan Banks and the Borrower. Interest on
all amounts held in escrow will accrue at a market rate. Such funds held in
escrow (except for any interest earned thereon) shall be applied by the Agent
in prepayment of the Term Loans with interest to such date which are Eurodollar
Rate Loans at the end of each Interest Period. At such time, the Agent shall
credit the Borrower's account with the Agent in an amount equal to the interest
earned on such funds held in escrow.
2.1g Term Loan Account. Each Term Loan Bank shall open and maintain on its
books a Term Loan Account in the Borrower's name with respect to such Bank's
Term Loan Amount, prepayments thereon, the computation and payment of interest
and the computation of other amounts due and sums paid to the Agent, on behalf
of such Term Loan Bank, pursuant to this Section 2.1. Except in the case of
manifest error, the Term Loan Accounts shall be conclusive and binding on the
Borrower as to the amount at any time due such Term Loan Bank from the Borrower
pursuant to this Section 2.1.
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2.2 Revolving Credit Loans.
2.2a Revolving Credit Commitment. The Revolving Credit Banks severally agree,
subject to the terms and conditions hereof and relying upon the representations
and warranties herein set forth, that the Borrower shall have the right to
borrow, repay and reborrow during the Availability Period an aggregate
principal amount not to exceed FIFTY MILLION AND NO/100 DOLLARS ($50,000,000)
at any one time outstanding (the "Revolving Credit Commitment"); provided,
however, the amount otherwise available for borrowing under the Revolving
Credit Commitment as of any time of determination shall be reduced by the sum
of (i) the aggregate Stated Amounts of all Letters of Credit issued and
outstanding, as of such date of determination plus (ii) the aggregate
unreimbursed draws of any Letter of Credit.
2.2b Individual Bank Commitment Amount. Each of the Revolving Credit Banks
shall be severally liable for advancing its respective Commitment Percentage
set forth opposite such Revolving Credit Bank's name on its signature pages
hereof; provided, however, that no such Revolving Credit Bank shall be required
to make a Revolving Credit Loan if such loan would cause that Revolving Credit
Bank's Revolving Credit Loans then outstanding to exceed the Commitment Amount
set forth opposite each such Revolving Credit Bank's name on its signature
pages hereto or on the most recent Assignment and Assumption Agreement to which
such Bank is a party.
2.2c Revolving Credit Disbursements.
(i) Each Revolving Credit Disbursement under Subsection 2.2a shall be in
the aggregate amount of $500,000 or more, provided that each increment in
excess of $500,000 shall be $100,000 or an integral multiple thereof. The
obligation of the Borrower to repay, on or before the Repayment Date, the
aggregate unpaid principal amount of all Revolving Credit Disbursements made by
the Revolving Credit Banks shall be evidenced by Revolving Credit Notes
substantially in the form of Exhibit "B" hereto, one made by the Borrower to
the order of each Revolving Credit Bank in the Commitment Amount of such
Revolving Credit Bank and delivered to each such Revolving Credit Bank. The
principal amount actually due and owing each Revolving Credit Bank under the
Revolving Credit Loans shall be the aggregate unpaid principal amount of all
Revolving Credit Loans made by such Revolving Credit Bank, all as shown on the
Revolving Credit Loan Accounts established pursuant to Subsection 2.2j hereof.
(ii) Each request for a Revolving Credit Disbursement under Subsection 2.2a
shall be made by 10:00 A.M. (Pittsburgh, Pennsylvania time) to the Agent orally
or in writing, by an Authorized Officer, (A) in the case of Base Rate Loans, at
least one (1) Business Day prior to the proposed Revolving Credit Disbursement
and (B) in the case of Eurodollar Rate Loans, at least three (3) Business Days
prior to the proposed Revolving Credit Disbursement, in each case specifying the
date on which such Revolving Credit Disbursement is to be made, the amount
thereof, selecting the interest rate therefor pursuant to Subsection 2.4b hereof
and, if appropriate, selecting the Interest Period therefor. Each written
request for a Revolving Credit Disbursement shall be evidenced by, and each oral
request for a Revolving Credit Disbursement hereunder shall be followed by, a
Request for
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Revolving Credit Loan substantially in the form of Exhibit "C" hereto, duly
executed by an Authorized Officer of the Borrower. Promptly upon receipt of
such notice, the Agent shall notify each Revolving Credit Bank of the
Borrower's request and the amount of such requested Revolving Credit
Disbursement which is to be advanced by such Revolving Credit Bank. Each such
Revolving Credit Bank shall make its pro rata share of such Revolving Credit
Disbursement available at the Agent's principal office in immediately available
funds no later than 11:00 A.M. (Pittsburgh, Pennsylvania time) on the date of
the requested Revolving Credit Disbursement. Each Revolving Credit
Disbursement shall be credited by the Agent to a demand deposit account of the
Borrower at the Agent's principal office no later than 11:00 A.M. (Pittsburgh,
Pennsylvania time) on the date of such Revolving Credit Disbursement.
2.2d Interest. The Revolving Credit Notes shall bear interest on the actual
unpaid principal amount thereof from time to time outstanding from the date
thereof until payment in full as set forth in Section 2.4 hereof.
2.2e Voluntary Permanent Reduction of the Revolving Credit Commitment. The
Borrower, upon three (3) Business Days' written notice to the Agent, may
permanently reduce the Revolving Credit Commitment; provided, however, that if
such reduction would require repayment of then outstanding amounts of the
Revolving Credit Loans, such repayment must occur on or before the date on
which the voluntary permanent reduction becomes effective.
2.2f Extension of the Term of the Revolving Credit Commitment. The Borrower
may request, by written notice executed by an Authorized Officer and delivered
to the Agent (an "Extension Request") on or before sixty (60) days prior to
each of the first and second anniversaries of the Closing Date, an extension or
further extension of the Revolving Credit Commitment for an additional one-year
period and a corresponding alteration of the Repayment Date. The Agent, upon
receiving any such Extension Request, shall immediately forward a copy thereof
to each of the Banks. If the Banks agree in writing to the Extension Request
and the alteration of the Repayment Date, the Agent shall communicate this
information to the Borrower in writing no later than thirty (30) days prior to
the applicable anniversary of the Closing Date. Upon the receipt of such
consents from the Banks, the Revolving Credit Commitment shall be deemed to be
extended for an additional one-year period and the Repayment Date
correspondingly altered. The failure of the Borrower to request the extension
of the Revolving Credit Commitment in any one year shall automatically
eliminate the Borrower's privilege to request an extension of the Revolving
Credit Commitment in that year.
2.2g Mandatory Reductions following Extensions of Repayment Date. If the
Revolving Credit Banks agree to any Extension Request and the corresponding
alteration of the Repayment Date for an additional one-year period pursuant to
Subsection 2.2f above, the Revolving Credit Commitment shall automatically and
permanently be reduced by $2,500,000 in each Fiscal Quarter occurring during
each such additional one-year period of such extension. For example, if the
Revolving Credit Banks agree in 1996 to extend the Repayment Date from March
16, 2000 to March 16, 2001, the Revolving Credit Commitment shall be reduced
from $50,000,000 to $47,500,000 on March 31, 2000, to
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$45,000,000 on June 30, 2000, to $42,500,000 on September 30, 2000 and to
$40,000,000 on December 31, 2000 and if the Revolving Credit Banks agree in
1997 to extend the Repayment Date from March 16, 2001 to March 16, 2002, the
Revolving Credit Commitment shall be reduced from $40,000,000 to $37,500,000 on
March 31, 2001, to $35,000,000 on June 30, 2001 to $32,500,000 on September 30,
2001 and $30,000,000 on December 31, 2001.
2.2h Commitment Fee. The Borrower agrees to pay to the Agent, for the benefit
of the Revolving Credit Banks, on March 31, 1995, and quarterly in arrears
thereafter on the last day of each succeeding June, September, December and
March during the term of the Revolving Credit Commitment to and including the
Repayment Date, a commitment fee calculated on the basis of the actual number
of days elapsed equal to the product of (i) the average daily (computed at the
opening of business) unused amount of the Revolving Credit Commitment (as
reduced by any loss of availability due to the issuance of Letters of Credit)
for the period then ending times (ii) the applicable percentage per annum set
forth in the chart below:
Leverage Ratio Commitment Fee
-------------- --------------
Greater than 1.50 to 1.0 3/8%
Less than or equal to 1.5 to 1.0 1/4%
; provided, however, the first payment under this Subsection 2.2h shall be for
the total number of days elapsed between the Closing Date and March 31, 1995
and the last payment under this Subsection 2.2h shall be for the total number
of days elapsed between the last quarter for which payment was received and the
Repayment Date. The Commitment Fee due hereunder shall be calculated on the
basis of a 365-366 day year and the actual number of days elapsed. Upon
receipt by the Agent of the quarterly financial statements delivered pursuant
to Subsection 5.2a hereof, the applicable percentage shall be adjusted, if
necessary, effective on the date such quarterly financial statements are due in
accordance with Subsection 5.2a hereof regardless of the actual date of
delivery thereof.
2.2i Repayment. On the Repayment Date, the Borrower shall repay in full all of
the then unpaid and outstanding Revolving Credit Loans, together with all
interest thereon to the date of such repayment and all other fees and costs due
hereunder.
2.2j Revolving Credit Loan Account. Each Revolving Credit Bank shall open and
maintain on its books a Revolving Credit Loan Account in the name of the
Borrower with respect to such Revolving Credit Bank's Revolving Credit Loans,
repayments, prepayments, the computation and payment of interest and the
computation of other amounts due and sums paid to the Agent, on behalf of such
Revolving Credit Bank, pursuant to this Section 2.2. Except in the case of
manifest error in computation, such Revolving Credit Loan Account shall be
conclusive and binding on the Borrower as to the amount at any time due to such
Revolving Credit Bank from the Borrower pursuant to this Section 2.2.
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2.3 Letters of Credit.
2.3a Issuance of Letter of Credit. The Issuing Bank has previously provided
for the benefit of the Borrower the Existing Letter of Credit under the 1989
Credit Agreement. For all purposes of this Credit Agreement, the Existing
Letter of Credit shall be deemed to be issued pursuant to this Credit
Agreement. Subject to the further terms and conditions of this Credit
Agreement and in reliance upon the representations and warranties of the
Borrower set forth herein, the Issuing Bank agrees to issue further Letters of
Credit, upon the request of the Borrower during the Availability Period, for
the account of the Borrower in an aggregate Stated Amount not to exceed EIGHT
MILLION AND NO/100 DOLLARS ($8,000,000). The issuance of any Letter of Credit
in accordance with the provisions of this Subsection 2.3a shall be in
accordance with the Issuing Bank's then current practices relating to the
issuance by the Issuing Bank of stand-by letters of credit as well as subject
to the satisfaction of each condition set forth in Section 7.1 hereof.
2.3b Risk Participations. (i) Participations. Immediately upon the issuance
of any Letter of Credit, and thereafter, immediately upon each increase or
decrease in the Stated Amount thereof, each Revolving Credit Bank hereby agrees
to irrevocably purchase and shall be deemed to have irrevocably purchased from
the Issuing Bank an undivided, full risk, non-recourse participation in each
such Letter of Credit (including any such increase or decrease in the Stated
Amount of each such Letter of Credit) and draw thereunder in an amount equal to
such Revolving Credit Bank's Commitment Percentage of the maximum Stated Amount
thereof which is or at any time may become available to be drawn thereunder.
(ii) Restrictions. In the event that the Issuing Bank is required for any
reason to refund or repay to the Borrower, any guarantor or any other Person
(other than a Revolving Credit Bank hereunder) all or any portion of any amount
remitted to the Issuing Bank pursuant to this Credit Agreement, the Revolving
Credit Banks shall promptly remit to the Issuing Bank, within three (3)
Business Days following demand therefor, their respective Commitment
Percentages of the amount which is so refunded or repaid. In the event any
restrictions are imposed upon the Issuing Bank or any of the Revolving Credit
Banks by any Governmental Rule of any Governmental Person having jurisdiction
over the banking activities of the Issuing Bank or any other Revolving Credit
Bank, which would prevent the Issuing Bank from issuing the Letter of Credit or
amending the Letter of Credit or would prevent any Revolving Credit Bank from
honoring its obligations under this Section 2.3, the commitment of the Issuing
Bank to issue the Letter of Credit or enter into any amendment with respect
thereto shall be immediately suspended.
(iii) Notice of Restrictions. If any Revolving Credit Bank believes any
such restriction would prevent such Revolving Credit Bank from honoring its
obligations under this Section 2.3, it shall promptly notify the Agent. The
Agent shall promptly notify the Borrower, the Issuing Bank and the other
Revolving Credit Banks of the existence and nature of (A) any restriction which
would cause the suspension of the commitment of the Issuing Bank to issue the
Letter of Credit or to enter into amendments with respect thereto and (B) any
restriction which would prevent any Revolving Credit Bank from honoring its
obligations under this Section 2.3.
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(iv) Effect of Restrictions. Upon receipt of any notice pursuant to item
(iii) above, the Borrower will thereupon undertake reasonable efforts to obtain
the cancellation of each Letter of Credit; provided, however, that the refusal
of any beneficiary of any Letter of Credit to surrender such Letter of Credit
will not be an Event of Default hereunder and the Borrower shall undertake good
faith efforts to obtain a substitute letter of credit for such Letter of
Credit. Nothing contained in this Subsection 2.3b shall be deemed a
termination of the Revolving Credit Commitment and, in the event of a
suspension of the commitment of the Issuing Bank to issue Letters of Credit or
to enter into amendments with respect thereto as set forth above, the Borrower
may continue to borrow under the Revolving Credit Commitment provided the
requirements of Section 7.1 hereof are complied with.
2.3c Payment of Amounts Drawn Under Letters of Credit. Upon each request for a
draw under any Letter of Credit by the beneficiary thereof, the Issuing Bank
shall immediately notify the Borrower and the Agent, and the Borrower shall
reimburse, or cause the reimbursement of, the Issuing Bank on demand in an
amount in same day funds equal to the amount of such draw; provided, however,
unless the Borrower shall have notified the Agent and the Issuing Bank prior to
such time that the Borrower intends to reimburse the Issuing Bank for all or a
portion of the amount of such draw with funds other than the proceeds of
Revolving Credit Loans, the Borrower shall conclusively be deemed to have given
a request for a Disbursement under Subsection 2.2c hereof to the Agent
requesting the Revolving Credit Banks to make Revolving Credit Loans at the
Base Rate Option on the first Business Day immediately following the date on
which such draw is honored in an aggregate amount equal to the excess of the
amount of such drawing over the amount theretofore received by the Issuing Bank
in reimbursement thereof (the "Unreimbursed Amount"), plus accrued interest on
such amount at the rate set forth in Subsection 2.3e(iii) hereof. If the
Borrower shall be deemed to have given a request for a Disbursement under
Subsection 2.2c hereof to the Agent pursuant to this Subsection 2.3c, then,
(notwithstanding the satisfaction or waiver of the conditions specified in
Section 7.1 hereof), the Revolving Credit Banks shall, on the first Business
Day immediately following the date of such draw, make Revolving Credit Loans at
the Base Rate Option in the aggregate amount of the Unreimbursed Amount plus
accrued interest on such amount at the rate set forth in Subsection 2.3e(iii)
hereof. The proceeds of any such Revolving Credit Loans shall be applied
directly by the Agent, upon receipt thereof from the Banks, to reimburse the
Issuing Bank for the Unreimbursed Amount plus accrued interest on such amount.
The foregoing shall not limit or impair the obligation of the Borrower to
reimburse the Issuing Bank on demand.
2.3d Payment by the Banks. In the event that the Borrower shall fail to
reimburse the Issuing Bank on demand as provided in Subsection 2.3c above in an
amount equal to the amount of any draw honored by the Issuing Bank under any
Letter of Credit, the Issuing Bank shall promptly notify the Agent and each
Revolving Credit Bank of the Unreimbursed Amount plus the accrued interest on
such amount and of such Bank's respective participation therein. Each
Revolving Credit Bank shall make available to the Issuing Bank an amount equal
to its respective participation in same day funds, at the office of the Issuing
Bank specified in such notice, not later than 12:00 Noon (Pittsburgh,
Pennsylvania time) on the Business Day specified in such notice by the Issuing
Bank. In the event that any Revolving Credit Bank fails to make available to
the Issuing Bank the amount of such Revolving Credit
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Bank's participation in such Letter of Credit as provided in this Subsection
2.3d, the Issuing Bank shall be entitled to recover such amount on demand from
such Revolving Credit Bank together with interest at the customary rate set by
the Issuing Bank for the correction of errors among banks for a period of three
(3) Business Days after demand and thereafter, at the Base Rate. Nothing in
this Subsection 2.3d shall be deemed to prejudice the right of any Revolving
Credit Bank to recover from the Issuing Bank any amounts made available by such
Revolving Credit Bank to the Issuing Bank pursuant to this Subsection 2.3d in
the event that it is determined by a court of competent jurisdiction that
payment of such amounts with respect to any Letter of Credit by the Issuing
Bank constituted gross negligence or willful misconduct on the part of the
Issuing Bank. The Issuing Bank shall distribute to each other Revolving Credit
Bank which has paid all amounts payable by it under this Subsection 2.3d with
respect to such Letter of Credit, such other Revolving Credit Bank's pro rata
share of all payments received by the Issuing Bank from the Borrower in
reimbursement of a draw honored by the Issuing Bank under such Letter of Credit
when such payments are received.
2.3e Compensation.
(i) Letter of Credit Fees. Upon (A) the issuance of any Letter of Credit,
(B) each anniversary thereof during the term of any such Letter of Credit and
(C) the issuance of any subsequent amendment, renewal, or extension thereof,
the Borrower agrees to pay to the Agent, on behalf of each Revolving Credit
Bank, to be shared by the Revolving Credit Banks on a pro rata basis in
accordance with each Revolving Credit Bank's risk participation in such Letter
of Credit pursuant to Subsection 2.3b hereof, a fee equal to the product of (A)
the Stated Amount of each Letter of Credit times (B) the applicable percentage
per annum as determined below:
APPLICABLE LETTER
OF CREDIT
LEVERAGE RATIO PERCENTAGE
-------------- -----------------
Greater than 3.00 to 1.0 2.00%
Less than or equal to 3.00 to
1.0, but greater than 2.25 to
1.0 1.50%
Less than or equal to 2.25 to
1.0, but greater than 1.50 to
1.0 1.25%
Less than or equal to 1.50 to 1.0 1.00%
Upon receipt by the Agent of the quarterly financial statements delivered
pursuant to Subsection 5.2a hereof, the Applicable Letter of Credit Percentage
shall be adjusted, if necessary, effective on the date such quarterly financial
statements are due in accordance with Subsection 5.2a hereof regardless of the
actual date of delivery thereof.
(ii) Issuance Fee. In addition to the Letter of Credit Fees set forth in
Subsection 2.3e(i) above, the Borrower shall pay to the Issuing Bank, for its
sole account, an
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Issuance Fee equal to one-eighth of one percent (1/8%) of the Stated Amount of
each Letter of Credit, upon the issuance of each such Letter of Credit.
(iii) Interest and Other Fees. (a) With respect to any draw made under
any Letter of Credit, the Borrower shall pay interest, payable on demand, on
the amount paid by the Issuing Bank in respect of such draw from the Business
Day of the draw through the date such amount is reimbursed by the Borrower
(including any such reimbursement out of the proceeds of Revolving Credit Loans
pursuant to Subsection 2.2c hereof) at a rate which is at all times equal to
(A) if no Event of Default shall have occurred and be continuing, the Base Rate
or (B) if any Event of Default shall have occurred and be continuing, two
percent (2.00%) per annum in excess of the Base Rate; and
(b) With respect to the issuance, amendment or transfer of any Letter of
Credit and a draw made thereunder, the Borrower shall pay documentary and
processing charges in accordance with the Issuing Bank's standard schedule for
such charges in effect at the time of such issuance, amendment, transfer or
draw, as the case may be.
2.3f Duty to Review Demands; Obligation Absolute. The obligation of the
Borrower to reimburse the Issuing Bank for draws made under any Letter of
Credit and the obligations of the Revolving Credit Banks under Subsection 2.3d
hereof shall be absolute, unconditional and irrevocable and shall be paid
directly in accordance with the terms of this Credit Agreement under all
circumstances, including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of such Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right which the
Borrower may have at any time against a beneficiary or any transferee of such
Letter of Credit (or any Persons for whom any such transferee may be acting),
the Issuing Bank, any Revolving Credit Bank or any other Person, whether in
connection with this Credit Agreement, the transactions contemplated herein or
any unrelated transaction (including any underlying transaction between the
Borrower or one of its Subsidiaries and the beneficiary of such Letter of
Credit);
(iii) any draft, demand, certificate or any other document presented under
such Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect provided that any act or failure to act on the part of the Issuing Bank
does not constitute gross negligence or willful misconduct on the part of the
Issuing Bank;
(iv) payment by the Issuing Bank under such Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit; provided that such payment does
not constitute gross negligence or willful misconduct on the part of the
Issuing Bank;
(v) any other circumstance or happening whatsoever, which is substantially
similar to any of the foregoing; and
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(vi) the fact that an Event of Default shall have occurred and be
continuing.
