Exhibit 10.1
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AMENDED AND RESTATED CREDIT AGREEMENT
among
TOWN SPORTS INTERNATIONAL, INC.,
VARIOUS LENDING INSTITUTIONS,
and
BANKERS TRUST COMPANY,
AS ADMINISTRATIVE AGENT
____________________________________
Dated as of October 16, 1997
____________________________________
$15,000,000
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TABLE OF CONTENTS
Page
SECTION 1. Amount and Terms of Credit.................................... 1
1.01 Commitments..................................................... 1
1.02 Minimum Borrowing Amounts, etc.................................. 3
1.03 Notice of Borrowing............................................. 3
1.04 Disbursement of Funds........................................... 4
1.05 Notes........................................................... 5
1.06 Conversions..................................................... 6
1.07 Pro Rata Borrowings............................................. 6
1.08 Interest........................................................ 6
1.09 Interest Periods................................................ 7
1.10 Increased Costs, Illegality, etc................................ 8
1.11 Compensation; Breakage.......................................... 10
1.12 Change of Lending Office........................................ 11
1.13 Replacement of Banks............................................ 11
SECTION 2. Letters of Credit............................................. 12
2.01 Letters of Credit............................................... 12
2.02 Minimum Stated Amount........................................... 13
2.03 Letter of Credit Requests; Notices of Issuance; Reports......... 13
2.04 Agreement to Repay Letter of Credit Drawings.................... 14
2.05 Letter of Credit Participations................................. 15
2.06 Increased Costs................................................. 17
SECTION 3. Fees; Commitments............................................. 18
3.01 Fees............................................................ 18
3.02 Voluntary Reduction of Commitments.............................. 19
3.03 Mandatory Adjustments of Commitments, etc....................... 20
SECTION 4. Payments...................................................... 21
4.01 Voluntary Prepayments........................................... 21
4.02 Mandatory Prepayments........................................... 22
4.03 Method and Place of Payment..................................... 24
4.04 Net Payments.................................................... 24
(i)
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SECTION 5. Conditions Precedent.......................................... 26
5.01 Execution of Agreement.......................................... 26
5.02 No Default; Representations and Warranties...................... 27
5.03 Officer's Certificate........................................... 27
5.04 Opinions of Counsel............................................. 27
5.05 Corporate Proceedings........................................... 27
5.06 Plans; Existing Indebtedness Agreements; Shareholders'
Agreements; Management Agreements; Employment Agreements...... 27
5.07 Adverse Change, etc............................................. 28
5.08 Litigation...................................................... 29
5.09 Approvals....................................................... 29
5.10 Senior Notes.................................................... 29
5.11 Repayment of Loans Under the Original Credit Agreement.......... 29
5.12 Security Documents Acknowledgments; Pledge Agreement; Security
Agreement; Mortgages.......................................... 30
5.13 Subsidiary Guaranty Acknowledgement............................. 31
5.14 Pro Forma Balance Sheets........................................ 31
5.15 Projections..................................................... 31
5.16 Existing Indebtedness; Preferred Stock.......................... 31
5.17 Payment of Fees................................................. 32
5.18 Notice of Borrowing; Letter of Credit Request................... 32
SECTION 6. Representations, Warranties and Agreements.................... 32
6.01 Corporate Status................................................ 32
6.02 Corporate Power and Authority................................... 33
6.03 No Violation.................................................... 33
6.04 Litigation...................................................... 33
6.05 Use of Proceeds; Margin Regulations............................. 33
6.06 Governmental Approvals.......................................... 34
6.07 Investment Company Act.......................................... 34
6.08 Public Utility Holding Company Act.............................. 34
6.09 True and Complete Disclosure.................................... 34
6.10 Financial Condition; Financial Statements....................... 34
6.11 Security Interests.............................................. 36
6.12 Representations and Warranties in Senior Note Documents......... 36
6.13 Consummation of Transaction..................................... 36
6.14 Tax Returns and Payments........................................ 36
6.15 Compliance with ERISA........................................... 37
6.16 Subsidiaries; Subsidiary Restrictions........................... 38
6.17 Patents, etc.................................................... 38
6.18 Pollution and Other Regulations................................. 38
6.19 Properties...................................................... 39
(ii)
Page
6.20 Labor Relations................................................. 39
6.21 Existing Indebtedness........................................... 40
6.22 Capitalization.................................................. 40
SECTION 7. Affirmative Covenants......................................... 40
7.01 Information Covenants........................................... 41
7.02 Books, Records and Inspections; Bank Meetings................... 42
7.03 Maintenance of Property; Insurance.............................. 43
7.04 Payment of Taxes................................................ 43
7.05 Corporate Franchises............................................ 44
7.06 Compliance with Statutes, etc................................... 44
7.07 ERISA........................................................... 44
7.08 Good Repair..................................................... 45
7.09 End of Fiscal Years; Fiscal Quarters............................ 45
7.10 Use of Proceeds................................................. 45
7.11 Further Assurances.............................................. 45
SECTION 8. Negative Covenants............................................ 46
8.01 Changes in Business............................................. 46
8.02 Consolidation, Merger, Sale of Assets, etc...................... 46
8.03 Liens........................................................... 48
8.04 Indebtedness.................................................... 50
8.05 Advances, Investments and Loans................................. 51
8.06 Prepayments of Indebtedness, etc................................ 52
8.07 Dividends, etc.................................................. 52
8.08 Transactions with Affiliates.................................... 54
8.09 Net Interest Coverage Ratio..................................... 54
8.10 Net Leverage Ratio.............................................. 55
8.11 Issuance of Stock............................................... 55
8.12 Limitation on Creation of Subsidiaries.......................... 55
SECTION 9. Events of Default............................................. 56
9.01 Payments........................................................ 56
9.02 Representations, etc............................................ 56
9.03 Covenants....................................................... 56
9.04 Default Under Other Agreements.................................. 56
9.05 Bankruptcy, etc................................................. 57
9.06 ERISA........................................................... 57
9.07 Security Documents.............................................. 58
9.08 Subsidiary Guaranty............................................. 58
9.09 Judgments....................................................... 58
9.10 Change of Control............................................... 58
(iii)
Page
SECTION 10. Definitions.................................................. 59
SECTION 11. The Administrative Agent..................................... 80
11.01 Appointment.................................................... 80
11.02 Nature of Duties............................................... 80
11.03 Lack of Reliance on the Administrative Agent................... 81
11.04 Certain Rights of the Administrative Agent..................... 81
11.05 Reliance....................................................... 82
11.06 Indemnification................................................ 82
11.07 The Administrative Agent in Its Individual Capacity............ 82
11.08 Holders........................................................ 82
11.09 Resignation by the Administrative Agent........................ 83
SECTION 12. Miscellaneous................................................ 83
12.01 Payment of Expenses, etc....................................... 83
12.02 Right of Setoff................................................ 84
12.03 Notices........................................................ 85
12.04 Assignments; Participations; Etc............................... 85
12.05 No Waiver; Remedies Cumulative................................. 87
12.06 Payments Pro Rata.............................................. 88
12.07 Calculations; Computations..................................... 88
12.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial................................................... 89
12.09 Counterparts................................................... 90
12.10 Effectiveness.................................................. 90
12.11 Headings Descriptive........................................... 90
12.12 Amendment or Waiver............................................ 90
12.13 Survival....................................................... 92
12.14 Domicile of Loans.............................................. 92
12.15 Confidentiality................................................ 92
12.16 Register....................................................... 92
ANNEX I -- Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Subsidiaries
ANNEX IV -- Real Property
ANNEX V -- Existing Indebtedness
ANNEX VI -- Insurance
ANNEX VII -- Existing Liens
ANNEX VIII -- Existing Ventures
ANNEX IX -- Refinanced Agreements
ANNEX X -- Optionholders
(iv)
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EXHIBIT A-1 -- Form of Notice of Borrowing
EXHIBIT A-2 -- Form of Letter of Credit Request
EXHIBIT B-1 -- Form of Revolving Note
EXHIBIT B-2 -- Form of Swingline Note
EXHIBIT C -- Form of 4.04(b)(ii) Certificate
EXHIBIT D -- Form of Opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
EXHIBIT E -- Form of Officers' Certificate
EXHIBIT F -- Form of Security Documents Acknowledgment
EXHIBIT G -- Form of Subsidiary Guaranty Acknowledgement
EXHIBIT H -- Form of Assignment and Assumption Agreement
(v)
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 19, 1997
and amended and restated as of October 16, 1997, among TOWN SPORTS
INTERNATIONAL, a New York corporation (the "Borrower"), the lenders listed on
Annex I (each, a "Bank" and, collectively, the "Banks"), and BANKERS TRUST
COMPANY, as Administrative Agent (in such capacity, the "Administrative
Agent"). Unless otherwise defined herein, all capitalized terms used herein
and defined in Section 10 are used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Borrower, the Agent and the Original Banks are parties
to a Credit Agreement, dated as of December 10, 1996 (as the same has been
amended, modified and supplemented to but excluding the Restatement Effective
Date, the "Original Credit Agreement");
WHEREAS, the Term Facility as defined in the Original Credit
Agreement has been repaid consistent with the terms of such original Credit
Agreement;
WHEREAS, subject to and upon the terms and conditions set forth
herein, the parties hereto wish to amend and restate the Original Credit
Agreement in the form of this Agreement;
WHEREAS, upon the occurrence of the Restatement Effective Date, the
Original Credit Agreement shall be amended and restated in its entirety and
shall be superseded hereby; and
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 Commitments. Subject to and upon the terms and conditions set
forth herein, each Bank severally agrees to make a loan or loans (each a
"Loan" and, collectively, the "Loans") to the Borrower under the Revolving
Facility as set forth below:
(a) Subject to and upon the terms and conditions herein set forth,
each Bank severally agrees to make a revolving loan or loans (each, a
"Revolving Loan" and, collectively, the "Revolving Loans") to the Borrower,
which Revolving Loans (i) shall be made at any time and from time to time on
and after the Restatement Effective Date and prior to
the Maturity Date, (ii) except as hereinafter provided, may, at the option of
the Borrower, be incurred and maintained as and/or converted into Base Rate
Loans or Eurodollar Loans, provided, that all Revolving Loans made as part of
the same Borrowing shall, unless otherwise specifically provided herein,
consist of Revolving Loans of the same Type, (iii) may be repaid and
reborrowed in accordance with the provisions hereof and (iv) shall not exceed
for any Bank at any time outstanding that aggregate principal amount which,
when combined with the aggregate outstanding principal amount of all other
Revolving Loans of such Bank and with such Bank's Adjusted Percentage, if
any, of the sum of (I) the Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time and
(II) the outstanding principal amount of Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Revolving Loans) at such
time, equals (1) if such Bank is a Non-Defaulting Bank, the Adjusted
Commitment, if any, of such Bank at such time and (2) if such Bank is a
Defaulting Bank, the Commitment, if any, of such Bank at such time.
(b) Subject to and upon the terms and conditions set forth herein,
BTCo in its individual capacity agrees to make at any time and from time to
time on and after the Restatement Effective Date and prior to the Swingline
Expiry Date, a Loan or Loans to the Borrower (each a "Swingline Loan," and,
collectively, the "Swingline Loans"), which Swingline Loans (i) shall be made
and maintained as Base Rate Loans, (ii) may be repaid and reborrowed in
accordance with the provisions hereof, (iii) shall not exceed in aggregate
principal amount at any time outstanding, when combined with the aggregate
principal amount of all Revolving Loans made by Non-Defaulting Banks then
outstanding and the Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Swingline Loans) at such time, an
amount equal to the Adjusted Total Commitment then in effect (after giving
effect to any reductions to the Adjusted Total Commitment on such date) and
(iv) shall not exceed in aggregate principal amount at any time outstanding
the Maximum Swingline Amount. BTCo will not make a Swingline Loan after it
has received written notice from the Required Banks that one or more of the
applicable conditions to Credit Events specified in Section 5 are not then
satisfied.
(c) On any Business Day, BTCo may, in its sole discretion, give
notice to the Banks that its outstanding Swingline Loans shall be funded with
a Borrowing of Revolving Loans (provided that each such notice shall be
deemed to have been automatically given upon the occurrence of an Event of
Default under Section 9.05 or upon the exercise of any of the remedies
provided in the last paragraph of Section 9), in which case a Borrowing of
Revolving Loans constituting Base Rate Loans (each such Borrowing, a
"Mandatory Borrowing") shall be made on the immediately succeeding Business
Day by all Banks pro rata based on each Bank's Adjusted Percentage, and the
proceeds thereof shall be applied
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directly to repay BTCo for such outstanding Swingline Loans. Each Bank
hereby irrevocably agrees to make Base Rate Loans upon one Business Day's
notice pursuant to each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the date specified in writing by
BTCo, notwithstanding (i) that the amount of the Mandatory Borrowing may not
comply with the Minimum Borrowing Amount otherwise required hereunder, (ii)
whether any conditions specified in Section 5 are then satisfied, (iii)
whether an Event of Default has occurred and is continuing, (iv) the date of
such Mandatory Borrowing and (v) any reduction in the Total Commitment or the
Adjusted Total Commitment after any such Swingline Loans were made. In the
event that any Mandatory Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code in respect of the
Borrower), each Bank (other than BTCo) hereby agrees that it shall forthwith
purchase from BTCo (without recourse or warranty) such assignment of the
outstanding Swingline Loans as shall be necessary to cause the Banks to share
in such Swingline Loans ratably based upon their respective Adjusted
Percentages, provided that all interest payable on the Swingline Loans shall
be for the account of BTCo until the date the respective assignment is
purchased and, to the extent attributable to the purchased assignment, shall
be payable to the Bank purchasing same from and after such date of purchase.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal
amount of each Borrowing of Loans shall not be less than the Minimum
Borrowing Amount applicable to such Loans; provided that the aggregate
principal amount of each Borrowing of Swingline Loans shall not be less than
$100,000, and, if greater, shall be in an integral multiple of $50,000. More
than one Borrowing may be incurred on any day, provided, that at no time
shall there be outstanding more than eight Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to
incur Revolving Loans (excluding Borrowings of Revolving Loans pursuant to a
Mandatory Borrowing), the Borrower shall give the Administrative Agent at its
Notice Office, prior to 11:00 A.M. (New York time), at least three Business
Days' prior written notice (or telephonic notice promptly confirmed in
writing) of each Borrowing of Eurodollar Loans and at least one Business
Day's prior written notice (or telephonic notice promptly confirmed in
writing) of each Borrowing of Base Rate Loans to be made hereunder. Each
such notice (each, a "Notice of Borrowing") shall be irrevocable, and, in the
case of each written notice and each confirmation of telephonic notice, shall
be in the form of Exhibit A-1, appropriately completed to specify (i) the
aggregate principal amount of the Loans to be made pursuant to such
Borrowing, (ii) the date of such Borrowing (which shall be a Business Day)
and (iii) whether the respective Borrowing shall consist of Base Rate Loans
or, to the extent permitted hereunder, Eurodollar Loans and, if Eurodollar
Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall promptly give each Bank written notice (or
telephonic notice promptly on that day confirmed in writing) of each proposed
Bor-
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rowing, of such Bank's proportionate share thereof, if any, and of the other
matters covered by the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to incur a Borrowing of
Swingline Loans hereunder, the Borrower shall give BTCo prior to 1:00 P.M.
(New York time) on the day such Swingline Loan is to be made, written notice
(or telephonic notice promptly confirmed in writing) of each Swingline Loan
to be made hereunder. Each such notice shall be irrevocable and shall
specify in each case (x) the date of such Borrowing (which shall be a
Business Day) and (y) the aggregate principal amount of the Swingline Loan to
be made pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified
in Section 1.01(c), with the Borrower irrevocably agreeing, by its incurrence
of any Swingline Loan, to the making of Mandatory Borrowings as set forth in
such Section 1.01(c).
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent or BTCo (in the case of a Borrowing of Swingline Loans) or the
respective Letter of Credit Issuer (in the case of Letters of Credit), as the
case may be, may prior to receipt of written confirmation act without
liability upon the basis of such telephonic notice, believed by the Agent,
BTCo, or such Letter of Credit Issuer, as the case may be, in good faith to
be from an Authorized Officer of the Borrower. In each such case, the
Borrower hereby waives the right to dispute the Agent's, BTCo's or such
Letter of Credit Issuer's record of the terms of such telephonic notice.
1.04 Disbursement of Funds. (a) No later than 1:00 P.M. (New York
time) on the date specified in each Notice of Borrowing, each Bank will make
available its pro rata share of each Borrowing requested to be made on such
date in the manner provided below, provided that all Swingline Loans shall be
made available by BTCo no later than 3:00 P.M. (New York time) on the date so
requested. All such amounts shall be made available to the Administrative
Agent in U.S. Dollars and immediately available funds at the Payment Office
and the Administrative Agent promptly will make available to the Borrower by
depositing to its account at the Payment Office the aggregate of the amounts
so made available in the type of funds received. Unless the Administrative
Agent shall have been notified by any Bank prior to the date of Borrowing
that such Bank does not intend to make available to the Administrative Agent
its portion of the Borrowing or Borrowings to be made on such date, the
Administrative Agent may assume that such Bank has made such amount available
to the Administrative Agent on such date of Borrowing, and the Administrative
Agent, in reliance upon such assumption, may (in its sole discretion and
without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Administrative Agent by such Bank and the Administrative
Agent has made available same to the Borrower, the Administrative Agent shall
be entitled to
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recover such corresponding amount from such Bank. If such Bank does not pay
such corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent shall promptly notify the Borrower, and
the Borrower shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to
recover on demand from such Bank or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Administrative Agent to
the Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (x) if paid by such Bank,
the overnight Federal Funds Effective Rate or (y) if paid by the Borrower,
the then applicable rate of interest, calculated in accordance with Section
1.08, for the respective Loans.
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights
which the Borrower may have against any Bank as a result of any default by
such Bank hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal of,
and interest on, all the Loans made to it by each Bank shall be evidenced (i)
if Revolving Loans, by a promissory note substantially in the form of Exhibit
B-1 with blanks appropriately completed in conformity herewith (each, a
"Revolving Note" and, collectively, the "Revolving Notes") and (ii) if
Swingline Loans, by a promissory note substantially in the form of Exhibit
B-2 with blanks appropriately completed in conformity herewith (the
"Swingline Note").
(b) The Revolving Note issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to the order of such Bank or its registered
assigns and be dated the Restatement Effective Date, (iii) be in a stated
principal amount equal to the Revolving Loan Commitment of such Bank and be
payable in the principal amount of the Revolving Loans evidenced thereby,
(iv) mature on the Revolving Loan Maturity Date, (v) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the Base
Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby, (vi)
be subject to voluntary prepayment as provided in Section 4.01, and mandatory
repayment as provided in Section 4.02 and (vii) be entitled to the benefits
of this Agreement and the other Credit Documents.
(c) The Swingline Note issued to BTCo shall (i) be executed by the
Borrower, (ii) be payable to the order of BTCo or its registered assigns and
be dated the Restatement Effective Date, (iii) be in a stated principal
amount equal to the Maximum Swingline Amount and be payable in the principal
amount of the Swingline Loans evidenced thereby, (iv) mature on the Swingline
Expiry Date, (v) bear interest as provided in Section 1.08 in respect of the
Base Rate Loans evidenced thereby, (vi) be subject to voluntary prepayment as
provided in Section 4.01, and mandatory repayment as provided in Section 4.02
and (vii) be entitled to the benefits of this Agreement and the other Credit
Documents.
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(d) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation or any error in such notation shall not affect the Borrower's
obligations in respect of such Loans.
1.06 Conversions. The Borrower shall have the option to convert on
any Business Day occurring on or after the Restatement Effective Date, all or
a portion at least equal to the applicable Minimum Borrowing Amount of the
outstanding principal amount of the Revolving Loans owing by the Borrower
into a Borrowing or Borrowings of another Type of Loan (other than Swingline
Loans, which at all times shall be maintained as Base Rate Loans); provided,
that (i) except as otherwise provided in Section 1.10(b), Eurodollar Loans
may be converted into Base Rate Loans only on the last day of an Interest
Period applicable thereto and no partial conversion of a Borrowing of
Eurodollar Loans shall reduce the outstanding principal amount of the
Eurodollar Loans made pursuant to such Borrowing to less than the Minimum
Borrowing Amount applicable thereto, (ii) Base Rate Loans may not be
converted into Eurodollar Loans if a violation of Sections 9.01 or 9.05 or an
Event of Default is in existence on the date of the conversion and the
Administrative Agent or the Required Banks have determined that such
conversion at such time would be disadvantageous to the Banks and (iii)
Borrowings of Eurodollar Loans resulting from this Section 1.06 shall be
limited in number as provided in Section 1.02. Each such conversion shall be
effected by the Borrower giving the Administrative Agent at its Notice
Office, prior to 11:00 A.M. (New York time), at least three Business Days'
(or two Business Days', in the case of a conversion into Base Rate Loans)
prior written notice (or telephonic notice promptly confirmed in writing)
(each a "Notice of Conversion") specifying the Loans to be so converted, the
Type of Loans to be converted into and, if to be converted into a Borrowing
of Eurodollar Loans, the Interest Period to be initially applicable thereto.
The Administrative Agent shall give each Bank prompt notice of any such
proposed conversion affecting any of its Loans.
1.07 Pro Rata Borrowings. All Loans under this Agreement (other
than Swingline Loans) shall be made by the Banks pro rata on the basis of
their Commitments, provided that Revolving Loans made pursuant to a Mandatory
Borrowing shall be made by the Banks pro rata on the basis of their Adjusted
Commitments. It is understood that no Bank shall be responsible for any
default by any other Bank of its obligation to make Loans hereunder and that
each Bank shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Bank to fulfill its
commitments hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise) at a rate per annum which
shall at all times be the Applicable Base Rate Margin plus the Base Rate in
effect from time to time.
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(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be
the Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to the Base Rate in
effect from time to time plus the sum of (i) 2% and (ii) the Applicable Base
Rate Margin, provided that no Loan shall bear interest after maturity
(whether by acceleration or otherwise) at a rate per annum less than 2% plus
the rate of interest applicable thereto at maturity.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the
last Business Day of each August, November, February and May, (ii) in respect
of each Eurodollar Loan, on the last day of each Interest Period applicable
thereto and, in the case of an Interest Period of six months, on the date
occurring three months after the first day of such Interest Period and (iii)
in respect of each Loan, on any prepayment or conversion (other than the
prepayment and conversion of Revolving Loans that are maintained as Base Rate
Loans) (on the amount prepaid or converted), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Administrative Agent, upon determining the interest rate
for any Borrowing of Eurodollar Loans for any Interest Period, shall promptly
notify the Borrower and the Banks thereof.
1.09 Interest Periods. (a) At the time the Borrower gives a
Notice of Borrowing or Notice of Conversion in respect of the making of, or
conversion into, a Borrowing of Eurodollar Loans (in the case of the initial
Interest Period applicable thereto) or prior to 11:00 A.M. (New York time) on
the third Business Day prior to the expiration of an Interest Period
applicable to a Borrowing of Eurodollar Loans, the Borrower shall have the
right to elect by giving the Administrative Agent written notice (or
telephonic notice promptly confirmed in writing) of the Interest Period
applicable to such Borrowing, which Interest Period shall, at the option of
the Borrower (but otherwise subject to the provisions of Sections 1.01(a)(ii)
and 1.01(b)(ii)), be a one, two, three or six month period. Notwithstanding
anything to the contrary contained above:
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(i) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence
on the day on which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day
of such calendar month;
(iii) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period for a Borrowing may be elected if it would
extend beyond the Maturity Date; and
(v) no Interest Period may be elected at any time when an Event of
Default is then in existence or when a violation of Sections 9.01 or 9.05
is then in existence and the Administrative Agent or the Required Banks
have determined that such an election at such time would be
disadvantageous to the Banks.