2.3g Indemnification; Nature of the Issuing Bank's Duties. In addition to
amounts payable as elsewhere provided in this Section 2.3, the Borrower hereby
agrees to protect, indemnify, pay and save each Revolving Credit Bank
(including, without limitation, the Issuing Bank) harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) which such Revolving Credit
Bank may incur or be subject to as a consequence, direct or indirect, of (i)
the issuance of the Letter of Credit or any amendment thereto, other than as a
result of the gross negligence or willful misconduct of the Issuing Bank as
determined by a court of competent jurisdiction, (ii) the failure of the
Issuing Bank to honor a draw under any Letter of Credit if the Issuing Bank in
good faith and upon advice of counsel believes that it is prohibited from
making such payment as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Person (all
such acts or omissions herein called "Government Acts"), or (iii) any material
breach by the Borrower of any representation, warranty, covenant, term or
condition in, or the occurrence of any default under, any document related to
the issuance or any amendment of any Letter of Credit. If any proceeding shall
be brought or threatened against any Revolving Credit Bank by reason of or in
connection with any event described in clauses (i) through (iii) above, such
Revolving Credit Bank shall promptly notify the Borrower in writing, and the
Borrower shall assume the defense thereof, including the employment of counsel
and payment of all costs of litigation. Notwithstanding the preceding
sentence, each Revolving Credit Bank shall have the right to employ its own
counsel and to determine its own defense of such action in any such case, but
the fees and expenses of such counsel shall be at the expense of such Revolving
Credit Bank unless (x) the employment of such counsel shall have been
authorized in writing by the Borrower or (y) the Borrower, after the
aforementioned notice of the action, shall not have employed counsel to have
charge of such defense, in either of which events the reasonable fees and
expenses of counsel for such Revolving Credit Bank shall be borne by the
Borrower. The Borrower shall not be liable for any settlement of any such
action affected without its consent.
As between the Borrower and the Issuing Bank, the Borrower assumes all
risks of the acts and omissions of, or misuse of any Letter of Credit by, the
beneficiary of any Letter of Credit. In furtherance and not in limitation of
the foregoing, the Issuing Bank shall not be responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for or the issuance
or amendment of any Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason; (iii) for failure of a
beneficiary of any Letter of Credit to comply fully with conditions required in
order to draw upon any Letter of Credit; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telecopy, telex or otherwise, whether or not they be in
cipher; (v) for errors in interpretation of technical terms; (vi) for any loss
or delay in the transmission or otherwise of any document required in order to
make a draw under any Letter of Credit or of the proceeds thereof; (vii) for
the misapplication by a
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beneficiary of any Letter of Credit of the proceeds of any drawing under any
Letter of Credit; (viii) for any consequences arising from causes beyond the
control of the Issuing Bank, including, without limitation, any Government
Acts; and (ix) for any other circumstances whatsoever in making or failing to
make payment under any Letter of Credit; except that the Borrower shall have a
claim against the Issuing Bank, and the Issuing Bank shall be liable to the
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by the Borrower, as determined by a court of
competent jurisdiction to be the result of (i) the Issuing Bank's willful
misconduct or gross negligence in determining whether documents presented under
any Letter of Credit comply with the terms of any Letter of Credit, (ii) the
Issuing Bank's payment on a draw under any Letter of Credit to any Person other
than the beneficiary of any Letter of Credit or its lawful successor,
representative or assign or (iii) the Issuing Bank's willful failure to pay
under any Letter of Credit after the presentation to it by the beneficiary of
any Letter of Credit or its lawful successor, representative or assign of a
sight draft and certificate or other documents strictly complying with the
terms and conditions of any Letter of Credit, unless the Issuing Bank in good
faith and upon advice of counsel believes that it is prohibited by law or other
legal authority from making such payment. None of the above shall affect,
impair, or prevent the vesting of any of the Issuing Bank's rights or powers
hereunder.
Except for the Issuing Bank's obligations under any Letter of Credit, the
Issuing Bank shall have no liability to the Borrower or to any other Person
resulting from a reduction of the credit rating of the Issuing Bank or any
deterioration in the Issuing Bank's financial condition.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Bank under or in connection with the Letter of Credit or the related sight
drafts or certificates or documents, if taken or omitted in good faith, shall
not put the Issuing Bank under any resulting liability to the Borrower.
2.3h Construction of Application and Agreement for Letter of Credit. This
Credit Agreement is intended to supplement any application or agreement
executed and delivered in connection with the issuance of any Letter of Credit
hereunder. Whenever possible, this Credit Agreement is to be construed as
consistent with any such application or agreement and, to the extent that the
provisions of this Credit Agreement and such application or agreement conflict,
the terms of this Credit Agreement shall control.
2.4 Certain Provisions Relating to Interest Rates. The Notes shall bear
interest, on the actual unpaid principal amount thereof from time to time
outstanding, from the date thereof until payment in full, at one or more of the
rates of interest set forth in this Section 2.4.
2.4a Interest Payments. The Borrower shall pay accrued interest on the unpaid
aggregate principal balance of the Notes in arrears (A) with respect to each
Base Rate Loan (i) on the last Business Day of each March, June, September and
December of each year during the term hereof, (ii) at maturity, whether by
acceleration or otherwise, of the Notes, and (iii) thereafter on demand until
all amounts outstanding under the Notes are paid in full;
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and (B) with respect to each Eurodollar Rate Loan (i) on the last day of each
Interest Period (provided, however, if the Interest Period chosen for any
Eurodollar Rate Loan exceeds three (3) months, interest on that Eurodollar Rate
Loan shall be due and payable on the last day of every three (3) month period
during such Interest Period and on the last day of such Interest Period), (ii)
at maturity, whether by acceleration or otherwise, of the Notes, and (iii)
thereafter on demand until all amounts outstanding under the Notes are paid in
full.
2.4b Interest Rates. The unpaid principal amount of the Loans shall bear
interest (except as to the Term Loans as provided in Subsection 2.4c below) for
each day until due at one or more rates selected by the Borrower from among the
Options set forth below; it being understood that, subject to the provisions of
this Credit Agreement, the Borrower may select different Options to apply
simultaneously to different Portions of the Loans and may select no more than
six (6) different Interest Periods to apply to Eurodollar Rate Loans.
(i) Base Rate Option. Interest under the Base Rate Option shall
accrue at a rate per annum (computed upon the basis of a year of 365 or
366 days, as the case may be, and the actual number of days elapsed) for
each day equal to the sum of (A) the Base Rate plus (B) the Applicable
Base Rate Margin as determined below.
APPLICABLE BASE
LEVERAGE RATIO RATE MARGIN
-------------- ---------------
Greater than 3.0 to 1.0 .50%
Less than or equal to 3.0 to 1.0 0%
Upon receipt by the Agent of the quarterly financial statements delivered
pursuant to Subsection 5.2a hereof, the Applicable Base Rate Margin shall
be adjusted, if necessary, effective on the date such quarterly financial
statements are due in accordance with Subsection 5.2a hereof regardless
of the actual date of delivery thereof.
(ii) Eurodollar Rate Option. Interest under the Eurodollar Rate
Option shall accrue at a rate per annum (computed upon the basis of a
year of 360 days and the actual number of days elapsed) for each day
equal to the sum of (A) the Eurodollar Rate for each Interest Period plus
(B) the Applicable Eurodollar Rate Margin as determined below.
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APPLICABLE
EURODOLLAR RATE
LEVERAGE RATIO MARGIN
-------------- ---------------
Greater than 3.00 to 1.0 2.00%
Less than or equal to 3.00 to
1.0, but greater than 2.25 to
1.0 1.50%
Less than or equal to 2.25 to
1.0, but greater than 1.50 to
1.0 1.25%
Less than or equal to 1.50 to 1.0 1.00%
Upon receipt by the Agent of the quarterly financial statements delivered
pursuant to Subsection 5.2a hereof, the Applicable Eurodollar Rate Margin
shall be adjusted, if necessary, effective on the date such quarterly
financial statements are due in accordance with Subsection 5.2a hereof
regardless of the actual date of delivery thereof.
(iii) Payment Default Rate. Upon the expiration of any cure period
relating to an Event of Default pursuant to Section 8.1 hereof, and
during the period in which such Event of Default continues, (A) the
principal amount of the Base Rate Loans, whether or not the same have
become due and payable by maturity, acceleration, declaration or
otherwise shall bear interest at a rate per annum which shall be two
hundred (200) basis points (2%) above the rate otherwise in effect for
the Base Rate Loans and (B) the principal amount of all of the Eurodollar
Rate Loans, whether or not the same have become due and payable by
maturity, acceleration, declaration or otherwise, shall bear interest,
until the end of the current Interest Period, at a rate per annum which
shall be two hundred (200) basis points (2%) above the rate otherwise in
effect for the Eurodollar Rate Loans. At the end of each then current
Interest Period, such Eurodollar Rate Loans shall automatically be
converted to Base Rate Loans, and thereafter the interest rate shall be
calculated in accordance with item (A) of this Subsection 2.4b(iii).
2.4c Tax-Exempt Rate. Subject to the provisions of Subsection 2.4d hereof, the
Term Loans shall bear interest at a tax-exempt rate equal to the applicable
Option (as set forth in Subsection 2.4b above) multiplied by the ESOP
Tax-Exempt Factor.
2.4d Adjustment to Tax-Exempt Rate.
(i) Tax Assumptions. The Term Loan Banks have agreed to charge
interest on the Term Loans at the tax-exempt rate set forth in Subsection
2.4c hereof under the assumptions ("Tax Assumptions") that, (i) pursuant
to Section 133 of the Code, each Term Loan Bank will at all times be able
to exclude from its gross income for federal income tax purposes
(regardless of whether the Term Loan Banks have any gross income for
federal income tax purposes for any tax period) an amount equal to fifty
percent (50%) of the interest received by such Term Loan Bank with
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respect to the Term Loans, (ii) the amount of interest on indebtedness
incurred or continued by such Term Loan Bank to purchase or carry the
funds loaned to the Borrower pursuant to the Term Loans shall be one
hundred percent (100%) deductible by such Term Loan Bank for federal
income tax purposes and shall not be subject to disallowance or reduction
in any manner pursuant to Sections 291(a)(3) and 265 of the Code, or any
other provision of the Code which are successors thereto, (iii) the
Corporate Tax Rate will not be changed during the term of the Term Loans
and (iv) the interest received with respect to the Term Loans is not
subject to any minimum tax including but not limited to the alternate
minimum tax imposed pursuant to Section 55 of the Code. With respect to
the interest income exclusion provided by Section 133 of the Code (the
"Interest Income Exclusion"), the Term Loan Banks have further assumed
that (i) the entire amount of the Term Loans will be used to finance an
Exempt Loan, and (ii) the entire amount of the Term Loans shall at all
times constitute a Securities Acquisition Loan.
(ii) Adjustment to Tax-Exempt Rate. Notwithstanding the tax-exempt
rate of interest described in Subsection 2.4c, in the event that, at any
time either:
(A) the Interest Income Exclusion is not available, in whole or
in part, as a result of either (1) an amendment to Section
133 of the Code or (2) the Term Loans failing, through no
fault of any Term Loan Bank, to qualify as a Securities
Acquisition Loan;
(B) there occurs a change in the Corporate Tax Rate;
an Adjusted ESOP Tax-Exempt Factor shall be calculated pursuant to the
following formula:
F X
Adjusted ESOP Tax Exempt Factor = 1.00 - .15 ( n n)
---------
FX
Where
F = then applicable Marginal Rate
n
X = then applicable Exclusion Percentage
n
F = original Marginal Rate
X = original Exclusion Percentage
As of the effective date of any event set forth in items (A) and (B)
above, the Term Loans shall bear interest per annum at a tax-exempt rate
equal to the applicable Option multiplied by the Adjusted ESOP Tax-Exempt
Factor.
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(iii) Adjustment for Alternative Minimum Tax. Notwithstanding the
tax-exempt rate of interest described in Subsection 2.4c, in the event
that at any time, (A) there is deemed applicable or inapplicable to the
Term Loans any alternative minimum tax pursuant to Section 55 of the Code
which tax is or was based upon the interest income from any obligation
the interest of which would otherwise be excludable from income pursuant
to Section 133 of the Code or (B) there is enacted after the Closing
Date, any change in the Code which subjects any Term Loan Bank to or
removes from any Term Loan Bank a minimum tax which tax is based solely
upon the interest paid to such Bank hereunder which otherwise would be
excludable from income pursuant to Section 133 of the Code, then the
Borrower shall pay to the Agent, on behalf of such Term Loan Bank, or the
Term Loan Bank shall credit to future interest payments of the Borrower,
as the case may be, an amount equal to the Borrower's pro rata share of
the affected Term Loan Bank's actual total increase in alternative
minimum tax or other minimum tax liability attributable to such change or
imposition.
(iv) Adjustment for Interest on Tax-Exempt Obligations.
Notwithstanding the tax-exempt rate of interest described in Subsection
2.4c, in the event that, at any time, pursuant to a change of law
relating to Sections 265 or 291(a)(3) of the Code or any provisions of
the Code which are successors thereto, which reduces or disallows in
whole or in part, or increases or allows, the amount allowable as a
deduction with respect to interest on any indebtedness incurred by any
Term Loan Bank to purchase or carry the funds loaned to the Borrower
pursuant to the Term Loans, then with respect to any loss or reduction of
deduction, or gain or increases of deduction, the applicable interest
rate shall be adjusted by a percentage which will maintain, after
deduction of any and all taxes required to be paid by the Term Loan Banks
as a result of the receipt of the interest received from the Borrower
based on the adjusted rate, each Term Loan Bank's overall net after-tax
income with respect to the Term Loans at a level which is equal to the
level that would have been available if such event had not occurred.
(v) Notice of Adjustments. Following the occurrence of any event
set forth above in Subsections 2.4d(ii), (iii), and (iv) above, the Agent
shall promptly submit to the Borrower a certificate of an appropriate
officer of any affected Term Loan Bank, which certificate sets forth in
reasonable detail the adjustment to the interest rate and/or the amount
of demand payment due pursuant to this Subsection 2.4d and the
calculations in reasonable detail related thereto. The Borrower agrees
that such certificate shall be prima facie evidence of such amounts due
pursuant to this Subsection 2.4d.
(vi) Payment. The Borrower shall pay to the Agent, on behalf of the
Term Loan Banks, within thirty (30) days of the receipt of the notice
thereof, or the Agent shall credit future interest payments of the
Borrower, as the case may be, the amount determined for the period
affected by the application of any Adjustment plus an amount which shall
be equal to the amount of any and all interest, penalties or additions to
tax specifically related to the Term Loans which is required to be paid
by any taxing authority in connection with any such Adjustment.
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(vii) Obligations to Survive. The obligations of the Borrower under
this Subsection 2.4d shall survive (A) the expiration or termination of
this Credit Agreement and the Amended and Restated Term Notes or (B) the
purchase of the Amended and Restated Term Notes by any other Person and
shall continue in full force and effect until the affected Person's
federal tax liability with respect to this transaction for the last year
in which the Tax Assumptions are applicable is finally settled by the IRS
or, if later, the period within which the IRS may bring an action to
recover any tax it alleges to be due with respect to this transaction for
such final year is exhausted. This indemnification obligation is
expressly for the benefit of, and enforceable by, the Term Loan Banks,
their successors and assigns.
2.4e Interest Periods; Limitations on Elections. At any time when the Borrower
shall select, convert to or renew the Eurodollar Rate Option to apply to all or
any Portion of the outstanding Loans, it may fix one or more Interest Periods
to apply to Eurodollar Rate Loans. All the foregoing, however, is subject to
the following:
(i) the nine (9) month Interest Period is subject to such Interest
Period being available to each Bank on a commercially reasonable basis
(as determined by each Bank in its sole discretion);
(ii) any Interest Period which would otherwise end on a day which is
not a Business Day shall be extended to the next Business Day unless such
Business Day falls in the succeeding calendar month in which case such
Interest Period shall end on the next preceding Business Day;
(iii) any Interest Period which begins on the last day of a calendar
month or on a day for which there is no numerically corresponding day in
the subsequent calendar month during which such Interest Period is to end
shall end on the last Business Day of such subsequent month;
(iv) the Eurodollar Rate Loan for each Interest Period shall be in
an aggregate principal amount of $1,000,000 or more; provided, however,
that each incremental unit in excess of $1,000,000 shall be $500,000 or
an integral multiple thereof; and
(v) no Interest Period may be elected in respect of the Term Loans
which would end after the Maturity Date or in respect of the Revolving
Credit Loans which would end after the Repayment Date.
2.4f Elections, Conversions or Renewals of Interest Rate Options. Elections of
or conversions to the Base Rate Option shall continue in effect until converted
as hereinafter provided. Elections of, conversions to or renewals of the
Eurodollar Rate Option shall expire as to each Eurodollar Rate Loan at the
expiration of the applicable Interest Period.
At any time with respect to any Base Rate Loan or at the expiration of the
applicable Interest Period with respect to any Eurodollar Rate Loan, the
Borrower (subject to Subsection 2.4e) may cause all or any part of the
principal amount of such Loan to be
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converted to and/or (in the case of Eurodollar Rate Loans) to be renewed under
the Eurodollar Rate Option by notice to the Agent as hereinafter provided.
Such notice (i) may be oral or in writing and if oral immediately confirmed in
writing to the Agent, (ii) shall be irrevocable, (iii) shall be given not later
than 11:00 a.m. (Pittsburgh, Pennsylvania time) not less than two (2) Business
Days prior to the proposed effective date for conversion to or renewal of,
either in whole or in part, the Eurodollar Rate Option and (iv) shall set
forth:
(A) the effective date, which shall be a Business Day;
(B) the new Interest Period or Interest Periods selected; and
(C) with respect to each such Interest Period, the aggregate
principal amount of the corresponding Eurodollar Rate Loan.
At the expiration of each Interest Period, any part (including the whole)
of the principal amount of the corresponding Eurodollar Rate Loan, as to which
no notice of conversion or renewal has been received as provided above, shall
automatically be converted to a Base Rate Loan. The Agent shall promptly
notify the Borrower of any such automatic conversion.
2.4g Eurodollar Rate Unascertainable. In the event that, on any date on which
the Eurodollar Rate would otherwise be set, the Agent shall have determined
(which determination shall be prima facie evidence of the unascertainability of
the Eurodollar Rate) that, by reason of circumstances affecting the eurodollar
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate, the Agent shall give prompt notice of such determination to
the Borrower, and, until the Agent notifies the Borrower that the circumstances
giving rise to such determination no longer exist, the right of the Borrower to
borrow under, convert to or renew the Eurodollar Rate Option shall be
suspended. Any notice of borrowing under, conversion to or renewal of a
Eurodollar Rate Loan which was to become effective during the period of such
suspension shall be treated as a request to borrow under, convert to or renew a
Base Rate Loan with respect to the principal amount therein specified.
2.4h Illegality. If the Agent shall determine in good faith (which
determination shall be final and conclusive) that compliance by any Bank or its
Lending Office with any applicable law, treaty or governmental rule,
regulation, guideline, order, request or directive (whether or not having the
force of law), or the interpretation or application thereof by any governmental
authority, has made it unlawful or commercially impractical for any such Bank
to make or maintain Eurodollar Rate Loans (including but not limited to
acquiring eurodollar liabilities to fund Eurodollar Rate Loans), the Agent
shall give notice of such determination to the Borrower; provided, however,
that before the giving of such notice pursuant to this Subsection 2.4h, such
Bank shall designate a different Lending Office, if such designation will avoid
the need for such notice and will not in the judgment of such Bank be otherwise
disadvantageous to such Bank. Notwithstanding any provision of this Credit
Agreement to the contrary, unless and until the Agent shall have given notice
that the circumstances giving rise to such determination no longer apply:
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(A) with respect to any Interest Periods thereafter commencing,
interest on any Eurodollar Rate Loan shall be computed and payable under
the Base Rate Option; and
(B) on such date, if any, as shall be required by law, any Eurodollar
Rate Loans then outstanding shall be automatically converted to Base Rate
Loans and the Borrower shall pay to the Agent, for the account of the
Banks, the accrued and unpaid interest on such Eurodollar Rate Loans to
(but not including) the date of such conversion.
The Agent shall furnish to the Borrower a certificate as to the amount
necessary to compensate the Banks for the costs associated with any prepayment
pursuant to Subsection 2.4h(B) above (which certificate shall be prima facie
evidence of the amount owed by the Borrower to the Banks), and the Borrower
shall pay such amount to the Agent for the account of the Banks, as additional
consideration hereunder, within fifteen (15) days of the Borrower's receipt of
such certificate.