(b) If upon the expiration of any Interest Period, the Borrower has
failed to, or been unable to, elect a new Interest Period to be applicable to
the respective Borrowing of Eurodollar Loans as provided above, the Borrower
shall be deemed to have elected to convert such Borrowing into a Borrowing of
Base Rate Loans effective as of the expiration date of such current Interest
Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that (x)
in the case of clause (i) below, the Administrative Agent or (y) in the case
of clauses (ii) and (iii) below, any Bank, shall have determined (which
determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period, that, by reason of any changes arising after the date of
this Agreement affecting the interbank Eurodollar market, adequate and
fair means do not exist for ascertaining the applicable interest rate on
the basis provided for in the definition of Eurodollar Rate; or
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(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect
to any Eurodollar Loans (other than any increased cost or reduction in
the amount received or receivable resulting from the imposition of or a
change in the rate of Taxes) because of (x) any change since the
Restatement Effective Date in any applicable law, governmental rule,
regulation, guideline, order or request (whether or not having the force
of law), or in the interpretation or administration thereof and including
the introduction of any new law or governmental rule, regulation,
guideline, order or request (such as, for example, but not limited to a
change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate) and/or (y) other circumstances
occurring after the Restatement Effective Date affecting such Bank, the
interbank Eurodollar market or the position of such Bank in such market;
or
(iii) at any time since the Restatement Effective Date, that the
making or continuance of any Eurodollar Loan has become unlawful by
compliance by such Bank in good faith with any law, governmental rule,
regulation, guideline or order (or would conflict with any such
governmental rule, regulation, guideline or order not having the force of
law but with which such Bank customarily complies even though the failure
to comply therewith would not be unlawful);
then, and in any such event, such Bank (or the Administrative Agent in the
case of clause (i) above) shall (x) on such date and (y) as promptly as
practicable (and in any event within ten Business Days) after the date on
which such event no longer exists give notice (by telephone confirmed in
writing) to the Borrower and to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit
to each of the other Banks). Thereafter, (x) in the case of clause (i) above,
Eurodollar Loans shall no longer be available until such time as the
Administrative Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by
the Borrower with respect to Eurodollar Loans which have not yet been
incurred shall be deemed rescinded by the Borrower, (y) in the case of clause
(ii) above, the Borrower shall pay to such Bank, upon written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Bank in its
sole discretion shall determine) as shall be required to compensate such Bank
for such increased costs or reductions in amounts receivable hereunder (a
written notice as to the additional amounts owed to such Bank, showing the
basis for the calculation thereof, submitted to the Borrower by such Bank
shall, absent manifest error, be final and conclusive and binding upon all
parties hereto) and (z) in the case of clause (iii) above, the Borrower shall
take one of the actions specified in Section 1.10(b) as promptly as possible
and, in any event, within the time period required by law.
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(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may
(and in the case of a Eurodollar Loan affected pursuant to Section
1.10(a)(iii) the Borrower shall) either (i) if the affected Eurodollar Loan
is then being made pursuant to a Borrowing, cancel said Borrowing by giving
the Administrative Agent telephonic notice (confirmed promptly in writing)
thereof on the same date that the Borrower was notified by a Bank pursuant to
Section 1.10(a)(ii) or (iii), or (ii) if the affected Eurodollar Loan is then
outstanding, upon at least three Business Days' notice to the Administrative
Agent, require the affected Bank to convert each such Eurodollar Loan into a
Base Rate Loan; provided, that if more than one Bank is affected at any time,
then all affected Banks must be treated the same pursuant to this Section
1.10(b).
(c) If any Bank shall have determined that after the Effective
Date, the adoption or effectiveness of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank (or any corporation
controlling such Bank) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on such Bank's (or such controlling corporation's) capital
or assets as a consequence of its commitments or obligations hereunder to a
level below that which such Bank (or such controlling corporation) could have
achieved but for such adoption, effectiveness, change or compliance (taking
into consideration such Bank's (or such controlling corporation's) policies
with respect to capital adequacy), then from time to time, within 15 days
after written demand by such Bank (with a copy to the Administrative Agent
and accompanied by the notice described in the last sentence of this Section
1.10(c)), the Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank (or such controlling corporation) for
such reduction. Each Bank, upon determining in good faith that any
additional amounts will be payable pursuant to this Section 1.10(c), will
give prompt written notice thereof to the Borrower, which notice shall set
forth the basis of the calculation of such additional amounts, although the
failure to give any such notice shall not release or diminish any of the
Borrower's obligations to pay additional amounts pursuant to this Section
1.10(c) upon the subsequent receipt of such notice.
1.11 Compensation; Breakage. The Borrower shall compensate each
Bank, upon its written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other
funds required by such Bank to fund its Eurodollar Loans but excluding in any
event the loss of anticipated profits) which such Bank may sustain: (i) if
for any reason (other than a default by such Bank or the Administrative
Agent) a Borrowing of Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion (whether or not
withdrawn by the Borrower or deemed
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withdrawn pursuant to Section 1.10(a)); (ii) if any prepayment, repayment or
conversion of any of its Eurodollar Loans occurs on a date which is not the
last day of an Interest Period applicable thereto; (iii) if any prepayment of
any of its Eurodollar Loans is not made on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of (x) any other
default by the Borrower to repay its Eurodollar Loans when required by the
terms of this Agreement or (y) an election made pursuant to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii)
or (iii), 1.10(c), 2.06 or 4.04 with respect to such Bank, it will, if
requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Bank) to designate another lending office for any
Loans or Letters of Credit, as the case may be, affected by such event,
provided that such designation is made on such terms that such Bank and its
lending office suffer no economic, legal or regulatory disadvantage, with the
object of avoiding the consequence of the event giving rise to the operation
of any such Section. Nothing in this Section 1.12 shall affect or postpone
any of the obligations of the Borrower or the right of any Bank provided in
Section 1.10, 2.06 or 4.04.
1.13 Replacement of Banks. (x) Upon the occurrence of any event
giving rise to the operation of Section 1.10(a)(ii) or (iii), Section
1.10(c), Section 2.06 or Section 4.04 with respect to any Bank which results
in such Bank charging to the Borrower increased costs in excess of those
being generally charged by the other Banks or becoming incapable of making
Eurodollar Loans, (y) if a Bank becomes a Defaulting Bank and/or (z) in the
case of a refusal by a Bank to consent to a proposed change, waiver,
discharge or termination with respect to this Agreement which has been
approved by the Required Banks as provided in Section 12.12(b), the Borrower
shall have the right, if no Default or Event of Default then exists, to
replace such Bank (the "Replaced Bank") with one or more other Eligible
Transferee or Transferees reasonably acceptable to the Administrative Agent,
none of whom shall constitute a Defaulting Bank at the time of such
replacement (collectively, the "Replacement Bank"), provided that (i) at the
time of any replacement pursuant to this Section 1.13, the Replacement Bank
shall enter into one or more Assignment and Assumption Agreements pursuant to
Section 12.04(b) (and with all fees payable pursuant to said Section 12.04(b)
to be paid by the Replacement Bank) pursuant to which the Replacement Bank
shall acquire all of the Commitments and outstanding Loans of, and
participations in Letters of Credit by, the Replaced Bank and, in connection
therewith, shall pay to (x) the Replaced Bank in respect thereof an amount
equal to the sum of (I) an amount equal to the principal of, and all accrued
interest on, all outstanding Loans of the Replaced Bank, (II) an amount equal
to all Unpaid Drawings that have been funded by (and not reimbursed to) such
Replaced Bank, together with all then unpaid interest with respect thereto at
such time and (III) an amount equal to all accrued, but theretofore unpaid,
Fees owing to the Replaced Bank pursuant to Section 3.01, (y) the respective
Letter of Credit Issuer an amount equal to such Replaced Bank's Adjusted
Percentage (for this purpose, determined as if the adjustment
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described in clause (ii) of the succeeding sentence had been made with
respect to such Replaced Bank) of any Unpaid Drawing (which at such time
remains an Unpaid Drawing) to the extent such amount was not theretofore
funded by such Replaced Bank and (z) BTCo an amount equal to such Replaced
Bank's Adjusted Percentage (for this purpose, determined as if the adjustment
described in clause (ii) of the succeeding sentence had been made with
respect to such Replaced Bank) of any Mandatory Borrowing to the extent such
amount was not theretofore funded by such Replaced Bank, and (ii) all
obligations of the Borrower owing to the Replaced Bank (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in
full to such Replaced Bank concurrently with such replacement. Upon the
execution of the respective Assignment and Assumption Agreements, the payment
of amounts referred to in clauses (i) and (ii) above and, if so requested by
the Replacement Bank, delivery to the Replacement Bank of the appropriate
Note or Notes executed by the Borrower, (A) the Replacement Bank shall become
a Bank hereunder and the Replaced Bank shall cease to constitute a Bank
hereunder, except with respect to indemnification provisions applicable to
the Replaced Bank under this Agreement, which shall survive as to such
Replaced Bank and (B) in the case of a replacement of a Defaulting Bank, the
Adjusted Percentage of the Banks shall be automatically adjusted at such time
to give effect to such replacement (and to give effect to the replacement of
a Defaulting Bank with one or more Non-Defaulting Banks).
SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions set forth herein, the Borrower may request a Letter of Credit
Issuer at any time and from time to time on or after the Restatement
Effective Date and prior to the Maturity Date to issue a letter of credit for
the account of the Borrower and in support of (x) trade obligations of the
Borrower and/or its Subsidiaries, which shall be payable at sight (each such
letter of credit, a "Trade Letter of Credit" and, collectively, the "Trade
Letters of Credit") and/or (y) on a standby basis, L/C Supportable
Obligations (each such letter of credit, a "Standby Letter of Credit" and,
collectively, the "Standby Letters of Credit," and together with the Trade
Letters of Credit, the "Letters of Credit"), and subject to and upon the
terms and conditions set forth herein such Letter of Credit Issuer agrees to
issue from time to time, irrevocable Letters of Credit in such form as may be
approved by such Letter of Credit Issuer and the Administrative Agent.
Notwithstanding the foregoing, no Letter of Credit Issuer shall be under any
obligation to issue any Letter of Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Letter
of Credit Issuer from issuing such Letter of Credit or any requirement of
law applicable to such Letter of Credit Issuer or any request or
directive (whether or not having the force of law) from any governmental
authority with jurisdiction over such Letter of Credit Issuer shall
prohibit, or request that such Letter of Credit Issuer refrain from, the
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issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon such Letter of Credit Issuer with respect
to such Letter of Credit any restriction or reserve or capital
requirement (for which such Letter of Credit Issuer is not otherwise
compensated) not in effect on the date hereof, or any unreimbursed loss,
cost or expense which was not applicable, in effect or known to such
Letter of Credit Issuer as of the date hereof and which such Letter of
Credit Issuer in good ▇▇▇▇▇ ▇▇▇▇▇ material to it; or
(ii) such Letter of Credit Issuer shall have received notice from
the Borrower or the Required Banks prior to the issuance of such Letter
of Credit of the type described in clause (iv) of Section 2.01(b).
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued, the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of,
and prior to the issuance of, the respective Letter of Credit) at such time,
would exceed either (x) $10,000,000 or (y) when added to the aggregate
principal amount of all Revolving Loans made by Non-Defaulting Banks and
Swingline Loans then outstanding, the Adjusted Total Commitment at such time;
(ii) (x) each Standby Letter of Credit shall have an expiry date occurring
not later than one year after such Letter of Credit's date of issuance
(although any Letter of Credit may be extendable (whether automatically or
otherwise) for successive periods of up to 12 months, but not beyond the
Business Day next preceding the Maturity Date), on terms acceptable to the
respective Letter of Credit Issuer and in no event shall any Standby Letter
of Credit have an expiry date occurring later than the Business Day next
preceding the Maturity Date and (y) each Trade Letter of Credit shall have an
expiry date occurring no later than the earlier of (a) 180 days after the
issuance thereof or (b) 30 days prior to the Maturity Date; (iii) each Letter
of Credit shall be denominated in U.S. dollars and will be issued on a sight
basis only; and (iv) no Letter of Credit Issuer shall issue any Letter of
Credit after it has received written notice from the Borrower that a Default
or an Event of Default exists until such time as the Letter of Credit Issuers
shall have received written notice of (x) recession of such notice from the
party or parties originally delivering the same or (y) waiver of such Default
or Event of Default by the Required Banks. On the Restatement Effective
Date, all letters of credit issued and outstanding under the Original
Agreement, as listed in Annex XI, shall be deemed issued hereunder and shall
automatically become "Letters of Credit" under this Agreement without the
delivery of a Letter of Credit Request.
2.02 Minimum Stated Amount. The initial Stated Amount of each
Letter of Credit shall be not less than $20,000 or such lesser amount
acceptable to the respective Letter of Credit Issuer.
2.03 Letter of Credit Requests; Notices of Issuance; Reports. (a)
Whenever the Borrower desires that a Letter of Credit be issued, the Borrower
shall give the
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Administrative Agent and the respective Letter of Credit Issuer a written
request (including by way of telecopier) in the form of Exhibit A-2 prior to
1:00 P.M. (New York time) at least three Business Days (or such shorter
period as may be acceptable to such Letter of Credit Issuer) prior to the
proposed date (which shall be a Business Day) of issuance (each a "Letter of
Credit Request"), which Letter of Credit Request shall include any other
documents that such Letter of Credit Issuer customarily requires in
connection therewith.
(b) The respective Letter of Credit Issuer shall, promptly after
each issuance of a Standby Letter of Credit by it, give the Administrative
Agent, each Bank and the Borrower written notice of the issuance of such
Standby Letter of Credit, accompanied by a copy of the Standby Letter of
Credit or Standby Letters of Credit issued by it.
(c) Each Letter of Credit Issuer (other than BTCo) shall, by 11:00
A.M. on the first Business Day of each week, forward to the Administrative
Agent (by way of telecopier) a report listing the aggregate daily outstanding
balances for the previous week of the Trade Letters of Credit issued by such
Letter of Credit Issuer. Each month the Administrative Agent shall forward
to each Bank a report listing the daily aggregate amount available to be
drawn under all Trade Letters of Credit outstanding during the previous month.
2.04 Agreement to Repay Letter of Credit Drawings. (a) The
Borrower hereby agrees to reimburse the respective Letter of Credit Issuer,
by making payment to the Administrative Agent at the Payment Office (which
funds the Administrative Agent shall promptly forward to such Letter of
Credit Issuer), for any payment or disbursement made by such Letter of Credit
Issuer under any Letter of Credit issued by it (each such amount so paid or
disbursed until reimbursed, an "Unpaid Drawing") immediately after, and in
any event on the date on which, the Borrower is notified by such Letter of
Credit Issuer of such payment or disbursement with interest on the amount so
paid or disbursed by such Letter of Credit Issuer, to the extent not
reimbursed prior to 1:00 P.M. (New York time) on the date of such payment or
disbursement, from and including the date paid or disbursed to but not
including the date such Letter of Credit Issuer is reimbursed therefor at a
rate per annum which shall be the Applicable Base Rate Margin then in effect
for Revolving Loans plus the Base Rate as in effect from time to time (plus
an additional 2% per annum if not reimbursed by the third Business Day after
the date of such notice of payment or disbursement), such interest also to be
payable on demand. Each Letter of Credit Issuer shall provide the Borrower
prompt notice of any payment or disbursement made by it under any Letter of
Credit issued by it, although the failure of, or delay in, giving any such
notice shall not release or diminish the obligations of the Borrower under
this Section 2.04 (a) or under any other Section of this Agreement.
(b) The Borrower's obligation under this Section 2.04 to reimburse
the respective Letter of Credit Issuer with respect to Unpaid Drawings
(including, in each case,
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interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against such Letter of Credit
Issuer, the Administrative Agent or any Bank, including, without limitation,
any defense based upon the failure of any payment under a Letter of Credit to
conform to the terms of the Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of such payment; provided,
however, that the Borrower shall not be obligated to reimburse any Letter of
Credit Issuer for any wrongful payment made by such Letter of Credit Issuer
under a Letter of Credit as a result of acts or omissions constituting
willful misconduct or gross negligence on the part of such Letter of Credit
Issuer as determined by a court of competent jurisdiction.
2.05 Letter of Credit Participations. (a) Immediately upon the
issuance by any Letter of Credit Issuer of a Letter of Credit, such Letter of
Credit Issuer shall be deemed to have sold and transferred to each other
Bank, and each such Bank (each a "Participant") shall be deemed irrevocably
and unconditionally to have purchased and received from such Letter of Credit
Issuer, without recourse or warranty, an undivided interest and
participation, to the extent of such Bank's Adjusted Percentage, in such
Letter of Credit, each substitute letter of credit, each payment made
thereunder and the obligations of the Borrower under this Agreement with
respect thereto (although the Letter of Credit Fee shall be payable directly
to the Administrative Agent for the account of the Banks as provided in
Section 3.01(b) and the Participants shall have no right to receive any
portion of any Facing Fees) and any security therefor or guaranty pertaining
thereto. Upon any change in the Commitments or Adjusted Percentages of the
Banks pursuant to Section 12.04(b) or upon a Bank Default, it is hereby
agreed that, with respect to all outstanding Letters of Credit and Unpaid
Drawings, there shall be an automatic adjustment to the participations
pursuant to this Section 2.05 to reflect the new Adjusted Percentages of the
assigning and assignee Bank or of all Banks, as the case may be.
(b) In determining whether to pay under any Letter of Credit, the
respective Letter of Credit Issuer shall not have any obligation relative to
the Participants other than to determine that any documents required to be
delivered under such Letter of Credit have been delivered and that they
substantially comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by any Letter of Credit
Issuer under or in connection with any Letter of Credit if taken or omitted
in the absence of gross negligence or willful misconduct, shall not create
for such Letter of Credit Issuer any resulting liability.
(c) In the event that the respective Letter of Credit Issuer makes
any payment under any Letter of Credit and the Borrower shall not have
reimbursed such amount in full to such Letter of Credit Issuer pursuant to
Section 2.04(a), such Letter of Credit Issuer shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each
Participant of such failure, and each Participant shall promptly and
unconditionally pay
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to the Administrative Agent for the account of such Letter of Credit Issuer,
the amount of such Participant's Adjusted Percentage of such payment in U.S.
dollars and in same day funds; provided, however, that no Participant shall
be obligated to pay to the Administrative Agent its Adjusted Percentage of
such unreimbursed amount for any wrongful payment made by such Letter of
Credit Issuer under a Letter of Credit as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of such
Letter of Credit Issuer. If the Administrative Agent so notifies any
Participant required to fund an Unpaid Drawing under a Letter of Credit prior
to 11:00 A.M. (New York time) on any Business Day, such Participant shall
make available to the Administrative Agent for the account of the respective
Letter of Credit Issuer (which funds the Administrative Agent shall promptly
forward to the Letter of Credit Issuer) such Participant's Adjusted
Percentage of the amount of such payment on such Business Day in same day
funds. If and to the extent such Participant shall not have so made its
Adjusted Percentage of the amount of such Unpaid Drawing available to the
Administrative Agent for the account of such Letter of Credit Issuer, such
Participant agrees to pay to the Administrative Agent for the account of such
Letter of Credit Issuer, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is
paid to the Administrative Agent for the account of such Letter of Credit
Issuer at the overnight Federal Funds Effective Rate. The failure of any
Participant to make available to the Administrative Agent for the account of
the respective Letter of Credit Issuer its Adjusted Percentage of any Unpaid
Drawing under any Letter of Credit shall not relieve any other Participant of
its obligation hereunder to make available to the Administrative Agent for
the account of the respective Letter of Credit Issuer its Adjusted Percentage
of any payment under any Letter of Credit on the date required, as specified
above, but no Participant shall be responsible for the failure of any other
Participant to make available to the Administrative Agent for the account of
such Letter of Credit Issuer such other Participant's Adjusted Percentage of
any such payment.
(d) Whenever the respective Letter of Credit Issuer receives a
payment of a reimbursement obligation as to which the Administrative Agent
has received for the account of such Letter of Credit Issuer any payments
from the Participants pursuant to clause (c) above, such Letter of Credit
Issuer shall pay to the Administrative Agent and the Administrative Agent
shall promptly pay to each Participant which has paid its Adjusted Percentage
thereof, in U.S. dollars and in same day funds, an amount equal to such
Participant's Adjusted Percentage of the principal amount thereof and
interest thereon accruing at the overnight Federal Funds Effective Rate after
the purchase of the respective participations.
(e) The obligations of the Participants to make payments to the
Administrative Agent for the account of the respective Letter of Credit
Issuer with respect to Letters of Credit shall be irrevocable and not subject
to counterclaim, set-off or other defense or any other qualification or
exception whatsoever (provided that no Participant shall be required to make
payments resulting from the Letter of Credit Issuer's gross negligence
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or willful misconduct, as determined by a court of competent jurisdiction and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
which the Borrower or any of it Subsidiaries may have at any time against
a beneficiary named in a Letter of Credit, any transferee of any Letter
of Credit (or any Person for whom any such transferee may be acting), the
Administrative Agent, the respective Letter of Credit Issuer, any Bank or
other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower
or any of its Subsidiaries and the beneficiary named in any such Letter
of Credit);
(iii) any draft, certificate or other document presented under the
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;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
(f) To the extent the respective Letter of Credit Issuer is not
indemnified for same by the Borrower, the Participants will reimburse and
indemnify the Letter of Credit Issuer, in proportion to their respective
Adjusted Percentages, for and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by such Letter of Credit Issuer in performing its
respective duties in any way relating to or arising out of its issuance of
Letters of Credit; provided that no Participant shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
such Letter of Credit Issuer's gross negligence or willful misconduct, as
determined by a court of competent jurisdiction.
2.06 Increased Costs. If at any time after the Restatement
Effective Date, the adoption or effectiveness of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof,
or compliance by the respective Letter of Credit Issuer or any Bank with any
request or
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directive (whether or not having the force of law) by any such authority,
central bank or comparable agency shall either (i) impose, modify or make
applicable any reserve, deposit, capital adequacy or similar requirement
against Letters of Credit issued by such Letter of Credit Issuer or such
Bank's participation therein, or (ii) shall impose on such Letter of Credit
Issuer or any Bank any other conditions affecting this Agreement, any Letter
of Credit or such Bank's participation therein; and the result of any of the
foregoing is to increase the cost to such Letter of Credit Issuer or such
Bank of issuing, maintaining or participating in any Letter of Credit, or to
reduce the amount of any sum received or receivable by such Letter of Credit
Issuer or such Bank hereunder (other than any increased cost or reduction in
the amount received or receivable resulting from the imposition of or a
change in the rate of taxes or similar charges), then, upon demand to the
Borrower by such Letter of Credit Issuer or such Bank (a copy of which notice
shall be sent by such Letter of Credit Issuer or such Bank to the
Administrative Agent), the Borrower shall pay to such Letter of Credit Issuer
or such Bank such additional amount or amounts as will compensate such Letter
of Credit Issuer or such Bank for such increased cost or reduction. A
certificate submitted to the Borrower by the respective Letter of Credit
Issuer or such Bank, as the case may be (a copy of which certificate shall be
sent by such Letter of Credit Issuer or such Bank to the Administrative
Agent), setting forth the basis for the determination of such additional
amount or amounts necessary to compensate such Letter of Credit Issuer or
such Bank as aforesaid shall be conclusive and binding on the Borrower absent
manifest error, although the failure to deliver any such certificate shall
not release or diminish any of the Borrower's obligations to pay additional
amounts pursuant to this Section 2.06 upon the subsequent receipt thereof.
SECTION 3. Fees; Commitments.
3.01 Fees. (a) The Borrower agrees to pay to the Administrative
Agent a commitment commission ("Commitment Commission") for the account of
each Non-Defaulting Bank Commitment for the period from and including the
Restatement Effective Date to, but not including, the date the Total
Revolving Commitment has been terminated, computed at a rate for each day
equal to the Applicable Commitment Commission Percentage on the daily average
of such Bank's Unutilized Commitment. Such Commitment Commission shall be
due and payable in arrears on each August 31, November 30, February 28, and
May 31 of each year and on the date upon which the Total Commitment is
terminated.
(b) The Borrower agrees to pay to the Administrative Agent for the
account of each Non-Defaulting Bank pro rata on the basis of its Adjusted
Percentage, a fee in respect of each Letter of Credit (the "Letter of Credit
Fee") in an amount equal to the Applicable Eurodollar Margin then in effect
for Revolving Loans on the daily Stated Amount of such Letter of Credit.
Accrued Letter of Credit Fees shall be due and payable quarterly in arrears
on each August 31, November 30, February 28 and May 31 of each year and on
the date upon which the Total Commitment is terminated.
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(c) The Borrower agrees to pay to the Administrative Agent for the
account of each Letter of Credit Issuer a fee in respect of each Letter of
Credit (the "Facing Fee") issued by such Letter of Credit Issuer computed at
the rate equal to (A) in the case of Trade Letters of Credit, 1/4 of 1% per
annum on the daily Stated Amount of such Trade Letter of Credit, provided,
that in any event, the minimum amount of the Facing Fee payable for each
Trade Letter of Credit shall be $100 and (B) in the case of Standby Letters
of Credit, 1/4 of 1% per annum on the daily Stated Amount of such Standby
Letter of Credit, provided, that in any event, the minimum amount of the
Facing Fee payable in any 12-month period for each Standby Letter of Credit
shall be $500 (it being agreed that, on each anniversary of the issuance of
any Standby Letter of Credit or upon any earlier termination or expiration of
a Standby Letter of Credit, if $500 exceeds the amount of Facing Fees
theretofore paid or then accrued with respect to such Standby Letter of
Credit, in either case after the date of the issuance thereof, or if later,
after the date of the last anniversary of the issuance thereof (but excluding
any amounts paid after such anniversary with respect to periods ending on or
prior to such anniversary, including, without limitation, as a result of the
operation of this parenthetical), the amount of such excess shall be payable
on the next date upon which accrued Facing Fees are otherwise payable with
respect to Standby Letters of Credit). Accrued Facing Fees shall be due and
payable quarterly in arrears on each August 31, November 30, February 28 and
May 31 of each year and upon the first day on or after the termination of the
Total Commitment upon which no Letters of Credit remain outstanding.
(d) The Borrower agrees to pay directly to the respective Letter of
Credit Issuer upon each issuance of, payment under, and/or amendment of, a
Letter of Credit issued by such Letter of Credit such amount as shall at the
time of such issuance, payment or amendment be the administrative charge and
expenses which such Letter of Credit Issuer is customarily charging for
issuances of, payments under or amendments of, letters of credit issued by it.
(e) The Borrower agrees to pay to the Administrative Agent such
other fees as agreed to between the Borrower and the Administrative Agent,
when and as due.
(f) All computations of Fees shall be made in accordance with
Section 12.07(b).
3.02 Voluntary Reduction of Commitments. Upon at least three
Business Days' prior written notice (or telephonic notice confirmed in
writing) to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks), the
Borrower shall have the right, without premium or penalty, to terminate or
partially reduce the Total Unutilized Commitment, provided that (x) any such
termination shall apply to proportionately and permanently reduce the
Commitment of each Bank, (y) no such reduction shall reduce any
Non-Defaulting Bank's Commitment to an amount that is less than the sum of
(I) the outstanding Revolving Loans of such Bank plus
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(II) such Bank's Adjusted Percentage of outstanding Swingline Loans and of
Letter of Credit Outstandings and (z) any partial reduction pursuant to this
Section 3.02 shall be in the amount of at least $1,000,000.
3.03 Mandatory Adjustments of Commitments, etc. (a) The Total
Commitment (and the Commitment of each Bank) shall terminate on October 20,
1997 unless the Restatement Effective Date has occurred on or before such
date.
(b) The Total Commitment (and the Commitment of each Bank) shall
terminate on the earlier of (x) the Maturity Date and (y) unless the Required
Banks otherwise agree in writing, the date on which any Change of Control
occurs.
(c) Within 5 Business Days following the date of receipt thereof by
the Borrower and/or any of its Subsidiaries of Cash Proceeds from any Asset
Sale, an amount equal to 100% of the Net Cash Proceeds from such Asset Sale
shall be applied as a mandatory reduction of the Total Commitment, provided
that up to an aggregate of $4,000,000 of Net Cash Proceeds from Asset Sales
shall not be required to be used to so reduce the Total Commitment in any
fiscal year of the Borrower to the extent the Borrower elects, as hereinafter
provided, to cause such Net Cash Proceeds to be reinvested in Reinvestment
Assets (a "Reinvestment Election"). The Borrower may exercise its
Reinvestment Election (within the parameters specified in the preceding
sentence) with respect to an Asset Sale if (x) no Default or Event of Default
exists and (y) the Borrower delivers a Reinvestment Notice to the
Administrative Agent within 3 Business Days following the date of the
consummation of the respective Asset Sale, with such Reinvestment Election
being effective with respect to an amount equal to the Net Cash Proceeds of
such Asset Sale equal to the Anticipated Reinvestment Amount specified in
such Reinvestment Notice.
(d) On the date of the receipt thereof by the Borrower and/or any
of its Subsidiaries, an amount equal to 100% of the proceeds (net of
underwriting discounts, commissions and taxes and other reasonable costs
associated therewith) of the incurrence of Indebtedness by the Borrower
and/or any of its Subsidiaries (other than Indebtedness permitted by Section
8.04 as in effect on the Restatement Effective Date) shall be applied as a
mandatory reduction of the Total Commitment.
(e) Within 30 days following each date on which the Borrower or any
of its Subsidiaries receives any proceeds from any Recovery Event, an amount
equal to 100% of the cash proceeds of such Recovery Event (net of reasonable
costs, expenses and taxes incurred in connection with such Recovery Event)
shall be applied as a mandatory reduction of the Total Commitment, provided
that so long as no Default or Event of Default then exists and such proceeds
do not exceed $5,000,000 in any fiscal year, such proceeds shall not be
required to be so applied to reduce the Total Commitment on such date to the
extent that the Borrower has delivered a certificate to the Administrative
Agent on or prior to such date
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stating that such proceeds shall be used or committed to be used to replace
or restore any properties or assets in respect of which such proceeds were
paid or otherwise acquire productive assets usable in the business of the
Borrower and its Subsidiaries within a period specified in such certificate
not to exceed 180 days after the date of receipt of such proceeds with
respect to such Recovery Event (which certificate shall set forth the
estimates of the proceeds to be so expended); and provided further, that if
all or any portion of such proceeds not required to be applied to reduce the
Total Commitment pursuant to the preceding proviso are not so used within the
period specified in the relevant certificate furnished pursuant to the
immediately preceding proviso, such remaining portion not used shall be
applied on the last day of such specified period as a mandatory reduction of
the Total Commitment.
(f) On the Reinvestment Prepayment Date with respect to a
Reinvestment Election, an amount equal to the Reinvestment Prepayment Amount,
if any, for such Reinvestment Election shall be applied as a mandatory
reduction of the Total Commitment.
(g) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, (i) all then outstanding Swingline Loans shall be repaid in
full on the Swingline Expiry Date, and (ii) all then outstanding Revolving
Loans shall be repaid in full on the Maturity Date.
(h) Each reduction to the Total Commitment pursuant to this Section
3.03 shall be applied proportionately to reduce the Commitment, as the case
may be, of each Bank.
SECTION 4. Payments.
4.01 Voluntary Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part, without premium or penalty, from time to
time on the following terms and conditions: (i) the Borrower shall give the
Administrative Agent at the Payment Office written notice (or telephonic
notice promptly confirmed in writing) of its intent to prepay the Loans,
whether such Loans are Revolving Loans or Swingline Loans, the amount of such
prepayment and (in the case of Eurodollar Loans) the specific Borrowing or
Borrowings pursuant to which made, which notice shall be given by the
Borrower at least one Business Day prior to the date of such prepayment with
respect to Base Rate Loans (other than Swingline Loans, with respect to which
notice may be given by the Borrower on the day of prepayment) and two
Business Days prior to the date of such prepayment with respect to Eurodollar
Loans, which notice shall promptly be transmitted by the Administrative Agent
to each of the Banks; (ii) (x) each partial prepayment of any Borrowing
(other than a Borrowing of Swingline Loans) shall be in an aggregate
principal amount of at least $500,000 and (y) each partial prepayment of any
Borrowing of Swingline Loans shall be in an aggregate principal amount of at
least $50,000, provided that no partial prepayment of Eurodollar Loans made
pursuant to a Borrowing shall reduce the aggregate principal
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amount of the Loans outstanding pursuant to such Borrowing to an amount less
than the Minimum Borrowing Amount applicable thereto; (iii) at the time of
any prepayment of Eurodollar Loans pursuant to this Section 4.01 on any date
other than the last day of the Interest Period applicable thereto, the
Borrower shall pay the amounts required pursuant to Section 1.11; and (iv)
each prepayment in respect of any Loans made pursuant to a Borrowing shall be
applied pro rata among such Loans, provided that at the Borrower's election
in connection with any prepayment of Revolving Loans pursuant to this Section
4.01, such prepayment shall not be applied to any Revolving Loans of a
Defaulting Bank.
4.02 Mandatory Prepayments.
(A) Requirements:
(a) (i) If on any date the sum of the aggregate outstanding
principal amount of Revolving Loans made by Non-Defaulting Banks, Swingline
Loans and the Letter of Credit Outstandings exceeds the Adjusted Total
Commitment as then in effect, the Borrower shall repay on such date the
principal of Swingline Loans, and if no Swingline Loans are or remain
outstanding, Revolving Loans of Non-Defaulting Banks, in an aggregate amount
equal to such excess. If, after giving effect to the repayment of all
outstanding Swingline Loans and Revolving Loans of Non-Defaulting Banks, the
aggregate amount of Letter of Credit Outstandings exceeds the Adjusted Total
Commitment, the Borrower shall pay to the Administrative Agent on such date
an amount in cash and/or Cash Equivalents equal to such excess (up to the
aggregate amount of the Letter of Credit Outstandings at such time) and the
Administrative Agent shall hold such payment as security for the obligations
of the Borrower hereunder pursuant to a cash collateral agreement to be
entered into in form and substance satisfactory to the Administrative Agent
(which shall permit certain investments in Cash Equivalents satisfactory to
the Administrative Agent, until the proceeds are applied to the secured
obligations).
(ii) If on any date the aggregate outstanding principal amount of
the Revolving Loans made by a Defaulting Bank exceeds the Commitment of such
Defaulting Bank, the Borrower shall repay on such date principal of Revolving
Loans of such Defaulting Bank in an amount equal to such excess.
(b) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, (i) all then outstanding Swingline Loans shall be repaid in
full on the Swingline Expiry Date, and (ii) then outstanding Revolving Loans
shall be repaid in full on the Maturity Date.
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(B) Application:
With respect to each prepayment of Loans required by Section 4.02,
the Borrower may designate the Types of Loans which are to be prepaid and the
specific Borrowing or Borrowings pursuant to which made, provided that (i)
Eurodollar Loans may so be designated for prepayment pursuant to this Section
4.02 only on the last day of an Interest Period applicable thereto unless all
Eurodollar Loans with Interest Periods ending on such date of required
prepayment and all Base Rate Loans have been paid in full; (ii) if any
prepayment of Eurodollar Loans made pursuant to a single Borrowing shall
reduce the outstanding Loans made pursuant to such Borrowing to an amount
less than the Minimum Borrowing Amount for such Borrowing, such Borrowing
shall be immediately converted into Base Rate Loans; (iii) each prepayment of
any Revolving Loans made by Non-Defaulting Banks pursuant to a Borrowing
shall be applied pro rata among such Revolving Loans; and (iv) each
prepayment of any Revolving Loans made by Defaulting Banks pursuant to a
Borrowing shall be applied pro rata among such Revolving Loans. In the
absence of a designation by the Borrower as described in the preceding
sentence, the Administrative Agent shall, subject to the above, make such
designation in its sole discretion with a view, but no obligation, to
minimize breakage costs owing under Section 1.11. Notwithstanding the
foregoing provisions of this Section 4.02(B), if at any time a mandatory or
voluntary prepayment of Loans pursuant to Sections 4.01 or 4.02(A) above
would result, after giving effect to the procedures set forth above, in the
Borrower incurring breakage costs under Section 1.11 as a result of
Eurodollar Loans being prepaid other than on the last day of an Interest
Period applicable thereto (the "Affected Eurodollar Loans"), then the
Borrower may in its sole discretion initially deposit a portion (up to 100%)
of the amounts that otherwise would have been paid in respect of the Affected
Eurodollar Loans with the Administrative Agent (which deposit must be equal
in amount to the amount of the Affected Eurodollar Loans not immediately
prepaid) to be held as security for the obligations of the Borrower hereunder
pursuant to a cash collateral arrangement satisfactory to the Administrative
Agent and shall provide for investments satisfactory to the Administrative
Agent, with such cash collateral to be directly applied upon the first
occurrence (or occurrences) thereafter of the last day of an Interest Period
applicable to the relevant Loans that are Eurodollar Loans (or such earlier
date or dates as shall be requested by the Borrower), to repay an aggregate
principal amount of such Loans equal to the Affected Eurodollar Loans not
initially prepaid pursuant to this sentence. Notwithstanding anything to the
contrary contained in the immediately preceding sentence, all amounts
deposited as cash collateral pursuant to the immediately preceding sentence
shall be held for the sole benefit of the Banks whose Loans would otherwise
have been immediately prepaid with the amounts deposited and upon the taking
of any action by the Administrative Agent or the Banks pursuant to the
remedial provisions of Section 9, any amounts held as cash collateral
pursuant to this Section 4.02(B) shall, subject to the requirements of
applicable law, be immediately applied to repay Loans.
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4.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the ratable (based on their respective pro rata shares)
account of the Banks entitled thereto (which funds the Administrative Agent
shall promptly forward to such Banks), not later than 1:00 P.M. (New York time)
on the date when due and shall be made in immediately available funds and in
lawful money of the United States of America at the Payment Office, it being
understood that written notice by the Borrower to the Administrative Agent to
make a payment from the funds in the Borrower's account at the Payment Office
shall constitute the making of such payment to the extent of such funds held in
such account. Any payments under this Agreement which are made later than 1:00
P.M. (New York time) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.
4.04 Net Payments. (a) All payments made by the Borrower hereunder
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 4.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or net profits of a Bank pursuant to the laws
of the jurisdiction in which it is organized or managed and controlled or the
jurisdiction in which the principal office or applicable lending office of such
Bank is located or any subdivision thereof or therein) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied or imposed,
the Borrower agrees to pay the full amount of such Taxes, and such additional
amounts, if any, as may be necessary so that every payment of all amounts due
under this Agreement or under any Note, after withholding or deduction for or on
account of any Taxes, will not be less than the amount provided for herein or in
such Note. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrower agrees to reimburse each Bank, upon the written
request of such Bank, for taxes imposed on or measured by the net income or net
profits of such Bank pursuant to the laws of the jurisdiction in which the
principal office or applicable lending office of such Bank is located or under
the laws of any political subdivision or taxing authority of any such
jurisdiction in which the principal office or applicable lending office of such
Bank is located and for any withholding of taxes as such Bank shall determine
are payable by, or withheld from, such Bank in respect of such amounts so paid
to or on behalf of such Bank pursuant to the preceding sentence and in respect
of any amounts paid to or on behalf of such Bank pursuant to this sentence. The
-24-
Borrower will furnish to the Administrative Agent within 45 days after the date
the payment of any Taxes is due pursuant to applicable law certified copies of
tax receipts evidencing such payment by the Borrower. The Borrower agrees to
indemnify and hold harmless each Bank, and reimburse such Bank upon its written
request, for the amount of any Taxes so levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Effective Date, or in the case
of a Bank that is an assignee or transferee of an interest under this Agreement
pursuant to Section 1.13 or 12.04 (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit C (any such certificate, a "Section
4.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Bank's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Bank agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
deliver to the Borrower and the Administrative Agent two new accurate and
complete original signed copies of Internal Revenue Service Form 4224 or 1001,
or Form W-8 and a Section 4.04(b)(ii) Certificate, as the case may be, and such
other forms as may be required in order to confirm or establish the entitlement
of such Bank to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement and any Note, or
it shall immediately notify the Borrower and the Administrative Agent of its
inability to deliver any such Form or Certificate. Notwithstanding anything to
the contrary contained in Section 4.04(a), but subject to Section 12.04(b) and
the immediately succeeding sentence, (x) the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or similar
taxes imposed by the United States (or any political subdivision or taxing
authority thereof or therein) from interest, fees or other amounts payable
hereunder for the account of any Bank which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income
tax purposes to the extent that such Bank has not provided to the Borrower U.S.
Internal Revenue Service Forms that establish a complete exemption from such
deduction or withholding and (y) the Borrower shall not be obligated pursuant to
Section 4.04(a) to gross-up payments to be made to a Bank in respect of income
or similar taxes imposed by the United States if (I) such Bank is not a U.S.
Person (defined as provided above) and has not provided to the Borrower the
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Internal Revenue Service Forms required to be provided to the Borrower pursuant
to this Section 4.04(b) or (II) in the case of a payment, other than interest,
to a Bank described in clause (ii) above, to the extent that such Forms do not
establish a complete exemption from withholding of such taxes. Notwithstanding
anything to the contrary contained in the preceding sentence or elsewhere in
this Section 4.04 and except as set forth in Section 12.04(b), the Borrower
agrees to pay additional amounts and to indemnify each Bank in the manner set
forth in Section 4.04(a) (without regard to the identity of the jurisdiction
requiring the deduction or withholding) in respect of any amounts deducted or
withheld by it as described in the immediately preceding sentence as a result of
any changes after the Effective Date in any applicable law, treaty, governmental
rule, regulation, guideline or order, or in the interpretation thereof, relating
to the deducting or withholding of such Taxes, provided such Bank shall provide
to the Borrower and the Administrative Agent, upon the request of the Borrower,
any reasonably available applicable IRS tax form (reasonably similar in its
simplicity and lack of detail to IRS Form 1001 or Form 4224 or a Section
4.04(b)(ii) Certificate) necessary or appropriate for the exemption or reduction
in the rate of such U.S. federal withholding tax.
(c) If the Borrower pays any additional amount under this Section 4.04
to a Bank and such Bank determines in its sole discretion that it has actually
received or realized in connection therewith any refund or any reduction of, or
credit against, its tax liabilities in or with respect to the taxable year in
which the additional amount is paid, such Bank shall pay to the Borrower an
amount that the Bank shall, in its sole discretion, determine is equal to the
net benefit, after tax, which was obtained by the Bank in such year as a
consequence of such refund, reduction or credit. Whether or not a Bank claims
any refund or credit or files any amended tax return shall be in the sole
discretion of such Bank. Nothing in this Section 4.04(c) shall require a Bank
to (i) disclose or detail the basis of its calculation of the amount of any tax
benefit or refund to the Borrower or any other party or (ii) disclose such
Bank's tax returns.
SECTION 5. Conditions Precedent. The occurrence of the Restatement
Effective Date, the obligation of the Banks to make each Loan hereunder, and the
obligation of the Letter of Credit Issuers to issue Letters of Credit hereunder,
is subject, at the time of each such Credit Event (except as otherwise
hereinafter indicated), to the satisfaction of each of the following conditions:
5.01 Execution of Agreement. On or prior to the Restatement
Effective Date, (i) this Agreement shall have become effective as provided in
Section 12.10 and (ii) there shall have been delivered to the Administrative
Agent for the account of each Bank the appropriate Revolving Note and, in the
case of BTCo, the Swingline Note, in each case, executed by the Borrower, and in
the amount, maturity and as otherwise provided herein.
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5.02 No Default; Representations and Warranties. At the time of each
Credit Event and also after giving effect thereto, (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Credit Documents in effect at such time shall
be true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, except to the extent that such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties will be true and correct in all material respects as of such earlier
date.
5.03 Officer's Certificate. On the Restatement Effective Date, the
Administrative Agent shall have received a certificate dated such date signed by
an appropriate officer of the Borrower stating that all of the applicable
conditions set forth in Sections 5.02, 5.08, 5.09, 5.10 and 5.11 exist or have
been satisfied as of such date.
5.04 Opinions of Counsel. On the Restatement Effective Date the
Administrative Agent shall have received an opinion, addressed to the
Administrative Agent and each of the Banks and dated the Restatement Effective
Date, from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, special counsel to the Borrower and each Subsidiary
Guarantor, which opinion shall cover the matters contained in Exhibit D.
5.05 Corporate Proceedings. (a) On the Restatement Effective Date,
the Administrative Agent shall have received from each Credit Party a
certificate, dated the Restatement Effective Date, signed by the President or
any Vice-President of each such Credit Party in the form of Exhibit E with
appropriate insertions and deletions, together with copies of the certificate of
incorporation, the by-laws or other organizational documents of each such Credit
Party and the resolutions of each such Credit Party referred to in such
certificate and all of the foregoing shall be satisfactory to the Administrative
Agent.
(b) On the Restatement Effective Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents shall be
satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received all information and copies of all
certificates, documents and papers, including good standing certificates and any
other records of corporate proceedings and governmental approvals, if any, which
the Administrative Agent may have reasonably requested in connection therewith,
such documents and papers, where appropriate, to be certified by proper
corporate or governmental authorities.
5.06 Plans; Existing Indebtedness Agreements; Shareholders'
Agreements; Management Agreements; Employment Agreements. On or prior to the
Restatement Effective Date, there shall have been delivered to the Banks, to the
extent not previously delivered to the Administrative Agent in connection with
-27-
the Original Credit Agreement, copies, certified as true and correct by an
appropriate officer of the Borrower of:
(i) all Plans (and for each Plan that is required to file an annual
report on Internal Revenue Service Form 5500-series, a copy of the most
recent such report (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information), and for each Plan
that is a "single-employer plan," as defined in Section 4001(a)(15) of
ERISA, the most recently prepared actuarial valuation therefor) and any
other "employee benefit plans," as defined in Section 3(3) of ERISA, and
any other material agreements, plans or arrangements, with or for the
benefit of current or former employees of the Borrower or any Subsidiary of
the Borrower or any ERISA Affiliate (provided that the foregoing shall
apply in the case of any multiemployer plan, as defined in Section
4001(a)(3) of ERISA, only to the extent that any document described therein
is in the possession of the Borrower or any Subsidiary of the Borrower or
any ERISA Affiliate or reasonably available thereto from the sponsor or
trustee of any such plan);
(ii) all agreements evidencing or relating to Existing Indebtedness
(the "Existing Indebtedness Agreements");
(iii) all agreements entered into by the Borrower or any of its
Subsidiaries (after giving effect to the Transaction) governing the terms
and relative rights of its capital stock, and any agreements entered into
by members or shareholders relating to any such entity with respect to
their capital stock (collectively, the "Shareholders' Agreements");
(iv) any material agreement with members of, or with respect to, the
management of the Borrower or any of its Subsidiaries (after giving effect
to the Transaction) (collectively, the "Management Agreements"); and
(v) any material employment agreements entered into by the Borrower
or any of its Subsidiaries (collectively the "Employment Agreements");
all of which Plans, Existing Indebtedness Agreements, Shareholders' Agreements,
Management Agreements and Employment Agreements shall be in form and substance
satisfactory to the Administrative Agent.
5.07 Adverse Change, etc. On the Restatement Effective Date, nothing
shall have occurred (and neither the Banks nor the Administrative Agent shall
have become aware of any facts or conditions not previously known) which the
Administrative Agent or the Required Banks shall determine (a) has, or is
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reasonably likely to have, a material adverse effect on the rights or remedies
of the Banks or the Administrative Agent, or on the ability of the Credit
Parties to perform their obligations to them, or (b) has, or is reasonably
likely to have, a Material Adverse Effect.
5.08 Litigation. On the Restatement Effective Date, there shall be
no actions, suits or proceedings pending or threatened (a) with respect to this
Agreement or any other Document or the transactions contemplated hereby or
thereby (including the Transaction) or (b) which the Administrative Agent or the
Required Banks shall determine could reasonably be expected to (i) have a
Material Adverse Effect or (ii) have a material adverse effect on the rights or
remedies of the Banks hereunder or under any other Credit Document or on the
ability of any Credit Party to perform its respective obligations to the Banks
hereunder or under any other Credit Document.
5.09 Approvals. On or prior to the Restatement Effective Date, all
material and necessary governmental and third party approvals in connection with
the transactions contemplated by the Documents and otherwise referred to herein
or therein shall have been obtained and remain in effect, and all applicable
waiting periods shall have expired without any action being taken by any
competent authority which restrains or prevents such transactions or imposes, in
the reasonable judgment of the Required Banks or the Administrative Agent,
materially adverse conditions upon the consummation of such transactions.
5.10 Senior Notes. (a) On or prior to the Restatement Effective
Date, the Borrower shall have received gross cash proceeds of at least
$85,000,000 from the issuance of the Senior Notes, and the Banks shall have
received true and correct copies of all Senior Notes Documents (certified as
such by an appropriate officer of the Borrower), and all of the terms and
conditions of such Senior Notes Documents (including, without limitation,
maturities, interest rates, sinking fund provisions, absence of security,
covenants, defaults and remedies), shall be in form and substance satisfactory
to the Administrative Agent and the Required Banks. All of the Senior Note
Documents shall have been duly executed and delivered by the parties thereto,
shall be in full force and effect and each of the conditions precedent to the
obligations of the parties to effectuate the issuance of the Senior Notes as set
forth in the Senior Note Documents shall have been satisfied, or waived, all to
the satisfaction of the Administrative Agent, and the Senior Notes shall have
been issued in accordance with the Senior Note Documents and all applicable
laws, rules and regulations.