2.5 Yield Protection and Reimbursement.
(i) Yield Protection. Except for changes addressed in Subsection 2.4d,
if any Governmental Rule issued after the Closing Date or if any change on or
after the Closing Date in any Governmental Rule (including, without limitation,
Regulation D) or the interpretation or application thereof by any Governmental
Person charged with the administration thereof (whether or not having the force
of law):
(A) subjects any Bank, its Lending Office or the Issuing Bank to any
tax, duty, levy, impost, charge, fee, deduction or withholding of any kind
hereunder (other than (x) a tax, including, without limitation, a branch
tax, imposed or based upon the income of such Bank, its Lending Office or
the Issuing Bank and (y) any franchise tax imposed on such Bank, its
Lending Office or the Issuing Bank by the laws of the jurisdiction under
which such Bank, such Lending Office or the Issuing Bank is organized or
any political subdivision thereof) or changes the basis of taxation of any
Bank, its Lending Office or the Issuing Bank with respect to the payments
by the Borrower of principal or interest due hereunder (other than any
change which affects, and to the extent that it affects, the taxation by
the United States or any state thereof of the total net income of such Bank
or the Issuing Bank);
(B) imposes, modifies or deems applicable any reserve, special
deposit or similar requirements against assets of, deposits with or for the
account of, or credit extended, commitments to lend or any Letters of
Credit issued or participations purchased therein by any Bank, its Lending
Office, the Issuing Bank or any corporation controlling such Bank or the
Issuing Bank (other than such requirements which are included in
determining the applicable rate or rates of interest hereunder); or
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(C) imposes upon any Bank, its Lending Office or the Issuing Bank any
other obligation or condition with respect to this Credit Agreement,
and the result of all of the foregoing is to increase the cost to such Bank,
its Lending Office, the Issuing Bank or any corporation controlling such Bank
or the Issuing Bank, of making the Loans, extending the Revolving Credit
Commitment, issuing any Letter of Credit or making or maintaining any
participation in any Letter of Credit, reduce the net after-tax income
receivable by such Bank, its Lending Office or the Issuing Bank from payments
under this Credit Agreement or impose any expense upon any Bank, its Lending
Office, the Issuing Bank or any corporation controlling such Bank, reduce the
rate of return on the capital of such Bank, its Lending Office, the Issuing
Bank or any corporation controlling such Bank by an amount which such Bank or
the Issuing Bank in good xxxxx xxxxx material,
(A) the Bank or the Issuing Bank so affected shall promptly notify the
Borrower and the Agent of the happening of such event; and of the amount
determined by such Bank, its Lending Office or the Issuing Bank (which
determination shall be prima facie evidence of the amount owed by the
Borrower to such Bank) to be necessary to compensate such Bank or the
Issuing Bank for such increase in cost, reduction in net after tax income
or additional expense;
(B) the Borrower shall pay to the affected Bank or the Issuing Bank,
on demand, as additional interest on the Loans or draws under any Letter of
Credit, such amount as will compensate such Bank or the Issuing Bank for
such additional cost or expense or reduced amount, calculated from the date
of the notification by such Bank or the Issuing Bank; and
(C) the Borrower may pay to such affected Bank or the Issuing Bank the
affected Loan or draw under any Letter of Credit in full without the
payment of any additional amount other than on account of such Bank's or
the Issuing Bank's out-of-pocket losses (including funding losses, if any,
as provided in paragraph (ii) below) not otherwise provided for in
subparagraph (B) immediately above.
A certificate as to the increased cost or reduced amount as a result of any of
the foregoing events shall be promptly submitted by such Bank or the Issuing
Bank to the Borrower and the Agent in accordance with the provisions of Section
10.2 hereof. Such certificate shall, in the absence of manifest error, be
conclusive and binding as to the amount thereof.
(ii) Reimbursement of Costs and Losses.
(A) Voluntary Breakage. The Borrower hereby agrees to indemnify each Bank
against any loss or expense which such Bank may sustain or incur as a
consequence of the Borrower (x) failing to make any borrowing, conversion or
renewal of a Eurodollar Rate Loan on the scheduled date, (y) failing to make
when due (whether by declaration, acceleration or otherwise); any payment or
prepayment of any amount due hereunder or in voluntarily making any payment or
prepayment of any Eurodollar Rate Loan or any part thereof on any day other
than the last day of its Interest Period, or (z) failing to make any mandatory
prepayment under Subsection 2.1f(ii), including, but not limited to, any
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loss of profit, premium or penalty incurred by such Bank in respect of funds
borrowed by it for the purpose of making or maintaining any Eurodollar Rate
Loan or any part thereof as determined by such Bank in the exercise of its sole
but reasonable discretion.
(B) Involuntary Breakage. The Borrower hereby agrees to indemnify each
Bank against any loss or expense which such Bank may sustain or incur as a
consequence of the Borrower (x) failing, through no fault of its own,
including, without limitation, the circumstances specified in Subsection 2.4h,
to make any borrowing, conversion or renewal of a Eurodollar Rate Loan on the
scheduled date, (y) failing to make when due (whether by declaration,
acceleration or otherwise) any payment or prepayment of any amount due
hereunder or (z) making any payment or prepayment of any Eurodollar Rate Loans
or any part thereof on any day other than the last day of its Interest Period,
including, but not limited to, any premium or penalty incurred by such Bank in
respect of funds borrowed by it for the purpose of making or maintaining any
Eurodollar Rate Loan or any part thereof as determined by such Bank in the
exercise of its sole but reasonable discretion.
(iii) Notice of Costs and Losses. Each Bank will promptly notify the
Borrower and the Agent of any event of which it has knowledge which will
entitle such Bank to compensation pursuant to this Section 2.5 and will
designate a different Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment
of such Bank, be otherwise disadvantageous to such Bank. Any Bank incurring
such loss or expense pursuant to this Section 2.5 shall furnish to the Borrower
(through the Agent) a certificate signed by an appropriate officer of such Bank
as to the amount of any such loss or expense showing the related calculations
in reasonable detail (which certificate shall be prima facie evidence of the
amount owed by the Borrower to such Bank), and the Borrower shall pay such
amount to such Bank within thirty (30) days of the Borrower's receipt of such
certificate). Notwithstanding the foregoing provisions of this Section 2.5,
the Borrower shall only be obligated to compensate any Bank for any amount
arising or accruing during (x) any time or period commencing not more than
ninety (90) days prior to the date on which such Bank notifies the Agent and
the Borrower that it proposes to demand such compensation and identifies to the
Agent and the Borrower the statute, regulation or other basis upon which the
claimed compensation is or will be based and (y) any time or period during
which, because of the retroactive application of such statute, regulation or
other basis, such Bank did not know that such amount would arise or accrue.
2.6 Capital Adequacy. If, after the Closing Date, any adoption of, any change
to or any change in the interpretation of any Governmental Rule by any
Governmental Person exercising control over banks or financial institutions
generally or any court (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by any
Bank or any corporation controlling such Bank (a "Capital Adequacy Event"), and
the result of such Capital Adequacy Event is to reduce the rate of return on
capital of such Bank or the capital of any corporation controlling such Bank as
a consequence thereof to a level below that which such Bank could have achieved
but for such Capital Adequacy Event (taking into consideration such Bank's
policies with respect to capital adequacy) by an amount which such Bank deems
to be material,
such Bank shall promptly deliver to the Borrower and the Agent a statement of
the amount necessary to compensate such Bank for the reduction in the rate of
return on its capital attributable to its Loans and
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the commitments under this Credit Agreement (the "Capital Compensation
Amount"). Each Bank shall determine the Capital Compensation Amount in good
faith, using reasonable attribution and averaging methods. Each Bank shall,
from time to time, furnish to the Borrower and the Agent a certificate as to
the amount so determined. Such certificate shall, in the absence of manifest
error, be conclusive and binding as to the amount thereof. Such amount shall
be due and payable by the Borrower to such Bank ten (10) days after such notice
is given. As soon as practicable after any Capital Adequacy Event, such Bank
shall submit to the Borrower and the Agent estimates of the Capital
Compensation Amounts that would be payable as a function of such Bank's
commitments hereunder.
2.7 Closing Fee. The Borrower agrees to pay to the Agent, for the benefit of
the Banks, a Closing Fee equal to $203,322.00. The Agent shall distribute to
each Bank a portion of such Closing Fee (a) equal to one-quarter of one percent
(1/4%) of each Bank's (which is also a 1989 Bank) existing commitments (whether
a revolving credit commitment or term loan commitment) under the 1989 Credit
Agreement and (b) equal to three-eighths of one percent (3/8%) of each Bank's
Commitment Amount less such Bank's existing commitments (whether a revolving
credit commitment or term loan commitment) under the 1989 Credit Agreement.
2.8 Lending Offices. Each Bank may book its Loans at any Lending Office
selected by such Bank and may change its Lending Office from time to time. All
terms of this Credit Agreement shall apply to any such Lending Office and the
Notes shall be deemed held by each Bank for the benefit of such Lending Office.
Each Bank may, by written notice to the Agent and the Borrower, designate a
Lending Office through which its Loans will be made by it and for whose account
payments are to be made.
2.9 Time, Place and Manner of Payments. All payments to be made by the
Borrower under the Revolving Credit Notes or the Amended and Restated Term
Notes or of the Commitment Fee, the Agent's Fee, the Facility Fee and all other
amounts due the Agent, whether for its own account or for the benefit of the
Banks, hereunder shall be made at the principal office of the Agent set forth
in Article X. All payments to be made by the Borrower under this Credit
Agreement shall be paid in Dollars in immediately available funds no later than
1:30 P.M. (Pittsburgh, Pennsylvania time) on the date such payment is due.
Except as specified elsewhere, if the date on which any payment is due is not a
Business Day such payment shall be due and payable on the next succeeding day
which is a Business Day and such extension of time shall be included in
computing any interest in respect of such payment.
2.10 Payment from Accounts Maintained by the Borrower. In the event that any
payment of principal, interest, Commitment Fee, Agent's Fee, Facility Fee, or
any other amount due the Agent, whether for its own account or for the benefit
of the Banks, under the Loan Documents is not paid when due, the Agent is
hereby authorized to effect such payment by debiting any demand deposit account
of the Borrower maintained with the Agent. This right of debiting accounts of
the Borrower is in addition to any right of set-off accorded the Agent
hereunder or by operation of law.
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2.11 Substitution of a Bank. If (i) the obligation of any Bank to fulfill its
obligations in relation to the issuance of any Letter of Credit or the purchase
of any risk participations therein under Section 2.3 has been suspended
pursuant to Subsection 2.3(b)(ii) hereof, (ii) the obligation of any Bank to
make Eurodollar Rate Loans has been suspended pursuant to Subsection 2.4h
hereof or (iii) any Bank has demanded compensation under Section 2.5 or Section
2.6 hereof, the Agent shall, at the request of the Borrower and with the
assistance of the Borrower, use commercially reasonable efforts to obtain a
mutually satisfactory substitute lending institution or lending institutions
(which may be one or more of the Banks) to purchase the Revolving Credit Note
or the Amended and Restated Term Note, as the case may be, and assume the
Revolving Credit Loans or the Term Loans and Revolving Credit Commitment of
such Bank, as the case may be.
ARTICLE III. SET-OFF AND SECURITY INTERESTS.
To secure the repayment of the Bank Indebtedness:
3.1 Set-Off. The Borrower hereby gives to the Banks a lien and security
interest for the amount of any Bank Indebtedness upon and in any property,
credits, securities or Monies (whether matured or unmatured) of the Borrower
which may at any time be delivered to, or be in the possession of, or owed by
any Bank in any capacity whatever, including the balance of any deposit account
but excluding any trust, fiduciary, reserve, electronic funds transfer or
direct loan accounts, in each case maintained by the Borrower with such Bank.
The Borrower hereby authorizes each Bank in case of an Event of Default, at
such Bank's option, at any time and from time to time, to apply, at the
discretion of such Bank, to the payment of Bank Indebtedness, any and all such
property, credits, securities or Monies now or hereafter in the hands of such
Bank belonging or owed to the Borrower.
3.2 Security Agreements. The Borrower shall grant, and shall cause AII to
grant, to the Agent, on behalf of the Banks and the Issuing Bank, a lien and
security interest in the Collateral for the amount of the Bank Indebtedness
which security interest, assuming the filing of the appropriate financing
statements, shall be a first priority perfected lien and security interest
except for Permitted Encumbrances. Prior to the initial Disbursements
hereunder, the Borrower and/or AII shall execute and deliver to the Agent, on
behalf of the Banks and the Issuing Bank, (i) an Amended and Restated Security
Agreement substantially in the form of Exhibit "D" hereto, (ii) an Amended and
Restated Subsidiary Security Agreement substantially in the form of Exhibit "E"
hereto and (iii) all financing statements reasonably requested by the Agent.
3.3 Pledge Agreements. The Borrower shall grant and shall cause to be granted
to the Agent, on behalf of the Banks and the Issuing Bank, a lien and security
interest in all of the issued and outstanding capital stock of each Active
Subsidiary, whether such capital stock is in existence as of the date hereof or
is hereafter created, as collateral security for the payment when due of the
Bank Indebtedness, which security interest shall be a first priority perfected
lien and security interest. To evidence the grant of the pledge and security
interest referred to above, the Borrower shall execute and deliver to the
Agent, on behalf of the Banks and the Issuing Bank, an Amended and Restated
Pledge Agreement substantially in the
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form of Exhibit "F" hereto and shall cause to be executed and delivered to the
Agent, Amended and Restated Subsidiary Pledge Agreements substantially in the
form of either Exhibit "G-1" or Exhibit "G-2" hereto, or Subsidiary Pledge
Agreements substantially in the form of Exhibit "G-3" hereto, together with all
requisite stock certificates and the associated stock transfer powers
previously not delivered to the Agent in connection with the 1989 Credit
Agreement.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES.
To induce the Banks, the Issuing Bank and the Agent to enter into this
Credit Agreement, to induce the Revolving Credit Banks to make the Revolving
Credit Loans herein provided for, to induce the Term Loan Banks to purchase the
1989 Term Loans as herein described and to induce the Issuing Bank to issue the
Letters of Credit herein provided for, the Borrower represents and warrants to
the Agent, the Banks and the Issuing Bank that:
4.1 Existence.
4.1a Borrower's Existence. The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania and is duly qualified and in good standing as a foreign
corporation, authorized to do business in each jurisdiction where, because of
the nature of its activities or properties, such qualification is required,
except for those foreign jurisdictions where the Borrower's non-qualification
would not have a Material Adverse Effect.
4.1b Active Subsidiary's Existence. Schedule 4.1 attached hereto sets forth
each Active Subsidiary of the Borrower in existence as of the Closing Date.
Each of the Borrower's Active Subsidiaries is duly organized, validly existing
and in good standing under the laws of the state of its incorporation and is
duly qualified and in good standing as a foreign corporation, authorized to do
business in each jurisdiction where, because of the nature of its activities or
properties, such qualification is required, except for those foreign
jurisdictions where such Active Subsidiary's non-qualification would not have a
Material Adverse Effect.
4.2 Authority.
4.2a Borrower's Authority. The Borrower has full power, authority and legal
right to engage in the activities conducted or proposed to be conducted by it
and, with respect to the Loans, to execute, deliver and perform its obligations
under this Credit Agreement, the Notes, the Amended and Restated Security
Agreement and the Amended and Restated Pledge Agreement. The Borrower has
taken all corporate actions necessary or appropriate to authorize the
execution, delivery and performance of this Credit Agreement, the Notes, the
Amended and Restated Security Agreement and the Amended and Restated Pledge
Agreement.
4.2b Active Subsidiaries' Authority. Each Active Subsidiary has full power,
authority and legal right to engage in the activities conducted or proposed to
be conducted by
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it, and with respect to the Loans, to execute, deliver and perform its
obligations under the Amended and Restated Subsidiary Pledge Agreement to be
signed by it. Each Active Subsidiary has taken all corporate actions necessary
or appropriate to authorize the execution, delivery and performance of the
Amended and Restated Subsidiary Pledge Agreement to be signed by it.
4.3 Capitalization. On and after the Closing Date, the authorized capital
stock of the Borrower will consist of 30,000,000 shares of Class A common
stock, $.0001 par value, 22,000,000 shares of Class B common stock, $.0001 par
value, and 1,000,000 shares of 10.19% convertible preferred stock, $.0001 par
value, of which 3,685,604 shares of Class A common stock, 10,064,024 shares of
Class B common stock and 220,750 shares of Series A 10.19% convertible
preferred stock will be outstanding on the Closing Date. The outstanding
shares of the Class A and Class B common stock and Series A 10.19% convertible
preferred stock have been duly authorized and validly issued and are fully paid
and nonassessable. As of the Closing Date, all of the Borrower's capital stock
is owned by the Management Stockholders, the ESOP and other Persons as more
fully set forth on Schedule 4.3. As of the Closing Date, the Borrower will not
have outstanding any stock or securities (except for the Series A 10.19%
convertible preferred stock and the Warrants) convertible or exchangeable for
any shares of its common stock, nor, except as set forth on Schedule 4.3, will
it have outstanding any rights or options to subscribe for or to purchase any
of the Borrower's capital stock or any stock or securities convertible into or
exchangeable for the Borrower's common stock.
4.4 Existence of ESOP. The ESOP is an employee stock ownership plan and trust
duly authorized, adopted by proper legal action, established and validly
existing under the laws of the Commonwealth of Pennsylvania and duly qualified,
subject to such modifications as are requested by the IRS as a condition
precedent to the issuance of a favorable determination letter, as a qualified
employee stock ownership plan and exempt trust under Sections 401(a), 501(a)
and 4975(e)(7) of the Code.
4.5 Validity and Enforceability. This Credit Agreement constitutes a legal,
valid and binding obligation of the Borrower, enforceable in accordance with
its terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law). The Notes, and each
other Loan Documents, when duly executed by the Borrower or any other Active
Subsidiary, as the case may be, and delivered in accordance with this Credit
Agreement, will constitute legal, valid and binding obligations of the Borrower
and/or each other Active Subsidiary which is a signatory thereto, enforceable
in accordance with their respective terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and to general
principles of equity (regardless of whether considered in a proceeding in
equity or at law).
4.6 No Conflict. The execution and delivery of this Credit Agreement, the
Notes, the Amended and Restated Security Agreement and
the Amended and Restated Pledge Agreement by the Borrower, and the execution
and delivery of the Amended and Restated
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Subsidiary Security Agreement and each Amended and Restated Subsidiary Pledge
Agreement to be executed by an Active Subsidiary and the compliance with the
provisions hereof and thereof by the relevant signatory, do not conflict with
or constitute on the part of the Borrower or any other Active Subsidiary, as
the case may be, a violation of, breach of, or default under (i) its respective
Certificate/Articles of Incorporation or By-Laws, (ii) any indenture, mortgage,
deed of trust, lease, note agreement or other agreement or instrument to which
the Borrower or any other Active Subsidiary is a party or by which the Borrower
or any other Active Subsidiary is bound, (iii) any Governmental Rule of any
Governmental Person having jurisdiction over the Borrower or any other Active
Subsidiary or any of their respective activities or property, (iv) any
provision of the ESOP or (v) any provision of ERISA or the Code.
4.7 Consents. All consents, approvals, authorizations and orders of
governmental or regulatory authorities which are required for the consummation
of the transactions contemplated by this Credit Agreement, the Notes and the
other Loan Documents, or which, in any way, would materially adversely affect
the validity or enforceability of any such Loan Document, if not obtained, have
been obtained.
4.8 Litigation. Except as set forth on Schedule 4.8, there are no actions,
suits, investigations, litigation or governmental proceedings pending, or to
the knowledge of the Borrower threatened, against it or any Subsidiary with
respect to the Borrower or such Subsidiary, the results of which would have a
material and adverse effect on the Consolidated financial condition or
operations of the Borrower and its Subsidiaries.
4.9 Compliance with Applicable Laws, etc. Neither the Borrower nor any of its
Subsidiaries is in default with respect to any order, writ, injunction or
decree (i) of any court or (ii) of any Governmental Person and the Borrower and
its Subsidiaries are each substantially complying with all applicable statutes
and regulations of each Governmental Person having jurisdiction over their
respective activities; provided, however, the Borrower shall not be deemed in
violation of this Section 4.9 as a result of any non-compliance if (A) such
order, writ, injunction or decree is being contested by the Borrower or any
Subsidiary in good faith and by proper proceedings appropriately conducted or
(B) the non-compliance with such order, writ, injunction or decree would not
materially and adversely affect the business operations or financial condition
of the Borrower or its Subsidiaries or the ability of the Borrower and its
Subsidiaries, taken as a whole, to perform their respective obligations under
the Loan Documents.
4.10 Financial Statements. Copies of the Borrower's (i) audited Consolidated
financial statements for the Fiscal Year ended June 30, 1994 and (ii) unaudited
Consolidated financial statements for the Fiscal Quarter ended September 30,
1994, each prepared on a basis not inconsistent with that of the preceding
Fiscal Year, have been furnished to the Agent, and each such statement presents
fairly the Consolidated financial condition of the Borrower as of such date and
the results of its operations.
4.11 Environmental Matters. (i) Except as set forth on Schedule 4.11 hereto,
to the best of the Borrower's knowledge:
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(A) the Borrower and each of its Subsidiaries is in
compliance with all applicable Environmental Laws except where
non-compliance with any such Environmental Law has not, or could
not reasonably be expected to, result in a Material Adverse
Effect;
(B) other than materials used or produced, held, transported
and disposed of in accordance with all Environmental Laws, neither
the Borrower nor any Subsidiary has used in its operations, and
the property of the Borrower or such Subsidiary is not now and has
never been used by the Borrower or such Subsidiary (or, to the
best knowledge of the Borrower after due inquiry, by any
predecessor in possession or other Person) for treatment,
generation, storage, recycling, or disposal of Hazardous
Substances in violation of any Environmental Laws;
(C) no Hazardous Substances are present at any property owned
or leased by the Borrower or any Subsidiary, nor will any
Hazardous Substances be present upon any such property or in the
operation thereof by the Borrower or any Subsidiary, except which
are handled in accordance with all Environmental Laws, in proper
storage containers; and
(D) the Borrower and its Subsidiaries have all necessary and
appropriate environmental permits, including but not limited to
those for air emissions, water discharges, and treatment, storage
and disposal of the Hazardous Substances.
(ii) There are no past, pending or, to the best of the Borrower's
knowledge, threatened Environmental Claims by or against the Borrower or any
Subsidiary or with respect to any property of the Borrower or such Subsidiary
that, individually or in the aggregate, could have a Material Adverse Effect on
the Borrower and its Subsidiaries, taken as a whole.
4.12 Deferred Compensation Plans. Except as listed on Schedule 4.12 attached
hereto, neither the Borrower nor any of its Active Subsidiaries has any
employee pension benefit plan (as that term is defined in Section 3(2)(A) of
ERISA) other than the ESOP.
4.13 Title to Properties. The Borrower and each Subsidiary has good title to
all of its properties and assets except for (i) defects in title which, taken
as a whole, are not material to the Borrower or such Subsidiary and (ii) other
Permitted Encumbrances.
4.14 Intellectual Property. The Borrower and each Subsidiary owns or licenses
all patents, patent applications, trademarks, trademark applications, permits,
service marks, trade names, copyrights, copyright applications, licenses,
franchises, authorizations and other intellectual property rights that are
necessary for the operations of its business, without infringement upon or
conflict with the rights of any other Person with respect thereto, except where
the consequences in the aggregate have no Material Adverse Effect. To the best
knowledge of the Borrower, (i) no device, product, process, method, substance,
part or component or other material now employed, or now contemplated to be
employed, by the
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Borrower or any Subsidiary infringes upon or conflicts with any rights owned by
any other Person and (ii) no claim or litigation regarding any of the foregoing
is pending or threatened. No patent, invention, device, application, principle
and no Governmental Rule, standard or code involving the Borrower's or any
Subsidiary's intellectual property is pending or, to the knowledge of the
Borrower, proposed, except where the consequences in the aggregate have no
Material Adverse Effect. All of the Borrower's and each Subsidiary's material
patents, trademarks, permits, service marks, trade names, copyrights, licenses,
franchises and authorizations are listed on Schedule 4.14 hereto.
4.15 Tax Returns and Payments. The Borrower and each of its Subsidiaries have
filed all United States Federal tax returns and the Borrower and each
Subsidiary has filed all other material tax returns which, to the knowledge of
the Borrower, are required by law to be filed by them (except where the failure
to file such tax returns would not materially adversely affect the business,
Consolidated financial conditions or the Consolidated results of operations of
the Borrower and its Subsidiaries as a whole) and have paid all taxes due
pursuant to such returns or pursuant to any assessments levied upon the
Borrower, the Subsidiaries or any of their respective properties, assets or
income which are due and payable, (other than those assessments, taxes, fees or
other charges, the amount or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Borrower or such
Subsidiary). The charges, accruals and reserves on the books of the Borrower
and its Subsidiaries, in respect of federal and state income taxes for all
fiscal periods to date, are adequate in accordance with GAAP.
4.16 Material Adverse Change. Since June 30, 1994, there has been no material
adverse change in operations or financial condition of the Borrower,
individually, or the Borrower and its Subsidiaries taken as a whole.
4.17 Solvency. The Borrower is, and after giving effect to the transactions
contemplated pursuant to this Credit Agreement and the other Loan Documents
will be, solvent.
4.18 Leveraged Securities. The Leveraged Securities constitute Employer
Securities.
4.19 Securities Acquisition Loans. The Term Loans continue to constitute
Securities Acquisition Loans.
4.20 Senior Debt Status. From and after the Closing Date, all Bank
Indebtedness outstanding under this Credit Agreement will constitute "senior
indebtedness" of the Borrower and will rank senior to all other Indebtedness
for Borrowed Money of the Borrower, from time to time outstanding (except for
Indebtedness for Borrowed Money which is secured by Permitted Encumbrances).
4.21 Escrow Agreement and Stockholders Contribution and Repayment Agreement.
The Escrow Agreement and the Stockholders Contribution and Repayment Agreement
have been terminated and are of no further force or effect.
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4.22 Investment Company Act. The Borrower is not an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended from time to time, or a company under the "control" of an
"investment company", as those terms are defined in such Act, and shall not
become such an "investment company" or under such "control."
4.23 Public Utility Holding Company Act. The Borrower is not a "holding
company," or a "subsidiary company" of a "holding company," or an "affiliate"
of a "holding company" or an "affiliate" of a "subsidiary company" of a
"holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended from time to time.
4.24 Disclosure. Neither this Credit Agreement nor any other document,
statement, certificate or other instrument delivered to the Agent or the Banks
by or on behalf of the Borrower pursuant to this Credit Agreement or any other
Loan Document contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
herein and therein, in light of the circumstances under which they were made,
not misleading. There is no fact known to the Borrower which materially and
adversely affects or, so far as the Borrower now foresees, will in the future
materially and adversely affect the business, operations, affairs, condition,
properties, assets, financial condition or results of operations of the
Borrower and its Subsidiaries which has not been set forth in this Credit
Agreement or in the other documents, instruments, certificates or statements
(financial or otherwise) furnished to the Agent or the Banks by or on behalf of
the Borrower prior to or on the Closing Date.
ARTICLE V. AFFIRMATIVE COVENANTS.
From the date hereof and for so much longer thereafter as the Revolving
Credit Commitment is in effect or any of the Bank Indebtedness remains unpaid,
the Borrower agrees, for the benefit of the Banks, the Issuing Bank and the
Agent, that:
5.1 Use of Proceeds. Proceeds of the Term Loans hereunder will be used to
purchase the 1989 Term Loans from the 1989 Banks. Proceeds of the Revolving
Credit Loans shall be used by the Borrower (a) to refinance the revolving
credit loans, if any, outstanding under the 1989 Credit Agreement, (b) for
general working capital purposes of the Borrower and its Active Subsidiaries,
including but not limited to capital expenditures, the acquisition and
development of additional schools, draws to meet DOE regulatory requirements
and Permitted Acquisitions, and (c) for financing of loans to the ESOP.
5.2 Furnishing Information. The Borrower will maintain a system of accounting
established and administered in accordance with GAAP consistently applied, and
will maintain its books in a manner so as to enable it to produce GAAP
statements. Further, the Borrower will:
5.2a Quarterly Reports of Borrower. Beginning with the period ending March 31,
1995, furnish to the Agent, for redelivery to each Bank, as soon as practicable
but in any
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event within forty-five (45) days after the end of each Fiscal Quarter, copies
of (i) internally prepared Consolidated balance sheets of the Borrower as at
the close of each such Fiscal Quarter and (ii) internally prepared Consolidated
statements of profit and loss, of retained earnings and cash flows of the
Borrower for the quarter then ended and for the period from the beginning of
the Fiscal Year to the date of such balance sheet, together with figures in
comparative form for the corresponding date or period, as the case may be, one
year prior thereto, all prepared in accordance with GAAP, consistently applied,
except for the absence of notes thereon and subject to year-end adjustments,
and in such reasonable detail as the Agent may request.
5.2b Annual Reports of Borrower. Furnish to the Agent, for redelivery to each
Bank, as soon as practicable but in any event within one hundred twenty (120)
days after the end of each Fiscal Year beginning on or after July 1, 1994,
copies of the annual audited Consolidated financial statements of the Borrower
which shall include, among other things, (A) the Consolidated balance sheet and
Consolidated statement of income of the Borrower as at the end of such Fiscal
Year, (B) a Consolidated statement of profit and loss and (C) a summary of
transactions in the stockholders' equity account of the Borrower, all in
reasonable detail, all prepared in accordance with GAAP and all certified
without qualification by an independent public accountant selected by the
Borrower and satisfactory to the Agent.
5.2c Annual Reports of the Active Subsidiaries. Furnish to the Agent, for
redelivery to each Bank, as soon as practicable but in any event within one
hundred twenty (120) days after the end of each Fiscal Year beginning on or
after July 1, 1994, copies of the internally prepared or audited balance sheet
and statement of income of each Active Subsidiary as at the end of such Fiscal
Year, and in such reasonable detail as the Agent may request.
5.2d Compliance Certificate. Together with each delivery of financial
statements pursuant to Subsections 5.2a, 5.2b and 5.2c above, a Compliance
Certificate substantially in the form of Exhibit "H" attached hereto, signed by
the Chief Financial Officer, or in his absence, the Treasurer of the Borrower,
stating that he has caused the terms of this Credit Agreement and of the Notes
to be reviewed and has made, or caused to be made under his supervision, a
review of the transactions and condition of the Borrower and its Subsidiaries
during the accounting period covered by such financial statements and that
nothing has come to his attention to lead him to believe that any Event of
Default hereunder or any condition or event which, after notice or lapse of
time or both, would constitute an Event of Default exists. If any such Event
of Default, condition or event existed or exists, such certificate shall
specify the nature and period of existence thereof and what action the Borrower
or such Subsidiary has taken or is taking or proposes to take with respect
thereto. Each such certificate shall also contain, for the period to which the
same relates, calculations in reasonable detail manifesting compliance as of
the close of such accounting period with the covenants contained in Sections
6.1 through 6.6 inclusive and Section 6.12 hereof. Such certificate shall in
all respects be in form and substance satisfactory to Agent.
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5.2e ESOP Annual Report. Furnish to the Agent, for redelivery to each Bank, as
soon as the same becomes available, but in no event later than thirty (30) days
following the date on which the filing with the IRS occurs, a copy of the
Annual Report.
5.2f Notification of Defaults. Furnish to the Agent, for redelivery to each
Bank, prompt notice upon the occurrence of any event of default or of any event
which, with the giving of notice or the lapse of time, or both, would
constitute an event of default under the Senior Subordinated Note Purchase
Agreements or the Senior Subordinated Notes.
5.2g Information re: Subordinated Debt. Furnish to the Agent, for redelivery
to each Bank, upon request by the Agent at any time a true, correct and
complete statement of the outstanding amount of Senior Subordinated Debt and
provide written notice to the Agent with respect to any change in the holders
of the Senior Subordinated Debt and with respect to all payments made on the
Senior Subordinated Debt, within five (5) days after any such change or such
payment.
5.2h Other Reports, Information and Notices. The Borrower will deliver or
cause to be delivered to the Agent, for redelivery to each Bank, within the
time periods set forth below, the following other reports, information and
notices:
(i) Auditor's Reports. As soon as practicable after they have
become available, copies of all other reports and management letters
which identify any material weakness or material changes in the
accounting practices of the Borrower submitted to the Borrower by its
accountants in connection with any annual or interim audit of the books
of the Borrower made by such accountants.
(ii) Notice of Events of Default and Material Adverse Changes.
Promptly after any Authorized Officer of the Borrower has learned of the
occurrence or existence of an Event of Default or a Material Adverse
Change, telephonic notice thereof specifying the details thereof, the
anticipated effect thereof and the action which the Borrower or the
affected Loan Party has taken, is taking or proposes to take with respect
thereto, which notice shall be promptly confirmed in writing within five
(5) days by an Authorized Officer of the Borrower.
(iii) Notice of Breach of Material Contract. Promptly after any
Authorized Officer of the Borrower has learned of the occurrence or
existence of a default by any party to any material contract to which the
Borrower or any Subsidiary is a party which default has had or which may
reasonably be expected to have a Material Adverse Effect, telephonic
notice thereof specifying the details thereof, the anticipated effect
thereof and the action which the Borrower or the affected Loan Party has
taken, is taking or proposes to take with respect thereto, which notice
shall be promptly confirmed in writing within five (5) days by an
Authorized Officer of the Borrower.
(iv) Notice of Litigation. (A) Promptly after the commencement
thereof, written notice of any action, suit, proceeding or investigation
before any Governmental Person affecting the Borrower or any Subsidiary,
except for actions, suits, proceedings and investigations which, if
adversely determined, would not and
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could not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Change and (B) promptly after any Authorized
Officer of the Borrower has notice thereof, written notice of any
decision, ruling, judgment which has had or which could reasonably be
expected to have a Material Adverse Effect and any appeal, reversal or
other significant action in connection with any such action, suit,
proceeding or investigation before any Governmental Person affecting the
Borrower or any Subsidiary.
(v) Orders, Etc. Promptly after receipt thereof, a copy of any
order, writ, decree, judgment, decision or injunction issued by any
Governmental Person in any proceeding, action, suit or investigation to
which the Borrower or any Subsidiary is a party which would or could
reasonably be expected to result in a Material Adverse Change.
(vi) ERISA Reports.
(A) As soon as possible, and in any event not later than the
date notice is sent to the PBGC, notice of any Reportable Event
regarding any Plan or Benefit Arrangement of the Borrower, any
Loan Party or any ERISA Affiliate and an explanation of any action
which has been or which is proposed to be taken with respect
thereto;
(B) concurrent with the filing thereof, a copy of any request
to the United States Secretary of the Treasury for a waiver or
variance of the minimum funding standards of Section 302 of ERISA
and Section 412 of the Code with respect to any Plan or Benefit
Arrangement of the Borrower, any Loan Party or any ERISA
Affiliate;
(C) as soon as possible, but in no event later than sixty
(60) days after an officer of the Borrower becomes aware of
unfunded accumulated benefit obligations for any Plan of the
Borrower or any ERISA Affiliate, as determined in accordance with
the Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 87, Employer's Accounting for Pensions
(or any superseding statement thereto), written notice of the
occurrence of such event;
(D) upon the request of the Agent, copies of each annual
report (Form 5500 Series) with accompanying schedules filed with
respect to any Plan or Benefit Arrangement of the Borrower or any
ERISA Affiliate;
(E) promptly after receipt thereof, a copy of any notice
which the Borrower or any ERISA Affiliate may receive from the
PBGC relating to the intention of the PBGC to terminate any Plan
or Benefit Arrangement, or to appoint a trustee to administer any
Plan or Benefit Arrangement, or to assert any liability under
Title IV of ERISA against the Borrower or any ERISA Affiliate;
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(F) a copy of any notice of assessment of Withdrawal
Liability received by the Borrower or any ERISA Affiliate in
relation to any Multiemployer Plan;
(G) as soon as possible, and in no event later than the date
notification is sent to the PBGC, notice of the failure by the
Borrower or any ERISA Affiliate to make a required installment or
other payment under Section 302 of ERISA and Section 412 of the
Code;
(H) concurrent with the filing thereof, a copy of any Notice
of Intent to Terminate any Plan of the Borrower or any ERISA
Affiliate filed under Section 4041(c) of ERISA; and
(I) promptly after receipt thereof, but without any
obligation or responsibility to secure the same, copies of any
calculations of estimated Unfunded Benefit Liabilities (or, if
applicable, the portions of any estimated Unfunded Benefit
Liabilities that would be allocated to the Borrower or any ERISA
Affiliate under Sections 4063 and 4064 or Section 4062(e) of
ERISA) for any Plans of the Borrower, any Loan Party or any ERISA
Affiliate.
(vii) Notice of Environmental Claims. Promptly after receipt
thereof, the Borrower shall deliver to the Agent, for redelivery to the
Banks, notice of any material Environmental Claim.
(viii) Tax Returns. The Borrower shall deliver to the Agent, for
redelivery to the Banks, promptly upon request, copies of all Federal tax
returns and reports filed by the Borrower or any Subsidiary in respect of
taxes measured by income (excluding sales, use and like taxes).
(ix) Notices of Tax Audits. Promptly, and in any event within ten
(10) days after receipt thereof by the Borrower or any Subsidiary, the
Borrower shall furnish to the Agent, for redelivery to the Banks, a copy
of each notice from any Governmental Person received by the Borrower or
any Subsidiary of such Governmental Person's intention to audit any
Federal tax return of the Borrower or any Subsidiary and a copy of each
subsequent notice with respect thereto from any such Governmental Person.
5.2i Updates to Schedules. Together with each delivery of the Borrower's
annual financial statements pursuant to Subsection 5.2b hereof, the Borrower
shall provide the Agent, for redelivery to the Banks, with written revisions or
updates to Schedule 4.1, 4.8, 4.11 and 5.12; provided, however, that no
schedule shall be deemed to have been amended, modified or superseded by any
such correction or update, nor shall any breach of warranty or representation
resulting from the inaccuracy or incompleteness of any such schedule be deemed
to have been cured thereby, unless and until the Agent, in its sole and
absolute discretion, shall have accepted in writing such revisions or updates
to such schedule.
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5.3 Preservation of Existence. Except as otherwise permitted pursuant to
Section 6.13, at its own cost and expense, the Borrower will, and will cause
each Active Subsidiary to, do all things necessary to preserve and keep in full
force and effect its corporate existence and its qualification under the laws
of the state of its incorporation. Further, the Borrower will, and will cause
each Active Subsidiary, other than Active Subsidiaries which no longer exist as
a result of a transaction permitted pursuant to Section 6.13, to maintain,
preserve and renew all rights, powers and privileges which are material to the
Consolidated operation of the Borrower's business, including the accreditation
of its Accredited Subsidiaries (the loss of which accreditation shall be deemed
for purposes of this Credit Agreement to be material).
5.4 Payment of Taxes and Fees. The Borrower will, and will cause each of its
Subsidiaries to, promptly pay and discharge all taxes, assessments, and
governmental charges and levies upon it or upon its income, profits or property
except for taxes, assessments and governmental charges or levies (a) the
payment of which is being contested in good faith by appropriate proceedings,
or (b) the non-payment of which would not have a material adverse effect on the
Borrower and its Subsidiaries taken as a whole, and as to which it shall have
set aside on its books reserves for such claims as are determined to be
adequate by the application of GAAP consistently applied.
5.5 Notice of Change of Business. The Borrower will promptly give written
notice to the Agent if the Borrower or any of its Active Subsidiaries which is
a Person primarily engaged in proprietary education or other related fields
ceases to be so primarily engaged.
5.6 Intentionally Omitted.
5.7 Preservation of Existence and Qualification of ESOP. At its own cost and
expense, except to the extent that such costs and expenses are paid by the
Trustee out of the assets of the ESOP, the Borrower will do all things
reasonably necessary to maintain the ESOP as a plan and trust, qualified under
Code Sections 401(a) and 501(a) designed to invest primarily in Employer
Securities.
5.8 Hazard and Casualty Insurance. The Borrower will, and will cause each
Subsidiary to, keep and maintain insurance with responsible insurance companies
on such of the properties of the Borrower and its Subsidiaries, in such amounts
and against such risks as is customarily maintained by similar businesses
similarly situated and owning, leasing or operating similar properties. The
Borrower will furnish to the Agent, on the date hereof and thereafter
concurrently with the delivery of the Borrower's annual financial statements
referred to in Section 5.2b hereof, certificates of insurers setting forth,
inter alia, the names of the insurance companies and the dates of expiration of
the policies and risks covered thereby, showing the Agent, for the benefit of
the Banks, as loss payee as its interest may appear together with a long-form
lender endorsement therefor and granting to the Agent thirty (30) days' prior
written notice of the cancellation of the policies and risks covered hereby.
The foregoing notwithstanding, provided no Event of Default, or no event which,
with the giving of notice or lapse of time or both would become such an Event of
Default, shall have occurred and be continuing: (i) proceeds of insurance of
less than $2,000,000 will be released to the Borrower and (ii) proceeds of
insurance in excess of $2,000,000 shall be
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promptly released, with the consent of the Required Banks, to the Borrower
after a written request from the Borrower to the Agent, such consent not to be
unreasonably withheld.