5.11 Repayment of Loans Under the Original Credit Agreement. On the
Restatement Effective Date, (i) all Original Loans shall have been repaid in
full in cash, together with accrued but unpaid interest thereon, and all letters
of credit issued thereunder shall have been assumed hereunder as Letters of
Credit pursuant to Section 2.01(b), (ii) there shall have been paid in cash in
full all accrued but unpaid Fees under, and as defined in, the Original Credit
Agreement (including, without limitation, commitment fees, letter of credit fees
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and facing fees) due prior to but excluding the Restatement Effective Date and
all other amounts, costs and expenses (including, without limitation, breakage
costs, if any, with respect to eurodollar rate loans due thereunder) then owing
to any of the Original Banks and/or the Administrative Agent, as agent under the
Original Credit Agreement, in each case to the satisfaction of the
Administrative Agent or the Original Banks, as the case may be, regardless of
whether or not such amounts would otherwise be due and payable at such time
pursuant to the terms of the Original Credit Agreement and (iii) all outstanding
Notes (as defined in the Original Credit Agreement) issued by the Borrower to
the Original Banks under the Original Credit Agreement shall be deemed
cancelled.
5.12 Security Documents Acknowledgments; Pledge Agreement; Security
Agreement; Mortgages. (a) On the Restatement Effective Date, the Borrower
and each Subsidiary Guarantor shall have duly authorized, executed and
delivered an assumption and acknowledgment in the form of Exhibit F and shall
have duly authorized, executed and delivered such assumption and
acknowledgement as shall be advised by local counsel to the Administrative
Agent in respect of (x) the Original Security Documents and (y) any pledge of
the stock of Subsidiary Guarantor (such assumptions and acknowledgements,
collectively, the "Security Documents Acknowledgment") with respect to the
Pledge Agreement, the Security Agreement, and the Mortgage, each of which
assumption and acknowledgement, among other things, (i) acknowledges and
agrees that the "Obligations" (as defined in each of such documents) or any
similar term include all of the Obligations under this Agreement after giving
effect to the Restatement Effective Date and (ii) acknowledges and agrees
that, after giving effect to the Restatement Effective Date, each of the
Pledge Agreement, the Security Agreement, and the Mortgage, shall remain in
full force and effect in accordance with the respective terms thereof, and
each of the Borrower and each Subsidiary Guarantor shall have taken all
actions reasonably requested by the Administrative Agent (including, without
limitation, the obtaining of UCC-11's or equivalent reports and the filing of
UCC-1's or UCC-3's) in connection with the granting of Liens pursuant to the
Pledge Agreement, the Security Agreement, and the Mortgage,.
(b) On the Restatement Effective Date, the Collateral Agent, as
pledgee shall have in its possession all of the Pledged Securities referred to
in the Pledge Agreement, endorsed in blank in the case of promissory notes or
accompanied by executed and undated stock powers in the case of capital stock,
and the Pledge Agreement shall be in full force and effect.
(c) On the Restatement Effective Date, (i) no filings, recordings,
registrations or other actions shall be necessary to maintain the perfection and
priority of the security interests granted pursuant to the Security Agreement in
the Collateral covered thereby, and (ii) the Banks shall have received evidence
that all other actions necessary or, in the opinion of the Collateral Agent,
desirable to perfect and protect the security interests purported to be created
by the Security Agreement have been taken.
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(d) On the Restatement Effective Date, the Banks shall have received
evidence that all other actions necessary or, in the opinion of the Collateral
Agent, desirable to perfect and protect the first priority Lien, subject only to
Permitted Encumbrances, on the respective Mortgaged Property in favor of the
Collateral Agent (or such other trustee as may be required or desired under
local law) for the benefit of the Banks have been taken, or arrangements
therefor have been made on a basis satisfactory to the Collateral Agent and
shall be in place.
5.13 Subsidiary Guaranty Acknowledgement. On the Restatement
Effective Date, each Subsidiary Guarantor shall have duly authorized, executed
and delivered an acknowledgment in the form of Exhibit G (the "Subsidiary
Guaranty Acknowledgment"), which acknowledgment, among other things, (i)
acknowledges this Agreement and the transactions contemplated hereby, (ii)
acknowledges and agrees that, the "Obligations" (as defined in the Subsidiary
Guaranty) include all of the Obligations under this Agreement after giving
effect to the Restatement Effective Date and any increase in the amounts owing
to the Banks or the Agent under this Agreement and (iii) acknowledges and agrees
that, after giving effect to the Restatement Effective Date, the Subsidiary
Guaranty shall remain in full force and effect in accordance with the terms
thereof.
5.14 Pro Forma Balance Sheets. On or prior the Restatement Effective
Date, there shall have been delivered to the Administrative Agent, an unaudited
pro forma consolidated balance sheet of Borrower and its Subsidiaries after
giving effect to the Transaction as of August 31, 1997 and prepared in
accordance with GAAP, together with a related funds flow statement, which pro
forma balance sheets and funds flow statement shall be reasonably satisfactory
in form and substance to the Administrative Agent and the Required Banks.
5.15 Projections. On or prior to the Restatement Effective Date, the
Banks shall have received the financial projections (the "Projections") of the
Borrower and its Subsidiaries for the five fiscal years ended after the
Restatement Effective Date, which Projections shall be in form and substance
satisfactory to the Administrative Agent and the Required Banks.
5.16 Existing Indebtedness; Preferred Stock. On the Restatement
Effective Date and after giving effect to the incurrence of the Senior Note and
the Loans incurred on the Restatement Effective Date, neither the Borrower nor
any of its Subsidiaries shall have any (i) Indebtedness outstanding except for
Indebtedness permitted under Section 8.04 and (ii) preferred stock outstanding
other than the Preferred Stock. On and as of the Restatement Effective Date,
all of the Existing Indebtedness shall remain outstanding after giving effect to
the Transaction and the other transactions contemplated hereby without any
default or events of default existing thereunder or arising as a result of the
Transaction as of August 31, 1997 and the other transactions contemplated hereby
(except to the extent amended or waived by the parties thereto on terms and
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conditions reasonably satisfactory to the Administrative Agent and the Required
Banks).
5.17 Payment of Fees. On the Restatement Effective Date, all fees
and expenses, due to the Administrative Agent or the Banks (including, without
limitation, reasonable fees and expenses of counsel) shall have been paid to the
extent due.
5.18 Notice of Borrowing; Letter of Credit Request. (a) Prior to
the making of each Loan (excluding Swingline Loans), the Administrative Agent
shall have received a Notice of Borrowing meeting the requirements of Section
1.03(a). Prior to the making of any Swingline Loan, BTCo shall have received
the notice required by Section 1.03(b)(i).
(b) Prior to the issuance of any Letter of Credit (other than Letters
of Credit assumed hereunder on the Restatement Effective Date pursuant to
Section 2.01(b)), the Administrative Agent and the respective Letter of Credit
Issuer shall have received a Letter of Credit Request required by Section
2.03(a).
5.19 Recording Taxes. Prior to any Credit Event, the Borrower shall
have paid any recording taxes to the satisfaction of the Collateral Agent
necessary to cover any additional advances as deemed necessary by the Collateral
Agent.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower to the Administrative Agent and each
of the Banks that all of the applicable conditions specified above exist as of
that time. All of the certificates, legal opinions and other documents and
papers referred to in this Section 5, unless otherwise specified, shall be
delivered to the Administrative Agent at its Notice Office for the account of
each of the Banks and, except for the Notes, in sufficient counterparts or
copies for each of the Banks and shall be satisfactory in form and substance to
the Administrative Agent.
SECTION 6. Representations, Warranties and Agreements. In order to
induce the Banks to enter into this Agreement and to make the Loans and issue
and/or participate in Letters of Credit provided for herein, the Borrower makes
the following representations and warranties to, and agreements with, the Banks,
in each case after giving effect to the Transaction, all of which shall survive
the execution and delivery of this Agreement and the making of the Loans and the
issuance and/or participation in Letters of Credit (with the making of each
Credit Event thereafter being deemed to constitute a representation and warranty
that the matters specified in this Section 6 are true and correct in all
material respects on and as of the date of each such Credit Event unless such
representation and warranty expressly indicates that it is being made as of any
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specific date, in which case such representation and warranty shall be true and
correct in all material respects as of such specific date):
6.01 Corporate Status. Each of the Borrower and each of its
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization and has the
corporate power and authority to own its property and assets and to transact the
business in which it is engaged and (ii) has duly qualified and is authorized to
do business and is in good standing in all jurisdictions where it is required to
be so qualified and where the failure to be so qualified could reasonably be
expected to have a Material Adverse Effect.
6.02 Corporate Power and Authority. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Documents to which it is a party. Each Credit Party has duly executed and
delivered each Document to which it is a party and each such Document
constitutes the legal, valid and binding obligation of such Person enforceable
in accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws generally affecting creditors' rights and by
equitable principles (regardless of whether enforcement is sought in equity or
at law).
6.03 No Violation. Neither the execution, delivery and performance
by any Credit Party of the Documents to which it is a party nor compliance by it
with the terms and provisions thereof, nor the consummation of the transactions
contemplated therein, (i) will contravene any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with, or
result in any breach of, any of the terms, covenants, conditions or provisions
of, or constitute a default under, or (other than pursuant to the Security
Documents) result in the creation or imposition of (or the obligation to create
or impose) any Lien upon any of the property or assets of the Borrower or any of
its Subsidiaries pursuant to the terms of, any material indenture, mortgage,
deed of trust, agreement or other instrument to which the Borrower or any of its
Subsidiaries is a party or by which it or any of its material property or assets
are bound or to which it may be subject or (iii) will violate any provision of
the certificate of incorporation or by-laws (or equivalent organizational
documents) of the Borrower or any of its Subsidiaries.
6.04 Litigation. There are no actions, suits or proceedings pending
or threatened with respect to the Borrower or any of its Subsidiaries (i) that
are likely to have a Material Adverse Effect or (ii) that could reasonably be
expected to have a material adverse effect on (a) the rights or remedies of the
Banks or on the ability of any Credit Party to perform its obligations to them
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hereunder and under the other Credit Documents to which it is a party or (b) the
ability to consummate the Transaction.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of Loans
shall be utilized for the general corporate and working capital and capital
expenditure purposes of the Borrower and its Subsidiaries;
(b) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate the provisions of Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System and no part of the proceeds of
any Loan will be used to purchase or carry any Margin Stock or to extend credit
for the purpose of purchasing or carrying any Margin Stock.
6.06 Governmental Approvals. No material order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any foreign or domestic governmental or public body or
authority, or any subdivision thereof, is required to authorize or is required
in connection with (i) the execution, delivery and performance of any Document
or (ii) the legality, validity, binding effect or enforceability of any
Document.
6.07 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.08 Public Utility Holding Company Act. Neither the Borrower nor
any of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
6.09 True and Complete Disclosure. All factual information (taken as
a whole) heretofore or contemporaneously furnished by or on behalf of the
Borrower or any of its Subsidiaries in writing to the Administrative Agent or
any Bank for purposes of or in connection with this Agreement or any transaction
contemplated herein is true and accurate in all material respects on the date as
of which such information is dated or certified and not incomplete by omitting
to state any material fact necessary to make such information (taken as a whole)
not misleading at such time in light of the circumstances under which such
information was provided. There is no fact known to the Borrower which would be
reasonably likely to have a Material Adverse Effect which has not been disclosed
herein or in such other documents, certificates and statements furnished to the
Banks for use in connection with the transactions contemplated hereby.
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6.10 Financial Condition; Financial Statements. (a) On and as of the
Restatement Effective Date, on a pro forma basis after giving effect to the
Transaction and to all Indebtedness incurred, and to be incurred, and Liens
created, and to be created, by each Credit Party in connection therewith, (x)
the sum of the assets, at a fair valuation, of the Borrower and its Subsidiaries
taken as a whole will exceed its debts, (y) the Borrower and its Subsidiaries
taken as a whole will not have incurred or intended to, or believe that they
will, incur debts beyond their ability to pay such debts as such debts mature
and (z) the Borrower and its Subsidiaries taken as a whole will not have
unreasonably small capital with which to conduct its business. For purposes of
this Section 6.10 (a), "debt" means any liability on a claim, and "claim" means
(i) right to payment whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured; or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(b)(i) The consolidated balance sheet of the Borrower at May 31, 1997
and the related consolidated statements of operations and cash flows of the
Borrower for the fiscal year ended as of said date, which have been audited by
Coopers & ▇▇▇▇▇▇▇ L.L.P., independent certified public accountants, who
delivered an unqualified audit opinion in respect therewith and (ii) the pro
forma unaudited consolidated balance sheet of the Borrower as of August 31,
1997, copies of which have heretofore been furnished to each Bank, present
fairly the consolidated financial position of the Borrower at the dates of said
statements and the results for the period covered thereby (or, in the case of
the pro forma balance sheet, presents a good faith estimate of the consolidated
pro forma financial condition of the Borrower (after giving effect to the
Transaction and the related financing thereof) at the date thereof) in
accordance with GAAP (except, in the case of the pro forma balance sheet, to the
extent provided therein), except to the extent provided in the notes to said
financial statements and, in the case of the balance sheet as of August 31,
1997, subject to normal year end adjustments. All such financial statements
(other than the aforesaid pro forma balance sheets) have been prepared in
accordance with GAAP consistently applied except to the extent provided in the
notes to said financial statements.
(c) Since August 31, 1997, and after giving effect to the Transaction,
nothing has occurred that has had or could reasonably be expected to have a
Material Adverse Effect.
(d)The Projections and pro forma financial information contained in
such materials are based on good faith estimates and assumptions believed by
such Persons to be reasonable at the time made, it being recognized by the Banks
that such Projections as to future events and pro forma adjustments are not to
be viewed as facts and that actual results during the period or periods covered
by any such projections may differ from the projected results or pro forma
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adjustments and that such differences may be material. On the Restatement
Effective Date, the Borrower believed that the Projections were reasonable and
attainable.
(e) Except as reflected in the financial statements and the notes
thereto described in Section 6.10(b), there were as of the Restatement Effective
Date no liabilities or obligations with respect to the Borrower or any of its
Subsidiaries of a nature (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, would be
material to the Borrower and its Subsidiaries taken as a whole.
6.11 Security Interests. On and after the Restatement Effective
Date, each of the Security Documents create, as security for the Obligations
purported to be secured thereby, a valid and enforceable perfected security
interest in and Lien on all of the Collateral subject thereto, superior to and
prior to the rights of all third Persons and subject to no other Liens (except
(x) to the extent expressly set forth in the Security Documents, (y) that the
Collateral may be subject to the security interests evidenced by Permitted Liens
relating thereto), and (z) that the Mortgaged Properties also may be subject to
Permitted Encumbrances relating thereto) in favor of the Collateral Agent for
the benefit of the Collateral Agent. No filings or recordings are required in
order to perfect the security interests created under any Security Document
except for filings or recordings required in connection with any such Security
Document (other than the Pledge Agreement) which shall have been made upon or
prior to (or are the subject of arrangements, satisfactory to the Administrative
Agent, for filing on or promptly after the date of, as set forth in Section
5.12(c)) the execution and delivery thereof.
6.12 Representations and Warranties in Senior Note Documents. All
representations and warranties of the Credit Parties and, to the best knowledge
of the Borrower, of all other Persons party thereto, set forth in the Senior
Note Documents were true and correct in all material respects as of the time
such representations and warranties were made and shall be true and correct in
all material respects as of the Restatement Effective Date as if such
representations and warranties were made on and as of such date, unless stated
to relate to a specific earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such earlier
date.
6.13 Consummation of Transaction. As of the Restatement Effective
Date, the Transaction shall have been consummated in accordance with the terms
and conditions of the Transaction Documents and all applicable laws. All
applicable waiting periods with respect thereto have or, prior to the time when
required, will have, expired without, in all such cases, any action being taken
by any competent authority which restrains, prevents, or imposes material
adverse conditions upon the consummation of the Transaction. As of the
Restatement Effective Date, there does not exist any judgment, order, or
injunction prohibiting the consummation of the Transaction, or the making of the
Loans or the performance by any Credit Party of its respective obligations under
the Documents.
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6.14 Tax Returns and Payments. Each of the Borrower and each of its
Subsidiaries has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid, or
properly accrued in accordance with GAAP, all material taxes and assessments
payable by it which have become due, other than those not yet delinquent and
those contested in good faith and for which adequate reserves have been
established in accordance with GAAP. The Borrower and each of its Subsidiaries
have paid, or have provided adequate reserves (in the good faith judgment of the
management of the Borrower) for the payment of, all federal, state and foreign
income taxes applicable for all prior fiscal years and for the current fiscal
year to the date hereof. There is no material action, suit, proceeding,
investigation, audit or claim now pending or, to the best knowledge of the
Borrower, threatened by any authority regarding any taxes relating to the
Borrower or any of its Subsidiaries.
6.15 Compliance with ERISA. Each Plan (and each related trust,
insurance contract or fund) is in substantial compliance with its terms and with
all applicable laws, including without limitation, ERISA and the Code; with
respect to each Plan (and each related trust, if any) which is intended to be
qualified under Section 401(a) of the Code, such Plan has received a
determination letter from the Internal Revenue Service to the effect that it
meets the requirements of Sections 401(a) and 501(a) of the Code or the Borrower
intends to apply for such a determination letter within the time period
prescribed for submitting such application, and the Borrower has not been
notified of, and the Borrower does not know of any condition or circumstance
that has resulted or would be likely to result, in the rejection of such a
application or the failure to issue such a favorable determination letter; no
Reportable Event has occurred; no Plan which is a multiemployer plan (as defined
in Section 4001(a)(3) of ERISA) is insolvent or in reorganization; no Plan has
an Unfunded Current Liability; no Plan which is subject to Section 412 of the
Code or Section 302 of ERISA has an accumulated funding deficiency, within the
meaning of such sections of the Code or ERISA or has applied for or received a
waiver of an accumulated funding deficiency or an extension of any amortization
period, within the meaning of Section 412 of the Code or Section 303 or 304 of
ERISA; all contributions required to be made with respect to a Plan have been
timely made; neither the Borrower, nor any Subsidiary of the Borrower nor any
ERISA Affiliate has incurred any material liability to or on account of a Plan
pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or expects to
incur any such liability under any of the foregoing sections with respect to any
Plan; no condition exists which presents a material risk to the Borrower or any
Subsidiary of the Borrower or any ERISA Affiliate of incurring a liability to or
on account of a Plan pursuant to the foregoing provisions of ERISA and the Code;
no proceedings have been instituted to terminate or appoint a trustee to
administer any Plan which is subject to Title IV of ERISA; using actuarial
assumptions and computation methods consistent with Part 1 of subtitle E of
Title IV of ERISA, the aggregate liabilities of the Borrower and its
Subsidiaries and its ERISA Affiliates to all Plans which are multiemployer plans
(as defined in Section 4001(a)(3) of ERISA) in the event of a complete
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withdrawal therefrom, as of the close of the most recent fiscal year of each
such Plan ended prior to the date hereof, would not have a Material Adverse
Effect; no action, suit, proceeding, hearing, audit or investigation with
respect to the administration, operation or investment of assets of any Plans
(other than routine claims for benefits) is pending, expected or threatened;
each group health plan (as defined in Section 607(1) of ERISA or Section
4980B(g)(2) of the Code) which covers or has covered employees or former
employees of the Borrower, any of its Subsidiaries, or any ERISA Affiliate has
at all times been operated in compliance with the provisions of Part 6 of
subtitle B of Title I of ERISA and Section 4980B of the Code; no lien imposed
under the Code or ERISA on the assets of the Borrower or any Subsidiary of the
Borrower or any ERISA Affiliate exists or is likely to arise on account of any
Plan; and the Borrower and its Subsidiaries do not maintain or contribute to any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) which
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any Plan the obligations with respect to
which could reasonably be expected to have a Material Adverse Effect.
6.16 Subsidiaries; Subsidiary Restrictions. (a) Annex III lists
each Subsidiary of the Borrower (and the direct and indirect ownership interest
of the Borrower therein), in each case existing on the Restatement Effective
Date.
(b) There are no restrictions on the Borrower or any of its
Subsidiaries which prohibit or otherwise restrict the transfer of cash or other
assets from any Subsidiary of the Borrower to the Borrower, other than
prohibitions or restrictions existing under or by reason of (i) this Agreement
and the other Credit Documents, (ii) the Senior Note Documents, (iii) applicable
law, (iv) customary non-assignment provisions entered into in the ordinary
course of business and consistent with past practices, (v) any restriction or
encumbrance with respect to a Subsidiary of the Borrower imposed pursuant to an
agreement which has been entered into for the sale or disposition of all or
substantially all of the capital stock or assets of such Subsidiary, so long as
such sale or disposition is permitted under this Agreement, and (vi) any
documents or instruments governing the terms of any Indebtedness or other
obligations secured by Permitted Liens, provided that such prohibitions or
restrictions apply only to the assets subject to such Permitted Liens.
6.17 Patents, etc. The Borrower and each of its Subsidiaries have
obtained all material patents, trademarks, service marks, trade names,
copyrights and licenses, free from materially burdensome restrictions, that are
used for the operation of their businesses taken as a whole as presently
conducted.
6.18 Pollution and Other Regulations. (a) Each of the Borrower and
each of its Subsidiaries is in compliance with all applicable Environmental Laws
governing its business for which failure to comply is likely to have a Material
Adverse Effect, and neither the Borrower nor any of its Subsidiaries is liable
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for any material penalties, fines or forfeitures for failure to comply with
any of the foregoing in the manner set forth above. All licenses, permits,
registrations or approvals required for the business of the Borrower and each
of its Subsidiaries, as conducted as of the Restatement Effective Date, under
any Environmental Law have been secured and each of the Borrower and each of
its Subsidiaries is in substantial compliance therewith, except such
licenses, permits, registrations or approvals the failure to secure or to
comply therewith is not likely to have a Material Adverse Effect. Neither
the Borrower nor any of its Subsidiaries is in any respect in noncompliance
with, breach of or default under any applicable writ, order, judgment,
injunction, or decree to which the Borrower or such Subsidiary is a party or
which would affect the ability of the Borrower or such Subsidiary to conduct
its business and no event has occurred and is continuing which, with the
passage of time or the giving of notice or both, would constitute
noncompliance, breach of or default thereunder, except in each such case,
such noncompliance, breaches or defaults as are not likely to, in the
aggregate, have a Material Adverse Effect. There are as of the Restatement
Effective Date no Environmental Claims pending or, to the best knowledge of
the Borrower, threatened, against the Borrower or any of its Subsidiaries, or
which (a) question the validity, term or entitlement of the Borrower or any
of its Subsidiaries for any permit, license, order or registration required
for the operation of any facility which the Borrower or any of its
Subsidiaries currently operates and (b) wherein an unfavorable decision,
ruling or finding would be reasonably likely to have a Material Adverse
Effect. There are no facts, circumstances, conditions or occurrences on any
Real Property at any time owned or operated by the Borrower or any of its
Subsidiaries or, to the knowledge of the Borrower, on any property adjacent
to any such Real Property that could reasonably be expected (i) to form the
basis of an Environmental Claim against the Borrower, any of its Subsidiaries
or any currently owned or operated Real Property of the Borrower or any of
its Subsidiaries, or (ii) (a) to cause any such Real Property currently owned
or operated to be subject to any restrictions on the occupancy or use of such
Real Property under any Environmental Law or (b) to cause any such owned Real
Property to be subject to any restrictions on the ownership or
transferability of such owned Real Property under any Environmental Law,
except in each such case, such Environmental Claims or restrictions that
individually or in the aggregate are not reasonably likely to have a Material
Adverse Effect.
(b) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or (ii) released on any such Real Property,
in each case where such occurrence or event individually or in the aggregate is
reasonably likely to have a Material Adverse Effect.
6.19 Properties. The Borrower and each of its Subsidiaries have good
title to all material properties owned by them, free and clear of all Liens,
other than (i) as referred to in the consolidated balance sheet referred to in
Section 6.10(b) or in the notes thereto or (ii) Permitted Liens. Annex IV
contains a true and complete list of each Real Property owned or leased by the
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Borrower or any of its Subsidiaries on the Restatement Effective Date and the
type of interest therein held by the Borrower or the respective Subsidiary.