5.9 Good Repair. The Borrower will, and will cause each Subsidiary to, do all
things necessary to maintain, preserve, protect and keep its respective
property in good repair, working order and condition, ordinary wear and tear
excepted, and make all necessary and proper repairs, renewals and replacements
so that its respective business carried on in connection therewith may be
conducted at all times as presently conducted.
5.10 Corporate Records. The Borrower will, and will cause each Subsidiary to,
maintain proper books of record and account in accordance with sound accounting
practice in which full, true and correct entries shall be made of all its
respective property and assets and its respective dealings and business
affairs.
5.11 Inspection of Records and Properties. The Borrower will, and will cause
each Subsidiary and the Trustee to, permit, on reasonable prior notice from the
Agent or any Bank or their respective agents or representatives to visit during
regular office hours any of their respective properties, to examine their
respective physical assets, books of account and other records, and to discuss
their respective affairs and accounts with, and be advised about them by the
management of the Borrower, any Subsidiary or the ESOP, and as often as the
Agent or such Bank may reasonably request.
5.12 Continued Ownership of Borrower and Subsidiaries.
5.12a Continued Ownership of Borrower. At all times during the term hereof, on
a fully diluted basis as if all outstanding securities convertible into common
stock had been converted and all outstanding warrants, options or other rights
to acquire common stock had been exercised, and except as otherwise permitted
by Section 6.13 hereof, (i) the ESOP and the Management Stockholders will own
at least fifty percent (50%) of the total value of the outstanding stock of the
Borrower, (ii) the Permitted Owners will own at least twelve percent (12%) of
the total value of the outstanding common stock of the Borrower, and (iii)
until such time as the Term Loans are repaid in full, the ESOP will own at
least thirty percent (30%) of the total value of outstanding stock of the
Borrower. The foregoing notwithstanding, it shall not be considered a
violation of item (iii) above if the ESOP fails to own at least thirty percent
(30%) of the total value of outstanding stock of the Borrower by reason of (a)
the purchase by the Borrower of stock pursuant to any Repurchase Obligation and
(b) any distribution to or retention of stock by former ESOP participants or
their beneficiaries.
5.12b Continued Ownership of Subsidiaries. Except as set forth on Schedule
5.12 and as otherwise permitted under Section 6.13 hereof, the Borrower shall
own, directly or indirectly, one hundred percent (100%) of each Subsidiary.
5.13 Compliance with Laws. The Borrower will, and will cause each Subsidiary
to, perform and promptly comply in all material respects, and cause all
property of the Borrower and each Subsidiary to be maintained, used and
operated in all material respects in accordance with all Governmental Rules
(including, without limitation, zoning ordinances,
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building codes and Environmental Laws) of every duly constituted Governmental
Person applicable to the Borrower, each Subsidiary or any of their respective
properties) except for those alleged violations which are being contested in
good faith and by appropriate proceedings promptly initiated and diligently
conducted and if an appropriate provision, as shall be required by GAAP, shall
have been made therefor. The foregoing notwithstanding, the Borrower shall not
be deemed to be in violation of this Section 5.13 as the result of any failure
to comply with such Governmental Rule if (A) the applicability of such
Governmental Rule is being contested by the Borrower or any Subsidiary in good
faith and by proper proceedings appropriately conducted or (B) the
non-compliance with such Governmental Rule would not materially and adversely
affect the business operations or financial condition of the Borrower or its
Subsidiaries or the ability of the Borrower and its Subsidiaries, taken as a
whole, to perform their respective obligations under the Loan Documents.
5.14 Further Assurances. At any time and from time to time, upon the Agent's
request, the Borrower shall, and shall cause each Active Subsidiary to, make,
execute and deliver, or cause to be made, executed and delivered, to the Agent
and where appropriate shall cause to be recorded or filed, and from time to
time thereafter to be re-recorded and refiled at such time and in such offices
and places as shall be deemed reasonably desirable by the Banks, any and all
such further certificates and other documents as the Banks may consider
necessary or desirable in order to effectuate, complete, or perfect the
security interest of the Agent, for the benefit of the Banks, in the collateral
or to continue and preserve the obligations of the Borrower or each Active
Subsidiary, as the case may be, under the Notes, the Security Documents and the
Encumbrances created thereby including but not limited to (i) any additional
capital stock issued by any Active Subsidiary and (ii) all of the issued and
outstanding capital stock of any Subsidiary which after the Closing Date
becomes an Active Subsidiary. Further, at any time and from time to time, the
Borrower shall make, execute and deliver or cause to be made, executed and
delivered, to the Agent upon the purchase or lease of any real property by the
Borrower mortgages or deeds of trust in recordable form in order to perfect in
the Agent for the benefit of the Banks a security interest, in such real
property or leasehold interest. Upon any failure by the Borrower and any Active
Subsidiary to do so, the Agent may make, execute, record, file, re-record or
refile any and each such Security Document, instrument, certificate and
document for and in the name of the Borrower and each Active Subsidiary.
ARTICLE VI. NEGATIVE COVENANTS.
From the date hereof and for so much longer thereafter as the Revolving
Credit Commitment is in effect or any of the Bank Indebtedness remains unpaid,
the Borrower agrees, for the benefit of the Banks, the Issuing Bank and the
Agent, that:
6.1 Maintenance of Consolidated Net Worth. The Borrower will not permit or
suffer to exist, as of the end of each Fiscal Year set forth below, its
Consolidated Net Worth to be less than the amount set forth below for such
Fiscal Year:
(i) as of June 30, 1994, $34,000,000;
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(ii) as of June 30, 1995 and June 30, 1996, the sum of (A) the
amount of the minimum Consolidated Net Worth required as of the preceding
Fiscal Year (whether pursuant to clause (i) above or as the cumulative
result of this clause (ii)) plus (B) one hundred percent (100%) of the
Net Offering Proceeds completed during the preceding Fiscal Year plus (C)
seventy-five percent (75%) of Net Income for the preceding Fiscal Year
(to the extent this is a positive number); and
(iii) as of the end of each Fiscal Year ended after July 1, 1996,
the sum of (A) the amount of the minimum Consolidated Net Worth required
for the preceding Fiscal Year (whether pursuant to (ii) above or as the
cumulative result of this clause (iii)) plus (B) one hundred percent
(100%) of the Net Offering Proceeds completed during the preceding Fiscal
Year plus (C) fifty percent (50%) of Net Income for the preceding Fiscal
Year (to the extent this is a positive number).
6.2 Maintenance of Interest Coverage Ratio. The Borrower will not permit or
suffer to exist, as of the end of each Fiscal Quarter set forth below, its
Interest Coverage Ratio for any such Fiscal Quarter to be less than the ratio
set forth opposite such Fiscal Quarter below:
Fiscal Quarter Ending Ratio
--------------------- -----
March 31, 1995 through June 30,
1996, inclusive 3.0 to 1.0
September 30, 1996 and thereafter 3.5 to 1.0
6.3 Intentionally Omitted.
6.4 Maintenance of Leverage Ratio. The Borrower will not permit or suffer to
exist, as of the end of each Fiscal Quarter set forth below, its Leverage Ratio
for any such Fiscal Quarter to be greater than the ratio set forth opposite
such Fiscal Quarter below:
Fiscal Quarter Ending Ratio
--------------------- -----
March 31, 1995 through June 30,
1996, inclusive 3.5 to 1.0
September 30, 1996 and thereafter 3.0 to 1.0
6.5 Disposal of Assets. The Borrower will not, nor will it permit any of its
Subsidiaries to, sell, lease or otherwise dispose of, in any one Fiscal Year
during the term hereof, assets having an aggregate fair market value in excess
of $1,000,000 or directly or indirectly enter into an agreement or arrangement
whereby the Borrower shall sell or transfer assets having an aggregate fair
market value in excess of $1,000,000; provided, however, that the amount by
which the actual disposition of assets in any Fiscal Year does not exceed the
amount permitted to be sold, leased or otherwise disposed of in such Fiscal Year
shall be
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added to the aggregate fair market value of assets permitted to be sold, leased
or otherwise disposed of in the next succeeding Fiscal Year so long as in no
event shall the aggregate fair market value of assets sold, leased or otherwise
disposed of exceed $2,000,000 in any Fiscal Year, and provided, further that
nothing contained in this Section 6.5 shall prohibit the sale, lease or other
disposition of the assets associated with (i) the sale of assets owned by or
used in connection with Ocean World Inc. (formerly the Institute for Marine
Technology, Inc.), (ii) the sale of assets associated with a sale-leaseback
transaction which occurs within one (1) year of the acquisition of such asset,
(iii) the sale of inventory in the ordinary course of business or (iv) merger
or consolidation otherwise permitted pursuant to Section 6.13 of this Credit
Agreement.
6.6 Permitted Capital Expenditures. The Borrower will not, nor will it permit
its Subsidiaries to, expend amounts for Capital Expenditures including
Capitalized Lease Expenditures in excess of $15,000,000 in the aggregate during
any single Fiscal Year during the term hereof; provided, however, that amounts
permitted to be expended as Capital Expenditures in the immediately preceding
Fiscal Year, but not so expended, may be expended in the next succeeding Fiscal
Year and provided, further that in no event shall more than $18,750,000 be
expended in any single Fiscal Year. The foregoing notwithstanding, amounts
debited to the fixed asset account of the Borrower or any Subsidiary thereof
relating to any fixed assets acquired in connection with any acquisition
permitted pursuant to items (i) and (ii) of Section 6.18 hereof shall not
constitute Capital Expenditures for purposes of this Section 6.6.
6.7 Intentionally Omitted.
6.8 Permitted Indebtedness.
6.8a Permitted Indebtedness of Borrower. The Borrower will not guarantee or
incur any Indebtedness for Borrowed Money except as otherwise permitted by
Subsection 6.8c hereof and except:
(i) the Bank Indebtedness;
(ii) Indebtedness for Borrowed Money outstanding pursuant to the
Senior Subordinated Note Purchase Agreements or any refinancings
thereof permitted pursuant to Subsection 6.15(i) hereof;
(iii) Indebtedness for Borrowed Money secured by Permitted
Encumbrances;
(iv) Indebtedness for Borrowed Money incurred in connection with
Permitted Capital Expenditures or guarantees of amounts thereunder;
(v) Guarantees of the Indebtedness for Borrowed Money of any
Subsidiary to the extent such Indebtedness for Borrowed Money is
permitted by either Subsection 6.8b or 6.8c below;
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(vi) Indebtedness for Borrowed Money related to letters of credit
issued by any Person during any period when the commitment of the
Issuing Bank to issue Letters of Credit hereunder has been
suspended pursuant to Section 2.3 hereof; provided, however, that
at no time shall the aggregate amount of Letters of Credit issued
and outstanding under this Credit Agreement and other letters of
credit permitted pursuant to this Subsection 6.8a(vii) exceed
$8,000,000;
(vii) Indebtedness for Borrowed Money pursuant to junior
subordinated notes due any selling Management Stockholders in
connection with the redemption of shares pursuant to a Management
Repurchase Agreement;
(viii) Indebtedness for Borrowed Money due the selling
stockholders, the former ESOP participants or the ESOP in
connection with the redemption of shares pursuant to any Repurchase
Obligations or diversification requirement relating to the ESOP;
and
(ix) Indebtedness for Borrowed Money not specifically enumerated in
items (i) through (viii) above outstanding on the Closing Date as
more fully set forth on Schedule 6.8a, as the same may be extended
or renewed.
6.8b Permitted Indebtedness of Subsidiaries. The Borrower will not permit any
Subsidiary to guarantee or incur any Indebtedness for Borrowed Money except as
otherwise permitted by Subsection 6.8c hereof and except:
(i) Indebtedness for Borrowed Money incurred by any Active
Subsidiary and due to the Borrower;
(ii) Guarantees of the Indebtedness for Borrowed Money of any
Subsidiary to the extent such Indebtedness for Borrowed Money is
permitted by either this Subsection 6.8b or Subsection 6.8c below;
(iii) Indebtedness for Borrowed Money incurred by any Subsidiary
for Capital Expenditures which is secured by an Encumbrance on the
property of such Subsidiary in an aggregate amount not to exceed
$5,000,000 per Fiscal Year; and
(iv) Indebtedness for Borrowed Money not specifically enumerated in
items (i) through (iii) above outstanding on the Closing Date as
more fully set forth on Schedule 6.8b, as the same may be extended
or renewed.
6.8c Permitted Indebtedness of Borrower or Subsidiaries. The Borrower will
not, and will not permit any Subsidiary to, guarantee or incur any Indebtedness
for Borrowed Money except as permitted by Subsections 6.8a and 6.8b hereof and
except:
(i) Guarantees of Teach-Out Obligations and other education-related
obligations of the Borrower or its Active Subsidiaries;
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(ii) Education related bonds issued by the Borrower or any of its
Active Subsidiaries and Guarantees related thereto;
(iii) Guarantees of any student loan programs of the Borrower or
its Active Subsidiaries; and
(iv) Indebtedness for Borrowed Money incurred by the Borrower or
its Subsidiaries with respect to indemnification of outside
directors or officers which indemnification is consistent with
authority under law and the by-laws of the Borrower or such
Subsidiary.
6.9 Permitted Encumbrances. The Borrower will not create, assume, incur or
suffer to exist, or allow any Subsidiary to create, assume, incur or suffer to
exist, any Encumbrance upon any of its assets, whether now owned or hereafter
acquired, nor acquire nor agree to acquire any asset subject to an Encumbrance,
except:
(i) Encumbrances in favor of the Agent and/or the Banks granted
hereunder;
(ii) Encumbrances in favor of the holders of the Senior
Subordinated Debt which Encumbrances are junior to the Encumbrances
in favor of the Agent;
(iii) Encumbrances to secure Indebtedness for Borrowed Money
permitted under Subsections 6.8a(vii) and (viii) hereof to the
extent such Encumbrances are limited solely to the stock of the
Borrower;
(iv) Encumbrances to secure Indebtedness for Borrowed Money
permitted under Subsection 6.8a(vi) hereof;
(v) Encumbrances for taxes or assessments or governmental charges
or levies which are not due or remain payable, without penalty, or
which are being contested in good faith by appropriate proceedings
and with respect to which the Borrower or the affected Subsidiary
has created reserves which are determined by the Borrower to be
adequate by the application of GAAP consistently applied;
(vi) Encumbrances to secure the obligations of the Borrower or any
Subsidiary under workmen's compensation laws, unemployment
insurance laws, social security laws or other similar legislation;
(vii) Encumbrances in connection with bids, tenders, performance
bonds, contracts or leases (including, without limitation,
equipment leases) to which the Borrower or any Subsidiary is a
party, or to secure public or statutory obligations;
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(viii) Encumbrances for landlords', mechanics', carriers',
workmen's, warehousemen's, materialmen's or repairmen's liens or
other like Encumbrances in the ordinary course of business;
(ix) Encumbrances to secure surety, replevin, attachment or appeal
bonds relating to legal proceedings to which the Borrower or any
Subsidiary is a party;
(x) Encumbrances arising out of judgments or awards against the
Borrower or any Subsidiary with respect to which the Borrower is
currently engaged in proceedings for review or appeal and with
respect to which the Borrower shall have secured a stay of
execution pending such proceedings for review or appeal;
(xi) minor survey exceptions, minor Encumbrances, easements or
reservations of, or rights of others for, rights of way, sewers,
electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real
properties or Encumbrances incidental to the conduct of the
business of the Borrower or its Subsidiaries or to the ownership of
their properties which were not incurred in connection with
Indebtedness for Borrowed Money or other extensions of credit and
which do not in the aggregate materially adversely affect the value
of said properties or materially impair their use in the operation
of the business of the Borrower or such Subsidiaries;
(xii) Encumbrances to secure any extension, renewal or replacement
(or successive extensions, renewals or replacements) as a whole, or
in part, of any obligations secured by any Encumbrances referred to
in the foregoing clauses (i) through (xi) and clause (xiii),
provided that (y) such extended, renewed or replaced Encumbrances
shall be limited to all or a part of the same property that secured
the Encumbrances extended, renewed or replaced (plus improvements
on such property) and (z) the obligations secured by such
Encumbrances at such time are not increased except in accordance
with the terms thereof; and
(xiii) Encumbrances not specifically enumerated in items (i)
through (xii) above which were in existence on the date hereof and
described on Schedule 6.9 hereto.
6.10 Restriction of Operating Leases. As of the Closing Date, the Borrower and
its Subsidiaries have in force as lessees the operating leases set forth on
Schedule 6.10 hereto. The Borrower will not, and will not permit any
Subsidiary to, incur or assume any new operating leases during any Fiscal Year
commencing after the Closing Date having aggregate payments, on a Consolidated
basis in such Fiscal Year, (i) in excess of $1,000,000 for each Fiscal Year
ending on or before June 30, 1996 and (ii) in excess of $1,250,000 for each
Fiscal Year ending after July 1, 1996; provided, however, that the foregoing
shall not
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prohibit the replacement, substitution, extension or renewal of any operating
lease in force prior to the Closing Date.
6.11 Advance of Funds and Investments.
6.11a Advance of Funds. The Borrower will not, nor will it permit any
Subsidiary to, make any advance, loan or extension of credit to any Person,
except: (a) extension of trade credit and student loans in the ordinary course
of business; (b) Indebtedness for Borrowed Money permitted by Subsection 6.8b
hereof; and (c) other loans and advances made in the ordinary course of
business not to exceed $1,000,000 in the aggregate at any one time outstanding.
6.11b Investments. The Borrower will not, nor will it permit any Subsidiary
to, make any capital contribution to, purchase any stocks, bonds, notes,
debentures or other securities of, or make any other investment in any other
Person, except (a) existing Subsidiaries; (b) investments in prime commercial
paper and certificates of deposit in United States commercial banks (having
capital resources in excess of $500,000,000), in each case due within one (1)
year from the date of purchase and payable in the United States in Dollars;
obligations issued or unconditionally guaranteed by the United States
Government or any agency thereof, and repurchase agreements of such banks for
terms of less than one year in respect of the foregoing certificates and
obligations; and (c) acquisitions permitted by Section 6.18 hereof.
6.12 Dividend and Redemption Restrictions.
6.12a Dividend Restrictions. The Borrower shall not declare or pay cash
dividends or distributions on its capital stock while the Credit Facility is
outstanding, except for (i) the payment of dividends on the (A) Series A 10.19%
preferred stock of the Borrower held by the ESOP or (B) Class A common stock of
the Borrower to the extent that in excess of ninety percent (90%) of said
common stock dividend is used to repay the Term Loans and (ii) dividends on any
class of stock of the Borrower in an amount not to exceed the following: (A)
the difference between (1) $1,000,000 in the earlier to occur of (x) any Fiscal
Year ended after July 1, 1996 or (y) any Fiscal Year during which the
Borrower's Consolidated Net Worth is greater than or equal to $50,000,000 minus
(2) any stock redemptions made during such period and permitted pursuant to
clause (A) of Subsection 6.12b below or (B) the difference between (1)
$1,500,000 in any Fiscal Year during which the Borrower's Consolidated Net
Worth is greater than or equal to $75,000,000 minus (2) any stock redemptions
made during such period and permitted pursuant to clause (A) of Subsection
6.12b below.
6.12b Redemption Restrictions. The Borrower shall not, nor shall it permit any
Subsidiary to, purchase the Borrower's capital stock while the Credit Facility
is outstanding, except for (i) the redemption of any such capital stock held by
the ESOP in connection with the termination of service of employees of the
Borrower or its Subsidiaries and (ii) the redemption of any such capital stock
by the Borrower from Management Shareholders as more fully set forth below.
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(A) Upon the death, incapacity, retirement or termination of a
Management Stockholder (other than Xxxxxxx, except as provided below),
the Borrower may purchase such Management Stockholder's capital stock
upon the terms and conditions set forth in the applicable Management
Repurchase Agreement, provided that after giving effect to such purchase
no Event of Default has occurred and is continuing and provided, further
that the aggregate Net Purchase Price of all such purchases does not
exceed in any Fiscal Year beginning on and after July 1, 1994, the sum
of:
(1) the applicable amount from among the following
amounts: (a) $500,000, (b) the difference between (i)
$1,000,000 in the earlier to occur of (A) any Fiscal
Year ended after July 1, 1996 or (B) any Fiscal Year
during which the Borrower's Consolidated Net Worth is
greater than or equal to $50,000,000 minus (ii) any
dividends paid during such period and permitted
pursuant to item (ii) of Subsection 6.12a above or (c)
the difference between (i) $1,500,000 in any Fiscal
Year during which the Borrower's Consolidated Net
Worth is greater than or equal to $75,000,000 minus
(ii) any dividends paid during such period and
permitted pursuant to item (ii) of Subsection 6.12a
above, plus
(2) the proceeds paid to the Borrower during such
Fiscal Year pursuant to life insurance policies on its
employees, plus
(3) the Net Proceeds paid to the Borrower during such
Fiscal Year upon the resale or reissuance of the
treasury stock related to repurchased capital stock.
(B) Upon the death, incapacity, retirement or termination of
Xxxxxxx, the Borrower may purchase his capital stock upon the terms and
conditions set forth in the RBK Exchange and Repurchase Agreement,
provided that after giving effect to such purchase no Event of Default
has occurred or is continuing, and if such purchase is pursuant to the
Initial Put and the Secondary Put (as such terms are defined in the RBK
Exchange and Repurchase Agreement) (1) such purchases do not exceed the
amounts set forth in Section 10(b) of the RBK Exchange and Repurchase
Agreement, and (2) any purchases of capital stock owned by any Permitted
Owner for cash may not exceed the proceeds available for such purposes
under Key Man Life Insurance; provided, however, to the extent that such
Key Man Life Insurance is unavailable or insufficient, the Borrower may
purchase capital stock owned by any Permitted Owner subject to the
limitations set forth in item (A) of this Subsection 6.12b.
The foregoing notwithstanding, amount permitted to be expended to redeem the
capital stock of the Borrower in the immediate Fiscal Year, but not so
expended, may be expended in the next succeeding Fiscal Year.
6.13 Merger. (a) The Borrower shall not merge or consolidate with any other
Person unless (i) the Borrower is the
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surviving corporation or, if the Borrower is not the surviving corporation, the
surviving corporation is a domestic corporation of the United States which will
expressly assume the obligations under the Credit Facility, (ii) no Event of
Default occurs as a result of such a merger or consolidation, and (iii) the
surviving corporation's net worth is not less than the Borrower's net worth
immediately prior to such merger or consolidation.
(b) The Borrower shall not permit any Subsidiary to merge or consolidate
with any Person (other than the Borrower or another Subsidiary) unless (i) such
Subsidiary is the surviving corporation or, if such Subsidiary is not the
surviving corporation, the surviving corporation is a domestic corporation of
the United States which continues the security interests in its assets in favor
of the Agent, on behalf of the Banks and the Issuing Bank, as well as having
its parent corporation pledge the capital stock of the surviving corporation to
the Agent, on behalf of the Banks and the Issuing Bank, and (ii) no Event of
Default occurs as a result of such merger or consolidation.
6.14 Regulations G, X, T and U Compliance. The Borrower will not, nor shall it
permit any of its Subsidiaries to, use, or permit the use of, the proceeds of
any borrowings hereunder to purchase or carry Margin Stock or otherwise act so
as to cause the Banks, in extending credit hereunder, to be in contravention of
Regulations G, X, T and U.
6.15 Subordination. The Borrower will not, nor shall it permit any of its
Subsidiaries to, directly or indirectly:
(i) make any payment of principal or interest or any prepayment or
any other payment pursuant to an acceleration or claim of breach or
otherwise in respect of any Senior Subordinated Debt, except regularly
scheduled payments of interest which commenced December 30, 1989 and
required scheduled prepayments which will commence December 30, 1997 (but
not including any optional prepayments or required prepayments upon a
change of control) as provided under the Senior Subordinated Note
Purchase Agreements subject to the provisions of Section 10 thereof;
provided, however, that the Borrower may prepay the Senior Subordinated
Debt with the proceeds of (A) other subordinated indebtedness of the
Borrower on terms no less favorable to the Banks (as determined in the
sole but reasonable discretion of the Banks) and the Borrower than the
Senior Subordinated Indebtedness or (B) any equity offerings by the
Borrower or other available cash if and only if the Borrower shall, both
before and after giving effect to such prepayment, be in compliance with
all terms, conditions and covenants contained in this Credit Agreement;
(ii) grant to the holders of the Senior Subordinated Debt any
additional collateral or guarantees for any Senior Subordinated Debt;
(iii) make any loan, gift or distribution of assets to the holders of
the Senior Subordinated Debt in violation of Subsection 6.15(i) hereof or
Section 10 of the Senior Subordinated Note Purchase Agreements; or
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(iv) convert any of the Senior Subordinated Debt into capital stock
except as permitted pursuant to Section 10 of the Senior Subordinated
Note Purchase Agreement.
6.16 Alteration of Various Agreements. Except for (i) amendments and
modifications to the Plan Documents necessary to obtain determination letters
from the IRS or to continue to be a qualified plan and trust under Code
Sections 401(a) and 501(a), (ii) amendments to the documents listed below,
which do not alter the provisions regarding redemption of the capital stock of
the Borrower or any Subsidiary, and (iii) amendments to the documents listed
below, which would not materially adversely affect the Banks, the Borrower
shall not, nor shall it permit any Subsidiary to, amend or modify any of the
following documents:
(A) until such time as the Term Loans are paid in
full, the ESOP and the ESOP Trust;
(B) Management Repurchase Agreements (except as
otherwise set forth on Schedule 6.16 hereto); and
(C) Stockholder Agreements.
In addition, the Borrower shall not, nor shall it permit any Subsidiary to,
amend or modify in any material respect the Senior Subordinated Note Purchase
Agreements, the Senior Subordinated Notes, the Senior Subordinated Collateral
Documents and the Warrants.
6.17 Cohort Default Rates. The Borrower will not permit any Art Institute
whose Operating HEBIT for the most recently completed Fiscal Year equals or
exceeds seven and one-half percent (7-1/2%) of the aggregate Operating HEBIT of
all Art Institutes for the same fiscal period to have a Cohort Default Rate in
excess of twenty-five percent (25%) per year for the two (2) previous years.
6.18 Permitted Acquisitions. The Borrower will not, nor will it permit any
Subsidiary to acquire all or substantially all of the assets of any second
Person or acquire the stock of any second Person or make any other investment
in any second Person other than (i) Permitted Acquisitions, (ii) other
acquisitions of any such assets or stock of any second Person the use or
business of which is related to the education or training businesses (whether
profit or non-profit) not to exceed $1,000,000 in the aggregate in any Fiscal
Year and (iii) as otherwise permitted by Section 6.11 hereof.
6.19 Change Fiscal Year. The Borrower will not, nor shall it permit any of its
Subsidiaries to, change its Fiscal Year.
6.20 Change of Business. The Borrower shall not engage, and shall cause each
Active Subsidiaries to refrain from engaging, in
any business other than its primary presently conducted businesses and other
related ancillary businesses.
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ARTICLE VII. CONDITIONS PRECEDENT.
7.1 All Revolving Credit Disbursements and all Letters of Credit. The
obligation of the Revolving Credit Banks to make each Revolving Credit
Disbursement pursuant to Section 2.2 hereof and of the Issuing Bank to issue
each Letter of Credit pursuant to Section 2.3 hereof is subject to the
performance by the Borrower of its obligations under this Credit Agreement and
to the satisfaction of the following further conditions:
7.1a Request for Revolving Credit Loan or Issuance of Letter of Credit. (i)
Except for a Revolving Credit Disbursement made simultaneously with the
execution of this Credit Agreement, receipt by the Agent, on behalf of the
Revolving Credit Banks, of a Request for Revolving Credit Loan satisfying the
requirements of Subsection 2.2c or (ii) receipt by the Agent, on behalf of the
Issuing Bank, of a fully-executed and completed Application and Agreement for
Letter of Credit.
7.1b No Default or Event of Default. The fact that, at the time of each
Revolving Credit Disbursement or issuance of each Letter of Credit, no Default
or Event of Default, shall have occurred and be continuing.
7.1c No Material Adverse Change. There shall not have occurred, since the most
recent prior date upon which a Revolving Credit Loan was made or a Letter of
Credit was issued, and be continuing (i) any Material Adverse Change or (ii)
any event which has had, or could reasonably be expected to have, a Material
Adverse Effect.
7.1d Compliance with Covenants. The fact that, at the time of each Revolving
Credit Loan or issuance of each Letter of Credit (after giving effect to such
Loan or Letter of Credit), the Borrower shall be in compliance with the
covenants contained in Sections 6.1, 6.2 and 6.4 hereof.
7.1e Representations Correct. The fact that the representations and warranties
contained in this Credit Agreement and the other Loan Documents are true and
correct in all material respects on and as of the date of borrowing, except to
the extent that such representations and warranties relate solely to an earlier
date (in which case, such representations and warranties shall have been true
and correct on and as of such earlier date).
Each request for a Revolving Credit Disbursement and each request for the
issuance of a Letter of Credit, whether made orally or in writing, by the
Borrower shall be deemed to be, as of the date of such request, a
representation and warranty by the Borrower as to the facts specified in
Subsections 7.1b, 7.1c, 7.1d and 7.1e.
7.2 Conditions Precedent to the Term Loans, the Initial Revolving Credit
Disbursement and the Issuance of the Initial Letter of Credit. The
obligation of the Term Loan Banks to make the Term Loans, of the
Revolving Credit Banks to make the initial Revolving Credit Disbursement
and of the Issuing Bank to issue the initial Letters of Credit are
subject to the satisfaction of each of the following conditions
precedent in addition to the applicable conditions precedent set forth
in Section 7.1 above:
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7.2a Credit Agreement. Receipt by the Agent of a counterpart original of this
Credit Agreement duly executed by each initial Bank, the Issuing Bank, the
Borrower and the Agent.
7.2b Revolving Credit Notes. Receipt by the Agent, for redelivery to each
Revolving Credit Bank, of a duly executed Revolving Credit Note made payable to
such Revolving Credit Bank in an amount equal to its respective Commitment
Amount.
7.2c Amended and Restated Term Notes. Receipt by the Agent, for redelivery to
each Term Loan Bank, of a duly executed Amended and Restated Term Note made
payable to such Term Loan Bank in an amount equal to its respective Term Loan
Amount.
7.2d Security Agreements and Financing Statements. Receipt by the Agent, on
behalf of the Banks, of counterpart originals of the Amended and Restated
Security Agreement and the Amended and Restated Subsidiary Security Agreement
duly executed by the Borrower or AII, as the case may be, and the Agent,
together with all requisite executed financing statements.
7.2e Pledge Agreements. Receipt by the Agent, on behalf of the Banks, of
counterpart originals of the Amended and Restated Pledge Agreement duly
executed by the Borrower and the Agent and each Amended and Restated Subsidiary
Pledge Agreement or Subsidiary Pledge Agreement duly executed by the Active
Subsidiary party thereto and the Agent, together with all of the outstanding
shares of capital stock of each Active Subsidiary pledged pursuant thereto and
executed blank stock powers relating thereto previously not delivered to the
Agent.
7.2f Amendment to Intercreditor Agreement and Amendment to Senior Subordinated
Note Purchase Agreement. Receipt by the Agent, on behalf of the Banks, of (i)
counterpart originals of the First Amendment to Intercreditor Agreement duly
executed by NML and NUFICP and (ii) amendments to the Senior Subordinated Note
Purchase Agreements which shall contain the consent of NML and NUFICP to the
incurrence of this Credit Agreement and the consummation of the transactions
contemplated herein, in form and substance satisfactory to the Agent and the
Banks.
7.2g Corporate Documents of the Borrower. Receipt by the Agent, on behalf of
the Banks, of a copy, duly certified as of the Closing Date by the secretary or
assistant secretary of the Borrower of (i) the By-Laws of the Borrower, (ii)
the resolutions of the Borrower's Board of Directors authorizing the borrowings
hereunder and the execution and delivery of this Credit Agreement, the Notes,
the Amended and Restated Security Agreement and the Amended and Restated Pledge
Agreement to be executed by it, (iii) all documents evidencing all other
necessary corporate action and (iv) all approvals or consents, if any, with
respect to this Credit Agreement, the Notes, the Amended and Restated Security
Agreement and Amended and Restated Pledge Agreement to be executed by it.
7.2h Corporate Documents of AII. Receipt by the Agent, on behalf of the Banks,
of a copy, duly certified as of the Closing Date by the secretary or assistant
secretary of AII of (i) the By-Laws of AII, (ii) the resolutions of AII's Board
of Directors authorizing the
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execution and delivery of the Amended and Restated Subsidiary Security
Agreement and the Amended and Restated Subsidiary Pledge Agreement to be
executed by it, (iii) all documents evidencing all other necessary corporate
action and (iv) all approvals or consents, if any, with respect to such Amended
and Restated Subsidiary Security Agreement and Amended and Restated Subsidiary
Pledge Agreement.
7.2i Corporate Documents of other Active Subsidiaries Party to any Loan
Documents. Receipt by the Agent, on behalf of the Banks, of a copy, duly
certified as of the Closing Date by the secretary or assistant secretary of
each Active Subsidiary (other than AII) executing an Amended and Restated
Subsidiary Pledge Agreement or Subsidiary Pledge Agreement of (i) the By-Laws
of each such Active Subsidiary, (ii) the resolutions of the Board of Directors
of each such Active Subsidiary authorizing the execution and delivery of the
Amended and Restated Subsidiary Pledge Agreement or Subsidiary Pledge Agreement
to be executed by it, (iii) all documents evidencing other necessary corporate
action and (iv) all approvals or consents, if any, with respect to the Amended
and Restated Subsidiary Pledge Agreement or the Subsidiary Pledge Agreement to
be executed by it.
7.2j Incumbency Certificate of the Borrower. Receipt by the Agent, on behalf
of the Banks, of a certificate of the secretary or assistant secretary of the
Borrower, certifying the names and offices of the officers of the Borrower
authorized to sign this Credit Agreement, the Notes, the Amended and Restated
Security Agreement, the Amended and Restated Pledge Agreement and all other
documents or certificates to be delivered hereunder, together with the true
signatures of such officers.
7.2k Incumbency Certificate of AII. Receipt by the Agent, on behalf of the
Banks, of a certificate of the secretary or assistant secretary of AII,
certifying the names and offices of the officers of AII authorized to sign the
Amended and Restated Subsidiary Security Agreement and the Amended and Restated
Subsidiary Pledge Agreement to be executed by it and all other documents or
certificates to be delivered hereunder, together with the true signatures of
such officers.
7.2l Incumbency Certificate of other Active Subsidiaries Party to any Loan
Documents. Receipt by the Agent, on behalf of the Banks, of a certificate of
the secretary or assistant secretary of each Active Subsidiary (other than AII)
executing an Amended and Restated Subsidiary Pledge Agreement or a Subsidiary
Pledge Agreement certifying the names and offices of the officers authorized to
sign such Amended and Restated Subsidiary Pledge Agreement or a Subsidiary
Pledge Agreement and all other documents or certificates to be delivered
hereunder, together with the true signatures of such officers.
7.2m Good Standing Certificates. Receipt by the Agent, on behalf of the Banks,
of a certificate of good standing (i) for the Borrower, AII, NCG and each other
Active Subsidiary issued by the Secretary of State of their respective states
of incorporation and (ii) for the Borrower, AII, NCG and each other Active
Subsidiary issued by the Secretary of State for each state in which the
Borrower or each such Active Subsidiary is authorized to do business, in each
case issued no more than thirty (30) days prior to the Closing Date.
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7.2n Certificates of Incorporation. Receipt by the Agent, on behalf of the
Banks, of a copy, duly certified by the appropriate governmental official, of
the Articles/Certificates of Incorporation of the Borrower, AII, NCG and each
other Active Subsidiary party to any Loan Document.
7.2o Insurance Certificates. Receipt by the Agent, on behalf of the Banks, of
the insurance certificates required pursuant to Section 5.8.
7.2p Closing Certificate. Receipt by the Agent, on behalf of the Banks, of a
certificate duly executed by an Authorized Officer of the Borrower certifying
that the conditions precedent set forth in Subsection 7.1b, 7.1c, 7.1d and 7.1e
above have been satisfied as of the Closing Date.
7.2q Closing Fees. Receipt by the Agent, on behalf of the Banks, of the
Closing Fees.
7.2r Opinion of Borrower's Counsel. Receipt by the Agent, on behalf of the
Banks, of a signed favorable opinion of Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx,
counsel to the Borrower and its Subsidiaries, substantially in the form of
Exhibit "I" attached hereto.
7.2s Proceedings Satisfactory. Receipt by the Agent, on behalf of the Banks,
of evidence that all proceedings taken in connection herewith and the
consummation of the transactions contemplated hereby and all documents and
papers relating hereto have been completed or duly executed, and receipt by the
Agent, on behalf of the Banks, of such documents and papers, all in form and
substance reasonably satisfactory to the Agent and the Agent's special counsel,
as the Agent or its special counsel may reasonably request in connection
therewith.
ARTICLE VIII. EVENTS OF DEFAULT.
8.1 Payment Default. (i) Default in the payment of principal of any of the
Notes. (ii) Default in the payment of any interest on or the payment of the
Commitment Fee or the Agent's Fee or any other amount due under the Bank
Indebtedness and continuance of any such nonpayment for ten (10) days after due
date.
8.2 Cross Defaults.
8.2a Nonpayment of Other Indebtedness. Except as provided in Subsection 8.2b,
any Indebtedness for Borrowed Money (other than the Bank Indebtedness) of the
Borrower or any Subsidiary in an amount in excess of $1,000,000 is not paid at
maturity or becomes or is declared to be due and payable prior to its expressed
maturity by reason of any default by the Borrower or the Subsidiary in the
performance or observance of any obligation or condition.
8.2b Failure to Comply with Covenants. Default in the performance of any of
the agreements and covenants made by the Borrower or any Subsidiary in
connection with the incurrence of Indebtedness for Borrowed Money (other than
the Bank Indebtedness) in an
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amount in excess of $1,000,000, following the expiration of any cure period
granted thereunder if the effect of such default is to cause or permit the
acceleration of the principal amount of such Indebtedness for Borrowed Money.
8.3 Insolvency.
8.3a Involuntary Proceedings. A proceeding shall have been instituted in a
court having jurisdiction seeking a decree or order for relief in respect of
the Borrower or any Subsidiary in an involuntary case under the Federal
bankruptcy laws, or any other similar applicable Federal or state law, now or
hereafter in effect, or for the appointment of a receiver, liquidator, trustee,
sequestrator or similar official for the Borrower or any Subsidiary or for a
substantial part of its property, or for the winding up or liquidation of its
affairs, and such shall remain undismissed or unstayed and in effect for a
period of sixty (60) days.
8.3b Voluntary Proceedings. The Borrower or any Subsidiary shall institute
proceedings to be adjudicated a voluntary bankrupt, or shall consent to the
filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under the Federal bankruptcy laws, or
any other similar applicable Federal or state law now or hereinafter in effect,
or shall consent or acquiesce in or to the filing of any such petition or shall
consent to or acquiesce in the appointment of a receiver, liquidator, trustee,
sequestrator or similar official for the Borrower or any Subsidiary or for a
substantial part of its property, or shall make an assignment for the benefit
of creditors, or shall admit in writing its inability to pay its debts
generally as they become due, or action shall be taken by the Borrower or any
Subsidiary in furtherance of any of the aforesaid purposes.
8.4 Dissolution. Except as permitted by Section 6.13 hereof, the existence of
the Borrower or any Subsidiary is terminated or the Borrower terminates the
existence of the ESOP.
8.5 Adverse Judgments. Any court shall render a final judgment or judgments
against the Borrower or any Subsidiary in an aggregate amount of $1,000,000 or
more in excess of any insurance protecting against such liability and such
judgment or judgments shall not be satisfactorily appealed, stayed, discharged,
vacated or set aside within thirty (30) days after entry; or any property of
the Borrower or any Subsidiary shall be attached under a claim or claims in an
aggregate amount of $1,000,000 or more in excess of any insurance protecting
against the liabilities on which such attachments are based and such
attachments shall not be released or provided for to the satisfaction of the
Banks within thirty (30) days.
8.6 Failure to Comply with Certain Covenants. Default in the performance of
any of the agreements and covenants set forth in Article III or in Article VI
hereof, except for Sections 6.8 and 6.9 hereof.
8.7 Failure to Comply With Other Covenants. Default by the Borrower or any Loan
Party in the performance of any of the agreements and covenants set forth in
Article V hereof or in Sections 6.8 or 6.9 hereof or in any of the Security
Documents and not
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constituting an Event of Default enumerated above and continuance thereof for
thirty (30) days after notice thereof to the Borrower from the Agent.
8.8 Misrepresentation. Any representation or warranty made by the Borrower or
any Loan Party in (i) this Credit Agreement or (ii) any of the other Loan
Documents is untrue in any material respect, or any schedule, statement,
report, notice or writing furnished by the Borrower or any other Loan Party or
on behalf of the Borrower or any other Loan Party to the Agent or the Banks is
untrue in any material respect on the date as of which the facts set forth are
stated or certified and is not corrected to the Banks' satisfaction (either by
the Borrower with respect to this Credit Agreement or the Borrower or any other
Person executing the relevant Security Document) within thirty (30) days after
notice of such misstatement to the Borrower from the Agent.
8.9 Consequences of an Event of Default.
8.9a Consequence of an Event of Default Set Forth in Sections 8.3 and 8.4.