6.20 Labor Relations. Neither the Borrower nor any of its
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a Material Adverse Effect. There is (i) no unfair labor
practice complaint pending against the Borrower or any Subsidiary of the
Borrower or, to the Borrower's knowledge, threatened against any of them, before
the National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against the Borrower or any Subsidiary of the Borrower or, to the Borrower's
knowledge, threatened against any of them, (ii) no strike, labor dispute, work
slowdown or stoppage pending against the Borrower or any Subsidiary of the
Borrower or, to the Borrower's knowledge, threatened against any of them and
(iii) no union representation petition existing with respect to the employees of
the Borrower or any Subsidiary of the Borrower and no union organizing
activities are taking place, except with respect to any matter specified in
clause (i), (ii) or (iii) above, either individually or in the aggregate, such
as is not reasonably likely to have a Material Adverse Effect.
6.21 Existing Indebtedness. Annex V sets forth a true and complete
list of all Indebtedness of the Borrower and each of its Subsidiaries as of the
Restatement Effective Date and which is to remain outstanding after giving
effect to the Transaction (excluding the Loans, the Letters of Credit and the
Senior Notes, the "Existing Indebtedness"), in each case showing the aggregate
principal amount thereof and the name of the respective borrower (or issuer) and
any other entity which directly or indirectly guaranteed such debt.
6.22 Capitalization. On the Restatement Effective Date and after
giving effect to the Transaction and the other transactions contemplated hereby,
the authorized capital stock of the Borrower shall consist of (w) 1,150,000
shares of Class A Common Stock, $.001 par value per share, of which 1,015,714
shares shall be issued and outstanding, (x) 500,000 shares of Class B Common
Stock, $.001 par value, none of which shall be issued and outstanding, (y)
200,000 shares of Series A Preferred Stock, $1.00 par value per share, of which
153,636.55 shares shall be issued and outstanding and (z) 200,000 shares of
Series B Preferred Stock, $1.00 par value per share of which 3,856.60 shares
shall be issued and outstanding. All such outstanding shares have been duly and
validly issued, are fully paid and nonassessable and are free of preemptive
rights. Other than pursuant to the Options and the Warrants, neither the
Borrower nor any of its Subsidiaries has outstanding any securities convertible
into or exchangeable for its capital stock or outstanding any rights to
subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock.
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SECTION 7. Affirmative Covenants. The Borrower covenants and agrees
that as of the Restatement Effective Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated, no Letters of
Credit or Notes are outstanding and the Loans and Unpaid Drawings, together with
interest, Fees and all other Obligations (other than indemnities described in
Section 12.13 hereof which are not then due and payable) incurred hereunder, are
paid in full:
7.01 Information Covenants. The Borrower will furnish to each Bank:
(a) Annual Financial Statements. Within 90 days after the close of
each fiscal year of the Borrower, the consolidated balance sheet of the
Borrower and its Subsidiaries, as at the end of such fiscal year and the
related consolidated statements of income and retained earnings and of cash
flows for such fiscal year, in each case setting forth comparative
consolidated figures for the preceding fiscal year, and in the case of the
consolidated financial statements, examined by independent certified public
accountants of recognized national standing whose opinion shall not be
qualified as to the scope of audit or as to the status of the Borrower or
any of its Subsidiaries as a going concern, together with a certificate of
such accounting firm stating that in the course of its regular audit of the
business of the Borrower, which audit was conducted in accordance with
generally accepted auditing standards, such accounting firm has obtained no
knowledge of any Default or Event of Default which has occurred and is
continuing or, if in the opinion of such accounting firm such a Default or
Event of Default has occurred and is continuing, a statement as to the
nature thereof.
(b) Quarterly Financial Statements. As soon as available and in any
event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year of the Borrower, the consolidated
balance sheet of the Borrower and its Subsidiaries, as at the end of such
quarterly accounting period and the related consolidated statements of
income and retained earnings and of cash flows for such quarterly
accounting period and for the elapsed portion of the fiscal year ended with
the last day of such quarterly accounting period, and in each case setting
forth comparative consolidated figures for the related periods in the prior
fiscal year, all of which shall be certified by the chief financial officer
or controller of the Borrower, subject to changes resulting from audit and
normal year-end audit adjustments.
(c) Monthly Reports. As soon as practicable, and in any event within
30 days after the end of each monthly accounting period of each fiscal year
of the Borrower (other than the last monthly accounting period in such
fiscal year), monthly reports in a form reasonably satisfactory to the
Administrative Agent, which shall include the consolidated balance sheet of
the Borrower and its Subsidiaries, as at the end of such monthly accounting
period, and the related consolidated statements of income and retained
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earnings and cash flow for such monthly accounting period, setting forth
comparative figures for the corresponding period of the previous year.
(d) Budgets; etc. Not more than 30 days after the commencement of
each fiscal year of the Borrower, a budget of the Borrower and its
Subsidiaries in reasonable detail for each of the twelve months of such
fiscal year. Together with each delivery of consolidated financial
statements pursuant to Sections 7.01(a), (b) and (c), a comparison of the
current year to date financial results against the budgets required to be
submitted pursuant to this clause (d) shall be presented.
(e) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 7.01(a) (b) and (c), a
certificate of the chief financial officer, controller or other Authorized
Officer of the Borrower to the effect that no Default or Event of Default
exists or, if any Default or Event of Default does exist, specifying the
nature and extent thereof, which certificate, in the case of the
certificate delivered pursuant to (x) Sections 7.01(a) and (b), shall set
forth the calculations required to establish whether the Borrower and its
Subsidiaries were in compliance with the provisions of Sections 8.07(a)
(but only to the extent the Borrower has made payments of the type
described in clause (ii) thereof in such fiscal quarter or year), 8.09 and
8.10 as at the end of such fiscal quarter or year, as the case may be, and
(y) Section 7.01(c), shall set forth the calculation of the Net Leverage
Ratio, together with the calculations required to establish such ratio.
(f) Notice of Default or Litigation. Promptly, and in any event
within three Business Days after the Borrower obtains knowledge thereof,
notice of (x) the occurrence of any event which constitutes a Default or an
Event of Default, which notice shall specify the nature thereof, the period
of existence thereof and what action the Borrower proposes to take with
respect thereto or (y) the commencement of or any significant development
in any litigation or governmental proceeding pending against the Borrower
or any of its Subsidiaries which is likely to have a Material Adverse
Effect or is likely to have a material adverse effect on the ability of the
Borrower or any other Credit Party to perform its obligations hereunder or
under any other Credit Document.
(g) Auditors' Reports. Promptly upon receipt thereof, a copy of each
final report or "management letter" submitted to the Borrower by its
independent accountants in connection with any annual, interim or special
audit made by it of the books of the Borrower.
(h) Other Information. From time to time, such other information or
documents (financial or otherwise) as the Administrative Agent on its own
behalf or on behalf of the Required Banks may reasonably request from time
to time.
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7.02 Books, Records and Inspections; Bank Meetings. (a) The
Borrower will, and will cause each of its Subsidiaries to, permit, upon
reasonable notice to the chief financial officer, controller or any other
Authorized Officer of the Borrower, (x) officers and designated representatives
of the Administrative Agent or the Required Banks to visit and inspect any of
the properties or assets of the Borrower or any of its Subsidiaries in
whomsoever's possession, and to examine the books of account of the Borrower or
any of its Subsidiaries and discuss the affairs, finances and accounts of the
Borrower or of any of its Subsidiaries with, and be advised as to the same by,
its and their officers and independent accountants, all at such reasonable times
and intervals and to such reasonable extent as the Administrative Agent or the
Required Banks may desire and (y) not more than once per year (and at any time
during the occurrence of a Default or an Event of Default) the Administrative
Agent, or a third party designated by the Administrative Agent, to conduct, at
the Borrower's expense, an audit of the accounts receivable and inventories of
the Borrower and its Subsidiaries at such times as the Administrative Agent
shall reasonably require.
(b) At the request of the Administrative Agent, the Borrower shall
within 120 days after the close of each fiscal year of the Borrower hold a
meeting at a time and place selected by the Borrower and acceptable to the
Administrative Agent with all of the Banks at which meeting shall be reviewed
the financial results of the previous fiscal year and the financial condition of
the Borrower and its Subsidiaries and the budgets presented for the current
fiscal year of the Borrower and its Subsidiaries.
7.03 Maintenance of Property; Insurance. The Borrower will, and will
cause each of its Subsidiaries to, at all times maintain in full force and
effect insurance in such amounts, covering such risks and liabilities and with
such deductibles or self-insured retentions as are in accordance with normal
industry practice. At any time that insurance at the levels described in Annex
VI is not being maintained by the Borrower and its Subsidiaries, the Borrower
will notify the Banks in writing thereof and, if thereafter notified by the
Administrative Agent to do so, the Borrower will, and will cause each of its
Subsidiaries to, obtain insurance at such levels at least equal to those set
forth in Annex VI to the extent then generally available, or otherwise as are
acceptable to the Administrative Agent. The Borrower will, and will cause each
of its Subsidiaries to, furnish annually after the Restatement Effective Date to
the Administrative Agent, upon its request, a summary of the insurance carried
together with certificates of insurance and other evidence of such insurance, if
any, naming the Collateral Agent as an additional insured and/or loss payee.
7.04 Payment of Taxes. The Borrower will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which material
penalties attach thereto, and all lawful claims which, if unpaid, might become a
Lien not otherwise permitted pursuant to Section 8.03(a) or charge upon any
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properties of the Borrower or any of its Subsidiaries, provided that neither the
Borrower nor any Subsidiary of the Borrower shall be required to pay any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by proper proceedings if it has maintained adequate reserves (in the good
faith judgment of the management of the Borrower) with respect thereto in
accordance with GAAP.
7.05 Corporate Franchises. The Borrower will do, and will cause each
of its Subsidiaries to do, or cause to be done, all things necessary to preserve
and keep in full force and effect its existence, material rights and authority,
provided that any transaction permitted by Section 8.02 will not constitute a
breach of this Section 7.05.
7.06 Compliance with Statutes, etc. The Borrower will, and will
cause each of its Subsidiaries to, comply with all applicable statutes
(including, without limitation, all applicable Environmental Laws), regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property except for such non-compliance which would not have a
Material Adverse Effect or would not have a material adverse effect on the
ability of any Credit Party to perform its obligations under any Credit Document
to which it is party.
7.07 ERISA. As soon as possible and, in any event, within 15 days
after the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate knows
or has reason to know of the occurrence of any of the following, the Borrower
will deliver to each of the Banks a certificate of the chief financial officer
or any vice president of the Borrower setting forth the full details as to such
occurrence and the action, if any, which the Borrower, a Subsidiary or an ERISA
Affiliate is required or proposes to take, together with any notices required or
proposed to be given to or filed with or by the Borrower, the Subsidiary, the
ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with
respect thereto: that a Reportable Event has occurred; that an accumulated
funding deficiency within the meaning of Section 412 of the Code or Section 302
of ERISA has been incurred or an application may be or has been made for a
waiver or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code or Section 303 or 304 of ERISA, with respect to a Plan; that any
contribution required to be made with respect to a Plan has not been timely
made; that a Plan has been or may be terminated, reorganized, partitioned or
declared insolvent under Title IV of ERISA; that a Plan has an Unfunded Current
Liability; that proceedings have been or are reasonably expected to be
instituted to terminate a Plan which is subject to Title IV of ERISA; that a
proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; that the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate will or may incur any liability to or on account
of the termination of or withdrawal from a Plan under Section 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under Section
401(a)(29), 4971, 4975 or 4980 of the Code or Section 409, 502(i) or 502(l) of
ERISA or with respect to a group health plan (as defined in Section 607(1) of
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ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code; or
that the Borrower or any Subsidiary of the Borrower may incur any material
liability pursuant to any employee welfare benefit plan (as defined in Section
3(l) of ERISA) that provides benefits to retired employees or other former
employees (other than as required by Section 601 of ERISA) or any Plan other
than any Plan subject to Title IV of ERISA and/or Section 412 of the Code. The
Borrower will deliver to the Banks a complete copy of the annual report (on
Internal Revenue Service Form 5500-series) of each Plan (including, to the
extent required, the related financial and actuarial statements and opinions and
other supporting statements, certifications, schedules and information) required
to be filed with the Internal Revenue Service. In addition to any certificates
or notices delivered to the Banks pursuant to the first sentence hereof, copies
of annual reports and any material notices received by the Borrower with respect
to a Plan shall be delivered to the Banks no later than 10 days after the date
such report has been filed with the Internal Revenue Service or such notice has
been received by the Borrower and copies of any material notices received by any
Subsidiary of the Borrower or any ERISA Affiliate shall be delivered to the
Banks no later than 30 days after the date such notice has been received by such
Subsidiary or ERISA Affiliate.
7.08 Good Repair. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its material properties and equipment used or
useful in its business in whomsoever's possession they may be, are kept, in all
material respects, in good repair, working order and condition, normal wear and
tear excepted, and, subject to Section 8.05, that from time to time there are
made in such properties and equipment all needful and proper repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto, to
the extent and in the manner useful or customary for companies in similar
businesses.
7.09 End of Fiscal Years; Fiscal Quarters. The Borrower will, for
financial reporting and tax purposes, cause (i) each of its, and each of its
Subsidiaries' fiscal years to end on May 31 of each year and (ii) each of its,
and each of its Subsidiaries' fiscal quarters to end on August 31, November 30,
February 28 (or February 29) and May 31 of each year.
7.10 Use of Proceeds. All proceeds of the Loans shall be used as
provided in Section 6.05.
7.11 Further Assurances. (a) The Borrower will, and will cause each
of its Subsidiaries to, at the expense of the Borrower, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments and take such
further steps relating to the Collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require. Furthermore, the
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Borrower will cause to be delivered to the Collateral Agent such opinions of
counsel, title insurance, and other related documents as may be requested by the
Administrative Agent to assure themselves that this Section 7.11 has been
complied with.
(b) The Borrower agrees that each action required by clause (a) above
in this Section 7.11 shall be completed as soon as possible, but in no event
later than 90 days after such action is requested to be taken by the
Administrative Agent or the Required Banks, provided that in no event shall the
Borrower be required to take any action, other than using its reasonable
commercial efforts without any material expenditure, to obtain consents from
third parties with respect to its compliance with such clause (a).
(d) In the event that the Administrative Agent or the Required Banks
at any time after the Restatement Effective Date determine in its or their good
faith discretion that real estate appraisals satisfying the requirements of
FIRREA (any such appraisal a "Required Appraisal") are or were required to be
obtained, or should be obtained, in connection with the Mortgaged Properties,
then, within 120 days after receiving written notice thereof from the
Administrative Agent or the Required Banks, as the case may be, such Required
Appraisal shall be delivered, at the expense of the Borrower, to the
Administrative Agent which Required Appraisal, and the respective appraiser,
shall be satisfactory to the Administrative Agent.
SECTION 8. Negative Covenants. The Borrower covenants and agrees
that as of the Restatement Effective Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated, no Letters of
Credit or Notes are outstanding and the Loans and Unpaid Drawings, together with
interest, Fees and all other Obligations (other than indemnities described in
Section 12.13 which are not then due and payable) incurred hereunder, are paid
in full:
8.01 Changes in Business. The Borrower will not, and will not permit
any of its Subsidiaries to, materially alter the character of the business of
the Borrower and its Subsidiaries from that conducted on the Restatement
Effective Date, provided that this Section 8.01 shall not restrict the making of
any investment expressly permitted by Section 8.05 or the consummation of any
transaction expressly permitted by Section 8.02.
8.02 Consolidation, Merger, Sale of Assets, etc. The Borrower will
not, and will not permit any of its Subsidiaries to, wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or
consolidation, or sell or otherwise dispose of all or any part of its
property or assets (other than inventory or obsolete equipment or excess
equipment no longer needed in the conduct of the business in the ordinary
course of business) or agree to do any of the foregoing at any future time,
except that the following shall be permitted:
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(a) any Wholly-Owned Subsidiary of the Borrower may be merged or
consolidated with or into, or be liquidated into, the Borrower or a
Subsidiary Guarantor that is a Wholly-Owned Domestic Subsidiary of the
Borrower (so long as the Borrower or such Subsidiary Guarantor, as the case
may be, is the surviving corporation), or all or any part of the business,
properties or assets of any Wholly-Owned Subsidiary of the Borrower may be
conveyed, leased, sold or transferred to the Borrower or any Subsidiary
Guarantor that is a Wholly-Owned Domestic Subsidiary of the Borrower;
(b) the investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 8.05;
(c) the Borrower and its Subsidiaries may lease (as lessee) real or
personal property in the ordinary course of business (so long as such lease
does not create a Capitalized Lease Obligation not otherwise permitted by
Section 8.04(c));
(d) licenses or sublicenses by the Borrower and its Subsidiaries of
software, customer lists, trademarks, service marks, patents, trade names
and copyrights and other intellectual property in the ordinary course of
business, provided, that such licenses or sublicenses shall not interfere
with the business of the Borrower or any such Subsidiary;
(e) other sales or dispositions of assets in the ordinary course of
business (other than assets disposed of in connection with a Recovery
Event), provided that (x) the aggregate Net Cash Proceeds received from all
such sales and dispositions shall not exceed $4,000,000 in any fiscal year
of the Borrower, (y) each such sale shall be in an amount at least equal to
the fair market value thereof (as determined in good faith by the Borrower)
and for proceeds consisting solely of not less than (A) 85% cash and (B)
seller indebtedness evidenced by promissory notes, which promissory notes
shall be pledged and delivered to the Collateral Agent pursuant to the
Pledge Agreement, and (z) the Net Cash Proceeds of any such sale are
applied to reduce the Total Commitment to the extent required by Section
3.03(c), and, provided further, that the sale or disposition of the capital
stock of (i) any Subsidiary Guarantor shall be prohibited and (ii) any
other Subsidiary of the Borrower shall be prohibited unless it is for all
of the outstanding capital stock of such Subsidiary owned by the Borrower
and its Subsidiaries;
(f) other sales or dispositions of assets (or similar transactions)
in each case to the extent the Required Banks have consented in writing
thereto and subject to such conditions as may be set forth in such consent;
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(g) any Subsidiary of the Borrower (including any Subsidiary
Guarantor so long as the assets of such Subsidiary Guarantor are
transferred pursuant to Section 8.02(j) may be liquidated into the Borrower
or a Subsidiary Guarantor that is a Wholly-Owned Domestic Subsidiary of the
Borrower;
(h) the Borrower and its Subsidiaries may dispose of assets in
connection with equipment trade-in/trade-up transactions;
(i) the Borrower and its Subsidiaries may, in the ordinary course of
business, sell, transfer or otherwise dispose of patents, trademarks,
service marks, trade names and copyrights which, in the reasonable judgment
of the Borrower or such Subsidiary, are determined to be uneconomical,
negligible or obsolete in the conduct of its business; and
(j) any Subsidiary of the Borrower may transfer assets to the
Borrower or to a Subsidiary Guarantor that is a Wholly-Owned Domestic
Subsidiary of the Borrower so long as the security interests granted to the
Collateral Agent pursuant to the Security Documents in the assets so
transferred shall remain in full force and effect and perfected (to at
least the same extent as in effect immediately prior to such transfer).
To the extent the Required Banks waive the provisions of this Section 8.02 with
respect to the sale or other disposition of any Collateral, or any Collateral is
sold or otherwise disposed of as permitted by this Section 8.02, such Collateral
(unless sold to the Borrower or a Subsidiary of the Borrower) shall be sold or
otherwise disposed of free and clear of the Liens created by the Security
Documents, and the Administrative Agent and Collateral Agent shall be authorized
to take any actions deemed appropriate in order to effect the foregoing.
8.03 Liens. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income, or
file or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute; provided
that the provisions of this Section 8.03 shall not prevent the creation,
incurrence, assumption or existence of the following (with such Liens described
below being herein referred to as "Permitted Liens"):
(a) inchoate Liens for taxes, assessments or governmental charges or
rules not yet due or Liens for taxes, assessments or governmental charges
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or rules being contested in good faith and by appropriate proceedings for
which adequate reserves (in the good faith judgment of the management of
the Borrower) have been established;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law which were incurred in the ordinary course
of business, such as carriers', warehousemen's and mechanics' Liens,
statutory landlord's Liens, and other similar Liens arising in the ordinary
course of business, and (x) which do not in the aggregate materially
detract from the value of such property or assets or materially impair the
use thereof in the operation of the business of the Borrower or any such
Subsidiary or (y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement and the other
Credit Documents;
(d) Liens existing on the Restatement Effective Date to the extent
listed on Annex VII, without giving effect to any subsequent extensions or
renewals thereof;
(e) Liens arising from judgments, decrees or attachments (or securing
of appeal bonds with respect thereto) in circumstances not constituting an
Event of Default under Section 9.09, so long as no cash or property (other
than proceeds of insurance payable by reason of such judgments, decrees or
attachments) is deposited or delivered to secure any respective judgment or
award, or any appeal bond in respect thereof, the fair market value of
which exceeds $1,500,000;
(f) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety bonds
(other than appeal bonds), bids, leases, government contracts, performance
and return-of-money bonds and other similar obligations incurred in the
ordinary course of business (exclusive of obligations in respect of the
payment for borrowed money);
(g) leases, subleases or licenses granted to others not interfering
in any material respect with the business of the Borrower or any of its
Subsidiaries;
(h) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
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(i) Liens arising from UCC financing statements regarding leases
permitted by this Agreement;
(j) purchase money Liens securing payables arising from the purchase
by the Borrower or any of its Subsidiaries of any equipment or goods in the
normal course of business, provided that such payables shall not constitute
Indebtedness;
(k) any interest or title of a lessor under any lease permitted by
this Agreement;
(l) Liens arising pursuant to purchase money mortgages relating to,
or security interests securing Indebtedness representing, the purchase
price or financing thereof of assets acquired by the Borrower or any of its
Subsidiaries after the Restatement Effective Date and Liens created
pursuant to Capital Leases, provided that any such Liens attach only to the
assets so acquired and that all Indebtedness secured by Liens created
pursuant to this clause (l) shall not exceed the amount permitted pursuant
to Section 8.04(d) at any time outstanding;
(m) Permitted Encumbrances; and
(n) Liens securing Indebtedness not in excess of $250,000 at any
time outstanding.
8.04 Indebtedness. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(b) Indebtedness of the Borrower incurred under the Senior Notes not
to exceed $125,000,000 in aggregate principal amount;
(c) Indebtedness owing by (i) any Subsidiary Guarantor to another
Subsidiary Guarantor or to the Borrower, (ii) any Subsidiary of the
Borrower that is not a Subsidiary Guarantor to another Subsidiary of the
Borrower that is not a Subsidiary Guarantor and (iii) the Borrower to any
Subsidiary Guarantor;
(d) Capitalized Lease Obligations of the Borrower and its
Subsidiaries incurred by the Borrower or any of its Subsidiaries after the
Restatement Effective Date and Indebtedness incurred pursuant to purchase
money mortgages permitted by Section 8.03(l), provided that the aggregate
amount of Indebtedness incurred pursuant to this clause (d) shall not
exceed $15,000,000 at any time outstanding;
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(e) Existing Indebtedness, without giving effect to any subsequent
extension, renewal or refinancing thereof;
(f) Indebtedness under Interest Rate Agreements relating to
Indebtedness otherwise permitted under this Section 8.04;
(g) Indebtedness consisting of guaranties by the Borrower of leases
permitted to be incurred by Wholly-Owned Subsidiaries;
(h) Contingent Obligations of the Borrower or any Subsidiary
Guarantor with respect to Indebtedness and lease obligations of the
Borrower or any Subsidiary Guarantor otherwise permitted under this
Agreement;
(i) Additional Indebtedness of the Borrower and its Subsidiaries not
to exceed an aggregate outstanding principal amount of $5,000,000 at any
time.
8.05 Advances, Investments and Loans. The Borrower will not, and
will not permit any of its Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any Person, except:
(a) investments made by the Borrower or any of its subsidiaries in
those partnerships and managed entities listed on Annex VIII (the "Existing
Ventures") (including the purchase of the interests held by third parties
in the Existing Ventures) in an aggregate principal amount not to exceed
$6,000,000 and reinvestments in Existing Ventures by the Borrower or any of
its Subsidiaries of any capital returned to the Borrower or any of its
Subsidiaries as a result of its interests in such Existing Ventures;
(b) the Borrower and its Subsidiaries may acquire and hold
receivables owing to them, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade
terms;
(c) the intercompany Indebtedness described in Section 8.04(c) shall
be permitted;
(d) investments made by the Borrower in Subsidiary Guarantors that
are Wholly-Owned Subsidiaries shall be permitted;
(e) loans and advances to employees in an aggregate principal amount
not to exceed $200,000 at any time outstanding shall be permitted;
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(f) the Borrower and its Subsidiaries may acquire and own investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in
the ordinary course of business;
(g) Interest Rate Agreements permitted by Section 8.04(f) shall be
permitted;
(h) the Borrower may hold the promissory notes acquired in accordance
with Section 8.02(e);
(i) the Borrower may repurchase stock to the extent permitted by
Section 8.07(a)(ii) and (iii); and
(j) investments made by the Borrower in Cash Equivalents shall be
permitted.
8.06 Prepayments of Indebtedness, etc. The Borrower will not, and
will not permit any of its Subsidiaries to, (x) make (or give any notice in
respect thereof) any voluntary or optional payment or prepayment or redemption
or acquisition for value of (including, without limitation, by way of depositing
with the trustee with respect thereto money or securities before due for the
purpose of paying when due) or exchange of any Existing Indebtedness or the
Senior Notes; provided, that (i) the Borrower and/or its Subsidiaries may prepay
Existing Indebtedness in an aggregate amount not to exceed $2,000,000 and (ii)
the Borrower may repay, repurchase or otherwise acquire Senior Notes under the
clawback provisions of the Senior Note Documents, (y) amend, modify or change in
any manner any agreements (including, without limitation, the Senior Note
Documents and the Existing Indebtedness Agreements) (A) relating to the Senior
Notes or (B) relating to the Existing Indebtedness, in a manner adverse to the
interests of the Banks in the case of this clause (B) or (z) amend, modify or
change in any manner materially adverse to the interests of the Banks, the
Certificate of Incorporation (including, without limitation, by the filing of
any additional certificate of designation) or By-Laws of the Borrower or any of
its Subsidiaries, the terms of any of its capital stock or any agreement entered
into by the Borrower with respect to its capital stock, the Shareholders
Agreement, or enter into any new agreement in any manner materially adverse to
the interests of the Banks with respect to the capital stock of the Borrower.
8.07 Dividends, etc. (a) The Borrower will not, and will not permit
any of its Subsidiaries to, declare or pay any dividends (other than dividends
payable solely in capital stock of such Person) or return any capital to its
stockholders or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for a consideration, any shares of
any class of its capital stock now or hereafter outstanding (or any warrants for
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or options or stock appreciation rights in respect of any of such shares), or
set aside any funds for any of the foregoing purposes, or permit any of its
Subsidiaries to purchase or otherwise acquire for consideration any shares of
any class of the capital stock of the Borrower or any other Subsidiary, as the
case may be, now or hereafter outstanding (or any options or warrants or stock
appreciation rights issued by such Person with respect to its capital stock)
(all of the foregoing "Dividends"), except that:
(i) any Subsidiary of the Borrower may pay cash dividends to the
Borrower or to a Wholly-Owned Subsidiary of the Borrower; and
(ii) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, the Borrower may redeem or repurchase
for cash, at fair value, the capital stock of the Borrower (or options to
purchase capital stock) from any employee or director of the Borrower upon
the death, disability, retirement or other termination of such employee or
director, provided, that all such repurchases under this clause (ii) shall
not exceed, in the aggregate, $2,500,000 (increased by the amount of
proceeds received by the Borrower in connection with the issuance of
capital stock to directors or employees of the Borrower and its
Subsidiaries after the Restatement Effective Date); provided further, the
Borrower may effect such repurchases without regard to the dollar
limitations set forth above solely with the proceeds of key man life
insurance obtained for the purpose of making such repurchases; and
(iii) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, the Borrower may repurchase options
of the Preferred Optionholders, so long as no net cash is used by the
Borrower in connection therewith.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist any encumbrance or
restriction which prohibits or otherwise restricts (A) the ability of any
Subsidiary of the Borrower to (a) pay dividends or make other distributions or
pay any Indebtedness owed to the Borrower or any other Subsidiary of the
Borrower, (b) make loans or advances to the Borrower or any other Subsidiary of
the Borrower, (c) transfer any of its properties or assets to the Borrower or
any other Subsidiary of the Borrower or (B) the ability of the Borrower or any
other Subsidiary of the Borrower to create, incur, assume or suffer to exist any
Lien upon its property or assets to secure the Obligations, other than
prohibitions or restrictions existing under or by reason of:
(i) this Agreement and the other Credit Documents;
(ii) the Senior Note Documents;
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(iii) applicable law;
(iv) customary non-assignment provisions entered into in the ordinary
course of business and consistent with past practices;
(v) any restriction or encumbrance with respect to a Subsidiary of
the Borrower imposed pursuant to an agreement which has been entered into
for the sale or disposition of all or substantially all of the capital
stock or assets of such Subsidiary, so long as such sale or disposition is
permitted under this Agreement; and
(vi) Liens permitted under Section 8.03 and any documents or
instruments governing the terms of any Indebtedness or other obligations
secured by any such Liens, provided that such prohibitions or restrictions
apply only to the assets subject to such Liens.
8.08 Transactions with Affiliates. The Borrower will not, and will
not permit any of its Subsidiaries to, enter into any transaction or series of
transactions after the Restatement Effective Date whether or not in the ordinary
course of business, with any Affiliate other than on terms and conditions
substantially as favorable to the Borrower or such Subsidiary as would be
obtainable by the Borrower or such Subsidiary at the time in a comparable arm's
length transaction with a Person other than an Affiliate; provided, that the
foregoing restrictions shall not apply to (i) advances to employees of the
Borrower and its Subsidiaries to the extent permitted by Section 8.05(e), (ii)
annual management fees to be paid to an Affiliate of BRS not to exceed $250,000
in any fiscal year, (iii) the reimbursement of the reasonable out-of-pocket
expenses incurred by the Investors in connection with the Transaction, (iv)
Dividends permitted under Section 8.07, (v) transactions between the Borrower
and its Subsidiaries to the extent otherwise expressly permitted under this
Agreement, (vi) employment arrangements (including arrangements made with
respect to bonuses) entered into in the ordinary course of business with members
of the Board of Directors of the Borrower and of its Subsidiaries, (vii) the
Shareholders' Agreements as in effect on the Restatement Effective Date, and
(viii) the Warrant Agreement.
8.09 Net Interest Coverage Ratio. The Borrower will not permit the
Net Interest Coverage Ratio for any Test Period ending on a date set forth below
to be less than the ratio set forth opposite such date:
Date Ratio
----- --------
November 30, 1997 1.75:1
February 28, 1998 1.75:1
May 31, 1998 1.75:1
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August 31, 1998 1.75:1
November 30, 1998 1.8:1
February 28, 1999 1.9:1
May 31, 1999 2.0:1
August 31, 1999 2.0:1
November 30, 1999 2.1:1
February 29, 2000 2.2:1
May 31, 2000 2.3:1
August 31, 2000 2.3:1
November 30, 2000 2.4:1
February 28, 2001 2.4:1
The Last Day of Each Fiscal Quarter Thereafter 2.5:1
8.10 Net Leverage Ratio. The Borrower will not permit the Net
Leverage Ratio on the last day of any calendar month which day occurs during a
period set forth below to be greater than the ratio set forth opposite such
period below:
Period Ratio
------ ------
Effective Date through November 30, 1997 4.5:1
Fiscal quarter ending February 28, 1998 4.5:1
Fiscal quarter ending May 31, 1998 4.5:1
Fiscal quarter ending August 31, 1998 4.5:1
Fiscal quarter ending November 30, 1998 4.5:1
Fiscal quarter ending February 28, 1999 4.4:1
Fiscal quarter ending May 31, 1999 4.3:1
Fiscal quarter ending August 31, 1999 4.3:1
Fiscal quarter ending November 30, 1999 4.2:1
Fiscal quarter ending February 29, 2000 4.1:1
Fiscal quarter ending May 31, 2000 4.0:1
Fiscal quarter ending August 31, 2000 3.9:1
Fiscal quarter ending November 30, 2000 3.85:1
Fiscal quarter ending February 28, 2001 3.80:1
Each Fiscal Quarter Thereafter 3.75:1
8.11 Issuance of Stock. The Borrower will not issue any shares of
capital stock (other than issuances of Common Stock not creating a Change of
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Control), and will not permit any of its Subsidiaries directly or indirectly to
issue, sell, assign, pledge or otherwise encumber or dispose of any shares of
its capital stock or other securities (or warrants, rights or options to acquire
shares or other equity securities) of such Subsidiary, except (x) to the extent
permitted by Section 8.05, (y) to the Borrower and/or any Subsidiary Guarantor
or (z) to qualify directors if required by applicable law.
8.12 Limitation on Creation of Subsidiaries. The Borrower shall not,
and shall not permit any of its Subsidiaries to, establish, create or acquire
any additional Subsidiaries without the prior written consent of the Required
Banks, provided that the Borrower and its Wholly-Owned Subsidiaries shall be
permitted to establish or create Wholly-Owned Subsidiaries in connection with
the acquisition or development of new fitness clubs or sports facilities so long
as (i) at least 5 days' prior written notice thereof (or such lesser notice as
is acceptable to the Administrative Agent) is given to the Administrative Agent,
(ii) such new Subsidiaries shall execute and deliver such guarantees and
security documents as the Required Banks shall request (including documents
substantially similar to or amendments to each of the Pledge Agreement and the
Security Agreement), and in such forms as shall be satisfactory to them, (iii)
the holders of the capital stock of such new Subsidiaries shall execute and
deliver additional pledge agreements, in form and substance satisfactory to the
Administrative Agent and (iv) such new Subsidiaries shall execute and deliver,
or cause to be executed and delivered, all other relevant documentation of the
type described in Section 5 as such new Subsidiaries would have had to deliver
if such new Subsidiaries were Credit Parties on the Restatement Effective Date.
SECTION 9. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment when
due of any principal of the Loans or (ii) default, and such default shall
continue for three or more Business Days, in the payment when due of any Unpaid
Drawing, any interest on the Loans or any Fees or any other amounts owing
hereunder or under any other Credit Document; or
9.02 Representations, etc. Any representation, warranty or statement
made by any Credit Party herein or in any other Credit Document or in any
statement or certificate delivered or required to be delivered pursuant hereto
or thereto shall prove to be untrue in any material respect on the date as of
which made or deemed made; or
9.03 Covenants. The Borrower or any of its Subsidiaries shall (a)
default in the due performance or observance by it of any term, covenant or
agreement contained in Sections 7.01(f)(x), 7.11 or 8, or (b) default in the due
performance or observance by it of any term, covenant or agreement (other than
those referred to in Section 9.01, 9.02 or clause (a) of this Section 9.03)
contained in this Agreement and such default shall continue
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unremedied for a period of at least 30 days after notice to the defaulting
party by the Administrative Agent or the Required Banks; or
9.04 Default Under Other Agreements. (a) The Borrower or any of its
Subsidiaries shall (i) default in any payment with respect to any Indebtedness
(other than the Obligations) beyond the period of grace, if any, applicable
thereto or (ii) default in the observance or performance of any agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause, any such
Indebtedness to become due prior to its stated maturity or (b) any such
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof, provided that it
shall not constitute an Event of Default pursuant to this Section 9.04 unless
the principal amount of any one issue of such Indebtedness exceeds $2,000,000 or
the aggregate amount of all Indebtedness referred to in clauses (a) and (b)
above exceeds $5,000,000 at any one time; or
9.05 Bankruptcy, etc. The Borrower or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against the
Borrower or any of its Subsidiaries and the petition is not controverted within
10 days, or is not dismissed within 60 days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of the Borrower or any of
its Subsidiaries; or the Borrower or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
of its Subsidiaries; or there is commenced against the Borrower or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or the Borrower or any of its Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; the Borrower or any of its Subsidiaries suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or the
Borrower or any of its Subsidiaries makes a general assignment for the benefit
of creditors; or any corporate action is taken by the Borrower or any of its
Subsidiaries for the purpose of effecting any of the foregoing; or
9.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
-57-
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, any Plan
which is subject to Title IV of ERISA shall have had or is likely to have a
trustee appointed to administer such Plan, any Plan which is subject to Title IV
of ERISA is, shall have been or is likely to be terminated or to be the subject
of termination proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a contribution required to be made with respect to a Plan has not
been timely made, the Borrower or a Subsidiary of the Borrower or any ERISA
Affiliate has incurred or is reasonably likely to incur any liability to or on
account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the
Code or on account of a group health plan (as defined in Section 607(1) of ERISA
or Section 4980B(g)(2) of the Code), or the Borrower or any of its Subsidiaries
has incurred or is likely to incur liabilities pursuant to one or more employee
welfare benefit plans (as defined in Section 3(1) of ERISA) that provide
benefits to retired employees or other former employees (other than as required
by Section 601 of ERISA) or Plans (other than any Plan subject to Title IV of
ERISA); and (b) there shall result from any such event or events the imposition
of a Lien, the granting of a security interest, or a liability or a material
risk of incurring a liability; and (c) such Lien, security interests or
liability, individually or in the aggregate, in the reasonable opinion of the
Required Banks, has had, or could reasonably be expected to have, a Material
Adverse Effect; or
9.07 Security Documents. Any Security Document shall cease to be in
full force and effect or, except as expressly set forth in the Security
Agreement, shall cease to give the Collateral Agent any perfected Lien
encumbering Collateral, or shall cease to give the Collateral Agent any material
rights, powers and privileges purported to be created thereby in favor of the
Collateral Agent or any Credit Party shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any such Security Document and such default shall continue
unremedied for a period of 30 days after notice to the Borrower by the
Administrative Agent or the Required Banks; or
9.08 Subsidiary Guaranty. The Subsidiary Guaranty or any provision
thereof shall cease to be in full force or effect, or any Subsidiary Guarantor
or any Person acting by or on behalf of any Subsidiary Guarantor shall deny or
disaffirm such guarantor's obligations under such Subsidiary Guaranty or any
Subsidiary Guarantor shall default in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed pursuant to
the Subsidiary Guaranty; or
9.09 Judgments. One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries involving a liability of
$2,000,000 or more in the case of any one such judgment or decree and $5,000,000
or more in the aggregate for all such judgments and decrees for the Borrower and
its Subsidiaries (in each case, not paid or to the extent not covered by
insurance) and any such judgments or decrees shall not have been vacated,
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discharged or stayed or bonded pending appeal within 60 days from the entry
thereof; or
9.10 Change of Control. A Change of Control shall occur;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Banks, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the
Administrative Agent or any Bank to enforce its claims against the Borrower,
except as otherwise specifically provided for in this Agreement (provided that,
if an Event of Default specified in Section 9.05 shall occur with respect to the
Borrower, the result which would occur upon the giving of written notice by the
Administrative Agent as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare the Total
Commitment terminated, whereupon the Commitment of each Bank shall forthwith
terminate immediately and any Commitment Commission shall forthwith become due
and payable without any other notice of any kind; (ii) declare the principal of
and any accrued interest in respect of all Loans and all Obligations owing
hereunder (including Unpaid Drawings) and thereunder to be, whereupon the same
shall become, forthwith due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower; (iii)
enforce, as Collateral Agent (or direct the Collateral Agent to enforce), any or
all of the Liens and security interests created pursuant to the Security
Documents; (iv) terminate any Letter of Credit which may be terminated in
accordance with its terms; (v) direct the Borrower to pay (and the Borrower
hereby agrees upon receipt of such notice, or upon the occurrence of any Event
of Default specified in Section 9.05 in respect of the Borrower, it will pay) to
the Collateral Agent at the Payment Office such additional amounts of cash, to
be held as security for the Borrower's reimbursement obligations in respect of
Letters of Credit then outstanding equal to the aggregate Stated Amount of all
Letters of Credit then outstanding; and (vi) apply any cash collateral held
pursuant to this Agreement to repay the Obligations.
SECTION 10. Definitions. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Adjusted Percentage" shall mean (x) at a time when no Bank Default
exists, for each Bank such Bank's Percentage and (y) at a time when a Bank
Default exists (i) for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage determined by dividing
such Bank's Commitment at such time by the Adjusted Total Commitment at such
time, it being understood that all references herein to Commitments and the
Adjusted Total Commitment at a time when the Total Commitment or Adjusted Total
Commitment, as the case may be, has been terminated shall be references to the
Commitments or Adjusted Total Commitment, as the case may be, in effect
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immediately prior to such termination, provided that (A) no Bank's Adjusted
Percentage shall change upon the occurrence of a Bank Default from that in
effect immediately prior to such Bank Default if, after giving effect to such
Bank Default and any repayment of Loans and Swingline Loans at such time
pursuant to Section 4.02(A)(a) or otherwise, the sum of (i) the aggregate
outstanding principal amount of Loans of all Non-Defaulting Banks plus (ii) the
aggregate outstanding principal amount of Swingline Loans plus (iii) the Letter
of Credit Outstandings, exceeds the Adjusted Total Commitment, (B) the changes
to the Adjusted Percentage that would have become effective upon the occurrence
of a Bank Default but that did not become effective as a result of the preceding
clause (A) shall become effective on the first date after the occurrence of the
relevant Bank Default on which the sum of (i) the aggregate outstanding
principal amount of the Loans of all Non-Defaulting Banks plus (ii) the
aggregate outstanding principal amount of the Swingline Loans plus (iii) the
Letter of Credit Outstandings is equal to or less than the Adjusted Total
Commitment and (C) if (i) a Non-Defaulting Bank's Adjusted Percentage is changed
pursuant to the preceding clause (B) and (ii) any repayment of such Bank's
Loans, or of Unpaid Drawings with respect to Letters of Credit or of Swingline
Loans, that were made during the period commencing after the date of the
relevant Bank Default and ending on the date of such change to its Adjusted
Percentage must be returned to any Borrower as a preferential or similar payment
in any bankruptcy or similar proceeding of such Borrower, then the change to
such Non-Defaulting Bank's Adjusted Percentage effected pursuant to said clause
(B) shall be reduced to that positive change, if any, as would have been made to
its Adjusted Percentage if (x) such repayments had not been made and (y) the
maximum change to its Adjusted Percentage would have resulted, in the sum of the
outstanding principal of Loans made by such Bank plus such Bank's new Adjusted
Percentage of the outstanding principal amount of Swingline Loans and of Letter
of Credit Outstandings equalling such Bank's Commitment at such time.
"Adjusted Commitment" for each Non-Defaulting Bank shall mean at any
time the product of such Bank's Adjusted Percentage and the Adjusted Total
Commitment.
"Adjusted Total Commitment" shall mean at any time the Total
Commitment less the aggregate Commitments of all Defaulting Banks.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 11.09.
"Affected Eurodollar Loans" shall have the meaning provided in Section
4.02(B).
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
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such Person possesses, directly or indirectly, the power (i), other than for
purposes of the definition of Permissible Transferees, to vote 5% or more of the
securities having ordinary voting power for the election of directors of such
corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Credit Agreement, as the same may be from
time to time modified, amended and/or supplemented.
"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice delivered
by the Borrower in connection therewith as the amount of the Net Cash Proceeds
from the related Asset Sale that the Borrower and/or the Subsidiary Guarantors
intend to use to purchase, construct or otherwise acquire Reinvestment Assets.
"Applicable Base Rate Margin" shall mean 1.50%.
"Applicable Commitment Commission Percentage" shall mean, at any time,
a percentage per annum equal to 1/2 of 1%, provided that the Applicable
Commitment Commission Percentage shall be 3/8 of 1% if, but only if, as of the
date that such Commitment Commission shall be due and payable as referenced in
Section 3.01, the Net Leverage Ratio for the Test Period then most recently
ended shall be less than 4.00:1.00.
"Applicable Eurodollar Margin" shall mean 2.50%.
"Asset Sale" shall mean the sale, transfer or other disposition by the
Borrower or any Subsidiary of the Borrower to any Person other than the Borrower
or any Subsidiary Guarantor of any asset of the Borrower or such Subsidiary
(other than sales, transfers or other dispositions (x) in the ordinary course of
business of inventory and/or obsolete or excess equipment or intellectual
property pursuant to 8.02(i) or (d) and/or pursuant to equipment
trade-in/trade-up transactions or (y) the proceeds of which do not exceed
$100,000 per annum).
"Assignment and Assumption Agreement" shall have the meaning provided
in Section 12.04(b).
"Authorized Officer" shall mean any senior officer of the Borrower
designated as such in writing to the Administrative Agent by the Borrower in
each case to the extent acceptable to the Administrative Agent.
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"Bank" shall have the meaning provided in the first paragraph of this
Agreement, and shall include each financial institution which becomes a party
hereto in accordance with Sections 1.13 and/or 12.04(b).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any incurrence of Loans
(including pursuant to a Mandatory Borrowing) or to fund its portion of any
unreimbursed payment under Section 2.05(c) or (ii) a Bank having notified the
Administrative Agent and/or the Borrower that it does not intend to comply with
its obligations under Section 1.01 or under Section 2.05(c).
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher of (i) the rate which is
1/2 of 1% in excess of the Federal Funds Effective Rate and (ii) the Prime
Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the incurrence of (i) Swingline Loans by the
Borrower from BTCo on a given date or (ii) one Type of Loan by the Borrower from
all of the Banks on a pro rata basis on a given date (or resulting from
conversions on a given date), having in the case of Eurodollar Loans the same
Interest Period; provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of any related Borrowing of Eurodollar Loans.
"BRS" shall mean Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., L.P., a limited
partnership organized under the laws of the State of Delaware.
"BRS Investors" shall mean each of the "BRS Investors" (as such term
is defined in the Stockholders Agreement).
"BTCo" shall mean Bankers Trust Company.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
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Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Bank, (y)
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500,000,000 or (z) any bank (or the parent company of such bank)
whose short-term commercial paper rating from Standard & Poor's Ratings Services
("S&P") is at least A-2 or the equivalent thereof or from ▇▇▇▇▇'▇ Investors
Service, Inc. ("▇▇▇▇▇'▇") is at least P-2 or the equivalent thereof (any such
bank, an "Approved Bank"), in each case with maturities of not more than six
months from the date of acquisition, (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (ii) above, (iv) commercial paper issued by any Bank or Approved Bank
or by the parent company of any Bank or Approved Bank and commercial paper
issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating of at least A-2 or the equivalent thereof by
S&P or at least P-2 or the equivalent thereof by Moody's (any such company, an
"Approved Company"), or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each thereof,
from S&P or Moody's, as the case may be, and in each case maturing within six
months after the date of acquisition and (v) investments in money market funds
substantially all of whose assets are comprised of securities of the type
described in clauses (i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) received by the Borrower and/or any Subsidiary from such Asset
Sale.
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"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq.
"Change of Control" shall mean either (i) prior to a registered
initial public offering of the Common Stock, (x) the Management Investors, BRS,
the BRS Investors and their Permissible Transferees shall in the aggregate cease
to own Common Stock representing more than 50% of the common voting equity
interest in the Borrower's capital stock on a fully-diluted basis assuming the
exercise of all securities exercisable, convertible or exchangeable for or into
common equity interests and (y) BRS, BRS Investors and their Permissible
Transferees shall in the aggregate cease to own Common Stock representing 37.5%
of the voting common equity interests with the Borrower's capital stock on a
fully diluted basis assuming the exercise of all securities exercisable,
convertible or exchangeable for or into common equity interests, (ii) after a
registered initial public offering, (x) the Management Investors, BRS, the BRS
Investors and their Permissible Transferees shall cease to own Common Stock
representing not less than 33% of the common voting equity interest in the
Borrower's capital stock or (y) BRS, BRS Investors and their Permissible
Transferees shall in the aggregate cease to own Common Stock representing 20% of
the common voting equity interests with the Borrower's capital stock on a fully
diluted basis assuming the exercise of all securities exercisable, convertible
or exchangeable for into common equity interests or (z) any Person or group (as
such term is used under the Exchange Act) of Persons, owns (beneficially or of
record) a greater percentage than BRS, the BRS Investors and their Permissible
Transferees of common equity interest in the Borrower's capital stock, in each
case, on a fully-diluted basis assuming the exercise of all securities
exercisable, convertible or exchangeable for or into common equity interests,
(iii) a "change of control" pursuant to, and as defined in, the Certificate of
Merger of the Borrower, as filed on December 10, 1996 and (iv) a "change of
control" pursuant to, and as defined in, the Senior Note Documents.
"Class A Common Stock" shall mean the Class A Common Stock of the
Borrower, par value $.001 per share.
"Class B Common Stock" shall mean the Class B Common Stock of the
Borrower, par value $.001 per share.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
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"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Banks pursuant to the Security Documents.