Upon the occurrence of an Event of Default set forth in Section 8.3 or 8.4
hereof, the Revolving Credit Commitment shall automatically terminate and the
Notes then outstanding shall become immediately due and payable, without
necessity of demand, presentation, protest, notice of dishonor or notice of
default. Thereafter, the Banks shall have no further obligation to make any
additional Loans hereunder. Upon the occurrence of an Event of Default set
forth in Section 8.3 or Section 8.4, the Banks shall have the full panoply of
rights and remedies granted to them under this Credit Agreement and the other
Loan Documents and all those rights and remedies granted by law to creditors.
No exercise of one right or remedy shall be deemed a waiver of other rights or
remedies.
8.9b Consequences of Remaining Events of Default. During the continuance of
any Event of Default set forth in Sections 8.1, 8.2, 8.5, 8.6, 8.7 or 8.8
hereof (unless remedied, waived or cured to the satisfaction of the Banks
required pursuant to Section 10.1), the Banks shall have no further obligation
to make any additional Loans hereunder; and the Agent may, and at the request
of the Required Banks shall, by written or telegraphic notice to the Borrower,
declare the Revolving Credit Commitment terminated and the Notes then
outstanding and interest accrued thereon and all other liabilities of the
Borrower hereunder to the Banks to be forthwith due and payable. Thereupon the
Revolving Credit Commitment shall be terminated and all amounts due hereunder
and under any Notes outstanding shall be due and payable without presentment,
demand, protest or other notice of any kind to the Borrower, all of which are
hereby expressly waived. Upon the occurrence of an Event of Default set forth
in Sections 8.1, 8.2, 8.5, 8.6, 8.7 or 8.8 hereof, the Banks shall have the
full panoply of rights and remedies granted to them under this Credit Agreement
and the other Loan Documents and all those rights and remedies granted by law
to creditors. No exercise of one right or remedy shall be deemed a waiver of
other rights or remedies.
ARTICLE IX. AGREEMENT AMONG BANKS.
9.1 Appointment and Grant of Authority. Each of the Banks hereby appoints and
designates PNC Bank, and PNC Bank hereby agrees to act as, the initial Agent
under this
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Credit Agreement and the other Loan Documents. As such Agent, PNC shall have
and may exercise such powers under this Credit Agreement and the other Loan
Documents as are specifically delegated to the Agent, by the terms hereof or
thereof, together with such other powers as are incidental thereto. Without
limiting the foregoing, each Bank, and each holder of a Note by its acceptance
of such Note, hereby authorizes the Agent, on behalf of the Banks, to execute
all of the Loan Documents (other than this Credit Agreement) and to accept all
of the Loan Documents and all other agreements, documents or instruments
reasonably required to carry out the intent of the parties to this Credit
Agreement. The Agent may perform any of its duties hereunder or under the Loan
Documents by and through its officers, directors, agents, employees or
affiliates.
9.2 Non-Reliance on Agent. Each Bank agrees that it has, independently and
without reliance on the Agent, based on such documents and information as it
has deemed appropriate, made its own credit analysis and evaluation (including
but not limited to an environmental review) of the Borrower and its operations,
and decision to enter into this Credit Agreement. Further, each Bank agrees
that it will, independently and without reliance upon the Agent, and based on
such documents and information as it shall deem reasonable and appropriate at
the time, continue to make its own analysis and decisions in taking or not
taking action under this Credit Agreement and the other Loan Documents. Each
Bank acknowledges that a copy of this Credit Agreement and the exhibits and
schedules hereto have been made available to it and to its independent legal
counsel for review and each Bank acknowledges that it is satisfied with the
form and substance of this Credit Agreement and the exhibits and schedules
hereto. Except as otherwise provided herein, the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to keep any Bank or
any holder of a Note informed as to the performance or observance by any Loan
Party of this Credit Agreement or any other document or instrument referred to
or provided for herein or to inspect the properties or books of the Borrower.
The Agent, in the absence of gross negligence or willful misconduct, shall not
be liable to any Bank for its failure to relay or furnish to the Bank any
information. The preceding provisions of this Section 9.2 to the contrary
notwithstanding, the Agent shall use its best efforts to relay to each Bank any
information pertaining to the Borrower or to any other Loan Party which comes
into the possession of the Agent's Select Industries Department.
9.3 Responsibility of Agent and Other Matters.
9.3a Ministerial Nature of Duties. As between the Banks and themselves, the
Agent shall have no duties or responsibilities except those expressly set forth
in this Credit Agreement or in the other Loan Documents, and those duties and
responsibilities shall be subject to the limitations and qualifications set
forth in this Article IX. The duties of the Agent shall be ministerial and
administrative in nature.
9.3b Limitation of Liability. As between the Banks and themselves, neither the
Agent nor any of its directors, officers, employees, agents or affiliates shall
be liable for any action taken or omitted (whether or not such action taken or
omitted is within or without the Agent's
responsibilities and duties expressly set forth in this Credit Agreement) under
or in connection with this Credit Agreement or any other instrument or document
executed or delivered in connection herewith except for gross negligence or
willful misconduct. Without
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limiting the foregoing, neither the Agent nor any of its directors, officers,
employees, agents or affiliates shall be responsible for, or have any duty to
examine (i) the genuineness, execution, validity, effectiveness,
enforceability, collectibility, value or sufficiency of (A) this Credit
Agreement or any of the other Loan Documents or (B) any other document or
instrument furnished pursuant to or in connection with this Credit Agreement,
(ii) the collectibility of any amounts owed by the Borrower to the Banks, (iii)
the truthfulness of any recitals, statements, representations or warranties
made to the Agent or the Banks in connection with this Credit Agreement or any
other Loan Documents, (iv) any failure of any party to this Credit Agreement to
receive any communication sent, including any telegram, telex, teletype,
facsimile transmission or telephone message or any writing, application,
notice, report, statement, certificate, resolution, request, order, consent
letter or other instrument or paper or communication entrusted to the mails or
to a delivery service, or (v) the assets, liabilities, financial condition,
results of operations or business, or creditworthiness of the Borrower or any
other Loan Party.
9.3c Reliance. The Agent shall be entitled to act, and shall be fully
protected in acting upon, any telegram, facsimile transmission or any writing,
application, notice, report, statement, certificate, resolution, request,
order, consent, letter or other instrument, paper or communication believed by
the Agent in good faith to be genuine and correct and to have been signed or
sent or made by a proper Person. The Agent may consult counsel (including
counsel of the Borrower or any other Loan Party), independent public
accountants and other experts selected by it and shall be entitled to act, and
shall be fully protected in any action taken in good faith, in accordance with
advice given by such counsel, independent public accountants and other experts.
The Agent may employ agents and attorneys-in-fact and shall not be liable for
the default or misconduct of any such agents or attorneys-in-fact selected by
the Agent with reasonable care. The Agent shall not be bound to ascertain or
inquire as to the performance or observance of any of the terms, provisions or
conditions of this Credit Agreement or any of the other Loan Documents on the
part of the Borrower, the other Loan Parties or any other party thereto.
9.4 Action on Instructions. The Agent shall be required to act and shall be
fully protected in so acting and shall be entitled to refrain from acting, and
shall be fully protected in refraining from so acting, under this Credit
Agreement, the other Loan Documents or any other instrument or document
executed or delivered in connection herewith or therewith, in accordance with
written instructions from the Required Banks or, in the case of the matters set
forth in items (A) through (G) of Section 10.1, from all of the Banks.
9.5 Action in Event of Default. If an Event of Default has occurred and is
continuing, the Banks shall immediately consult with one another in an attempt
to agree upon a mutually acceptable course of conduct. Failing unanimous
agreement upon a course of conduct and if the Banks wish to exercise any of
their rights and remedies under the Credit Agreement or under any other Loan
Document, the Agent will exercise the rights of the Banks hereunder or
thereunder as directed by the Required Banks.
9.6 Indemnification. To the extent the Borrower does not reimburse and save
harmless the Agent according to the terms of this Credit Agreement for and from
all costs, expenses and disbursements in connection herewith, such costs,
expenses and disbursements
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shall be borne by the Banks ratably. Each Bank hereby agrees on such basis (i)
to reimburse and indemnify the Agent for such Bank's pro rata share of all such
reasonable costs, expenses and disbursements on request and (ii) to the extent
of each such Bank's pro rata share, to indemnify and save harmless the Agent
against and from any and all liabilities, losses, obligations, damages,
penalties, claims, actions, judgments and suits and other costs, expenses and
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent, arising out of or in connection with
this Credit Agreement, the other Loan Documents or any other agreement,
instrument or document executed or delivered in connection herewith or
therewith, or any request of the Required Banks or all of the Banks, as the
case may be, including without limitation the reasonable costs, expenses and
disbursements in connection with defending themselves against any claim or
liability, or answering any subpoena or other process related to the exercise
or performance of any of its powers or duties under this Credit Agreement, the
other Loan Documents, or any of the other agreements, instruments or documents
executed or delivered in connection herewith. The foregoing notwithstanding,
no Bank shall be liable for any portion of such losses, obligations, damages,
penalties, claims, actions, judgments and suits, and other costs, expense and
disbursements resulting from or as a consequence of (A) the Agent's gross
negligence or willful misconduct, (B) a claim against the Agent or the Banks
with respect to which each Bank was not given notice and the opportunity to
participate (at its own expense) in the defense thereof or (C) a compromise and
settlement agreement entered into without the consent of all of the Banks.
9.7 Agent's Rights as a Bank. With respect to the commitment of the Agent as a
Bank hereunder, the other Loan Documents and any other agreements, instruments
and documents delivered pursuant hereto and any Loans of the Agent under this
Credit Agreement, and any other amounts due to the Agent under this Credit
Agreement or the other Loan Documents, the Agent shall have the same rights and
powers, duties and obligations under this Credit Agreement, the other Loan
Documents or other agreement, instrument or document as any Bank and may
exercise such rights and powers and shall perform such duties and fulfill such
obligations as though it were not the Agent. The terms "Banks", "Required
Banks", "holder" or any similar term shall, unless the context clearly
indicates otherwise, include the Agent in its individual capacity. The Agent
may accept deposits from, lend money to, and generally engage, and continue to
engage, in any kind of banking, trust or other business with the Borrower, any
other Loan Party or any Affiliate thereof as if it were not the Agent hereunder
and may accept fees and other consideration from the Borrower, any other Loan
Party or any Affiliate thereof for services in connection with the Credit
Agreement or otherwise without having to account for the same to the Banks.
9.8 Advances by Agent. Unless the officers of the Agent responsible for
administering this Credit Agreement shall have been notified in writing by a
Bank prior to the date of any Disbursement that such Bank will not make the
amount which would constitute its pro rata share of such Disbursement available
to the Agent on the date of such Loan, the Agent may (but shall not be required
to) assume that such Bank has made such amount available to the Agent on the
date of such Loan and the Agent, in reliance upon such assumption, may make
available to the Borrower a corresponding amount. If such pro rata share is
made available to the Agent on a date after the date of such Disbursement,
such Bank shall pay to the Agent on demand an amount equal to the product of
(i) during each day
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included in the period referred to in (iii) below, the Federal Funds Rate
during each day included in such period, multiplied by (ii) the amount of such
Bank's pro rata share of such Disbursement, multiplied by (iii) a fraction, the
numerator of which is the number of days that elapse from and including the
date of such Loan to the date on which such pro rata share of such Disbursement
shall become immediately available to the Agent and the denominator of which is
360. A statement of the Agent submitted to such Bank with respect to any
amounts owing under this Section 9.8 shall be prima facie evidence as to the
amount owed by such Bank to the Agent. If such Bank's pro rata share is not in
fact made available to the Agent by such Bank within three (3) Business Days of
such borrowing date, the Agent shall be entitled to recover such amount with
interest thereon at the rate per annum equal to the Base Rate during such
period, on demand, from such Bank.
9.9 Payment to Banks. Promptly after receipt by the Agent from the Borrower of
any principal repayment of the Loans, interest due on the Loans, any fees or
other amounts due under any Loan Document (except for such amounts which are
payable for the sole account of any Bank or the Agent), the Agent shall
distribute to each Bank that Bank's pro rata share of the funds so received.
9.10 Pro Rata Sharing. All interest and principal payments on the Loans, all
Commitment Fees, the Closing Fee and any other Fees are to be divided pro rata
among the Banks. Any sums obtained from the Borrower by any Bank by reason of
the exercise of its rights of setoff, banker's lien or in collection shall be
shared (net of costs) pro rata among the Banks. Nothing in this Section 9.10
shall be deemed to require the sharing among the Banks of collections
specifically relating to, or of the proceeds of any collateral securing, any
other Indebtedness of the Borrower to any Bank.
9.11 Successor Agent.
9.11a Resignation of the Agent. Subject to a successor Agent being appointed
and such Person accepting the duties and obligations of the Agent hereunder and
under the Loan Documents, the Agent may resign from the performance of its
functions and duties hereunder and under the other Loan Documents at any time
by giving at least sixty (60) days prior written notice to the Banks and the
Borrower. In the event that the Agent gives notice of its desire to resign
from the performance of its functions and duties hereunder and under the Loan
Documents, then the Borrower and the Agent shall use all reasonable commercial
efforts to identify, and the Required Banks shall appoint, a successor who
shall be reasonably satisfactory to the Required Banks and the Borrower
(provided that such approval of the Borrower shall not be unreasonably withheld
and that no such approval of the Borrower shall be required after the
occurrence and during the continuance of an Event of Default). If a successor
Agent shall not have been appointed within said sixty (60) day period, the
Required Banks shall, after consultation with the Borrower, appoint a successor
Agent from among the Banks. Any such successor agent shall succeed to the
rights, powers and duties of the Agent. The foregoing notwithstanding, any
retiring agent shall continue to hold as custodian any Collateral in its
possession until such time as it can deliver such Collateral to the successor
agent.
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9.11b Rights of the Former Agent. Upon the appointment of such successor
agent, the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Credit Agreement. After any retiring
Agent's resignation hereunder as administrative agent for the Banks hereunder,
the provisions of this Article IX shall inure to the benefit of such retiring
Agent as to any actions taken or omitted to be taken by it while it was Agent
under this Credit Agreement.
ARTICLE X. MISCELLANEOUS.
10.1 Amendments and Waivers.
10.1a Amendments to Credit Agreement or any Loan Document. Subject to the
remaining provisions of this Section 10.1, the Agent, the Banks, the Issuing
Bank, the Borrower and the other Loan Parties may, from time to time, enter
into amendments, modifications, extensions, supplements and replacements to and
of this Credit Agreement or any other Loan Document and the Banks or the
Required Banks, as the case may be, may, from time to time, waive compliance
with a provision hereof or thereof. No amendment or waiver of any provision of
this Credit Agreement, the Amended and Restated Term Notes, the Revolving
Credit Notes or any other Loan Document, nor any consent to any departure
therefrom by the Borrower shall be effective unless the same shall be in
writing and signed by the Borrower or other Person, whichever is the obligor of
the document to be amended or the provisions of which are being waived, and the
Agent and the Required Banks, and then such amendment, waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
The foregoing notwithstanding, no amendment, waiver or consent shall do
any of the following unless in writing and signed by all of the Banks (or the
Agent with the consent of all of the Banks):
(A) increase the Revolving Credit Commitment or the maximum
aggregate principal amount of the Revolving Credit Notes or the
Amended and Restated Term Notes,
(B) except as contemplated in this Credit Agreement, reduce the
interest rate on the Revolving Credit Loans or any fees in connection
therewith,
(C) postpone the Repayment Date (other than as contemplated in this
Credit Agreement) or the date any payment of interest or fees are due in
connection with the Revolving Credit Commitment,
(D) postpone the Maturity Date or the date any payment of interest
or fees are due in connection with the Term Loans,
(E) release any security for the Bank Indebtedness except in
accordance with the terms of the Security Document creating such
interest,
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(F) amend Article III or this Section 10.1 or
(G) amend the definition of "Required Banks".
In the case of any waiver or consent relating to any provision of this Credit
Agreement, the parties shall be restored to their former positions and rights
hereunder, and the Event of Default so waived or consented to shall be deemed
to be cured and not continuing; but no such waiver or consent shall extend to
any subsequent or other Event of Default or impair any right consequent
thereon. The foregoing notwithstanding, an Assignment and Assumption Agreement
(i) executed by (A) the Transferor Bank, (B) the Purchasing Bank and (C) the
Agent in its own right and as agent for the remaining Banks and (ii) consented
to by the Borrower shall constitute an amendment of this Credit Agreement
solely for the purposes of adjusting the Term Loan Amount, Term Loan
Percentage, Commitment Amount and Commitment Percentage as set forth therein
and as admitting the Purchasing Bank as a Bank hereunder.
Any such supplemental agreement shall apply equally to the Borrower, the
affected Loan Party, if any, and each of the Banks and shall be binding upon
the Borrower, the Banks, the Agent and all future holders of the Notes.
10.1b Waivers. No delay on the part of the Banks in the exercise of any power
or right shall operate as a waiver thereof, nor shall any single or partial
exercise of any power or right preclude other or further exercise thereof, or
the exercise of any other power or right. In the case of any waiver, the
Borrower, the Banks and the Agent shall be restored to their former positions
and rights, and any Event of Default waived shall be deemed to be cured and not
continuing, but no such waiver shall extend to any subsequent or other Event of
Default, or impair any right consequent thereon.
10.2 Notices.
10.2a Notice to the Borrower. All notices required to be sent to the Borrower
shall be sent to the following address, by hand delivery, by recognized
national overnight courier service, by facsimile transmission or other means of
electronic data communication, or by the United States Mail, first class,
postage prepaid:
If by United States Mail: If by other means:
Education Management Corporation Education Management Corporation
000 Xxxxx Xxxxxx 000 Xxxxx Xxxxxx
Xxxxx 000 Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000 Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Chief Financial Officer Attention: Chief Financial Officer
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
10.2b Notice to the Agent. All notices required to be sent to the Agent shall
be sent to the following address, by hand delivery, by recognized national
overnight courier service,
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by facsimile transmission or other means of electronic data communication, or
by the United States Mail, first class, postage prepaid:
If by United States Mail: If by other means:
PNC Bank, National Association PNC Bank, National Association
Multi-Bank Loan Administration Multi-Bank Loan Administration
One PNC Plaza - 19th Floor One PNC Plaza - 19th Floor
Xxxxxxxxxx, Xxxxxxxxxxxx 00000 Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx Attention: Xxxxxx X. Xxxxx
Assistant Vice President Assistant Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
PNC Bank, National Association PNC Bank, National Association
Two PNC Plaza - 2nd Floor Two PNC Plaza - 2nd Floor
Xxxxxxxxxx, Xxxxxxxxxxxx 00000 Fifth Avenue and Wood Street
Attention: Select Industries Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Department Attention: Select Industries Department
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
10.2c Notice to the Banks. All notices required to be delivered to the Banks
pursuant to this Credit Agreement and the other Loan Documents shall be in
writing and shall be sent to the address set forth on the signature pages of
the Credit Agreement, by hand delivery, by recognized national overnight
courier service, by facsimile transmission or other means of electronic data
communication, or by the United States mail, first class, postage prepaid.
10.2d Receipt of Notices. All such notices shall be effective three (3) days
after mailing, one (1) day after deposit with the courier service, the date of
electronic transmission or when received, whichever is earlier. The Borrower,
the Banks and the Agent may each change the address for service of notice upon
it by a notice in writing to the other parties hereto.
10.3 Holiday Payments. If any payments to be made by the Borrower hereunder
shall become due on a date not a Business Day, such payments shall be made on
the next succeeding Business Day.
10.4 Tax Withholding. At least five (5) Business Days prior to the first date
on which interest or fees are payable hereunder for the account of each Bank,
each Bank that is not incorporated under the laws of the United States of
America or a state thereof agrees that it will deliver to the Agent and the
Borrower two (2) duly completed copies of either (i) IRS Form W-9, 1001 or 4224
or such other applicable form prescribed by the IRS, certifying in each case
that such Bank is entitled to receive payments
under this Credit Agreement or its
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Revolving Credit Note or Amended and Restated Term Note, as the case may be,
without deduction or withholding of United States federal income taxes, or is
subject to such tax at a reduced rate under an applicable tax treaty or (ii)
IRS Form W-8 or such other applicable form prescribed by the IRS or a
certificate of such Bank indicating that no such exemption or reduced rate of
taxation is allowable with respect to such payments. Each Bank which delivers
an IRS Form W-8, W-9, 4224 or 1001 further undertakes to deliver to the Agent
and the Borrower two (2) additional copies of any such form (or any successor
form) on or before the date on which that form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form so
delivered by it, and such amendments thereto or extensions or renewals thereof
as may be reasonably requested by the Borrower or the Agent, either certifying
that such Bank is entitled to receive payments under this Credit Agreement or
its Revolving Credit Note or Amended and Restated Term Note, as the case may
be, without deduction or withholding of any United States federal income taxes
or is subject to such tax at a reduced rate under an applicable tax treaty or
stating the date on which that no such exemption or reduced rate is allowable.
The Agent shall be entitled to withhold, from each payment made to such Bank
hereunder or under the Revolving Credit Note or Amended and Restated Term Note
payable to it, United States federal income taxes at the full withholding rate
unless each Bank referred to in the first sentence of this Section 10.4
establishes an exemption or at the applicable reduced rate established pursuant
to the above provisions.
10.5 Survival. Until payment in full of the Bank Indebtedness and the
termination of the Revolving Credit Commitment, all covenants, agreements,
warranties and representations made herein and in all certificates or other
documents delivered in connection with this Credit Agreement by or on behalf of
the Borrower, shall survive the advances of money made by the Banks to the
Borrower hereunder and the delivery of the Revolving Credit Notes and the
Amended and Restated Term Notes, and all such covenants, agreements, warranties
and representations shall inure to the benefit of the successors and assigns of
the Banks and the Agent whether or not so expressed.
10.6 Costs. The Borrower shall pay:
(i) All reasonable costs and expenses of the Agent (including
without limitation the reasonable fees and disbursements of the Agent's
special counsel, Xxxxxx Xxxxxxxxx, P.C.), incurred in connection with the
preparation, negotiation, execution and delivery of this Credit Agreement
and the other Loan Documents and any and all other documents and
instruments prepared in connection herewith, including but not limited to
all amendments, extensions, modifications, waivers, consents and other
documents and instruments prepared or entered into from time to time,
including after the Closing Date;
(ii) All reasonable costs and expenses of the Agent and the Banks
(including without limitation the reasonable fees and disbursements of
the Agent's and each of the Bank's counsel) in connection with (A) the
enforcement of this Credit Agreement and the other Loan Documents
(whether through negotiations, legal proceedings or otherwise) arising
pursuant to a breach by any Loan Party of any of the terms, conditions,
representations, warranties or covenants of any Loan Document
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to which it is a party, and (B) defending or prosecuting any actions,
suits or proceedings relating to any of the Loan Documents.
All of such costs and expenses shall be payable by the Borrower to the Banks or
the Agent, as the case may be, upon demand or as otherwise agreed upon by the
Banks or the Agent and the Borrower, and shall constitute Bank Indebtedness
under this Credit Agreement. The Borrower's obligation to pay such costs and
expenses shall survive the termination of this Credit Agreement and the
satisfaction of all of the Borrower's obligations hereunder.
10.7 Certain Taxes. The Borrower agrees to pay, and save the Banks harmless
from, all liability for any stamp or other taxes which may be payable with
respect to the execution or delivery of this Credit Agreement or the Loan
Documents or the issuance of the Notes, which obligation of the Borrower shall
survive the termination of this Credit Agreement.
10.8 Successors, Assigns and Participations.
10.8a Benefit of Agreement. Subject to the remaining provisions of this
Section 10.8, this Credit Agreement shall be binding upon the Borrower, the
Agent and the Banks and their respective successors and assigns, and shall
inure to the benefit of the Borrower, the Agent and the Banks and the
successors and assigns of the Agent and the Banks; provided, however that the
Borrower may not assign its rights or duties hereunder or under any other Loan
Document without the prior written consent of the Banks and the Agent.
10.8b Assignments. Subject to the remaining provisions of this Subsection
10.8b, any Bank, at any time, in the ordinary course of its commercial banking
business and in accordance with applicable law, may sell to one or more
Purchasing Banks (which Purchasing Banks may be Affiliates of the Transferor
Bank), a portion or all of its rights and obligations under this Credit
Agreement and the Revolving Credit Note or Amended and Restated Term Note then
held by it pursuant to as Assignment and Assumption Agreement substantially in
the form of Exhibit "J" and executed by the Transferor Bank and such Purchasing
Bank and consented to by the Agent and the Borrower; subject, however to the
following requirements:
(i) The Borrower and the Agent must give their prior consent to any
such assignment (other than an assignment made by a Bank to an Affiliate
of such Bank) which consent shall not be unreasonably withheld;
(ii) Each such assignment must be in a minimum amount of
$10,000,000, or, if in excess thereof, in integral multiples of
$1,000,000, unless otherwise agreed by the Borrower and the Agent;
(iii) No Purchasing Bank which purchases a Revolving Credit
Commitment of less than or equal to $10,000,000 may sell Participations;
(iv) No Purchasing Bank may make assignments unless otherwise agreed
by the Borrower; and
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(v) On the date such assignment is made, the Transferor Bank shall
pay to the Agent a $2,000 service fee for each assignment;
provided, however the restrictions set forth in Subsection 10.8a(i), (ii),
(iii) and (iv) above shall not apply in the case of any assignment by any
Transferor Bank upon the occurrence and during the continuation of an Event of
Default.
Upon the execution, delivery, acceptance and recording of any such
Assignment and Assumption Agreement, from and after the Transfer Effective Date
set forth in such Assignment and Assumption Agreement, (a) the Purchasing Bank
thereunder shall be a party hereto as a Bank and, to the extent provided in
such Assignment and Assumption Agreement, shall have the rights and obligations
of a Bank hereunder with a Commitment Amount, Commitment Percentage, Term Loan
Amount or Term Loan Percentage as set forth therein and (b) the Transferor Bank
thereunder shall be released from its obligations as a Bank under this Credit
Agreement to the extent provided in such Assignment and Assumption Agreement.
Such Assignment and Assumption Agreement shall be deemed to amend this Credit
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Bank as a Bank and the resulting adjustment of
Commitment Percentages or Term Loan Percentages arising from the purchase by
such Purchasing Bank of all or a portion of the rights and obligations of such
Transferor Bank under this Credit Agreement and its Revolving Credit Note or
Amended and Restated Term Note, as the case may be. On or prior to the
Transfer Effective Date, the Borrower shall execute and deliver to the Agent,
in exchange for the surrendered Revolving Credit Note or Amended and Restated
Term Note held by the Transferor Bank, a new Revolving Credit Note or Amended
and Restated Term Note, as the case may be, to the order of such Purchasing
Bank in an amount equal to the Commitment Amount or Term Loan Amount assumed by
it and purchased by it pursuant to such Assignment and Assumption Agreement,
and a new Revolving Credit Note or Amended and Restated Term Note, as the case
may be, to the order of the Transferor Bank in an amount equal to the
Commitment Amount or Term Loan Amount retained by it hereunder, if any.
10.8c Assignment Register. The Agent shall maintain, at its address referred
to in Subsection 10.2b hereof, a copy of each Assignment and Assumption
Agreement delivered to it and a register (the "Register") for the recordation
of the names and addresses of the Banks, and the amount of the Commitment
Amount and/or Term Loan Amount of each Bank, if any, then in effect, and the
amount of the Loans owing to each Bank, from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Banks may treat each Person whose name is recorded
in the Register as the owner of the Loans for all purposes of this Credit
Agreement. The Register shall be available at the office of the Agent set
forth in Subsection 10.2b hereof for inspection by the Borrower or any Bank at
any reasonable time and from time to time upon reasonable prior notice.
10.8d Participations. Any Bank, in the ordinary course of its commercial
banking business and in accordance with applicable law, may sell to one or more
Participants a Participation in any Loan owing to such Bank, the interest of
such Bank in (i) any Revolving Credit Note or Amended and Restated Term Note or
(ii) the Commitment Amount or Term
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Loan Amount of such Bank. In the event of any such sale by a Bank of a
Participation to a Participant, such Bank's obligations under this Credit
Agreement to the other parties to this Credit Agreement shall remain unchanged,
such Bank shall remain solely responsible for the performance thereof, such
Bank shall remain the holder of its Revolving Credit Note or Amended and
Restated Term Note for all purposes under this Credit Agreement (including
voting rights hereunder), and the Borrower, the other Banks and the Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Credit Agreement or the other Loan
Documents; provided, however, that no Bank shall transfer or grant any
Participation under which the Participant shall have rights to approve any
amendment, modification or waiver of this Credit Agreement or any other Loan
Document except to the extent such amendment, modification or waiver would (i)
reduce or increase the principal amount of such Participant's Participation
over the amount then in effect, (ii) decrease the interest rate relating to the
Loans, (iii) reduce the Commitment Fee as any other Fee payable to the
Participant, (iv) postpone any date fixed for any payment of principal of or
interest on the Loans, the Commitment Fee or any other Fees or obligations of
the Borrower set forth in Article II or (v) release any collateral granted to
the Agent, on behalf of the Bank, by any Loan Party to secure the Bank
Indebtedness.
10.8e Other Assignments. Notwithstanding the foregoing provisions of this
Section 10.8, any Bank may, at any time and from time to time, assign all or
any portion of its rights under this Credit Agreement and its Revolving Credit
Note or Amended and Restated Term Note to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank. No such
assignment shall release any assigning Bank from its obligations hereunder.
10.8f Disclosure. The Borrower authorizes each Bank to disclose to any
Participant or Purchasing Bank and any prospective Participant or Purchasing
Bank any and all financial information in such Bank's possession concerning the
Borrower and its Subsidiaries which has been delivered to such Bank by or on
behalf of the Borrower pursuant to this Credit Agreement or in connection with
such Bank's credit evaluation of the Borrower prior to becoming a party to this
Credit Agreement.
10.9 Confidentiality. Unless otherwise agreed to in writing by the Borrower,
the Agent and the Banks hereby agree to keep all Proprietary Information
confidential and not to disclose or reveal any Proprietary Information to any
Person other than the Agent's or the Banks' directors, officers, employees,
Affiliates and agents and to actual or potential Purchasing Banks and
Participants, and then only on a confidential basis; provided, however, that
the Agent or the Banks may disclose Proprietary Information (i) as required by
any Governmental Rule, (ii) to their respective attorneys and accountants or
(iii) as requested or required by any state, federal or foreign authority or
examiner regulating banks or banking; and further, provided, that the Agent or
the Banks may not disclose any confidential information concerning identified
students before giving the Borrower notice of such proposed disclosure and
affording it a reasonable opportunity to obtain a judicial protective order
from a court of competent jurisdiction.
10.10 Indemnification. The Borrower will indemnify and hold harmless the Agent
and the Banks, any of their respective directors, officers or employees and
each Person, if
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any, who controls the Agent or the Banks within the meaning of the Securities
Act of 1933 or the Securities and Exchange Act of 1934 (any and all of whom are
referred to as an "Indemnified Party") from and against any and all losses,
claims, damages and liabilities (including but not limited to any Environmental
Claim or the liability of any Bank thereon), joint or several (including but
not limited to all legal fees or other expenses reasonably incurred by any
Indemnified Party in connection with the preparation for or defense of any
pending or threatened claim, action or proceeding, whether or not resulting in
any liability), to which such Indemnified Party may become subject (whether or
not such Indemnified Party is a party thereto) under any applicable federal or
state law or otherwise caused by or arising out of, or allegedly caused by or
arising out of, this Credit Agreement or any transaction contemplated hereby,
other than losses, claims, damages or liabilities resulting from the transfer
of any of the Notes in violation of any applicable law or regulation; provided,
the Borrower shall not be liable where any action or failure to act was due to
the gross negligence or willful misconduct of the Indemnified Party.
Promptly after receipt by an Indemnified Party of notice of any claim, action
or proceeding with respect to which an Indemnified Party is entitled to
indemnity hereunder, such Indemnified Party will notify the Borrower of such
claim or the commencement of such action or proceeding, provided that the
failure of an Indemnified Party to give notice as provided herein shall not
relieve the Borrower of its obligations under this Section 10.10 with respect
to such Indemnified Party, except to the extent that the Borrower is actually
prejudiced by such failure. The Borrower will assume the defense of such
claim, action or proceeding and will assume the defense of such claim, action
or proceeding and will employ counsel satisfactory to the Indemnified Party and
will pay the fees and expenses of such counsel. Notwithstanding the preceding
sentence, the Indemnified Party will be entitled, at the expense of the
Borrower, to employ counsel separate from counsel for the Borrower and for any
other party in such action if the Indemnified Party reasonably determines that
a conflict of interest or other reasonable basis exists which makes
representation by counsel chosen by the Borrower not advisable, provided that
the Borrower shall not be obligated to pay for the fees and expenses of more
than one counsel for all Indemnified Parties. In the event an Indemnified
Party appears as a witness in any action or proceeding brought against the
Borrower (or any of its officers, directors or employees) in which an
Indemnified Party is not named as a defendant, the Borrower agrees to reimburse
such Indemnified Party for all expenses incurred by it (including fees and
expenses of counsel) in connection with its appearing as a witness.
The Borrower's obligations under this Section 10.10 shall survive the
termination of this Credit Agreement and repayment of the Bank Indebtedness.
10.11 Integration. This Credit Agreement together with the other Loan
Documents constitutes the entire agreement between the parties relating to this
financing transaction and its supersedes all prior understandings and
agreements, whether written or oral between the parties hereto concerning the
transactions provided for herein.
10.12 Severability. Any provision of this Credit Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of
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such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
10.13 APPLICABLE LAW. THIS CREDIT AGREEMENT, THE REVOLVING CREDIT NOTES, THE
AMENDED AND RESTATED TERM NOTES, THE AMENDED AND RESTATED SECURITY AGREEMENT,
THE AMENDED AND RESTATED PLEDGE AGREEMENT, AND THE AMENDED AND RESTATED
SUBSIDIARY PLEDGE AGREEMENT SHALL BE CONTRACTS MADE UNDER AND GOVERNED BY THE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REFERENCE TO THE PROVISIONS
THEREOF REGARDING CONFLICTS OF LAW.
10.14 CONSENT TO JURISDICTION. THE PARTIES HERETO AGREE THAT ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, THE NOTES OR
THE OTHER LOAN DOCUMENTS SHALL BE COMMENCED IN THE COURT OF COMMON PLEAS OF
ALLEGHENY COUNTY, PENNSYLVANIA OR IN XXX XXXXXXXX XXXXX XX XXX XXXXXX XXXXXX
FOR THE WESTERN DISTRICT OF PENNSYLVANIA AND EACH PARTY AGREES THAT A SUMMONS
AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING IN EITHER OF SUCH COURTS SHALL
BE PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION IF SERVED PERSONALLY
OR BY CERTIFIED MAIL TO THE PARTY IN RESPECT OF THE BORROWER OR THE AGENT, AT
ITS ADDRESS SET FORTH IN SECTION 10.2 HEREOF AND IN RESPECT OF ANY BANK, AT ITS
ADDRESS SET FORTH ON ITS SIGNATURE PAGE TO THIS CREDIT AGREEMENT OR ON THE
ASSIGNMENT AND ASSUMPTION AGREEMENT TO WHICH SUCH BANK IS A PARTY, OR AS
OTHERWISE PROVIDED UNDER THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA.
FURTHER, THE BORROWER, THE AGENT AND THE BANKS HEREBY SPECIFICALLY CONSENT TO
THE PERSONAL JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY,
PENNSYLVANIA AND THE DISTRICT COURT OF THE UNITED STATES FOR THE WESTERN
DISTRICT OF PENNSYLVANIA AND WAIVE AND HEREBY ACKNOWLEDGE THAT THE BORROWER,
THE AGENT AND THE BANKS ARE ESTOPPED FROM RAISING ANY CLAIM THAT EITHER SUCH
COURT LACKS PERSONAL JURISDICTION OVER THE BORROWER, THE AGENT OR THE BANKS SO
AS TO PROHIBIT EITHER SUCH COURT FROM ADJUDICATING ANY ISSUES RAISED IN A
COMPLAINT FILED WITH EITHER SUCH COURT CONCERNING THIS CREDIT AGREEMENT OR THE
NOTES.
10.15 Counterparts. This Credit Agreement may be executed in as many identical
counterparts as may be convenient and by the different parties hereto on
separate counterparts. This Credit Agreement shall become binding when the
Agent, the Banks and the Borrower have executed at least one counterpart.
Immediately after the execution of counterparts and solely for the convenience
of the parties hereto, the Borrower and the Banks will execute sufficient
counterparts so that Borrower shall have counterparts executed by it, and the
Banks shall have counterparts executed by it and the Borrower. All
counterparts shall constitute but one and the same instrument.
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10.16 Amendment and Restatement. This Credit Agreement amends and restates in
its entirety the 1989 Credit Agreement except to the extent of certain
provisions contained in the 1989 Credit Agreement which by their terms are
intended to survive the expiration or termination of the 1989 Credit Agreement.
The Bank Indebtedness as evidenced by the Notes and as described herein is a
continuation, in part, of the indebtedness provided under the 1989 Credit
Agreement, and it is the express intention of the parties that no novation
shall occur.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Executed as of the day and year first above written.
EDUCATION MANAGEMENT CORPORATION
By ___________________________________
Name _________________________________
Title ________________________________
PNC BANK, NATIONAL ASSOCIATION,
in its capacity as the Agent
By ___________________________________
Name _________________________________
Title ________________________________
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IN WITNESS WHEREOF, intending to be legally bound hereby, the undersigned
Bank has caused this Credit Agreement by and among EDUCATION MANAGEMENT
CORPORATION, the FINANCIAL INSTITUTIONS PARTY HERETO and PNC BANK, NATIONAL
ASSOCIATION, as the Agent, to be executed by its duly authorized officer as of
the date first above written.
Revolving Credit Commitment: PNC BANK, NATIONAL ASSOCIATION, in its
$27,000,000.00 capacity as a Bank and the Issuing Bank
Commitment Percentage: 54.00%
By ____________________________________
Term Loan Amount: Name: Xxxx X. Xxxxx
$2,602,825.00 Title: Assistant Vice President
Term Loan Percentage: 28.2742%
Addresses for notice purposes:
If by United States Mail: If by other means:
PNC Bank, National Association PNC Bank, National Association
Multi-Bank Loan Administration Multi-Bank Loan Administration
One PNC Plaza - 19th Floor One PNC Plaza - 19th Floor
Xxxxxxxxxx, Xxxxxxxxxxxx 00000 Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx Attention: Xxxxxx X. Xxxxx
Assistant Vice President Assistant Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
PNC Bank, National Association
Select Industries Department
Two PNC Plaza - 2nd Floor
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Assistant Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Address for Eurodollar Rate Loan funding if different from above:
______________________________________
______________________________________
______________________________________
Telephone: ___________________________
Telecopier: __________________________
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IN WITNESS WHEREOF, intending to be legally bound hereby, the undersigned
Bank has caused this Credit Agreement by and among EDUCATION MANAGEMENT
CORPORATION, the FINANCIAL INSTITUTIONS PARTY HERETO and PNC BANK, NATIONAL
ASSOCIATION, as the Agent, to be executed by its duly authorized officer as of
the date first above written.
Revolving Credit Commitment: NATIONAL CITY BANK,
$15,000,000.00 in its capacity as a Bank
Commitment Percentage: 30.00%
By _____________________________________
Term Loan Amount: Name: __________________________________
$4,602,825.00 Title: _________________________________
Term Loan Percentage: 50.00%
Addresses for notice purposes:
If by United States Mail: If by other means:
National City Bank National City Bank
0000 Xxxx Xxxxx Xxxxxx 0000 Xxxx Xxxxx Xxxxxx
LOC 3032 LOC 3032
Xxxxxxxxx, Xxxx 00000 Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx Xxxxxxxxx Attention: Xxxxx Xxxxxxxxx
Commercial Loan Commercial Loan Operations
Operations Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
National City Bank
0000 Xxxx Xxxxx Xxxxxx
XXX 0000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxx
Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Address for Eurodollar Rate Loan funding if different from above:
___________________________________
___________________________________
___________________________________
Telephone: ________________________
Telecopier: _______________________
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IN WITNESS WHEREOF, intending to be legally bound hereby, the undersigned
Bank has caused this Credit Agreement by and among EDUCATION MANAGEMENT
CORPORATION, the FINANCIAL INSTITUTIONS PARTY HERETO and PNC BANK, NATIONAL
ASSOCIATION, as the Agent, to be executed by its duly authorized officer as of
the date first above written.
Revolving Credit Commitment: SOCIETY NATIONAL BANK,
$8,000,000.00 in its capacity as a Bank
Commitment Percentage: 16.00%
By ___________________________________
Term Loan Amount: Name: ________________________________
$2,000,000.00 Title: _______________________________
Term Loan Percentage: 21.7258%
Addresses for notice purposes:
If by United States Mail: If by other means:
Society National Bank Society National Bank
000 Xxxxxx Xxxxxx 000 Xxxxxx Xxxxxx
XX-00-00-0000 XX-00-00-0000
Xxxxxxxxx, Xxxx 00000 Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx Zalewaki Attention: Xxxxx Zalewaki
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Society National Bank
000 Xxxxxx Xxxxxx
XX-00-00-0000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx Xxxxxxxxxxx
Assistant Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Address for Eurodollar Rate Loan funding if different from above:
______________________________________
______________________________________
______________________________________
Telephone: ___________________________
Telecopier: __________________________
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