"Commitment" shall mean, with respect to each Bank, the amount set
forth opposite such Bank's name in Annex I directly below the column entitled
"Commitment," (x) as the same may be reduced from time to time pursuant to
Sections 1.13, 3.02 and/or 3.03 or (y) adjusted from time to time as a result of
assignments to or from such Bank pursuant to Section 12.04.
"Commitment Commission" shall have the meaning provided in
Section 3.01(a).
"Common Optionholders" shall mean those employees of the Borrower
designated as Common Optionholders on Annex X.
"Common Stock" shall mean, collectively, the Class A Common Stock and
the Class B Common Stock.
"Consolidated EBIT" shall mean, for any period, (A) the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) provisions for cash
taxes based on income, (iii) Consolidated Interest Expense, (iv) amortization or
write-off of deferred financing costs to the extent deducted in determining
Consolidated Net Income and (v) losses on sales of assets (excluding sales in
the ordinary course of business) and other extraordinary or nonrecurring losses
less (B) the amount for such period of gains on sales of assets (excluding sales
in the ordinary course of business) and other extraordinary or nonrecurring
gains, all as determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDAD" shall mean, for any period, the sum of the
amounts for such period of (i) Consolidated EBIT, (ii) depreciation expense,
(iii) amortization expense, (iv) deferred rent expense and (v) without
duplication, all other non-cash charges included in determining Consolidated Net
Income during such period, all as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Indebtedness" shall mean, as at any date of
determination, the aggregate amount of all Indebtedness of the Borrower and its
Subsidiaries on a consolidated basis.
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including that attributable to Capital Leases in accordance
with GAAP) of the Borrower and its Subsidiaries on a consolidated basis with
respect to all outstanding Indebtedness of the Borrower and its Subsidiaries,
including, without limitation, all capitalized interest, but excluding (x) all
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commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under Interest Rate
Agreements and (y) Transaction Expenses.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss) of the Borrower and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP,
provided that there shall be excluded (i) the income (or loss) of any Person
(other than Subsidiaries of the Borrower) in which any other Person (other than
the Borrower or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to the
Borrower or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of the Borrower or is merged into or consolidated with the Borrower or any of
its Subsidiaries or that Person's assets are acquired by the Borrower or any of
its Subsidiaries, (iii) the income of any Subsidiary of the Borrower to the
extent that the declaration or payment of dividends or similar distributions by
that Subsidiary of that income is not at the time permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary, (iv)
Transaction Expenses, (v) compensation expense resulting from the issuance of
capital stock, stock options or stock appreciation rights issued to former or
current employees, including officers, of the Borrower or any Subsidiary of the
Borrower, or the exercise of such options or rights, in each case to the extent
the obligation (if any) associated therewith is not expected to be settled by
the payment of cash by the Borrower or any Affiliate of the Borrower and (vi)
compensation expense resulting from the repurchase of capital stock, options and
rights described in clause (v) of this definition of Consolidated Net Income.
"Consolidated Net Interest Expense" shall mean, for any period,
Consolidated Interest Expense for such period less consolidated interest income
shown on the financial statements of the Borrower for such period.
"Contingent Obligations" shall mean, as to any Person, any obligation
of such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof, provided, however, that
the term Contingent Obligation shall not include endorsements of instruments for
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deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement, each of the Notes, each
of the Security Documents (including the Security Documents Acknowledgments),
the Subsidiary Guaranty (including the Subsidiary Guaranty Acknowledgment) and
any documents executed in connection therewith.
"Credit Event" shall mean and include the making of a Loan or the
issuance of a Letter of Credit.
"Credit Party" shall mean the Borrower and the Subsidiary Guarantors.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Dividends" shall have the meaning provided in Section 8.07.
"Documents" shall mean, collectively, (a) the Credit Documents and (b)
the Senior Note Documents.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined by Regulation D
of the Securities Act of 1933).
"Employment Agreements" shall have the meaning provided in Section
5.06(v).
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, administrative investigations or
proceedings relating in any way to any violation of or any liability under any
Environmental Law or any permit issued, or under any approval given, under any
such Environmental Law (hereafter, "Claims"), including, without limitation,
(a) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
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pursuant to any applicable Environmental Law, and (b) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, rule of common law or
written and binding policy or guide, now or hereafter in effect and in each case
as amended, and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment, relating to
the environment, health, safety or Hazardous Materials, including, without
limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, as amended,
33 U.S.C. Section 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C.
Section 7401 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the
Safe Drinking Water Act, 42 U.S.C. Section 3808 et seq.; the Oil Pollution Act
of 1990, 33 U.S.C. Section 2701 et seq.; and any applicable state and local or
foreign counterparts or equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Borrower or a Subsidiary of the Borrower would
be deemed to be a "single employer" within the meaning of Section 414(b), (c),
(m) or (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest Period for
a Eurodollar Loan, (i) the offered quotation to first-class banks in the New
York interbank Eurodollar market by the Administrative Agent for dollar deposits
of amounts in same day funds comparable to the outstanding principal amount of
the Eurodollar Loan of the Administrative Agent for which an interest rate is
then being determined with maturities comparable to the Interest Period to be
applicable to such Eurodollar Loan, determined as of 10:00 A.M. (New York time)
on the date which is two Business Days prior to the commencement of such
Interest Period divided (and rounded upward to the next whole multiple of 1/16
of 1%) by (ii) a percentage equal to 100% minus the then stated maximum rate of
all reserve requirements (including without limitation any marginal, emergency,
supplemental, special or other reserves) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
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"Event of Default" shall have the meaning provided in Section 9.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Existing Indebtedness" shall have the meaning provided in Section
6.21.
"Existing Indebtedness Agreements" shall have the meaning provided in
Section 5.06(ii).
"Existing Ventures" shall have the meaning provided in Section
8.05(a).
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Farallon" shall mean, collectively, Farallon Capital Partners, L.P.,
Farallon Capital Institutional Partners, L.P., RR Capital Partners, L.P., and
Farallon Capital Institutional Partners II, L.P.
"Federal Funds Effective Rate" shall mean, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"FIRREA" shall mean Financial Institution Reform, Recovery and
Enforcement Act of 1989.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 8, including defined terms as used therein, are subject (to the
extent provided therein) to Section 12.07(a).
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
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contained, electric fluid containing levels of polychlorinated biphenyls, and
radon gas; (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar meaning and regulatory effect, under any applicable Environmental Law;
and (c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has been assumed, (v) all Capitalized Lease Obligations
of such Person, (vi) all obligations of such Person to pay a specified purchase
price for goods or services whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations, (vii) all net obligations of such Person
under Interest Rate Agreements and (viii) all Contingent Obligations of such
Person, (other than Contingent Obligations arising from the guaranty by such
Person of the obligations of the Borrower and/or its Subsidiaries to the extent
such guaranteed obligations do not constitute Indebtedness), provided that
Indebtedness shall not include trade payables, deferred revenue, taxes and
accrued expenses, in each case arising in the ordinary course of business.
"Interest Period" with respect to any Eurodollar Loan shall mean the
interest period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap agreement,
any interest rate cap agreement, any interest rate collar agreement or other
similar agreement or arrangement designed to hedge the position of the Borrower
or any Subsidiary with respect to interest rates.
"Investors" shall mean, collectively, BRS, the BRS Investors,
Farallon, and the Management Investors and their respective "Permitted
Transferees" (as such term is defined in the Stockholders Agreement).
"L/C Supportable Obligations" shall mean and include obligations of
the Borrower or its Subsidiaries incurred in the ordinary course of business
(including without limitation pursuant to lease obligations in respect of real
property leased by the Borrower or any of its Subsidiaries) and such other
obligations of the Borrower or any of its Subsidiaries as are reasonably
acceptable to the Administrative Agent and the respective Letter of Credit
Issuer and otherwise permitted to exist pursuant to the terms of this Agreement.
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"Leasehold" of any Person shall mean all of the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Issuer" shall mean BTCo and any other Bank which at
the request of the Borrower and with the consent of the Administrative Agent
agrees, in such Bank's sole discretion, to become a Letter of Credit Issuer for
purposes of issuing Letters of Credit pursuant to Section 2.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section
2.03(a).
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Loan" shall have the meaning provided in Section 1.01.
"Management Agreements" shall have the meaning provided in Section
5.06 (iv).
"Management Investors" shall mean the directors, executive officers
and other senior management investors of the Borrower party to the
Recapitalization Agreement or the Stockholders Agreement.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(c).
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
business, property, assets, liabilities, operations, condition (financial or
otherwise) or prospects of the Borrower or of the Borrower and its Subsidiaries
taken as a whole, after giving effect to the Transaction.
"Maturity Date" shall mean October 15, 2002.
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"Maximum Swingline Amount" shall mean $2,000,000.
"Minimum Borrowing Amount" shall mean (i) for Revolving Loans
maintained as Base Rate Loans, $250,000 and (ii) for Revolving Loans maintained
as Eurodollar Loans, $500,000.
"Mortgage" shall mean the Mortgage as defined in, and delivered
pursuant to, the Original Credit Agreement, as same may be amended, modified or
supplemented from time to time.
"Mortgage Policies" shall have the meaning provided in the Original
Credit Agreement.
"Mortgaged Properties" shall mean each of the Real Properties listed
on Annex IV hereto and designated as a "Mortgaged Property" thereon.
"Multiemployer Plan" shall have the meaning provided in Section
4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of expenses of sale (including payment of
principal, premium and interest of other Indebtedness secured by the assets the
subject of the Asset Sale and required to be, and which is, repaid under the
terms thereof as a result of such Asset Sale), and incremental taxes paid or
payable as a result thereof; provided that Net Cash Proceeds shall not include
cash deposited with the Administrative Agent pursuant to a cash collateral
arrangement pursuant to this Agreement.
"Net Interest Coverage Ratio" shall mean, for any Test Period, the
ratio of (i) Consolidated EBITDAD for such Test Period to (ii) Consolidated Net
Interest Expense for such Test Period.
"Net Leverage Ratio" shall mean, at any date of determination, the
ratio of (i) Consolidated Indebtedness on such date less cash and Cash
Equivalents held by the Borrower and its Subsidiaries on such date to (ii)
Consolidated EBITDAD for the Test Period most recently ended (taken as one
accounting period).
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
"Note" shall mean and include each Revolving Note and the Swingline
Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
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"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ or such other office as the
Administrative Agent may designate to the Borrower from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Administrative Agent, the Collateral Agent or any Bank pursuant to the terms
of this Agreement or any other Credit Document.
"Option Agreements" shall mean, collectively, (i) the Preferred Stock
Option Agreements by and among the Borrower and the Preferred Optionholders and
(ii) the Common Stock Option Agreements by and among the Borrower and the Common
Optionholders.
"Option Plan" shall mean the Town Sports International, Inc. 1996
Stock Option Plan, as in effect from time to time.
"Optionholders" shall mean, collectively, the Common Optionholders and
the Preferred Optionholders.
"Options" shall mean, collectively, (i) the options to purchase Series
B Preferred Stock issued pursuant to the Recapitalization Documents and (ii) the
options to purchase Common Stock granted pursuant to the Option Plan.
"Original Bank" shall mean each Person which was a Bank under, and as
defined in, the Original Credit Agreement.
"Original Credit Agreement" shall have the meaning provided in the
first WHEREAS clause of this Agreement.
"Original Loans" shall mean the Loans under, and as defined in, the
Original Credit Agreement.
"Participant" shall have the meaning provided in Section 2.05(a).
"Payment Office" shall mean the office of the Administrative Agent
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ or such other office as the
Administrative Agent may designate to the Borrower from time to time.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" shall mean at any time for each Bank the percentage
obtained by dividing such Bank's Commitment by the Total Commitment, provided
that if the Total Commitment has been terminated, the Percentage of each Bank
shall be determined by dividing such Bank's Commitment immediately prior to such
termination by the Total Commitment immediately prior to such termination.
"Permissible Transferees" shall mean (i) in the case of BRS or any BRS
Investor, (A) any Affiliate of BRS (other than any corporation or other Person
(except for any corporation or other Person engaged in a business similar,
complementary or related to the nature or type of the business of the Borrower
and its Subsidiaries) controlled by, or any investment fund managed by, BRS),
(B) any managing director, general partner, limited partner, director, officer
or employee of BRS or any Affiliate thereof (collectively, "BRS Associates"),
and his or her spouse, parents, siblings, members of his or her immediate family
(including adopted children) and/or direct lineal descendants or (C) the heirs,
executors, administrators, testamentary trustees, legatees or beneficiaries of
any BRS Associate and (D) any trust, the beneficiaries of which, or a
corporation or partnership, the stockholders or partners of which, include only
a BRS Associate, his or her spouse, parents, siblings, or direct lineal
descendants, and (ii) in the case of any Management Investor, (A) his or her
executor, administrator, testamentary trustee, legatee or beneficiaries, (B) his
or her spouse, parents, siblings, members of his or her immediate family
(including adopted children) and/or direct lineal descendants or (C) a trust,
the beneficiaries of which, or a corporation or partnership, the stockholders or
partners of which, include only the Management Investor, as the case may be, and
his or her spouse, parents, siblings, members of his or her immediate family
(including adopted children) and/or direct lineal descendants.
"Permitted Encumbrances" shall mean, with respect to any Real Property
subject to a Mortgage or an Additional Mortgage, such exceptions to title as are
set forth in the title insurance policy or title commitment delivered with
respect thereto, all of which exceptions must be reasonably acceptable to the
Administrative Agent.
"Permitted Liens" shall have the meaning provided in Section 8.03.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) the Borrower, a Subsidiary of the Borrower or an
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ERISA Affiliate, and each such plan for the five-year period immediately
following the latest date on which the Borrower, a Subsidiary of the Borrower,
or an ERISA Affiliate maintained, contributed to or had an obligation to
contribute to such plan.
"Pledge Agreement" shall mean the Pledge Agreement delivered in, and
delivered pursuant to, the Original Credit Agreement, as same may be amended,
modified or supplemented from time to time.
"Pledged Securities" shall mean all the Pledged Securities as defined
in the Pledge Agreement.
"Preferred Optionholders" shall mean those employees of the Borrower
designated as Preferred Optionholders on Annex X.
"Preferred Stock" shall mean collectively, the Series A Preferred
Stock and the Series B Preferred Stock.
"Prime Lending Rate" shall mean the rate which BTCo announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. BTCo may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Projections" shall have the meaning set forth in Section 5.15.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 et seq.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recapitalization Agreement" shall mean the Agreement and Plan of
Merger, dated November 8, 1996, by and among the Borrower, the Stockholders and
Merger Sub, as amended, restated or modified prior to the date hereof.
"Recovery Event" shall mean the receipt by the Borrower or any of its
Subsidiaries of any cash insurance proceeds or condemnation award payable (i) by
reason of theft, loss, physical destruction or damage or any other similar event
with respect to any property or asset of the Borrower or any of its
Subsidiaries, or (ii) by reason of any condemnation, taking, seizing or similar
event with respect to any property or asset of the Borrower or any of its
Subsidiaries.
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"Register" shall have the meaning provided in Section 12.16.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation G, T, U and X" shall mean Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System as from time to time in effect
and any successor to all or a portion thereof establishing margin requirements.
"Reinvestment Assets" shall mean any assets to be employed in the
business of the Borrower and its Subsidiaries as described in Sections 3.03(c),
3.03(g) and 8.02(e).
"Reinvestment Election" shall have the meaning provided in Section
3.03(c).
"Reinvestment Notice" shall mean a written notice signed by an
Authorized Officer of the Borrower stating that the Borrower, in good faith,
intends and expects to use all or a specified portion of the Net Cash Proceeds
of an Asset Sale to purchase, construct or otherwise acquire Reinvestment
Assets.
"Reinvestment Prepayment Amount" shall mean, with respect to any
Reinvestment Election, the amount, if any, on the Reinvestment Prepayment Date
relating thereto by which (a) the Anticipated Reinvestment Amount in respect of
such Reinvestment Election exceeds (b) the aggregate amount thereof expended by
the Borrower and its Subsidiaries to acquire Reinvestment Assets.
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Administrative Agent, on behalf of the Required Banks, shall have delivered a
written termination notice to the Borrower, provided that such notice may only
be given while an Event of Default exists, (ii) the date occurring one year
after such Reinvestment Election and (iii) the date on which the Borrower shall
have determined not to, or shall have otherwise ceased to, proceed with the
purchase, construction or other acquisition of Reinvestment Assets with the
related Anticipated Reinvestment Amount.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
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those events as to which the 30-day notice period is waived under subsection
.13, .14, .16, .18, .19 or .20 of PBGC Regulation Section 4043.
"Required Banks" shall mean Non-Defaulting Banks whose outstanding
Loans and Commitments (or, if after the Total Commitment has been terminated,
outstanding Loans and Adjusted Percentage of outstanding Swingline Loans and
Letter of Credit Outstandings) constitute greater than 50% of the sum of (i) the
total outstanding Loans of Non-Defaulting Banks and (ii) the Adjusted Total
Commitment (or, if after the Total Commitment has been terminated, the total
outstanding Loans of Non-Defaulting Banks and the aggregate Adjusted Percentages
of all Non-Defaulting Banks of the total outstanding Swingline Loans and Letter
of Credit Outstandings at such time).
"Restatement Effective Date" shall have the meaning provided in
Section 12.10.
"Revolving Loan" shall have the meaning provided in Section 1.01(a).
"Revolving Note" shall have the meaning provided in Section
1.05(a)(i).
"SEC" shall mean the Securities and Exchange Commission and any
successor thereto.
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Security Agreement" shall mean the Security Agreement defined in, and
delivered pursuant to, the Original Credit Agreement, as same may be amended,
modified or supplemented from time to time.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Documents" shall mean the Pledge Agreement, the Security
Agreement, and each Mortgage.
"Security Documents Acknowledgement" shall have the meaning provided
in Section 5.12(a).
"Senior Notes" shall mean the Borrower's unsecured 9.75% Notes due
December 16, 2004, as in effect on the Restatement Effective Date and as the
same may be amended, modified or supplemented pursuant to the terms hereof and
thereof.
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"Senior Notes Documents" shall mean the Senior Notes, and each of
the other documents and agreements relating to the issuance by the Borrower
of the Senior Notes, as in the effect of the Restatement Effective Date as
the same may be amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.
"Series A Preferred Stock" shall mean the Series A Preferred Stock of
the Borrower, par value $1.00 per share.
"Series B Preferred Stock" shall mean the Series B Preferred Stock of
the Borrower, par value $1.00 per share.
"Shareholders' Agreements" shall have the meaning provided in Section
5.06(iii).
"Standby Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Stated Amount" of each Letter of Credit shall mean the maximum amount
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met).
"Stockholders" shall mean Coranda S.A., ▇▇▇▇▇▇▇ D.E., Orleans--▇▇▇▇▇▇
and the Preferred Optionholders.
"Stockholders Agreement" shall mean the Shareholders Agreement, dated
as of December 10, 1996, by and among BRS, the BRS Investors, Farallon,
Canterbury Mezzanine Capital, the Management Investors and each other
shareholder of the Borrower party thereto as the same may be amended, modified
or supplemented pursuant to the terms hereof and thereof.
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Subsidiary Guarantors" shall mean each Subsidiary of the Borrower
incorporated in the United States or any State thereof.
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"Subsidiary Guaranty" shall mean the Subsidiary Guaranty as defined
in, and delivered pursuant to, the Original Credit Agreement, as same may be
amended, modified or supplemented from time to time.
"Subsidiary Guaranty Acknowledgment" shall have the meaning provided
in Section 5.13.
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(b).
"Swingline Note" shall have the meaning provided in Section
1.05(a)(ii).
"Taxes" shall have the meaning provided in Section 4.04(a).
"Test Period" shall mean the four consecutive fiscal quarters of the
Borrower then last ended (taken as one accounting period).
"Total Commitment" shall mean the sum of the Commitments of each of
the Banks.
"Total Unutilized Commitment" shall mean, at any time, (i) the Total
Commitment at such time less (ii) the sum of the aggregate principal amount of
all Revolving Loans and Swingline Loans outstanding at such time plus the Letter
of Credit Outstandings at such time.
"Trade Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Transaction" shall mean, collectively, (i) the repayment of all
Original Loans, (ii) the issuance of the Senior Notes and (iii) the
effectiveness of this Agreement on the Restatement Effective Date.
"Transaction Expenses" shall mean all fees and expenses incurred in
connection with, and payable prior to or in connection with the closing of, the
Recapitalization and the transactions contemplated in connection with the
Recapitalization Documents and the Transaction including the financing of the
Recapitalization, and including all fees paid to any of the Banks and the
Administrative Agent hereunder, fees paid to BRS or its Affiliates permitted
hereunder; attorney's fees, accountants' fees, placement agents' fees, discounts
and commissions and brokerage, and consultant fees. Transaction Expenses shall
include the amortization of any such fees and expenses that are capitalized and
not classified as an expense on the date incurred.
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"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code, as in effect from time
to time in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 87, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"Unpaid Drawing" shall have the meaning provided in Section 2.04(a).
"Unutilized Commitment" for any Bank at any time shall mean the excess
of (i) the Commitment of such Bank over (ii) the sum of (x) the aggregate
outstanding principal amount of Loans made by such Bank plus (y) an amount equal
to such Bank's Adjusted Percentage of the Letter of Credit Outstandings at such
time.
"Voting Stock" shall mean, with respect to any corporation, the
outstanding stock of all classes (or equivalent interests) which ordinarily, in
the absence of contingencies, entitles holders thereof to vote for the election
of directors (or Persons performing similar functions) of such corporation, even
though the right so to vote has been suspended by the happening of such a
contingency.
"Warrant" shall mean each warrant issued pursuant to the Warrant
Agreement.
"Warrant Agreement" shall mean the Warrant Agreement dated December
10, 1996, between the Borrower and Canterbury Mezzanine Capital as the same may
be amended, restated or modified from time to time.
"Wholly-Owned Domestic Subsidiary" shall mean each Wholly-Owned
Subsidiary of the Borrower that is incorporated under the laws of the United
States or any State thereof.
"Wholly-Owned Subsidiary" of any Person shall mean any Subsidiary of
such Person to the extent all of the capital stock or other ownership interests
in such Subsidiary, other than directors' qualifying shares, is owned directly
or indirectly by such Person.
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"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex, facsimile transmission,
telegraph or cable.
SECTION 11. The Administrative Agent.
11.01 Appointment. The Banks hereby designate Bankers Trust
Company as Administrative Agent (for purposes of this Section 11, the term
"Administrative Agent" shall include BTCo in its capacity as Collateral Agent
pursuant to the Security Documents) to act as specified herein and in the
other Credit Documents. Each Bank hereby irrevocably authorizes, and each
holder of any Note by the acceptance of such Note shall be deemed irrevocably
to authorize, the Administrative Agent to take such action on its behalf
under the provisions of this Agreement, the other Credit Documents and any
other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and thereunder as
are specifically delegated to or required of the Administrative Agent by the
terms hereof and thereof and such other powers as are reasonably incidental
thereto. The Administrative Agent may perform any of its duties hereunder or
under the other Credit Documents by or through its respective officers,
directors, agents, employees or affiliates.
11.02 Nature of Duties. The Administrative Agent shall not have
any duties or responsibilities except those expressly set forth in this
Agreement and the Security Documents. Neither the Administrative Agent nor
any of its respective officers, directors, agents, employees or affiliates
shall be liable for any action taken or omitted by it or them hereunder or
under any other Credit Document or in connection herewith or therewith,
unless caused by its or their gross negligence or willful misconduct. The
duties of the Administrative Agent shall be mechanical and administrative in
nature; the Administrative Agent shall not have by reason of this Agreement
or any other Credit Document a fiduciary relationship in respect of any Bank
or the holder of any Note; and nothing in this Agreement or any other Credit
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Administrative Agent any obligations in respect of this
Agreement or any other Credit Document except as expressly set forth herein
or therein.
11.03 Lack of Reliance on the Administrative Agent. Independently
and without reliance upon the Administrative Agent, each Bank and the holder
of each Note, to the extent it deems appropriate, has made and shall continue
to make (i) its own independent investigation of the financial condition and
affairs of the Borrower and its Subsidiaries in connection with the making
and the continuance of the Loans and the taking or not taking of any action
in connection herewith and (ii) its own appraisal of the creditworthiness of
the Borrower and its Subsidiaries and, except as expressly provided in this
Agreement, the Administrative Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to provide any
Bank or the holder of any Note with any credit or other information with
respect thereto, whether coming into its possession before the making of
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the Loans or at any time or times thereafter. The Administrative Agent shall
not be responsible to any Bank or the holder of any Note for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectability, priority or sufficiency of this Agreement or any
other Credit Document or the financial condition of the Borrower and its
Subsidiaries or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of
this Agreement or any other Credit Document, or the financial condition of
the Borrower and its Subsidiaries or the existence or possible existence of
any Default or Event of Default.
11.04 Certain Rights of the Administrative Agent. If the
Administrative Agent shall request instructions from the Required Banks with
respect to any act or action (including failure to act) in connection with
this Agreement or any other Credit Document, the Administrative Agent shall
be entitled to refrain from such act or taking such action unless and until
the Administrative Agent shall have received instructions from the Required
Banks; and the Administrative Agent shall not incur liability to any Person
by reason of so refraining. Without limiting the foregoing, neither any Bank
nor the holder of any Note shall have any right of action whatsoever against
the Administrative Agent as a result of the Administrative Agent acting or
refraining from acting hereunder or under any other Credit Document in
accordance with the instructions of the Required Banks.
11.05 Reliance. The Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or telecopier
message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by any Person that the Administrative Agent believed to
be the proper Person, and, with respect to all legal matters pertaining to
this Agreement and any other Credit Document and its duties hereunder and
thereunder, upon advice of counsel selected by the Administrative Agent
(which may be counsel for the Borrower).
11.06 Indemnification. To the extent the Administrative Agent is
not reimbursed and indemnified by the Borrower or the Subsidiary Guarantors,
the Banks will reimburse and indemnify the Administrative Agent, in
proportion to their respective "percentages" as used in determining the
Required Banks, for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Administrative Agent in performing its respective
duties hereunder or under any other Credit Document, in any way relating to
or arising out of this Agreement or any other Credit Document; provided that
no Bank shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Administrative Agent's gross negligence or
willful misconduct.
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11.07 The Administrative Agent in Its Individual Capacity. With
respect to its obligation to make Loans under this Agreement, the
Administrative Agent shall have the rights and powers specified herein for a
"Bank" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Banks," "Required
Banks," "holders of Notes" or any similar terms shall, unless the context
clearly otherwise indicates, include the Administrative Agent in its
individual capacity. The Administrative Agent may accept deposits from, lend
money to, and generally engage in any kind of banking, trust or other
business with any Credit Party or any Affiliate of any Credit Party as if it
were not performing the duties specified herein, and may accept fees and
other consideration from the Borrower or any other Credit Party for services
in connection with this Agreement and otherwise without having to account for
the same to the Banks.
11.08 Holders. The Administrative Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment, transfer or endorsement thereof, as
the case may be, shall have been filed with the Administrative Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall
be conclusive and binding on any subsequent holder, transferee, assignee or
indorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
11.09 Resignation by the Administrative Agent. (a) The
Administrative Agent may resign from the performance of all its functions and
duties hereunder and/or under the other Credit Documents at any time by
giving 30 Business Days' prior written notice to the Borrower and the Banks.
Such resignation shall take effect upon the appointment of a successor
Administrative Agent pursuant to clauses (b) and (c) below or as otherwise
provided below.
(b) Upon any such notice of resignation, the Required Banks shall
appoint a successor Administrative Agent hereunder or thereunder who shall be
a commercial bank or trust company reasonably acceptable to the Borrower.
(c) If a successor Administrative Agent shall not have been so
appointed within such 30 Business Day period, the Administrative Agent, with
the consent of the Borrower (which consent shall not be unreasonably
withheld), shall then appoint a successor Administrative Agent who shall
serve as Administrative Agent hereunder or thereunder until such time, if
any, as the Required Banks appoint a successor Administrative Agent as
provided above.
(d) If no successor Administrative Agent has been appointed
pursuant to clause (b) or (c) above by the 30th Business Day after the date
such notice of resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the Required
Banks shall thereafter perform all the duties of the Administrative
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Agent hereunder and/or under any other Credit Document until such time, if
any, as the Banks appoint a successor Administrative Agent as provided above.
SECTION 12. Miscellaneous.
12.01 Payment of Expenses, etc. The Borrower agrees to: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Administrative Agent in
connection with the negotiation, preparation, execution and delivery of the
Credit Documents and the documents and instruments referred to therein and
any amendment, waiver or consent relating thereto (including, without
limitation, the reasonable fees and disbursements of White & Case) and of the
Administrative Agent and each of the Banks in connection with the enforcement
of the Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and disbursements of
counsel for the Administrative Agent and one counsel (or in-house counsel)
for each of the Banks); (ii) pay and hold each of the Banks harmless from and
against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save each of the Banks harmless from and
against any and all liabilities with respect to or resulting from any delay
or omission (other than to the extent attributable to such Bank) to pay such
taxes; and (iii) indemnify each Bank (including in its capacity as the
Administrative Agent or a Letter of Credit Issuer), its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred
by any of them (whether asserted by the Borrower or otherwise) as a result
of, or arising out of, or in any way related to, or by reason of, (a) any
investigation, litigation or other proceeding (whether or not any Bank is a
party thereto) related to the entering into and/or performance of any Credit
Document or the use of the proceeds of any Loans hereunder or the
Recapitalization or the consummation of any transactions contemplated in any
Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified) or (b) the
actual or alleged presence of Hazardous Materials in the air, surface water,
groundwater, surface or subsurface of any Real Property owned or at any time
operated by the Borrower or any of its Subsidiaries, the generation, storage,
transportation or disposal of Hazardous Materials at any location whether or
not owned or operated by the Borrower or any of its Subsidiaries, the
non-compliance of any Real Property owned or at any time operated by the
Borrower or any of its Subsidiaries with federal, state and local laws,
regulations, and ordinances (including applicable permits thereunder)
applicable to any such Real Property, or any Environmental Claim asserted
against the Borrower, any of its Subsidiaries, or any such Real Property,
including, in each case, without limitation, the reasonable fees and
disbursements of counsel and other consultants incurred in connection with
any such investigation, litigation or other proceeding (but excluding any
losses, liabilities, claims, damages or expenses to the extent incurred by
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reason of the gross negligence or willful misconduct of the Person to be
indemnified). To the extent that the undertaking to indemnify, pay or hold
harmless the Administrative Agent or any Bank set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrower shall make the maximum contribution to the payment and
satisfaction of each of the indemnified liabilities which is permissible
under applicable law.
12.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of
any such rights, if an Event of Default then exists, each Bank is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to any Credit Party or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special) and any other
Indebtedness at any time held or owing by such Bank (including without
limitation by branches and agencies of such Bank wherever located) to or for
the credit or the account of any Credit Party against and on account of the
Obligations and liabilities of such Credit Party to such Bank under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations of such Credit Party purchased by
such Bank pursuant to Section 12.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other
Credit Document, irrespective of whether or not such Bank shall have made any
demand hereunder and although said Obligations, liabilities or claims, or any
of them, shall be contingent or unmatured.
12.03 Notices. (a) Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, telecopier or cable communication) and
mailed, telegraphed, telexed, telecopied, cabled or delivered, if to a Credit
Party, at the address specified opposite its signature below or in the other
relevant Credit Documents, as the case may be, if to the Administrative
Agent, at its Notice Office; if to any Bank, at its address specified for
such Bank on Annex II; or, at such other address as shall be designated by
any party in a written notice to the other parties hereto. All such notices
and communications shall be mailed, telegraphed, telexed, telecopied, or
cabled or sent by overnight courier, and shall be effective when received.
(b) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent or BTCo (in the case of a Borrowing of Swingline Loans)
or any Letter of Credit Issuer, as the case may be, may prior to receipt of
written confirmation act without liability upon the basis of such telephonic
notice, believed by the Administrative Agent or BTCo or any Letter of Credit
Issuer in good faith to be from an Authorized Officer of the Borrower. In
each such case, the Borrower hereby waives the right to dispute the
Administrative Agent's or BTCo's record of the terms of such telephonic
notice.
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12.04 Assignments; Participations; Etc. (a) This Agreement shall
be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto, provided that the
Borrower may not assign or transfer any of its rights or obligations
hereunder without the prior written consent of the Banks. Each Bank may at
any time grant participations in any of its rights hereunder or under any of
the Notes to another financial institution, provided that in the case of any
such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights
against such Bank in respect of such participation to be those set forth in
the agreement executed by such Bank in favor of the participant relating
thereto) and all amounts payable by the Borrower hereunder shall be
determined as if such Bank had not sold such participation, except that the
participant shall be entitled to the benefits of Sections 1.10, 2.06 and 4.04
to the extent that such Bank would be entitled to such benefits if the
participation had not been entered into or sold, and, provided further that
no Bank shall transfer, grant or assign any participation under which the
participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (i) extend the final scheduled maturity of any Loan or Note or
Letter of Credit (unless such Letter of Credit is not extended beyond the
Maturity Date) in which such participant is participating (it being
understood that any waiver of the application of any prepayment or the method
of any application of any prepayment to, the amortization of the Loans shall
not constitute an extension of the final maturity date), or reduce the rate
or extend the time of payment of interest or Fees thereon (except in
connection with a waiver of the applicability of any post-default increase in
interest rates), or reduce the principal amount thereof (it being understood
that any amendment or modification to the financial definitions in this
Agreement shall not constitute a reduction in the rate of interest for
purposes of this clause (i)), or increase such participant's participating
interest in any Commitment over the amount thereof then in effect (it being
understood that (x) a waiver of any Default or Event of Default or of a
mandatory reduction in the Total Commitment, or a mandatory prepayment, shall
not constitute a change in the terms of any Commitment and (y) an increase in
any Commitment or Loan shall be permitted without the consent of any
participant's participation is not increased as a result thereof), (ii)
release all or substantially all of the Collateral which support the Loans in
which such participant is participating (except as expressly permitted in any
Credit Document) or (iii) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement.
(b) Notwithstanding the foregoing, (x) any Bank may assign all or a
portion of its outstanding Loans and/or Commitment and its rights and
obligations hereunder to an Affiliate of such Bank or to another Bank, and
(y) with the consent of the Administrative Agent (which consent shall not be
unreasonably withheld), any Bank may assign all or a portion of its
outstanding Commitment and its rights and obligations hereunder to one or
more Eligible Transferees. No assignment pursuant to the immediately
preceding sentence shall to the extent such assignment represents an
assignment to an institution other than one
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or more Banks hereunder, be in an aggregate amount less than $5,000,000
unless the entire Commitment and outstanding Loans of the assigning Bank is
so assigned. If any Bank so sells or assigns all or a part of its rights
hereunder or under the Notes, any reference in this Agreement or the Notes to
such assigning Bank shall thereafter refer to such Bank and to the respective
assignee to the extent of their respective interests and the respective
assignee shall have, to the extent of such assignment (unless otherwise
provided therein), the same rights and benefits as it would if it were such
assigning Bank. Each assignment pursuant to this Section 12.04(b) shall be
effected by the assigning Bank and the assignee Bank executing an Assignment
and Agreement (the "Assignment and Assumption Agreement") substantially in
the form of Exhibit L (appropriately completed). In the event of (and at the
time of) any such assignment, either the assigning or the assignee Bank shall
pay to the Administrative Agent a nonrefundable assignment fee of $3,500, and
at the time of any assignment pursuant to this Section 12.04(b), (i) Annex I
shall be deemed to be amended to reflect the Commitment of the respective
assignee (which shall result in a direct reduction to the Commitment of the
assigning Bank) and of the other Banks, and (ii) if any such assignment
occurs after the Restatement Effective Date, the Borrower will issue new
Notes to the respective assignee and to the assigning Bank in conformity with
the requirements of Section 1.05. No transfer or assignment under this
Section 12.04(b) will be effective until recorded by the Administrative Agent
on the Register pursuant to Section 12.16. To the extent of any assignment
pursuant to this Section 12.04(b), the assigning Bank shall be relieved of
its obligations hereunder with respect to its assigned Commitment. At the
time of each assignment pursuant to this Section 12.04(b) to a Person which
is not already a Bank hereunder and which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) for Federal income
tax purposes, the respective assignee Bank shall provide to the Borrower and
the Administrative Agent the appropriate Internal Revenue Service Forms (and,
if applicable, a Section 4.04(b)(ii) Certificate) described in Section
4.04(b). To the extent that an assignment of all or any portion of a Bank's
Commitments and related outstanding Obligations pursuant to Section 1.13 or
this Section 12.04(b) would, at the time of such assignment, result in
increased costs under Section 1.10, 1.11, 2.06 or 4.04 which exceed those
being charged, if any, by the respective assigning Bank prior to such
assignment, then the Borrower shall not be obligated to pay such excess
increased costs (although the Borrower shall be obligated to pay any other
increased costs of the type described above resulting from changes giving
rise to such increased costs after the date of the respective assignment).
Each Bank and the Borrower agree to execute such documents (including without
limitation amendments to this Agreement and the other Credit Documents) as
shall be necessary to effect the foregoing.
(c) Nothing in this Agreement shall prevent or prohibit any Bank
from pledging its Notes or Loans to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank.
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(d) Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Bank hereunder
or any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the "Blue Sky" laws of
any State.
(e) Each Bank initially party to this Agreement hereby represents,
and each Person that became a Bank pursuant to an assignment permitted by
this Section 12 will, upon its becoming party to this Agreement, represent
that it is an Eligible Transferee which makes loans in the ordinary course of
its business and that it will make or acquire Loans for its own account in
the ordinary course of such business, provided that subject to the preceding
clauses (a) and (b), the disposition of any promissory notes or other
evidences of or interests in Indebtedness held by such Bank shall at all
times be within its exclusive control.
12.05 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Administrative Agent or any Bank in exercising any right, power
or privilege hereunder or under any other Credit Document and no course of
dealing between any Credit Party and the Administrative Agent or any Bank
shall operate as a waiver thereof; nor shall any single or partial exercise
of any right, power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Administrative Agent or any Bank would otherwise have. No
notice to or demand on any Credit Party in any case shall entitle any Credit
Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Administrative
Agent or the Banks to any other or further action in any circumstances
without notice or demand.
12.06 Payments Pro Rata. (a) The Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of any Credit
Party in respect of any Obligations of such Credit Party hereunder, it shall
distribute such payment to the Banks (other than any Bank that has expressly
waived its right to receive its pro rata share thereof) pro rata based upon
their respective shares, if any, of the Obligations with respect to which
such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or
interest on, the Loans or Fees, of a sum which with respect to the related
sum or sums received by other Banks is in a greater proportion than the total
of such Obligation then owed and due to such Bank bears to the total of such
Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment
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shall purchase for cash without recourse or warranty from the other Banks an
interest in the Obligations of the respective Credit Party to such Banks in
such amount as shall result in a proportional participation by all of the
Banks in such amount, provided that if all or any portion of such excess
amount is thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 12.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
12.07 Calculations; Computations. (a) The financial statements to
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in
writing by the Borrower to the Banks), provided that (x) except as otherwise
specifically provided herein, all computations determining compliance with
Section 8, including definitions used therein, and in determining the amount
of Excess Cash Flow Ratio, shall utilize accounting principles and policies
in effect at the time of the preparation of, and in conformity with those
used to prepare, the May 31, 1996 historical financial statements of the
Borrower delivered to the Banks as described in Section 6.10(b) but shall not
give effect to purchase accounting adjustments arising in connection with the
Recapitalization, to the extent required or permitted by APB 16 and APB 17
and their interpretations and (y) that if at any time the computations
determining compliance with Section 8, including definitions used therein,
and in determining the amount of Excess Cash Flow utilize accounting
principles different from those utilized in the financial statements
furnished to the Banks, such financial statements shall be accompanied by
reconciliation work-sheets.
(b) All computations of interest and fees hereunder shall be made
on the actual number of days elapsed over a year of 360 days (except, in the
case of Base Rate Loans and Fees, 365/366 days).
12.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial. (a) This Agreement and the other Credit Documents and the
rights and obligations of the parties hereunder and thereunder shall be
construed in accordance with and be governed by the law of the state of New
York. Any legal action or proceeding with respect to this Agreement or any
other Credit Document may be brought in the courts of the State of New York
or of the United States for the Southern District of New York, and, by
execution and delivery of this Agreement, each Credit Party hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Credit Party
party to this Agreement hereby further irrevocably
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waives any claim that any such courts lack jurisdiction over such Credit
Party, and agrees not to plead or claim, in any legal action or proceeding
with respect to this Agreement or any other Credit Document brought in any of
the aforesaid courts, that any such court lacks jurisdiction over such Credit
Party. Each Credit Party party to this Agreement further irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to each Credit Party located outside New
York City and by hand delivery to each Credit Party located within New York
City, at its address for notices pursuant to Section 12.03, such service to
become effective 30 days after such mailing. Each Credit Party party to this
Agreement hereby irrevocably waives any objection to such service of process
and further irrevocably waives and agrees not to plead or claim in any action
or proceeding commenced hereunder or under any other Credit Document that
service of process was in any way invalid or ineffective. Nothing herein
shall affect the right of the Administrative Agent or any Bank to serve
process in any other manner permitted by law or to commence legal proceedings
or otherwise proceed against any Credit Party in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement or
any other Credit Document brought in the courts referred to in clause (a)
above and hereby further irrevocably waives and agrees not to plead or claim
in any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
(c) Each of the parties to this Agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the other Credit Documents or
the transactions contemplated hereby or thereby.
12.09 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective on the
date (the "Restatement Effective Date") on which (i) each of the Borrower,
each Agent and each Bank shall have signed a counterpart hereof (whether the
same or different counterparts) and shall have delivered (including by way of
facsimile device) the same to the Administrative Agent at its Notice Office
and (ii) the conditions precedent contained in Section 5 are met to the
satisfaction of the Administrative Agent and the Required Banks (determined
immediately after the occurrence of the Restatement Effective Date). Unless
the Administrative Agent has received actual notice from any Bank that the
conditions contained in Section 5 have not
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been met to its satisfaction, upon the satisfaction of the condition
described in clause (i) of the immediately preceding sentence and upon the
Administrative Agent's good faith determination that the conditions described
in clause (ii) of the immediately preceding sentence have been met, then the
Restatement Effective Date shall have been deemed to have occurred,
regardless of any subsequent determination that one or more of the conditions
thereto had not been met (although the occurrence of the Restatement
Effective Date shall not release the Borrower from any liability for failure
to satisfy one or more of the applicable conditions contained in Section 5).
The Administrative Agent will give the Borrower and each Bank prompt written
notice of the occurrence of the Restatement Effective Date.
12.11 Headings Descriptive. The headings of the several sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
12.12 Amendment or Waiver. (a) Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination
is in writing signed by the Borrower and the Required Banks, provided that no
such change, waiver, discharge or termination shall, without the consent of
each Bank (other than a Defaulting Bank) (with Obligations being directly
affected thereby in the case of the following clause(i)), (i) extend the
Maturity Date, as the case may be (it being understood that any waiver of the
application of any prepayment of or the method of application of any
prepayment to the amortization of, the Loans shall not constitute any such
extension), or reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any post-default
increase in interest rates) or Fees thereon, or reduce the principal amount
thereof (it being understood that any amendment or modification to the
financial definitions in this Agreement shall not constitute a reduction in
the rate of interest for purposes of this clause (i)), (ii) release all or
substantially all of the Collateral (in each case except as expressly
provided in the Credit Documents), (iii) amend, modify or waive any provision
of this Section 12.12(a), (iv) reduce the percentage specified in the
definition of Required Banks (it being understood that, with the consent of
the Required Banks, additional extensions of credit pursuant to this
Agreement may be included in the determination of the Required Banks on
substantially the same basis as the extensions of Revolving Loans pursuant to
the Commitments are included on the Restatement Effective Date) or (v)
consent to the assignment or transfer by the Borrower of any of its rights
and obligations under this Agreement; provided further, that no such change,
waiver, discharge or termination shall (v) increase the Commitment of any
Bank over the amount thereof then in effect without the consent of such Bank
(it being understood that waivers or modifications of conditions precedent,
covenants, Defaults or Events of Default or of a mandatory reduction in the
Total Commitment shall not constitute an increase of the Commitment of any
Bank, and that an increase in the available portion of any Commitment of any
Bank shall not constitute an increase in the Commitment of such Bank), (w)
without the consent of each Letter of Credit Issuer, amend, modify or waive
any
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provision of Section 2 or alter its rights or obligations with respect to
Letters of Credit, (x) without the consent of the Administrative Agent,
amend, modify or waive any provision of Section 11 as same applies to the
Administrative Agent or any other provision as same relates to the rights or
obligations of the Administrative Agent, (y) without the consent of the
Collateral Agent, amend, modify or waive any provision relating to the rights
or obligations of the Collateral Agent or (z) without the consent of BTCo,
alter its rights or obligations with respect to Swingline Loans.
(b) If, in connection with any proposed change, waiver, discharge
or termination to any of the provisions of this Agreement as contemplated by
clauses (a)(i) through (v), inclusive, of this Section 12.12, the consent of
the Required Banks is obtained but the consent of one or more of the other
Banks whose consent is required is not obtained, then the Borrower shall have
the right to replace each such non-consenting Bank or Banks (so long as all
non-consenting Banks are so replaced) with one or more Replacement Banks
pursuant to Section 1.13 so long as at the time of such replacement, each
such Replacement Bank consents to the proposed change, waiver, discharge or
termination, provided that the Borrower shall not have the right to replace a
Bank solely as a result of the exercise of such Bank's rights (and the
withholding of any required consent by such Bank) pursuant to the second
proviso of Section 12.12(a).
12.13 Survival. All indemnities set forth herein including,
without limitation, in Section 1.10, 1.11, 2.06, 4.04, 11.06 or 12.01 shall
survive the execution and delivery of this Agreement and the making and
repayment of the Loans.
12.14 Domicile of Loans. Each Bank may transfer and carry its
Loans at, to or for the account of any branch office, subsidiary or affiliate
of such Bank, provided that the Borrower shall not be responsible for costs
arising under Section 1.10, 2.06 or 4.04 resulting from any such transfer
(other than a transfer pursuant to Section 1.12) to the extent not otherwise
applicable to such Bank prior to such transfer.
12.15 Confidentiality. Subject to Section 12.04, the Banks shall
hold all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrower in accordance
with its customary procedure for handling confidential information of this
nature and in accordance with safe and sound banking practices and in any
event may make disclosure reasonably required by any bona fide actual or
potential transferee or participant in connection with the contemplated
transfer of any Loans or participation therein or an Affiliate of such Bank
(including attorneys, legal advisors and consultants of such Bank) (so long
as such transferee, participant or Affiliate agrees to be bound by the
provisions of this Section 12.15) or as required or requested by any
governmental agency or representative thereof or pursuant to legal process,
provided that, unless specifically prohibited by applicable law or court
order, each Bank shall notify the Borrower of any request by any governmental
agency or representative thereof (other
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than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) for disclosure of any
such non-public information prior to disclosure of such information, and
provided further that in no event shall any Bank be obligated or required to
return any materials furnished by the Borrower or any Subsidiary.
12.16 Register. The Borrower hereby designates the Administrative
Agent to serve as the Borrower's agent, solely for purposes of this Section
12.16, to maintain a register (the "Register") on which it will record the
Commitment from time to time of each of the Banks, the Loans made by each of
the Banks and each repayment in respect of the principal amount of the Loans
of each Bank. Failure to make any such recordation, or any error in such
recordation shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Bank, the transfer of the Commitment of such Bank
and the rights to the principal of, and interest on, any Loan made pursuant
to such Commitments shall not be effective until such transfer is recorded on
the Register maintained by the Administrative Agent with respect to ownership
of such Commitment and Loans and prior to such recordation all amounts owing
to the transferor with respect to such Commitments and Loans shall remain
owing to the transferor. The registration of assignment or transfer of all
or part of any Commitments and Loans shall be recorded by the Administrative
Agent on the Register only upon the acceptance by the Administrative Agent of
a properly executed and delivered Assignment and Assumption Agreement
pursuant to Section 12.04(b). Coincident with the delivery of such an
Assignment and Assumption Agreement to the Administrative Agent for
acceptance and registration of assignment or transfer of all or part of a
Loan, or as soon thereafter as practicable, the assigning or transferor Bank
shall surrender the Note evidencing such Loan, and thereupon one or more new
Notes in the same aggregate principal amount shall be issued to the assigning
or transferor Bank and/or the new Bank.
* * *
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the
date first above written.
Address: TOWN SPORTS INTERNATIONAL, INC.
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
By
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Attention: Chief Financial Officer Title: Chief Financial Officer
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BANKERS TRUST COMPANY,
Individually and as Administrative Agent
By
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Title: Vice President
BANK OF SCOTLAND
By
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Title:
