EXHIBIT 10.1
EXECUTION COPY
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SECOND AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
Dated as of March 29, 2002
among
UTI HOLDINGS, INC.,
as Borrower,
-and-
UNIVERSAL TECHNICAL INSTITUTE, INC.,
as Parent,
with
ANTARES CAPITAL CORPORATION,
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ BANK,
as Trustee of the Antares Funding Trust
created under a Trust Agreement dated as of November 30, 1999,
-and-
THE ROYAL BANK OF SCOTLAND PLC,
as Lenders
-and-
▇▇▇▇▇▇ FINANCIAL, INC.,
as Agent and as a Lender
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TABLE OF CONTENTS
PAGE
SECTION 1 AMOUNTS AND TERMS OF LOANS.................................................................... 2
1.1 Loans......................................................................................... 2
(A) Term Loan A and Term Loan B.......................................................... 2
(B) Revolving Loans...................................................................... 4
(C) Letters of Credit and Risk Participation Agreements.................................. 7
(1) Maximum Amount.............................................................. 7
(2) Reimbursement............................................................... 8
(3) Conditions of Issuance of Letters of Credit or Risk Participation Agreements 8
(4) Request for Lender Letters of Credit or Risk Participation Agreements....... 9
(5) Confirmation of Obligations................................................. 9
(D) Notes................................................................................ 9
1.2 Interest and Related Fees..................................................................... 9
(A) Interest............................................................................. 9
(B) Commitment Fee....................................................................... 12
(C) Risk Participation Fee............................................................... 12
(D) Computation of Interest and Related Fees............................................. 13
(E) Default Rate of Interest............................................................. 13
(F) Excess Interest...................................................................... 13
(G) LIBOR Rate Election.................................................................. 13
1.3 Other Fees and Expenses....................................................................... 14
(A) Certain Fees......................................................................... 14
(B) Agency Fee........................................................................... 14
(C) LIBOR Breakage Fee................................................................... 14
(D) Expenses and Attorneys Fees.......................................................... 15
1.4 Payments...................................................................................... 15
1.5 Prepayments................................................................................... 16
(A) Voluntary Prepayment of Term Loans................................................... 16
(B) Prepayments from Excess Cash Flow.................................................... 16
(C) Prepayments from Asset Dispositions.................................................. 16
(D) Prepayment from Issuance of Securities............................................... 16
(E) Omitted.............................................................................. 17
(F) Application of Proceeds.............................................................. 17
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TABLE OF CONTENTS
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PAGE
(G) Risk Participation Liability......................................................... 17
1.6 Term of the Agreement......................................................................... 17
1.7 Loan Accounts................................................................................. 17
1.8 Yield Protection.............................................................................. 18
(A) Capital Adequacy and Other Adjustments............................................... 18
(B) Increased LIBOR Funding Costs........................................................ 18
1.9 Taxes......................................................................................... 19
(A) No Deductions........................................................................ 19
(B) Changes in Tax Laws.................................................................. 19
(C) Foreign Lenders...................................................................... 20
1.10 Optional Prepayment/Replacement of Lender in Respect of Increased Costs....................... 20
SECTION 2 AFFIRMATIVE COVENANTS......................................................................... 21
2.1 Compliance With Laws and Contractual Obligations.............................................. 21
2.2 Maintenance of Properties; Insurance.......................................................... 22
2.3 Inspection; Lender Meeting.................................................................... 23
2.4 Corporate Existence, Etc...................................................................... 23
2.5 Environmental Matters......................................................................... 23
2.6 Further Assurances............................................................................ 24
2.7 Use of Proceeds............................................................................... 24
SECTION 3 NEGATIVE COVENANTS............................................................................ 25
3.1 Indebtedness.................................................................................. 25
3.2 Liens and Related Matters..................................................................... 26
(A) No Liens............................................................................. 26
(B) No Negative Pledges.................................................................. 27
(C) No Restrictions on Subsidiary Distributions to Borrower.............................. 27
3.3 Investments; Joint Ventures................................................................... 27
3.4 Contingent Obligations........................................................................ 29
3.5 Restricted Junior Payments.................................................................... 30
3.6 Restriction on Fundamental Changes............................................................ 32
3.7 Disposal of Assets or Subsidiary Stock........................................................ 32
3.8 Transactions with Affiliates.................................................................. 33
3.9 Management Fees and Compensation.............................................................. 33
3.10 Conduct of Business........................................................................... 34
3.11 Changes Relating to Subordinated Indebtedness and Other Agreements............................ 34
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TABLE OF CONTENTS
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3.12 Fiscal Year................................................................................... 34
3.13 Press Releases; Public Offering Materials..................................................... 34
3.14 Subsidiaries.................................................................................. 35
SECTION 4 FINANCIAL COVENANTS/REPORTING................................................................. 35
4.1 Capital Expenditure Limits.................................................................... 35
4.2 Omitted....................................................................................... 35
4.3 EBITDA........................................................................................ 35
4.4 Fixed Charge Coverage......................................................................... 36
4.5 Total Interest Coverage....................................................................... 37
4.6 Omitted....................................................................................... 38
4.7 Total Indebtedness to TTM EBITDA Ratio........................................................ 38
4.8 Financial Statements and Other Reports........................................................ 39
(A) Monthly Financials................................................................... 39
(B) Year-End Financials.................................................................. 39
(C) Compliance Certificate............................................................... 39
(D) Omitted.............................................................................. 39
(E) Accountants' Reports................................................................. 39
(F) Omitted.............................................................................. 40
(G) DOE Letter of Credit Requirement..................................................... 40
(H) Additional Deliveries................................................................ 40
(I) Appraisals........................................................................... 40
(J) Projections.......................................................................... 40
(K) SEC Filings and Press Releases....................................................... 41
(L) Events of Default, Etc............................................................... 41
(M) Litigation........................................................................... 41
(N) Supplemented Schedules; Notice of Corporate Changes.................................. 41
(O) Other Information.................................................................... 42
4.9 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement............ 42
SECTION 5 REPRESENTATIONS AND WARRANTIES................................................................ 42
5.1 Disclosure.................................................................................... 42
5.2 No Material Adverse Effect.................................................................... 43
5.3 No Default.................................................................................... 43
5.4 Organization, Powers, Capitalization and Good Standing........................................ 43
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TABLE OF CONTENTS
(CONTINUED)
PAGE
(A) Organization and Powers.............................................................. 43
(B) Capitalization....................................................................... 44
(C) Binding Obligation................................................................... 44
(D) Qualification........................................................................ 44
5.5 Financial Statements.......................................................................... 44
5.6 Intellectual Property......................................................................... 44
5.7 Investigations, Audits, Etc................................................................... 45
5.8 Employee Matters.............................................................................. 45
5.9 Solvency...................................................................................... 45
5.10 Regulatory Compliance of Holdings and its Subsidiaries........................................ 45
5.11 Leases and Contracts; Indebtedness............................................................ 46
5.12 Fees.......................................................................................... 46
5.13 Existing Loan Documents....................................................................... 46
5.14 Margin Regulations............................................................................ 47
5.15 Environmental Matters......................................................................... 47
5.16 Subordinated Indebtedness and Seller Subordinated Notes....................................... 47
SECTION 6 DEFAULT, RIGHTS AND REMEDIES.................................................................. 48
6.1 Event of Default.............................................................................. 48
(A) Payment.............................................................................. 48
(B) Default in Other Agreements.......................................................... 48
(C) Breach of Certain Provisions......................................................... 48
(D) Breach of Warranty................................................................... 48
(E) Other Defaults Under Loan Documents.................................................. 48
(F) Involuntary Bankruptcy; Appointment of Receiver, Etc................................. 48
(G) Voluntary Bankruptcy; Appointment of Receiver, Etc................................... 49
(H) Governmental Liens................................................................... 49
(I) Judgment and Attachments............................................................. 49
(J) Dissolution.......................................................................... 49
(K) Solvency............................................................................. 49
(L) Injunction........................................................................... 49
(M) ERISA; Pension Plans................................................................. 49
(N) Environmental Matters................................................................ 50
(O) Invalidity of Loan Documents......................................................... 50
(P) Damage; Strike; Casualty............................................................. 50
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TABLE OF CONTENTS
(CONTINUED)
PAGE
(Q) Licenses and Permits................................................................. 50
(R) Failure of Security.................................................................. 50
(S) Business Activities.................................................................. 50
(T) Change in Control.................................................................... 50
(U) Loss of Funding, Accreditation....................................................... 51
(V) Subordinated Indebtedness............................................................ 51
6.2 Suspension of Commitments..................................................................... 51
6.3 Acceleration.................................................................................. 52
6.4 Performance by Agent.......................................................................... 52
6.5 Application of Proceeds....................................................................... 52
SECTION 7 CONDITIONS TO LOANS; CONDITIONS TO EFFECTIVENESS.............................................. 53
7.1 Conditions to Initial Loans under this Agreement.............................................. 53
7.2 Conditions to All Loans....................................................................... 54
7.3 Conditions to Effectiveness................................................................... 55
SECTION 8 ASSIGNMENT AND PARTICIPATION.................................................................. 55
8.1 Assignments and Participations in Loans and Notes............................................. 55
8.2 Agent......................................................................................... 57
(A) Appointment.......................................................................... 57
(B) Nature of Duties..................................................................... 58
(C) Rights, Exculpation, Etc............................................................. 58
(D) Reliance............................................................................. 59
(E) Indemnification...................................................................... 59
(F) ▇▇▇▇▇▇ Individually.................................................................. 59
(G) Successor Agent...................................................................... 60
(1) Resignation................................................................. 60
(2) Appointment of Successor.................................................... 60
(3) Successor Agent............................................................. 60
(H) Collateral Matters................................................................... 60
(1) Release of Collateral....................................................... 60
(2) Confirmation of Authority; Execution of Releases............................ 61
(3) Absence of Duty............................................................. 61
(I) Agency for Perfection................................................................ 61
(J) Dissemination of Information......................................................... 62
(K) Notice of Default.................................................................... 62
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TABLE OF CONTENTS
(CONTINUED)
PAGE
8.3 Amendments, Consents and Waivers for Certain Actions.......................................... 62
8.4 Set Off and Sharing of Payments............................................................... 62
8.5 Disbursement of Funds......................................................................... 63
8.6 Disbursements of Advances; Payment............................................................ 63
(A) Revolving Loan Advances, Payments and Settlements; Related Fee Payments.............. 63
(B) Term Loan Payments; Related Fee Payments............................................. 65
(C) Availability of Lender's Pro Rata Share.............................................. 65
(D) Return of Payments................................................................... 65
SECTION 9 MISCELLANEOUS................................................................................. 65
9.1 Indemnities................................................................................... 65
9.2 Amendments and Waivers........................................................................ 66
9.3 Notices....................................................................................... 66
9.4 Failure or Indulgence Not Waiver; Remedies Cumulative......................................... 68
9.5 Marshalling; Payments Set Aside............................................................... 68
9.6 Severability.................................................................................. 68
9.7 Lenders' Obligations Several; Independent Nature of Lenders' Rights........................... 68
9.8 Headings...................................................................................... 68
9.9 Applicable Law................................................................................ 68
9.10 Successors and Assigns........................................................................ 69
9.11 No Fiduciary Relationship..................................................................... 69
9.12 Construction.................................................................................. 69
9.13 Confidentiality; Dissemination of Information................................................. 69
9.14 Consent to Jurisdiction and Service of Process................................................ 70
9.15 Waiver of Jury Trial.......................................................................... 70
9.16 Survival of Warranties and Certain Agreements................................................. 71
9.17 Entire Agreement.............................................................................. 71
9.18 Counterparts.................................................................................. 71
9.19 Schedules and Exhibits........................................................................ 71
9.20 Consent of Lenders............................................................................ 71
9.21 No Novation................................................................................... 71
9.22 Historical References......................................................................... 72
SECTION 10 DEFINITIONS................................................................................... 72
10.1 Certain Defined Terms......................................................................... 72
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TABLE OF CONTENTS
(CONTINUED)
PAGE
10.2 Other Definitional Provisions................................................................. 87
-vii-
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 1.2(G) - LIBOR Loan Request
Exhibit 1.5(B) - Excess Cash Flow Computation
Exhibit 3.2(A) - Form of Intercompany Note
Exhibit 3.2(B) - Form of Intercompany Note (Borrower)
Exhibit 4.8(C) - Compliance Certificate
Exhibit 10.1(A) - Form of Amended and Restated Term Note A
Form of Second Amended and Restated Term Note B
Form of Revolving Note
Exhibit 10.1(B) - Form of Lender Addition Agreement
Exhibit 10.1(C) - Omitted
Exhibit 10.1(D) - Form of Management Note
Exhibit 10.1(E) - Form of Intercompany Intercreditor Letter
Exhibit 10.1(F) - Form of Intercompany Security Agreement
Exhibit 10.1(G) - Form of NTT/PTA Release
SCHEDULES
Schedule A - Exiting Lenders
Schedule 1.2(E) - Excluded Defaults
Schedule 2 - Purchased Securities
Schedule 3.1(D) - Indebtedness
Schedule 3.2(A)(10) - Liens
Schedule 3.4 - Contingent Obligations
Schedule 3.8 - Affiliate Transactions
Schedule 3.9 - Management Fees and Compensation
Schedule 3.10 - Business Description
Schedule 5.3 - Violations, Conflicts, Breaches and Defaults
Schedule 5.4(A) - Jurisdictions of Organization
Schedule 5.4(B) - Capitalization
Schedule 5.4(D) - Foreign Qualifications
Schedule 5.6 - Intellectual Property
Schedule 5.7 - Investigations and Audits
Schedule 5.8 - Employee Matters
Schedule 5.11 - Noncontravention
Schedule 5.16 - Subordinated Indebtedness and Seller Subordinated
Notes
Schedule 7.1 - List of Closing Documents
Schedule 10.1(A) - Pro Forma
Schedule 10.1(B) - September 1999 Capital Contribution
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INDEX OF DEFINED TERMS
DEFINED TERM DEFINED IN SECTION
ACCST Section 10.1
Accounting Changes Section 4.9
Accrediting Agency Section 10.1
Adjustment Date Section 1.2(A)
Affected Lender Section 1.10
Affiliate Section 10.1
Agent Section 10.1
Agreement Section 10.1
Amended and Restated Credit Agreement Recitals
Amendment and Restatement Date Section 10.1
Amendment ▇▇. ▇ ▇▇▇▇▇▇▇ ▇▇.▇
▇▇▇▇▇▇▇▇▇ ▇▇. ▇ Date Section 10.1
Amendment ▇▇. ▇ ▇▇▇▇▇▇▇ ▇▇.▇
▇▇▇▇▇▇▇▇▇ ▇▇. ▇ Date Section 10.1
Amendment No. 3 Section 10.1
Annuity Trust Section 10.1
Antares Preamble
Antares Trustee Preamble
Applicable Date Exhibit 4.8(C)
Asset Disposition Section 10.1
Asset Purchase Agreement Section 10.1
Assigning Lender Section 8.3(C)
Availability Section 10.1
Bankruptcy Code Section 10.1
Base Rate Section 1.2(A)
Base Rate Loans Section 1.2(A)
Base Rate Margin Section 1.2(A)
Basel Accord Section 1.8
Borrower Preamble
Business Day Section 10.1
Business Unit Disposition Section 10.1
Calculation Period Section 1.2(A)
Capex Limit Section 4.1
Capital Expenditure Section 4.1
Cash Collateral Agreement Section 10.1
Cash Equivalents Section 3.3
Certificate of Exemption Section 1.9(C)
Certifications and Accreditations Section 10.1
CEG Closing Note Section 10.1
CERCLA Section 10.1 (Def. of "Environmental Laws")
Charlesbank Section 10.1
CHC/CEG Assets Section 10.1
Closing Date Section 10.1
Cohort Default Rate Section 10.1
Collateral Section 10.1
Collateralized DOE Letter of Credit Section 1.1(B)
Common Stock Section 10.1
Companies Section 10.1
Contingent Obligation Section 3.4
Continuing Lenders Preamble
-ix-
INDEX OF DEFINED TERMS
(CONTINUED)
DEFINED TERM DEFINED IN SECTION
Contractual Obligations Section 10.1
Convertible Preferred Stock Section 10.1
Convertible Preferred Stock Purchase Agreement Section 10.1
Current Stockholders Section 10.1
Daily Loan Balance Section 8.6(A)(3)(a)
Daily Interest Amount Section 8.6(A)(3)(c)
Daily Interest Rate Section 8.6(A)(3)(b)
Default Section 10.1
DOE Section 10.1
DOE Exposure Section 1.1(B)
DOE Issuer Section 1.1(B) (Def. of "DOE Letter of Credit")
DOE Letter of Credit Section 1.1(B)
DOE Risk Participation Liability Section 1.1(B)
DOE Sublimit Section 1.1(B)(2)
DOE Working Capital Loan Section 1.1(B)
EBITDA Exhibit 4.8(C)
Employment Agreements Section 10.1
Environmental Laws Section 10.1
Environmental Liabilities Section 10.1
Environmental Permits Section 10.1
ERISA Section 10.1
Event of Default Section 6.1
Excess Cash Flow Exhibit 4.8(C)
Existing Lenders Recitals
Existing Revolving Loans Section 1.1(B)
Exiting Lenders Recitals
Expiry Date Section 10.1
First Amended and Restated Credit Agreement Section 10.1
Fiscal Quarter Section 10.1
Fixed Charge Coverage Exhibit 4.8(C)
Foreign Lender Section 1.9(C)
Freely Available Cash and Cash Equivalents Section 10.1
Funding Date Section 7.2
GAAP Section 10.1
Governmental Authority Section 10.1
Hazardous Material Section 10.1
▇▇▇▇▇▇ Preamble
Holdings Preamble
Holdings Subordinated Indebtedness Section 10.1
Holdings Subordinated Indebtedness (JZEP) Section 10.1
Holdings Subordinated Indebtedness (NTT) Section 10.1
Holdings Subordinated Indebtedness (Sellers) Section 10.1
Holdings Subordinated Indebtedness Documents Section 10.1
Holdings Subordinated Indebtedness Documents (MCIT) Section 10.1
Holdings Subordinated Indebtedness Documents (NTT) Section 10.1
Incremental Term Loan A Section 1.1(A)
Indebtedness Section 10.1
Indemnitees Section 9.1
Institution Section 10.1
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INDEX OF DEFINED TERMS
(CONTINUED)
DEFINED TERM DEFINED IN SECTION
Institution Subsidiary Section 10.1
Intellectual Property Section 5.6
Intercompany Intercreditor Letter Section 10.1
Intercompany Note Section 3.1(B)(2)
Intercompany Security Agreement Section 10.1
Interest Expense Exhibit 4.8(C)
Interest Period Section 1.2(A)
Interest Ratio Section 8.6(A)(3)(d)
Interest Settlement Date Section 8.6(A)(3)
Investment Section 3.3
IRC Section 10.1
Jordan Section 10.1
Jordan Group Section 10.1
JZEP Section 10.1
Lender(s) Section 10.1
Lender Addition Agreement Section 10.1
Lender Letter of Credit Section 1.1(C)
Letter of Non-Exemption Section 1.9(C)
LIBOR Section 1.2(A)
LIBOR Breakage Fee Section 1.3(C)
LIBOR Loans Section 1.2(A)
LIBOR Margin Section 1.2(A)
Lien Section 10.1
Loan(s) Section 10.1
Loan Documents Section 10.1
Loan Party Section 10.1
Loan Year Section 10.1
Management Agreement Section 10.1
Management Note Section 10.1
Material Adverse Effect Section 10.1
Maximum DOE Limit Section 1.1(B)
Maximum Non-DOE Limit Section 1.1(B)
Maximum Revolver Loan Balance Section 1.1(B)
MCIT Section 10.1
Modification No. 1 Section 10.1
Modification ▇▇. ▇ ▇▇▇▇▇▇▇ ▇▇.▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇ Section 10.1
Nascar Sale/Leaseback Section 10.1
Necessary Regulatory Authorities Section 10.1
Net Proceeds Section 10.1 (Def. of "Asset Disposition")
Newco 2nd Recital
New Lender Recitals
1999 Subscription Agreement Section 3.11
Non-Collateralized DOE Letter of Credit Section 1.1(B)
Non-DOE Exposure Section 1.1(B)
Non-DOE Letter of Credit Section 1.1(B)
Non-DOE Risk Participation Liability Section 1.1(B)
Non-DOE Sublimit Section 1.1(B)(1)
Non-DOE Working Capital Loan Section 1.1(B)
-xi-
INDEX OF DEFINED TERMS
(CONTINUED)
DEFINED TERM DEFINED IN SECTION
Non-Institution Subsidiary Section 10.1
Normalized Capital Expenditures Section 10.1
Note(s) Section 10.1
NTT Section 10.1
NTT/PTA Release Section 10.1
NTT Purchase Agreement Section 10.1
NTT Purchase Transaction Section 10.1
NTT Related Transactions Section 10.1
Obligations Section 10.1
Old CEG Section 10.1
Old CHC Section 10.1
Original Credit Agreement 1st Recital
Original Term Loan B Section 1.1(A)
Original Transaction Date Section 10.1
Penske Section 10.1
Penske/Charlesbank Related Transactions Section 10.1
Penske/Charlesbank Related Transaction Documents Section 10.1
Permitted Acquisition Section 10.1
Permitted Encumbrances Section 3.2(A)
Person Section 10.1
Pledge Agreement Schedule 7.1
Preferred Stock Section 10.1
Pre-Acquisition Target EBITDA Section 10.1
Pro Forma Section 10.1
Projections Section 10.1
Pro Rata Share Section 10.1
Program Participation Agreement Section 10.1
PTA Section 10.1
Purchase Agreement (MCIT) Section 10.1
RBS Preamble
Real Estate Section 10.1
Register Section 8.1
Regulations Section 10.1
Related Fund Section 8.1
Related Transactions Section 10.1
Related Transactions Documents Section 10.1
Release Section 10.1
Remaining Subordinated Indebtedness Section 10.1
Remaining Subordinated Indebtedness Documents Section 10.1
Replacement Lender Section 1.10(A)
Required Lending Multiple Section 1.1(B)
Required Revolving Lenders Section 10.1
Requisite Lenders Section 10.1
Responsible Officer Section 10.1
Restricted Junior Payment Section 3.5
Revolving Loan Commitment Section 1.1(B)
Revolving Loans Section 1.1(B)
Revolving Note Section 10.1
Risk Participation Agreement Section 1.1(C)
-xii-
INDEX OF DEFINED TERMS
(CONTINUED)
DEFINED TERM DEFINED IN SECTION
Risk Participation Liability Section 1.1(B)
Salomon Section 8.1
Scheduled Installments Section 1.1(A)
Second Amendment and Restatement Date Section 10.1
Securities Purchase Agreement Section 10.1
Security Documents Section 10.1
Seller Subordinated Notes Section 10.1
Sellers Section 10.1
September 1999 Capital Contribution Section 10.1
Series C Preferred Stock Section 10.1
Settlement Date Section 8.6(A)(2)
Sharp Section 10.1
Statement Section 4.8(B)
Start-Up Expenses Section 10.1
Stockholders Agreement Section 10.1
Subject Subordinated Indebtedness Section 10.1
Subordinated Indebtedness Section 10.1
Subordinated Indebtedness Documents Section 10.1
Subsidiary Section 10.1
Target Business Section 10.1 (Def. of "Permitted Acquisition")
Target Person Section 10.1 (Def. of "Permitted Acquisition")
Tax Liabilities Section 1.9(A)
Tax-Sharing Agreement Section 10.1
Term Loan A Section 1.1(A)
Term Loan B Section 1.1(A)
Term Loan B Prepayment Section 7.1(G)
Term Loans Section 1.1(A)
Term Note Section 10.1
Third Amendment Section 10.1
Third Amendment Date Section 10.1
Title IV Section 10.1
Total DOE Exposure Section 1.1(B)
Total Indebtedness Exhibit 4.8(C)
Total Interest Coverage Exhibit 4.8(C)
Total Risk Participation Liability Section 1.1(B)
Trusts Section 10.1
TTM EBITDA Section 1.2(A)
UCC Section 10.1
Underlying DOE Letter of Credit Section 10.1 (Def. of "DOE Letter of Credit")
Unitrust Section 10.1
UTI Related Transactions Section 1.1(B)
UTI Transactions Section 10.1
White Note Section 10.1
Wholly-Owned Subsidiary Section 10.1
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SECOND AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
This SECOND AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT is dated as of March
29, 2002 and entered into by and among UTI HOLDINGS INC., an Arizona corporation
("BORROWER"), with its principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and UNIVERSAL TECHNICAL INSTITUTE, INC., a Delaware
corporation ("HOLDINGS"), with its principal place of business at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and ANTARES CAPITAL CORPORATION, a Delaware
corporation ("ANTARES"), as a Lender (as hereinafter defined), ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
BANK, a New York banking corporation, as Trustee of the Antares Funding Trust
created under a Trust Agreement dated as of November 30, 1999 ("ANTARES
TRUSTEE"), as a Lender, and THE ROYAL BANK OF SCOTLAND PLC, a bank organized
under the laws of Scotland ("RBS"), as a Lender, and ▇▇▇▇▇▇ FINANCIAL, INC., a
Delaware corporation (in its individual capacity "▇▇▇▇▇▇"), with offices at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as a Lender, and as agent for all
Lenders, and such other persons executing this Agreement as Lenders. All terms
used in the Recitals but not defined therein are used as defined in Section 10
of this Agreement.
R E C I T A L S:
WHEREAS, Borrower, Holdings, Agent and certain financial institutions, as
lenders (the "EXISTING LENDERS"), are parties to an Amended and Restated Credit
Agreement, dated as of June 30, 1998 as amended, by Amendment No. 1, dated as of
September 30, 1998, Amendment No. 2, dated as of September 30, 1998, Amendment
No. 3, dated as of September 30, 1999 and Amendment No. 4, dated as of December
11, 2001 (the "ORIGINAL CREDIT AGREEMENT" and as amended and restated by this
Second Amendment and Restatement, this "AMENDED AND RESTATED CREDIT AGREEMENT"
or this "AGREEMENT");
WHEREAS, the lenders identified on Schedule A (the "EXITING LENDERS") shall
immediately prior to the effectiveness of this Agreement, assign all amounts
owing to them under the Original Credit Agreement (other than the proceeds of
the Term Loan B Prepayment and interest payable in connection therewith) to New
Lenders (as hereinafter defined) and/or Continuing Lenders and all of their
rights and obligations as a "Lender" under and as defined in the Original Credit
Agreement to New Lenders and/or Continuing Lenders and cease to be parties to
the Original Credit Agreement (but shall continue to be entitled to receive the
proceeds of the Term Loan B Prepayment and interest payable in connection
therewith);
WHEREAS, certain parties to this Agreement identified as "New Lenders" on the
signature pages hereto ("NEW LENDERS") shall concurrently with the effectiveness
of this Agreement become a party to the Original Credit Agreement by executing
and delivering one or more counterparts of this Agreement and by becoming an
assignee of an Exiting Lender and/or Continuing Lender;
WHEREAS, certain of the lenders party to the Original Credit Agreement
identified as such on the signature pages hereto (the "CONTINUING LENDERS")
shall continue as Lenders under this Agreement [and may assign rights and
obligations under the Original Credit Agreement to one or more other Continuing
Lenders or New Lenders and/or accept assignments of rights and obligations under
the Original Credit Agreement from one or more other Continuing Lenders or New
Lenders]; and
WHEREAS, Holdings and Borrower have requested Agent, the New Lenders and the
Continuing Lenders (collectively and severally, as more particularly defined in
Section 10, "LENDERS") to amend and restate the Original Credit Agreement to,
inter alia, provide for an increase of the Revolving Loan Commitment to
$20,000,000, extend the terms of the Revolving Loan Commitment, Term Loan A and
Term Loan B, provide for a prepayment of Term Loan B in the principal amount of
$24,788,500.00 and increase Term Loan A by $6,906,250.00; and
WHEREAS, Agent and Lenders are willing, subject to and upon the terms and
conditions herein set forth, to so amend and restate the Original Credit
Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, Borrower, Lenders and Agent hereby agree that
the Original Credit Agreement (including, without limitation, the exhibits and
schedules thereto) is, subject to the satisfaction of the conditions set forth
in subsection 7.3 hereof, amended and restated in its entirety by this
Agreement.
SECTION 1
AMOUNTS AND TERMS OF LOANS
1.1 LOANS. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower and Holdings
contained herein:
(A) TERM LOAN A AND TERM LOAN B. (a) As of the date hereof and
immediately prior to the Second Amendment and Restatement
Date,
(1) the outstanding principal balance of the term loan
("TERM LOAN A") in the original principal amount of
$22,000,000 and originally advanced hereunder on
January 23, 1998, is $13,093,750 and remains
outstanding and the Borrower agrees that such
principal amount is owing without defense, offset,
recoupment or deduction and
(2) the outstanding principal balance of the term loan
("TERM LOAN B") in the original principal amount of
$18,000,000 advanced hereunder on January 23, 1998
and of an additional $38,500,000 advanced hereunder
on June 30, 1998 is $54,788,500.00, and the Borrower
agrees that such principal amount is owing without
defense, offset, recoupment or deduction,
(3) subject to the terms and conditions hereof, on the
Second Amendment and Restatement Date, the Lenders
severally and not jointly agree to lend to the
Borrower their respective Pro Rata Shares
("INCREMENTAL TERM LOAN A") of an additional amount,
to be added to and to become a part of Term Loan A
equal to $6,906,250.00, and
(4) after giving effect to the advance of Incremental
Term Loan A, the outstanding principal balance of
Term Loan A will be $20,000,000 and after giving
effect to the Term Loan B Prepayment, (as hereinafter
defined) the outstanding principal balance of Term
Loan B shall be $30,000,000 (Term Loan A and Term
Loan B, hereinafter sometimes referred to
individually as a "TERM LOAN" and collectively as
"TERM LOANS").
Borrower shall repay Term Loan A and Term Loan B
through periodic payments on the dates and in the
amounts indicated below (together with the
installments referred to in subsection 1.1(B)(2),
"SCHEDULED INSTALLMENTS").
-2-
TERM LOAN A:
--------------------------------------------------
DATE SCHEDULED INSTALLMENT
--------------------------------------------------
June 30, 2002 $ 425,000
--------------------------------------------------
September 30, 2002 $ 425,000
--------------------------------------------------
December 31, 2002 $ 425,000
--------------------------------------------------
March 31, 2003 $ 425,000
--------------------------------------------------
June 30, 2003 $ 675,000
--------------------------------------------------
September 30, 2003 $ 675,000
--------------------------------------------------
December 31, 2003 $ 675,000
--------------------------------------------------
March 31, 2004 $ 675,000
--------------------------------------------------
June 30, 2004 $ 925,000
--------------------------------------------------
September 30, 2004 $ 925,000
--------------------------------------------------
December 31, 2004 $ 925,000
--------------------------------------------------
March 31, 2005 $ 925,000
--------------------------------------------------
June 30, 2005 $1,300,000
--------------------------------------------------
September 30, 2005 $1,300,000
--------------------------------------------------
December 31, 2005 $1,300,000
--------------------------------------------------
March 31, 2006 $1,300,000
--------------------------------------------------
June 30, 2006 $1,675,000
--------------------------------------------------
September 30, 2006 $1,675,000
--------------------------------------------------
December 31, 2006 $1,675,000
--------------------------------------------------
March 31, 2007 $1,675,000
--------------------------------------------------
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TERM LOAN B:
--------------------------------------------------
DATE SCHEDULED INSTALLMENT
--------------------------------------------------
June 30, 2002 $ 75,000
--------------------------------------------------
September 30, 2002 $ 75,000
--------------------------------------------------
December 31, 2002 $ 75,000
--------------------------------------------------
March 31, 2003 $ 75,000
--------------------------------------------------
June 30, 2003 $ 75,000
--------------------------------------------------
September 30, 2003 $ 75,000
--------------------------------------------------
December 31, 2003 $ 75,000
--------------------------------------------------
March 31, 2004 $ 75,000
--------------------------------------------------
June 30, 2004 $ 75,000
--------------------------------------------------
September 30, 2004 $ 75,000
--------------------------------------------------
December 31, 2004 $ 75,000
--------------------------------------------------
March 31, 2005 $ 75,000
--------------------------------------------------
June 30, 2005 $ 75,000
--------------------------------------------------
September 30, 2005 $ 75,000
--------------------------------------------------
December 31, 2005 $ 75,000
--------------------------------------------------
March 31, 2006 $ 75,000
--------------------------------------------------
June 30, 2006 $ 75,000
--------------------------------------------------
September 30, 2006 $ 75,000
--------------------------------------------------
December 31, 2006 $ 75,000
--------------------------------------------------
March 31, 2007 $ 75,000
--------------------------------------------------
June 30, 2007 $3,125,000
--------------------------------------------------
September 30, 2007 $3,125,000
--------------------------------------------------
December 31, 2007 $3,125,000
--------------------------------------------------
March 31, 2008 $3,125,000
--------------------------------------------------
June 30, 2008 $4,000,000
--------------------------------------------------
September 30, 2008 $4,000,000
--------------------------------------------------
December 31, 2008 $4,000,000
--------------------------------------------------
March 31, 2009 $4,000,000
--------------------------------------------------
Amounts borrowed under this subsection 1.1(A) and
repaid may not be reborrowed.
(B) REVOLVING LOANS.
(1) Subject to the satisfaction of the terms and
conditions set forth herein and in reliance upon the
representations and warranties set forth herein, each
Lender agrees, severally and not jointly, to lend to
Borrower from the Second Amendment and Restatement
Date to the Expiry Date its Pro Rata Share of the
loans requested by Borrower to be made by Lenders
under this subsection 1.1(B), up to an aggregate
maximum principal amount for all Lenders of
$20,000,000 outstanding at any one time (as the same
may be reduced from time to time hereunder, the
"REVOLVING LOAN COMMITMENT") which may be used for
general corporate and working capital purposes (i) to
reimburse drawings under DOE Letters of Credit ("DOE
WORKING CAPITAL LOANS") and (ii) other than for
reimbursement of drawings under DOE Letters of Credit
("NON-DOE WORKING CAPITAL LOANS"). The outstanding
principal amount of DOE Working Capital
-4-
Loans, together with the DOE Risk Participation
Liability, shall not exceed at any time the greater
of (a) $10,000,000 and (b) an amount, not exceeding
$15,000,000, equal to 10% of Title IV funding
received by the Borrower's Institution Subsidiaries
for the fiscal year of the Borrower ending most
recently prior to such time (the "DOE SUBLIMIT"). The
outstanding principal amount of Non-DOE Working
Capital Loans, together with the Non-DOE Risk
Participation Liability, shall not exceed at any time
the amount by which the Revolving Loan Commitment
exceeds the DOE Sublimit (the "NON-DOE SUBLIMIT").
The Revolving Loan made on the Second Amendment and
Restatement Date shall not exceed $4,500,000 and only
one Revolving Loan shall be made on the Second
Amendment and Restatement Date. Advances or amounts
outstanding under the Revolving Loan Commitment will
be called "REVOLVING LOANS". Revolving Loans may be
repaid and reborrowed until the Expiry Date. Borrower
confirms that, immediately prior to the Second
Amendment and Restatement Date, there are no
Revolving Loans outstanding.
(2) No DOE Working Capital Loan shall be made and no DOE
Letter of Credit shall be issued if, as a result of
either thereof, the DOE Exposure would exceed the
Maximum DOE Limit. No Non-DOE Working Capital Loan
shall be made and no Non-DOE Letter of Credit shall
be issued if, as a result of either thereof, the
Non-DOE Exposure would exceed the Maximum Non-DOE
Limit. No Revolving Loan shall be made and no Lender
Letter of Credit or Risk Participation Agreement
shall be issued if, as a result of either thereof,
the outstanding balance of Revolving Loans would
exceed the Maximum Revolver Loan Balance. If, at any
time, the outstanding principal balance of Revolving
Loans exceeds the Maximum Revolver Loan Balance,
Borrower shall immediately repay Revolving Loans
and/or immediately provide cash collateral to Agent
on terms acceptable to Agent for Risk Participation
Liability to eliminate such excess. If, at any time,
the DOE Exposure exceeds the Maximum DOE Limit,
Borrower shall immediately repay DOE Working Capital
Loans and/or immediately cause any Non-Collateralized
DOE Letters of Credit to become Collateralized DOE
Letters of Credit, in an amount sufficient to
eliminate such excess. If, at any time, the Non-DOE
Exposure exceeds the Maximum Non-DOE Limit, Borrower
shall immediately repay Non-DOE Working Capital Loans
and/or immediately provide cash collateral to Agent
on terms acceptable to Agent for Non-DOE Risk
Participation Liability, in an amount sufficient to
eliminate such excess.
Revolving Loans may be requested by Borrower in any
amount with one (1) Business Day's prior notice
required for Revolving Loans in amounts greater than
or equal to $2,000,000. For Revolving Loans of less
than $2,000,000, written or telephonic notice must be
provided by 12:00 noon CST on the day on which the
Revolving Loan is to be made, provided, that Borrower
shall in any event be required to provide three (3)
Business Days' prior written or telephonic notice to
Agent of each LIBOR Loan by 12:00 noon CST on the
third Business Day prior to the Funding Date for such
LIBOR Loan. All Loans requested telephonically must
be confirmed in writing within twenty-four (24)
hours. Neither Agent nor any Lender shall incur any
liability to Borrower for acting upon any telephonic
notice that Agent believes in good faith to have been
given by a duly authorized officer or other person
authorized to borrow on behalf of Borrower.
-5-
(3) For the purposes of this Agreement:
"COLLATERALIZED DOE LETTER OF CREDIT" means a DOE
Letter of Credit for which Borrower shall have
deposited cash collateral, pursuant to a Cash
Collateral Agreement, in an amount equal to the DOE
Risk Participation Liability arising under such DOE
Letter of Credit.
"DOE EXPOSURE" means the sum, at any time of (i) the
outstanding principal amount of DOE Working Capital
Loans plus (ii) DOE Risk Participation Liability
(after giving effect to the use of proceeds of any
DOE Working Capital Loan included in (i) above).
"DOE LETTER OF CREDIT" means a Lender Letter of
Credit or Risk Participation Agreement issued in
respect of a letter of credit, which Lender Letter of
Credit or letter of credit shall have been issued (i)
for the benefit of DOE for the account of Borrower or
(ii) (x) for the benefit of the issuer ("DOE ISSUER")
of a letter of credit issued for the benefit of DOE
for the account of Borrower or any of its
Subsidiaries (an "UNDERLYING DOE LETTER OF CREDIT")
and (y) in respect of the DOE Issuer's liability in
respect of an Underlying DOE Letter of Credit; and
which Lender Letter of Credit, letter of credit, Risk
Participation Agreement and Underlying DOE Letter of
Credit, as applicable, shall be in form, scope and
substance satisfactory to Agent and Requisite
Lenders, and any amendment, renewal, extension or
renewal of such Lender Letter of Credit, letter of
credit, Risk Participation Agreement and Underlying
Letter of Credit, as applicable, which has been
consented to in writing by Agent and the Requisite
Lenders.
"DOE RISK PARTICIPATION LIABILITY" means Risk
Participation Liability arising from a DOE Letter of
Credit.
"MAXIMUM DOE LIMIT" means the lesser of (i) the
Revolving Loan Commitment and (ii) the DOE Sublimit.
"MAXIMUM NON-DOE LIMIT" means the lesser of (i) the
Revolving Loan Commitment and (ii) the Non-DOE
Sublimit.
"MAXIMUM REVOLVER LOAN BALANCE" means (i) the
Revolving Loan Commitment less (ii) the Total Risk
Participation Liability.
"NON-COLLATERALIZED DOE LETTER OF CREDIT" means a DOE
Letter of Credit other than a Collateralized DOE
Letter of Credit.
"NON-DOE EXPOSURE" means the sum, at any time of (i)
the outstanding principal amount of Non-DOE Working
Capital Loans plus (ii) Non-DOE Risk Participation
Liability (after giving effect to the use of proceeds
of any Non-DOE Working Capital Loan included in (i)
above).
"NON-DOE LETTER OF CREDIT" means a Lender Letter of
Credit or Risk Participation Agreement other than a
DOE Letter of Credit.
"NON-DOE RISK PARTICIPATION LIABILITY" means Risk
Participation Liability, other than DOE Risk
Participation Liability.
-6-
"RISK PARTICIPATION LIABILITY" means, as to each
Lender Letter of Credit and each Risk Participation
Agreement, all reimbursement obligations of Borrower
to the issuer of the Lender Letter of Credit or to
the issuer of the letter of credit with respect to
the transaction for which the Risk Participation
Agreement was executed and delivered, consisting of
(1) (a) the amount available to be drawn or which may
become available to be drawn; (b) all amounts which
have been paid and made available by the issuing bank
to the extent not reimbursed by Borrower, whether by
the making of a Revolving Loan or otherwise; and (c)
all accrued and unpaid interest, fees and expenses
with respect thereto less (2) the amount of cash
collateral held by Agent, on terms and conditions
acceptable to Agent, as collateral security for the
amounts referred to in (1) above and in which Agent
has a first priority perfected security interest. For
purposes of determining the outstanding amount of
Risk Participation Liability, the maximum amount
potentially owing under any Risk Participation
Agreement will be considered outstanding unless the
bank which is the beneficiary of such Risk
Participation Agreement reports daily activity to
Agent showing actual outstanding letters of credit
subject to such Risk Participation Agreement and
Borrower (i) has an operating account permitted
hereunder at the issuing bank or (ii) is directly
charged by the issuing bank for drawings under the
letters of credit underlying such Risk Participation
Liability and debits relating to applicable fees.
"TOTAL RISK PARTICIPATION LIABILITY" means at any
time, the Risk Participation Liability for all Lender
Letters of Credit and Risk Participation Agreements
outstanding at such time.
(C) LETTERS OF CREDIT AND RISK PARTICIPATION AGREEMENTS. The
Revolving Loan Commitment may, in addition to advances under
the Revolving Loan, be utilized, upon the request of Borrower,
for (i) the issuance of standby letters of credit for the
account of Borrower (to support obligations of Borrower or any
of its Subsidiaries) by Agent or, at the request of Agent, by
General Electric Capital Corporation (each such letter of
credit, a "LENDER LETTER OF CREDIT") or (ii) the issuance by
Agent or, at the request of Agent, by General Electric Capital
Corporation of risk participation agreements (each such
agreement, a "RISK PARTICIPATION AGREEMENT") to confirm
payment to banks which issue standby letters of credit for the
account of Borrower (in support of obligations of Borrower or
any of its Subsidiaries). Where the context so requires,
references to Agent in this subsection 1.1(C) shall apply to
General Electric Capital Corporation to the extent that
General Electric Capital Corporation issues a Lender Letter of
Credit or a Risk Participation Agreement at the request of
Agent.
(1) Maximum Amount. The aggregate amount of Non-DOE Risk
Participation Liability with respect to all Lender
Letters of Credit and Risk Participation Agreements
outstanding for the account of Borrower at any time
shall not exceed the Non-DOE Sublimit (and no Non-DOE
Letter of Credit shall be issued if it would cause
such limit to be exceeded) and the aggregate amount
of DOE Risk Participation Liability outstanding for
the account of Borrower at any time shall not exceed
the DOE Sublimit (and no DOE Letter of Credit shall
be issued if it would cause such limit to be
exceeded). In no event shall any Lender Letter of
Credit or Risk Participation Agreement be issued or
be required to be issued hereunder if such issuance
would be prohibited under Section 1.1(B)(2).
-7-
(2) Reimbursement. Borrower shall be irrevocably and
unconditionally obligated forthwith without
presentment, demand, protest or other formalities of
any kind, to reimburse Agent for any amounts paid by
Agent with respect to a Lender Letter of Credit or a
Risk Participation Agreement issued for the account
of Borrower, including all reasonable fees, costs and
expenses paid by Agent to any bank that issues
letters of credit. Borrower hereby authorizes and
directs Agent, at Agent's option, to make a Revolving
Loan in the amount of any payment made by Agent with
respect to any Lender Letter of Credit or any Risk
Participation Agreement. All amounts paid by Agent
with respect to any Lender Letter of Credit or Risk
Participation Agreement that are not immediately
repaid by Borrower with the proceeds of a Revolving
Loan or otherwise shall bear interest at the interest
rate applicable to Revolving Loans calculated using
the Base Rate. Each Lender agrees to fund its Pro
Rata Share of any Revolving Loan made pursuant to
this subsection 1.1(C)(2). If no such Revolving Loan
is made, each Lender agrees to purchase, and shall be
deemed to have purchased, a participation in such
Lender Letter of Credit or Risk Participation
Agreement, as the case may be, in an amount equal to
its Pro Rata Share of the Risk Participation
Liability of such Lender Letter of Credit or Risk
Participation Agreement, as the case may be, and each
Lender agrees to pay to Agent such Lender's Pro Rata
Share of any payments made by Agent under such Lender
Letter of Credit and Risk Participation Agreement.
The obligation of each Lender to deliver to Agent an
amount equal to its respective Pro Rata Share of a
Revolving Loan or participation, as applicable,
pursuant to the preceding two (2) sentences shall be
absolute and unconditional and such remittance shall
be made notwithstanding the occurrence or
continuation of an Event of Default or Default or the
failure to satisfy any condition set forth in
subsection 7.2. If any Lender fails to make available
to Agent the amount of such Lender's Pro Rata Share
of any payments made by Agent in respect of such
Lender Letter of Credit or Risk Participation
Agreement as provided in this subsection 1.1(C)(2),
Agent shall be entitled to recover such amount on
demand from such Lender together with interest at the
Base Rate. As issuer of a Lender Letter of Credit or
Risk Participation Agreement, Agent may require, as a
condition to issuance thereof, that Borrower execute
and deliver such letter of credit applications and
reimbursement agreements as Agent may deem advisable.
(3) Conditions of Issuance of Letters of Credit or Risk
Participation Agreements. In addition to all other
terms and conditions set forth in this Agreement, the
issuance by Agent of any Lender Letter of Credit or
Risk Participation Agreement shall be subject to the
conditions precedent that the Lender Letter of
Credit, the Risk Participation Agreement or the
letter of credit for which Borrower requests a Risk
Participation Agreement shall support (i) a
transaction (other than a Permitted Acquisition)
entered into in the ordinary course of Borrower's or
any of its Subsidiaries' business or (ii) an
obligation to DOE (or an obligation to a DOE Issuer
in respect of such DOE Issuer's liability arising
from a letter of credit issued by such DOE Issuer for
the benefit of DOE), and in any case, shall be in
such form, be for such amount, and contain such terms
and conditions as are reasonably satisfactory to
Agent. The expiration date of each Lender Letter of
Credit and each letter of credit to be issued under a
Risk Participation Agreement shall be on a date which
is the earliest of (a) one year from its date of
issuance, (b) the date thirty (30) days prior to the
date set forth in clause (c) of the definition of the
term "Expiry Date". Each Risk Participation
-8-
Agreement shall provide that the agreement terminates
and all demand or claims for payment must be
presented by a date certain, which date will be no
later than the date thirty (30) days prior to the
date set forth in clause (c) of the definition of the
term "Expiry Date".
(4) Request for Lender Letters of Credit or Risk
Participation Agreements. Borrower shall give Agent
at least three (3) Business Days prior notice
specifying the date a Lender Letter of Credit or Risk
Participation Agreement (or a letter of credit to be
issued under a Risk Participation Agreement) is
requested to be issued, identifying the beneficiary
and indicating (x) the nature of the transactions
proposed to be supported thereby and (y) whether or
not the request is for a DOE Letter of Credit. After
the issuance of a Risk Participation Agreement in
favor of a bank that will issue letters of credit for
the account of Borrower, Borrower shall give Agent at
least two (2) Business Days prior written notice
specifying the date a letter of credit is to be
issued under a Risk Participation Agreement (five (5)
Business Days in the case of the first letter of
credit to be issued under a particular Risk
Participation Agreement), identifying the beneficiary
and describing the nature of the transactions
proposed to be supported thereby. Any notice
described in this paragraph shall be accompanied by
the form of the Lender Letter of Credit or the letter
of credit to which such Risk Participation Agreement
relates.
(5) Confirmation of Obligations. Borrower hereby confirms
that immediately prior to the Second Amendment and
Restatement Date, an Underlying DOE Letter of Credit
(No. UTIHCF110900004) in the original principal
amount of $6,400,000 has been issued by Agent, and
that Borrower is obligated to reimburse Agent for any
amounts paid by Agent with respect to such Underlying
DOE Letter of Credit in accordance with the terms of
the Original Credit Agreement (and from and after the
Second Amendment and Restatement Date, this
Agreement) without offset, defense, claim,
counterclaim, cross-claim or right of set-off or
recoupment.
(D) NOTES. Borrower shall execute and deliver to each Lender in
replacement for the promissory notes issued pursuant to the
Original Credit Agreement (i) a Note to evidence the Revolving
Loans, such Note to such Lender to be in the principal amount
of such Lender's Pro Rata Share of the Revolving Loan
Commitment, and (ii) an amended and restated Note to evidence
Term Loan A, and an amended and restated Note to evidence Term
Loan B, each such Note to such Lender to be in the principal
amount of such Lender's Pro Rata Share of each such Term Loan.
In the event of an assignment under subsection 8.1, Borrower
shall, upon surrender of the assigning Lender's Notes, issue
new Notes to reflect the interests of the assigning Lender and
the Person to which interests are to be assigned. All Notes
shall be dated and delivered the Second Amendment and
Restatement Date. Upon receipt of such amended and restated
Notes, each Lender shall return to Borrower on the Second
Amendment and Restatement Date any and all Notes issued prior
to the Second Amendment and Restatement Date in respect of the
Revolving Loans and Term Loan A and Term Loan B.
1.2 INTEREST AND RELATED FEES.
(A) INTEREST. Subject to subsection 1.2(E), from the date the
Loans are made, and from the date Obligations (other than
Loans) become due, depending upon Borrower's election
-9-
from time to time, as permitted herein, to have portions of
the Loans accrue interest based upon the LIBOR, the Loans and
such other Obligations shall bear interest at the rates set
forth below:
(1) If a Base Rate Loan or an Obligation other than a
Loan, then at the sum of the Base Rate plus the Base
Rate Margin; or
(2) If a LIBOR Loan, then at the sum of the LIBOR plus
the LIBOR Margin.
"ADJUSTMENT DATE" means the date which is the first day of a
calendar month next following the delivery to Agent pursuant
to subsection 4.8(C) of a Compliance Certificate in respect of
any March, June, September or December.
"BASE RATE" means a variable rate of interest per annum equal
to the rate of interest from time to time published by the
Board of Governors of the Federal Reserve System in Federal
Reserve statistical release H.15 (519) entitled "Selected
Interest Rates" as the Bank prime loan rate. Base Rate also
includes rates published in any successor publications of the
Federal Reserve System reporting the Bank prime loan rate or
its equivalent. The statistical release generally sets forth a
Bank prime loan rate for each business day. The applicable
Bank prime loan rate for any date not set forth shall be the
rate set forth for the last preceding date. In the event the
Board of Governors of the Federal Reserve System ceases to
publish a Bank prime loan rate or equivalent, the term "BASE
RATE" shall mean a variable rate of interest per annum equal
to the highest of the "prime rate", "reference rate", "base
rate" or other similar rate as determined by Agent announced
from time to time by any of Bankers Trust Company, Citibank,
N.A. or ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank (with the understanding that any
such rate may merely be a reference rate and may not
necessarily represent the lowest or best rate actually charged
to any customer by such bank).
"BASE RATE LOANS" means Loans other than LIBOR Loans.
"BASE RATE MARGIN" means, (i) as of the day immediately
preceding the Second Amendment and Restatement Date, (x) in
the case of Term Loan B, 1.50% or (y) in the case of
Obligations other than Term Loan B, 1.00%, (ii) for the period
commencing on the Second Amendment and Restatement Date and
ending on the day immediately preceding the Adjustment Date
occurring on or most recently after the date that is six
months after the Second Amendment and Restatement Date, (x) in
the case of Term Loan B, 2.50% or (y) in the case of
Obligations other than Term Loan B, 2.00%, and (iii) for each
Calculation Period which begins on or after such Adjustment
Date the applicable percent per annum set forth in the pricing
table below opposite Total Indebtedness to TTM EBITDA for the
fiscal quarter reflected in the Compliance Certificate
delivered on or most recently prior to such Calculation
Period.
"CALCULATION PERIOD" means each period beginning on an
Adjustment Date and ending on the day immediately preceding
the immediately succeeding Adjustment Date.
"LIBOR" means, for each Interest Period, a rate per annum
equal to:
(a) the offered rate for deposits in U.S.
dollars in an amount comparable to the amount of the
applicable Loan in the London interbank market which is
published by the British Bankers' Association, and that
currently appears on Telerate Page 3750, or any
-10-
other source available to Agent, as of 11:00 a.m. (London
time) on the day which is two (2) Business Days prior to the
first day of the relevant Interest Period for a term
comparable to such Interest Period; or if, for any reason,
such a rate is not published by the British Bankers'
Association on Telerate or any other source available to
Agent, the rate per annum equal to the average rate (rounded
upwards, if necessary, to the nearest 1/100 of 1%) at which
Agent determines that U.S. dollars in an amount comparable to
the amount of the applicable Loans are being offered to prime
banks at approximately 11:00 a.m. (London time) on the day
which is two (2) Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period
for settlement in immediately available funds by leading banks
in the London interbank market selected by Agent; divided by
(b) a number equal to 1.0 minus the aggregate
(but without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on the day which
is two (2) Business Days prior to the beginning of such
Interest Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction
with respect thereto, as now and from time to time in effect)
for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board)
which are required to be maintained by a member bank of the
Federal Reserve System; such rate to be rounded upward to the
next whole multiple of one-sixteenth of one percent (.0625%).
"LIBOR LOANS" means Loans bearing interest at rates determined
by reference to the LIBOR.
"LIBOR MARGIN" means, (i) for all LIBOR Loans through the day
immediately preceding the Second Amendment and Restatement
Date, (x) and constituting Term Loan B or a portion thereof,
3.00% or (y) and constituting a Loan or portion thereof other
than Term Loan B or a portion thereof, 2.50%, (ii) for all
LIBOR Loans for the period beginning on the Second Amendment
and Restatement Date and ending on the day immediately
preceding the Adjustment Date occurring on or most recently
after the date that is six months after the Second Amendment
and Restatement Date, (x) and constituting Term Loan B or a
portion thereof, 3.75% or (y) constituting a Loan or portion
thereof other than Term Loan B or a portion thereof, 3.25%,
and (iii) for all LIBOR Loans for any period after such
Adjustment Date the applicable percent per annum set forth in
the pricing table below opposite Total Indebtedness to TTM
EBITDA for the fiscal quarter reflected in the Compliance
Certificate delivered on or most recently prior to such
Calculation Period.
"TOTAL INDEBTEDNESS TO TTM EBITDA RATIO" means, for any fiscal
quarter, the ratio of (A) Total Indebtedness as of the last
day of such fiscal quarter, to (B) TTM EBITDA for the twelve
(12) month period ending on the last day of such fiscal
quarter.
"TTM EBITDA" means the sum of (i) EBITDA for Holdings and its
Subsidiaries (per attachment 4.3 to Exhibit 4.8(C)) for the
most recent period of four full fiscal quarters in respect of
which financial statements under subsection 4.8(A) have been
delivered to Agent and Lenders (including that of any Target
Person or Target Business included in such financial
statements and including that of any Subsidiary acquired
during such period as if such Subsidiary had been acquired on
the first day of such period) plus
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(ii) Pre-Acquisition Target EBITDA for any one or more Target
Persons or Target Businesses.
PRICING TABLE
BASE RATE MARGIN LIBOR MARGIN
------------------------- -------------------------
OBLIGATIONS LOANS OTHER
OTHER THAN THAN
TOTAL DEBT TO TTM EBITDA TERM LOAN B TERM LOAN B TERM LOAN B TERM LOAN B
------------------------ ----------- ----------- ----------- -----------
> 3.00x 2.25% 2.75% 3.50% 4.00%
> 2.50 and < than = to 3.00x 2.00% 2.50% 3.25% 3.75%
> 2.00 and < than = to 2.50x 1.75% 2.25% 3.00% 3.50%
< than = to 2.00x 1.50% 2.00% 2.75% 3.25%
If Borrower shall fail to deliver a Compliance Certificate by
the date required pursuant to subsection 4.8(C), effective as
of the tenth Business Day following the date on which such
Compliance Certificate was due, each applicable Base Rate
Margin and each applicable LIBOR Rate Margin shall be
conclusively presumed to equal the highest applicable Base
Rate Margin and the highest applicable LIBOR Margin specified
in the pricing table set forth above until such time as
Borrower shall have delivered such Compliance Certificate.
Each LIBOR Loan may be obtained for a one (1), two (2), three
(3), or six (6) month period (each being an "INTEREST
PERIOD"). With respect to all LIBOR Loans: (a) the Interest
Period will commence on the date that the LIBOR Loan is made
or the date on which a Base Rate Loan is converted into a
LIBOR Loan, as applicable, or in the case of immediately
successive Interest Periods, each successive Interest Period
shall commence on the day on which the next preceding Interest
Period expires, (b) if the Interest Period expires on a day
that is not a Business Day, then it will expire on the next
Business Day and (c) no Interest Period shall extend beyond
March 31, 2009.
(B) COMMITMENT FEE. From the Closing Date, Borrower shall pay
Agent, for the benefit of all Lenders committed to make
Revolving Loans (based upon their respective Pro Rata Shares),
a fee in an amount equal to (1)(a) the Revolving Loan
Commitment less (b) the sum of (i) the average daily balance
of the Revolving Loans during the preceding fiscal quarter or
portion thereof plus (ii) the average daily aggregate amount
of outstanding Total Risk Participation Liability during the
preceding fiscal quarter or portion thereof, multiplied by (2)
until the Second Amendment and Restatement Date three eighths
of one percent (.375%) per annum and from and after the Second
Amendment and Restatement Date one-half of one percent (.500%)
per annum. Such fee is to be paid quarterly in arrears on the
first day of each fiscal quarter and on the Expiry Date.
(C) RISK PARTICIPATION FEE. From the Closing Date, Borrower shall
pay Agent, for the benefit of all Lenders committed to make
Revolving Loans (based upon their respective Pro Rata Shares),
a per annum fee (i) for all periods until (but excluding) the
Second Amendment and Restatement Date, for each (x) Lender
Letter of Credit and each Risk Participation Agreement (in
each case, other than any which constitutes a Collateralized
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DOE Letter of Credit) from the date of issuance to the date of
termination equal to the average daily outstanding amount of
the Risk Participation Liability arising therefrom multiplied
by 2.00% per annum and (y) each Collateralized DOE Letter of
Credit from the date of issuance (or the date a DOE Letter of
Credit became a Collateralized DOE Letter of Credit, whichever
is later) to the date of termination (or until the Second
Amendment and Restatement Date, if earlier) equal to the
average outstanding amount of Risk Participation Liability
arising therefrom multiplied by 20 basis points (0.2%) or (ii)
for all periods from and after the Second Amendment and
Restatement Date, for each Lender Letter of Credit and each
Risk Participation Agreement, the LIBOR Margin applicable to
Term Loan A and Revolving Loan in effect on such day. Such fee
is to be paid quarterly in arrears on the first day of each
fiscal quarter and on the Expiry Date. Borrower shall also
reimburse Agent for any and all fees and expenses paid by any
Lender to the issuer of any letter of credit that is in any
way related to a Risk Participation Agreement.
(D) COMPUTATION OF INTEREST AND RELATED FEES. Interest on all
Loans and all other Obligations and any per annum fees set
forth in this subsection 1.2 shall be calculated daily on the
basis of a three hundred sixty (360) day year for the actual
number of days elapsed in the period during which it accrues.
The date of funding a Base Rate Loan and the first day of an
Interest Period with respect to a LIBOR Loan shall be included
in the calculation of interest. The date of payment of a Base
Rate Loan and the last day of an Interest Period with respect
to a LIBOR Loan shall be excluded from the calculation of
interest. If a Loan is repaid on the same day that it is made,
one (1) days' interest shall be charged. Interest on all Base
Rate Loans is payable in arrears on the first day of each
fiscal quarter and on the Expiry Date, whether by acceleration
or otherwise. Interest on LIBOR Loans shall be payable on the
last day of the applicable Interest Period, unless the
Interest Period is greater than three (3) months, in which
case interest will be payable on the last day of each three
(3) month interval. In addition, interest on LIBOR Loans is
due and payable on the Expiry Date, whether by acceleration or
otherwise.
(E) DEFAULT RATE OF INTEREST. At the election of Agent or
Requisite Lenders, after the occurrence of an Event of
Default, other than an Event of Default listed on Schedule
1.2(E) and for so long as it continues, the Loans and other
Obligations shall bear interest at a rate that is two percent
(2.00%) in excess of the rates otherwise payable under this
Agreement. Furthermore, during any period in which any such
Event of Default is continuing, as the Interest Periods for
LIBOR Loans then in effect expire, such Loans shall be
converted at Agent's discretion into Base Rate Loans and the
LIBOR election will not be available to Borrower until all
such Events of Default are cured or waived.
(F) EXCESS INTEREST. Under no circumstances will the rate of
interest chargeable be in excess of the maximum amount
permitted by applicable law. If excess interest is charged and
paid in error, then the excess amount will be promptly
refunded.
(G) LIBOR RATE ELECTION. All Loans shall constitute Base Rate
Loans and remain so for at least three (3) Business Days
following the Second Amendment and Restatement Date.
Thereafter, Borrower, by written or telephonic notice to Agent
by 12:00 noon CST on the third Business Day prior to the
Funding Date for the applicable LIBOR Loans requested thereby
in each instance, may request that Revolving Loans to be made
be LIBOR Loans and that outstanding portions of any Term Loan
be converted to LIBOR Loans. Once given, a LIBOR Loan request
shall be irrevocable and Borrower shall be bound thereby. Upon
the expiration of an Interest Period, in the absence of a new
LIBOR Loan request
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submitted to Agent not less than three (3) Business Days prior
to the end of such Interest Period, the LIBOR Loan then
maturing shall be automatically converted to a Base Rate Loan.
There may be no more than six (6) LIBOR Loans outstanding at
any one time. Loans which are not the subject of a LIBOR Loan
request shall be Base Rate Loans. Agent will notify the
Lenders, by telephonic or facsimile notice, of each LIBOR
request received by Agent not less than two (2) Business Days
prior to the Funding Date of the LIBOR Loan requested thereby.
Notwithstanding any other provision of this Agreement, if any
Lender shall notify Agent that any change of law makes it
unlawful or any change in circumstance makes it impossible for
such Lender to perform its obligations hereunder to make LIBOR
Loans, (i) any obligation of such Lender to make, maintain,
renew or fund LIBOR Loans shall be suspended until Agent shall
notify Borrower and Lenders that the circumstances causing
such suspension no longer exist and (ii) Borrower shall
forthwith prepay in full the LIBOR Loans of such Lender then
outstanding, together with interest accrued thereon, unless
Borrower, within ten (10) Business Days of notice from Agent
and in accordance with this subsection 1.2(G), shall have
simultaneously converted all LIBOR Loans of such Lender to
Base Rate Loans such that the circumstances giving rise to
such notice no longer exist. Notwithstanding anything to the
contrary contained herein, all Interest Periods under the
Original Credit Agreement shall end on the Second Amendment
and Restatement Date and all interest accrued and unpaid on
the Loans and other Obligations accrued through the Second
Amendment and Restatement Date shall become due and payable on
the Second Amendment and Restatement Date.
1.3 OTHER FEES AND EXPENSES.
(A) CERTAIN FEES. Borrower shall pay to Agent, for the account of
the Lenders pro rata (based on their respective Revolving Loan
Commitments and Commitments for Term Loan A and Term Loan B),
on the Second Amendment and Restatement Date, a closing fee in
an amount equal to 1.75% of $70,000,000 and a fee in an amount
equal to $350,000. In addition, Borrower shall pay all fees
required by any fee letter with Agent or ▇▇▇▇▇▇.
(B) AGENCY FEE. Borrower shall pay to Agent, for Agent's account,
on the Second Amendment and Restatement Date and on each
anniversary of the Second Amendment and Restatement Date, an
"agency fee" in the amount of $70,000.
(C) LIBOR BREAKAGE FEE. Upon any payment of a LIBOR Loan on any
day that is not the last day of the Interest Period applicable
thereto (regardless of the source of such prepayment and
whether voluntary, by acceleration or otherwise) or upon
failure of Borrower to borrow a LIBOR Loan on the date
scheduled for borrowing for any reason, Borrower shall pay
Agent, for the benefit of all affected Lenders, an amount (the
"LIBOR BREAKAGE FEE") equal to the amount of any losses,
expenses and liabilities (including, without limitation, any
loss (including interest paid) sustained by each such affected
Lender in connection with the re-employment of such funds)
that any such affected Lender may sustain as a result of the
payment of such LIBOR Loan on a day that is not the last day
of the Interest Period applicable thereto or the failure of
Borrower so to borrow. Interest paid on the Second Amendment
and Restatement Date as required by subsection 1.2(G) shall be
deemed to have been paid on a date other than the last day of
an Interest Period, notwithstanding the provisions of
subsection 1.2(G) that provide that all Interest Periods end
on such date (except in the case of any Interest Period that
would
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have ended on the Second Amendment and Restatement Date
without regard to such provision of subsection 1.2(G)).
(D) EXPENSES AND ATTORNEYS FEES. Borrower agrees to pay on demand
all reasonable and documented fees, costs and expenses
(including those of one firm of attorneys and local or special
counsel hired by such one firm) incurred by Agent in
connection with any matters contemplated by or arising out of
the Loan Documents, in connection with the examination,
review, due diligence investigation, documentation,
negotiation and closing of the transactions contemplated
herein and to promptly pay all reasonable and documented fees,
costs and expenses (including those of one firm of attorneys
and local or special counsel hired by such one firm) incurred
by Agent in connection with the continued administration
(excluding any fees, costs and expenses incurred by Agent in
connection with assignments and participations in Loans and
Notes) of the Loan Documents including any amendments,
modifications and waivers. Furthermore, Borrower agrees to pay
on demand reasonable and documented fees, costs and expenses
in connection with the negotiation, preparation and closing of
this Agreement for each Lender other than Agent in amount not
to exceed, in the aggregate for each such Lender, $3,500.
Without limiting the foregoing, all such fees, costs and
expenses incurred through the date the parties hereto sign
this Agreement shall be paid on such date. Borrower agrees to
promptly pay all reasonable and documented fees, costs and
expenses (including those of attorneys) incurred by Agent and
Lenders in connection with any action to enforce any Loan
Document or to collect any payments due from Borrower or any
other Loan Party. All fees, costs and expenses for which
Borrower is responsible under this subsection 1.3(D) shall be
deemed part of the Obligations when incurred, shall bear
interest, shall be payable in accordance with the final two
sentences of subsection 1.4 and shall be secured by the
Collateral.
1.4 PAYMENTS. All payments by Borrower of the Obligations shall be made in
same day funds and delivered to Agent, for the benefit of Agent and Lenders, as
applicable, by wire transfer to the following account or such other place as
Agent may from time to time designate.
ABA No. ▇▇▇▇-▇▇▇▇-▇
Account Number 55-00540
Bank One, N.A.
▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Reference: ▇▇▇▇▇▇ Corporate Finance Group for the benefit of
UTI Holdings, Inc.
Borrower shall receive credit on the day of receipt for funds received by Agent
by 1:00 p.m. CST. In the absence of timely receipt, such funds shall be deemed
to have been paid on the next Business Day. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the amount of interest and fees due
hereunder.
Borrower hereby authorizes Lenders to make Revolving Loans, on the basis of
their Pro Rata Shares, for the payment of Scheduled Installments, interest,
commitment fees, Risk Participation Liability fees, LIBOR Breakage Fees and
other fees, and Risk Participation Liability payments. Prior to an Event of
Default, other fees, costs and expenses (including those of attorneys)
reimbursable to Agent pursuant to subsections 1.3(A) through (D) or elsewhere in
any Loan Document may be debited to the Revolving
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Loan which debit, in the case of subsection 1.3(D), shall be after fifteen (15)
days' notice. After the occurrence and during the continuation of an Event of
Default, no notice of any debit will be required.
1.5 PREPAYMENTS.
(A) VOLUNTARY PREPAYMENT OF TERM LOANS. At any time, Borrower may
prepay the Term Loans in whole or in part, without penalty,
but with LIBOR Breakage Fees, if applicable, which prepayment
shall be applied in accordance with subsection 1.5(F) or as
may otherwise be agreed to between Borrower and Agent.
(B) PREPAYMENTS FROM EXCESS CASH FLOW. Within one hundred twenty
(120) days after the end of each of its fiscal years,
beginning with the fiscal year ending September 30, 2003,
Borrower shall prepay the Loans in an amount equal to
seventy-five percent (75%) of the Excess Cash Flow for such
fiscal year pursuant to the calculation on Exhibit 1.5(B);
provided, that if at the end of any fiscal year of Borrower,
the ratio of Total Indebtedness to TTM EBITDA is less than
2.0x, Borrower shall prepay the Loans in an amount equal to
fifty percent (50%) of the Excess Cash Flow for such fiscal
year pursuant to the calculation on Exhibit 1.5(B). The
calculation shall be based on the audited financial statements
for Holdings and its Subsidiaries. The payments shall be
applied in accordance with subsection 1.5(F).
(C) PREPAYMENTS FROM ASSET DISPOSITIONS. (i) Immediately (except
as provided below in this paragraph (C)) upon receipt of the
Net Proceeds from the sale of any current assets (as
determined in accordance with GAAP) in the ordinary course of
business, which Net Proceeds exceed $750,000 in any fiscal
year, Borrower shall prepay the outstanding principal balance
of the Revolving Loan by the amount equal to that portion of
such Net Proceeds in excess of $750,000. (ii) Immediately upon
receipt of the Net Proceeds from the sale of any assets, other
than current assets (as determined in accordance with GAAP) in
the ordinary course of business, which Net Proceeds exceed
$750,000 in any fiscal year, Borrower shall prepay the Loans
in an amount equal to that portion of such Net Proceeds in
excess of $750,000, which payments under this clause (ii)
shall be applied in accordance with subsection 1.5(F). (iii)
In the event that any sale includes both current and
non-current assets, the Net Proceeds shall be apportioned by
Borrower with the consent of Agent. Notwithstanding the
foregoing, (x) Borrower may reinvest, within one hundred
eighty (180) days, the Net Proceeds of any sale of assets in
productive assets of a kind then used or usable in the
business of Borrower and the requirement to make a prepayment
under this paragraph (C) with the balance, if any, of any such
Net Proceeds otherwise required to be so prepaid shall be
postponed until the expiration of such 180 day period or the
date on which Borrower determines not so to reinvest,
whichever is earlier and (y) the provisions of this subsection
1.5(C) shall not apply to the receipt of Net Proceeds arising
from the Nascar Sale/Leaseback.
(D) PREPAYMENT FROM ISSUANCE OF SECURITIES. Immediately upon the
receipt by Holdings, Borrower or any of its Subsidiaries of
the proceeds of the issuance of equity securities (other than
(1) proceeds of the issuance of equity securities received on
or before the Second Amendment and Restatement Date, (2)
proceeds from the issuance of equity securities to members of
the management of Holdings, Borrower or any of their
Subsidiaries, (3) proceeds of the issuance of equity
securities to Borrower or any Subsidiary, (4) proceeds in an
amount not to exceed $15,000,000 in the aggregate from the
issuance of common stock or Qualified Preferred Stock in
Holdings pursuant to a sale that is exempt from the
registration requirements of the Securities Act of 1933, as
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amended, as a private placement and is not registered,
provided such proceeds are invested in Borrower or any
Subsidiary of Borrower, and (5) subject to the limitations of
subsection 6.1(T), proceeds from the issuance of common stock
or Qualified Preferred Stock in Holdings in connection with a
Permitted Acquisition), Borrower shall prepay the Loans in an
amount equal to such proceeds, net of underwriting discounts
and commissions, taxes, costs and expenses associated with the
Management Agreement and other reasonable costs associated
therewith. The payments shall be applied in accordance with
subsection 1.5(F).
(E) OMITTED.
(F) APPLICATION OF PROCEEDS. With respect to the mandatory
prepayments described in subsections 1.5(B), 1.5(C)(ii) and
1.5(D), such prepayments shall first, be applied in payment of
the Term Loans pro rata against all remaining Scheduled
Installments of the Term Loans and, at any time after the Term
Loans shall have been prepaid in full, such prepayments shall
be applied second, to reduce the outstanding principal balance
of the Revolving Loans and third, to cash collateralize any
Lender Letters of Credit. Upon such payment in full of all
Revolving Loans and full cash collateralization of all Lender
Letters of Credit, the Revolving Loan Commitment shall
terminate.
(G) RISK PARTICIPATION LIABILITY. In the event any Lender Letters
of Credit or Risk Participation Agreements are outstanding at
the time that Borrower prepays the Obligations or terminates
the Revolving Loan Commitment, Borrower shall (1) deposit with
Agent for the benefit of all Lenders with a Revolving Loan
Commitment cash in an amount equal to 103% of the aggregate
outstanding Risk Participation Liability to be available to
Agent to reimburse payments of drafts drawn under such Letters
of Credit and pay any fees and expenses related thereto and
(2) prepay the fee payable under subsection 1.2(C) with
respect to such Lender Letters of Credit or Risk Participation
Agreements for their full remaining terms. Upon termination of
any such Lender Letter of Credit or Risk Participation
Agreement, the unearned portion of such prepaid fee
attributable to such Lender Letter of Credit or Risk
Participation Agreement shall be refunded to Borrower.
1.6 TERM OF THE AGREEMENT. All of the Obligations shall become due and
payable as otherwise set forth herein, but in any event, all of the remaining
Obligations (other than in respect of principal of and interest on Term Loan B
to the extent not otherwise then due and payable) shall become due and payable
on the date set forth in clause (c) of the definition of the term "Expiry Date".
Except as otherwise set forth herein, all Obligations in respect of Term Loan B,
and any other Obligations which were not required to be paid on the date set
forth in clause (c) of the definition of "Expiry Date" shall become due and
payable as otherwise provided herein and in any event shall become due and
payable on March 31, 2009. On March 31, 2009 and following repayment in full of
the Obligations, this Agreement will terminate. Notwithstanding any such
termination, until all Obligations have been fully paid in cash and satisfied
(and there shall be no Lender Letters of Credit or Risk Participation Agreements
outstanding), Agent, for the benefit of Agent and Lenders, shall be entitled to
retain the security interests in the Collateral granted under the Security
Documents and the ability to exercise all rights and remedies available to them
under the Loan Documents and applicable laws.
1.7 LOAN ACCOUNTS. Agent will maintain loan account records for (a) all
Loans, interest charges and payments thereof, (b) all Risk Participation
Liability, (c) the charging and payment of all fees, costs and expenses and (d)
all other debits and credits pursuant to this Agreement. The balance in the loan
accounts shall be presumptive evidence of the amounts due and owing to Lenders,
provided that any failure by
-17-
Agent to so record shall not limit or affect Borrower's obligation to pay.
Within five (5) days of the first of each month, Agent shall provide Borrower
with a statement for each loan account setting forth the principal of each
account and interest due thereon. Borrower must deliver a written objection
within sixty (60) days after receipt of the statement or the statement will be
presumptive evidence of the Obligations absent manifest error. During the
continuance of an Event of Default, Borrower irrevocably waives the right to
direct the application of any and all payments and Borrower hereby irrevocably
agrees that Agent shall have the continuing exclusive right to apply and reapply
payments in any manner it deems appropriate.
1.8 YIELD PROTECTION.
(A) CAPITAL ADEQUACY AND OTHER ADJUSTMENTS. In the event that any
Lender shall have determined that the adoption after the date
hereof of any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar
requirements or compliance (excluding compliance with the
implementation at the national level of the Basel Accord) by
any Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having
the force of law and whether or not failure to comply
therewith would be unlawful) from any central bank or
governmental agency or body having jurisdiction does or shall
have the effect of increasing the amount of capital, reserves
or other funds required to be maintained by such Lender or any
corporation controlling such Lender and thereby reducing the
rate of return on such Lender's or such corporation's capital
as a consequence of its obligations hereunder, then Borrower
shall from time to time within thirty (30) days after notice
and demand from such Lender (together with the certificate
referred to in the next sentence and with a copy to Agent) pay
to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A
certificate as to the amount of such cost showing in
reasonable detail the basis of the computation of such cost
submitted by such Lender to Borrower and Agent shall, absent
manifest error, be final, conclusive and binding for all
purposes. No Lender shall be entitled to compensation under
this subsection 1.8 to the extent the increase or reduction in
respect of which compensation is claimed shall result from an
event described in this subsection 1.8 which occurred more
than 180 days prior to the issuance by such Lender of such
notice and demand. For purposes, of this Section 1.8, "BASEL
ACCORD" shall mean the proposals for risk-based capital
framework described by the Basel Committee on Bank Regulations
and Supervisory Practices in its paper entitled "International
Convergence of Capital Measurement and Capital Standards"
dated July 1988, as in effect on the date hereof.
(B) INCREASED LIBOR FUNDING COSTS. Subject to Section 1.10, if the
introduction of or the interpretation of any law, rule, or
regulation, in each case, after the date of this Agreement
would increase the reserve requirement or otherwise increase
the cost to any Lender of making or maintaining a LIBOR Loan,
then Agent, on behalf of all affected Lenders, shall submit a
certificate to Borrower demonstrating the calculation of the
increased cost and requiring payment thereof by Borrower to
Agent for the benefit of the affected Lenders within thirty
(30) days after the date of the certificate, and the Borrower
shall make such payment within such thirty (30) day period.
There are no limitations on the number of times such
certificate may be submitted, provided, however, that each
affected Lender shall take reasonable steps (which shall not
require any affected Lender to incur any unreimbursed cost or
expense) to avoid or minimize such increase in costs to the
extent that such avoidance or minimization is not inconsistent
with such affected
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Lender's internal policies or legal or statutory restrictions
and which such affected Lender has reasonably determined does
not cause such affected Lender to suffer any disadvantage or
burden. A certificate as to the amount of such cost and
showing the basis of the computation of such cost submitted by
Agent on behalf of all such affected Lenders to Borrower
shall, absent manifest error, be final, conclusive and binding
for all purposes.
1.9 TAXES.
(A) NO DEDUCTIONS. Any and all payments or reimbursements made
hereunder or under the Notes shall be made free and clear of
and without deduction for any and all taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with
respect thereto (all such taxes, levies, imposts, deductions,
charges or withholdings and all liabilities with respect
thereto excluding such taxes imposed on net income, herein
"TAX LIABILITIES"), excluding, however, taxes imposed on the
net income of a Lender or Agent. If Borrower shall be required
by law to deduct any such amounts from or in respect of any
sum payable hereunder to any Lender or Agent, then the sum
payable hereunder shall be increased as may be necessary so
that, after making all required deductions, such Lender or
Agent receives an amount equal to the sum it would have
received had no such deductions been made.
(B) CHANGES IN TAX LAWS. In the event that, subsequent to the
Closing Date, (1) any changes in any existing law, regulation,
treaty or directive or in the interpretation or application
thereof, (2) any new law, regulation, treaty or directive
enacted or any interpretation or application thereof, or (3)
compliance by Agent or any Lender with any request or
directive (whether or not having the force of law) from any
Governmental Authority, agency or instrumentality:
(1) does or shall subject Agent or any Lender to any tax
of any kind whatsoever with respect to this
Agreement, the other Loan Documents or any Loans made
or Lender Letters of Credit or Risk Participation
Agreements issued hereunder, or change the basis of
taxation of payments to Agent or such Lender of
principal, fees, interest or any other amount payable
hereunder (except for net income taxes, or franchise
taxes imposed in lieu of net income taxes, imposed
generally by federal, state or local taxing
authorities with respect to interest or commitment or
other fees payable hereunder or changes in the rate
of tax on the overall net income of Agent or such
Lender); or
(2) does or shall impose on Agent or any Lender any other
condition or increased cost in connection with the
transactions contemplated hereby or participations
herein;
and the result of any of the foregoing is to increase the cost to Agent
or any such Lender of issuing any Lender Letter of Credit or Risk
Participation Agreement or making or continuing any Loan hereunder, as
the case may be, or to reduce any amount receivable hereunder, then, in
any such case, Borrower shall promptly pay to Agent or such Lender,
upon its demand, any additional amounts necessary to compensate Agent
or such Lender, on an after-tax basis, for such additional cost or
reduced amount receivable, as determined by Agent or such Lender with
respect to this Agreement or the other Loan Documents. If Agent or such
Lender becomes entitled to claim any additional amounts pursuant to
this subsection, it shall promptly notify Borrower of the event by
reason of which Agent or such Lender has become so entitled. A
certificate as to any additional
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amounts payable pursuant to the foregoing sentence submitted by Agent
or such Lender to Borrower and Agent shall, absent manifest error, be
final, conclusive and binding for all purposes.
(C) FOREIGN LENDERS. Each Lender organized under the laws of a
jurisdiction outside the United States (a "FOREIGN LENDER") as
to which payments to be made under this Agreement or under the
Notes are exempt from United States withholding tax or are
subject to United States withholding tax at a reduced rate
under an applicable statute or tax treaty shall provide to
Borrower and Agent (1) a properly completed and executed
Internal Revenue Service Form W8-ECI or W8-BEN or other
applicable form, certificate or document prescribed by the
Internal Revenue Service of the United States certifying as to
such Foreign Lender's entitlement to such exemption or reduced
rate of withholding with respect to payments to be made to
such Foreign Lender under this Agreement and under the Notes
and any other documents or information required in connection
therewith (a "CERTIFICATE OF EXEMPTION") or (2) a letter from
any such Foreign Lender stating that it is not entitled to any
such exemption or reduced rate of withholding (a "LETTER OF
NON-EXEMPTION"). Prior to becoming a Lender under this
Agreement and within fifteen (15) days after a reasonable
written request of Borrower or Agent from time to time
thereafter, each Foreign Lender that becomes a Lender under
this Agreement shall provide a Certificate of Exemption or a
Letter of Non-Exemption to Borrower and Agent.
If a Foreign Lender is entitled to an exemption with respect
to payments to be made to such Foreign Lender under this
Agreement (or to a reduced rate of withholding) and does not
provide a Certificate of Exemption to Borrower and Agent
within the time periods set forth in the preceding paragraph,
Borrower shall withhold taxes from payments to such Foreign
Lender at the applicable statutory rates and Borrower shall
not be required to pay any additional amounts as a result of
such withholding, provided that all such withholding shall
cease upon delivery by such Foreign Lender of a Certificate of
Exemption to Borrower and Agent.
1.10 OPTIONAL PREPAYMENT/REPLACEMENT OF LENDER IN RESPECT OF INCREASED
COSTS. If any Lender (an "AFFECTED LENDER") (i) is subject to increased costs or
taxes under subsections 1.8 or 1.9 and Agent makes demand upon Borrower in
respect thereof, (ii) is unable to fund or maintain LIBOR Loans as described in
subsection 1.2(G), (iii) defaults in its obligation to make Loans in accordance
with the terms of this Credit Agreement or (iv) in connection with any proposed
change, waiver, discharge or termination to any of the provisions of this
Agreement as contemplated by subsection 9.2 (other than with respect to
increasing the amount of the applicable Commitments or outstanding Term Loans of
any of the Lenders), does not provide its consent when required to approve such
proposed change, waiver, discharge or termination even though the consent of the
Requisite Lenders (or, as applicable, the Requisite Revolving Lenders) is
obtained, the Borrower may, so long as no Default or Event of Default has
occurred and is then continuing, within thirty (30) days of receipt of such
demand, notice or default, as the case may be, by notice (a "REPLACEMENT
NOTICE") to the Agent and such Affected Lender, do the following:
(A) Borrower may request the Affected Lender to reasonably
cooperate with the Borrower in obtaining a replacement Lender
reasonably satisfactory to the Agent or its successor and the
Borrower (the "REPLACEMENT LENDER");
(B) Borrower may request the non-Affected Lenders to acquire and
assume all of the Affected Lender's Loans and Commitment as
provided herein, but none of such Lenders shall be under an
obligation to do so;
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(C) Borrower may obtain, at Borrower's expense, a Replacement
Lender for such Affected Lender, which Replacement Lender
shall be reasonably satisfactory to Agent. In the event
Borrower obtains a Replacement Lender within ninety (90) days
following notice of its intention to do so, the Affected
Lender shall sell and assign its Loans and its obligations
under the Revolving Loan Commitment to such Replacement
Lender, and the Affected Lender shall pay all principal of,
and interest and fees accrued and unpaid on or with respect
to, the Loans to the Replacement Lender; provided that
Borrower has reimbursed such Affected Lender for its increased
costs and all Obligations (other than principal, interest and
fees) for which it is entitled to reimbursement or payment
under this Agreement through the date of such sale and
assignment; or
(D) Borrower may prepay in full all outstanding Obligations owed
to such Affected Lender and terminate such Affected Lender's
Pro Rata Share of the Revolving Loan Commitment, in which case
the Revolving Loan Commitment will be reduced by the amount of
such Pro Rata Share. Borrower shall, within ninety (90) days
following notice of its intention to do so, prepay in full all
outstanding Obligations owed to such Affected Lender
(including such Affected Lender's increased costs for which it
is entitled to reimbursement under this Agreement through the
date of such prepayment), and terminate such Affected Lender's
obligations under the Revolving Loan Commitment.
SECTION 2
AFFIRMATIVE COVENANTS
Each of Borrower and Holdings covenants and agrees that so long as the Revolving
Loan Commitment is in effect and until payment in full of all Obligations and
termination of all Lender Letters of Credit and Risk Participation Agreements,
unless Requisite Lenders shall otherwise give their prior written consent, each
of Borrower and Holdings shall perform and comply with, and shall cause each of
its Subsidiaries to perform and comply with, all covenants in this Section 2
applicable to such Person.
2.1 COMPLIANCE WITH LAWS AND CONTRACTUAL OBLIGATIONS.
(A) Each of Holdings and Borrower shall (1) (i) subject to
specific representations regarding Environmental Laws, comply
with and shall cause each of their respective Subsidiaries to
comply with the requirements of all applicable laws, rules,
regulations and orders of any Governmental Authority
(including, without limitation, laws, rules, regulations and
orders relating to taxes, employer and employee contributions,
securities, employee retirement and welfare benefits,
environmental protection matters and employee health and
safety) as now in effect and which may be imposed in the
future in all jurisdictions in which Holdings, Borrower or any
of their respective Subsidiaries are now doing business or may
hereafter be doing business which failure to comply could not
reasonably be expected to have a Material Adverse Effect and
(ii) comply with the obligations, covenants and conditions
contained in all Contractual Obligations of the Borrower or
such Subsidiary, as applicable other than those laws, rules,
regulations, orders and provisions of such Contractual
Obligations the noncompliance with which could not reasonably
be expected to have, either individually or in the aggregate,
a Material Adverse Effect, and (2) subject to specific
representations regarding Environmental Laws, maintain or
obtain and shall cause each of its Subsidiaries to maintain or
obtain, all licenses, qualifications and permits now held or
hereafter required to be held by Holdings, Borrower or any of
their respective Subsidiaries, for which the loss, suspension,
revocation or failure to obtain or renew, could not reasonably
be expected to
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have a Material Adverse Effect. This subsection 2.1 shall not
preclude Holdings, Borrower or any of their respective
Subsidiaries from contesting any regulatory action, taxes or
other payments, if they are being diligently contested in good
faith and if appropriate expense provisions have been recorded
in conformity with GAAP and no Lien which can have priority
over Agent's Lien in any Collateral or in respect of any Loan
shall have attached to any assets of Holdings, Borrower or any
of its Subsidiaries. Each of Holdings and Borrower represents
and warrants that as of the date hereof, subject to specific
representations regarding Environmental Laws, it (i) is in
compliance in all material respects and each of their
respective Subsidiaries is in compliance with the requirements
of all applicable laws, rules, regulations and orders of any
Governmental Authority as now in effect and all Contractual
Obligations the noncompliance with which could not reasonably
be expected to have a Material Adverse Effect, and (ii)
maintains and each of their respective Subsidiaries maintains
all material licenses, qualifications and permits referred to
above for which the loss, suspension, revocation or failure to
obtain or renew could reasonably be expected to have a
Material Adverse Effect.
(B) Without limitation of any other portion of this subsection
2.1, Holdings, Borrower, each Subsidiary thereof and each
Institution shall maintain all necessary permits, licenses,
franchises, authorizations and clearances of governmental or
regulatory authorities as are required or necessary (1) to
operate in the states in which the Institutions are located as
of the Second Amendment and Restatement Date or may thereafter
be located, (2) to participate in federal student assistance
programs under Title IV and (3) to own, lease and operate
their respective properties and to conduct their business, in
each case, in a manner no less advantageous to Holdings,
Borrower, each Subsidiary thereof and each Institution as
conducted by Holdings and its Subsidiaries immediately prior
to the Second Amendment and Restatement Date;
(C) without limitation of any other portion of this subsection
2.1, each Institution shall maintain in full force and effect
a Program Participation Agreement for each Institution and
will comply in all material respects with each such Program
Participation Agreement;
(D) without limitation of any other portion of this subsection
2.1, each Institution shall apply for recertification of
eligibility to participate in federal student financial
assistance programs under Title IV where such reapplication is
necessary to assure that no Program Participation Agreement
will expire;
(E) without limitation of any other portion of this subsection
2.1, Holdings, Borrower, each Subsidiary thereof and each
Institution shall comply in all material respects with the
applicable provisions of Title IV and the Regulations,
including Sections 668.171-668.175 of the Regulations and with
all applicable laws of each state in which it is located that
regulates educational institutions; and
(F) Without limitation of any other portion of this subsection
2.1, each Institution shall obtain and maintain all required
accreditations for such Institution from each Accrediting
Agency and shall obtain and maintain all licenses that are
required to operate in each state in which each Institution is
located and that are necessary and appropriate for each
Institution to remain eligible for Title IV funding.
2.2 MAINTENANCE OF PROPERTIES; INSURANCE. Holdings shall maintain or cause
to be maintained in good repair, working order and condition all material
properties used in the business of Holdings and its Subsidiaries and will make
or cause to be made all appropriate repairs, renewals and replacements
-22-
thereof. Holdings shall maintain or cause to be maintained, with financially
sound and reputable insurers, public liability and property damage insurance
with respect to its business and properties and the business and properties of
its Subsidiaries against loss or damage of the kinds reasonable for the business
risks and in amounts reasonably acceptable to Agent and will deliver evidence
thereof to Agent if and as requested by Agent. Holdings shall maintain or cause
to be maintained, with financially sound and reputable insurers, business
interruption insurance in amounts acceptable to Agent. Holdings shall cause,
pursuant to endorsements and assignments in form and substance reasonably
satisfactory to Agent, Agent, for the benefit of Agent and Lenders, (i) to be
named as lender's loss payee in the case of casualty insurance, Agent for the
benefit of Agent and Lenders, (ii) to be named as additional insured in the case
of all liability insurance and Agent, for the benefit of Agent and Lenders, and
(iii) to be named as assignee (pursuant to assignment agreements, in form, scope
and substance satisfactory to Agent) in the case of all business interruption
insurance. Provided no Event of Default has occurred and is continuing, the
Agent and Lenders shall make any proceeds of insurance available to Borrower for
restoration of any casualty or reinvestment in accordance with Section 1.5(C).
Holdings represents and warrants that it and each of its Subsidiaries currently
maintains all material properties as set forth above and maintains all insurance
described above.
2.3 INSPECTION; LENDER MEETING. Upon reasonable notice, (except during the
continuation of a Default or an Event of Default, in which case no notice will
be required) each of Holdings and Borrower shall permit any authorized
representatives of Agent to visit and inspect any of the properties of Holdings,
Borrower or any of their respective Subsidiaries, including its and their
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and business with its
and their officers and certified public accountants, at such reasonable times
during normal business hours and as often as may be reasonably requested.
Representatives of each Lender will be permitted to accompany representatives of
Agent during each visit, inspection and discussion referred to in the
immediately preceding sentence. Without in any way limiting the foregoing,
Holdings shall participate and shall cause its and its Subsidiaries key
management personnel to participate in a meeting with Agent and Lenders at least
once during each year, which meeting shall be held at such time and such place
as may be reasonably requested by Agent. Holdings shall pay the reasonable
travel costs and lodging expenses of Agent and Lenders for such meetings.
2.4 CORPORATE EXISTENCE, ETC. Except as otherwise permitted by subsections
3.6 and 3.7, each of Holdings and Borrower shall, and shall cause each of their
respective Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to its
business.
2.5 ENVIRONMENTAL MATTERS. Each of Holdings and Borrower shall, and shall
cause each of their respective Subsidiaries and each other Person within their
respective control, to: (a) conduct its operations in compliance with all
Environmental Laws and Environmental Permits, except for such noncompliance that
would not result in Environmental Liabilities which could reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect; (b)
implement any and all investigation, remediation, removal and response actions
that are appropriate or necessary to maintain the value and marketability of the
Real Estate or to otherwise comply with Environmental Laws and Environmental
Permits pertaining to the presence, generation, treatment, storage, use,
disposal, transportation or Release of any Hazardous Material on, at, in, under,
above, to, from or about any of its Real Estate; (c) notify Agent promptly after
such Loan Party becomes aware of any violation of Environmental Laws or
Environmental Permits or any Release on, at, in, under, above, to, from or about
any Real Estate that is reasonably likely to result in Environmental Liabilities
in excess of $100,000; and (d) promptly forward to Agent a copy of any order,
notice, request for information or any communication or report received by such
Loan Party or Person in connection with any such violation or Release or any
other matter relating to any Environmental Laws or Environmental Permits that
could reasonably be expected to result in
-23-
Environmental Liabilities in excess of $100,000, in each case whether or not the
Environmental Protection Agency or any Governmental Authority has taken or
threatened any action in connection with any such violation, Release or other
matter. If Agent at any time has a reasonable basis to believe that there may be
a violation of any Environmental Laws or Environmental Permits by Holdings,
Borrower, any of their respective Subsidiaries or any Person within their
respective control or any Environmental Liability arising thereunder, or a
Release of Hazardous Materials on, at, in, under, above, to, from or about any
of its Real Estate, that, in each case, could reasonably be expected to have a
Material Adverse Effect, then each Loan Party shall, or shall cause such Person
to, upon Agent's written request (i) cause the performance of such environmental
audits including subsurface sampling of soil and groundwater, and preparation of
such environmental reports, at Borrower's expense, as Agent may from time to
time reasonably request, which shall be conducted by reputable environmental
consulting firms reasonably acceptable to Agent and shall be in form and
substance reasonably acceptable to Agent, and (ii) permit Agent or its
representatives to have reasonable access to all Real Estate for the purpose of
conducting such environmental audits and testing as Agent deems appropriate,
including subsurface sampling of soil and groundwater. Borrower shall reimburse
Agent for the costs of such audits and tests and the same will constitute a part
of the Obligations secured hereunder.
2.6 FURTHER ASSURANCES.
(A) Each of Holdings and Borrower shall and shall cause each of
their respective present and future Subsidiaries (other than
any Institution Subsidiary of Borrower) to, from time to time,
execute such guaranties, financing statements, documents,
security agreements and reports as Agent or Requisite Lenders
at any time may reasonably request to evidence, perfect or
otherwise implement the guaranties and security for repayment
of the Obligations contemplated by the Loan Documents.
(B) At Agent's or Requisite Lenders' request, Holdings and
Borrower shall cause any of their respective Subsidiaries
(other than any Institution Subsidiary of Borrower) promptly
to guaranty the Obligations and to grant to Agent, for the
benefit of Agent and Lenders, a first priority, perfected
security interest in the real, personal and mixed property
(other than interests as lessee in real property) of such
Subsidiary to secure the Obligations. The documentation for
such guaranty or security shall be substantially similar to
the Loan Documents executed or amended and restated
concurrently with this Agreement with such modifications as
are reasonably requested by Agent and shall include such legal
opinions as Agent shall reasonably require.
2.7 USE OF PROCEEDS. Proceeds of the Loans shall be used by Borrower (A) in
the case of Incremental Term Loan A and the initial Revolving Loan made on the
Closing Date, to the prepayment of Term Loan B, Subject Subordinated
Indebtedness, certain fees and certain expenses and (B) in the case of
subsequent Revolving Loans, for working capital purposes of Borrower and its
Subsidiaries as more particularly described in Section 1.1(B)(1), provided, that
in the event that Borrower transfers any proceeds of Revolving Loans to any
Subsidiary of Borrower, such transfer shall be in the form of a loan to such
transferee evidenced by an Intercompany Note of the transferee issued in
accordance with subsection 3.1(B)(2) and pledged to Agent, in each case, to the
extent not prohibited by the Regulations and otherwise as contributions to such
Subsidiary of common equity. Nothing contained in this subsection 2.7 shall
permit any payment or transfer of funds otherwise prohibited by this Agreement.
-24-
SECTION 3
NEGATIVE COVENANTS
Each of Borrower and Holdings covenants and agrees that so long as the Revolving
Loan Commitment is in effect and until payment in full in cash of all
Obligations and termination of all Lender Letters of Credit and Risk
Participation Agreements, unless Requisite Lenders shall otherwise give their
prior written consent, each of Borrower and Holdings shall perform and comply
with, and shall cause its Subsidiaries to perform and comply with, all covenants
in this Section 3 applicable to such Person.
3.1 INDEBTEDNESS. Each of Holdings and Borrower shall not and shall not
suffer or permit any of their respective Subsidiaries directly or indirectly to
create, incur, assume, guaranty, or otherwise become or remain directly or
indirectly liable with respect to any Indebtedness except:
(A) the Obligations;
(B) intercompany Indebtedness among Holdings and its Subsidiaries;
provided, that the obligations of each obligor of such
Indebtedness shall: (1) to the extent not physically delivered
in pledge to the Agent, be subordinated in right of payment to
the Obligations from and after such time as any portion of the
Obligations shall become due and payable (whether at stated
maturity, by acceleration or otherwise); (2) be evidenced by
promissory notes (each an "INTERCOMPANY NOTE"), which shall
have been (to the extent not prohibited by the Regulations)
pledged to Agent, for the benefit of Agent and Lenders, as
security for the Obligations pursuant to written agreements in
form, scope and substance satisfactory to Agent; and (3) have
such other terms and provisions as Agent or Requisite Lenders
may reasonably require;
(C) the Remaining Subordinated Indebtedness;
(D) Indebtedness of Holdings and its Subsidiaries existing as of
the Second Amendment and Restatement Date and described on
Schedule 3.1(D) less any payments of principal made on or
after the Second Amendment and Restatement Date thereon;
(E) Indebtedness of Borrower and its Subsidiaries in respect of
purchase money obligations or capitalized lease obligations so
long as the aggregate principal (or notional) principal
Indebtedness outstanding does not exceed $10,000,000 at any
time;
(F) Indebtedness described in clauses (g) and (h) of the
definition of "Permitted Acquisition" of Borrower or the
Institution Subsidiary thereof that is the subject of such
Permitted Acquisition;
(G) Indebtedness secured by Permitted Liens described in clauses
(1), (2), (3), (4) and (6) of clause (A) of subsection 3.2;
(H) OMITTED;
(I) Indebtedness of Borrower so long as the aggregate principal
Indebtedness outstanding does not exceed $5,000,000 at any
time;
(J) Indebtedness of Holdings arising under the Management
Agreement and of Holdings and its Subsidiaries arising under
the Tax Sharing Agreement; and
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(K) Indebtedness of Holdings evidenced by Management Notes.
3.2 LIENS AND RELATED MATTERS.
(A) NO LIENS. Each of Holdings and Borrower shall not and shall
not suffer or permit any of their respective Subsidiaries
directly or indirectly to create, incur, assume or permit to
exist any Lien on or with respect to any property or asset
(including any document or instrument with respect to goods or
accounts receivable) of Holdings, Borrower or any of their
respective Subsidiaries, whether now owned or hereafter
acquired, or any income or profits therefrom, except Permitted
Encumbrances. "PERMITTED ENCUMBRANCES" means the following:
(1) Liens for taxes, assessments or other governmental
charges not yet due and payable;
(2) statutory Liens incurred by Borrower or any of its
Subsidiaries of landlords, carriers, warehousemen,
mechanics, materials and other similar liens imposed
by law, which are incurred in the ordinary course of
business for sums not more than thirty (30) days
delinquent or which are being contested in good
faith; provided that a reserve or other appropriate
provision shall have been made therefor and the
aggregate amount of liabilities secured by such Liens
is less than $2,000,000;
(3) Liens (other than any Lien imposed by the Employee
Retirement Income Security Act of 1974 or any rule or
regulation promulgated thereunder) 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, stay, customs and appeal bonds,
bids, leases, government contracts, trade contracts,
performance and return of money bonds and other
similar obligations (exclusive of obligations for the
payment of borrowed money);
(4) deposits, in an aggregate amount not to exceed
$1,000,000, made by Holdings or any of its
Subsidiaries in the ordinary course of business to
secure liability to insurance carriers;
(5) Liens granted by Borrower or any of its Subsidiaries
for purchase money obligations and capital leases;
provided that: (a) the purchase or acquisition by
lease of the asset subject to any such Lien is
permitted under subsection 4.1; (b) the Indebtedness
secured by any such Lien is permitted under
subsection 3.1(E); and (c) any such Lien encumbers
only the asset so purchased or leased and secures
only such Indebtedness;
(6) any attachment or judgment Lien not constituting an
Event of Default under subsection 6.1(I);
(7) easements, rights of way, restrictions, and other
similar charges or encumbrances not interfering in
any material respect with the ordinary conduct of the
business of Holdings or any of its Subsidiaries;
(8) any interest or title of a lessor or sublessor under
any operating lease;
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(9) Liens in favor of Agent, for the benefit of Agent and
Lenders;
(10) Liens created by Holdings or its Subsidiaries prior
to the Second Amendment and Restatement Date securing
Indebtedness permitted under subsection 3.1(D) and
set forth on Schedule 3.2(A)(10) hereto;
(11) Liens on assets of the Institution Subsidiary
acquired in a Permitted Acquisition as described in
clauses (g) and (h) of the definition of "Permitted
Acquisition";
(12) OMITTED;
(13) OMITTED;
(14) OMITTED; and
(15) Liens granted by (i) an Institution Subsidiary to
another Institution Subsidiary to secure
Indebtedness, evidenced by an Intercompany Note,
substantially in the form of Exhibit 3.2(A), of such
Institution Subsidiary to the order of such other
Institution Subsidiary, or (ii) Borrower or a
Subsidiary (other than an Institution Subsidiary) of
Borrower to the order of an Institution Subsidiary to
secure Indebtedness of Borrower or such Subsidiary,
evidenced by an Intercompany Note in the form of
Exhibit 3.2(B), to such Institution Subsidiary, so
long as any Lien described in clause (i) or (ii) of
this paragraph 15 is (x) granted pursuant to an
Intercompany Security Agreement and (y) subject to an
Intercompany Intercreditor Letter.
(B) NO NEGATIVE PLEDGES. Each of Holdings and Borrower shall not
and shall not suffer or permit any of their respective
Subsidiaries directly or indirectly to enter into or assume
any agreement (other than the Loan Documents and Remaining
Subordinated Indebtedness Documents) prohibiting the creation
or assumption of any Lien upon its properties or assets,
whether now owned or hereafter acquired.
(C) NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO BORROWER.
Except as provided herein, each of Holdings and Borrower shall
not and shall not suffer or permit any of their respective
Subsidiaries directly or indirectly to create or otherwise
cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any
such Subsidiary to: (1) pay dividends or make any other
distribution on any of such Subsidiary's capital stock owned
by Borrower or any Subsidiary of Borrower; (2) subject to
subordination provisions for the benefit of Agent and Lenders,
pay any Indebtedness owed to Borrower or any other Subsidiary;
(3) make loans or advances to Borrower or any of its
Subsidiaries; or (4) transfer any of its property or assets to
Borrower or any of its Subsidiaries.
3.3 INVESTMENTS; JOINT VENTURES. Each of Holdings and Borrower shall not
and shall not suffer or permit any of their respective Subsidiaries directly or
indirectly to make or own any Investment in any Person except:
(A) Borrower and its Subsidiaries may make and own Investments in
Cash Equivalents; provided that such Cash Equivalents are not
subject to setoff rights;
-27-
(B) Borrower may make intercompany loans to (i) any Subsidiary of
Borrower, to the extent the Indebtedness created thereby is
permitted by subsection 3.1, in order to provide for the cash
requirements of such Subsidiary in the ordinary course of
business (to the extent the use of the proceeds of such
intercompany loans are otherwise not prohibited by this
Agreement), and (ii) so long as no Default or Event of Default
is continuing, Holdings, to the extent the Indebtedness
created thereby is permitted by subsection 3.1, to the extent,
and as and when, needed in order to permit Holdings to make
interest payments required under, and permitted by the
subordination provisions of, the Sharp Note;
(C) Borrower and its Subsidiaries may make loans and advances to
employees for moving, entertainment, travel and other similar
expenses in the ordinary course of business not to exceed
$500,000 in the aggregate at any time outstanding;
(D) Non-cash proceeds of asset sales permitted under subsection
3.7 (so long as such non-cash proceeds, unless representing
proceeds of a sale by an Institution Subsidiary of Borrower,
are subjected to a perfected Lien in favor of Agent pursuant
to documentation acceptable to Agent);
(E) Investments (w) by Holdings in the White Note, (x) by Holdings
and Borrower existing on the Second Amendment and Restatement
Date in the capital stock of their respective Subsidiaries and
Investments by Holdings in the common stock of Borrower, (y)
by Borrower in its Subsidiaries with proceeds of Revolving
Loans as permitted by subsection 2.7 and (z) by Holdings and
its Subsidiaries existing on the Second Amendment and
Restatement Date and set forth on subschedule 7.1(B)(4);
(F) Investments by Borrower and its Wholly-Owned Subsidiaries in
Permitted Acquisitions;
(G) Investments constituting Restricted Junior Payments permitted
under subsection 3.5;
(H) OMITTED;
(I) OMITTED;
(J) so long as no Default or Event of Default is continuing,
Borrower may make Investments after the Second Amendment and
Restatement Date not to exceed $3,000,000 in the aggregate
outstanding at any time;
(K) OMITTED; and
(L) Investment by Holdings or Borrower through the conversion of
an Intercompany Note of Holdings or any of its Subsidiaries
into common equity in such entity as permitted by Subsection
3.5(K) hereof.
"INVESTMENT" means (i) any direct or indirect purchase or other acquisition by
Holdings or any of its Subsidiaries of any beneficial interest in, including
stock, partnership interest, membership interest or other equity securities of,
any other Person; and (ii) any direct or indirect loan, advance or capital
contribution by Holdings or any of its Subsidiaries to any other Person,
including all indebtedness and accounts receivable from that other Person that
are not current assets or did not arise from sales to that other Person in the
ordinary course of business. The amount of any Investment outstanding at any
time shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such
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Investment less the amount of cash paid to Borrower in respect of, and as a
return of capital on, such Investment.
"CASH EQUIVALENTS" means: (i) marketable direct obligations issued or
unconditionally guarantied by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year from the date of acquisition thereof;
(ii) commercial paper maturing no more than one (1) year from the date issued
and, at the time of acquisition, having a rating of at least A-1 from Standard &
Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇ Companies, or at least P-1 from
▇▇▇▇▇'▇ Investors Service, Inc.; (iii) certificates of deposit or bankers'
acceptances maturing within one (1) year from the date of issuance thereof
issued by, or overnight reverse repurchase agreements from, any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia having combined capital and surplus of not less than
$500,000,000; (iv) time deposits maturing no more than thirty (30) days from the
date of creation thereof with commercial banks having membership in the Federal
Deposit Insurance Corporation in amounts not exceeding the lesser of $100,000 or
the maximum amount of insurance applicable to the aggregate amount of Holdings'
or its Subsidiary's deposits at such institution; and (v) deposits or
investments in mutual or similar funds offered or sponsored by brokerage or
other companies having membership in the Securities Investor Protection
Corporation in amounts not exceeding the lesser of $100,000 or the maximum
amount of insurance applicable to the aggregate amount of Holdings' or its
Subsidiary's deposits at such institution.
3.4 CONTINGENT OBLIGATIONS. Each of Holdings and Borrower shall not and
shall not suffer or permit any of their respective Subsidiaries directly or
indirectly to create or become or be liable with respect to any Contingent
Obligation except those:
(A) resulting from endorsement of negotiable instruments for
collection in the ordinary course of business;
(B) existing on the Second Amendment and Restatement Date and
described in Schedule 3.4 annexed hereto;
(C) arising with respect to customary indemnification obligations
incurred in connection with Asset Dispositions;
(D) incurred by Borrower or any of its Subsidiaries in the
ordinary course of business with respect to fiduciary, surety
and appeal bonds, performance and return-of-money bonds and
other similar obligations not exceeding at any time
outstanding $10,000,000 in aggregate liability;
(E) incurred (other than by any Subsidiary of Borrower and other
than incurred in respect of the Remaining Subordinated
Indebtedness) with respect to Indebtedness permitted by
subsection 3.1;
(F) arising under the Security Documents;
(G) arising under the Employment Agreements;
(H) not permitted by clauses (A) through (G) above, so long as any
such Contingent Obligations, in the aggregate at any time
outstanding, do not exceed $4,000,000;
-29-
(I) of the Institution Subsidiary acquired in, and arising in
respect of, a Permitted Acquisition;
(J) OMITTED;
(K) OMITTED;
(L) OMITTED;
(M) arising under the Related Transactions Documents, as in effect
on the Second Amendment and Restatement Date; and
(N) of Borrower and Holdings arising in connection with the Nascar
Sale/Leaseback.
"CONTINGENT OBLIGATION", as applied to any Person, means any direct or indirect
liability of that Person: (i) with respect to any indebtedness, lease, dividend
or other obligation of another Person if the primary purpose or intent of the
Person incurring such liability, or the primary effect thereof, is to provide
assurance to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such liability will be protected (in whole or in part)
against loss with respect thereto; (ii) with respect to any letter of credit
issued for the account of that Person or as to which that Person is otherwise
liable for reimbursement of drawings; or (iii) under any foreign exchange
contract, currency swap agreement, interest rate swap agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates. Contingent Obligations shall
also include (a) the direct or indirect guaranty, endorsement (other than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation
of another, (b) the obligation to make take-or-pay or similar payments if
required regardless of nonperformance by any other party or parties to an
agreement, and (c) any liability of such Person for the obligations of another
through any agreement to purchase, repurchase or otherwise acquire such
obligation or any property constituting security therefor, to provide funds for
the payment or discharge of such obligation or to maintain the solvency,
financial condition or any balance sheet item or level of income of another. The
amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if not a fixed and
determined amount, the maximum amount so guaranteed.
3.5 RESTRICTED JUNIOR PAYMENTS. Each of Holdings and Borrower shall not and
shall not suffer or permit any of their respective Subsidiaries directly or
indirectly to declare, order, pay, make or set apart any sum for any Restricted
Junior Payment, except that:
(A) Borrower may make payments and distributions to Holdings to
permit Holdings to pay federal and state income taxes then due
and owing, franchise taxes and other similar licensing
expenses incurred in the ordinary course of business pursuant
to and provided in the Tax Sharing Agreement;
(B) any Wholly-Owned Subsidiary of Borrower may make Restricted
Junior Payments to Borrower with respect to the common stock
of such Wholly-Owned Subsidiary;
(C) Borrower may make Restricted Junior Payments to Holdings to
the extent, and as and when needed in order to permit Holdings
to pay, when due and payable, accounting and legal fees
incurred in the ordinary course of Holdings' business and
filing, registration and reporting fees and expenses
associated with state and federal qualifications and other
state, federal or regulatory compliance matters of Holdings;
-30-
(D) so long as no Event of Default is continuing or would arise as
a result of any such Restricted Junior Payment and after
giving effect to any such payment Availability under the
Revolving Loan Commitment plus Freely Available Cash and Cash
Equivalents shall equal at least $2,500,000, Borrower may make
Restricted Junior Payments to the extent, and as and when,
needed (together with any previously deferred interest
payments), in order to permit Holdings to make interest
payments, and payment of principal on or after September 30,
2009, to be paid only in cash as required under the Sharp
Note;
(E) so long as no Default or Event of Default is continuing or
would arise therefrom, loans (evidenced by one or more
Intercompany Notes) from Borrower to Holdings to the extent
necessary, after taking into account interest received by
Holdings on the White Note (which interest so received shall
be used by Holdings solely to pay interest on the CEG Closing
Note or as provided below in this clause (E)), to pay interest
which is then due and payable on the CEG Closing Note and
which loan shall be used by Holdings for the payment of such
interest so long as any such loan is repaid from such interest
under the White Note when such interest is received by
Holdings;
(F) only (i) (a) so long as no Event of Default under subsection
6.1(A) or 6.1(U) is continuing or would occur as a result of
any such Restricted Junior Payment; (b) so long as no
Compliance Certificate is overdue; and (c) so long as no Event
of Default under subsection 6.1(C) (as it relates to
subsections 4.3, 4.4, 4.5, 4.7, 4.8(A) and 4.8(B)) is
continuing as evidenced by a Compliance Certificate (which
must be for the period most recently delivered prior to such
payment), then, if all of the foregoing conditions have been
satisfied, Borrower may make Restricted Junior Payments to the
extent, and as and when needed in order to permit Holdings to
pay (x) the fees payable under section 2 of the Management
Agreement, but not in excess of the amount then permitted to
be paid under subsection 3.9 and (y) reimbursement by Holdings
of out-of-pocket expenses required to be reimbursed under the
terms of the Management Agreement, and, in each case, subject
to the delivery of the above mentioned Compliance Certificate
and (ii) so long as no Event of Default is continuing, any
other amounts payable under the Management Agreement;
(G) so long as no Event of Default arising under subsection 6.1(A)
is continuing or would occur as a result of any such
Restricted Junior Payment, Borrower may make Restricted Junior
Payments to Holdings to permit Holdings to pay director fees,
not in excess of $120,000 in any fiscal year;
(H) Holdings and Subsidiaries of Borrower may make payments in
respect of Intercompany Notes to the extent not prohibited by
the subordination provisions, if any, thereof;
(I) so long as (a) no Event of Default is continuing or would
arise as a result of any such Restricted Junior Payment, (b)
after giving effect to any such payment (i) Availability under
the Revolving Loan Commitment plus Freely Available Cash and
Cash Equivalents shall equal at least $2,500,000, (ii) the
Fixed Charge Coverage for Holdings and its Subsidiaries for
the period of four consecutive quarters ending on or most
recently prior to the date of such payment as if such payment
were made on the last date of such fiscal period shall be
equal to or greater than 1.2 : 1.0, (iii) the Total
Indebtedness of Holdings and its Subsidiaries at the time of
such payment to TTM EBITDA of Holdings and its Subsidiaries
for the period of four consecutive fiscal quarters ending on
or most recently prior to the date of such payment as if such
payment were made on the last date of such fiscal period shall
be equal to or less than 1.50 : 1.0, and (c) the Borrower
shall
-31-
have delivered to Agent a Compliance Certificate evidencing
compliance with the foregoing requirements, the Borrower may
pay a Junior Restricted Payment to Holdings, once in each
fiscal year, in order to permit Holdings to make a payment of
accrued dividends on the Convertible Preferred Stock once in
each fiscal year;
(J) so long as no Event of Default is continuing or would occur as
a result of such Restricted Junior Payment, Borrower may make
Restricted Junior Payments to provide funds to Holdings to (i)
purchase shares pursuant to the terms of the Stockholders
Agreement and (ii) make regularly scheduled payments on
Management Notes, so long as the Restricted Junior Payments
provided for pursuant to clauses (i) and (ii) of this
subsection 3.5(J) shall not exceed an aggregate amount, after
the Second Amendment and Restatement Date, of $2,500,000; and
(K) as of the last day of any fiscal year, Borrower or any
Subsidiary thereof may cause any one or more of its
Intercompany Notes to be converted to common equity in
Borrower or such Subsidiary, as applicable, to the extent
necessary for Borrower or such Subsidiary to comply with
Section 668.15(b)(7)(i)(A) of the Regulations.
"RESTRICTED JUNIOR PAYMENT" means: (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Borrower
or any of its Subsidiaries now or hereafter outstanding, except a dividend
payable solely in shares of that class of stock to the holders of that class;
(ii) any redemption, conversion, exchange, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of stock of Borrower or any of its Subsidiaries now or
hereafter outstanding; (iii) any payment or prepayment of interest on, principal
of, premium, if any, redemption, conversion, exchange, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any subordinated
indebtedness of Borrower or any of its Subsidiaries excluding payments required
and permitted to be made under any Intercompany Note; and (iv) any payment made
to retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of stock of Borrower or any of its
Subsidiaries now or hereafter outstanding.
3.6 RESTRICTION ON FUNDAMENTAL CHANGES. Each of Holdings and Borrower shall
not and shall not suffer or permit any of their respective Subsidiaries directly
or indirectly to: (a) amend, modify or waive any term or provision of its
articles of incorporation or by-laws in any manner reasonably likely to have a
material adverse effect on any Lender or any provision of its articles of
incorporation relating to, or its certificates of designations pertaining to,
preferred stock unless required by law; (b) enter into any transaction of merger
or consolidation (other than a merger of a Wholly-Owned Subsidiary of Borrower
into or with another Wholly-Owned Subsidiary of Borrower or the merger of a
Target Person with a Wholly-Owned Subsidiary of Borrower to effect a Permitted
Acquisition); (c) liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution); or (d) acquire by purchase or otherwise all or any
substantial part of the business or assets of any other Person other than
pursuant to a Permitted Acquisition.
3.7 DISPOSAL OF ASSETS OR SUBSIDIARY STOCK. Each of Holdings and Borrower
shall not and shall not suffer or permit any of their respective Subsidiaries
directly or indirectly to: convey, sell, lease, sublease, transfer or otherwise
dispose of, or grant any Person an option to acquire, in one transaction or a
series of transactions, any of its property, business or assets, or the capital
stock of or other equity interests in any of its Subsidiaries, whether now owned
or hereafter acquired, except for (a) bona fide sales by Borrower or any of its
Subsidiaries of inventory to customers for fair value in the ordinary course of
business and dispositions of obsolete equipment not used or useful in the
business, (b) the Nascar Sale/Leaseback and (c) Asset Dispositions by Borrower
or any of its Subsidiaries if all of the following conditions are met: (i) such
Asset Disposition does not constitute a Business Unit Disposition; (ii) such
Asset Disposition
-32-
does not constitute the conveyance, sale, lease, sublease, transfer or other
disposition of, or grant of an option to acquire, (x) less than 100% of the
shares of each class of capital of any Subsidiary of Borrower or (y) any shares
of any class of capital stock of Borrower; (iii) the consideration received is
at least equal to the fair market value of such assets as determined (x) in the
case of an Asset Disposition to an Affiliate of Holdings (other than Asset
Dispositions to such Affiliates in the ordinary course of business aggregating,
in any fiscal year, not more than $100,000 (higher of total consideration for
such Asset Dispositions or book value of the assets subject to such Asset
Dispositions)), by a third-party appraisal satisfactory to Agent or (y) in the
case of Asset Dispositions other than to any such Affiliate (other than such
Asset Dispositions not in excess of $750,000 in total consideration in any
fiscal year), as determined by Holdings with the approval of the Requisite
Lenders, such approval not to be withheld unreasonably; (iv) at least 85% of the
consideration received is cash; (v) the Net Proceeds of such Asset Disposition
are applied as required by subsection 1.5(C); (vi) after giving effect to the
sale or other disposition of the assets included within the Asset Disposition
and the repayment of Indebtedness with the proceeds thereof, Holdings and its
Subsidiaries are in compliance on a pro forma basis with the covenants set forth
in Section 4 recomputed for the most recently ended month for which information
is available and is in compliance with all other terms and conditions contained
in this Agreement; and (vii) no Default or Event of Default then exists or shall
result from such sale or other disposition.
3.8 TRANSACTIONS WITH AFFILIATES. Each of Holdings and Borrower shall not
and shall not suffer or permit any of their respective Subsidiaries directly or
indirectly to enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate (excluding the Remaining Subordinated Indebtedness
Documents, the other Related Transaction Documents, the Tax Sharing Agreement,
the Management Agreement, and the Employment Agreements and the Transition
Agreement) or with any director, officer or employee of Holdings or any
Subsidiary thereof, except (a) as set forth on Schedule 3.8, (b) as set forth on
Schedule 3.9, subject to the provisions of subsection 3.9, or (c) transactions
in the ordinary course of and pursuant to the reasonable requirements of the
business of Holdings, Borrower or any of their respective Subsidiaries and upon
fair and reasonable terms which, if such transaction involves more than $250,000
in the aggregate, are fully disclosed to Agent and in any event (and regardless
of the amount involved) are no less favorable to Holdings, Borrower or such
Subsidiary than would have been obtainable in a comparable arm's length
transaction with a Person that is not an Affiliate; provided, however that
nothing in this subsection 3.8 shall prohibit Borrower or Holdings from making
payments otherwise permitted by subsection 3.5, and such payments need not be
listed on Schedule 3.8. Notwithstanding the foregoing, upon the election of
Agent no payments may be made with respect to any items set forth on Schedule
3.8 upon the occurrence and during the continuation of a Default or Event of
Default.
3.9 MANAGEMENT FEES AND COMPENSATION. Each of Holdings and Borrower shall
not and shall not suffer or permit any of their respective Subsidiaries directly
or indirectly to pay any management, consulting, disposition, investment banking
or similar fees to any Affiliate or to any director, officer or employee of
Holdings, Borrower or any Subsidiary thereof except as set forth on Schedule
3.9; provided that notwithstanding the foregoing, on the Second Amendment and
Restatement Date, Holdings may pay all fees and other amounts described in
Sections 2.3(B), 2.3(D) and 2.4 of the Convertible Preferred Stock Purchase
Agreement; provided, further, that fees payable under Section 2 of, and other
amounts payable under, the Management Agreement as in effect on the Second
Amendment and Restatement Date for periods ending after September 30, 2001 shall
be permitted to be paid only to the extent that Borrower is entitled to make a
Restricted Junior Payment to Holdings for such purpose. Notwithstanding the
foregoing, upon the election of Agent no payments may be made with respect to
any items set forth on Schedule 3.9 upon the occurrence and during the
continuation of a Default or Event of Default arising under subsection 6.1(A).
-33-
3.10 CONDUCT OF BUSINESS. Each of Holdings and Borrower shall not suffer or
permit any of their respective Subsidiaries directly or indirectly to engage in
any business other than businesses of the type described on Schedule 3.10.
Holdings will not engage in any business activity, except its consummation of
the financing contemplated hereby, the financing contemplated by the Remaining
Subordinated Indebtedness Documents, its ownership of Borrower, its ownership of
intellectual property used in the business of the Borrower and its Subsidiaries
and its performance from time to time of its obligations under the Loan
Documents and the Related Transactions Documents to which it is a party and the
other documents referred to in subsection 3.11 to which it is a party, and
activities incidental thereto.
3.11 CHANGES RELATING TO SUBORDINATED INDEBTEDNESS AND OTHER AGREEMENTS.
Each of Holdings and Borrower shall not and shall not suffer or permit any of
their respective Subsidiaries directly or indirectly to change or amend (A) the
terms of the Remaining Subordinated Indebtedness if the effect of such amendment
is to: (1) increase the interest rate on such Indebtedness; (2) foreshorten the
dates upon which payments of principal or interest are due on such Indebtedness;
(3) change any event of default or change any covenant with respect to such
Indebtedness in a manner which is adverse to any Loan Party; (4) change the
prepayment provisions of such Indebtedness in a manner which is adverse to any
Lender; (5) add any event of default or add any covenant; (6) change any of the
subordination provisions thereof (or the subordination terms of any guaranty
thereof) or change any provision which restricts Holdings, Borrower or any of
their respective Subsidiaries from amending any of the Loan Documents or
incurring Obligations or Liens in respect thereof; or (7) change or amend any
other term if such change or amendment described in this clause (7) would
materially increase the obligations of the obligor or confer additional material
rights on the holder of such Indebtedness in a manner adverse to Holdings,
Borrower or any of their respective Subsidiaries or Agent or Lenders, (B) any of
the terms of the Convertible Preferred Stock Purchase Agreement, that certain
Subscription Agreement dated September 30, 1999 by the shareholders listed
therein and Holdings (the "1999 SUBSCRIPTION AGREEMENT"), the Asset Purchase
Agreement, the Securities Purchase Agreement, any Redemption Agreement or the
Exchange Agreement (each as defined therein), the Preferred Stock, the Tax
Sharing Agreement, the Management Agreement or the NTT Purchase Agreement, in
each case under this clause (B), in a manner which is materially adverse to any
Lender or (C) any of the terms of the CEG Closing Note.
3.12 FISCAL YEAR. Neither Holdings, nor Borrower nor any other Subsidiary of
Holdings shall change its fiscal year.
3.13 PRESS RELEASES; PUBLIC OFFERING MATERIALS. Each of Holdings and
Borrower shall not and shall not suffer or permit any of their respective
Subsidiaries to issue any press releases or other public disclosure, including
but not limited to any prospectus, proxy statement or other material filed with
any governmental entity relating to a public offering of the capital stock of
Holdings, Borrower or any of their respective Subsidiaries, using the name of
Agent or any Lender or any of their respective affiliates or referring to this
Agreement, the other Loan Documents or the Related Transactions Documents
without at least two Business Days' prior notice to Agent or the appropriate
Lender and without the prior written consent of Agent or the appropriate Lender,
which consent shall not be withheld unreasonably, unless (and only to the extent
that) Holdings, Borrower or the relevant Subsidiary is required to do so under
law and then, in any event, Holdings or the relevant Subsidiary shall consult
with Agent or the appropriate Lender before issuing such press release or other
public disclosure. Any tombstone or similar advertising material relating to the
financing transactions contemplated by this Agreement to be published by Agent
or any Lender shall be subject to the prior written consent of Borrower (not to
be withheld unreasonably) following at least two Business Days' prior notice to
Borrower. Agent and Lenders reserve the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.
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3.14 SUBSIDIARIES. Each of Holdings and Borrower shall not and shall not
suffer or permit any of their respective Subsidiaries directly or indirectly to
establish, create or acquire any new Subsidiary except as part of a Permitted
Acquisition or the opening of an Institution (which is not owned and operated by
Borrower and its Subsidiaries as of the Second Amendment and Restatement Date.
SECTION 4
FINANCIAL COVENANTS/REPORTING
Each of Borrower and Holdings covenants and agrees that so long as the Revolving
Loan Commitment is in effect and until payment in full in cash of all
Obligations and termination of all Lender Letters of Credit and Risk
Participation Agreements, unless Requisite Lenders shall otherwise give their
prior written consent, each of Borrower and Holdings shall perform and comply
with, and shall cause each of its Subsidiaries to perform and comply with, all
covenants in this Section 4 applicable to such Person.
4.1 CAPITAL EXPENDITURE LIMITS. The aggregate amount of all Capital
Expenditures of Holdings and its Subsidiaries will not exceed $9,000,000
annually for each fiscal year of Holdings (the "CAPEX LIMIT"), and no Capital
Expenditures shall be made other than by Borrower and Subsidiaries of Borrower;.
Notwithstanding the foregoing, in the event Borrower and Subsidiaries of
Borrower do not expend the entire Capex Limit permitted in any fiscal year,
Borrower and its Subsidiaries may carry forward to the immediately succeeding
fiscal year 100% of the unutilized portion (not to exceed $3,000,000) of the
Capex Limit. All Capital Expenditures made by Borrower and its Subsidiaries
shall first be applied to reduce the applicable Capex Limit and then to reduce
the carry forward from the previous fiscal year, if any. "CAPITAL EXPENDITURES"
will be calculated as illustrated on Exhibit 4.8(C). For purposes of those
calculations, Capital Expenditures of Holdings and its Subsidiaries for the
fiscal quarter ending on the last day of September, 2001, shall be deemed to be
$1,310,000, Capital Expenditures of Holdings and its Subsidiaries for the fiscal
quarter ending on the last day of December, 2001, shall be deemed to be
$3,079,000, and Capital Expenditures of Holdings and its Subsidiaries for the
month ending January, 2002, shall be deemed to be $1,223,000
4.2 OMITTED.
4.3 EBITDA. Borrower shall not permit EBITDA for any period of four
consecutive fiscal quarters ending on the last day of any month set forth below
to be less than the amount set forth below for such period:
------------------------------------------------------
PERIOD AMOUNT
------------------------------------------------------
June 30, 2002 $18,000,000
------------------------------------------------------
September 30, 2002 $18,000,000
------------------------------------------------------
December 31, 2002 $18,125,000
------------------------------------------------------
March 31, 2003 $18,250,000
------------------------------------------------------
June 30, 2003 $18,375,000
------------------------------------------------------
September 30, 2003 $18,500,000
------------------------------------------------------
December 31, 2003 $18,750,000
------------------------------------------------------
March 31, 2004 $19,000,000
------------------------------------------------------
June 30, 2004 $19,250,000
------------------------------------------------------
September 30, 2004 $19,500,000
------------------------------------------------------
December 31, 2004 $20,000,000
------------------------------------------------------
March 31, 2005 $20,500,000
------------------------------------------------------
June 30, 2005 $21,000,000
------------------------------------------------------
September 30, 2005 $21,500,000
------------------------------------------------------
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------------------------------------------------------
PERIOD AMOUNT
------------------------------------------------------
December 31, 2005 $22,750,000
------------------------------------------------------
March 31, 2006 $22,750,000
------------------------------------------------------
June, 30, 2006 $22,750,000
------------------------------------------------------
September 30, 2006 $22,750,000
------------------------------------------------------
December 31, 2006 $23,750,000
------------------------------------------------------
March 31, 2007 $23,750,000
------------------------------------------------------
June 30, 2007 $23,750,000
------------------------------------------------------
September 30, 2007 $23,750,000
------------------------------------------------------
December 31, 2007 $24,500,000
------------------------------------------------------
March 31, 2008 $24,500,000
------------------------------------------------------
June 30, 2008 $24,500,000
------------------------------------------------------
September 30, 2008 $24,500,000
------------------------------------------------------
December 31, 2008 $25,000,000
------------------------------------------------------
March 31, 2009 $25,000,000
------------------------------------------------------
"EBITDA" will be calculated as illustrated on Exhibit 4.8(C). For purposes of
those calculations, EBITDA for the Borrower for the fiscal quarter ending on the
last day of September, 2001, shall be deemed to be $5,267,000, EBITDA for the
Borrower for the fiscal quarter ending on the last day of December, 2001, shall
be deemed to be $8,313,000, and EBITDA for the Borrower for the month ending
January, 2002, shall be deemed to be $3,592,000.
4.4 FIXED CHARGE COVERAGE. Holdings and Borrower shall not suffer or permit
Fixed Charge Coverage of Holdings and its Subsidiaries for any period of four
consecutive fiscal quarters ending on the last day of any month set forth below
to be less than the amount set forth opposite such period:
------------------------------------------------------
PERIOD AMOUNT
------------------------------------------------------
June 30, 2002 1.00 : 1.00
------------------------------------------------------
September 30, 2002 1.00 : 1.00
------------------------------------------------------
December 31, 2002 1.00 : 1.00
------------------------------------------------------
March 31, 2003 1.00 : 1.00
------------------------------------------------------
June 30, 2003 1.00 : 1.00
------------------------------------------------------
September 30, 2003 1.00 : 1.00
------------------------------------------------------
December 31, 2003 1.02 : 1.00
------------------------------------------------------
March 31, 2004 1.03 : 1.00
------------------------------------------------------
June 30, 2004 1.04 : 1.00
------------------------------------------------------
September 30, 2004 1.05 : 1.00
------------------------------------------------------
December 31, 2004 1.07 : 1.00
------------------------------------------------------
March 31, 2005 1.08 : 1.00
------------------------------------------------------
June 30, 2005 1.09 : 1.00
------------------------------------------------------
September 30, 2005 1.10 : 1.00
------------------------------------------------------
December 31, 2005 1.10 : 1.00
------------------------------------------------------
March 31, 2006 1.10 : 1.00
------------------------------------------------------
June, 30, 2006 1.10 : 1.00
------------------------------------------------------
September 30, 2006 1.10 : 1.00
------------------------------------------------------
December 31, 2006 1.10 : 1.00
------------------------------------------------------
March 31, 2007 1.10 : 1.00
------------------------------------------------------
June 30, 2007 1.10 : 1.00
------------------------------------------------------
September 30, 2007 1.10 : 1.00
------------------------------------------------------
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------------------------------------------------------
PERIOD AMOUNT
------------------------------------------------------
December 31, 2007 1.10 : 1.00
------------------------------------------------------
March 31, 2008 1.10 : 1.00
------------------------------------------------------
June 30, 2008 1.10 : 1.00
------------------------------------------------------
September 30, 2008 1.10 : 1.00
------------------------------------------------------
December 31, 2008 1.10 : 1.00
------------------------------------------------------
March 31, 2009 1.10 : 1.00
------------------------------------------------------
"FIXED CHARGE COVERAGE" will be calculated as illustrated on Exhibit 4.8(C). For
purposes of those calculations, Fixed Charges for the Borrower for the fiscal
quarter ending on the last day of September, 2001, shall be deemed to be
$608,000, Fixed Charges for the Borrower for the fiscal quarter ending on the
last day of December, 2001, shall be deemed to be $1,209,000, and Fixed Charges
for the Borrower for the month ending January, 2002, shall be deemed to be
$588,000, and Interest Expenses for the four consecutive fiscal quarters ending
on the last day of June, 2002, shall be deemed to be Interest Expenses for the
fiscal quarter ending on said day multiplied by four, Interest Expenses for the
four consecutive fiscal quarters ending on the last day of September, 2002,
shall be deemed to be the sum of Interest Expenses for the fiscal quarters
ending on the last day of June, 2002, and the last day of September, 2002,
multiplied by two, and Interest Expenses for the four consecutive fiscal
quarters ending on the last day of December, 2002, shall be deemed to be the sum
of Interest Expenses for the fiscal quarters ending on the last day of June,
2002, the last day of September, 2002, and the last day of December, 2002,
multiplied by 1.33.
4.5 TOTAL INTEREST COVERAGE. Holdings and Borrower shall not suffer or
permit Total Interest Coverage of Holdings and its Subsidiaries for any period
of four consecutive fiscal quarters ending on the last day of any month set
forth below to be less than the amount set forth opposite such period:
------------------------------------------------------
Period Amount
------------------------------------------------------
June 30, 2002 3.00 : 1.00
------------------------------------------------------
September 30, 2002 3.00 : 1.00
------------------------------------------------------
December 31, 2002 3.00 : 1.00
------------------------------------------------------
March 31, 2003 3.00 : 1.00
------------------------------------------------------
June 30, 2003 3.00 : 1.00
------------------------------------------------------
September 30, 2003 3.00 : 1.00
------------------------------------------------------
December 31, 2003 3.00 : 1.00
------------------------------------------------------
March 31, 2004 3.00 : 1.00
------------------------------------------------------
June 30, 2004 3.00 : 1.00
------------------------------------------------------
September 30, 2004 3.00 : 1.00
------------------------------------------------------
December 31, 2004 3.00 : 1.00
------------------------------------------------------
March 31, 2005 3.00 : 1.00
------------------------------------------------------
June 30, 2005 3.00 : 1.00
------------------------------------------------------
September 30, 2005 3.00 : 1.00
------------------------------------------------------
December 31, 2005 3.00 : 1.00
------------------------------------------------------
March 31, 2006 3.00 : 1.00
------------------------------------------------------
June, 30, 2006 3.00 : 1.00
------------------------------------------------------
September 30, 2006 3.00 : 1.00
------------------------------------------------------
December 31, 2006 3.00 : 1.00
------------------------------------------------------
March 31, 2007 3.00 : 1.00
------------------------------------------------------
June 30, 2007 3.00 : 1.00
------------------------------------------------------
September 30, 2007 3.00 : 1.00
------------------------------------------------------
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------------------------------------------------------
Period Amount
------------------------------------------------------
December 31, 2007 3.00 : 1.00
------------------------------------------------------
March 31, 2008 3.00 : 1.00
------------------------------------------------------
June 30, 2008 3.00 : 1.00
------------------------------------------------------
September 30, 2008 3.00 : 1.00
------------------------------------------------------
December 31, 2008 3.00 : 1.00
------------------------------------------------------
March 31, 2009 3.00 : 1.00
------------------------------------------------------
"TOTAL INTEREST COVERAGE" will be calculated as illustrated on Exhibit 4.8(C).
For purposes of those calculations, Interest Expenses for the four consecutive
fiscal quarters ending on the last day of June, 2002, shall be deemed to be
Interest Expenses for the fiscal quarter ending on said day multiplied by four,
Interest Expenses for the four consecutive fiscal quarters ending on the last
day of September, 2002, shall be deemed to be the sum of Interest Expenses for
the fiscal quarters ending on the last day of June, 2002, and the last day of
September, 2002, multiplied by two, and Interest Expenses for the four
consecutive fiscal quarters ending on the last day of December, 2002, shall be
deemed to be the sum of Interest Expenses for the fiscal quarters ending on the
last day of June, 2002, the last day of September, 2002, and the last day of
December, 2002, multiplied by 1.33.
4.6 OMITTED.
4.7 TOTAL INDEBTEDNESS TO TTM EBITDA RATIO. Holdings and Borrower shall not
suffer or permit as of the last day of any fiscal quarter ending on the last day
of any month set forth below the ratio of (a) Total Indebtedness of Holdings and
its Subsidiaries to (b) TTM EBITDA of Holdings and its Subsidiaries for the
period of four consecutive fiscal quarters ending on the last day of such fiscal
quarter, to be greater than the amount set forth below opposite such day:
------------------------------------------------------
PERIOD AMOUNT
------------------------------------------------------
June 30, 2002 3.25 : 1.00
------------------------------------------------------
September 30, 2002 3.25 : 1.00
------------------------------------------------------
December 31, 2002 3.25 : 1.00
------------------------------------------------------
March 31, 2003 3.25 : 1.00
------------------------------------------------------
June 30, 2003 3.18 : 1.00
------------------------------------------------------
September 30, 2003 3.12 : 1.00
------------------------------------------------------
December 31, 2003 3.06 : 1.00
------------------------------------------------------
March 31, 2004 3.00 : 1.00
------------------------------------------------------
June 30, 2004 2.93 : 1.00
------------------------------------------------------
September 30, 2004 2.87 : 1.00
------------------------------------------------------
December 31, 2004 2.81 : 1.00
------------------------------------------------------
March 31, 2005 2.75 : 1.00
------------------------------------------------------
June 30, 2005 2.50 : 1.00
------------------------------------------------------
September 30, 2005 2.50 : 1.00
------------------------------------------------------
December 31, 2005 2.50 : 1.00
------------------------------------------------------
March 31, 2006 2.50 : 1.00
------------------------------------------------------
June, 30, 2006 2.00 : 1.00
------------------------------------------------------
September 30, 2006 2.00 : 1.00
------------------------------------------------------
December 31, 2006 2.00 : 1.00
------------------------------------------------------
March 31, 2007 2.00 : 1.00
------------------------------------------------------
June 30, 2007 1.75 : 1.00
------------------------------------------------------
September 30, 2007 1.75 : 1.00
------------------------------------------------------
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------------------------------------------------------
PERIOD AMOUNT
------------------------------------------------------
December 31, 2007 1.75 : 1.00
------------------------------------------------------
March 31, 2008 1.75 : 1.00
------------------------------------------------------
June 30, 2008 1.75 : 1.00
------------------------------------------------------
September 30, 2008 1.75 : 1.00
------------------------------------------------------
December 31, 2008 1.75 : 1.00
------------------------------------------------------
March 31, 2009 1.75 : 1.00
------------------------------------------------------
4.8 FINANCIAL STATEMENTS AND OTHER REPORTS. Holdings shall maintain, and
cause each of its Subsidiaries to maintain, a system of accounting established
and administered in accordance with sound business practices to permit
preparation of financial statements in conformity with GAAP (it being understood
that monthly financial statements are not required to have footnote disclosures
and are subject to year end adjustments). Holdings will deliver each of the
financial statements and other reports described below to Agent and each Lender.
(A) MONTHLY FINANCIALS. As soon as available and in any event
within forty-five (45) days after the end of each month
(including the last month of each fiscal year), Holdings will
deliver (1) the consolidated and consolidating balance sheets
of Holdings and its Subsidiaries, as at the end of such month,
and the related consolidated and consolidating statements of
income, stockholders' equity and cash flow for such month and
for the period from the beginning of the then current fiscal
year of Holdings to the end of such month, which shall also
set forth EBITDA for such month and for the trailing 12-month
period and (2) a comparison of such monthly financials to the
corresponding figures for the corresponding month of the prior
fiscal year and the most recent Projections for the current
fiscal year delivered pursuant to subsection 4.8(J) and (3) a
detail of non-recurring items included in the TTM EBITDA and a
comparison of these non-recurring items with those of the
prior year.
(B) YEAR-END FINANCIALS. As soon as available and in any event
within one hundred twenty (120) days after the end of each
fiscal year of Holdings, Holdings will deliver (1) the
consolidated balance sheets of Holdings and its Subsidiaries,
as at the end of such year, and the related consolidated and
consolidating statements of income, stockholders' equity and
cash flow for such fiscal year and (2) a report with respect
to the financial statements from a firm of Certified Public
Accountants selected by Holdings and reasonably acceptable to
Agent, which report shall be prepared in accordance with
Statement of Auditing Standards No. 58 (the "STATEMENT")
entitled "Reports on Audited Financial Statements" and such
report shall be "Unqualified" (as such term is defined in such
Statement).
(C) COMPLIANCE CERTIFICATE. Together with each delivery of
financial statements of Holdings and its Subsidiaries pursuant
to subsections 4.8(A) and 4.8(B) above, Holdings will deliver
a fully and properly completed Compliance Certificate
substantially in the form of Exhibit 4.8(C).
(D) OMITTED.
(E) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, Holdings
will deliver copies of all significant reports submitted by
Holdings' firm of certified public accountants in connection
with each annual, interim or special audit or review of any
type of the financial statements or related internal control
systems of Holdings made by such
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accountants, including any comment letter submitted by such
accountants to management in connection with their services.
(F) OMITTED.
(G) DOE LETTER OF CREDIT REQUIREMENT. If the DOE demands, requests
or requires (or gives notice of same) of any change to the
letter of credit requirement that Borrower or any of its
Institution Subsidiaries must provide for the fiscal year of
Borrower ending most recently prior to such demand, request or
requirement received by Borrower's Institution Subsidiaries
(in the case of such a demand, request or requirement on
Borrower) or such Institution Subsidiary (in the case of such
a demand, request or requirement on an Institution
Subsidiary), the Borrower shall promptly inform Agent of such
requirement and in no event shall such notice be received
later than seven (7) business days following Borrower's
knowledge of such demand, request or requirement or of such
notice from the DOE.
(H) ADDITIONAL DELIVERIES. As soon as available and in no event
later than thirty (30) days after the last day of each of
Holdings' fiscal years, Holdings will deliver evidence that:
(i) to the extent Holdings and its Subsidiaries must comply
with Sections 668.8(d)(3) and 668.8(e) of the Regulations, no
less than 70% of the students who enrolled in the educational
programs offered by the Institutions graduated from such
programs, as calculated by the method set forth at Section
668.8(f) of the Regulations, (ii) to the extent Holdings and
its Subsidiaries must comply with Sections 668.8(d)(3) and
668.8(e) of the Regulations, no less than 70% of the students
who graduated from such educational programs offered by each
of the Institutions secured employment in a field related to
such program within six months of completing the program, as
calculated by the method set forth at Section 668.8(g) of the
Regulations, (iii) the Cohort Default Rate for each of the
Institutions, as determined by the DOE, did not exceed 25% for
three (3) consecutive years, and (iv) the Institutions have
derived no more than 90% of their revenues from Title IV,
Higher Education Act program funds, as calculated by the
formula set forth at Section 600.5(d) of the Regulations.
(I) APPRAISALS. (i) From time to time, if Agent or any Lender
determines that obtaining appraisals is necessary in order for
Agent or such Lender to comply with applicable laws or
regulations, Agent will, at Borrower's expense, obtain
appraisal reports in form and substance and from appraisers
satisfactory to Agent stating the then current fair market
values of all or any portion of the Real Estate owned by
Borrower or any of its Subsidiaries. In addition to the
foregoing, from time to time while an Event of Default is
continuing, Agent may require Borrower to obtain and deliver
to Agent appraisal reports in form and substance and from
appraisers satisfactory to Agent stating the then current
market values of all or any portion of the Real Estate and
personal property owned by Borrower or any of its
Subsidiaries. (ii) At the Borrower's expense, the Agent shall
have the right once per year, unless there exists a Default or
an Event of Default (in which case, Agent shall have the right
as often as it may request), (x) to audit the existence and
condition of the Collateral and (y) to review compliance with
the Loan Documents.
(J) PROJECTIONS. As soon as available and in any event no later
than thirty (30) days after the last day of each of Holdings'
fiscal years, Holdings will deliver Projections of Holdings
and its Subsidiaries for the forthcoming fiscal year, on a
month by month basis.
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(K) SEC FILINGS AND PRESS RELEASES. Promptly upon their becoming
available, Holdings will deliver copies of (1) all financial
statements, reports, notices and proxy statements sent or made
available by Holdings or any of its Subsidiaries to its public
security holders (including, without limitation, the holders
of Holdings Subordinated Indebtedness), (2) all regular and
periodic reports and all registration statements and
prospectuses, if any, filed by Holdings or any of its
Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental or
private regulatory authority, and (3) all press releases and
other statements made available by Holdings or any of its
Subsidiaries to its public security holders concerning
developments in the business of any such Person.
(L) EVENTS OF DEFAULT, ETC. Promptly upon any Responsible Officer
of Holdings or any of its Subsidiaries obtaining knowledge of
any of the following events or conditions, Borrower shall
deliver copies of all notices given or received by Holdings or
any of its Subsidiaries with respect to any such event or
condition and a certificate of Holdings' or such Subsidiary's
chief executive officer specifying the nature and period of
existence of such event or condition and what action Holdings
or such Subsidiary has taken, is taking and proposes to take
with respect thereto: (1) any condition or event that
constitutes an Event of Default or Default; (2) any notice
that any Person has given to Borrower or any of its
Subsidiaries or any other action taken with respect to a
claimed default or event or condition of the type referred to
in subsection 6.1(B); or (3) any event or condition that could
reasonably be expected to result in any Material Adverse
Effect.
(M) LITIGATION. Within ten (10) days following the date any
officer of Holdings or any of its Subsidiaries obtains
knowledge of (1) the institution of any action, suit,
proceeding, governmental investigation or arbitration against
or affecting Holdings or any of its Subsidiaries or any
property of Holdings or any of its Subsidiaries not previously
disclosed by Holdings or any of its Subsidiaries to Agent or
(2) any material development in any action, suit, proceeding,
governmental investigation or arbitration at any time pending
against or affecting Holdings or any of its Subsidiaries or
any property of Holdings or any of its Subsidiaries which, in
the case of (1) or (2), could reasonably be expected to have a
Material Adverse Effect, Holdings or such Subsidiary will give
notice thereof to Agent and provide such other information as
may be reasonably available to them to enable Agent and its
counsel to evaluate such matter.
(N) SUPPLEMENTED SCHEDULES; NOTICE OF CORPORATE CHANGES. Annually,
concurrently with Holdings' delivery of the Projections
required by subsection 4.8(J), Holdings shall supplement in
writing and deliver revisions of the Schedules annexed to this
Agreement to the extent necessary to disclose new or changed
facts or circumstances after the Second Amendment and
Restatement Date; provided that subsequent disclosures shall
not constitute a cure or waiver of any Default or Event of
Default resulting from the matters disclosed. Holdings shall
provide prompt written notice of (1) all jurisdictions in
which Holdings or any of its Subsidiaries becomes qualified
after the Second Amendment and Restatement Date to transact
business, (2) any material change after the Second Amendment
and Restatement Date in the authorized and issued capital
stock or other equity interests of Holdings or any of its
Subsidiaries or any other material amendment to their charter,
by-laws or other organization documents and (3) any Subsidiary
created or acquired by Holdings or any of its Subsidiaries
after the Second Amendment and Restatement Date, such notice,
in each case, to identify the applicable jurisdictions,
capital structures or Subsidiaries, as applicable.
-41-
(O) OTHER INFORMATION. With reasonable promptness, Holdings will
deliver such other information and data with respect to
Holdings or any of its Subsidiaries as from time to time may
be reasonably requested by Agent.
4.9 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT. For purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. Financial statements and other information furnished to
Agent pursuant to subsection 4.8 shall be prepared in accordance with GAAP as in
effect at the time of such preparation. No "Accounting Changes" (as defined
below) shall affect financial covenants, standards or terms in this Agreement;
provided that Holdings shall prepare footnotes to each Compliance Certificate
and the financial statements required to be delivered hereunder that show the
differences between the financial statements delivered (which reflect such
Accounting Changes) and the basis for calculating financial covenant compliance
(without reflecting such Accounting Changes). "ACCOUNTING CHANGES" means: (a)
changes in accounting principles required by GAAP and implemented by Borrower;
(b) changes in accounting principles recommended by Holdings' certified public
accountants and implemented by Holdings; (c) changes in carrying value of
Holdings' or any of its Subsidiaries' assets, liabilities or equity accounts
resulting from (i) the application of purchase accounting principles (A.P.B. 16
and/or 17 or SFAS 141, as applicable, and EITF 88-16 and FASB 109) to the
Related Transactions or (ii) as the result of any other adjustments that, in
each case, were applicable to, but not included in, the Pro Forma and (d)
changes in the manner in which prepaid student acquisition costs are capitalized
and subsequently expensed.
SECTION 5
REPRESENTATIONS AND WARRANTIES
In order to induce Agent and Lenders to enter into this Agreement, to make Loans
and to issue Lender Letters of Credit and Risk Participation Agreements,
Holdings and Borrower represent and warrant to Agent and each Lender that the
following statements are and, after giving effect to the Related Transactions,
will be true, correct and complete:
5.1 DISCLOSURE. No representation or warranty of Holdings or any of its
Subsidiaries contained in this Agreement, the financial statements referred to
in subsection 5.5, the other Related Transactions Documents or any other
document, certificate or written statement furnished to Agent or any Lender by
or on behalf of any such Person for use in connection with the Loan Documents or
the Related Transactions Documents contains ((x) in the case of the Related
Transactions Documents and documents, certificates and written statements
furnished in connection therewith, as of the date first made or as of the date
such document, certificate or written statement was delivered or (y) in the case
of this Agreement, the other Loan Documents or any document, certificate or
written statement furnished in connection therewith, as of the date made,
repeated or delivered, as applicable) any untrue statement of a material fact or
omitted, omits or will omit (in each case, as of the respective dates specified
in (x) or (y) above) to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made; provided that to the extent any such
information, report, financial statement, exhibit or schedule was based upon or
constitutes a forecast, projection or expressions of opinion, each of Holdings
and the Borrower represents only that it acted in good faith and utilized
reasonable assumptions and due care in the preparation of such information,
report, financial statement, exhibit or schedule. It is recognized that such
projections, estimates and forecasts are subject to significant contingencies
and uncertainties, many of which are beyond the control of Holdings and Borrower
and that no assurances are given that such projections, estimates and forecasts
will be achieved.
-42-
5.2 NO MATERIAL ADVERSE EFFECT. Since September 30, 2001, there have been
no events or changes in facts or circumstances affecting Holdings or any of its
Subsidiaries which individually or in the aggregate have had or could reasonably
be expected to have a Material Adverse Effect and that have not been disclosed
herein or in the attached Schedules.
5.3 NO DEFAULT.
(A) The consummation of the UTI Related Transactions did not as of
the Closing Date and will not violate, the consummation of the
NTT Related Transactions did not and will not violate, and the
consummation of the Penske/Charlesbank Related Transactions
does not conflict with, result in a breach of, or constitute a
default (with due notice or lapse of time or both) under any
contract of Holdings or any of its Subsidiaries or of the
Companies except if such violations, conflicts, breaches or
defaults have either been waived on or before the Closing Date
with respect to the UTI Related Transactions, the Amendment
and Restatement Date with respect to the NTT Related
Transactions, or the Second Amendment and Restatement Date
with respect to the Penske/Charlesbank Related Transactions,
and are disclosed on Schedule 5.3 or could not reasonably be
expected to have, either individually or in the aggregate, a
Material Adverse Effect.
(B) Each component of the Related Transactions (including, without
limitation, the redemptions) were consummated, as of the
Closing Date, with respect to the UTI Related Transactions, as
of the Amendment and Restatement Date with respect to the NTT
Related Transactions or as of the Second Amendment and
Restatement Date with respect to the Penske/Charlesbank
Related Transactions (a) in accordance with the respective
terms of the applicable Related Transaction Documents in the
form supplied to Agent, without modification, waiver or
amendment, except those which had the prior written consent of
Agent or which, neither individually or in the aggregate, were
material, (b) in compliance with all applicable laws,
including, without limitation, Title IV and the Regulations,
the Delaware General Corporation Law, the Code, all
regulations of the IRC and the United States Department of
Labor applicable to employee stock ownership plans, the
Regulations and the laws pursuant to which the Regulations
were promulgated, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, the corporate laws of each state in
which any corporation now controlled by Holdings is or was
prior to its merger with Holdings or an entity controlled by
Holdings incorporated, and the laws of all states in which any
Institution is located applicable to such Institution.
(C) Neither the execution, delivery or performance by Holdings or
any of its Subsidiaries of this Agreement or any other Loan
Document (i) contravenes (x) any law or regulation (including,
without limitation, the laws and regulations referred to above
in this paragraph, Regulations T, U and X of the Board of
Governors of the Federal Reserve System and the Investment
Company Act of 1940, as amended) or (y) any contract,
agreement, indenture, lease or other instrument to which
Holdings or any Subsidiary is a party or by which any of their
respective assets is bound, or (ii) requires any consent of,
filing or registration with or approval from any governmental
entity or authority, except as disclosed on Schedule 5.3.
5.4 ORGANIZATION, POWERS, CAPITALIZATION AND GOOD STANDING.
(A) ORGANIZATION AND POWERS. Each of Holdings and each of its
Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation (which jurisdiction is set forth on Schedule
5.4(A)). Each of Holdings and
-43-
each of its Subsidiaries has all requisite corporate power and
authority to own and operate its properties, to carry on its
business as now conducted and proposed to be conducted, to
enter into each Related Transactions Document and Loan
Documents to which it is a party and to carry out the Related
Transactions and the Obligations.
(B) CAPITALIZATION. Immediately after giving effect to the
consummation of the Penske/Charlesbank Related Transactions on
the Second Amendment and Restatement Date, (i) the authorized
capital stock of each of Holdings and each of its Subsidiaries
is as set forth on Schedule 5.4(B), (ii) all issued and
outstanding shares of capital stock of each of Holdings and
each of its Subsidiaries are duly authorized and validly
issued, fully paid, nonassessable, free and clear of all Liens
other than those in favor of Agent, for the benefit of Agent
and Lenders, and such shares were issued in compliance with
all applicable state and federal laws concerning the issuance
of securities, (iii) the capital stock of each of Holdings and
each of its Subsidiaries is owned by the stockholders and in
the amounts set forth on Schedule 5.4(B), (iv) no shares of
the capital stock of Holdings or any of its Subsidiaries,
other than those described above, are issued and outstanding
and (v) except as set forth on Schedule 5.4(B), there are no
preemptive or other outstanding rights, options, warrants,
conversion rights or similar agreements or understandings for
the purchase or acquisition from Holdings or any of its
Subsidiaries, of any shares of capital stock or other
securities of any such entity.
(C) BINDING OBLIGATION. This Agreement, the other Loan Documents
and the Related Transactions Documents are the legally valid
and binding obligations of the applicable parties thereto,
each enforceable against each of such parties, as applicable,
in accordance with their respective terms.
(D) QUALIFICATION. Each of Holdings and each of its Subsidiaries
is duly qualified and in good standing wherever necessary to
carry on its business and operations, except in jurisdictions
in which the failure to be qualified and in good standing
could not reasonably be expected to have a Material Adverse
Effect. All jurisdictions in which each of Holdings and each
of its Subsidiaries is qualified to do business are set forth
on Schedule 5.4(D).
5.5 FINANCIAL STATEMENTS. All financial statements concerning Holdings and
its Subsidiaries which have been or will hereafter be furnished to Agent
pursuant to this Agreement, including those listed below, have been or will be
prepared in accordance with GAAP consistently applied (except as disclosed
therein; it being understood that monthly financial statements are not required
to have footnote disclosures and are subject to year-end adjustments) and do or
will present fairly the financial condition of the corporations covered thereby
as at the dates thereof and the results of their operations for the periods then
ended.
(A) The audited balance sheets at September 30, 2001 (including
all notes thereto) and related statements of income of
Holdings and its Subsidiaries for the fiscal year then ended,
certified by PricewaterhouseCoopers LLP.
(B) The unaudited balance sheets at January 31, 2002 (including
all notes thereto) and related statements of income for the
four months then ended.
5.6 INTELLECTUAL PROPERTY. Holdings and each of its Subsidiaries owns, is
licensed to use or otherwise has the right to use, all patents, trademarks,
trade names, copyrights, technology, know-how and processes used in or necessary
for the conduct of its business as currently conducted that are material
-44-
to the condition (financial or other), business or operations of Holdings and
its Subsidiaries (collectively called "INTELLECTUAL PROPERTY") and all such
Intellectual Property is identified on Schedule 5.6 (other than software
licenses granted by third party vendors) and fully protected and/or duly and
properly registered, filed or issued in the appropriate office and jurisdictions
for such registrations, filings or issuances. Except as disclosed in Schedule
5.6, the use of such Intellectual Property by Holdings and its Subsidiaries does
not and has not been alleged by any Person to infringe on the rights of any
Person.
5.7 INVESTIGATIONS, AUDITS, ETC. Except as set forth on Schedule 5.7 or
Subschedule 7.1(B)(1), none of Holdings or any of its Subsidiaries, is the
subject of (x) any review or audit by the Internal Revenue Service or any
investigation by a Governmental Authority or Necessary Regulatory Authority
concerning the violation or possible violation of any law or (y) any litigation,
judgment, action, charge, claim, demand, suit, petition, or arbitration which
could reasonably be expected to result in a Material Adverse Effect.
5.8 EMPLOYEE MATTERS. Except as set forth on Schedule 5.8, (a) none of
Holdings or any of its Subsidiaries nor any of their respective employees is
subject to any collective bargaining agreement, (b) no petition for
certification or union election is pending with respect to the employees of
Holdings or any of its Subsidiaries and no union or collective bargaining unit
has sought such certification or recognition with respect to the employees of
Holdings or any of its Subsidiaries and (c) there are no strikes, slowdowns,
work stoppages or controversies pending or, to the best knowledge of Borrower
after due inquiry, threatened between Holdings or any of its Subsidiaries and
their respective employees, other than employee grievances arising in the
ordinary course of business which could not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. Except as
set forth on Schedule 5.8, neither Holdings nor any of its Subsidiaries is party
to an employment contract. Except as set forth on Subschedule 7.1(B)(2) neither
Holdings nor any member of its controlled group or person under common control
with Holdings, within the meaning of Title I or Title IV of ERISA or section
412, 414 (b) or 414(c) of the IRC, maintained or is required to contribute to
any "employee benefit plan" as defined in Section 3(3) of ERISA or
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA).
5.9 SOLVENCY. Each of Holdings and each of its Subsidiaries (a) owns and
will own assets the fair saleable value of which are (i) greater than the total
amount of liabilities (including contingent liabilities) of Holdings or such
Subsidiary, as the case may be, and (ii) greater than the amount that will be
required to pay the probable liabilities of Holdings or such Subsidiary's, as
the case may be, then existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales reasonably
available to Holdings or such Subsidiary, as the case may be; (b) has capital
that is not unreasonably small in relation to its business as presently
conducted or after giving effect to any contemplated transaction; and (c) does
not intend to incur and does not believe that it will incur debts beyond its
ability to pay such debts as they become due.
5.10 REGULATORY COMPLIANCE OF HOLDINGS AND ITS SUBSIDIARIES.
(A) Holdings, its Subsidiaries and each Institution have all
necessary permits, licenses, franchises, authorizations and
clearances of governmental or regulatory authorities as are
required or necessary (1) to operate in the states (and
locations therein) in which the Institutions are located, (2)
to participate in federal student assistance programs under
Title IV and (3) to own, lease and operate their respective
properties and to conduct their business, in each case, in a
manner no less advantageous to Holdings, its Subsidiaries and
each Institution as conducted as of the time immediately prior
to the Original Transaction Date (or, with respect to Newco,
immediately prior to the Amendment and Restatement Date);
-45-
(B) Each Institution has in full force and effect a Program
Participation Agreement for each Institution and is in
compliance in all material respects with each such Program
Participation Agreement;
(C) Each Institution has applied for recertification of
eligibility to participate in federal student financial
assistance programs under Title IV where such reapplication
was necessary to assure that no Program Participation
Agreement would expire;
(D) Each Institution is in compliance in all material respects
with Title IV and the Regulations, including Section 668.16
and 668.171 - 668.175 of the Regulations, and with all
applicable laws of each state in which it is located that
regulates educational institutions;
(E) no accreditations or state licensees held by Holdings, its
Subsidiaries or any Institution as of the time immediately
prior to the Original Transaction Date (or, with respect to
the Companies, the Amendment and Restatement Date) or
thereafter acquired have been suspended, revoked, terminated,
not renewed or continued, discontinued or canceled;
(F) Holdings and its Subsidiaries have obtained assurances from
each Necessary Regulatory Authority that the
Penske/Charlesbank Related Transactions did not constitute a
"change of ownership" or a "change of control" under each
Necessary Regulatory Authorities' laws, regulations or
standards, or, in the event that a Necessary Regulatory
Authority did treat the Penske/Charlesbank Related
Transactions as a change of ownership or a change of control,
Holdings and its Subsidiaries have timely filed all required
notifications and applications necessary to secure such
Necessary Regulatory Authorities' consent to the transactions
contemplated thereby, and no Necessary Regulatory Authority
has refused such consent; and
(G) the representations and warranties of Holdings set forth in
Section 3.9 of the Convertible Preferred Stock Purchase
Agreement are true and correct as of the Second Amendment and
Restatement Date.
5.11 LEASES AND CONTRACTS; INDEBTEDNESS. Except as set forth on Schedule
5.11, upon consummation of the Penske/Charlesbank Related Transactions and after
giving effect thereto all leases of real and personal property and all material
agreements (including, without limitation, debt agreements and capital leases)
to which Holdings or any of its Subsidiaries is a party are in full force and
effect without default or right of the lessor or other obligee to terminate or
accelerate thereunder.
5.12 FEES. Except as set forth on subschedule 7.1(B)(3) hereto, no fees are
currently payable in connection with the UTI Related Transactions, the NTT
Related Transactions, the Penske/Charlesbank Related Transactions or the
financing contemplated by this Agreement, the Original Credit Agreement, by
Holdings or any of its Subsidiaries to Affiliates of Holdings.
5.13 EXISTING LOAN DOCUMENTS. Each of the Loan Documents delivered by
Holdings, Borrower and their Subsidiaries on the Second Amendment and
Restatement Date and the provisions thereof (including the Original Credit
Agreement, as amended and restated hereby, and the amended and restated Notes
being delivered hereunder (a) are and remain legal, valid and binding
obligations of the respective parties thereto, enforceable in accordance with
their terms, (b) have not been modified, supplemented or waived (except as
modified pursuant to the terms of this Agreement or agreements supplied by the
Agent) and (c) remain in full force and effect. The obligations of Holdings and
the Non-Institution Subsidiaries under the Guaranties delivered on the Closing
Date and amended or amended and restated as of the Second Amendment and
Restatement Date are hereby confirmed and such agreements are and remain
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legal, valid and binding obligations of the respective parties thereto,
enforceable in accordance with their terms and in full force and effect without
offset, defense, claims, counterclaims, cross-claims or right of set-off or
recoupment.
5.14 MARGIN REGULATIONS. No part of the proceeds of any Loan will be used
for "buying" or "carrying" "margin stock" within the respective meanings of such
terms under Regulation U of the Board of Governors of the Federal Reserve System
as now and from time to time hereafter in effect or for any other purpose that
violates the provisions of the regulations of the Board of Governors of the
Federal Reserve System. If requested by Agent, Borrower will furnish to Agent
and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in
Regulation U.
5.15 ENVIRONMENTAL MATTERS.
(A) Except as set forth on Schedule 5.7: (i) Holdings and each of
its Subsidiaries are and have been in compliance with all
Environmental Laws, except for such noncompliance that would
not result in Environmental Liabilities which could reasonably
be expected to have a Material Adverse Effect; (ii) Holdings
and each of its Subsidiaries have obtained, and are in
compliance with, all Environmental Permits required by
Environmental Laws for the operations of their respective
businesses as presently conducted or as proposed to be
conducted, except where the failure to so obtain or comply
with such Environmental Permits would not result in
Environmental Liabilities which could reasonably be expected
to have a Material Adverse Effect, and all such Environmental
Permits are valid, uncontested and in good standing; (iii)
neither Holdings nor any of its Subsidiaries is involved in
operations or knows of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely
to result in any Environmental Liabilities of such Loan Party
which could reasonably be expected to have a Material Adverse
Effect; (iv) there is no Litigation arising under or related
to any Environmental Laws, Environmental Permits or Hazardous
Material that seeks damages, penalties, fines, costs or
expenses in excess of $100,000 or injunctive relief against,
or that alleges criminal misconduct by, Holdings or any of its
Subsidiaries; (v) no notice has been received by Holdings or
any of its Subsidiaries identifying it as a "potentially
responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of Holdings and
each of its Subsidiaries, there are no facts, circumstances or
conditions that could reasonably be expected to result in
Holdings or any of its Subsidiaries being identified as a
"potentially responsible party" under CERCLA or analogous
state statutes; and (vi) Holdings and each of its Subsidiaries
have provided to Agent copies of all existing material
environmental reports, reviews and audits and all material
written information pertaining to actual or potential
Environmental Liabilities, in each case relating to Holdings
or any of its Subsidiaries.
(B) Holdings and each of its Subsidiaries hereby acknowledge and
agree that Agent (i) is not now, and has not ever been, in
control of any the affairs of Holdings or any of its
Subsidiaries, and (ii) does not have the capacity through the
provisions of the Loan Documents or otherwise to influence any
the conduct of Holdings or any of its Subsidiaries with
respect to compliance with Environmental Laws or Environmental
Permits.
5.16 SUBORDINATED INDEBTEDNESS AND SELLER SUBORDINATED NOTES. Schedule 5.16
hereto sets forth a list of all Subordinated Indebtedness and each Seller
Subordinated Note outstanding immediately prior to the Second Amendment and
Restatement Date.
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SECTION 6
DEFAULT, RIGHTS AND REMEDIES
6.1 EVENT OF DEFAULT. "EVENT OF DEFAULT" means the occurrence or existence
of any one or more of the following:
(A) PAYMENT. Failure of Borrower to pay any payment or prepayment
of principal of any Loan when due, or to repay when required
any DOE Working Capital Loan, Non-DOE Working Capital Loan, or
any Revolving Loan to reduce its principal balance to the
Maximum DOE Limit, Maximum Non-DOE Limit or Maximum Revolver
Loan Balance, or to reduce the amount outstanding under the
Revolving Loan Commitment as required by subsection 1.5(G) or
to provide cash collateral for any Risk Participation
Liability when required or to reimburse Agent for any payment
made by Agent under or in respect of any Lender Letters of
Credit or Risk Participation Agreements when due or failure to
pay, within five (5) days after the due date, any interest on
any Loan or any other amount due under this Agreement or any
of the other Loan Documents; or
(B) DEFAULT IN OTHER AGREEMENTS. (1) Failure of Holdings or any of
its Subsidiaries to pay when due or within any applicable
grace period any principal or interest on Indebtedness (other
than the Loans) or any Contingent Obligations or (2) breach or
default of Holdings or any of its Subsidiaries with respect to
any Indebtedness (other than the Loans) or any Contingent
Obligations, if the effect of such breach or default is to
cause or to permit the holder or holders (or any requisite
percentage thereof) then to cause, Indebtedness and/or
Contingent Obligations having an individual principal amount
in excess of $2,000,000 or having an aggregate principal
amount in excess of $5,000,000 to become or be declared due
prior to their stated maturity; or
(C) BREACH OF CERTAIN PROVISIONS. Failure of Holdings or any of
its Subsidiaries to perform or comply with any term or
condition contained in (i) that portion of subsection 2.2
relating to the obligation to maintain insurance, (ii)
subsection 2.3, (iii) Section 3 or (iv) Section 4; or
(D) BREACH OF WARRANTY. Any representation, warranty,
certification or other statement made by Holdings or any of
its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by such Person in writing
pursuant or in connection with any Loan Document is false in
any material respect on the date made; or
(E) OTHER DEFAULTS UNDER LOAN DOCUMENTS. Holdings or any of its
Subsidiaries defaults in the performance of or compliance with
any term contained in this Agreement or the other Loan
Documents and such default is not remedied or waived within
thirty (30) days after receipt by Borrower of notice from
Agent or Requisite Lenders of such default (other than
occurrences described in other provisions of this subsection
6.1 for which a different grace or cure period is specified or
which constitute immediate Events of Default); or
(F) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1) A
court enters a decree or order for relief with respect to
Holdings or any of its Subsidiaries in an involuntary case
under the Bankruptcy Code, which decree or order is not stayed
or other similar relief is not granted under any applicable
federal or state law; or (2) the continuance of any of the
following events for sixty (60) days unless dismissed, bonded
or discharged: (a) an involuntary case is commenced against
Holdings or any of its Subsidiaries under any
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applicable bankruptcy, insolvency or other similar law now or
hereafter in effect; or (b) a decree or order of a court for
the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over
Holdings or any of its Subsidiaries or over all or a
substantial part of its property, is entered; or (c) an
interim receiver, trustee or other custodian is appointed
without the consent of Holdings or any of its Subsidiaries,
for all or a substantial part of the property of such Person;
or
(G) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1) An
order for relief is entered with respect to Holdings or any of
its Subsidiaries or Holdings or any of its Subsidiaries
commences a voluntary case under the Bankruptcy Code, or
consents to the entry of an order for relief in an involuntary
case or to the conversion of an involuntary case to a
voluntary case under any such law or consents to the
appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property;
or (2) Holdings or any of its Subsidiaries makes assignment
for the benefit of creditors; or (3) the Board of Directors of
Holdings or any of its Subsidiaries adopts any resolution or
otherwise authorizes action to approve any of the actions
referred to in this subsection 6.1(G); or
(H) GOVERNMENTAL LIENS. Any lien, levy or assessment is filed or
recorded with respect to or otherwise imposed upon all or any
part of the Collateral or the assets of Holdings or any of its
Subsidiaries by the United States or any department or
instrumentality thereof or by any state, county, municipality
or other governmental agency (other than Permitted
Encumbrances); or
(I) JUDGMENT AND ATTACHMENTS. Any money judgment, writ or warrant
of attachment, or similar process (other than those described
in subsection 6.1(H)) involving (1) an amount in any
individual case in excess of $2,500,000 or (2) an amount in
the aggregate at any time in excess of $2,500,000 (in either
case not adequately covered by insurance as to which the
insurance company has acknowledged coverage) is entered or
filed against Holdings or any of its Subsidiaries or any of
their respective assets and remains undischarged, unvacated,
unbonded or unstayed for a period of thirty (30) days or in
any event later than five (5) Business Days prior to the date
of any proposed sale thereunder; or
(J) DISSOLUTION. Any order, judgment or decree is entered against
Holdings or any of its Subsidiaries decreeing the dissolution
or split up of Holdings or such Subsidiary and such order
remains undischarged or unstayed for a period in excess of
fifteen (15) days; or
(K) SOLVENCY. Holdings or any of its Subsidiaries ceases to be
solvent (as represented in subsection 5.9) or admits in
writing its present or prospective inability to pay its debts
as they become due; or
(L) INJUNCTION. Holdings or any of its Subsidiaries is enjoined,
restrained or in any way prevented by the order of any court
or any administrative or regulatory agency from conducting all
or any material part of its business and such order continues
for more than thirty (30) days; or
(M) ERISA; PENSION PLANS. (1) Holdings or any of its Subsidiaries
or any of its Affiliates fails to make full payment when due
of all amounts which, under the provisions of any employee
benefit plans or any applicable provisions of the IRC, any
such Person is required to pay as contributions thereto and
such failure results in or is likely to result in a
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Material Adverse Effect; or (2) an accumulated funding
deficiency in excess of $750,000 occurs or exists, whether or
not waived, with respect to any such employee benefit plans;
or (3) any employee benefit plan loses its status as a
qualified plan under the IRC which results in or could
reasonably be expected to result in a Material Adverse Effect
and any such failure, deficiency or loss continues for more
than twenty (20) consecutive days; or
(N) ENVIRONMENTAL MATTERS. Holdings or any of its Subsidiaries
fails to: obtain or maintain any operating licenses or permits
required by environmental authorities; begin, continue or
complete any remediation activities as required by any
environmental authorities; store or dispose of any hazardous
materials in accordance with applicable environmental laws and
regulations; or comply with any other environmental laws; in
each case, if such failure could reasonably be expected to
have a Material Adverse Effect and any such failure remains
unremedied for more than thirty (30) consecutive days; or
(O) INVALIDITY OF LOAN DOCUMENTS. Any of the Loan Documents for
any reason, other than a partial or full release in accordance
with the terms thereof, ceases to be in full force and effect
or is declared to be null and void (other than solely as a
result of action taken by Agent of any Lender), or Holdings or
any Subsidiary denies that it has any further liability under
any Loan Documents to which it is party, or gives notice to
such effect; or
(P) DAMAGE; STRIKE; CASUALTY. Any material damage to, or loss,
theft or destruction of, any Collateral, whether or not
insured, or any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other casualty
which causes, for more than twenty (20) consecutive days, the
cessation or substantial curtailment of revenue producing
activities at any facility of Holdings or any of its
Subsidiaries if any such event or circumstance could
reasonably be expected to have a Material Adverse Effect; or
(Q) LICENSES AND PERMITS. The loss, suspension or revocation of,
or failure to renew, any license or permit now held or
hereafter acquired by Holdings or any of its Subsidiaries, if
such loss, suspension, revocation or failure to renew could
reasonably be expected to have a Material Adverse Effect, and
any such loss, suspension or revocation continues for more
than twenty (20) consecutive days; or
(R) FAILURE OF SECURITY. Agent, for the benefit of Agent and
Lenders, does not have or ceases to have a valid and perfected
first priority security interest in the Collateral (subject to
Permitted Encumbrances) or any substantial portion thereof, in
each case, for any reason other than the failure of Agent to
take any action within its control; or
(S) BUSINESS ACTIVITIES. (1) Holdings engages in any type of
business activity other than the ownership of stock of
Borrower and performance of its obligations under the Related
Transactions Documents and Loan Documents to which it is a
party or (2) Borrower shall engage in any business other than
the ownership of stock in its other Subsidiaries and
performance of its obligations under the Related Transactions
Documents and Loan Documents to which it is a party; or
(T) CHANGE IN CONTROL. If (1) the Jordan Group, JZEP, Penske,
Charlesbank, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (including trusts,
partnerships or other entities created by ▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇
▇▇▇▇▇▇▇ solely for the benefit, if any, of their respective
family members), together, beneficially and of record shall
own and control, directly or indirectly, less than a majority
(on a fully diluted basis) of the issued and outstanding
shares of each class of common stock of Holdings entitled
(without regard to the
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occurrence of any contingency) to vote for the election of the
members of the board of directors of Holdings, (2) the Jordan
Group, JZEP, Penske and Charlesbank shall own and control less
than 51% (on a fully diluted basis) of the issued and
outstanding shares of any class of capital stock of Holdings
entitled (without regard to the occurrence of any contingency)
to vote for the election of the members of the board of
directors of Holdings, (3) any person or "group" within the
meaning of Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended, (other than ▇▇▇▇ ▇▇▇▇▇ or
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (including such trusts)) shall own or control a
greater percentage (on a fully diluted basis) of the issued
and outstanding shares of any class of common stock of
Holdings entitled (without regard to the occurrence of any
contingency) to vote for the election of the members of the
board of directors of Holdings than that percentage (on a
fully diluted basis) held by the Jordan Group, JZEP, Penske
and Charlesbank (combined), (4) Holdings, beneficially and of
record, shall own and control less than one hundred percent
(100%) of the issued and outstanding shares of any class of
capital stock of Borrower, (5) Borrower, beneficially and of
record, shall own and control less than one hundred percent
(100%) of the issued and outstanding shares of any class of
capital stock of any Subsidiary of Borrower, (6) Borrower
ceases to beneficially and of record own and control one
hundred percent (100%) of the issued and outstanding shares of
each class of capital stock of each Subsidiary of Borrower
acquired or created after the Second Amendment and Restatement
Date or (7) a "Change of Control" (as defined in the Charter
of Holdings or the certificate of designation of preferences
and rights of any Preferred Stock) shall occur; or
(U) LOSS OF FUNDING, ACCREDITATION. If (i) any accreditation
necessary for Title IV eligibility held by any Institution as
of the Original Transaction Date or any accreditation acquired
after the Original Transaction Date shall be cancelled, not
renewed or continued, revoked, terminated or suspended for any
in excess of forty-five (45) consecutive days (ii) the ability
of any Institution to participate in the federal student
financial assistance program under Title IV shall be
cancelled, not renewed or continued, revoked, terminated or
suspended for any period in excess of forty-five (45)
consecutive days, (iii) any permit, license, franchise,
authorization or clearance of any governmental or regulatory
agency necessary for Holdings, any Subsidiary thereof or any
Institution to operate in the states and locations therein in
which the Institutions are located as of the Second Amendment
and Restatement Date or in any location of any Institution
which location was established after the Second Amendment and
Restatement Date shall be cancelled, not renewed or continued,
revoked, terminated or suspended for any period in excess of
forty-five (45) consecutive days, which could reasonably be
expected to have a Material Adverse Effect, (iv) any
Institution shall default under any Program Participation
Agreement or under the laws or regulations of any federal,
state or local governmental entity applicable to Holdings, any
Subsidiary thereof or such Institution, which default could
reasonably be expected to result in any event referred to in
clause (i), (ii) or (iii) of this paragraph (U) or in a
Material Adverse Effect or (v) the Borrower or any of its
Institution Subsidiaries fails to provide a letter of credit
or guaranty required by the DOE.
(V) SUBORDINATED INDEBTEDNESS. The failure of Holdings or any of
its Subsidiaries or any other creditor of Borrower or any of
its Subsidiaries to comply with the terms of any subordination
or intercreditor agreement or any subordination provisions of
any note or other document running to the benefit of Agent or
Lenders.
6.2 SUSPENSION OF COMMITMENTS. Upon the occurrence and during the
continuation of any Default or Event of Default, Agent and each Lender without
notice or demand, may immediately cease making
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additional Loans and issuing Lender Letters of Credit and Risk Participation
Agreements and cause its obligation to lend its Pro Rata Share of the Revolving
Loan Commitment to be suspended; provided that, in the case of a Default, if the
subject condition or event is waived, cured or removed by Requisite Lenders
within any applicable grace or cure period, any suspended portion of the
Revolving Loan Commitment shall be reinstated. Each Lender may alternatively
suspend only a portion of its obligation to lend its Pro Rata Share of the
Revolving Loan Commitment.
6.3 ACCELERATION. Upon the occurrence of any Event of Default described in
the foregoing subsection 6.1(F) or 6.1(G), the unpaid principal amount of and
accrued interest and fees on the Term Loans and the Revolving Loans, payments
under the Lender Letters of Credit and Risk Participation Agreements and all
other Obligations shall automatically become immediately due and payable,
without presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other requirements of any kind, all of which are hereby
expressly waived by Borrower, and the obligations of Agent and Lenders to make
Revolving Loans and issue Lender Letters of Credit and Risk Participation
Agreements shall thereupon terminate. Upon the occurrence and during the
continuance of any other Event of Default, Agent may, and upon written demand by
Requisite Lenders shall, by written notice to Borrower (a) declare all or any
portion of the Loans and all or some of the other Obligations to be, and the
same shall forthwith become, immediately due and payable together with accrued
interest thereon, and the obligations of Agent and Lenders to make Revolving
Loans and issue Lender Letters of Credit and Risk Participation Agreements shall
thereupon terminate and (b) demand that Borrower immediately deposit with Agent
an amount equal to the Total Risk Participation Liability to enable Agent to
make payments under the Lender Letters of Credit and Risk Participation
Agreements when required and such amount shall become immediately due and
payable.
6.4 PERFORMANCE BY AGENT. If any Loan Party shall fail to perform any
covenant, duty or agreement contained in any of the Loan Documents, Agent may
perform or attempt to perform such covenant, duty or agreement on behalf of such
Person after the expiration of any cure or grace periods set forth herein. In
such event, Holdings or any of its Subsidiaries shall, at the request of Agent,
promptly pay any amount reasonably expended by Agent in such performance or
attempted performance to Agent, together with interest thereon at the rate of
interest in effect upon the occurrence of an Event of Default as specified in
subsection 1.2(E) from the date of such expenditure until paid. Notwithstanding
the foregoing, it is expressly agreed that Agent shall not have any liability or
responsibility for the performance of any obligation of Holdings or any of its
Subsidiaries under this Agreement or any other Loan Document.
6.5 APPLICATION OF PROCEEDS. Notwithstanding anything to the contrary
contained in this Agreement, upon the occurrence and during the continuance of
an Event of Default other than an Event of Default listed on Schedule 1.2(E),
(a) Borrower irrevocably waives the right to direct the application of any and
all payments at any time or times thereafter received by Agent from or on behalf
of Borrower, and Agent shall have the continuing and exclusive right to apply
and to reapply any and all payments received at any time or times after the
occurrence and during the continuance of an Event of Default against the
Obligations in such manner as Agent may deem advisable notwithstanding any
previous application by Agent and (b) in the absence of a specific determination
by Agent with respect thereto, the proceeds of any sale of, or other realization
upon, all or any part of the Collateral shall be applied: first, to all fees,
costs and expenses incurred by or owing to Agent and any Lender with respect to
this Agreement, the other Loan Documents or the Collateral; second, to accrued
and unpaid interest on the Obligations (including any interest which but for the
provisions of the Bankruptcy Code, would have accrued on such amounts); third,
to the principal amount of the Obligations outstanding (including cash
collateral for Risk Participation Liability); and fourth, to any other
indebtedness or obligations of Borrower owing to Agent or any Lender under the
Loan Documents. Any balance remaining shall be delivered to Borrower or to
whomever may be lawfully entitled to receive such balance or as a court of
competent jurisdiction may direct.
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SECTION 7
CONDITIONS TO LOANS; CONDITIONS TO EFFECTIVENESS
The obligations of Lenders to make Loans and of Agent to issue Lender Letters of
Credit and Risk Participation Agreements are subject to satisfaction of all of
the applicable conditions set forth below.
7.1 CONDITIONS TO INITIAL LOANS UNDER THIS AGREEMENT. The obligations of
Lenders to make Incremental Term Loan A and the initial Revolving Loan made on
or after the Second Amendment and Restatement Date and of Agent to issue any
Lender Letters of Credit and Risk Participation Agreements on the Second
Amendment and Restatement Date are, in addition to the conditions precedent
specified in subsection 7.2, subject to:
(A) the delivery of all documents listed on Schedule 7.1, all in
form and substance satisfactory to Agent;
(B) the condition that such assignments by Exiting Lenders and/or
Continuing Lenders of the rights and obligations under the
Original Credit Agreement to Lenders as may be necessary to
consummate the transactions contemplated hereby shall have
been completed and evidenced by such documentation required by
the Original Credit Agreement and otherwise in form and
substance satisfactory to Agent;
(C) the condition that, upon receipt of the proceeds of the
Penske/Charlesbank Related Transactions, Incremental Term Loan
A and a Revolving Loan of not more than $5,500,000, Holdings
and Borrower shall have sufficient funds to satisfy in full
all Subject Subordinated Indebtedness, make the Term Loans B
Prepayment and to pay all costs and all expenses incurred
(whether or not billed) in connection with the
Penske/Charlesbank Related Transactions and the financing
contemplated by this Agreement;
(D) the condition that all Subordinated Indebtedness, other than
the Holdings Subordinated Indebtedness (NTT) and the CEG
Closing Note, shall have been paid and satisfied in full in
cash and all Subordinated Indebtedness Documents relating to
such satisfied Subordinated Indebtedness shall have been
terminated and released;
(E) the condition that (i) the Penske/Charlesbank Related
Transactions shall have been consummated in accordance with
all applicable laws and regulations and in accordance with the
applicable Penske/Charlesbank Related Transactions Documents,
without waiver or amendment of any material term (except with
the prior written consent of Agent and the Lenders), (ii) the
Convertible Preferred Stock shall have been issued in
accordance with the Penske/Charlesbank Related Transaction
Documents without waiver or amendment of any material term
(except with the prior written consent of Agent and Lenders)
and (iii) the aggregate proceeds from the sale thereof shall
have been applied to the satisfaction of the Subject
Subordinated Indebtedness and to the payment of costs, fees
and expenses incurred in connection with the
Penske/Charlesbank Related Transactions and the financing
contemplated by this Agreement;
(F) the condition that all holders of the Remaining Subordinated
Indebtedness shall have consented to the amendment and
restatement of the Original Credit Agreement, pursuant to the
terms hereof;
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(G) the condition that Borrower shall have paid or prepaid (i) all
accrued and unpaid interest on the Obligations as of the
Second Amendment and Restatement Date, (ii) $24,788,500.00 in
respect of principal of Term Loan B (the "TERM LOAN B
PREPAYMENT"), (iii) any accrued commitment fee (as such fee is
set forth in subsection 1.2(B) of the Original Credit
Agreement) that has not been paid as of the Second Amendment
and Restatement Date and (iv) $153,300 in respect of the
unpaid portion of the amendment fee in respect of Amendment
No. 3 (as such fee is set forth in the last sentence of
subsection 1.3(A) of the Original Credit Agreement) that has
not been paid as of the Second Amendment and Restatement Date
(to be allocated among the Existing Lenders as determined by
Agent);
(H) the condition that (i) Holdings and its Subsidiaries have
obtained assurances from each Necessary Regulatory Authority
that the Penske/Charlesbank Related Transactions did not
constitute a "change of ownership" or a "change of control"
under each Necessary Regulatory Authorities' laws, regulations
or standards or (ii) in the event that a Necessary Regulatory
Authority did treat the Penske/Charlesbank Related
Transactions as a change of ownership or a change of control,
Holdings and its Subsidiaries have timely filed all required
notifications and applications necessary to secure such
Necessary Regulatory Authorities' consent to the transactions
contemplated thereby, and no Necessary Regulatory Authority
has refused such consent;
(I) the condition that the Holdings Subordinated Indebtedness
Documents governing the Remaining Subordinated Indebtedness
shall have been amended in a manner satisfactory to the Agent
and Requisite Lenders;
(J) the condition that Holdings shall have certified to Agent and
Lenders that to the best of its knowledge all representations
and warranties made to Holdings in the Penske/Charlesbank
Related Transaction Document were true and correct in all
material respects as of the date made and as of the Second
Amendment and Restatement Date;
(K) the condition that no Revolving Loans are outstanding
immediately prior to the Second Amendment and Restatement
Date; and
(L) the condition that (assuming the effectiveness of this
amendment and restatement) all amounts payable to Agent and
the Lenders through the Second Amendment and Restatement Date
under subsection 1.3 shall have been paid.
7.2 CONDITIONS TO ALL LOANS. The obligations of Lenders to make Loans and
of Agent to issue Lender Letters of Credit and Risk Participation Agreements on
any date ("FUNDING DATE"), including, without limitation, the Second Amendment
and Restatement Date, are subject to the further conditions precedent set forth
below.
(A) Except in the case of a Revolving Loan referred to in
subsection 1.1(C)(2), Agent shall have received, in accordance
with the provisions of subsection 1.1, a notice requesting an
advance of a Revolving Loan or issuance of a Lender Letter of
Credit or Risk Participation Agreement.
(B) Except in the case of a Revolving Loan referred to in
subsection 1.1(C)(2), the representations and warranties
contained in Section 5 of this Agreement and elsewhere herein
and in the Loan Documents shall be (and each request by
Borrower for a Loan or a Lender Letter of Credit or Risk
Participation Agreement shall constitute a representation
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and warranty by Borrower that such representations and
warranties are) true, correct and complete in all material
respects on and as of that Funding Date to the same extent as
though made on and as of that date, except for any
representation or warranty limited by its terms to a specific
date and taking into account any amendments to the Schedules
or Exhibits as a result of any disclosures made in writing by
Borrower to Agent after the Second Amendment and Restatement
Date and approved by Agent in writing.
(C) Except in the case of a Revolving Loan referred to in
subsection 1.1(C)(2), no event shall have occurred and be
continuing or would result from the consummation of the
borrowing contemplated (or notice requesting issuance of a
Lender Letter of Credit or Risk Participation Agreement) that
would constitute an Event of Default or a Default and no
circumstance described in subsection 1.1(B)(2) shall exist. In
the case of a Revolving Loan referred to in subsection
1.1(C)(2), no Event of Default under subsection 6.1(F) or
subsection 6.1(G) and no acceleration of the Obligations shall
have occurred.
(D) Except in the case of a Revolving Loan referred to in
subsection 1.1(C)(2), no order, judgment or decree of any
court, arbitrator or Governmental Authority shall purport to
enjoin or restrain any Lender from making any Loan or Agent
from issuing any Lender Letter of Credit or Risk Participation
Agreement.
7.3 CONDITIONS TO EFFECTIVENESS. This amendment and restatement of the
Original Credit Agreement shall not become effective unless and until the
following conditions are satisfied in full (as determined by Agent) or, with the
prior written consent of Agent and Lenders, waived:
(A) All conditions to borrowing under subsection 7.1 and
subsection 7.2 shall be satisfied.
(B) This Agreement shall have been executed and delivered by the
Continuing Lenders, the New Lenders, Agent, Borrower and
Holdings.
SECTION 8
ASSIGNMENT AND PARTICIPATION
8.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND NOTES. Each Lender
(including ▇▇▇▇▇▇) may at its own cost assign, subject to the terms of a Lender
Addition Agreement, its rights and delegate its obligations under this Agreement
to another Person; provided that (a) (i) such Lender (excluding ▇▇▇▇▇▇) shall
first obtain the written consent of Agent, which consent shall not be
unreasonably withheld and (ii) such Lender (including ▇▇▇▇▇▇) shall first obtain
the prior written consent of Borrower (unless such assignment is being made to a
Person which is already a Lender or is being made to an Affiliate of such
Lender), which consent shall not be unreasonably withheld; (b) no portion of the
Revolving Loan Commitment or Term Loans being assigned shall in any event be
less than the lesser of (i) $5,000,000 and (ii) the entire amount of the portion
of the Revolving Loan Commitment or applicable Term Loan of the assigning
Lender; and (c) upon the consummation of each such assignment the assigning
Lender shall pay Agent an administrative fee of $3,500; provided, further, that
any sale or assignment by Antares or ▇▇▇▇▇▇ to Salomon Brothers Holding Company,
Inc. ("SALOMON") for the purposes of warehousing or otherwise holding loans and
by Salomon or Antares to Mariner CDO 2002, Ltd. and/or Nova CDO 2001, Ltd. shall
be permitted and shall not be subject to the minimum assignment amount specified
in this Agreement (it being understood that any sale or assignment so permitted
shall nonetheless be subject to the $3,500 fee payable to Agent under clause (c)
of this sentence). The administrative fee referred to in clause (c) of the
preceding sentence shall not apply to an assignment from a Lender to an
Affiliate of such Lender. In the case of an assignment authorized under this
subsection 8.1, the assignee shall have, to the
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extent of such assignment, the same rights, benefits and obligations as it would
if it were an initial Lender hereunder. The assigning Lender shall be relieved
of its obligations hereunder with respect to its Pro Rata Share of the Revolving
Loan Commitment or assigned portion thereof. Borrower hereby acknowledges and
agrees that any assignment will give rise to a direct obligation of Borrower to
the assignee and that the assignee shall be considered to be a "LENDER".
Agent shall maintain at its office in Chicago, Illinois a copy of each Lender
Addition Agreement delivered to it and a register for the recordation of the
names and addresses of Lenders, and the commitments of, and principal amount of
the Loans owing to each Lender pursuant to the terms hereof from time to time
(the "REGISTER"). The entries in the Register shall be presumptive evidence of
the amounts due and owing to Lender in the absence of manifest error. Borrower,
Agent and each Lender may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by Borrower and
any Lender, at any reasonable time upon reasonable prior notice.
Upon its receipt of a duly completed Lender Addition Agreement executed by an
assigning Lender and its assignee (together with the Notes subject to such
assignment) and the administrative fee referred to above, Agent shall (subject
to the consent of Agent and Borrower to such assignment, if required) (1) accept
such Lender Addition Agreement, (2) record the information contained therein in
the Register to reflect such Lender Addition Agreement and (3) give prompt
notice thereof to Borrower and Lenders. Upon request by Agent, Borrower shall
promptly execute and deliver to Agent Notes evidencing the Obligations owed by
Borrower to the assignee and, if applicable, the assigning Lender, after giving
effect to the assignment. Agent shall cancel the Notes delivered to it by the
assigning Lender and deliver the new Notes to the assignee and, unless the
assigning Lender has assigned all of its interests under this Agreement, the
assigning Lender.
Each Lender (including ▇▇▇▇▇▇) may at its own cost sell participations in all or
any part of its Pro Rata Share of the Revolving Loan Commitment and the Term
Loans to another Person, provided that (a) such Lender (excluding ▇▇▇▇▇▇) shall
first obtain the prior written consent of Agent, which consent shall not be
unreasonably withheld; (b) such Lender (including ▇▇▇▇▇▇) shall first obtain the
prior written consent of Borrower (unless such participation is being sold to a
Person which is already a Lender or a participant in the Loans or is being made
to an Affiliate of such Lender) which consent shall not be unreasonably
withheld; and (c) any such participation shall be in a minimum amount of
$5,000,000, and provided, further, that all amounts payable by Borrower
hereunder shall be determined as if that Lender had not sold such participation
and the holder of any such participation shall not be entitled to require such
Lender to take or omit to take any action hereunder except action directly
effecting (i) any reduction in the principal amount, interest rate or fees
payable with respect to any Loan in which such holder participates; (ii) any
extension of the Expiry Date, any extension of the date on which any Scheduled
Installment is to be paid or any change of any date fixed for any payment of
interest or fees payable with respect to any Loan in which such holder
participates; (iii) any change of the aggregate unpaid principal amount of the
Loans; (iv) any change of the percentage of Lenders which shall be required for
Lenders or any of them to take any action hereunder; (v) any release of
Collateral (except if the sale or disposition of such Collateral is permitted
under this Agreement or any other Loan Document); (vi) any amendment or waiver
of this subsection 8.1 or the definitions of the terms used in this subsection
8.1 insofar as the definitions affect the substance of this subsection 8.1;
(vii) any consent to the assignment, delegation or other transfer by any Loan
Party of any of its rights and obligations under any Loan Document; and (viii)
any change in the form in which interest is required to be paid. Borrower hereby
acknowledges and agrees that any participation will give rise to a direct
obligation of Borrower to the participant for purposes of subsections 1.8, 1.9,
8.4 and 9.1 and the participant shall be considered a "Lender" for such
purposes.
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Notwithstanding any other provision of this Agreement, any Lender may at any
time, following written notice to Agent, (1) pledge the Obligations held by it
or create a security interest in all or any portion of its rights under this
Agreement or the other Loan Documents in favor of any Person; provided, however,
that (a) no such pledge or grant of security interest to any Person shall
release such Lender from its obligations hereunder or under any other Loan
Document and (b) the acquisition of title to such Lender's Obligations pursuant
to any foreclosure or other exercise of remedies by such Person shall be subject
to the provisions of this Agreement and the other Loan Documents in all respects
including, without limitation, any consent required by this subsection 8.1 and
(2) assign all or any portion of its funded loans to an Affiliate of such Lender
which is at least 50% owned by such Lender or its parent company, to one or more
other Lenders or to a Related Fund. For purposes of this paragraph, a "RELATED
FUND" shall mean, with respect to any Lender, a fund or other investment vehicle
that invests in commercial loans and is managed by such Lender or by the same
investment advisor that manages such Lender or by an Affiliate of such
investment advisor.
Except as otherwise provided in this subsection 8.1 no Lender shall, as between
Borrower and that Lender, be relieved of any of its obligations hereunder as a
result of any sale, assignment, transfer or negotiation of, or granting of a
participation in, all or any part of the Loans, the Notes or other Obligations
owed to such Lender. Each Lender may furnish any information concerning Holdings
and its Subsidiaries or as to the Related Transactions in the possession of that
Lender from time to time to assignees and participants (including prospective
assignees and participants), subject to the provisions of subsection 9.13.
Holdings and its Subsidiaries agree that each of them will use its reasonable
best efforts to assist and cooperate with Agent and any Lender in any manner
reasonably requested by Agent or such Lender to effect the sale of a
participation or an assignment described above, including without limitation
assistance in the preparation of appropriate disclosure documents or placement
memoranda.
Agent shall provide Borrower with written notice of the name and address of any
new Lender after the date hereof and will identify the amount of each assignment
or participation and the type of Loan in which each new Lender has an interest
and the amount and percentage of its Revolving Loan Commitment, if any.
Notwithstanding anything contained in this Agreement to the contrary, so long as
the Requisite Lenders shall remain capable of making LIBOR Loans, no Person
shall become a "Lender" hereunder unless such Person shall also be capable of
making LIBOR Loans.
8.2 AGENT.
(A) APPOINTMENT. Each Lender hereby designates and appoints ▇▇▇▇▇▇
as its Agent under this Agreement and the other Loan
Documents, and each Lender hereby irrevocably authorizes Agent
to take such action or to refrain from taking such action on
its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers as are set
forth herein or therein, together with such other powers as
are reasonably incidental thereto. Agent is authorized and
empowered to amend, modify, or waive any provisions of this
Agreement or the other Loan Documents on behalf of Lenders
subject to the requirement that certain of Lenders' consent be
obtained in certain instances as provided in subsections 8.3
and 9.2. Agent agrees to act as such on the express conditions
contained in this subsection 8.2. The provisions of this
subsection 8.2 are solely for the benefit of Agent and Lenders
and neither Borrower nor any Loan Party shall have any rights
as a third party beneficiary of any of the provisions hereof.
In performing its functions and duties under this Agreement,
Agent shall act solely as agent
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of Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or
trust with or for Borrower or any other Loan Party. Agent may
perform any of its duties hereunder, or under the Loan
Documents, by or through its agents or employees.
(B) NATURE OF DUTIES. The duties of Agent shall be mechanical and
administrative in nature. Agent shall not have by reason of
this Agreement a fiduciary relationship in respect of any
Lender and Agent expressly. Nothing in this Agreement or any
of the Loan Documents, express or implied, is intended to or
shall be construed to impose upon Agent any obligations in
respect of this Agreement or any of the Loan Documents except
as expressly set forth herein or therein. Each Lender shall
make its own independent investigation of the financial
condition and affairs of Borrower and each other Loan Party in
connection with the extension of credit hereunder and shall
make its own appraisal of the creditworthiness of Borrower and
each other Loan Party, and Agent shall have no duty or
responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with
respect thereto (other than as expressly required herein). If
Agent seeks the consent or approval of any Lenders to the
taking or refraining from taking any action hereunder, then
Agent shall send notice thereof to each Lender. Agent shall
promptly notify each Lender any time that the Requisite
Lenders have instructed Agent to act or refrain from acting
pursuant hereto.
(C) RIGHTS, EXCULPATION, ETC. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to
any Lender for any action taken or omitted by them hereunder
or under any of the Loan Documents, or in connection herewith
or therewith, except that Agent shall be liable with respect
to its own gross negligence or willful misconduct. Agent shall
not be liable for any apportionment or distribution of
payments made by it in good faith and if any such
apportionment or distribution is subsequently determined to
have been made in error the sole recourse of any Lender to
whom payment was due but not made, shall be to recover from
other Lenders any payment in excess of the amount to which
they are determined to be entitled (and such other Lenders
hereby agree to return to such Lender any such erroneous
payments received by them). In performing its functions and
duties hereunder, Agent shall exercise the same care which it
would in dealing with loans for its own account, but neither
Agent nor any of its officers, directors, employees or agents
shall be responsible to any Lender for any recitals,
statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity,
enforceability, collectibility, or sufficiency of this
Agreement or any of the Loan Documents or the transactions
contemplated thereby, or for the financial condition of any
Loan Party. Agent shall not 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 of
the Loan Documents or the financial condition of any Loan
Party, or the existence or possible existence of any Default
or Event of Default. Agent may at any time request
instructions from Lenders with respect to any actions or
approvals which by the terms of this Agreement or of any of
the Loan Documents Agent is permitted or required to take or
to grant, and if such instructions are promptly requested,
Agent shall be absolutely entitled to refrain from taking any
action or to withhold any approval and shall not be under any
liability whatsoever to any Person for refraining from any
action or withholding any approval under any of the Loan
Documents until it shall have received such instructions from
Requisite Lenders or all of the Lenders, as applicable.
Without limiting the foregoing, no Lender shall have any right
of action whatsoever against Agent as a result of Agent acting
or refraining from acting under this Agreement, the Notes, or
any of the other Loan Documents in accordance with the
instructions of Requisite
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Lenders. Agent shall have no obligation to take any action if
it believes, in good faith, that such action exposes Agent to
any liability for which it has not received satisfactory
indemnification in accordance with subsection 8.2(E).
(D) RELIANCE. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any written or oral notices,
statements, certificates, orders or other documents or any
telephone message or other communication (including any
writing, telex, telecopy or telegram) believed by it in good
faith to be genuine and correct and to have been signed, sent
or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the Loan Documents and
its duties hereunder or thereunder, upon advice of counsel
selected by it. Agent shall be entitled to rely upon the
advice of legal counsel, independent accountants, and other
experts selected by Agent in its sole discretion.
(E) INDEMNIFICATION. Lenders will reimburse and indemnify Agent
for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, attorneys' fees and expenses),
advances or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement
or any of the Loan Documents or any action taken or omitted by
Agent under this Agreement or any of the Loan Documents, in
proportion to each Lender's Pro Rata Share (in each case, to
the extent not paid by the Loan parties); provided, however,
that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, advances or disbursements
resulting from Agent's gross negligence or willful misconduct.
If any indemnity furnished to Agent for any purpose shall, in
the opinion of Agent, be insufficient or become impaired,
Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such
additional indemnity is furnished. The obligations of Lenders
under this subsection 8.2(E) shall survive the payment in full
of the Obligations (including termination of the Total Risk
Participation Liability) and the termination of this
Agreement.
(F) ▇▇▇▇▇▇ INDIVIDUALLY. With respect to its obligations under the
Revolving Loan Commitment, the Loans made by it, and the Notes
issued to it, ▇▇▇▇▇▇ shall have and may exercise the same
rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth
herein for any other Lender. The terms "Lenders" or "Requisite
Lenders" or any similar terms shall, unless the context
clearly otherwise indicates, include ▇▇▇▇▇▇ in its individual
capacity as a Lender or one of the Requisite Lenders. ▇▇▇▇▇▇,
either directly or through strategic affiliations, may lend
money to, acquire equity or other ownership interests in,
provide advisory services to and generally engage in any kind
of banking, trust or other business with any Loan Party as if
it were not acting as Agent pursuant hereto and without any
duty to account therefor to Lenders. ▇▇▇▇▇▇, either directly
or through strategic affiliations, may accept fees and other
consideration from any Loan Party for services in connection
with this Agreement or otherwise without having to account for
the same to Lenders. Each Lender understands and acknowledges
that General Electric Capital Corporation, the parent
corporation of Agent, is an equity investor in Penske.
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(G) SUCCESSOR AGENT.
(1) Resignation. Agent may resign from the performance of
all its agency functions and duties hereunder at any
time by giving at least thirty (30) Business Days'
prior written notice to Borrower and the Lenders.
Such resignation shall take effect upon the
acceptance by a successor Agent of appointment
pursuant to clause (2) below or as otherwise provided
below. ▇▇▇▇▇▇ will resign as Agent at such time as it
holds no Loans, and its Commitments to make Revolving
Loans and Term Loans and its Risk Participation
Liability equals zero.
(2) Appointment of Successor. Upon any such notice of
resignation pursuant to clause (1) above, Requisite
Lenders shall, upon receipt of Borrower's prior
consent which shall not be unreasonably withheld,
appoint a successor Agent. If a successor Agent shall
not have been so appointed within the thirty (30)
Business Day period, referred to in clause (1) above,
the retiring Agent, upon notice to Borrower, shall
then appoint a successor Agent who shall serve as
Agent until such time, if any, as Requisite Lenders,
upon receipt of Borrower's prior written consent
which shall not be unreasonably withheld, appoint a
successor Agent as provided above.
(3) Successor Agent. Upon the acceptance of any
appointment as Agent under the Loan Documents by a
successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its
duties and obligations under the Loan Documents.
After any retiring Agent's resignation as Agent under
the Loan Documents, the provisions of this subsection
8.2 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent
under the Loan Documents.
(H) COLLATERAL MATTERS.
(1) Release of Collateral. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion,
to release any Lien granted to or held by Agent upon
any property covered by the Security Documents (i)
upon termination of the Revolving Loan Commitment and
payment and satisfaction of all Obligations
including, without limitation, termination of the
Total Risk Participation Liability (other than
contingent indemnification Obligations not then due
and payable); (ii) constituting property being sold
or disposed of if Borrower certifies to Agent that
the sale or disposition is made in compliance with
the provisions of this Agreement (and Agent may rely
in good faith conclusively on any such certificate,
without further inquiry); (iii) constituting property
leased to Borrower or another Loan Party under a
lease which has expired or been terminated in a
transaction permitted under this Agreement or is
about to expire and which has not been, and is not
intended by Borrower to be, renewed or extended; or
(iv) in accordance with the provisions of the
succeeding sentence. Agent may release or compromise
any Collateral and the proceeds thereof having a
value not greater than ten percent (10%) of the total
book value of all Collateral, either in a single
transaction or in a series of related transactions,
with the consent of Lenders owning an aggregate of at
least eighty percent (80%) of the Revolving Loan
Commitment and the outstanding Term Loans, provided
that in no event will Agent, acting under the
authority granted to it pursuant to this sentence,
release
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or compromise Collateral or the proceeds thereof
having a total book value in excess of twenty percent
(20%) of the book value of all Collateral, as
determined by Agent, during any calendar year.
Notwithstanding the foregoing, the Agent is
authorized and directed to execute and deliver the
NTT/PTA Release.
(2) Confirmation of Authority; Execution of Releases.
Without in any manner limiting Agent's authority to
act without any specific or further authorization or
consent by Lenders (as set forth in subsection
8.2(H)(1)), each Lender agrees to confirm in writing,
upon request by Agent or Borrower or any other Loan
Party, the authority to release any property covered
by the Security Documents conferred upon Agent under
clause (i) through (iii) of subsection 8.2(H)(1).
Upon receipt by Agent of confirmation from the
requisite percentage of Lenders required by
subsection 8.2(H)(1), if any, of its authority to
release or compromise any particular item or types of
property covered by the Security Documents, and upon
at least ten (10) Business Days prior written request
by Borrower or any other Loan Party, Agent shall (and
is hereby irrevocably authorized by Lenders to)
execute such documents as may be necessary to
evidence the release or compromise of the Liens
granted to Agent, for the benefit of Agent and
Lenders, upon such Collateral, provided that (i)
Agent shall not be required to execute any such
document on terms which, in Agent's opinion, would
expose Agent to liability or create any obligation or
entail any consequence other than the release or
compromise of such Liens without recourse or
warranty, and (ii) such release or compromise shall
not in any manner discharge, affect or impair the
Obligations or any Liens upon (or obligations of any
Loan Party, in respect of), all interests retained by
any Loan Party, including (without limitation) the
proceeds of any sale, all of which shall continue to
constitute part of the property covered by the
Security Documents.
(3) Absence of Duty. Agent shall have no obligation
whatsoever to any Lender or any other Person to
assure that the property covered by the Security
Documents exists or is owned by Borrower or any other
Loan Party or is cared for, protected or insured or
has been encumbered or that the Liens granted to
Agent have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty
of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers
granted or available to Agent in this subsection
8.2(H) or in any of the Loan Documents, it being
understood and agreed that in respect of the property
covered by the Security Documents or any act,
omission or event related thereto, Agent may act in
any manner it may deem appropriate, in its
discretion, given Agent's own interest in property
covered by the Security Documents as one of the
Lenders and that Agent shall have no duty or
liability whatsoever to any of the other Lenders,
provided that Agent shall exercise the same care
which it would in dealing with loans for its own
account.
(I) AGENCY FOR PERFECTION. Agent and each Lender hereby
appoint each other Lender as agent for the purpose of
perfecting Agent's security interest in assets which,
in accordance with Article 9 of the Uniform
Commercial Code in any applicable jurisdiction, can
be perfected only by possession and each Lender
hereby or by executing and delivering a Lender
Addition Agreement accepts such appointment. Should
any Lender (other than Agent) obtain possession of
any such Collateral, such Lender shall
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notify Agent thereof, and, promptly upon Agent's
request therefor, shall deliver such Collateral to
Agent or in accordance with Agent's instructions.
Each Lender agrees that it will not have any right
individually to enforce or seek to enforce any
Security Document or to realize upon any collateral
security for the Loans, it being understood and
agreed that such rights and remedies may be exercised
only by Agent.
(J) DISSEMINATION OF INFORMATION. Agent will use its best
efforts to provide Lenders with any information
received by Agent from Holdings or its Subsidiaries
which is required to be provided to a Lender
hereunder, provided that Agent shall not be liable to
Lenders for any failure to do so, except to the
extent that such failure is attributable to Agent's
gross negligence or willful misconduct.
(K) NOTICE OF DEFAULT. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default
or Event of Default except with respect to defaults
in the payment of principal, interest and fees
required to be paid to Agent for the account of
Lenders, unless Agent shall have received written
notice from a Lender or Borrower referring to this
Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of
default". Agent will notify each Lender of its
receipt of any such notice. Agent shall take such
action with respect to such Default or Event of
Default as may be requested by Requisite Lenders in
accordance with Section 6. Unless and until Agent has
received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from
taking such action, with respect to such Default or
Event of Default as it shall deem advisable or in the
best interests of Lenders.
8.3 AMENDMENTS, CONSENTS AND WAIVERS FOR CERTAIN ACTIONS.
(A) Except as otherwise provided in this subsection 8.3, in
subsection 9.2 or in any Lender Addition Agreement and except
as to matters set forth in other subsections hereof or in any
other Loan Document as requiring only Agent's consent, the
consent of Requisite Lenders and Borrower will be required to
amend, modify, terminate, or waive any provision of this
Agreement or any of the other Loan Documents.
(B) In the event Agent requests the consent of a Lender and does
not receive a written consent or denial thereof within ten
(10) Business Days after such Lender's receipt of such
request, then such Lender will be deemed to have denied the
giving of such consent.
(C) In the event Agent requests the consent of a Lender and such
consent is denied, then ▇▇▇▇▇▇ or the Lender which assigned
its interest in the Loans to such Lender (the "ASSIGNING
LENDER") may, at its option, require such Lender to reassign
its interest in the Loans to ▇▇▇▇▇▇ or the Assigning Lender,
as applicable, for a price equal to the then outstanding
principal amount thereof plus accrued and unpaid interest,
fees and expenses due such Lender, which interest, fees and
expenses will be paid when collected from Borrower. In the
event that ▇▇▇▇▇▇ or the Assigning Lender elects to require
any Lender to reassign its interest to ▇▇▇▇▇▇ or the Assigning
Lender, ▇▇▇▇▇▇ or the Assigning Lender, as applicable, will so
notify such Lender in writing within forty-five (45) days
following such Lender's denial, and such Lender will reassign
its interest to ▇▇▇▇▇▇ or the Assigning Lender, as applicable,
no later than five (5) days following receipt of such notice.
The Consent of Borrower shall not be required for any
assignment under this paragraph (C).
8.4 SET OFF AND SHARING OF PAYMENTS. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, during the continuance of any Event of
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Default, each Lender is hereby authorized by Holdings and Borrower at any time
or from time to time, with reasonably prompt subsequent notice to Holdings and
Borrower (any prior or contemporaneous notice being hereby expressly waived) to
set off and to appropriate and to apply any and all (A) balances held by such
Lender at any of its offices for the account of Holdings or any of its
Subsidiaries (other than any Institution Subsidiary of Borrower) (regardless of
whether such balances are then due to Holdings or any of its Subsidiaries), and
(B) other property at any time held or owing by such Lender to or for the credit
or for the account of Holdings or any of its Subsidiaries (other than any
Institution Subsidiary of Borrower), against and on account of any of the
Obligations; except that no Lender shall exercise any such right without the
prior written consent of Agent. Any Lender exercising a right to set off shall,
to the extent the amount of any such set off exceeds its Pro Rata Share of the
amount received in connection therewith by all Lenders, purchase for cash (and
the other Lenders shall sell) interests in each such other Lender's Pro Rata
Share of the Obligations as would be necessary to cause such Lender to share
such excess with each other Lender in accordance with their respective Pro Rata
Shares. Each of Holdings and Borrower agrees, to the fullest extent permitted by
law, that any Lender may exercise its right to set off with respect to amounts
in excess of its Pro Rata Share of the Obligations and upon doing so shall
deliver such excess to Agent for the benefit of all Lenders in accordance with
their Pro Rata Shares.
8.5 DISBURSEMENT OF FUNDS. Agent may, on behalf of Lenders, disburse funds
to Borrower for Loans requested. Each Lender shall reimburse Agent on demand for
all funds disbursed on its behalf by Agent, or if Agent so requests, each Lender
will remit to Agent its Pro Rata Share of any Loan before Agent disburses same
to Borrower. If Agent elects to require that each Lender make funds available to
Agent, prior to a disbursement by Agent to Borrower, Agent shall advise each
Lender by telephone or telecopy of the amount of such Lender's Pro Rata Share of
the Loan requested by Borrower no later than 12:00 noon CST on the Funding Date
applicable thereto, and each such Lender shall pay Agent such Lender's Pro Rata
Share of such requested Loan, in same day funds, by wire transfer to Agent's
account on such Funding Date. If any Lender fails to pay the amount of its Pro
Rata Share forthwith upon Agent's demand, Agent shall promptly notify Borrower,
and Borrower shall immediately repay such amount to Agent. Any repayment
required pursuant to this subsection 8.5 shall be without premium or penalty.
Nothing in this subsection 8.5 or elsewhere in this Agreement or the other Loan
Documents, including without limitation the provisions of subsection 8.6, shall
be deemed to require Agent to advance funds on behalf of any Lender or to
relieve any Lender from its obligation to fulfil its commitments hereunder or to
prejudice any rights that Agent or Borrower may have against any Lender as a
result of any default by such Lender hereunder.
8.6 DISBURSEMENTS OF ADVANCES; PAYMENT.
(A) REVOLVING LOAN ADVANCES, PAYMENTS AND SETTLEMENTS; RELATED FEE
PAYMENTS.
(1) The Revolving Loan balance may fluctuate from day to
day through Agent's disbursement of funds to, and
receipt of funds from, Borrower. In order to minimize
the frequency of transfers of funds between Agent and
each Lender notwithstanding terms to the contrary set
forth in Section 1 or subsection 8.5, Revolving Loan
advances and payments will be settled among Agent and
Lenders according to the procedures described in this
subsection 8.6. Notwithstanding these procedures,
each Lender's obligation to fund its portion of any
advances made by Agent to Borrower will commence on
the date such advances are made by Agent. Such
payments will be made by such Lender without set-off,
counterclaim or reduction of any kind.
(2) On the second (2nd) Business Day of each week, or
more frequently (including daily), if Agent so elects
(each such day being a "SETTLEMENT DATE"), Agent will
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advise each Lender by telephone or telecopy of the
amount of each such Lender's Pro Rata Share of the
Revolving Loan balance as of the close of business of
the (2nd) second Business Day immediately preceding
the Settlement Date. In the event that payments are
necessary to adjust the amount of such Lender's
required Pro Rata Share of the Revolving Loan balance
to such Lender's actual Pro Rata Share of the
Revolving Loan balance as of any Settlement Date, the
party from which such payment is due will pay the
other, in same day funds, by wire transfer to the
other's account not later than 3:00 p.m. CST on the
Business Day following the Settlement Date.
(3) For purposes of this subsection 8.6(A)(3), the
following terms will have the meanings indicated:
(a) "DAILY LOAN BALANCE" means an amount
calculated as of the end of each calendar
day by subtracting (i) the cumulative
principal amount paid by Agent to a Lender
on a Loan from the Closing Date through and
including such calendar day, from (ii) the
cumulative principal amount on a Loan
advanced by such Lender to Agent on that
Loan from the Closing Date through and
including such calendar day.
(b) "DAILY INTEREST RATE" means an amount
calculated by dividing the interest rate
payable to a Lender on a Loan (as set forth
in subsection 1.2) as of each calendar day
by three hundred sixty (360).
(c) "DAILY INTEREST AMOUNT" means an amount
calculated by multiplying the Daily Loan
Balance of a Loan by the associated Daily
Interest Rate on that Loan.
(d) "INTEREST RATIO" means a number calculated
by dividing the total amount of the interest
on a Loan received by Agent with respect to
the immediately preceding month by the total
amount of interest on that Loan due from
Borrower during the immediately preceding
month.
On the first (1st) Business Day of each month ("INTEREST
SETTLEMENT DATE"), Agent will advise each Lender by telephone,
telex, or telecopy of the amount of such Lender's Pro Rata
Share of interest and fees on each of the Revolving Loans and
in respect of Risk Participating Liability as of the end of
the last day of the immediately preceding month. Provided that
such Lender has made all payments required to be made by it
under this Agreement, Agent will pay to such Lender, by wire
transfer to such Lender's account (as specified by such Lender
on the signature page of this Agreement or the applicable
Lender Addition Agreement, as amended by such Lender from time
to time after the date hereof pursuant to the notice
provisions contained herein or in the applicable Lender
Addition Agreement) not later than 3:00 p.m. CST on the next
Business Day following the Interest Settlement Date, such
Lender's Pro Rata Share of interest and fees on each of the
Loans. Such Lender's Pro Rata Share of interest on each Loan
will be calculated for that Loan by adding together the Daily
Interest Amounts for each calendar day of the prior month for
that Loan and multiplying the total thereof by the Interest
Ratio for that Loan. Such Lender's Pro Rata Share of each of
the commitment fee described in subsection 1.2(B) and the Risk
Participation Liability fee described in subsection 1.2(C)
shall be paid and calculated in a manner consistent with the
payment and calculation of interest as described in this
subsection 8.6(A).
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(B) TERM LOAN PAYMENTS; RELATED FEE PAYMENTS. Payments of
principal, interest and fees in respect of the Term Loans, and
payment of all other fees and expenses not otherwise described
in subsection 8.6(A) will be settled on the Business Day
received by Agent in accordance with the provisions of Section
1.
(C) AVAILABILITY OF LENDER'S PRO RATA SHARE.
(1) Unless Agent has been notified by a Lender prior to a
Funding Date of such Lender's intention not to fund
its Pro Rata Share of the Loan amount requested by
Borrower, Agent may assume that such Lender will make
such amount available to Agent on the Business Day
following the next Settlement Date. If such amount is
not, in fact, made available to Agent by such Lender
when due, Agent will be entitled to recover such
amount on demand from such Lender without set-off,
counterclaim or deduction of any kind.
(2) Nothing contained in this subsection 8.6(C) will be
deemed to relieve a Lender of its obligation to
fulfil its commitments or to prejudice any rights
Agent or Borrower may have against such Lender as a
result of any default by such Lender under this
Agreement.
(3) Without limiting the generality of the foregoing,
each Lender shall be obligated to fund its Pro Rata
Share of any Revolving Loan made after any Event of
Default or acceleration of the Obligations with
respect to any draw on a Lender Letter of Credit or a
Risk Participation Agreement.
(D) RETURN OF PAYMENTS.
(1) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related
payment has been or will be received by Agent from
Borrower and such related payment is not received by
Agent, then Agent will be entitled to recover such
amount from such Lender without set-off, counterclaim
or deduction of any kind.
(2) If Agent determines at any time that any amount
received by Agent under this Agreement must be
returned to Borrower or paid to any other person
pursuant to any solvency law or otherwise, then,
notwithstanding any other term or condition of this
Agreement, Agent will not be required to distribute
any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such
Lender, together with interest at such rate, if any,
as Agent is required to pay to Borrower or such other
Person, without set-off, counterclaim or deduction of
any kind.
SECTION 9
MISCELLANEOUS
9.1 INDEMNITIES. Borrower agrees to indemnify, pay, and hold Agent, each
Lender and their respective officers, directors, employees, agents, and
attorneys (the "INDEMNITEES") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits and claims of
any kind or nature whatsoever that may be imposed on, incurred by, or asserted
against the Indemnitee as a result of its being a party to this Agreement or the
transactions contemplated by this Agreement or otherwise relating to any of the
Related Transactions; provided that Borrower shall have no obligation to
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an Indemnitee hereunder with respect to liabilities arising from the gross
negligence or willful misconduct of that Indemnitee as determined by a court of
competent jurisdiction. If and to the extent that the foregoing undertaking may
be unenforceable for any reason, Borrower agrees to make the maximum
contribution to the payment and satisfaction thereof that is permissible under
applicable law. This subsection and other indemnification provisions contained
within the Loan Documents shall survive the termination of this Agreement,
payment of the Loans, termination of the Total Risk Participation Liability and
payment of all other Obligations.
9.2 AMENDMENTS AND WAIVERS. Except as otherwise provided herein, no
amendment, modification, termination or waiver of any provision of this
Agreement, the Notes or any of the other Loan Documents, or consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by Requisite Lenders (or Agent, if
expressly set forth herein, in any Note or in any other Loan Document) and the
applicable Loan Party; provided, that except to the extent permitted by the
applicable Lender Addition Agreement, no amendment, modification, termination or
waiver shall, unless in writing and signed by all Lenders, do any of the
following: (a) increase any Lender's Pro Rata Share of the Revolving Loan
Commitment; (b) reduce the principal of, rate of interest on or fees payable
with respect to any Loan or Risk Participation Liability; (c) extend the Expiry
Date, extend the date on which any Scheduled Installment is to be paid or change
any date fixed for any payment of interest or fees; (d) change the aggregate
unpaid principal amount of the Loans; (e) change the percentage of Lenders which
shall be required for Lenders or any of them to take any action hereunder; (f)
release Collateral (except if the sale or disposition of such Collateral is
permitted under this Agreement or any other Loan Document); (g) amend or waive
this subsection 9.2 or the definitions of the terms used in this subsection 9.2
insofar as the definitions affect the substance of this subsection 9.2; (h)
consent to the assignment, delegation or other transfer by any Loan Party of any
of its rights and obligations under any Loan Document; (i) change the form in
which interest is required to be paid and (j) increase "Maximum Revolver Loan
Balance", any component thereof or any sublimit contained therein; and provided,
further, that no amendment, modification, termination or waiver affecting the
rights or duties of Agent under any Loan Document or in respect of any Lender
Letter of Credit or Risk Participation Agreement shall in any event be
effective, unless in writing and signed by Agent, in addition to Lenders
required hereinabove to take such action. Notwithstanding anything to the
contrary in this subsection 9.2, Agent and Borrower may execute amendments to
this Agreement and the other Loan Documents for the purpose of correcting
typographical errors without the consent of the Lenders. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent to take
additional Collateral pursuant to any Loan Document. No amendment, modification,
termination or waiver of any provision of any Note shall be effective without
the written concurrence of the holder of that Note. No notice to or demand on
Borrower or any other Loan Party in any case shall entitle Borrower or any other
Loan Party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 9.2 shall be binding upon each
holder of the Notes at the time outstanding, each future holder of the Notes,
and, if signed by a Loan Party, on such Loan Party. Notwithstanding the
foregoing, while the Revolving Loan Commitment is in effect, no waiver of any
Default or Event of Default shall result in the condition referred to in clause
(C) of subsection 7.2 being satisfied as a result of such waiver unless such
waiver shall have been approved in writing by the Requisite Revolving Lenders;
furthermore, no amendment or waiver of the provisions of this sentence shall be
effective unless such amendment or waiver shall have been approved in writing by
the Requisite Lenders and the Requisite Revolving Lenders.
9.3 NOTICES. Any notice or other communication required shall be in writing
addressed to the respective party as set forth below and may be personally
served, telecopied, sent by overnight courier service or U.S. mail and shall be
deemed to have been given: (a) if delivered in person, when delivered; (b) if
delivered by telecopy, on the date of transmission if transmitted on a Business
Day before 4:00 p.m.
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CST; (c) if delivered by overnight courier, two (2) days after delivery to the
courier properly addressed; or (d) if delivered by U.S. mail, four (4) Business
Days after deposit with postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to Borrower or Holdings:
Universal Technical Institute, Inc.
c/o The Jordan Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Universal Technical Institute, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ & Maw
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent or ▇▇▇▇▇▇:
▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Account Manager
Corporate Finance
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Services
Corporate Finance
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Lender:
To the address set forth on the signature page hereto or in
the applicable Lender Addition Agreement
9.4 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of Agent or any Lender to exercise, nor any partial exercise
of, any power, right or privilege hereunder or under any other Loan Documents
shall impair such power, right, or privilege or be construed to be a waiver of
any Default or Event of Default. All rights and remedies existing hereunder or
under any other Loan Document are cumulative to and not exclusive of any rights
or remedies otherwise available.
9.5 MARSHALLING; PAYMENTS SET ASIDE. Neither Agent nor any Lender shall be
under any obligation to ▇▇▇▇▇▇▇▇ any assets in payment of any or all of the
Obligations. To the extent that Borrower makes payment(s) or Agent enforces its
Liens or Agent or any Lender exercises its right of set-off, and such payment(s)
or the proceeds of such enforcement or set-off is subsequently invalidated,
declared to be fraudulent or preferential, set aside, or required to be repaid
by anyone, then to the extent of such recovery, the Obligations or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or set-off had not occurred.
9.6 SEVERABILITY. The invalidity, illegality, or unenforceability in any
jurisdiction of any provision under the Loan Documents shall not affect or
impair the remaining provisions in the Loan Documents.
9.7 LENDERS' OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligation of each Lender hereunder is several and not joint and no Lender
shall be responsible for the obligation or commitment of any other Lender
hereunder. In the event that any Lender at any time should fail to make a Loan
as herein provided, the Lenders, or any of them, at their sole option, may make
the Loan that was to have been made by the Lender so failing to make such Loan.
Nothing contained in any Loan Document and no action taken by Agent or any
Lender pursuant hereto or thereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.
9.8 HEADINGS. Section and subsection headings are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purposes or be given substantive effect.
9.9 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (WHICH PRINCIPLES SHALL BE
DEEMED NOT TO INCLUDE SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS).
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9.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
except that none of Holdings or Borrower may assign its rights or obligations
hereunder without the written consent of all Lenders.
9.11 NO FIDUCIARY RELATIONSHIP. No provision in the Loan Documents and no
course of dealing between the parties shall be deemed to create any fiduciary
duty owing to Holdings or Borrower or any other Loan Party by Agent or any
Lender. Borrower agrees that neither Agent nor any Lender shall have liability
to Borrower (whether sounding in tort, contract or otherwise) for losses
suffered by Borrower in connection with, arising out of, or in any way related
to the transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless and to the extent that it is determined that such losses resulted from
the gross negligence or willful misconduct of the party from which recovery is
sought as determined by a court of competent jurisdiction. Neither Agent nor any
Lender shall have any liability with respect to, and Borrower hereby waives,
releases and agrees not to ▇▇▇ for, any special, indirect or consequential
damages suffered by Borrower in connection with, arising out of, or in any way
related to the Loan Documents or the transactions contemplated thereby.
9.12 CONSTRUCTION. Agent, each Lender, Holdings and Borrower acknowledge
that each of them has had the benefit of legal counsel of its own choice and has
been afforded an opportunity to review the Loan Documents with its legal counsel
and that the Loan Documents shall be construed as if jointly drafted by Agent,
each Lender, Holdings and Borrower.
9.13 CONFIDENTIALITY; DISSEMINATION OF INFORMATION.
(A) Agent and the Lenders shall hold all nonpublic information
obtained pursuant to the requirements of this Agreement in
accordance with such Person's customary procedures of handling
confidential information of this nature, it being agreed that
such confidential information and other information are
intended to be used solely in connection with evaluation of
the performance of Holdings and its Subsidiaries by Agent, the
Lenders and Transferees and prospective Transferees under the
Loan Documents and the enforcement of rights and obligations
under the Loan Documents, and are not to be used (without the
prior written consent of Borrower) for any other purpose,
including in connection with extending of credit to, analyzing
or advising any competitor of the Borrower provided, however,
any Lender may make disclosure as required or requested by any
regulatory body or Governmental Authority or representative
thereof or pursuant to legal process. In no event shall the
Agent or any Lender be obligated or required to return any
materials furnished by Holdings or Borrower.
(B) Each of Holdings and the Borrower authorizes each Lender to
disclose to any participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of
law (each a "TRANSFEREE") and any prospective Transferee any
and all information in such Lender's possession concerning
Holdings, the Borrower and its Subsidiaries and the
Collateral; provided that prior to any such disclosure, such
prospective Transferee shall agree to preserve in accordance
with Section 9.13 the confidentiality of any confidential
information described therein; and provided, further, each
prospective Transferee shall be required to agree that if it
does not become a participant or assignee it shall return or
destroy all written materials furnished to it in connection
with this Agreement.
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9.14 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
(A) EACH OF HOLDINGS AND BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
NEW YORK STATE COURT SITTING IN NEW YORK CITY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS
AND BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR
THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF AGENT OR ANY LENDER TO BRING PROCEEDINGS
AGAINST HOLDINGS OR BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY HOLDINGS OR BORROWER
AGAINST AGENT OR ANY LENDER OR ANY AFFILIATE THEREOF
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK CITY,
NEW YORK.
(B) EACH OF HOLDINGS AND BORROWER DESIGNATES AND APPOINTS CT
CORPORATION SYSTEM AND SUCH OTHER PERSONS AS MAY HEREAFTER BE
SELECTED BY HOLDINGS AND BORROWER WHICH IRREVOCABLY AGREE IN
WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH
COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY EACH OF
HOLDINGS AND BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE
MAILED BY REGISTERED MAIL TO HOLDINGS AND BORROWER AT ITS
ADDRESS PROVIDED IN SUBSECTION 9.3 EXCEPT THAT UNLESS
OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH
COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF
ANY AGENT APPOINTED BY HOLDINGS OR BORROWER REFUSES TO ACCEPT
SERVICE, EACH OF HOLDINGS AND BORROWER HEREBY AGREES THAT
SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE.
NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.
9.15 WAIVER OF JURY TRIAL. EACH OF HOLDINGS, BORROWER, AGENT AND EACH LENDER
HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION
AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF HOLDINGS,
BORROWER, AGENT AND EACH LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY
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RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF
HOLDINGS, BORROWER, AGENT AND EACH LENDER FURTHER WARRANTS AND REPRESENTS THAT
EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE LOAN DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS OR THE LENDER LETTERS OF CREDIT OR
RISK PARTICIPATION AGREEMENTS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. EACH OF HOLDINGS, BORROWER,
AGENT AND EACH LENDER ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND
WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF AGENT AND EACH LENDER.
9.16 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loans, issuances of Lender Letters
of Credit and Risk Participation Agreements and the execution and delivery of
the Notes. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Borrower set forth in subsections 1.3(D), 1.8 and
9.1 shall survive the payment of the Loans, and other obligations, termination
of the Total Risk Participation Liability and the termination of this Agreement.
The agreements contained in subsections 1.3(D), 1.8 and 9.1 of the Original
Credit Agreement shall continue in full force and effect as to each Lender under
the Original Credit Agreement, notwithstanding the amendment and restatement of
the Original Credit Agreement hereby.
9.17 ENTIRE AGREEMENT. This Agreement, the Notes and the other Loan
Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, understandings, whether oral or written, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous or subsequent oral agreements or discussions of the
parties hereto.
9.18 COUNTERPARTS. This Agreement and any amendments, waivers, consents or
supplements may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all of which counterparts together
shall constitute but one and the same instrument.
9.19 SCHEDULES AND EXHIBITS. The Schedules and Exhibits attached to the
Original Credit Agreement shall be deemed attached hereto, except in the case of
any Schedule or Exhibit attached hereto, which Schedule or Exhibit attached
hereto shall supersede any Schedule or Exhibit attached to the Original Credit
Agreement and bearing the same identifying number(s) and/or letter(s).
9.20 CONSENT OF LENDERS. Each Lender hereby consents for purposes of Section
3.11, to the amendment of the Holdings Subordinated Indebtedness Documents as
contemplated by subsection 7.1(J).
9.21 NO NOVATION. Notwithstanding anything contained herein, this Agreement
is not intended to and does not serve to effect a novation of the Obligations.
Instead, it is the express intention of the parties hereto to reaffirm the
indebtedness created under the Original Credit Agreement, which indebtedness is
evidenced by the note or notes provided for therein and secured by the
Collateral. Borrower acknowledges and confirms that the liens and security
interests granted pursuant to the Loan Documents secure the indebtedness,
liabilities and obligations of Borrower to Agent and Lenders under this
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Agreement and that the term "Obligations" as used in the Loan Documents (or any
other term used in the Loan Documents to describe or refer to the indebtedness,
liabilities and obligations of Borrower to Agent and Lenders) includes, without
limitation, the indebtedness, liabilities and obligations of Borrower under the
Notes to be delivered hereunder and under this Agreement, as the same may be
amended, amended and restated, supplemented or otherwise modified from time to
time. The Loan Documents and all agreements, instruments and documents executed
or delivered in connection with any of the foregoing shall each be deemed to be
amended to the extent necessary to give effect to the provisions of this
Agreement. Cross-references in the Loan Documents to particular section numbers
of the Original Credit Agreement shall be deemed to be cross-references to the
corresponding sections, as applicable, of this Agreement.
9.22 HISTORICAL REFERENCES. It is understood and agreed that neither NTT nor
PTA are parties to this Agreement or any other Loan Document (and have been
released therefrom), that all references to NTT and PTA (and the "COMPANIES") in
this Agreement and the other Loan Documents are for historical purposes only,
and that notwithstanding anything to the contrary contained in this Agreement or
any other Loan Document, there shall be no Default or Event of Default (or other
breach of this Agreement or any other Loan Document or any cause of action by
any Lender or Agent) based on any statement, representation, warranty or
covenant (including any misstatement, misrepresentation or breach of warranty or
covenant) by or as to NTT, PTA, the NTT Management Participation Letter, NTT
Purchase Agreement, NTT Purchase Transaction and NTT Related Transactions in
this Agreement or any other Loan Document, or any failure of NTT or PTA to
perform any obligation under any Loan Document, including any that have
previously occurred.
SECTION 10
DEFINITIONS
10.1 CERTAIN DEFINED TERMS. The terms defined below are used in this
Agreement as so defined. Terms defined in the preamble and recitals to this
Agreement are used in this Agreement as so defined.
"ACCREDITING AGENCY" means any nationally recognized accrediting agency
which, as of the Original Transaction Date has accredited, or after the
Original Transaction Date shall accredit, any Institution and shall
include, without limitation, the Accrediting Commission of Career
Schools and Colleges of Technology.
"ACCSCT" means the Accrediting Commission of Career Schools and
Colleges of Technology.
"AFFILIATE" means any Person: (a) directly or indirectly controlling,
controlled by, or under common control with, Holdings or Borrower; (b)
directly or indirectly owning or holding ten percent (10%) or more of
any equity interest in Holdings or Borrower; or (c) ten percent (10%)
or more of whose voting stock or other equity interest is directly or
indirectly owned or held by Holdings or Borrower. For purposes of this
definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by" and "under common control with") means
the possession directly or indirectly of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities or by contract or otherwise.
"AGENT" means ▇▇▇▇▇▇ in its capacity as agent for the Lenders under
this Agreement and each of the other Loan Documents and any successor
in such capacity appointed pursuant to subsection 8.2.
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"AGREEMENT" means this Second Amended and Restated Credit Agreement
(including all schedules and exhibits hereto).
"AMENDMENT AND RESTATEMENT DATE" means June 30, 1998.
"AMENDMENT NO. 1" means Amendment No. 1 to the Amended and Restated
Credit Agreement, dated as of September 30, 1998.
"AMENDMENT NO. 1 DATE" means September 30, 1998.
"AMENDMENT NO. 2" means Amendment No. 2 to the Amended and Restated
Credit Agreement, dated as of September 30, 1998.
"AMENDMENT NO. 2 DATE" means September 30, 1998.
"AMENDMENT NO. 3" means Amendment No. 3 to the Amended and Restated
Credit Agreement dated as of September 30, 1999.
"ANNUITY TRUST" means ▇▇▇▇▇▇ ▇▇▇▇▇ 1998 Charitable Remainder Annuity
Trust, a Colorado charitable trust.
"ASSET DISPOSITION" means the disposition whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise of any
of the following: (i) any of the capital stock of any of Borrower's
Subsidiaries or (ii) any or all of the assets of Holdings or any of its
Subsidiaries other than sales of inventory in the ordinary course of
business. "NET PROCEEDS" means cash proceeds received by Holdings or
any of its Subsidiaries from any Asset Disposition (including insurance
proceeds, awards of condemnation, and payments under notes or other
debt securities received in connection with any Asset Disposition), net
of (a) the costs of such sale, lease, transfer or other disposition
(including, but not limited to, taxes attributable to such sale, lease
or transfer and costs and expenses payable under the Management
Agreement, (b) amounts applied to repayment of Indebtedness (other than
the Obligations) secured by a Lien on the asset or property disposed,
(c) an appropriate reserve for income taxes in accordance with GAAP
after taking into account all available credits and deductions, and (d)
reasonable and customary reserves established by Holdings associated
with an Asset Disposition, which reserves shall be subject to Agent's
reasonable approval.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement, dated as
of September 30, 1997 (as amended, modified or supplemented from time
to time in accordance with its terms and the terms hereof) by and among
Old CHC, Old CEG, Holdings, The ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, and Clinton
Education Group, Inc., whereby Holdings purchased all of the assets of
Old CHC and Old CEG (the "CHC/CEG ASSETS").
"AVAILABILITY" means, at any time, the amount, if any, by which the
Maximum Revolver Loan Balance exceeds the sum of the outstanding
principal amount of the Revolving Loans, at such time.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
and all rules and regulations promulgated thereunder.
"BORROWER" has the meaning ascribed to that term in the preamble of
this Agreement.
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"BUSINESS DAY" means (a) for all purposes other than as covered by
clause (b) below, any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the Commonwealth of Pennsylvania,
or the States of Illinois, Arizona, New York, Florida, Colorado or
Texas or is a day on which banking institutions located in any such
states are closed, and (b) with respect to all notices, determinations,
fundings and payments in connection with Loans bearing interest at the
LIBOR, any day that is a Business Day described in clause (a) above and
that is also a day for trading by and between banks in Dollar deposits
in the applicable interbank LIBOR market.
"BUSINESS UNIT DISPOSITION" means the conveyance, sale, lease,
sublease, transfer, other disposition or grant of an option to acquire
(x) assets of Holdings or any of its Subsidiaries or (y) the equity
interests in any Subsidiary of Holdings, which assets described in
clause (x) or Subsidiary described in clause (y) accounted for, as
determined in accordance with GAAP, more than 5% of the gross revenues
of Holdings and its Subsidiaries determined in accordance with GAAP on
a consolidated basis for the most recent period of twelve consecutive
months.
"CASH COLLATERAL AGREEMENT" means a cash collateral agreement between
Borrower and Agent in form and substance satisfactory to Agent.
"CERTIFICATIONS AND ACCREDITATIONS" means all certifications,
accreditations, licenses, permits and other authorizations, including
Program Participation Agreements, necessary to allow individuals
enrolled in training programs conducted by the Institution Subsidiaries
to qualify for educational loans, grants and other forms of student
financial assistance from governmental agencies and other sources
referred to in the catalogs and advertising literature of Holdings and
its Subsidiaries, including, without limitation, all Certifications and
Accreditations necessary for the Institution Subsidiaries to
participate in student financial aid programs administered by the DOE
pursuant to Title IV.
"CEG CLOSING NOTE" means the subordinated promissory note of Holdings,
dated September 30, 1997, issued to Old CEG, in the original principal
amount of $4,000,000.
"CHARLESBANK" means affiliates of Charlesbank Capital Partners, LLC,
including but not limited to, Charlesbank Equity Fund V, Limited
Partnership, a Massachusetts limited partnership, and each of their
respective principals, employees, partners and family members and
trusts for the benefit of any of the foregoing and their respective
Subsidiaries.
"CHC/CEG ASSETS" is defined in the definition of Asset Purchase
Agreement.
"CLOSING DATE" means January 23, 1998.
"COHORT DEFAULT RATE" means, as to any Institution, the percentage of
students or former students of such Institution who default on loans
received through the Federal Family Education Loan or Federal Direct
Loan Programs, or any other applicable program under Title IV, before
the end of the Federal fiscal year after the year in which such
students or former students enter repayment for such loans, as further
described in Section 668.17(d) of the Regulations.
"COLLATERAL" means, collectively: (a) all capital stock and other
property pledged pursuant to the Security Documents; (b) all
"Collateral" as defined in the Security Documents; (c) all real
property mortgaged pursuant to the Security Documents; and (d) any
property or interest provided in addition to or in substitution for any
of the foregoing.
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"COMMON STOCK" means the common stock, $1 par value per share, of
Borrower outstanding on the Closing Date or thereafter issued.
"COMPANIES" means and includes PTA and NTT.
"CONTRACTUAL OBLIGATIONS," as applied to any Person, means any
indenture, mortgage, deed of trust, contract, undertaking, agreement or
other instrument to which that Person is a party or by which it or any
of its properties is bound or to which it or any of its properties is
subject, including, without limitation, the Related Transactions
Documents.
"CONVERTIBLE PREFERRED STOCK" means the 7.5% Series D convertible
preferred stock of Holdings and convertible, at the option of the
holders or upon an initial public offering, for 42.5% of the fully
diluted issued and outstanding common stock of Holdings.
"CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT" means the Preferred
Stock Purchase Agreement, dated as of January 8, 2002 among Holdings,
Penske and Charlesbank, as originally in effect or as amended, modified
or supplemented as permitted hereby.
"CURRENT STOCKHOLDERS" means the Stockholders of Holdings existing on
the Closing Date.
"DEFAULT" means a condition or event that, after notice or lapse of
time or both, would constitute an Event of Default if that condition or
event were not cured or removed within any applicable grace or cure
period.
"DOE" means the United States Department of Education.
"EMPLOYMENT AGREEMENTS" means the Amended and Restated Non-Interference
Agreements, each dated as of the Amendment No. 1 Date, between Borrower
on the one hand and ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, respectively
on the other hand, as in effect on the Amendment No. 1 Date.
"ENVIRONMENTAL LAWS" means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and any applicable judicial or
administrative interpretation thereof, including any applicable
judicial or administrative order, consent decree, order or judgment,
imposing liability or standards of conduct for or relating to the
regulation and protection of human health, safety, the environment and
natural resources (including ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species
and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42
U.S.C. Sections 9601 et seq.) ("CERCLA"); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C. Sections 5101 et
seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. Sections 136 et seq.); the Solid Waste Disposal Act (42
U.S.C. Sections 6901 et seq.); the Toxic Substance Control Act (15
U.S.C. Sections 2601 et seq.); the Clean Air Act (42 U.S.C. Sections
7401 et seq.); the Federal Water Pollution Control Act (33
U.S.C. Sections 1251 et seq.); the Occupational Safety and Health Act
(29 U.S.C. Sections 651 et seq.); and the Safe Drinking Water Act (42
U.S.C. Sections 300(f) et seq.), and any and all regulations
promulgated thereunder, and all analogous state, local and foreign
counterparts or equivalents and any transfer of ownership notification
or approval statutes.
"ENVIRONMENTAL LIABILITIES" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and
removal costs, investigation and feasibility study costs,
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capital costs, operation and maintenance costs, losses, damages,
punitive damages, property damages, natural resource damages,
consequential damages, treble damages, costs and expenses (including
all reasonable fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a
result of or related to any claim, suit, action, investigation,
proceeding or demand by any Person, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil
statute or common law, including any arising under or related to any
Environmental Laws, Environmental Permits, or in connection with any
Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real
or personal property.
"ENVIRONMENTAL PERMITS" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental
Authority under any Environmental Laws.
"ERISA" means at any time the Employee Retirement Income Security Act
of 1974 and the regulations promulgated and rulings issued thereunder,
all as the same shall be in effect at such time.
"EXPIRY DATE" means the earlier of (a) the suspension (subject to
reinstatement) of the Lenders' obligations to make Revolving Loans
pursuant to subsection 6.2, (b) the acceleration of the Obligations
pursuant to subsection 6.3 or (c) March 31, 2007.
"FIRST AMENDED AND RESTATED CREDIT AGREEMENT" means the Original Credit
Agreement as in effect as of June 30, 1998 (and after giving effect to
the first amendment and restatement occurring on or about such date).
"FISCAL QUARTER" or "FISCAL QUARTER" means each quarterly period ending
on the last day of March, June, September or December.
"FREELY AVAILABLE CASH AND CASH EQUIVALENTS" means, at any time, the
excess, if any, of (i) the aggregate amount of cash on hand and Cash
Equivalents (excluding cash securing any Collateralized DOE Letter of
Credit), in each case, free of all Liens (other than in favor of Agent
as security for the Obligations) of Borrower and its Subsidiaries at
such time, in each case, immediately available to Borrower or its
Subsidiaries, as applicable, on demand over (ii) the aggregate amount
of cash on hand and Cash Equivalents (free of all Liens) required by
the DOE to be maintained by Borrower and its Subsidiaries as of the
last day of Borrower's most recent fiscal year ending on or prior to
such time or such more recent time (on or prior to such time) as DOE
shall have revised such requirement.
"GAAP" means generally accepted accounting principles as set forth in
statements from Auditing Standards No. 69 entitled "The Meaning of
Present Fairly in Conformance with Generally Accepted Accounting
Principles in the Independent Auditors Reports'" issued by the Auditing
Standards Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board that are applicable to the circumstances as
of the date of determination.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"HAZARDOUS MATERIAL" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under,
any Environmental Laws, including any material or
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substance that is (a) defined as a "solid waste," "hazardous waste,"
"hazardous material," "hazardous substance," "extremely hazardous
waste," "restricted hazardous waste," "pollutant," "contaminant,"
"hazardous constituent," "special waste," "toxic substance" or other
similar term or phrase under any Environmental Laws, or (b) petroleum
or any fraction or by-product thereof, asbestos, polychlorinated
biphenyl's (PCB's), or any radioactive substance.
"HOLDINGS SUBORDINATED INDEBTEDNESS" means, collectively, the Holdings
Subordinated Indebtedness (Sellers), the Holdings Subordinated
Indebtedness (NTT) and the Holdings Subordinated Indebtedness (JZEP).
"HOLDINGS SUBORDINATED INDEBTEDNESS (JZEP)" means the $19,400,000 in
principal amount of 13.50% subordinated indebtedness issued by Holdings
pursuant to the terms of the Holdings Subordinated Indebtedness
Documents (MCIT) and held, as of the Amendment No. 1 Date, by JZEP (and
excludes the Holding Subordinated Indebtedness (Sellers)).
"HOLDINGS SUBORDINATED INDEBTEDNESS (NTT)" means $5,250,000 in
principal amount of 8.00% convertible subordinated indebtedness issued
by Holdings to ▇▇▇▇▇▇ ▇▇▇▇▇ and any indebtedness issued in lieu of
payment of interest pursuant to the terms of the Holding Subordinated
Indebtedness Documents (NTT).
"HOLDINGS SUBORDINATED INDEBTEDNESS (SELLERS)" means the $4,000,000 in
original principal amount of 13.5% junior subordinated indebtedness
exchanged on the Amendment No. 1 Date, for a like principal amount of
13.5% promissory notes of Holdings issued on January 23, 1998, together
with all accrued interest added to the principal thereof pursuant to
paragraph (B) thereof as in effect on the Amendment No. 1 Date.
"HOLDINGS SUBORDINATED INDEBTEDNESS DOCUMENTS" means, collectively, the
Holdings Subordinated Indebtedness Documents (MCIT) and the Holdings
Subordinated Indebtedness Documents (NTT).
"HOLDINGS SUBORDINATED INDEBTEDNESS DOCUMENTS (MCIT)" means (i) the
Purchase Agreement (MCIT) and each other "Purchase Document" (as
defined in such Purchase Agreement (MCIT) as of the Amendment No. 1
Date) and (ii) the Seller Subordinated Notes; in each case, as amended,
modified or supplemented from time to time in accordance with their
respective terms and the terms of this Agreement.
"HOLDINGS SUBORDINATED INDEBTEDNESS DOCUMENTS (NTT)" means the Sharp
Note and each other document executed in connection therewith, in each
case, as amended, modified or supplemented from time to time in
accordance with its terms and with the terms of this Agreement.
"INDEBTEDNESS", as applied to any Person, means: (a) all indebtedness
for borrowed money; (b) that portion of obligations with respect to
capital leases that is properly classified as a liability on a balance
sheet in conformity with GAAP; (c) notes payable and drafts accepted
representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any
part of the deferred purchase price of property or services if the
purchase price is due more than six (6) months from the date the
obligation is incurred or is evidenced by a note or similar written
instrument; and (e) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether
the indebtedness secured thereby shall have been assumed by that Person
or is nonrecourse to the credit of that Person; provided, however, that
"Indebtedness" shall not include (i) unsecured liabilities incurred
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in the ordinary course of business, which are not evidenced by a note
or other instrument and which are not described in clause (d) of this
definition, or (ii) liabilities under leases which, under GAAP, are
operating leases.
"INSTITUTION" means each eligible institution (now or hereafter owned
or operated by Holdings or any of its Subsidiaries or prior to the
Original Transaction Date by Old CHC and Old CEG) as defined under the
Higher Education Act of 1965, as amended.
"INSTITUTION SUBSIDIARY" means any Subsidiary of Borrower which
operates an Institution and has no other material business.
"INSTRUCTING LENDERS" means Lenders having (a) sixty-six and two-thirds
percent (66-2/3%) or more of the sum of the Revolving Loan Commitment
and the outstanding principal balance of the Term Loans or, (b) if the
Revolving Loan Commitment has been terminated, sixty-six and two-thirds
(66-2/3%) or more of the aggregate outstanding principal balance of the
Loans and Risk Participation Liability.
"INTERCOMPANY INTERCREDITOR LETTER" means a letter agreement among the
applicable debtor, the applicable secured party and the Agent,
substantially in the form of Exhibit 10.1(E) (with blanks appropriately
completed), as such letter agreement may be amended, modified or
supplemented from time to time in accordance with its terms.
"INTERCOMPANY NOTE" has the meaning assigned to that term in subsection
3.1(B)(2).
"INTERCOMPANY SECURITY AGREEMENT" means a security agreement in favor
of an Institutional Subsidiary, substantially in the form of Exhibit
10.1(F), as such security agreement may be amended, modified or
supplemented from time to time in accordance with its terms and the
terms of an applicable Intercompany Intercreditor Letter.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time and all rules and regulations promulgated thereunder.
"JORDAN" means The Jordan Company.
"JORDAN GROUP" means The Jordan Company, Jordan/Zalaznick Capital
Corporation and their respective principals, employees, partners and
family members and trusts for the benefit of any of the foregoing, and
Leucadia National Corporation and their respective Subsidiaries.
"JZEP" means JZ Equity Partners PLC (f/k/a MCIT PLC), a public company
incorporated under the laws of England and Wales.
"LENDER" or "LENDERS" means the New Lenders and the Continuing Lenders,
together with their respective successors and permitted assigns
pursuant to subsection 8.1.
"LENDER ADDITION AGREEMENT" means an agreement, substantially in the
form of Exhibit 10.1(B), among Agent, a Lender and such Lender's
assignee regarding their respective rights and obligations with respect
to assignments of the Loans, the Revolving Loan Commitment and other
interests under this Agreement and the other Loan Documents.
"LIEN" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary (including
any conditional sale or other title retention agreement
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and any lease in the nature thereof), and any agreement to give any
lien, mortgage, pledge, security interest, charge or encumbrance.
"LOAN" or "LOANS" means an advance or advances under the Revolving Loan
Commitment or any Term Loan.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security
Documents, each reimbursement agreement relating to a Lender Letter of
Credit or Risk Participation Agreement and all other instruments,
documents and agreements executed by or on behalf of any Loan Party and
delivered on the Closing Date or concurrently herewith or at any time
hereafter to or for the benefit of Agent or any Lender in connection
with the Loans and other transactions contemplated by this Agreement,
all as amended, supplemented or modified from time to time.
"LOAN PARTY" means, collectively, Holdings, Borrower, and any other
Person (other than Agent and any Lender) which is or becomes a party to
any Loan Document.
"LOAN YEAR" means each period of one year, beginning on the Closing
Date and on each anniversary thereof.
"MANAGEMENT AGREEMENT" means the Management Consulting Agreement dated
as of September 30, 1997, between Holdings and TJC Management
Corporation as in effect on the Original Transaction Date, as amended
by that certain side letter dated September 30, 1998, that certain side
letter dated September 30, 1999 (the "SECOND SIDE LETTER") by TJC
Management Corporation and Holdings and that certain side letter, dated
[the Second Amendment and Restatement Date] among TJC Management
Corporation, Penske, Charlesbank Capital Partners, LLC and Holdings.
"MANAGEMENT NOTE" means a promissory note, substantially in the form of
Exhibit 10.1(D) hereto, issued by Holdings pursuant to the Stockholders
Agreement.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect upon the
business, operations, properties, assets or condition (financial or
otherwise) of Holdings and its Subsidiaries taken as a whole or (b) the
impairment of the ability of any Loan Party to perform its obligations
under any Loan Document to which it is a party or of Agent or any
Lender to enforce any Loan Document or collect any of the Obligations.
"MCIT" means JZEP.
"MODIFICATION NO. 1" means the letter agreement, dated as of the
Amendment and Restatement Date, from Holdings to JZEP, amending and
modifying the Purchase Agreement (MCIT).
"MODIFICATION NO. 2" means the letter agreement, dated as of June 26,
1998, from Holdings to JZEP, amending and modifying the Purchase
Agreement (MCIT).
"MODIFICATION NO. 3" means the letter agreement, dated as of the
Amendment No. 1 Date, from Holdings to JZEP, amending and modifying the
Purchase Agreement (MCIT).
"NASCAR SALE/LEASEBACK" means the sale and leaseback of certain
property located in Mooresville, North Carolina pursuant to the terms
of that certain Holdback Agreement and certain Lease Agreement, each
dated as of February 11, 2002 by an between Speed (NC) QRS
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14-70, Inc., a Delaware corporation, Universal Technical Institute of
North Carolina, Inc. (formerly known as Nascar Technical Institute,
Inc.), a Delaware corporation, and the Borrower.
"NECESSARY REGULATORY AUTHORITIES" means each of (i) the DOE; (ii) the
ACCSCT; (iii) the Arizona State Board for Private Postsecondary
Education; (iv) the California Bureau of Private Postsecondary and
Vocational Education; (v) the Florida Commission for Independent
Education; (vi) the Illinois State Board of Education; (vii) the North
Carolina Community College System; (viii) the Texas Workforce
Commission; and (ix) the Texas Higher Education Coordinating Board.
"NET PROCEEDS" has the meaning assigned to that term in the definition
of "Asset Disposition."
"NON-INSTITUTION SUBSIDIARY" means any Subsidiary that is not an
Institution Subsidiary.
"NOTE" or "NOTES" means one or more of the notes of Borrower
substantially in the form of Exhibit 10.1(A), or any combination
thereof.
"NTT" means National Technology Transfer, Inc., a Delaware corporation.
"NTT MANAGEMENT PARTICIPATION LETTER" means the side letter between
▇▇▇▇▇▇ ▇▇▇▇▇ and Holdings, dated June 12, 1998, related to NTT
Management equity participation.
"NTT/PTA RELEASE" means the release in the form of Exhibit 10.1(G)
hereto.
"NTT PURCHASE AGREEMENT" means the Stock Purchase Agreement, dated as
of June 12, 1998, as amended, modified or supplemented from time to
time in accordance with its terms and the terms hereof by and among NTT
Acquisition, Inc., the Trusts and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"NTT PURCHASE TRANSACTION" means the purchase by NTT Acquisition, Inc.
of 100% of the capital stock of NTT.
"NTT RELATED TRANSACTIONS" means the NTT Purchase Transaction, the
issuance of the Holdings Subordinated Indebtedness (NTT) and the
payment of all fees, costs and expenses incurred by Holdings and its
Subsidiaries in connection with the foregoing and the financing
contemplated hereby.
"OBLIGATIONS" means all obligations, liabilities and indebtedness of
every nature of each Loan Party from time to time owed to Agent
(including, for this purpose General Electric Capital Corporation to
the extent it has issued a Lender Letter of Credit or Risk
Participation Agreement at the request of ▇▇▇▇▇▇, as Agent) or any
Lender under the Loan Documents including the principal amount of all
debts, claims and indebtedness, accrued and unpaid interest (including,
without limitation, interest accrued after the commencement of a
proceeding under the Bankruptcy Code in which any Loan Party is a
debtor, whether or not a claim in respect of such interest is an
allowed claim in such proceeding), and all fees, costs and expenses,
whether primary, secondary, direct, contingent, fixed or otherwise,
heretofore, now and/or from time to time hereafter owing, due or
payable whether before or after the filing of a proceeding under the
Bankruptcy Code by or against any Loan Party.
"OLD CEG" means Clinton Education Group Inc., an Arizona corporation.
"OLD CHC" means The ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, a Delaware corporation.
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"ORIGINAL TRANSACTION DATE" means September 30, 1997.
"PENSKE" means Penske Capital Partners, LLC and its affiliates,
including but not limited to, Worldwide Training Group, LLC, a Delaware
limited liability company, and each of their respective principals,
employees, partners and family members and trusts for the benefit of
any of the foregoing and their respective Subsidiaries.
"PENSKE/CHARLESBANK RELATED TRANSACTIONS" means the purchase from
Holdings by Penske and Charlesbank of Convertible Preferred Stock for
not less than $45,500,000 in cash and the other transactions
contemplated by the Convertible Preferred Stock Purchase Agreement.
"PENSKE/CHARLESBANK RELATED TRANSACTION DOCUMENTS" means the
Convertible Preferred Stock Purchase Agreement and the certificates of
designation for the Convertible Preferred Stock.
"PERMITTED ACQUISITION" means an acquisition (i) by Borrower of all of
the issued and outstanding capital stock or other equity interests (and
all options, warrants and other rights in respect thereof) of any
Person incorporated or organized under the laws of any state of the
United States of America, or (ii) by a wholly-owned Subsidiary (other
than an Institution Subsidiary) of Borrower of all or substantially all
of the assets of any Person, to the extent that:
(a) in the case of an acquisition described in (i) above, the
business of such Person ("TARGET PERSON") consists solely of
the operation (or operation and ownership) of an Institution
within the United States of America, or in the case of an
acquisition described in (ii) above, the assets purchased
("TARGET BUSINESS") constitute a business consisting solely of
the operation (or ownership and operation) of an Institution
in the United States of America;
(b) financial statements for the Target Person or Target Business
are delivered to Agent and Lenders and are reasonably
acceptable to the Instructing Lenders and demonstrate to the
reasonable satisfaction of the Instructing Lenders that the
Target Person or Target Business, as the case may be, had
positive Pre-Acquisition Target EBITDA (calculated in
accordance with attachment 4.3 to the Compliance Certificate)
for a period of not less than 12 months prior to the
acquisition;
(c) projections for Holdings and its Subsidiaries after giving
effect to such acquisition, are delivered to Agent and the
Lenders and are acceptable to the Instructing Lenders and
demonstrate to the reasonable satisfaction of the Instructing
Lenders that Holdings and its Subsidiaries (including the
Target Person or Target Business, as the case may be) shall be
in compliance with the covenants contained in Section 4 hereof
through the date described in clause (c) of the definition of
"Expiry Date";
(d) Agent shall be satisfied that all requisite consents from all
governmental agencies (including, without limitation, for
continuation of Title IV funding) and Accrediting Agencies for
the consummation of such acquisition have been obtained and
that the Target Person or Target Business, as the case may be,
shall have been in substantial compliance with the
Regulations, all state laws and regulations applicable to
Institutions and all rules and regulations of all applicable
Accrediting Agencies;
(e) for each of the three (3) completed fiscal years of the Target
Person or Target Business, as the case may be, ending most
recently prior to the date of such acquisition, such Target
Person or Target Business, as the case may be, has derived not
more than 89% of its
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revenues from Title IV program funds, as calculated by the
formula set forth in Section 600.5(d) of the Regulations;
(f) in none of the three (3) completed fiscal years of the Target
Person or Target Business, as the case may be, ending most
recently prior to the date of such acquisition, was the Cohort
Default Rate of the Institutions operated (or owned and
operated) by such Target Person or constituting such Target
Business, as the case may be, in excess of 25%;
(g) the total consideration provided for such acquisition by
Holdings and its Subsidiaries (including, without limitation,
Indebtedness and other liabilities and Liens assumed or
attaching to purchased assets, and Indebtedness (on terms and
pursuant to documentation reasonably acceptable to the
Instructing Lenders, which Indebtedness, in any event, must be
unsecured and subordinated on terms acceptable to the
Instructing Lenders and any Liens which survive such
acquisition shall be subject to an intercreditor agreement in
favor of Agent on terms and conditions and pursuant to
documents satisfactory to the Instructing Lenders) issued to
the seller of the Target Person or Target Business, as the
case may be, in connection with such acquisition) shall not
exceed $5,000,000 for such acquisition and the total
consideration for such acquisition and all acquisitions
consummated in such fiscal year shall not exceed $7,500,000 in
the aggregate;
(h) Instructing Lenders shall be satisfied with the terms of and
all documentation in connection with such acquisition,
including, without limitation, all documents evidencing,
governing or creating Indebtedness or Liens assumed, incurred,
issued or otherwise constituting consideration for such
acquisition or surviving the acquisition, and all employment,
management, non-competition and similar agreements, and Agent
shall have completed, with results reasonably satisfactory to
Instructing Lenders, such due diligence with respect to the
Target Person or Target Business, as the case may be, as
Instructing Lenders shall have determined;
(i) Agent shall have received not less than thirty (30) days'
prior written notice of such acquisition, and shall have, at
least fifteen (15) days prior to the consummation of such
acquisition, received projections, in form and substance
satisfactory to Instructing Lenders and all other financial
information and pro forma financial information necessary to
determine if such acquisition is a Permitted Acquisition;
(j) after giving effect to such acquisition and the financing
thereof, Availability plus Freely Available Cash and Cash
Equivalents is $2,500,000 or greater; and
(k) concurrently with the consummation of such acquisition, Agent
shall have been furnished with (x) in the case of a Target
Person, a first priority perfected security interest in all
capital stock (or other equity interests) of such Target
Person, all distributions in respect thereof and all proceeds
thereof and such documents, opinions, stock certificates,
stock powers and other documents as Agent shall have requested
in connection therewith and (y) to the extent permitted by the
Regulations and not adverse to the Borrower insofar as the DOE
is concerned in the case of a Target Business, a first
priority perfected security interest on all assets
constituting such Target Business and all proceeds thereof,
and such documents, opinions, stock certificates, stock powers
and other documents as Agent shall have requested in
connection therewith.
"PERSON" means and includes natural persons, corporations, limited
liability companies, limited partnerships, limited liability
partnerships, limited liability companies, general partnerships, joint
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stock companies, joint ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and
agencies and political subdivisions thereof and their respective
permitted successors and assigns (or in the case of a governmental
person, the successor functional equivalent of such Person).
"PRE-ACQUISITION TARGET EBITDA" for any Target Person or Target
Business means, at any time, EBITDA for any Target Person or Target
Business (calculated in a manner consistent with the calculation of
EBITDA as provided in attachment 4.3 to Exhibit 4.8(C) with such
adjustments thereto as may be agreed upon between Borrower and Agent)
for the period of twelve full fiscal months ending on or most recently
prior to such time, to the extent such EBITDA has not been included in
EBITDA of Holdings and its Subsidiaries for such period of twelve full
fiscal months (per attachment 4.3 to Exhibit 4.8(C).
"PREFERRED STOCK" means the Convertible Preferred Stock, the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
of Holdings.
"PRO FORMA" means the unaudited consolidated and consolidating balance
sheet of Holdings and its Subsidiaries prepared in accordance with GAAP
as of the Second Amendment and Restatement Date after giving effect to
the Penske/Charlesbank Related Transactions. The Pro Forma is annexed
hereto as Schedule 10.1(A).
"PRO FORMA BASIS" means after giving pro forma effect to (x) any
acquisition or sale of a person, business or asset, related incurrence,
repayment or refinancing of Indebtedness, capital expenditures or other
related transactions, including any restructuring charges which would
otherwise be accounted for as adjustments permitted by Regulation S-X
under the Securities Act of 1933, as amended, or on a pro forma basis
under GAAP, or (y) any issue, repayment or refinancing of any
Indebtedness and the application of the proceeds therefrom, in each
case, as if such acquisition or sale and related transactions,
restructurings, consolidations, cost savings, reductions, issue,
repayment or refinancing were realized on the first day of the relevant
period.
"PROGRAM PARTICIPATION AGREEMENT" means a program participation
agreement as described in Section 668.14 of the Regulations.
"PROJECTIONS" means Holdings forecasted consolidated and consolidating:
(a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a
division by division and Subsidiary by Subsidiary basis on a consistent
basis with historical financial statements of Holdings and its
Subsidiaries, together with appropriate supporting details and a
statement of underlying assumptions. The Projections represent and will
represent as of the date thereof the good faith estimate of Holdings
and its senior management concerning the most probable course of its
business. It is recognized that such projections, estimates and
forecasts are subject to significant contingencies and uncertainties,
many of which are beyond the control of Holdings and Borrower and that
no assurances are given that such projections, estimates and forecasts
will be achieved.
"PRO RATA SHARE" means (a) with respect to a Lender's obligation to
lend a portion of Term Loan A (including Incremental Term Loan A) or
Term Loan B and receive payments of interest and principal with respect
thereto, the percentage obtained by dividing (i) such Lender's
commitment to make a portion of such Term Loan, as set forth on the
signature page of this Agreement opposite such Lender's signature or in
the most recent Lender Addition Agreement, if any, executed by such
Lender, by (ii) all such commitments of all Lenders to make such Term
Loan, (b) with respect to a Lender's obligation to make Revolving Loans
and receive payments of
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interest and principal with respect thereto (and with respect to the
related commitment fee described in subsection 1.2(B)) and with respect
to a Lender's obligation to share in any Risk Participation Liability
(and with respect to the related Risk Participation Liability fee
described in subsection 1.2(C)), the percentage obtained by dividing
(i) such Lender's commitment to make Revolving Loans, as set forth on
the signature page of this agreement opposite such Lender's signature
or in the most recent Lender Addition Agreement, if any, executed by
such Lender, by (ii) all such commitments of all Lenders to make
Revolving Loans and (c) with respect to all other matters (including
without limitation the indemnification obligations arising under
subsection 8.2(E)), the percentage obtained by dividing (i) the sum of
the then outstanding portions of the Term Loans which were funded by
such Lender, plus the commitment of such Lender to make Revolving
Loans, as set forth on the signature page of this Agreement opposite
such Lender's signature or in the most recent Lender Addition
Agreement, if any, executed by such Lender, by (ii) the sum of the then
outstanding Term Loans, plus the aggregate Revolving Loan Commitment.
"PTA" means Performance Training Associates, Inc., a Delaware
corporation.
"PURCHASE AGREEMENT (MCIT)" means the Purchase Agreement, dated the
Closing Date, between Holdings, as Issuer, and MCIT, as purchaser, for
the 13.5% senior subordinated notes of Holdings due 2006 and 2008 in
the aggregate principal amount of $19,400,000, as amended by
Modification ▇▇. ▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇ and Modification No. 3 and as
further amended, modified or supplemented in accordance with its terms
and the terms of this Agreement.
"QUALIFIED PREFERRED STOCK" means preferred stock of Holdings which by
its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or upon the happening of any event,
(i) has no requirement for the payment of dividends in cash prior to
March 31, 2009 and (ii) does not mature, is not mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, and is not
redeemable at the option of the holder thereof, in whole or in part, in
any case, on or prior to March 31, 2009.
"REAL ESTATE" means any real property owned, operated, leased or
occupied by any Loan Party, any Institution Subsidiary or any other
Person within the control of any Loan Party.
"REGULATIONS" means the regulations promulgated by the DOE under Title
IV.
"RELATED TRANSACTIONS" means the UTI Related Transactions, the NTT
Related Transactions and the Penske/Charlesbank Related Transactions.
"RELATED TRANSACTIONS DOCUMENTS" means, collectively: (a) any or all of
the stock certificates, notes, debentures or other instruments
representing securities bought, sold or issued, or loans made, to
facilitate the consummation of the Related Transactions; (b) the
indentures or other documents pursuant to which such stock, notes,
debentures or other instruments are issued or to be issued; (c) each
document governing the issuance of, or setting forth the terms of, such
stock, notes, debentures or other instruments, including, without
limitation, the provisions governing the Preferred Stock; (d) any
stockholders, registration rights or intercreditor agreement among or
between the holders of such stock, notes, debentures or other
instruments; (e) the Convertible Preferred Stock Purchase Agreement,
the Securities Purchase Agreement, the Asset Purchase Agreement, the
"Related Agreements" (as defined in the Securities Purchase Agreement
and Asset Purchase Agreement), the NTT Purchase Agreement and all
documents, instruments and agreements executed in connection therewith;
(f) all other instruments, documents and agreements executed in
connection with the Related Transactions, but excluding all Loan
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Documents; and (g) the Holdings Subordinated Indebtedness Documents; in
the case of each of the documents described in (a) through (g), on
terms and conditions satisfactory to Agent and as in effect on the
Second Amendment and Restatement Date or as amended, modified or
supplemented from time to time in accordance with their respective
terms and the terms hereof.
"RELEASE" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration
of Hazardous Material in the indoor or outdoor environment, including
the movement of Hazardous Material through or in the air, soil, surface
water, ground water or property.
"REMAINING SUBORDINATED INDEBTEDNESS" means Subordinated Indebtedness
outstanding immediately prior to the Second Amendment and Restatement
Date other than Subject Subordinated Indebtedness.
"REMAINING SUBORDINATED INDEBTEDNESS DOCUMENTS" the Holdings
Subordinated Indebtedness Documents (NTT) and the CEG Closing Note.
"REQUISITE LENDERS" means Lenders having (a) fifty-one percent (51%) or
more of the sum of the Revolving Loan Commitment and the outstanding
principal balance of the Term Loans or, (b) if the Revolving Loan
Commitment has been terminated, fifty-one percent (51%) or more of the
aggregate outstanding principal balance of the Loans and Risk
Participation Liability.
"REQUISITE REVOLVING LENDERS" means Lenders having fifty-one percent
(51%) or more of the Revolving Loan Commitment.
"RESPONSIBLE OFFICER" means the chairman, chief executive officer,
chief financial officer, president, any vice-president, secretary,
assistant secretary, treasurer or assistant treasurer or any director
of Borrower or Holdings, as the case may be.
"REVOLVING NOTE" means a Note of the Borrower issued in respect of a
Revolving Loan and Substantially in the form included in Exhibit
10.1(A).
"SECOND AMENDMENT AND RESTATEMENT DATE" means the date and time that
the conditions set forth in subsection 7.3 are satisfied.
"SECURITIES PURCHASE AGREEMENT" means the Agreement for the Purchase of
Securities, dated as of September 30, 1997, by and among Holdings and
the current stockholders as described therein.
"SECURITY DOCUMENTS" means all instruments, documents and agreements
executed by or on behalf of any Loan Party to guaranty or provide
collateral security with respect to the Obligations including, without
limitation, any security agreement or pledge agreement, any guaranty of
the Obligations, any mortgage, and all instruments, documents and
agreements executed pursuant to the terms of the foregoing.
"SELLER SUBORDINATED NOTES" has the meaning provided in the Purchase
Agreement (MCIT) as in effect on the Amendment No. 1 Date.
"SELLERS" means Sharp and the Trusts.
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"SEPTEMBER 1999 CAPITAL CONTRIBUTION" means the capital contribution of
cash on the Third Amendment Date equal to (a) $2,354,000 by the
non-management purchasers listed in the 1999 Subscription Agreement to
Holdings in exchange for the shares of Series C Preferred Stock and
common stock of Holdings as set forth on Schedule 10.1(B) attached
hereto and (b) $1,733,260.28 by certain of Holding's management
stockholders to Holdings in exchange for the shares of Series C
Preferred Stock and common stock of Holdings as set forth on Schedule
10.1(B) attached hereto.
"SERIES C PREFERRED STOCK" means all shares of Series C Preferred Stock
of Holdings.
"SHARP" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"SHARP NOTE" means that certain 8.00% convertible promissory note of
Holdings, dated June 30, 1998, issued to Sharp in the original
principal amount of $5,250,000, as amended through the Second Amendment
and Restatement Date and evidencing the Holding Subordinated
Indebtedness (NTT).
"START-UP EXPENSES" means expenses (a) not exceeding $1,500,000 in the
aggregate in the fiscal year ended September 30, 1998, incurred by
Borrower and its Subsidiaries in connection with the establishment of
satellite campuses, the formation of Clinton Education Group and the
formation of the Mercedes and BMW facilities, (b) not exceeding
$1,000,000 in the aggregate beginning in the fiscal year ending
September 30, 1999 through and including December 31, 2000, incurred by
the Borrower and its Subsidiaries in connection with prospective NASCAR
and Ford programs, and (c) and losses not exceeding $2,532,000 in the
aggregate in the fiscal year ended September 30, 2002 in connection
with the establishment of satellite campuses, and (d) and losses not
exceeding $420,000 in the aggregate in the fiscal quarter ended
December 31, 2002; in each case, to the extent taken into account in
the determination of net income of Holdings and its Subsidiaries.
"STOCKHOLDERS AGREEMENT" means the Amended and Restated Universal
Technical Institute, Inc. Stockholders Agreement, dated as of March 29,
2002, as amended, modified or supplemented from time to time in
accordance with its terms.
"SUBJECT SUBORDINATED INDEBTEDNESS" means the Subordinated Indebtedness
required to be satisfied as a condition precedent under subsection
7.1(C).
"SUBORDINATED INDEBTEDNESS" means the Holdings Subordinated
Indebtedness and the obligations under the Indebtedness evidenced by
the CEG Closing Note.
"SUBORDINATED INDEBTEDNESS DOCUMENTS" means the Holdings Subordinated
Indebtedness Documents, and all documents evidencing, governing or
securing all other Subordinated Indebtedness.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association or other business entity of which more than
fifty percent (50%) of the total voting power of shares of stock (or
equivalent ownership or controlling interest) entitled (without regard
to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person or a combination thereof.
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"TARGET BUSINESS" has the meaning assigned to that term in the
definition of "Permitted Acquisition".
"TARGET PERSON" has the meaning assigned to that term in the definition
of "Permitted Acquisition".
"TAX SHARING AGREEMENT" means the tax-sharing agreement, dated as of
September 30 1997, among Holdings, Borrower and the Subsidiaries of
Holdings listed therein as in effect on the Closing Date.
"TERM NOTE" means a Note of the Borrower in respect of a Term Loan and
substantially in the form included in Exhibit 10.1(A).
"THIRD AMENDMENT" shall mean the Third Amendment to the First Amended
and Restated Credit Agreement, among Holdings, Borrower, National
Technology Transfer, Inc., Agent and Lenders.
"THIRD AMENDMENT DATE" shall mean the effective date of the Third
Amendment.
"TITLE IV" means Title IV of the Higher Education Act of 1965, as
amended.
"TRANSITION AGREEMENT" means the Employment and Non-Interference
Agreement between Borrower and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, dated as of and as in
effect on June 30, 1998.
"TRUSTS" means and includes the Unitrust and the Annuity Trust.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York.
"UNITRUST" means ▇▇▇▇▇▇ ▇▇▇▇▇ 1998 Charitable Remainder Unitrust, a
Colorado charitable remainder trust.
"UTI RELATED TRANSACTIONS" means the UTI Transactions, the issuance of
Holdings Subordinated Indebtedness (JZEP) on January 23, 1998 and
Preferred Stock, and the payment of all fees, costs and expenses
incurred by Holdings and its Subsidiaries in connection with the
foregoing.
"UTI TRANSACTIONS" means the acquisition and recapitalization
transactions contemplated by the Asset Purchase Agreement and the
Securities Purchase Agreement.
"WHITE NOTE" means that certain promissory note of White's Family
Corporation, LLC, dated September 30, 1997, issued to Holdings in the
original principal amount of $4,000,050.
"WHOLLY-OWNED SUBSIDIARY" means, as to any Person, a Subsidiary, all of
the shares of each class of capital stock of such Subsidiary is
beneficially owned and controlled by such Person.
10.2 OTHER DEFINITIONAL PROVISIONS. References to "Sections", "subsections",
"Exhibits" and "Schedules" shall be to Sections, subsections, Exhibits and
Schedules, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 10.1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference. In this Agreement, "hereof", "herein", "hereto", "hereunder" and the
like mean and refer to this Agreement as a whole and not merely to the specific
section, paragraph or clause in which the respective word appears;
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words importing any gender include the other gender; references to "writing"
include printing, typing, lithography and other means of reproducing words in a
tangible visible form; the words "including", "includes" and "include" shall be
deemed to be followed by the words "without limitation"; references to
agreements and other contractual instruments shall be deemed to include
subsequent amendments, assignments, and other modifications thereto, but only to
the extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement or any other Loan Document; references
to Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; and all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
[Remainder of page left blank intentionally; signatures on following pages.]
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Witness the due execution hereof by the respective duly authorized officers of
the undersigned as of the date first written above.
UTI HOLDINGS, INC.,
as Borrower
By: _______________________________________
Name: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Title: Vice President
UNIVERSAL TECHNICAL INSTITUTE,
INC., as Parent
By: _______________________________________
Name: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Title: Vice President
▇▇▇▇▇▇ FINANCIAL, INC.,
as Agent and a Continuing Lender
By: _______________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
Commitment to make Revolving Loans:
$8,571,428.57
Percentage of Revolving Loan Commitment:
42.8571429%
Commitment to make original Term Loan A:
$5,611,607.15 (Fully Advanced)
Percentage of Term Loan A:
42.8571429%
Commitment to make Incremental Term Loan A:
$2,959,821.42
Percentage of Incremental Term Loan A:
42.8571429%
Commitment to make Original Term Loan B:
$14,657,142.86 (Fully Advanced)
Percentage of Original Term Loan B:
47.1428571%
ANTARES CAPITAL CORPORATION,
Continuing Lender
By: ______________________________________
Name:
Title:
Commitment to make Revolving Loans:
$5,714,285.71
Percentage of Revolving Loan Commitment:
28.5714286%
Commitment to make original Term Loan A:
$1,907,946.43 (Fully Advanced)
Percentage of Term Loan A:
14.5714286%
Commitment to make Incremental Term Loan A:
$1,006,339.28
Percentage of Incremental Term Loan A:
14.5714286%
Commitment to make Original Term Loan B:
$4,371,428.57 (Fully Advanced)
Percentage of Original Term Loan B:
18.5714286%
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ BANK,
AS TRUSTEE OF THE ANTARES FUNDING TRUST
CREATED UNDER A TRUST AGREEMENT DATED AS OF
NOVEMBER 30, 1999
New Lender
By:________________________________________
Name:
Title:
Commitment to make Revolving Loans:
$0
Percentage of Revolving Loan Commitment:
0%
Commitment to make original Term Loan A:
$1,047,500 (Fully Advanced)
Percentage of Term Loan A:
8.0000000%
Commitment to make Incremental Term Loan A:
$552,500
Percentage of Incremental Term Loan A:
8.0000000%
Commitment to make Original Term Loan B:
$2,400,000 (Fully Advanced)
Percentage of Original Term Loan B:
5.7142857%
THE ROYAL BANK OF SCOTLAND PLC,
New Lender
By: _______________________________________
Name:
Title:
Commitment to make Revolving Loans:
$5,714,285.71
Percentage of Revolving Loan Commitment:
28.5714286%
Commitment to make original Term Loan A:
$3,741,071.43 (Fully Advanced)
Percentage of Term Loan A:
28.5714286%
Commitment to make Incremental Term Loan A:
$1,973,214.28
Percentage of Incremental Term Loan A:
28.5714286%
Commitment to make Original Term Loan B:
$8,571,428.57 (Fully Advanced)
Percentage of Original Term Loan B:
28.5714286%
LIBOR RATE LOAN REQUEST
EXHIBIT 1.2(G)
[INSERT NAME AND ADDRESS OF BORROWER]
[ ], 200[ ]
▇▇▇▇▇▇ Financial, Inc., as Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Portfolio Analyst
Corporate Finance Group
Ladies and Gentlemen:
We refer to the Second Amendment and Restatement of Credit Agreement dated as of
[ ], 2002 (as the same has been or may hereafter be amended, modified or
supplemented, the "CREDIT AGREEMENT") among ▇▇▇▇▇▇ Financial, Inc., a Delaware
corporation, as Agent and a Lender ("AGENT"), UTI Holdings, Inc. and Universal
Technical Institute, Inc., and the other Lenders party thereto from time to
time. Capitalized terms used but not defined herein have the meanings given to
them in the Credit Agreement.
Pursuant to subsection 1.2(G) of the Credit Agreement, Borrower hereby:
(1) gives notice that on [ ], [200[ ]] it desires to borrow
an aggregate principal amount of $[ ], which shall be a
LIBOR Loan. The LIBOR Loan shall have an Interest Period of
[ ] months [INSERT ONE, TWO, THREE OR SIX]; or
(2) makes a request to:
(a) convert $[ ] [of presently outstanding [Base Rate/LIBOR] Revolving
Loans] [of the presently outstanding Term Loan, which is presently a [Base
Rate/LIBOR Rate with an Interest Period expiration date of [ ], [200[ ]]]] to
[Base Rate/LIBOR] Loans on [ ], [200[ ]]. If converting to LIBOR Loans, the
Interest Period for such LIBOR Loans is requested to be a [one/two/three/six]
month period.
(b) continue as LIBOR Loans $[ ] of presently outstanding LIBOR Loans
constituting [Revolving Loans/a portion of the Term Loan] with an Interest
Period expiration date of [ ], [200[ ]]. The Interest Period for such LIBOR
Loans is requested to be a [one/two/three/six] month period.
The undersigned hereby certifies that, both before and after giving effect to
the advance, conversion or continuation request above (i) all of the
representations and warranties contained in the Credit Agreement and the other
Loan Documents, together with all supplemental disclosures delivered to Agent
prior to the date hereof, are true, correct and complete in all material
respects as of the date hereof (except for any representation or warranty
limited by its terms to a specific date and taking into account amendments to
Schedules or Exhibits as a result of any disclosures made in writing by Borrower
after the Second Amendment and Restatement Date and approved by Agent in
writing) and (ii) no Default or Event of Default has occurred and is continuing
on the date hereof.
EXHIBIT 1.2(G)
Sincerely,
UTI HOLDINGS, INC.
By: __________________________________
Name:
Title:
EXHIBIT 1.2(G)-2
EXCESS CASH FLOW COMPUTATION
EXHIBIT 1.5(B)
This certificate is given by UTI Holdings, Inc., an Arizona corporation
("BORROWER") and Universal Technical Institute, Inc. ("HOLDINGS"), pursuant to
subsection 1.5(B) of that certain Second Amended and Restated Credit Agreement
dated as of [ ], 2002 (as the same has been or may hereafter be amended,
modified or supplemented, the "CREDIT AGREEMENT") among ▇▇▇▇▇▇ Financial, Inc.,
a Delaware corporation, as Agent and a Lender ("AGENT"), Borrower and Holdings
and the other Lenders party thereto from time to time. Capitalized terms used
herein without definition shall have the meanings set forth in the Credit
Agreement.
The officer executing this certificate is the Chief Financial Officer [CHIEF
EXECUTIVE OFFICER] of each of Borrower and Holdings and as such is duly
authorized to execute and deliver this certificate on behalf of Holdings and its
Subsidiaries. By executing this certificate such officer hereby certifies to
Agent and Lenders that:
(a) set forth below is a schedule of Excess Cash Flow for the year
ended [ ], [200[ ]] and the calculation of the required
repayment of $[ ];
(b) the schedule set forth below is based on the audited financial
statements which have been delivered to Agent and Lenders in
accordance with subsection 4.8(B)
IN WITNESS WHEREOF, Borrower and Holdings have caused this Certificate to be
executed by their Chief Financial Officer [CHIEF EXECUTIVE OFFICER] this [ ]
day of [ ], 200[ ].
UTI HOLDINGS, INC.
UNIVERSAL TECHNICAL INSTITUTE, INC.
By: __________________________________
Chief Financial Officer
[Chief Executive Officer]
EXHIBIT 1.5(B)
SCHEDULE OF EXCESS CASH FLOW
ATTACHMENT TO EXCESS CASH FLOW COMPUTATION
Excess Cash Flow is defined as follows:
EBITDA (as calculated on attachment 4.3 of Exhibit 4.8(C) to the Credit Agreement
("EXHIBIT 4.8(C)") $
--------------
Less: Any provision for (or plus any benefit from) income or franchise taxes
included in the determination of net income --------------
Unfinanced Capital Expenditures (as calculated on Exhibit 4.8(C)) --------------
Other Capitalized Costs, defined as the gross amount capitalized, for any
fiscal period, as long term assets (net of cash received in respect of long
term assets), other than (a) Capital Expenditures and (b) fees and expenses
capitalized with respect to the Related Transactions --------------
Scheduled principal payments with respect to Indebtedness actually paid in
cash (excluding mandatory prepayments required by subsection 1.5) --------------
Total Interest Expenses (as calculated on Exhibit 4.8(C)) --------------
The aggregate of all voluntary prepayments of the Term Loans made in
accordance with subsection 1.5(A) of the Credit Agreement --------------
Restricted Junior Payments made in cash and permitted under subsection 3.5
of the Credit Agreement --------------
Plus: Decrease (increase) in Working Capital (defined below) --------------
Decreases (increases) in long term deferred tax assets --------------
Increases (decreases) in long term deferred tax liabilities --------------
Increases (decreases) in long term portion of accrued liabilities
and other long-term liabilities, excluding Indebtedness --------------
Fees paid for the period under the Management Agreement in compliance with
this Agreement and director's fees paid for the period in compliance with
this Agreement --------------
EXHIBIT 1.5(B)-2
Start-Up Expenses for the period --------------
Expenditures pursuant to the last sentence of subsection 4.9 applicable to,
but not included in, the Pro Forma; including expenditures during the
period made in connection with the Related Transactions and payment of
liabilities existing on the Closing Date --------------
$200,000
Excess Cash Flow $
==============
Prepayment percent 75%(1)
Prepayment amount $
==============
----------------------
(1) or 50% if the Ratio of Total Indebtedness to TTM EBITDA as demonstrated
on attachment 4.7 as at the end of such fiscal year is less than 2.0x.
EXHIBIT 1.5(B)-3
Decrease (increase) in Working Capital, for the purposes of the calculation of
Excess Cash Flow, means the following:
BEG. OF PERIOD END OF PERIOD
Current assets: $ $
---------------------- --------------------
Less: Freely Available Cash and Cash Equivalents ---------------------- --------------------
Amounts due from Affiliates ---------------------- --------------------
Adjusted current assets ---------------------- --------------------
Current liabilities: $ $
---------------------- --------------------
Less: Revolving Loans* ---------------------- --------------------
Current portion of Indebtedness* ---------------------- --------------------
Amounts due to Affiliates ---------------------- --------------------
Adjusted current liabilities $ $
---------------------- --------------------
Working Capital $ $
====================== --------------------
Decrease (Increase) in Working Capital [BEGINNING OF PERIOD-END
OF PERIOD WORKING CAPITAL] $
====================
* To the extent included in current liabilities.
EXHIBIT 1.5(B)-4
FORM OF INTERCOMPANY NOTE
EXHIBIT 3.2(A)
PROMISSORY NOTE
Revolver
$________________ September 30, 1998
Phoenix, Arizona
FOR VALUE RECEIVED, _______________________, a(n) _____________ ______
corporation ("MAKER"), promises to pay to the order of ____________ _________,
a(n) _________________ corporation ("HOLDER"), at ___________________ _______,
__________________, or such other place as the Holder hereof may, from time to
time, specify in writing, the principal sum of ___________________________ and
_____/100 DOLLARS ($___________________.__________) or such lesser amount as may
have been advanced by Holder to Maker and be outstanding hereunder at September
30, 1998, together with interest, as provided in this Promissory Note ("NOTE").
1. Demand. The unpaid principal amount of this Note will be
payable on demand.
2. Remedies of Holder. Upon the occurrence and during the
continuance of an Event of Default, as defined herein, the
remaining payments of principal, at the option of the holder
hereof, shall at once become due and payable, and the
principal sum hereof shall bear interest at the rate of
percent ( %) per annum so long as such Default remains
uncured. In addition, Holder shall have any and all rights
available to it, at law, in equity or otherwise, and such
rights will be cumulative and non-exclusive.
3. [Omitted]
4. Event of Default. Each of the following will constitute an
event of default ("EVENT OF DEFAULT") under this Note:
(a) Failure by Maker to pay any amounts under this Note
when due and such failure continues uncured for a
period of ten (10) days after delivery of written
notice to Maker.
(b) Maker's (i) admission in writing of its inability to
pay its obligations as they become due, (ii)
assignment for the benefit of its creditors, or (iii)
application for, consent to or acquiescence in, the
appointment of a trustee, receiver or other custodian
for Maker, the property of Maker or any part thereof,
or in the absence of any application, consent or
acquiescence, the appointment of a trustee, receiver
or other custodian for Maker or a substantial part of
the property of Maker, which appointment is not
discharged within sixty (60) days.
(c) Commencement of any case under Title 11 of the United
States Code or any other bankruptcy, reorganization,
receivership, custodianship, or similar proceeding
under any state or federal law by or against Maker
and, with respect to any such case or proceeding that
is involuntary, such case or proceeding is not
dismissed within ninety (90) days of the filing
thereof.
EXHIBIT 3.2(A)
(d) Commencement of any litigation or proceeding before
any court, government or governmental agency, body or
instrumentality (federal, state, local or foreign)
against or affecting Maker, and such litigation or
proceeding substantially impairs the ability of Maker
to perform its obligations under the Note.
5. [Omitted]
6. General Provisions.
(a) Successors and Assigns. This note will be binding
upon and inure to the benefit of Holder, Maker and
their respective successors, assigns, executors,
heirs, devisees, and beneficiaries.
(b) Modification. This Note may not be modified except in
writing signed by Maker and Holder.
(c) Time of Essence. Time is of the essence with regard
to each and every term, condition, and obligation of
the Maker of this Note.
(d) Non-Waiver. Failure or delay in exercising any right
or option hereunder given to Holder will not
constitute a waiver of any such right or option or
waiver of any other right or option under this Note.
(e) Applicable Law. This Note is governed by the laws of
the State of Arizona. Maker promises to pay all costs
and expenses of collection, including reasonable
attorneys' fees, in the event this Note is placed in
the hands of an attorney for collection, and such
collection is affected without suit. The prevailing
party in any litigation, arbitration or other
proceedings arising out of this Note shall be
reimbursed by the other party for all costs and
expenses incurred in such proceedings, including
reasonable attorneys' fees.
(f) Severability. If at any time any provision of this
Note is or becomes illegal, invalid or unenforceable
in any respect, the legality, validity and
enforceability of the remaining provisions of this
Note will not be affected and such remaining
provisions will remain in full force and effect.
(g) Waiver of Maker's Rights. Maker hereby expressly
waives demand, presentment for payment, protest,
notice of protest and diligence in collection, and
consents to the time said payment or any part thereof
is to be made and may be extended by the Holder
hereof.
(h) Notices. All notices or other communications required
or provided to be sent by either party shall be in
writing, shall be delivered by one or more of the
following methods and shall be effective as indicated
below:
1. By hand delivery, in which event notice is
deemed to be effective on the date that
notice is received; or
2. By United States Postal Service certified or
registered mail, postage prepaid, in which
event notice is deemed to be effective on
the date which is three (3) days after the
date on which notice is mailed; or
EXHIBIT 3.2(A)-2
3. By overnight delivery by a commercial entity
which is in the business of providing
overnight delivery service (fees prepaid) or
by overnight United States Postal Service
delivery (fees prepaid), in which event
notice is deemed to be effective on the date
following the date on which notice is
properly deposited with such commercial
entity or with the United States Postal
Service; or
4. By electronic facsimile process, in which
event notice is deemed to be effective on
the date of electronic transmission properly
made (if transmission is made before 12:00
o'clock noon, sender's time), or on the next
day after the date of electronic
transmission properly made (if transmission
is made after 12:00 o'clock noon, sender's
time).
Notices shall be sent to the addresses shown below or
at such other address or addresses (but neither party
may designate a post office box for receipt of
notices) as the parties may, from time to time,
specify in writing, such changes to be made in a like
manner:
To Maker: __________________________________
__________________________________
Attn: ________________________
FAX: _________________________
To Holder: _________________________________
_________________________________
Attn: ________________________
FAX: _________________________
(i) Interest. Notwithstanding any provision herein or in
any document or instrument now or hereafter securing
this Note, the total liability for payments in the
nature of interest shall not exceed the limits now
imposed by applicable law. The contracted rate of
interest shall consist of the sum of the interest
rate stated herein, and any charges to obtain this
loan, other charges, fees, goods, penalties, things
in action, or sums or things of value paid by Maker
to Holder, to the extent that such charges are
considered to be interest. Any sums collected by
Holder deemed to be interest in excess of the legal
rate shall, at the option of Holder (i) be returned
to Maker or (ii) to the extent permitted by
applicable law, be applied by Holder in payment of
the outstanding principal balance under this Note.
7. Security. This Note is and shall be secured by security
interest in all of the Maker's assets, now existing or
hereafter acquired.
MAKER:
______________________________________
a(n) _____________________ corporation
By: __________________________________
Its: _________________________________
EXHIBIT 3.2(A)-3
FORM OF INTERCOMPANY NOTE (BORROWER)
EXHIBIT 3.2(B)
PROMISSORY NOTE
Revolver
$________________ September 30, 1998
Phoenix, Arizona
FOR VALUE RECEIVED, ____________________, a(n)________________________
_______ _____corporation ("MAKER"), promises to pay to the order
of____________________________________ _______, a(n) _________________
corporation ("HOLDER"), at __________________________________ ______,
_________________, or such other place as the Holder hereof may, from time to
time, specify in writing, the principal sum of
__________________________________________________ and ____/100 DOLLARS
($________________________._________) or such lesser principal amount as may
have been advanced by Holder to Maker and be outstanding hereunder at September
30, 1998, together with interest, as provided in this Promissory Note ("NOTE").
1. Demand. The unpaid principal amount of this Note will be
payable on demand.
2. Remedies of Holder. Upon the occurrence and during the
continuance of an Event of Default, as defined herein, the
remaining payments of principal, at the option of the holder
hereof, shall at once become due and payable, and the
principal sum hereof shall bear interest at the rate of
percent ( %) per annum so long as such Default remains
uncured. In addition, Holder shall have any and all rights
available to it, at law, in equity or otherwise, and such
rights will be cumulative and non-exclusive.
3. [Omitted]
4. Event of Default. Each of the following will constitute an
event of default ("EVENT OF DEFAULT") under this Note:
(a) Failure by Maker to pay any amounts under this Note
when due and such failure continues uncured for a
period of ten (10) days after delivery of written
notice to Maker.
(b) Maker's (i) admission in writing of its inability to
pay its obligations as they become due, (ii)
assignment for the benefit of its creditors, or (iii)
application for, consent to or acquiescence in, the
appointment of a trustee, receiver or other custodian
for Maker, the property of Maker or any part thereof,
or in the absence of any application, consent or
acquiescence, the appointment of a trustee, receiver
or other custodian for Maker or a substantial part of
the property of Maker, which appointment is not
discharged within sixty (60) days.
(c) Commencement of any case under Title 11 of the United
States Code or any other bankruptcy, reorganization,
receivership, custodianship, or similar proceeding
under any state or federal law by or against Maker
and, with respect to any such case or proceeding that
is involuntary, such case or proceeding is not
dismissed within ninety (90) days of the filing
thereof.
EXHIBIT 3.2(B)
(d) Commencement of any litigation or proceeding before
any court, government or governmental agency, body or
instrumentality (federal, state, local or foreign)
against or affecting Maker, and such litigation or
proceeding substantially impairs the ability of Maker
to perform its obligations under the Note.
5. [Omitted]
6. General Provisions.
(a) Successors and Assigns. This note will be binding
upon and inure to the benefit of Holder, Maker and
their respective successors, assigns, executors,
heirs, devisees, and beneficiaries.
(b) Modification. This Note may not be modified except in
writing signed by Maker and Holder.
(c) Time of Essence. Time is of the essence with regard
to each and every term, condition, and obligation of
the Maker of this Note.
(d) Non-Waiver. Failure or delay in exercising any right
or option hereunder given to Holder will not
constitute a waiver of any such right or option or
waiver of any other right or option under this Note.
(e) Applicable Law. This Note is governed by the laws of
the State of Arizona. Maker promises to pay all costs
and expenses of collection, including reasonable
attorneys' fees, in the event this Note is placed in
the hands of an attorney for collection, and such
collection is affected without suit. The prevailing
party in any litigation, arbitration or other
proceedings arising out of this Note shall be
reimbursed by the other party for all costs and
expenses incurred in such proceedings, including
reasonable attorneys' fees.
(f) Severability. If at any time any provision of this
Note is or becomes illegal, invalid or unenforceable
in any respect, the legality, validity and
enforceability of the remaining provisions of this
Note will not be affected and such remaining
provisions will remain in full force and effect.
(g) Waiver of Maker's Rights. Maker hereby expressly
waives demand, presentment for payment, protest,
notice of protest and diligence in collection, and
consents to the time said payment or any part thereof
is to be made and may be extended by the Holder
hereof.
(h) Notices. All notices or other communications required
or provided to be sent by either party shall be in
writing, shall be delivered by one or more of the
following methods and shall be effective as indicated
below:
1. By hand delivery, in which event notice is
deemed to be effective on the date that
notice is received; or
2. By United States Postal Service certified or
registered mail, postage prepaid, in which
event notice is deemed to be effective on
the date which is three (3) days after the
date on which notice is mailed; or
EXHIBIT 3.2(B)-2
3. By overnight delivery by a commercial entity
which is in the business of providing
overnight delivery service (fees prepaid) or
by overnight United States Postal Service
delivery (fees prepaid), in which event
notice is deemed to be effective on the date
following the date on which notice is
properly deposited with such commercial
entity or with the United States Postal
Service; or
4. By electronic facsimile process, in which
event notice is deemed to be effective on
the date of electronic transmission properly
made (if transmission is made before 12:00
o'clock noon, sender's time), or on the next
day after the date of electronic
transmission properly made (if transmission
is made after 12:00 o'clock noon, sender's
time).
Notices shall be sent to the addresses shown below or
at such other address or addresses (but neither party
may designate a post office box for receipt of
notices) as the parties may, from time to time,
specify in writing, such changes to be made in a like
manner:
To Maker: __________________________________
__________________________________
Attn: ________________________
FAX: _________________________
To Holder: _________________________________
_________________________________
Attn: ________________________
FAX: _________________________
(i) Interest. Notwithstanding any provision herein or in
any document or instrument now or hereafter securing
this Note, the total liability for payments in the
nature of interest shall not exceed the limits now
imposed by applicable law. The contracted rate of
interest shall consist of the sum of the interest
rate stated herein, and any charges to obtain this
loan, other charges, fees, goods, penalties, things
in action, or sums or things of value paid by Maker
to Holder, to the extent that such charges are
considered to be interest. Any sums collected by
Holder deemed to be interest in excess of the legal
rate shall, at the option of Holder (i) be returned
to Maker or (ii) to the extent permitted by
applicable law, be applied by Holder in payment of
the outstanding principal balance under this Note.
7. Security. This Note is and shall be secured by security
interest in all of the Maker's assets, now existing or
hereafter acquired.
8. Subordination.
8.1 All indebtedness evidenced hereby, including, without
limitation, principal hereof, interest accrued or to
accrue hereon and fees and expenses payable hereunder
("JUNIOR INDEBTEDNESS") shall, to the extent and in
the manner hereinafter set forth, be subordinated and
subject in right of payment to the prior payment in
full of Superior Indebtedness.
EXHIBIT 3.2(B)-3
For the purposes hereof, the term "SUPERIOR
INDEBTEDNESS":
(a) shall mean all indebtedness, direct or
indirect, absolute or contingent, heretofore
or hereafter incurred by the Maker under or
in connection with that certain Amended and
Restated Credit Agreement, dated as of June
30, 1998, among UTI Holdings, Inc.,
Universal Technical Institute, Inc., NTT
Acquisition, Inc., Antares Capital
Corporation, Balanced High-Yield Fund I
Ltd., BHF-Bank Aktiengesellschaft and ▇▇▇▇▇▇
Financial Inc., any guarantee of the
"Obligations" (as defined therein) or any
other "Loan Documents" (as defined therein)
as such agreement, guarantee or any one or
more Loan Documents may be amended,
modified, restated, replaced, renewed,
extended, refinanced or refunded from time
to time and all refinancings and refundings
of any or all such indebtedness; and
(b) shall include, without limitation, any
interest, and any and all reasonable
expenses, payable in respect of any of the
foregoing in clause (a) above subsequent to
the commencement of any proceeding against
or with respect to the Maker under Title 11
of the United States Code, as amended from
time to time or any successors thereto (the
"BANKRUPTCY ACT") whether or not such
interest is an allowed claim in any such
proceeding.
For the purposes here, "indebtedness" shall include
principal, interest, fees, indemnities and any
expenses, if any, incurred with respect thereto.
8.2 No payment under Junior Indebtedness shall be made by
the Maker if and so long as any portion of the
Superior Indebtedness has become and remains due and
payable. The provisions of this Section 8.2 shall not
be applicable to any payment governed by Section 8.3
hereof.
8.3 Upon (i) any payment being required to be made by the
Maker under Junior Indebtedness upon any declaration
of acceleration of the principal amount thereof or
any demand for payment thereof or (ii) any payment or
distribution of assets of the Maker of any kind or
character, whether in cash, property or securities,
to creditors upon any dissolution or winding up or
total or partial liquidation or reorganization of the
Maker, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership, or other
proceedings; and upon any such declaration of
acceleration or dissolution or winding up or
liquidation or reorganization, any distribution of
assets of the Maker of any kind or character, whether
in cash, property or securities, to which the holders
of Junior Indebtedness would be entitled except for
the provisions hereof, all principal, premium, if
any, and interest due or to become due and all other
amounts payable under Superior Indebtedness shall be
paid by the Maker or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, or by the
holders of Junior Indebtedness if received by them,
directly to the holders of Superior Indebtedness of
the Maker (pro rata to each such holder on the basis
of the respective amounts of such Superior
Indebtedness held by such holder), or their
representatives to the extent necessary to pay all
such Superior Indebtedness in full, in cash, after
giving effect to any concurrent payment of
distribution to or for the benefit of the holders of
such Superior
EXHIBIT 3.2(B)-4
Indebtedness, before any payment or distribution is
made to the holders of Junior Indebtedness. In
furtherance of the foregoing, but not by way of
limitation thereof, if the Maker shall file or have
filed against it a petition under any chapter of the
Bankruptcy Act or an order for relief shall be
entered as to the Maker thereunder, with the result
that the Maker is excused from the obligation to pay
all or any part of the interest otherwise payable in
respect of any Superior Indebtedness during the
period subsequent to the commencement of any such
proceeding under the Bankruptcy Act, each holder of
Junior Indebtedness by his acceptance hereof does
hereby agree that all or such part of such interest,
as the case may be, shall be payable out of, and to
that extent diminish and be at the expense of
reorganization dividends or other distributions in
respect of such Junior Indebtedness.
8.4 If any payment or distribution of assets of the Maker
of any kind or character, whether in cash, property
or securities, not permitted by the foregoing shall
be received by the holders of Junior Indebtedness
before all Superior Indebtedness is paid in full in
cash and all commitments under which any Superior
Indebtedness can be created have expired or
terminated, such payment or distribution shall be
held for the benefit of, and shall be paid over or
delivered to, the holders of such Superior
Indebtedness or their representative or
representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments
evidencing any of such Superior Indebtedness may have
been issued or under which such instruments are
pledged or issued, as their respective interests may
appear, for application to the payment of all
Superior Indebtedness remaining unpaid to the extent
necessary to pay all such Superior Indebtedness in
full in accordance with its terms, after giving
effect to any concurrent payment or distribution to
or for the holders of such Superior Indebtedness.
8.5 The provisions hereof are solely for the purpose of
defining the relative rights of the holders of
Superior Indebtedness on the one hand and the holders
of Junior Indebtedness on the other hand, and nothing
herein shall impair, as between the Maker and the
holder of any Junior Indebtedness, the obligations of
the Maker under Junior Indebtedness, which are
unconditional and absolute, nor shall anything herein
prevent the holders of any Junior Indebtedness from
exercising all remedies otherwise permitted by
applicable law or hereunder upon default hereunder,
all subject to the rights, if any, hereunder of
holders of Superior Indebtedness to receive cash,
property or securities otherwise payable or
deliverable to the holders of Junior Indebtedness.
8.6 Each holder of Junior Indebtedness by his acceptance
hereof acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of
any Superior Indebtedness, whether such Superior
Indebtedness was created or acquired before or after
the issuance of this Junior Indebtedness, to acquire
and/or continue to hold such Superior Indebtedness
and such holder of Superior Indebtedness shall be
deemed conclusively to have relied on such
subordination provisions in acquiring and/or
continuing to hold such Superior Indebtedness.
8.7 Subject to the payment in full in cash of all
Superior Indebtedness, the holders of Junior
Indebtedness shall be subrogated to the rights of the
holders of Superior
EXHIBIT 3.2(B)-5
Indebtedness to receive payments or distributions of
assets of the Maker applicable to the Superior
Indebtedness until the Superior Indebtedness shall be
paid in full, and no such payments or distributions
to the holders of Superior Indebtedness shall, as
among the Maker, its creditors other than the holders
of Superior Indebtedness and the holders of Junior
Indebtedness, be deemed to be a payment by the Maker
to or on account of the Junior Indebtedness.
8.8 Notwithstanding anything to the contrary contained
herein, in the event the Maker fails to make any
payment required under this Note which would have
been due but for the provisions of this Section 8,
the Maker shall (a) notify the Holder of the
circumstances justifying such nonpayment, (b) provide
the Holder with reasonable periodic updates
concerning such circumstances, (c) take commercially
reasonable steps to eliminate such circumstances, and
(d) make such payment as soon as thereafter permitted
under this Section 8. The Maker represents to the
Holder that there currently exists no breach or
default under any Superior Indebtedness and, further,
that neither the execution, delivery nor payment of
this Note in accordance herewith shall constitute
such a breach or default.
8.9 Returned Payments. Without limiting any other
provision of this Section 8, Superior Indebtedness
shall not be deemed to have been paid in full for
purposes of this Section 8, if any payment in respect
thereof shall have been restored or returned to the
payor or its trustee in dissolution, liquidation or
reorganization of the payor (or a settlement of any
claim or potential claim made in connection with any
such proceeding), or as required or agreed upon or as
a result of the appointment of a custodian, receiver,
trustee or other officer with respect to the payor or
any substantial part of its property or otherwise,
and the provisions of this Section 8 shall be
reinstated as to any Superior Indebtedness as to
which any such restoration or return shall have
occurred.
8.10 Certain Powers of Holders of Superior Indebtedness.
Without notice to or further consent by it, (a) the
liability of any Maker in respect of the Superior
Indebtedness may, in whole or in part, be renewed,
extended, modified, released, replaced, refinanced or
refunded by the holders of Superior Indebtedness and
the documents and instruments creating or evidencing
the Superior Indebtedness may be amended or
supplemented, as such holders of Superior
Indebtedness may deem advisable, (b) any collateral
and/or security interests in respect of Superior
Indebtedness may, from time to time, in whole or in
part, be exchanged, released, not perfected, not
timely perfected, sold or surrendered by the holders
of Superior Indebtedness, (c) the amount of the
Superior Indebtedness may, from time to time, be
increased through further loans, or otherwise, (d)
any deposit balance or balances to the credit of any
Maker may, from time to time, in whole or in part, be
surrendered or released by the holders of Superior
Indebtedness, and (e) any of the provisions hereof
may be waived partially or entirely by the holders of
Superior Indebtedness, all without impairing or in
any way affecting the subordination of the Junior
Indebtedness contained in this Section 8; nor shall
the subordination of the Junior Indebtedness herein
contained be impaired or affected in any way by any
other actions, inaction or omission in respect of the
Superior Indebtedness or this Section 8.
EXHIBIT 3.2(B)-6
MAKER:
______________________________________
a(n) _____________________ corporation
By: __________________________________
Its: _________________________________
EXHIBIT 3.2(B)-7
COMPLIANCE CERTIFICATE
EXHIBIT 4.8(C)
This certificate is given by Universal Technical Institute, Inc., a Delaware
corporation ("HOLDINGS") and UTI Holdings, Inc., an Arizona corporation
("BORROWER"), pursuant to subsection 4.8(C) of that certain Second Amended and
Restated Credit Agreement dated as of [ ], 2002 (as the same has been or may
hereafter be amended, modified or supplemented, the "CREDIT AGREEMENT") among
▇▇▇▇▇▇ Financial, Inc., a Delaware corporation, as Agent and a Lender ("AGENT"),
Borrower and Holdings and the other Lenders party thereto from time to time.
Capitalized terms used herein without definition shall have the meanings set
forth in the Credit Agreement.
The officer executing this certificate is the Chief Financial Officer [CHIEF
EXECUTIVE OFFICER] of each of Holdings and Borrower and as such is duly
authorized to execute and deliver this certificate on behalf of Holdings and
Borrower. By executing this certificate such officer hereby certifies to Agent
and Lenders that:
(a) the financial statements delivered with this certificate in
accordance with subsection 4.8(A) and/or 4.8(B) of the Credit
Agreement fairly present in all material respects the results
of operations and financial condition of Holdings and its
Subsidiaries as of the dates of such financial statements;
(b) I have reviewed the terms of the Credit Agreement and the
Notes and have made, or caused to be made under my
supervision, a review in reasonable detail of the transactions
and conditions of Holdings and its Subsidiaries during the
accounting period covered by such financial statements;
(c) such review has not disclosed the existence during or at the
end of such accounting period, and I have no knowledge of the
existence as of the date hereof, of any condition or event
that constitutes a Default or an Event of Default, except as
set forth in Exhibit A hereto which includes a description of
the nature and period of existence of such Default or an Event
of Default and what action Holdings and its Subsidiaries has
taken, is undertaking and proposes to take with respect
thereto;
(d) Borrower is in compliance with the covenants contained in
Section 4 of the Credit Agreement, as demonstrated below,
except as set forth below or described in Exhibit A hereto;
and
(e) the Total Indebtedness to TTM EBITDA Ratio, as demonstrated on
attachment 4.7 is [ ] to [ ].
EXHIBIT 4.8(C)
IN WITNESS WHEREOF, Holdings has caused this Certificate to be executed by its
Chief Financial Officer [CHIEF EXECUTIVE OFFICER] this [ ] day of [ ],
200[ ].
UTI HOLDINGS, INC.
UNIVERSAL TECHNICAL INSTITUTE, INC.
By: __________________________________
Chief Financial Officer
[Chief Executive Officer]
EXHIBIT 4.8(C)-2
4.1 CAPITAL EXPENDITURE LIMIT
Capital Expenditures are defined as follows:
Amount capitalized as capital expenditures for the period, under GAAP, as
property, plant, and equipment (other than those incurred as part of a Permitted
Acquisition) $
-------------
Plus: deposits made in the period in connection with
property, plant and equipment; less deposits of a prior period included -------------
above
Less: Net Proceeds of Asset Dispositions (including but not limited to
insurance proceeds and the trade-in value of equipment) included in
capital expenditures above, which Borrower is permitted to reinvest under
subsection 1.5(C) of the Credit Agreement -------------
Utilization of credits received from Snap-On Tools, Inc., and from others
under similar agreements, for student purchases -------------
Gross proceeds received in connection with the Nascar Sale/Leaseback -------------
Capital Expenditures $
Less: Portion of Capital Expenditures financed under capital leases or other
Indebtedness (Indebtedness, for this purpose, does not include drawings
under the Revolving Loan Commitment)* $
-------------
Unfinanced Capital Expenditures (used in calculation of Fixed Charge Coverage and
Excess Cash Flow) $
-------------
Capital Expenditures (from above) $
-------------
Permitted Capital Expenditures $
-------------
In Compliance Yes/No
*Note: All amounts in Schedule 4.8(C) are without duplication
EXHIBIT 4.8(C)-3
4.3 EBITDA
EBITDA is defined as follows:
Net income (or loss) for the period of Holdings and its Subsidiaries on a
consolidated basis determined in accordance with GAAP, but excluding: (a) the
income (or loss) of any Person (other than Wholly-Owned Subsidiaries of
Holdings) in which Holdings or any of its Subsidiaries has an ownership interest
unless received by Holdings or any Subsidiary thereof in a cash distribution;
and (b) the income (or loss) of any Person accrued prior to the date it became a
Subsidiary of Holdings or is merged into or consolidated with Holdings or any
Subsidiary thereof. $
---------------------
Plus: Any provision for (or less any benefit from) income and franchise
taxes included in the determination of net income ---------------------
Interest expense deducted in the determination of net income ---------------------
Amortization and depreciation expenses deducted in determining net
income ---------------------
Losses (or less gains) from Asset Dispositions or other non-cash items
included in the determination of net income (excluding sales, expenses
or losses related to current assets) ---------------------
Extraordinary losses (or less gains), as defined under GAAP, net of
related tax effects ---------------------
Expenses of the Related Transactions or Permitted Acquisitions
included in the determination of Net Income provided that such
expenses were included in the pro forma adjustments to the financial
statements delivered at the Closing Date or the Amendment and
Restatement Date or in connection with any Permitted Acquisition, or
disclosed in the notes thereto ---------------------
Start-Up Expenses ---------------------
Amounts paid for the period under the Management Agreement in
compliance with this Agreement and director's fees paid for the period
in compliance with this Agreement, in each instance, to the extent
deducted in the determination of net income ---------------------
EBITDA $
=====================
Note: EBITDA will be calculated on a rolling twelve-month basis.
EXHIBIT 4.8(C)-4
4.4 FIXED CHARGE COVERAGE
Fixed Charge Coverage is defined as follows:
Fixed Charges:
Interest expense, net of interest income, included in the determination of net
income $
---------------------
Less: Amortization of capitalized fees and expenses incurred with respect to
the Related Transactions and Permitted Acquisitions included in
interest expense ---------------------
Interest paid in kind or which accrues and is added to principal and
included in interest expense ---------------------
Interest Expenses $
---------------------
Plus: Any provision for (benefit from) income or franchise taxes included
in the determination of net income
Any decreases (less increases) in short-term and long-term deferred
tax liabilities; and ---------------------
Any increases (less decreases) in short-term and long-term deferred
tax assets
Scheduled payments of principal with respect to all Indebtedness
(including the principal portion of scheduled payments of capital
lease obligations, but excluding mandatory prepayments required by
subsection 1.5) of Holdings and its Subsidiaries on a consolidated
basis, but excluding reductions of the Revolving Loan ---------------------
Restricted Junior Payments made in cash ---------------------
Start-Up Expenses for the period ---------------------
Fees paid for the period under the Management Agreement in compliance
with this Agreement and director's fees paid for the period in
compliance with this Agreement (excluding any such fees payable on the
Second Amendment and Restatement Date) ---------------------
Fixed Charges $
=====================
Operating Cash Flow:
EBITDA (defined in attachment 4.3 of Exhibit 4.8(C)) $
---------------------
EXHIBIT 4.8(C)-5
Less: Unfinanced Capital Expenditures (defined in attachment 4.1 of Exhibit
4.8(C))l
Other Capitalized Costs, including without limitation prepaid student
acquisition costs, defined as the gross amount capitalized, for any
fiscal period, as long term assets (net of cash received in respect of
long term assets), other than (a) Capital Expenditures and (b) fees
and expenses capitalized with respect to the Related Transactions or
Permitted Acquisitions
Operating Cash Flow $
=====================
Fixed Charge Coverage (Operating Cash Flow / Fixed Charges) ---------------------
Required Fixed Charge Coverage ---------------------
In Compliance Yes/No
EXHIBIT 4.8(C)-6
4.5 TOTAL INTEREST COVERAGE
Interest Expenses (defined in attachment 4.4 of Exhibit 4.8(C)) ---------------------
EBITDA (defined in attachment 4.3 of Exhibit 4.8(C)) ---------------------
Total Interest Coverage (EBITDA / Interest Expenses) ---------------------
Required Total Interest Coverage ---------------------
In Compliance Yes/No
EXHIBIT 4.8(C)-7
4.7 TOTAL INDEBTEDNESS TO TTM EBITDA RATIO
Outstanding principal balance of all Indebtedness of Holdings and its
Subsidiaries (excluding Total Risk Participation Liability but including all
remaining Subordinated Indebtedness (whether or not for borrowed money) ---------------------
Total Indebtedness $
=====================
TTM EBITDA for the twelve (12) month period ending on the date set forth above $
=====================
Total Indebtedness to TTM EBITDA Ratio [ ] to [ ]
EXHIBIT 4.8(C)-8
EXHIBIT 10.1(A)
[FORM OF AMENDED AND RESTATED TERM NOTE A]
TERM NOTE A
[$ __________] _____________, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, the undersigned, UTI HOLDINGS, INC., an Arizona
corporation ("BORROWER"), hereby unconditionally promises to pay to the order of
[______________________] ("LENDER"), to the Agent's account as specified in the
Credit Agreement (defined below), or at such other place as the holder of this
Term Note A may from time to time designate in writing, in lawful money of the
United States of America and in immediately available funds, the principal sum
of [____________________________________ and __/100 DOLLARS ($__________)].
This Term Note A is payable as set forth in the Second Amendment and
Restatement of Credit Agreement with the first installment due and payable on
June 30, 2002 and the final installment due and payable on March 31, 2007, if
not sooner paid.
This Term Note A is one of the amended and restated Notes referred to
in, was executed and delivered pursuant to, and evidences indebtedness of
Borrower incurred under, that certain Second Amendment and Restatement of Credit
Agreement dated as of March 29, 2002, by and among Borrower, Universal Technical
Institute, Inc., the lenders named therein and ▇▇▇▇▇▇ Financial, Inc., in its
capacity as Agent for the Lenders (as the same may be amended, restated,
supplemented or otherwise modified and in effect from time to time, the "CREDIT
AGREEMENT"), to which reference is hereby made for a statement of the terms and
conditions under which Term Loan A, a portion of which is evidenced hereby, was
made and is to be repaid and for a statement of Agent's and Lender's remedies
upon the occurrence of an Event of Default. Capitalized terms used herein but
not otherwise specifically defined shall have the meanings ascribed to such
terms in the Credit Agreement.
This Term Note A amends and restates and replaces in whole or in part
that certain Term Note A in the original principal amount of $[ ], dated
January 23, 1998, by Borrower as maker to [ ] as payee delivered under the
Credit Agreement dated as of January 23, 1998 (as the same has been amended,
amended and restated, supplemented or otherwise modified from time to time), by
and among Borrower, Universal Technical Institute, Inc., the lenders named
therein and ▇▇▇▇▇▇ Financial, Inc., in its capacity as agent for the such
lenders, and evidences all or a portion of the indebtedness arising under such
replaced Term Note A.
Borrower further promises to pay interest on the outstanding unpaid
principal amount hereof from the date hereof until payment in full at the rate
from time to time applicable to Term Loan A as determined in accordance with the
Credit Agreement; provided, however, that upon the occurrence and during the
continuance of an Event of Default, Borrower shall pay interest on demand by
Agent or Requisite Lenders on the outstanding principal balance of this Term
Note A at the rate of interest applicable following the occurrence of an Event
of Default as determined in accordance with the Credit Agreement.
Interest on this Term Note A shall be payable at the times and from the
dates specified in the Credit Agreement, on the date of any prepayment hereof,
at maturity, whether due by acceleration or
EXHIBIT 10.1(A)
otherwise, and as otherwise provided in the Credit Agreement. From and after the
date when the principal balance hereof becomes due and payable, whether by
acceleration or otherwise, interest hereon shall be payable on demand. In no
contingency or event whatsoever shall interest charged hereunder, however such
interest may be characterized or computed, exceed the highest rate permissible
under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event that such a court determines
that Lender has received interest hereunder in excess of the highest rate
applicable hereto, such excess shall be applied in accordance with the terms of
the Credit Agreement.
The indebtedness evidenced by this Term Note A is secured pursuant to
the terms of the Loan Documents.
This Term Note A may be prepaid in whole or in part at any time subject
to the terms of the Credit Agreement.
Borrower hereby waives demand, presentment and protest and notice of
demand, presentment, protest and nonpayment.
Borrower agrees that no amendment, termination or waiver of any
provision of this Term Note A or consent to any departure by Borrower therefrom,
shall in any event be effective except as provided in the Credit Agreement.
Borrower further agrees, subject only to any limitation imposed by
applicable law, to pay all expenses, including attorneys' fees and legal
expenses, incurred by Lender in endeavoring to collect any amounts payable
hereunder which are not paid when due, whether by acceleration or otherwise.
THIS TERM NOTE A HAS BEEN DELIVERED AT NEW YORK, NEW YORK AND SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (WHICH
PRINCIPLES SHALL BE DEEMED NOT TO INCLUDE SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW). Whenever possible each provision of this Term Note A shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Term Note A shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Term Note A. Whenever in this Term Note A
reference is made to Agent, Lender or Borrower, such reference shall be deemed
to include, as applicable, a reference to their respective permitted successors
and assigns, and, in the case of Lender, any financial institution to which it
has sold or assigned all or any part of its interest in Term Loan A or in its
commitment to make Term Loan A as permitted by the Credit Agreement. The
provisions of this Term Note A shall be binding upon and shall inure to the
benefit of such permitted successors and assigns. Borrower's successors and
assigns shall include, without limitation, a receiver, trustee or debtor in
possession of or for Borrower.
UTI HOLDINGS, INC.
By: __________________________________
Name:
Title:
EXHIBIT 10.1(A)-2
[FORM OF SECOND AMENDED AND RESTATED TERM NOTE B]
TERM NOTE B
[$ __________] _____________, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, the undersigned, UTI HOLDINGS, INC., an Arizona
corporation ("BORROWER"), hereby unconditionally promises to pay to the order of
[______________________] ("LENDER"), to the Agent's account as specified in the
Credit Agreement (defined below), or at such other place as the holder of this
Term Note B may from time to time designate in writing, in lawful money of the
United States of America and in immediately available funds, the principal sum
of [____________________________________ and __/100 DOLLARS ($__________)].
This Term Note B is payable as set forth in the Second Amendment and
Restatement of Credit Agreement with the first installment due and payable on
June 30, 2002 and the final installment due and payable on March 31, 2009, if
not sooner paid.
This Term Note B is one of the amended and restated Notes referred to
in, was executed and delivered pursuant to, and evidences indebtedness of
Borrower incurred under, that certain Second Amendment and Restatement of Credit
Agreement, dated as of March 29, 2002, by and among Borrower, Universal
Technical Institute, Inc., the lenders named therein and ▇▇▇▇▇▇ Financial, Inc.,
in its capacity as Agent for the Lenders, (as the same may be amended, restated,
supplemented or otherwise modified and in effect from time to time, the "CREDIT
AGREEMENT"), to which reference is hereby made for a statement of the terms and
conditions under which Term Loan B, a portion of which is evidenced hereby, was
made and is to be repaid and for a statement of Agent's and Lender's remedies
upon the occurrence of an Event of Default. Capitalized terms used herein but
not otherwise specifically defined shall have the meanings ascribed to such
terms in the Credit Agreement.
This Term Note B amends and restates and replaces in whole or in part
that certain amended and restated Term Note B in the original principal amount
of $[ ], dated June 30, 1998, by Borrower, as maker to [ ], as payee
delivered under the First Amended and Restated Credit Agreement and evidences
all or a portion of the indebtedness arising under such replaced Term Note B.
Borrower further promises to pay interest accrued and unpaid on the
promissory note which this Term Note B replaces as well as interest on the
outstanding unpaid principal amount hereof from the date hereof until payment in
full at the rate from time to time applicable to Term Loan B as determined in
accordance with the Credit Agreement; provided, however, that upon the
occurrence and during the continuance of an Event of Default, Borrower shall pay
interest on demand by Agent or Requisite Lenders on the outstanding principal
balance of this Term Note B at the rate of interest applicable following the
occurrence of an Event of Default as determined in accordance with the Credit
Agreement.
Interest on this Term Note B shall be payable at the times and from the
dates specified in the Credit Agreement, on the date of any prepayment hereof,
at maturity, whether due by acceleration or otherwise, and as otherwise provided
in the Credit Agreement. From and after the date when the principal balance
hereof becomes due and payable, whether by acceleration or otherwise, interest
hereon shall be payable on demand. In no contingency or event whatsoever shall
interest charged hereunder, however such interest may be characterized or
computed, exceed the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable hereto.
In the event that such a court determines that Lender has received interest
hereunder in excess of the highest rate applicable hereto, such excess shall be
applied in accordance with the terms of the Credit Agreement.
EXHIBIT 10.1(A)-3
The indebtedness evidenced by this Term Note B is secured pursuant to
the terms of the Loan Documents.
This Term Note B may be prepaid in whole or in part at any time subject
to the terms of the Credit Agreement.
Borrower hereby waives demand, presentment and protest and notice of
demand, presentment, protest and nonpayment.
Borrower agrees that no amendment, termination or waiver of any
provision of this Term Note B or consent to any departure by Borrower therefrom,
shall in any event be effective except as provided in the Credit Agreement.
Borrower further agrees, subject only to any limitation imposed by
applicable law, to pay all expenses, including attorneys' fees and legal
expenses, incurred by Borrower in endeavoring to collect any amounts payable
hereunder which are not paid when due, whether by acceleration or otherwise.
THIS TERM NOTE B HAS BEEN DELIVERED AT NEW YORK, NEW YORK AND SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (WHICH
PRINCIPLES SHALL BE DEEMED NOT TO INCLUDE SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW). Whenever possible each provision of this Term Note B shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Term Note B shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Term Note B. Whenever in this Term Note B
reference is made to Agent, Lender or Borrower, such reference shall be deemed
to include, as applicable, a reference to their respective permitted successors
and assigns, and, in the case of Lender, any financial institution to which it
has sold or assigned all or any part of its interest in Term Loan B or in its
commitment to make Term Loan B as permitted by the Credit Agreement. The
provisions of this Term Note B shall be binding upon and shall inure to the
benefit of such permitted successors and assigns. Borrower's successors and
assigns shall include, without limitation, a receiver, trustee or debtor in
possession of or for Borrower.
UTI HOLDINGS, INC.
By: __________________________________
A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
Vice President
EXHIBIT 10.1(A)-4
[FORM OF REVOLVING NOTE]
REVOLVING NOTE
[$ __________] _____________, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, the undersigned, UTI HOLDINGS, INC., an Arizona
corporation ("BORROWER"), hereby unconditionally promises to pay to the order of
[____________________________] ("LENDER"), to the Agent's account as specified
in the Credit Agreement (defined below), or at such other place as the holder of
this Revolving Note may from time to time designate in writing, in lawful money
of the United States of America and in immediately available funds, the
principal sum of [_____________________ and __/100 DOLLARS ($_________)], or, if
less, the aggregate unpaid principal amount of all Revolving Loans made to
Borrower by Lender pursuant to subsection 1.1(B), subsection 1.1(C)(2) or other
provisions of the Credit Agreement, at such times as are specified therein.
This Revolving Note is one of the Notes referred to in, was executed
and delivered pursuant to, and evidences indebtedness of Borrower incurred
under, that certain Second Amendment and Restatement of Credit Agreement dated
as of March [-], 2002, by and among Borrower, Universal Technical Institute,
Inc., the lenders named therein and ▇▇▇▇▇▇ Financial, Inc., in its capacity as
Agent for the Lenders (as the same may be amended, restated, supplemented or
otherwise modified and in effect from time to time, the "CREDIT AGREEMENT"), to
which reference is hereby made for a statement of the terms and conditions under
which the loan evidenced hereby was made and is to be repaid and for a statement
of Agent's and Lender's remedies upon the occurrence of an Event of Default.
Capitalized terms used herein but not otherwise specifically defined shall have
the meanings ascribed to such terms in the Credit Agreement.
Borrower further promises to pay interest on the outstanding unpaid
principal amount hereof from the date hereof until payment in full at the rate
from time to time applicable to the Revolving Loan as determined in accordance
with the Credit Agreement; provided, however, that upon the occurrence and
during the continuance of an Event of Default, Borrower shall pay interest on
demand by Agent or Requisite Lenders on the outstanding principal balance of
this Revolving Note at the rate of interest applicable following the occurrence
of an Event of Default as determined in accordance with the Credit Agreement.
Interest on this Revolving Note shall be payable, at the times and from
the dates specified in the Credit Agreement, on the date of any prepayment
hereof, at maturity, whether due by acceleration or otherwise, and as otherwise
provided in the Credit Agreement. From and after the date when the principal
balance hereof becomes due and payable, whether by acceleration or otherwise,
interest hereon shall be payable on demand. In no contingency or event
whatsoever shall interest charged hereunder, however such interest may be
characterized or computed, exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that Lender has
received interest hereunder in excess of the highest rate applicable hereto,
such excess shall be applied in accordance with the terms of the Credit
Agreement.
The indebtedness evidenced by this Revolving Note is secured pursuant
to the terms of the Loan Documents.
EXHIBIT 10.1(A)-5
Borrower hereby waives demand, presentment and protest and notice of
demand, presentment, protest and nonpayment.
Borrower agrees that no amendment, termination or waiver of any
provision of this Revolving Note or consent to any departure by Borrower
therefrom, shall in any event be effective except as provided in the Credit
Agreement.
Borrower further agrees, subject only to any limitation imposed by
applicable law, to pay all expenses, including attorneys' fees and legal
expenses, incurred by Borrower in endeavoring to collect any amounts payable
hereunder which are not paid when due, whether by acceleration or otherwise.
THIS REVOLVING NOTE HAS BEEN DELIVERED AT NEW YORK, NEW YORK AND SHALL
BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (WHICH
PRINCIPLES SHALL BE DEEMED NOT TO INCLUDE SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW). Whenever possible each provision of this Revolving Note shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Revolving Note shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Revolving Note. Whenever in this Revolving
Note reference is made to Agent, Lender or Borrower, such reference shall be
deemed to include, as applicable, a reference to their respective permitted
successors and assigns and in the case of Lender, any financial institution to
which it has sold or assigned all or any part of its interest in the Revolving
Loan or in its commitment to make the Revolving Loan as permitted by the Credit
Agreement. The provisions of this Revolving Note shall be binding upon and shall
inure to the benefit of such permitted successors and assigns. Borrower's
successors and assigns shall include, without limitation, a receiver, trustee or
debtor in possession of or for Borrower.
UTI HOLDINGS, INC.
By: __________________________________
Name:
Title:
EXHIBIT 10.1(A)-6
EXHIBIT 10.1(B)
[FORM OF]
LENDER ADDITION AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "AGREEMENT") is entered into by
and between the parties designated as Assignor ("ASSIGNOR") and Assignee
("ASSIGNEE") above the signatures of such parties on the Schedule of Terms
attached hereto and hereby made an integral part hereof (the "SCHEDULE OF
TERMS") and relates to the Credit Agreement described in the Schedule of Terms
(as the same has been amended, supplemented or otherwise modified to the date
hereof and as it may hereafter be further amended, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"; the terms defined therein
and not otherwise defined herein being used herein as therein defined).
IN CONSIDERATION of the agreements, provisions and covenants herein contained,
the parties hereto hereby agree as follows:
SECTION 1. ASSIGNMENT AND ASSUMPTION
(a) Effective as of the Settlement Date specified in Item 4 of the
Schedule of Terms (the "SETTLEMENT DATE"), Assignor hereby
sells and assigns to Assignee, without recourse,
representation or warranty (except as expressly set forth
herein), and Assignee hereby purchases and assumes from
Assignor, that percentage interest in all of Assignor's rights
and obligations as a Lender arising under the Credit Agreement
and the other Loan Documents which represents, as of the
Settlement Date, the percentage interest specified in Item 3
of the Schedule of Terms of all rights and obligations of
Lenders arising under the Credit Agreement and the other Loan
Documents with respect to the Revolving Loan Commitment and
any outstanding Loans (the "ASSIGNED SHARE"). Without limiting
the generality of the foregoing, the parties hereto hereby
expressly acknowledge and agree that any assignment of all or
any portion of Assignor's rights and obligations relating to
Assignor's Revolving Loan Commitment shall include the sale to
Assignee of a ratable portion of any participation previously
purchased by Assignor with respect to any Lender Letters of
Credit or Risk Participation Agreements.
(b) In consideration of the assignment described above, Assignee
hereby agrees to pay to Assignor, on the Settlement Date, the
principal amount of any outstanding Loans included within the
Assigned Share, such payment to be made by wire transfer of
immediately available funds in accordance with the applicable
payment instructions set forth in Item 5 of the Schedule of
Terms.
(c) Assignor and Assignee hereby agree that, upon giving effect to
the assignment and assumption described above, (i) Assignee
shall be a party to the Credit Agreement and shall have all of
the rights and obligations under the Loan Documents, and shall
be deemed to have made all of the covenants and agreements
contained in the Loan Documents, arising out of or otherwise
related to the Assigned Share, and (ii) Assignor shall be
absolutely released from any of such obligations, covenants
and agreements assumed or made by Assignee in respect of the
Assigned Share. Assignee hereby acknowledges and agrees that
the agreement set forth in this Section 1(c) is expressly made
for the benefit of Borrower, Agent, Assignor and the other
Lenders and their respective successors and permitted assigns.
EXHIBIT 10.1(B)
(d) Assignor and Assignee hereby acknowledge and confirm their
understanding and intent that (i) this Agreement shall effect
the sale and assignment by Assignor and the purchase and
assumption by Assignee of Assignor's rights and obligations
with respect to the Assigned Share, (ii) any other assignments
by Assignor of a portion of its rights and obligations with
respect to the Revolving Loan Commitment and any outstanding
Loans shall have no effect on the Pro Rata Share of Assignee
in the Revolving Loan Commitment as set forth in Item 3 of the
Schedule of Terms or on the interest of Assignee in any
outstanding Loans corresponding thereto or otherwise set forth
in such Item 3, and (iii) from and after the Settlement Date,
Agent shall make all payments under the Credit Agreement in
respect of the Assigned Share (including without limitation
all payments of principal and accrued but unpaid interest,
commitment fees, unused line fees and letter of credit fees
with respect thereto) (A) in the case of any such interest and
fees that shall have accrued prior to the Settlement Date, to
Assignor, and (B) in all other cases, to Assignee; provided
that Assignor and Assignee shall make payments directly to
each other in accordance with the payment instructions set
forth in Item 5 of the Schedule of Terms to the extent
necessary to effect any appropriate adjustments in any amounts
distributed to Assignor and/or Assignee by Agent under the
Loan Documents in respect of the Assigned Share in the event
that, for any reason whatsoever, the payment of consideration
contemplated by Section 1(b) occurs on a date other than the
Settlement Date.
SECTION 2. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS
(a) Assignor represents and warrants that it is the legal and
beneficial owner of the Assigned Share, free and clear of any
adverse claim.
(b) Assignor hereby represents and warrants that Item 3 of the
Schedule of Terms correctly sets forth (1) the aggregate
amount of each of (i) the Revolving Loan Commitment, (ii) Term
Loan A and (iii) Term Loan B, and (2) the Assigned Share being
transferred to Assignee pursuant to this Agreement as
described above. Taking into account Assignee's existing
Revolving Loan Commitment and Pro Rata Share of each of Term
Loan A and Term Loan B, in each case, if any, prior to the
effectiveness of this Agreement, the Total Share of Assignee
in all of the Lenders' Revolving Loan Commitment and
outstanding Loans under the Credit Agreement is as set forth
in Item 3 of the Schedule of Terms.
(c) Assignor represents and warrants that it has delivered to
Agent the Notes delivered to Assignor by Borrower pursuant to
the Credit Agreement and requests that Agent exchange such
Notes for new Notes executed by Borrower payable to Assignor
and Assignee in the amounts necessary to reflect the
transaction contemplated by this Agreement.
(d) Assignor makes no representation and warranty to Assignee with
respect to, and shall not be responsible to Assignee for, the
execution, effectiveness, genuiness, validity, enforceability,
collectibility or sufficiency of any of the Loan Documents or
for any representations, warranties, recitals or statements
made therein or made in any written or oral statements or in
any financial or other statements, instruments, reports or
certificates or any other documents furnished or made by or on
behalf of Borrower or any other Loan Party in connection with
the Loan Documents and the transactions contemplated thereby
or for the financial condition or business affairs of Borrower
or any other Loan Party, nor shall Assignor be required to
ascertain or inquire as to (i) the performance or observance
of any of the terms, conditions, provisions, covenants or
agreements contained in any of
EXHIBIT 10.1(B)-2
the Loan Documents, (ii) the use of the proceeds of the Loans,
(iii) the use of the Lender Letters of Credit or Risk
Participation Agreements or (iv) the existence or possible
existence of any Event of Default or Default.
(e) Assignee represents and warrants that it satisfies any
eligibility requirements to be a Lender under the Credit
Agreement; that it has experience and expertise in the making
or the purchasing of loans such as the Loans; that it has
acquired the Assigned Share for its own account and without
any present intention of selling all or any portion of such
interest; and that it has received, reviewed and approved a
copy of the Credit Agreement (including all Exhibits and
Schedules thereto) and copies of all other Loan Documents
which it has requested.
(f) Assignee represents and warrants that it has received from
Assignor such financial information regarding Borrower and the
other Loan Parties as Assignee has requested, that it has made
its own independent investigation of the financial condition
and affairs of Borrower and the other Loan Parties in
connection with the assignment evidenced by this Agreement,
and that it has made and shall continue to make its own
appraisal of the creditworthiness of Borrower and the other
Loan Parties. Assignor shall have no duty or responsibility,
either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Assignee or
to provide Assignee with any other credit or other information
with respect thereto, whether coming into its possession
before the Settlement Date or at any time or times thereafter,
and Assignor shall not have any responsibility with respect to
the accuracy of or the completeness of any information
provided to Assignee.
(g) Each party to this Agreement represents and warrants to the
other party hereto that it has full power and authority to
enter into this Agreement and to perform its obligations
hereunder in accordance with the provisions hereof, that this
Agreement has been duly authorized, executed and delivered by
such party and that this Agreement constitutes a legal, valid
and binding obligation of such party, enforceable against such
party in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of
equity.
SECTION 3. MISCELLANEOUS
(a) Each of Assignor and Assignee hereby agrees from time to time,
upon request of the other such party hereto, to take such
additional actions and to execute and deliver such additional
documents and instruments as such other party may reasonably
request to effect the transactions contemplated by, and to
carry out the intent of, this Agreement.
(b) Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated, except by an instrument in
writing signed by the party (including, if applicable, any
party required to evidence its consent to or acceptance of
this Agreement) against whom enforcement of such change,
waiver, discharge or termination is sought.
(c) Unless otherwise specifically provided herein, all notices,
approvals, requests, demands and other communications
hereunder shall be given in accordance with the notice
provision of the Credit Agreement. For the purposes hereof,
the notice address of each of Assignor and Assignee shall be
as set forth on the Schedule of Terms or, as to either such
party, such other address as shall be designated by such party
in a written notice delivered
EXHIBIT 10.1(B)-3
to the other such party. In addition, the notice address of
Assignee set forth on the Schedule of Terms shall serve as the
initial notice address of Assignee for purposes of the Credit
Agreement.
(d) In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
(e) THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES (WHICH PRINCIPLES SHALL BE DEEMED NOT TO INCLUDE
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).
(f) This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors
and assigns.
(g) This Agreement may be executed in one or more counterparts and
by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute
but one and the same instrument; signature pages may be
detached from multiple separate counterparts and attached to a
single counterpart so that all signature pages are physically
attached to the same document.
(h) This Agreement shall become effective upon the date (the
"EFFECTIVE DATE") upon which all of the following conditions
are satisfied: (i) the execution of a counterpart hereof by
each of Assignor and Assignee, (ii) the execution of a
counterpart hereof by Agent as evidence of its consent hereto
to the extent required under subsection 8.1 of the Credit
Agreement, (iii) the receipt by Agent of the administrative
fee referred to in subsection 8.1 of the Credit Agreement,
(iv) in the event Assignee is a foreign person (i.e., a person
other than a United States person for United States Federal
income tax purposes), the delivery by Assignee to Agent of
such forms, certificates or other evidence with respect to
United States federal income tax withholding matters as shall
be requested by Agent in order to establish that Assignee
shall be entitled to receive payments of principal, interest
and fees under the Credit Agreement free from withholding of
United States Federal income tax, and (v) the receipt by Agent
of originals or telecopies of the counterparts described
above.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized,
such execution being made as of the Effective Date in the applicable spaces
provided on the Schedule of Terms.
EXHIBIT 10.1(B)-4
SCHEDULE OF TERMS
1. BORROWER: UTI Holdings, Inc.
2. NAME AND DATE OF CREDIT AGREEMENT: Second Amendment and Restatement of
Credit Agreement dated as of March 29, 2002 by and among UTI Holdings,
Inc., as Borrower, Universal Technical Institute, Inc., as Parent,
Antares Capital Corporation, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank, as Trustee of the
Antares Funding Trust created under a Trust Agreement dated as of
November 30, 1999, and The Royal Bank of Scotland, as Lenders, and
▇▇▇▇▇▇ Financial, Inc., as a Lender and as Agent for the Lenders.
3. AMOUNTS/PRO RATA SHARE:
AMOUNT PRO RATA SHARE
Aggregate Revolving Loan
Commitment of all Lenders: $____________ N/A
Aggregate Term Loan A of all
Lenders: $____________ N/A
Aggregate Term Loan B of all
Lenders: $____________ N/A
Assigned Share of Revolving Loan
Commitment: $____________ _____%
Assigned Share of Term Loan A: $____________ _____%
Assigned Share of Term Loan B: $____________ _____%
Total Share of Revolving Loan
Commitment of Assignee: $____________ _____%
Total Share of Term Loan A of
Assignee: $____________ _____%
Total Share of Term Loan B of
Assignee: $____________ _____%
4. SETTLEMENT DATE: [ ]
5. PAYMENT INSTRUCTIONS:
ASSIGNOR: ASSIGNEE:
_____________________________ ____________________________
ABA No.: ___________________ ABA No.: __________________
Account No.: _______________ Account No.: ______________
Name: ______________________ Name: _____________________
EXHIBIT 10.1(B)-5
Reference: __________________ Reference: ________________
6. NOTICE ADDRESSES:
ASSIGNOR: ASSIGNEE:
_____________________________ ____________________________
_____________________________ ____________________________
_____________________________ ____________________________
Attention: __________________ Attention: _________________
7. SIGNATURES:
[NAME OF ASSIGNOR], [NAME OF ASSIGNEE],
as Assignor as Assignee
By: _________________________ By: ________________________
Title: ______________________ Title: _____________________
Consented to in accordance with
subsection 8.1 of the Credit
Agreement
▇▇▇▇▇▇ FINANCIAL, INC.,
as Agent
By: ________________________
Title: _____________________
UTI HOLDINGS, INC.,
as Borrower
By: ________________________
Title: _____________________
EXHIBIT 10.1(B)-6
EXHIBIT 10.1(C)
OMITTED
EXHIBIT 10.1(C)
FORM OF MANAGEMENT NOTE
EXHIBIT 10.1(D)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAWS AND ACCORDINGLY MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT OR LAWS OR PURSUANT TO AN EXEMPTION THEREFROM. THE
PRINCIPAL AMOUNT OF THIS NOTE, AND INTEREST IN RESPECT THEREOF, IS SUBORDINATED
TO THE PAYMENT IN FULL OF ALL SUPERIOR INDEBTEDNESS, AS DESCRIBED IN THIS NOTE.
UNIVERSAL TECHNICAL INSTITUTE, INC.
Subordinated Junior Note
$____________ [DATE]
UNIVERSAL TECHNICAL INSTITUTE, INC. (hereinafter called the "COMPANY"),
a Delaware corporation, for value received, hereby promises to pay to [MANAGER]
(the "HOLDER") at the office of the Company in Phoenix, Arizona, subject to the
conditions hereinafter stated, the principal sum of $________________ on the
date three years after the date set forth above (the "MATURITY DATE") and to pay
interest on the unpaid principal amount hereof from the date of this Note until
payment in full of all amounts due hereunder at 8.0% per annum. Interest on this
Note shall be payable annually on each anniversary of the date hereof. All
accrued interest hereon shall in any event be payable not later than the
Maturity Date. Payments of principal and interest shall be made in lawful money
of the United States of America. This Note may be prepaid, subject to the terms
and provisions hereof, in whole or in part at any time without premium or
penalty.
ARTICLE I
Subordination
1.1 All indebtedness evidenced hereby ("JUNIOR INDEBTEDNESS")
shall, to the extent and in the manner hereinafter set forth, be subordinated
and subject in right of payment to the prior payment in full of Superior
Indebtedness.
For the purposes hereof, the term "SUPERIOR INDEBTEDNESS":
(a) shall mean (i) all indebtedness heretofore or
hereafter incurred by the Company for money borrowed unless by its
terms it is provided that such indebtedness is not Superior
Indebtedness, (ii) all other indebtedness heretofore or hereafter
incurred by the Company which by its terms provides that such
indebtedness is Superior Indebtedness, (iii) all guarantees,
endorsements and other contingent obligations in respect of, or
obligations to purchase or otherwise acquire or service, indebtedness
or obligations of others of the Company including without limitation,
all obligations of the Company under letters of credit issued on behalf
of the Company, and (iv) any amendments, modifications, deferrals,
renewals or extension of any such Superior Indebtedness, or debentures,
notes or evidences of indebtedness heretofore or hereafter issued in
evidence of or in exchange for such Superior Indebtedness; and
(b) shall include, without limitation, any interest, and
any and all reasonable expenses, payable in respect of any of the
foregoing in clause (a) above subsequent to the
EXHIBIT 10.1(D)
commencement of any proceeding against or with respect to the Company
under Title 11 of the United States Code (the "BANKRUPTCY ACT") whether
or not such interest is an allowed claim in any such proceeding.
For the purposes hereof, "indebtedness" shall include principal, interest, fees,
indemnities and any expenses, if any, incurred with respect thereto.
1.2 No payment under Junior Indebtedness shall be made by the
Company if and so long as there exists a breach by the Company of any one or
more of the covenants contained in any instrument pursuant to which Superior
Indebtedness is issued.
1.3 No payment under Junior Indebtedness shall be made by the
Company unless full payment of amounts then due for principal of or premium, if
any, sinking funds and interest on Superior Indebtedness has been made or duly
provided for in money by the Company. No payment under Junior Indebtedness shall
be made by the Company if, at the time of such payment or immediately after
giving effect thereto, (i) there shall exist a default in the payment of
principal or mandatory prepayments of or premium, if any, sinking funds or
interest with respect to any Superior Indebtedness or (ii) there shall have
occurred an event of default (other than a default in the payment or principal,
mandatory prepayments, premium, if any, sinking funds or interest) with respect
to any Superior Indebtedness as defined herein or in the instrument under which
the same is outstanding permitting the holders thereof (or of the indebtedness
secured thereby) to accelerate the maturity thereof (or of the indebtedness
secured thereby) and such event of default shall not have been cured or waived
or shall not have ceased to exist. The provisions of this Section 1.3 shall not
be applicable to any payment governed by Section 1.4 hereof.
1.4 Upon (i) any payment being required to be made by the Company
under Junior Indebtedness upon any declaration of acceleration of the principal
amount thereof or (ii) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding up or total or partial liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership, or other proceedings; and upon any such
declaration of acceleration or dissolution or winding up or liquidation or
reorganization, any distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the holders of
Junior Indebtedness would be entitled except for the provisions hereof, all
principal, premium, if any, and interest due or to become due in full, or
payment thereof provided for in money, before any payment is made under Junior
Indebtedness shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, or by the holders of Junior Indebtedness if received by them,
directly to the holders of Superior Indebtedness of the Company (pro rata to
each such holder on the basis of the respective amounts of such Superior
Indebtedness held by such holder), or their representatives to the extent
necessary to pay all such Superior Indebtedness in full, in cash, after giving
effect to any concurrent payment or distribution to or for the benefit of the
holders of such Superior Indebtedness, before any payment or distribution is
made to the holders of Junior Indebtedness. In furtherance of the foregoing, but
not by way of limitation thereof, if the Company shall file or have filed
against it a petition under any chapter of the Bankruptcy Act or be adjudicated
a bankrupt thereunder, with the result that the Company is excused from the
obligation to pay all or any part of the interest otherwise payable in respect
of any Superior Indebtedness during the period subsequent to the commencement of
any such proceeding under the Bankruptcy Act, each holder of Junior Indebtedness
by his acceptance hereof does hereby agree that all or such part of such
interest, as the case may be, shall be payable out of, and to that extent
diminish and be at the expense of, reorganization dividends or other
distributions in respect of such Junior Indebtedness.
EXHIBIT 10.1(D)-2
1.5 If any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, not permitted by the
foregoing shall be received by the holders of Junior Indebtedness before all
Superior Indebtedness is paid in full in cash and all commitments under which
any Superior Indebtedness can be created have expired or terminated, such
payment or distribution shall be held for the benefit of, and shall be paid over
or delivered to, the holders of such Superior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Superior
Indebtedness may have been issued or under which such instruments are pledged or
issued, as their respective interests may appear, for application to the payment
of all Superior Indebtedness remaining unpaid to the extent necessary to pay all
such Superior Indebtedness in full in accordance with its terms, after giving
effect to any concurrent payment or distribution to or for the holders of such
Superior Indebtedness.
1.6 The provisions hereof are solely for the purpose of defining
the relative rights of the holders of Superior Indebtedness on the one hand and
the holders of Junior Indebtedness on the other hand, and nothing herein shall
impair, as between the Company and the holder of any Junior Indebtedness, the
obligations of the Company under Junior Indebtedness, which are unconditional
and absolute, nor shall anything herein prevent the holders of any Junior
Indebtedness from exercising all remedies otherwise permitted by applicable law
or hereunder upon default hereunder, all subject to the rights, if any,
hereunder of holders of Superior Indebtedness to receive cash, property or
securities otherwise payable or deliverable to the holders of Junior
Indebtedness.
1.7 Each holder of Junior Indebtedness by his acceptance hereof
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Superior
Indebtedness, whether such Superior Indebtedness was created or acquired before
or after the issuance of this Junior Indebtedness, to acquire and/or continue to
hold such Superior Indebtedness and such holder of Superior Indebtedness shall
be deemed conclusively to have relied on such subordination provisions in
acquiring and/or continuing to hold such Superior Indebtedness.
1.8 Subject to the payment in full of all Superior Indebtedness,
the holders of Junior Indebtedness shall be subrogated to the rights of the
holders of Superior Indebtedness to receive payments or distributions of assets
of the Company applicable to the Superior Indebtedness until the Superior
Indebtedness shall be paid in full, and no such payments or distributions to the
holders of Superior Indebtedness shall, as among the Company, its creditors
other than the holders of Superior Indebtedness and the holders of Junior
Indebtedness, be deemed to be a payment by the Company to or on account of the
Junior Indebtedness.
ARTICLE II
Defaults
2.1 Events of Default. If one or more of the following events
("EVENTS OF DEFAULT") shall have occurred and be continuing:
(a) the Company shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar
official, or shall consent to any such relief or to the appointment of
or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make the a general
assignment for the benefit of creditors; or
EXHIBIT 10.1(D)-3
(b) an involuntary case or other proceeding shall be
commenced against the Company seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 90 days; or an order
for relief shall be entered against the Company under the Federal
bankruptcy laws as now or hereafter in effect;
then, and in every such event, subject to the provisions of Article I, the
Holder may, by notice to the Company and to the holders of Superior
Indebtedness, declare the unpaid principal amount of this Note together with
accrued interest thereon, to be, and such portions of this Note (and accrued
interest thereon) shall thereupon become, due and payable immediately following
delivery of such notice to the Company and to the holders of Superior
Indebtedness without presentment, demand, protest or further notice of any kind,
all of which are hereby waived by the Company.
ARTICLE III
Miscellaneous
3.1. Prepayment. The Company may prepay any amount of principal due
and owing on this Note, together with accrued interest on the amount so prepaid,
at any time without premium or penalty.
3.2. Notices. Any notice, request or other communication given
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or sent by certified, registered or express mail, postage
prepaid, and shall be deemed given when so delivered personally or sent by
facsimile transmission, or if mailed or sent by overnight courier, upon receipt
thereof, as follows:
If to the Company, to: Universal Technical Institute, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holder, to: _________________________________
_________________________________
_________________________________
_________________________________
Facsimile No. __________________
3.3. Governing Law. This Note shall be governed by the internal
laws of the State of New York.
3.4. Assignment. This Note may not be assigned or otherwise
transferred by the Holder prior written consent of the Company.
EXHIBIT 10.1(D)-4
IN WITNESS WHEREOF, UNIVERSAL TECHNICAL INSTITUTE, INC. has caused this
Note to be executed and signed the day and year above set forth.
UNIVERSAL TECHNICAL INSTITUTE, INC.
By: ______________________________
Name:
Title:
EXHIBIT 10.1(D)-5
FORM OF INTERCOMPANY INTERCREDITOR LETTER
EXHIBIT 10.1(E)
▇▇▇▇▇▇ Financial, Inc.,
as Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Portfolio Manager
Corporate Financial Group
Ladies/Gentlemen:
Reference is made to (i) the Second Amendment and Restatement of Credit
Agreement, dated as of March [-], 2002, as the same may hereafter be amended,
amended and restated, supplemented or otherwise modified from time to time (the
"SENIOR CREDIT AGREEMENT") by and among UTI Holdings, Inc., as borrower (the
"BORROWER"), Universal Technical Institute, Inc., as parent, ▇▇▇▇▇▇ Financial,
Inc., as Agent and as a Lender, and the other Lenders party thereto from time to
time, (ii) the Security Agreement, dated [ ] (as amended, modified or
supplemented in accordance with the terms of this Agreement, the "DEBTOR
SECURITY AGREEMENT") between [the Borrower][Subsidiary], as debtor [(the
"DEBTOR")], and [ ], an Institution Subsidiary, as secured party, (the "SECURED
PARTY") and (iii) the promissory note, dated [ ] (the "PROMISSORY NOTE") by the
Debtor to the order of the Secured Party. Capitalized terms used herein but not
defined herein shall have the meanings given such terms in the Debtor Security
Agreement.
As required by the Senior Credit Agreement and in consideration of the Lenders
entering into the second amendment and restatement thereof and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Secured Party and the Debtor, the Secured Party and the
Debtor agree with the Agent (for the benefit of the Agent and the Lenders) as
follows, which agreements shall continue in full force and effect until all
Obligations shall have been paid in full in cash and there shall be no
outstanding Obligations or Revolving Loan Commitment:
1. Without the prior written consent of the Agent in each instance, the
Secured Party shall not take any action or suffer or permit the Debtor
to take any action to (a) perfect any security interest granted or
arising under the Debtor Security Agreement, (b) exercise any remedies
under the Debtor Security Agreement or applicable law against any
Collateral or any records thereof, or (c) realize upon or collect any
Collateral or otherwise enforce its rights under the Debtor Security
Agreement or in respect of the Collateral or any records thereof.
2. Without the prior written consent of the Agent in each instance,
neither the Secured Party nor the Debtor shall amend any term of the
Debtor Security Agreement or Promissory Note.
3. This agreement shall constitute a Loan Document.
4. THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES (WHICH
EXHIBIT 10.1(E)
PRINCIPLES SHALL BE DEEMED NOT TO INCLUDE SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW).
5. The obligations of the Secured Party and the Debtor under this
agreement shall not be affected by any (a) waiver, amendment,
modification, extension, renewal, refinancing, refunding or other
change in or under the Obligations or any Loan Document, (b) sale,
exchange, surrender or release by the Agent of any Lender of any
Obligations or any Collateral or any failure of the Agent or any Lender
to perfect its security interest in any Collateral, (c) delay in any
such perfection, (d) any increase in the Obligations or (e) any other
circumstance whatsoever, whether similar or dissimilar to all or any of
the foregoing.
6. This agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when
so executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute one and the same instrument.
7. No amendment, modification, termination or waiver of any provision of
this agreement shall be effective unless the same shall be in writing
and signed by the Agent, the Debtor and the Secured Party.
Please indicate your acceptance of this agreement by signing in the space
provided below.
Very truly yours,
[UTI Holdings, Inc.] [Subsidiary]
By: _________________________________
Name:
Title:
[ ]
By: _________________________________
Name:
Title:
ACCEPTED AND AGREED:
▇▇▇▇▇▇ Financial, Inc.,
As Agent
By: _________________________________
Name:
Title:
EXHIBIT 10.1(E)-2
FORM OF INTERCOMPANY SECURITY AGREEMENT
EXHIBIT 10.1(F)
SECURITY AGREEMENT
(All Assets)
THIS SECURITY AGREEMENT (the "AGREEMENT") is made this __ day of
__________, 200*, by and between ______________________, a (n) ________________
corporation ("SECURED PARTY") and ______________, a (n) _______________
corporation ("DEBTOR").
RECITALS:
A. Debtor is or may be indebted to Secured Party from time to time up to a
maximum of ___________ and ___/100 DOLLARS ($___________.___) as
evidenced by a promissory note of even date herewith (the "NOTE").
B. As security for the Note, Debtor is willing to give to Secured Party a
security interest in the assets hereinafter described.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. SECURITY INTEREST.
1.1 Collateral. In consideration of the loan evidenced by the
Note, Debtor hereby grants to Secured Party a security
interest in all the assets of Debtor, now existing or created
in the future, together with replacements and all proceeds
thereof (collectively the "COLLATERAL").
1.2 Indebtedness. This Agreement and the rights hereby granted
shall secure the following (collectively the "OBLIGATIONS"):
the indebtedness evidenced by the Note (and any renewals,
extensions or modifications thereof), together with interest
thereon, late charges and collection costs as provided in the
Note.
2. DEBTOR'S WARRANTIES, COVENANTS AND AGREEMENTS.
Debtor hereby warrants, covenants and agrees that:
2.1 Binding Obligation. This Agreement is the legally valid and
binding obligation of Debtor, enforceable against it in
accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws or equitable principles relating to or
limiting creditor's generally.
2.2 Debtor's Organization. Debtor is a corporation in good
standing, organized solely under the laws of and duly
certified to do business in the State of ________ ([with the
following organizational identification number: #________]
[without any organizational identification number, which is
not required to be organized and qualified to do business in
such State]) and maintains its principal office at the address
set forth in this
EXHIBIT 10.1(F)
Agreement. Debtor retains its records concerning the
Collateral at the same address. Debtor shall promptly notify
Secured Party of any change in address.
2.3 Transferability. The Collateral is transferable to Secured
Party.
2.4 Inspection of Records. Debtor will, at all reasonable times,
allow Secured Party or its representatives free and complete
access to all of Debtor's records regarding the Collateral for
such inspection and examination as Secured Party deems
necessary.
2.5 Condition of Collateral. So long as this Assignment remains in
effect, Assignor shall diligently pursue collection of the
Collateral. Debtor will promptly notify Secured Party of any
levy, distraint or other seizure by legal process or otherwise
of any part of the Collateral and of any threatened or filed
claim or proceedings that might in any way affect or impair
any of the Collateral.
2.6 Title to and Protection of Collateral.
(a) Debtor shall pay promptly when due all taxes, fees,
charges and assessments, if any, upon the Collateral.
(b) Secured Party may, at its option, and without any
obligation to do so, pay, perform and discharge any
and all amounts, costs, expenses and liabilities
herein agreed to be paid or performed by Debtor, and
all amounts expended by Secured Party in so doing or
in respect of or in connection with the Collateral
shall become part of the Obligations secured hereby
and shall be immediately due and payable by Debtor to
Secured Party upon demand therefor and shall bear
interest at the rate of interest in effect after
default on the indebtedness outstanding under the
Note.
2.7 Perfection. Debtor will do all acts and things, will execute
and file all instruments (including security agreements,
financing statements, continuation statements, etc.) requested
by Secured Party to establish, maintain and continue the
security interest of Secured Party in the Collateral, and will
promptly on demand pay all costs and expenses of (a) filing
and recording, including the costs of any searches deemed
necessary by Secured Party from time to time to establish and
determine the validity and the continuing priority of the
security interest of Secured Party and (b) all other claims
and charges that in the opinion of Secured Party might
prejudice, imperil or otherwise affect the Collateral or
security interest therein of Secured Party.
2.8 Loss of Collateral. Debtor will promptly give written notice
to Secured Party of any loss of any substantial part of the
Collateral. Secured Party is not responsible for any loss of
the Collateral unless caused by willfully wrongful acts or
omissions of Secured Party.
2.9 No Surrender of Rights. This Agreement shall remain in full
effect, without waiver or surrender of any of Secured Party's
rights hereunder, notwithstanding any one or more of the
following: (a) extension of time or payment of the whole or
any part of the Note; (b) any change in the terms and
conditions of the Note; (c) substitution of any other note or
evidence of indebtedness for the Note; (d) acceptance by
Secured Party of any collateral or security of any kind for
the payment of the Note, any and all extensions, or renewals
thereof; (e) surrender, release, exchange or alteration of any
collateral or other security, either in whole or in part; or
(f) release, settlement, discharge, compromise,
EXHIBIT 10.1(F)-2
change or amendment, in whole or in part, of any claim of
Secured Party against Debtor or of any claim against any
guarantor or other party secondarily or additionally liable
for the payment of the Note.
3. EVENTS OF DEFAULT. Debtor shall be in default hereunder if any of the
following shall occur:
3.1 Note Default. An "Event of Default" under the Note;
3.2 Breach of Agreements. Failure or neglect by Debtor to observe
or perform any of the obligations, terms, provisions,
promises, agreements or covenants of this Agreement or any
instrument or security agreement executed and delivered by
Debtor in connection with the indebtedness secured by this
Agreement; or
3.3 Breach of Representation. Any representation or warranty in
the Note, this Agreement or in any other agreement, document
or instrument evidencing, securing or relating to any of the
obligations, covenants, promises and agreements secured hereby
is false or incorrect as of the date made.
4. SECURED PARTY'S REMEDIES. During the continuation of an event of
default, Secured Party shall have the following rights and remedies:
4.1 Acceleration. Secured Party may, at its options, declare all
or any part of the Obligations immediately due and payable.
4.2 Take Possession of Records. Secured Party may, without notice
or demand and without legal process, take possession of
Debtor's records evidencing the Collateral where found and,
for this purpose, may enter upon any property occupied by or
in the control of Debtor.
4.3 Collection from Obligors. Secured Party may demand payment
from the obligors of the Collateral, without any further
notice to Debtor. By signing this Agreement, Debtor hereby
authorizes the obligors of the Collateral to pay to Secured
Party all sums of Collateral owed until Secured Party is paid
in full, immediately upon receipt or written demand from
Secured Party, and without any authorization or consent from
Debtor. Debtor agrees that the obligors of the Collateral may
rely upon any such demand of Secured Party, without any
obligation to verify with or obtain the consent of Debtor.
4.4 Remedies Non-Exclusive. Secured Party may pursue any legal
remedy available to collect all sums secured hereby and to
enforce its title in and right to possession of the Collateral
and to enforce any and all other rights or remedies available
to it. No such action shall operate as a waiver of any other
right or remedy of Secured Party.
4.5 Uniform Commercial Code. Secured Party shall have all the
rights and remedies afforded a secured party under the Arizona
Uniform Commercial Code and all other legal or equitable
remedies provided by the laws of the United States and the
State of Arizona.
5. MISCELLANEOUS PROVISIONS.
5.1 Waiver; Amendments. No default hereunder by Debtor shall be
deemed to have been waived by Secured Party except by a
writing to that effect signed by Secured Party and
EXHIBIT 10.1(F)-3
no waiver of any default shall operate as a waiver of any
other default on a future occasion. No modification,
rescission, waiver, release or amendment of any provision of
this Agreement shall be made except by a written agreement
signed by Debtor and Secured Party.
5.2 Severability. Should any one or more provisions of this
Agreement be determined to be illegal or unenforceable, such
provision or provisions shall be modified to the minimum
extent necessary to make it or its application valid and
enforceable, and all other provisions nevertheless shall be
effective.
5.3 Governing Law. The terms herein shall have the meanings in and
be construed under the Arizona Uniform Commercial Code and all
issues arising hereunder shall be governed by the laws of the
State of Arizona.
5.4 Entire Agreement. This Agreement contains the entire
understanding of the parties and supersedes any prior
understandings and agreements, written or oral, respecting the
subjects discussed herein.
5.5 Successors and Assigns. This Agreement shall be binding on and
inure to the benefit of the parties, their respective
successors and assigns.
5.6 Counterparts; Duplicate Originals. Agreements may be executed
in multiple counterparts and when a counterpart has been
executed by each of the parties hereto such counterparts,
taken together, shall constitute a single agreement. Duplicate
originals may also be utilized, each of which shall be deemed
an original document.
EXHIBIT 10.1(F)-4
DEBTOR:
__________________________________________
a(n) _____________________ corporation
Address: _________________________________
__________________________________________
By: ______________________________________
Its:
SECURED PARTY:
a(n) _____________________ corporation
Address: _________________________________
__________________________________________
By: ______________________________________
Its:
EXHIBIT 10.1(F)-5
FORM OF NTT/PTA RELEASE
EXHIBIT 10.1(G)
RELEASE
Reference is made to (a) the Second Amendment and Restatement of Credit
Agreement dated as of September 29, 2002 (as amended or otherwise modified from
time to time, the "Credit Agreement") by and among UTI Holdings, Inc., an
Arizona corporation (the "Pledgor"), Universal Technical Institute, Inc., a
Delaware corporation, the Lenders, NTT Acquisition Inc., a Delaware corporation
("NTT Acquisition") and ▇▇▇▇▇▇ Financial, Inc., a Delaware corporation
("Agent"), (b) the Pledge Agreement dated as of June 30, 1998 between Pledgor
and Agent (the "NTT Acquisition Pledge"), (c) the Pledge Agreement dated as of
June 30, 1998 between NTT Acquisition and Agent (the "NTT/PTA Pledge"), (d) the
Guaranty dated as of June 30, 1998 by NTT Acquisition in favor of the Agent (the
"NTT Acquisition Guaranty"), (e) the Guaranty dated as of June 30, 1998 by
National Technology Transfer, Inc., a Delaware corporation ("NTT") in favor of
the Agent (the "NTT Guaranty") and (f) the Guaranty dated as of June 30, 1998 by
Performance Training Associates, Inc., formerly a Delaware corporation ("PTA")
in favor of the Agent (the "PTA Guaranty"). Terms not otherwise defined herein
shall have the meanings assigned in the Credit Agreement.
WHEREAS, Pledgor owns all of the outstanding shares of capital stock in
NTT Acquisition;
WHEREAS, NTT Acquisition owned all of the outstanding shares of capital
stock in NTT and PTA;
WHEREAS, PTA merged with and into NTT as evidenced by a Certificate of
Ownership and Merger filed with the Secretary of State of the State of Delaware
on July 31 2001, with NTT continuing as the surviving corporation;
WHEREAS, pursuant to that certain Stock Purchase Agreement, dated as of
September 29, 2001, by and between NTT Acquisition Corp., a Delaware corporation
("NTT Corp.") and Pledgor, NTT Corp. owns all of the outstanding shares of NTT;
WHEREAS, in accordance with the terms of the Credit Agreement and as
collateral security for the prompt and complete payment, performance and
observance by the Loan Parties of all present and future Obligations, Pledgor
pledged 100% of its shares of NTT Acquisition under the NTT Acquisition Pledge;
(ii) 100% of its shares in NTT and PTA under the NTT/PTA Pledge;
WHEREAS, in accordance with the terms of the Credit Agreement and as
collateral security for the prompt and complete payment, performance and
observance by the Loan Parties of all present and future Obligations, NTT
Acquisition pledged 100% of its shares in NTT and PTA under the NTT/PTA Pledge;
WHEREAS, in accordance with the terms of the Credit Agreement, (i) NTT
Acquisition guarantees the Borrower's Obligations under the Credit Agreement
pursuant to the NTT Acquisition Guaranty, (ii) NTT guarantees the Borrower's
Obligations under the Credit Agreement pursuant to the NTT Guaranty and (iii)
PTA guarantees the Borrower's Obligations under the Credit Agreement pursuant to
the PTA Guaranty;
EXHIBIT 10.1(G)
NOW, THEREFORE, the undersigned agrees to the following:
1. The undersigned hereby releases, effective as of the date of this
Release, the Pledged Collateral, as defined in both the NTT Acquisition
Pledge and the NTT/PTA Pledge (such Pledged Collateral collectively
being herein referred to as the "Released Collateral") from any Lien
granted to or held by the Agent or Loan Parties pursuant to the Credit
Agreement, NTT Acquisition Pledge or the NTT/PTA Pledge. The Agent
agrees to execute any other documents and take any further action
necessary to release any Lien granted to or held by the Agent or the
Loan Parties with respect to the Released Collateral, including,
without limitation, executing and delivering termination statements
with regard to any Uniform Commercial Code or other financing
statements executed in favor of the Agent that relate to the Released
Collateral.
2. The undersigned hereby releases, effective as of the date of this
Release, NTT Acquisition, NTT and PTA from their respective obligations
to guarantee to the Agent, for the benefit of the Agent and the
Lenders, the full and punctual payment when due (whether as stated
maturity, by required pre-payment, by acceleration or otherwise), as
well as the performance, of all of the Obligations under the Credit
Agreement pursuant to the NTT Acquisition Guaranty, NTT Guaranty and
PTA Guaranty.
3. Effective as of the date of this Release, the undersigned acknowledges
and agrees that the NTT Acquisition Pledge, NTT/PTA Pledge, NTT
Acquisition Guaranty, NTT Guaranty and PTA Guaranty and all of the
terms and provisions and rights and obligations set forth in such
agreements are hereby terminated.
This Release does not constitute a waiver or release of any of the obligations
for which the Released Collateral was given as security or a waiver, release or
subordination of the Lien of any other security agreements, pledge agreements,
mortgages, deeds of trust or other instruments given as security for the same
obligations, and the remaining property described in any such other security
agreements, pledge agreements, mortgages, deeds of trust or other instruments
given as security for the same obligations shall continue to be held by the
secured party, mortgagees or trustees under such other security agreements,
mortgages, deeds of trust or other instruments given as security for the same
obligations in accordance with the terms thereof. This Release is made without
affecting the personal liability of any person for payment of the Obligations
secured by the Released Collateral.
[Signature to Follow on Next Page]
EXHIBIT 10.1(G)-2
In Witness whereof, the undersigned has caused this Release to be
executed and delivered this __ day of March, 2002.
▇▇▇▇▇▇ FINANCIAL, INC., as Agent
By: ___________________________________
Name:
Title:
Accepted and Agreed:
NTT ACQUISITION, INC.
By: ___________________________________
Name: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
NATIONAL TECHNOLOGY TRANSFER, INC.
By: __________________________________
Name: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
UTI HOLDINGS, INC.
By: __________________________________
Name: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
EXHIBIT 10.1(G)-3
SCHEDULES TO THE
AMENDED AND RESTATED CREDIT AGREEMENT
FOR
UNIVERSAL TECHNICAL INSTITUTE, INC.
INTRODUCTION TO THE DISCLOSURE SCHEDULES
The Disclosure Schedules set forth below are part of the Second Amended
and Restated Credit Agreement dated as of March 29, 2002, (the "CREDIT
AGREEMENT") by and among Universal Technical Institute, Inc. ("HOLDINGS"); UTI
Holdings, Inc., as Borrower; ▇▇▇▇▇▇ Financial, Inc., as Agent and a Lender; and
the other parties thereto listed as Lenders. These Disclosure Schedules contain
exceptions made to the representations, warranties, and covenants of Holdings
and Borrower in the Credit Agreement.
Any matter specifically described and set forth herein as an exception
to a Section of the Credit Agreement or specifically described and set forth in
a Schedule to the Credit Agreement shall be deemed to constitute an exception to
all other sections of the Credit Agreement to which it applies. No general
disclosure in any Schedule herein shall be limited by any more specific
disclosure in either that Schedule or any other Schedule herein. Where the terms
of a contract or other disclosure item have been summarized or described in the
Disclosure Schedules, such summary or description does not purport to be a
complete statement of the material terms of such contract or other item. Any
cross referencing is purely for the assistance of the reader and is intended to
be exclusive as to which Schedule the information pertains.
SCHEDULE A
EXITING LENDERS
PB Capital Corporation (formerly known as BHF-Bank Aktiengesellschaft)
Balanced High Yield Fund I, Ltd. (through its Asset Manager, ING Capital
Advisors LLC)
Balanced High Yield Fund II, Ltd. (through its Asset Manager, ING Capital
Advisors LLC)
LaSalle Bank National Association
First Source Loan Obligations Trust (through its Servicer and Administrator,
First Source Financial, Inc.)
Fleet National Bank
Schedule A
SCHEDULE 1.2(E)
EXCLUDED DEFAULTS
Section 6.1(C) only
as it related to Sections: 2.3
3.10
3.12
3.13
3.14
4.1
4.8(C)
4.8(E)
4.8(I) - (N)
4.9
Section 6.1 (D)
Section 6.1 (E)
Section 6.1 (H) (as long a such lien, levy or assessment is less than $500,000)
Section 6.1 (O)
Section 6.1 (S)
Schedule 1.2(E)
SCHEDULE 2
PURCHASED SECURITIES
PREFERRED PREFERRED PREFERRED PREFERRED RESTRICTED TOTAL
STOCKHOLDER SERIES A SERIES B SERIES C SERIES D COMMON COMMON COMMON OPTIONS
UTI SHAREHOLDERS
Whites' Family
Company LLC 3,673.00000 732.10420 493.67444 1.17919 494.85363 41.29098
▇▇▇▇ ▇. ▇▇▇▇▇ 67.20000 67.20000
--------------------------------------------------------------------------------------------------
TOTAL WHITE
(CHC STOCKHOLDERS) 3,673.00000 - 732.10420 493.67444 68.37919 562.05363 41.29098
--------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2,821.00000 540.33034 205.87712 84.71192 290.58904 41.82441
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Trustees 50.00000 - 50.00000
▇▇▇▇▇▇▇ Investments
Limited Partnership 197.12000 - 197.12000
--------------------------------------------------------------------------------------------------
TOTAL ▇▇▇▇▇▇▇ - 2,821.00000 540.33034 452.99712 84.71192 537.70904 41.82441
--------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 551.21000 - 70.34980 10.59274 80.94254 6.29592
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 51.16500 - 15.04500 8.23436 23.27936 1.81073
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 51.16500 - 15.04500 - 15.04500 -
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 10.18000 - 16.00000 - 16.00000 -
▇▇▇▇▇ ▇▇▇▇▇ 22.07000 26.27171 31.38540 5.88597 37.27137 2.89906
▇▇▇▇▇▇ ▇▇▇▇▇▇ 57.96000 25.62888 26.36140 4.93662 31.29802 2.43444
▇▇▇▇▇▇▇ ▇▇▇▇▇ 51.46000 - 26.36140 4.93662 31.29802 2.43444
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 31.22000 9.93851 25.10540 1.97864 27.08404 -
▇▇▇▇▇ ▇▇▇▇▇▇▇ 320.21000 - 25.10540 4.93662 30.04202 -
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 37.44000 10.77974 20.08140 3.76742 23.84882 1.85502
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 31.22000 - 14.29100 2.82806 17.11906 1.33157
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 30.70000 4.02941 12.57059 1.87871 14.44930 1.12390
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 16.67700 3.57435 16.42500 19.99935 3.55562
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 9.25074 6.28730 1.17919 7.46649 0.58076
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 8.23500 1.76500 5.47500 7.24000 0.56315
UTI Tax-Deferred
Trust dd 2/24/99 464.75447
-------------------------------------------------------------------------------------------------
TOTAL MANAGEMENT
STOCKHOLDERS 3,673.00000 4,067.00000 1,848.00000 1,256.00000 226.14606 1,482.14606 108.00000
-------------------------------------------------------------------------------------------------
Schedule 2
PREFERRED PREFERRED PREFERRED PREFERRED RESTRICTED TOTAL
STOCKHOLDER SERIES A SERIES B SERIES C SERIES D COMMON COMMON COMMON OPTIONS
THE JORDAN COMPANY &
JZEP
JZEP Preferred 1,176.00000
Holdings Limited 7,505.00000
JZEP 799.50000 799.50000
UTI/TJC Voting Trust 799.50000 799.50000
Jordan Industries, Inc. 1,176.00000
---------------------------------------------------------------------------------------------
TOTAL TJC & JZEP 7,505.00000 - 2,352.0000 1,599.0000 - 1,599.00000
---------------------------------------------------------------------------------------------
Worldwide Training 1110.73097
Group
Charlesbank Voting Trust 1246.46395
TOTAL PENSKE GROUP
INVESTORS 2357.19491
Schedule 2-2
SCHEDULE 3.1(D)
INDEBTEDNESS
1. 6.55% Subordinated Note, due September 30, 2023, in the principal
amount of $4,000,000 from Universal Technical Institute, Inc. to
Clinton Education Group, Inc., an Arizona corporation.
2. Letter of Credit in the amount of $6,400,000 issued on behalf of
Universal Technical Institute of Texas, Inc. in favor of the DOE.
3. 8% Convertible Note, due June 30, 2006, in the principal amount of
$7,010,660, from Universal Technical Institute, Inc. to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇.
Schedule 3.1(D)
SCHEDULE 3.2(A)(10)
LIENS AND ENCUMBRANCES
1. Holdings and The ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation ("CHC") have received
training aids (e.g. cars, motorcycles, etc.) as loans or donations from
manufacturers and other companies. There are substantial restrictions
on the use and/or transferability of these training aids, and in most
cases the property must be either returned or destroyed. CHC possesses
certificates of title for many of these training aids, though in most
cases such title is defective. A list of the Holdings training aids as
of the Closing Date is attached as Annex A. A list of CHC training aids
as of the Closing Date is attached as Annex B.
2. UCC-l filings against Holdings and CHC are listed below in Annex C.
Many of the filings were terminated prior to the Amendment and
Restatement Date. Copies of the liens related to Holdings' current
borrowing facility and the liens which will remain outstanding after
the Amendment and Restatement Date are attached.
3. We incorporate by reference the results of the UCC lien search and
copyright search performed by the Lender's counsel attached hereto as
Annex D.
Schedule 3.2(A)(10)
ANNEX A
LIST OF UTI TRAINING AIDS
UTI has several items that have been loaned or donated to UTI's
Institutions. These assets are consistently valued at $0 for accounting purposes
since they cannot be sold or transferred.
Schedule 3.2(A)(10)-2
ANNEX B
LIST OF CHC TRAINING AIDS AND TITLES OF DEFECTS
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ CORPORATION
TRAINING AID TITLES
Certificates
or
Open Title Statements Title not Other
(transferee of Origin, properly Lien not ownership
Item # Year Make Model VIN/Serial # left blank) Not Titles Executed released papers
------ ---- -------- -------- ----------------- ----------- ------------ --------- -------- ---------
1 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ X
2 1996 Suzuki GSXR7 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
3 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
4 1996 Kawasaki ZL6 H8G▇▇▇▇▇▇▇▇▇▇ X
5 1940 Harley Knuckle X
6 2001 Suzuki GS500K1 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
7 2001 Suzuki GS500K1 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
8 2001 Suzuki GS500K1 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
9 2001 Suzuki GS500K1 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
10 2001 Suzuki GS500K1 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
11 2001 Suzuki GS500K1 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
12 1995 Suzuki VS800GLS ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
13 1995 Suzuki LS650PS ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
14 1995 Suzuki DR350SES ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
15 1995 Suzuki LTF4WDXS ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
16 1995 Suzuki DR250SES ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
17 1994 Suzuki LTF4WDXR ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
18 1996 Suzuki LS650PT ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
19 1994 Suzuki DR125SER ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
20 1990 Suzuki GS500EL ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
21 1937 Harley 74 37UL5720 X
22 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
23 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ X
24 1989 Honda CR250R ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
25 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
26 1995 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
27 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
28 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ X
29 1986 Harley ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
30 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
31 1987 Honda ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
32 1987 Honda ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
33 1993 Honda CR250 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
34 1973 Harley H8GK882180097 X
35 1964 Harley H4L5880210051 X
36 1963 Harley 63FLH3338 X
37 1951 Harley 51WL1136 X
38 1995 Harley ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
39 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
40 1993 Harley ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
41 1994 Harley ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
42 1996 Harley ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
43 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
44 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
45 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
46 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
47 1996 Harley ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
48 1996 Harley ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
49 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
50 1996 Harley ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
51 1998 Suzuki ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
Schedule 3.2(A)(10)-3
Certificates
or
Open Title Statements Title not Other
(transferee of Origin, properly Lien not ownership
Item # Year Make Model VIN/Serial # left blank) Not Titles Executed released papers
------ ---- -------- -------- ----------------- ----------- ------------ --------- -------- ---------
52 1996 Suzuki ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
53 1986 Harley ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
54 1993 Honda VFR750FL ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
55 1986 Honda CB450SCL ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
56 1990 Honda NS50F ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
57 1990 Honda VTR250 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
58 1988 Honda NX125 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
59 1986 Honda CMX450C ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
60 1986 Honda VF700C ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
61 1985 Honda VF700SL ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
62 1985 Honda VF700SL ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
63 1996 Honda CH80 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
64 1985 Honda VF700SL ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
65 1986 Honda CB450SC ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
66 1982 Honda CB450T ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
67 1984 Honda VF700CL ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
68 1990 Honda VTR250L ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
69 1990 Honda NX125L ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
70 1998 Honda CBR600F3 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
71 1997 Honda CB750L ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
72 1996 Honda CB250L ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
73 1998 Honda TRX450S ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
74 1998 Honda TRX450ES ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
75 1996 Honda CB250L ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
76 1996 Honda CB250L ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
77 1997 Honda VF750CL ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
78 1997 Honda VF750CL ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
79 1997 Honda VF750CL ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
80 1997 Honda XR400R ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
81 1998 Honda CR25ORL ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
82 1997 Honda TRX300 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
83 1999 Honda ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
84 2001 Honda CR25OR ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
85 2000 Honda VT1100T ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
86 2000 Honda SA50 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
87 2001 Honda CMX250C ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
88 1999 Honda CR80R JH2HE04C6XK6000004 X
89 2001 Honda CR125R ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
90 2000 Honda VT1100C ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
91 2001 Honda CR250R ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
92 2001 Honda CMX250C ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
93 2001 Honda CMX250C ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
94 2001 Honda CMX250C ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
95 2001 Honda CR250R ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
96 2001 Honda CMX250C ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
97 2001 Honda CBR600F41 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
98 2000 Honda XR650R ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
99 1999 Honda CBR600F4 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
100 2000 Honda CH80 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
101 2000 Honda CH80 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
102 1996 Suzuki GSX-R750T ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
103 1990 Kawasaki KE100-B9 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
104 1990 Kawasaki KE100-B9 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
105 1990 Kawasaki EN450-A6L ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
106 2001 Suzuki GS500K1 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
107 2001 Suzuki GS500K1 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
108 2001 Suzuki GS500K1 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
109 2001 Suzuki GS500K1 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
110 2001 Suzuki GS500K1 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
111 2001 Suzuki GS500K1 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
112 1984 Honda CB700SC ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
113 1984 Honda GL1200A ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
Schedule 3.2(A)(10)-4
Certificates
or
Open Title Statements Title not Other
(transferee of Origin, properly Lien not ownership
Item # Year Make Model VIN/Serial # left blank) Not Titles Executed released papers
------ ---- -------- -------- ----------------- ----------- ------------ --------- -------- ---------
114 1983 Honda CT110 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
115 1983 Honda CT110 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
116 1996 Buell S1 DOM ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ X
Schedule 3.2(A)(10)-5
ANNEX C
LIENS
SECURED PARTY / JURISDICTION &
DEBTOR / LESSEE LESSOR FILE NO. DATE COMMENTS
--------------------------------------------------------------------------------
I. LIEN SEARCH FOR UNIVERSAL TECHNICAL INSTITUTE, INC.
--------------------------------------------------------------------------------
Universal Technical Inter-Tel Leasing, Inc. Arizona - 2/1/99
Institute, Inc. 01051465
--------------------------------------------------------------------------------
Universal Technical Inter-Tel Leasing, Inc. Arizona - 5/10/99
Institute, Inc. 0167322
--------------------------------------------------------------------------------
Universal Technical Inter-Tel Leasing, Inc. Arizona - 11/18/99
Institute, Inc. 01093402
--------------------------------------------------------------------------------
Universal Technical Textron Financial Florida 5/15/99
Institute, Inc. Corporation
--------------------------------------------------------------------------------
Universal Technical Textron Financial Florida 6/21/99
Institute, Inc. Corporation
--------------------------------------------------------------------------------
Schedule 3.2(A)(10)-6
ANNEX D
AGENT'S COUNSEL'S LIEN SEARCH RESULTS
DEBTOR: U.T.I. OF ILLINOIS, INC.
------------------------------------------------------------------------------------------------------------------------------
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
------------------------------------------------------------------------------------------------------------------------------
ILLINOIS SECRETARY OF 1 UCC through 1) UCC-1: Bank One 12/31/1997 003780484 Blanket Collateral Clear through N/A
STATE 02/20/2002 Arizona N.A. Statement 02/20/2002
------------------------------------------------------------------------------------------------------------------------------
DU PAGE COUNTY CLEAR through -- -- -- -- Clear through Clear through
02/26/2002 02/26/2002 02/26/2002
------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-7
DEBTOR: UNIVERSAL TECHNICAL INSTITUTE INC.
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
-----------------------------------------------------------------------------------------------------------------------------------
ARIZONA SECRETARY OF 3 UCCs through 1) UCC-1: Inter-Tel 02/01/1998 1051465-0 Equipment Lease Clear through N/A
STATE 02/27/2002 Leasing, Inc. 02/27/2002
-----------------------------------------------------------------------------------------------------------------------------------
2) UCC-1: Inter-Tel 05/10/1999 1067322-0 Equipment Lease
Leasing, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
3) UCC-1: Inter-Tel 11/18/1999 1093402-0
Leasing, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY Clear through -- -- -- -- Clear through Clear through
01/14/2002 01/14/2002 01/14/2002
-----------------------------------------------------------------------------------------------------------------------------------
DELAWARE SECRETARY OF Clear through -- -- -- -- Clear through N/A
STATE 02/28/2002 02/28/2002
-----------------------------------------------------------------------------------------------------------------------------------
FLORIDA SECRETARY OF 2 UCCs through 1) UCC-1: Textron 06/15/1999 ▇▇▇▇▇▇▇▇▇▇ Equipment Clear through Clear through
STATE 09/27/2001 Financial Corporation 07 09/27/2001 09/27/2001
-----------------------------------------------------------------------------------------------------------------------------------
2) UCC-1: Textron 06/21/1999 9900001406 Equipment
Financial Corporation 59
-----------------------------------------------------------------------------------------------------------------------------------
MINNESOTA SECRETARY Clear through -- -- -- -- Clear through N/A
OF STATE 02/26/2002 02/26/2002
-----------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA Clear through -- -- -- -- Clear through N/A
SECRETARY OF STATE 02/27/2002 02/27/2002
-----------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-8
DEBTOR: UNIVERSAL TECHNICAL INSTITUTE OF ARIZONA, INC.
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
-----------------------------------------------------------------------------------------------------------------------------------
ARIZONA SECRETARY OF 6 UCCs through 1) UCC-1: Bank One, 11/21/1997 994294 Blanket Collateral Clear through N/A
STATE 02/27/2002 Arizona Statement 02/27/2002
-----------------------------------------------------------------------------------------------------------------------------------
2) UCC-1: IBM 12/11/1997 996624 Equipment Lease
Credit Corporation
-----------------------------------------------------------------------------------------------------------------------------------
3) UCC-1: Banc One 08/06/1998 1028245 Equipment Lease
Leasing Corporation
-----------------------------------------------------------------------------------------------------------------------------------
4) UCC-1: Banc One 08/06/1998 1028246 Equipment Lease
Leasing Corporation
-----------------------------------------------------------------------------------------------------------------------------------
5) UCC-3: Terminated 1028246
Termination
-----------------------------------------------------------------------------------------------------------------------------------
6) UCC-1: BankVest 08/24/1998 1030386 Equipment Lease
Capital Corp.
-----------------------------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY Clear through -- -- -- -- Clear through Clear through
01/14/2002 01/14/2002 01/14/2002
-----------------------------------------------------------------------------------------------------------------------------------
DELAWARE SECRETARY OF Clear through -- -- -- -- Clear through N/A
STATE 02/28/2002 02/28/2002
-----------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-9
DEBTOR: UNIVERSAL TECHNICAL INSTITUTE OF CALIFORNIA, INC.
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
---------------------------------------------------------------------------------------------------------------------
CALIFORNIA SECRETARY 1 UCC through 1) UCC-1: Inter-Tel 10/13/1998 29360237 Equipment Clear through Clear through
OF STATE 02/13/2002 Leasing, Inc. 02/13/2002 02/13/2002
---------------------------------------------------------------------------------------------------------------------
SAN BERNARDINO Clear through -- -- -- -- Clear through Clear through
COUNTY 02/11/2002 02/11/2002 02/11/2002
---------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA Clear through -- -- -- -- Clear through N/A
SECRETARY OF STATE 02/27/2002 02/27/2002
---------------------------------------------------------------------------------------------------------------------
IREDELL COUNTY CLEAR through -- -- -- -- Clear through Clear through
03/01/2002 03/01/2002 03/01/2002
---------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-10
DEBTOR: UNIVERSAL TECHNICAL INSTITUTE OF TEXAS, INC.
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
--------------------------------------------------------------------------------------------------------------------------------
FLORIDA SECRETARY OF Clear through -- -- -- -- Clear through Clear through
STATE 09/27/2002 09/27/2002 09/27/2002
--------------------------------------------------------------------------------------------------------------------------------
TEXAS SECRETARY OF 1 UCC through 1) UCC-1: Bank One, 12/24/1997 9700241382 Blanket Collateral Clear through N/A
STATE 02/18/2002 Arizona Statement 02/18/2002
--------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ COUNTY 1 UCC through 1) UCC-1: Bank One, 12/24/1997 ###-##-#### Blanket Collateral Clear through Clear through
02/27/2002 Arizona Statement 02/27/2002 02/27/2002
--------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-11
DEBTOR: UTI HOLDINGS, INC.
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
------------------------------------------------------------------------------------------------------------------------------------
ARIZONA SECRETARY OF 9 UCCs through 1) UCC-1: ▇▇▇▇▇▇ 01/27/1998 1002234-0 Blanket Collateral Clear through N/A
STATE 02/27/2002 Financial Inc. Statement 02/27/2002
------------------------------------------------------------------------------------------------------------------------------------
2) UCC-1: Leasetec 02/17/1999 1054454-0 Equipment Lease
Corporation
------------------------------------------------------------------------------------------------------------------------------------
3) UCC-1: Trinity 05/03/1999 1066607-0 Equipment Lease
Capital Corporation
------------------------------------------------------------------------------------------------------------------------------------
4) UCC-1: Trinity 05/03/1999 1066608-0 Equipment Lease
Capital Corporation
------------------------------------------------------------------------------------------------------------------------------------
5) UCC-1: LeaseVest 07/06/1999 1074934-0 Equipment Lease
Capital Corp.
------------------------------------------------------------------------------------------------------------------------------------
6) UCC-1: LeaseVest 07/06/1999 1074935-0 Equipment Lease
Capital Corp.
------------------------------------------------------------------------------------------------------------------------------------
7) UCC-1: LeaseVest 07/06/1999 1074936-0 Equipment Lease
Capital Corp.
------------------------------------------------------------------------------------------------------------------------------------
8) UCC-1: LeaseVest 07/06/1999 1074939-0 Equipment Lease
Capital Corp.
------------------------------------------------------------------------------------------------------------------------------------
9) UCC-1: LeaseVest 07/06/1999 1074940-0 Equipment Lease
Capital Corp.
------------------------------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 01/27/1998 980059880 Blanket Collateral Clear through Clear through
01/10/2002 Financial Inc. Statement 01/10/2002 01/10/2002
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS SECRETARY OF 2 UCCs through 1) UCC-1: ▇▇▇▇▇▇ 01/27/1998 003793378 Blanket Collateral Clear through N/A
STATE 02/20/2002 Financial Inc. Statement 02/20/2002
------------------------------------------------------------------------------------------------------------------------------------
2) UCC-1: LeaseVest 02/02/1999 003982763 Equipment Lease
Capital Corp.
------------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-12
DEBTOR: UTI HOLDINGS, INC.
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
-----------------------------------------------------------------------------------------------------------------------------------
NEW YORK DEPARTMENT 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 01/27/1998 018032 Blanket Collateral Clear through N/A
OF STATE 02/26/2002 Financial, Inc. Statement 02/26/2002
-----------------------------------------------------------------------------------------------------------------------------------
NEW YORK COUNTY 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 01/27/1998 98PN04319 Blanket Collateral Clear through Clear through
02/19/2002 Financial, Inc. Statement 02/11/2002 02/11/2002
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS SECRETARY OF 12 UCCs through 1) UCC-1: ▇▇▇▇▇▇ 01/27/1998 98016463 Blanket Collateral Clear through N/A
STATE 02/06/2002 Financial Inc. Statement 02/06/2002
-----------------------------------------------------------------------------------------------------------------------------------
2) UCC-1: BankVest 02/01/1999 99021142 Equipment Lease
Capital Corp.
-----------------------------------------------------------------------------------------------------------------------------------
3) UCC-1: Trinity 05/03/1999 99088246 Equipment Lease
Capital Corporation
-----------------------------------------------------------------------------------------------------------------------------------
4) UCC-1: Trinity 05/03/1999 99088247 Equipment Lease
Capital Corporation
-----------------------------------------------------------------------------------------------------------------------------------
5) UCC-1: BankVest 07/05/1999 99136908 Equipment Lease
Capital Corp.
-----------------------------------------------------------------------------------------------------------------------------------
6) UCC-1: BankVest 07/05/1999 99136909 Equipment Lease
Capital Corp.
-----------------------------------------------------------------------------------------------------------------------------------
7) UCC-1: BankVest 07/05/1999 99136910 Equipment Lease
Capital Corp.
-----------------------------------------------------------------------------------------------------------------------------------
8) UCC-1: BankVest 07/05/1999 99136911 Equipment Lease
Capital Corp.
-----------------------------------------------------------------------------------------------------------------------------------
9) UCC-1: BankVest 07/05/1999 99136912 Equipment Lease
Capital Corp.
-----------------------------------------------------------------------------------------------------------------------------------
10) UCC-1: BankVest 07/09/1999 99139155 Equipment Lease
Capital Corp.
-----------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-13
DEBTOR: UTI HOLDINGS, INC.
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
------------------------------------------------------------------------------------------------------------------------------------
TEXAS SECRETARY OF 11) UCC-1: BankVest 07/09/1999 ▇▇▇▇▇▇▇▇ Equipment Lease
STATE Capital Corp.
------------------------------------------------------------------------------------------------------------------------------------
12) UCC-1: BankVest 07/09/1999 ▇▇▇▇▇▇▇▇ Equipment Lease
Capital Corp.
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON SECRETARY Clear through -- -- -- -- Clear through N/A
OF STATE 09/25/2001 09/25/2001
------------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-14
DEBTOR: CLINTON EDUCATION GROUP, INC.
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
------------------------------------------------------------------------------------------------------------------------------------
ARIZONA SECRETARY OF 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 02/27/1998 1002232-0 Blanket Collateral Clear through N/A
STATE 02/27/2002 Financial Inc. Statement 02/27/2002
------------------------------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 01/27/1998 ▇▇-▇▇▇▇▇▇▇ Blanket Collateral Clear through Clear through
01/10/2202 Financial Inc. Statement 01/10/2002 01/10/2002
------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA SECRETARY 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 01/27/1998 02860560 Blanket Collateral Clear through Clear through
OF STATE 02/13/2002 Financial Inc. Statement 02/13/2002 02/13/2002
------------------------------------------------------------------------------------------------------------------------------------
DELAWARE SECRETARY Clear through -- -- -- -- Clear through N/A
OF STATE 02/28/2002 02/28/2002
------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS SECRETARY 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 01/27/1998 3793380 Blanket Collateral Clear through N/A
OF STATE 02/20/2002 Financial Inc. Statement 02/20/2002
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK DEPARTMENT 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 01/27/1998 018030 Blanket Collateral Clear through N/A
OF STATE 02/26/2002 Financial Inc. Statement 02/26/2002
------------------------------------------------------------------------------------------------------------------------------------
NEW YORK COUNTY 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 01/27/1998 98PN04318 Blanket Collateral Clear through Clear through
02/19/2002 Financial Inc. Statement 02/11/2002 02/11/2002
------------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-15
DEBTOR: CLINTON EDUCATION GROUP, INC.
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
------------------------------------------------------------------------------------------------------------------------------------
TEXAS SECRETARY OF 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 01/27/1998 9800016464 Blanket Collateral Clear through N/A
STATE 02/06/2002 Financial Inc. Statement 02/06/2002
------------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-16
DEBTOR: CUSTOM TRAINING GROUP, INC.
---------------------------------------------------------------------------------------------------------------------------------
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
---------------------------------------------------------------------------------------------------------------------------------
ARIZONA SECRETARY OF 2 UCCs through 1)UCC-1: Bank One 11/21/1997 ▇▇▇▇▇▇▇-0 Blanket Collateral Clear through N/A
STATE 02/27/2002 Arizona NA Statement 02/27/2002
---------------------------------------------------------------------------------------------------------------------------------
2)UCC-1: ▇▇▇▇▇▇ 01/27/1998 1002233-0 Blanket Collateral
Financial Inc. Statement
---------------------------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY 1 UCC through 1)UCC-1: ▇▇▇▇▇▇ 01/27/2002 980059881 Blanket Collateral Clear through Clear through
0110/2202 Financial Inc. Statement 01/10/2002 01/10/2002
---------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA SECRETARY 1 UCC through 1)UCC-1: ▇▇▇▇▇▇ 01/27/1998 02860254 Blanket Collateral Clear through Clear through
OF STATE 02/13/2002 Financial Inc. Statement 02/13/2002 02/13/2002
---------------------------------------------------------------------------------------------------------------------------------
BERNARDINO COUNTY Clear through -- -- -- -- Clear through Clear through
02/11/2002 02/11/2002 02/11/2002
---------------------------------------------------------------------------------------------------------------------------------
FLORIDA SECRETARY OF Clear through -- -- -- -- Clear through Clear through
STATE 03/06/2002 03/06/2002 03/06/2002
---------------------------------------------------------------------------------------------------------------------------------
BREVARD COUNTY Clear through -- -- -- -- Clear through Clear through
02/27/2002 02/27/2002 02/27/2002
---------------------------------------------------------------------------------------------------------------------------------
ORANGE COUNTY Clear through -- -- -- -- Clear through Clear through
02/19/2002 02/19/2002 02/19/2002
---------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-17
DEBTOR: CUSTOM TRAINING GROUP, INC.
---------------------------------------------------------------------------------------------------------------------------------
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
---------------------------------------------------------------------------------------------------------------------------------
ILLINOIS SECRETARY OF 1 UCC through 1)UCC-1: ▇▇▇▇▇▇ 01/27/1998 003793379 Blanket Collateral Clear through N/A
STATE 02/20/2002 Financial Inc. Statement 02/20/2002
---------------------------------------------------------------------------------------------------------------------------------
DUPAGE COUNTY Clear through -- -- -- -- Clear through Clear through
03/01/2002 03/01/2002 03/01/2002
---------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ COUNTY 1 UCC through 1)UCC-1: ▇▇▇▇▇▇ 01/27/1998 179899 Blanket Collateral Clear through Clear through
02/13/2002 Financial, Inc. Statement 02/13/2002 02/13/2002
---------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY SECRETARY Clear through -- -- -- -- N/A Clear through
OF STATE 02/24/2002 02/22/2002
---------------------------------------------------------------------------------------------------------------------------------
BERGEN COUNTY Clear through -- -- -- -- Clear through Clear through
01/14/2002 02/20/2002 02/20/2002
---------------------------------------------------------------------------------------------------------------------------------
NEW YORK DEPARTMENT 1 UCC through 1)UCC-1: ▇▇▇▇▇▇ 01/27/1998 018028 Blanket Collateral Clear through N/A
OF STATE 02/26/2002 Financial Inc. Statement 02/26/2002
---------------------------------------------------------------------------------------------------------------------------------
NEW YORK COUNTY 1 UCC through 1)UCC-1: ▇▇▇▇▇▇ 01/27/1998 98PN04320 Blanket Collateral Clear through Clear through
02/19/2002 Financial, Inc. Statement 02/11/2002 02/11/2002
---------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA Clear through -- -- -- -- N/A N/A
SECRETARY OF STATE 02/28/2002
--------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-18
DEBTOR: CUSTOM TRAINING GROUP, INC.
---------------------------------------------------------------------------------------------------------------------------------
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
---------------------------------------------------------------------------------------------------------------------------------
LEHIGH COUNTY Clear through -- -- -- -- Clear through Clear through
03/01/2002 03/01/2002 03/01/2002
---------------------------------------------------------------------------------------------------------------------------------
TEXAS SECRETARY OF 1 UCC through 1)UCC-1: ▇▇▇▇▇▇ 01/27/1998 9800016465 Blanket Collateral Clear through N/A
STATE 02/26/2002 Financial Inc. Statement 02/06/2002
---------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ COUNTY Clear through -- -- -- -- Clear through Clear through
02/27/2002 02/27/2002 02/27/2002
---------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-19
DEBTOR: PERFORMANCE TRAINING ASSOCIATES, INC.
----------------------------------------------------------------------------------------------------------------------------------
JURISDICTION UCC SECURED PARTY FILE DATE FILE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
----------------------------------------------------------------------------------------------------------------------------------
COLORADO SECRETARY OF 1 UCCs through 1) UCC-1: ▇▇▇▇▇▇ 07/10/1998 19982044719 Blanket Collateral Clear through N/A
STATE 02/13/2002 Financial, Inc. Statement 02/13/2002
----------------------------------------------------------------------------------------------------------------------------------
ARAPAHOE COUNTY 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 07/07/1998 A8102758 Blanket Collateral Clear through Clear through
02/13/2002 Financial, Inc. Statement 02/25/2002 02/25/2002
----------------------------------------------------------------------------------------------------------------------------------
DENVER COUNTY 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 07/09/1998 9800109443 Blanket Collateral Clear through Clear through
02/13/2001 Financial, Inc. Statement 02/25/2002 02/25/2002
----------------------------------------------------------------------------------------------------------------------------------
FLORIDA SECRETARY OF 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 07/13/1998 155362 Blanket Collateral Clear through Clear through
STATE 02/22/2002 Financial Inc. Statement 02/22/2002 02/22/2002
----------------------------------------------------------------------------------------------------------------------------------
HILLSBOROUGH COUNTY 1 UCC through 1) UCC-1: ▇▇▇▇▇▇ 07/08/1998 98152887 Blanket Collateral Clear through Clear through
02/20/2002 Financial Inc. Statement 02/20/2002 02/20/2002
----------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-20
DEBTOR: UNIVERSAL TECHNICAL INSTITUTE OF NORTH CAROLINA, INC. (FORMERLY KNOWN AS
NASCAR TECHNICAL INSTITUTE, INC.)
---------------------------------------------------------------------------------------------------------------------------------
FILE
JURISDICTION UCC SECURED PARTY FILE DATE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
---------------------------------------------------------------------------------------------------------------------------------
ARIZONA SECRETARY OF Clear through -- -- -- -- Clear through N/A
STATE 3/11/2002 03/11/2002
---------------------------------------------------------------------------------------------------------------------------------
MARICOPA COUNTY Clear through -- -- -- -- Clear through Clear through
03/14/2002 03/14/2002 03/14/2002
---------------------------------------------------------------------------------------------------------------------------------
DELAWARE SECRETARY OF Clear through -- -- -- -- Clear through N/A
STATE 02/28/2002 02/28/2002
---------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA Clear through -- -- -- -- Clear through N/A
SECRETARY OF STATE 03/08/2002 03/08/2002
---------------------------------------------------------------------------------------------------------------------------------
IREDELL COUNTY Clear through -- -- -- -- Clear through Clear through
03/11/2002 03/11/2002 03/11/2002
---------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-21
DEBTOR: THE ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ CORPORATION
---------------------------------------------------------------------------------------------------------------------------------
JURISDICTION UCC SECURED PARTY FILE DATE FILE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
---------------------------------------------------------------------------------------------------------------------------------
ARIZONA SECRETARY OF Clear through -- -- -- -- Clear through N/A
STATE 02/27/2002 02/27/2002
---------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA SECRETARY Clear through -- -- -- -- Clear through Clear through
OF STATE 02/13/2002 02/13/2002 02/13/2002
---------------------------------------------------------------------------------------------------------------------------------
DELAWARE SECRETARY OF Clear through -- -- -- -- Clear through N/A
STATE 02/28/2002 02/28/2002
---------------------------------------------------------------------------------------------------------------------------------
FLORIDA SECRETARY OF 1 UCC through 1) UCC-1: Inter-Tel 01/10/2000 200000006556 Equipment Lease Clear through Clear through
STATE 09/27/2001 Leasing Inc. 02/27/2002 02/27/2002
---------------------------------------------------------------------------------------------------------------------------------
ILLINOIS SECRETARY OF Clear through -- -- -- -- Clear through N/A
STATE 02/20/2002 02/20/2002
---------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI SECRETARY Clear through -- -- -- -- Clear through N/A
OF STATE 11/09/2001 11/09/2001
---------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY SECRETARY Clear through -- -- -- -- N/A Clear through
OF STATE 02/04/2202 02/27/2002
---------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-22
DEBTOR: THE ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ CORPORATION
---------------------------------------------------------------------------------------------------------------------------------
JURISDICTION UCC SECURED PARTY FILE DATE FILE NUMBER COLLATERAL FEDERAL TAX LIENS JUDGEMENTS
---------------------------------------------------------------------------------------------------------------------------------
WASHINGTON SECRETARY Clear through -- -- -- -- Clear through N/A
OF STATE 09/25/2001 09/25/2001
---------------------------------------------------------------------------------------------------------------------------------
Schedule 3.2(A)(10)-23
SCHEDULE 3.4
CONTINGENT OBLIGATIONS
Letter of Credit in the amount of $6,400,000 issued on behalf of Universal
Technical Institute, Inc. in favor of the United States Department of Education.
Schedule 3.4
SCHEDULE 3.8
AFFILIATE TRANSACTIONS
1. Lease Agreement dated January 1, 2002 between the ▇▇▇▇ ▇. & ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ Family Trust, as lessor, and the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, as
lessee, for premises commonly known as ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇.
Rent: Base monthly rent $16,479.00/month plus sales taxes.
Increases in base rent calculated upon CPI increases
or 4% whichever is greater at the end of each year
Term: Expires 12/31/2016
Other costs: Pass through of certain costs, including building
improvements, casualty, insurance, taxes and
utilities.
Permitted Uses: Motorcycle classroom and/or lab.
2. Lease Agreement dated July 2, 2001 between Delegates, LLC, as lessor ,
and the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, as lessee, for premises commonly
known as ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇.
Rent: $43,719 base rent/month plus sales taxes. Increases
in base rent calculated upon CPI increases or 4%
whichever is greater at the end of each year
Term: Expires 12/31/2016
Other costs: Pass through of certain costs, including
building improvements, casualty, insurance, taxes and
utilities.
Permitted Uses: Motorcycle classroom and/or lab.
3. Lease Agreement dated April 1, 1994 between City Park, L.L.C., as
lessor, and the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, as lessee, for premises
commonly known as ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
Rent: $30,345.00 base rent/month; plus 4% increases
annually plus sales taxes.
Term: Expires 2/28/2015
Other Costs: Pass through of certain costs, including taxes and
insurance.
Schedule 3.8
4. Lease Agreement between Universal Technical Institute of Texas, Inc.
("UTI Texas") and Universal Investment Properties for the premises
commonly known as ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, dated August 1,
1999.
Rent: Currently $71,375 per month plus taxes, assessments
and property-related expenses. Yearly increases based
on CPI with a minimum of 3% but not to exceed 6%.
Term: Expires July 31, 2016.
Universal Investment Properties is a Texas General Partnership formed
on October 1, 1983. The partners consist of the following former and
current shareholders of UTI:
PARTNER PERCENTAGE
------- ----------
▇▇▇▇▇▇ ▇▇▇▇▇ 32.455%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2.510
▇▇▇▇▇ ▇▇▇▇▇▇▇ 7.520
Estate of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 7.520
▇▇▇▇▇▇ ▇▇▇▇▇▇ 12.530
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ Family Trust 32.455
▇▇▇▇ ▇▇▇▇▇▇ 5.010
--------
TOTAL 100.000
========
5. Holdings has entered into a Deferred Compensation Agreement with the
following Sales Representatives:
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
The Deferred Compensation Agreement provides that Holdings continue to
compensate these Sales Representatives during the one year following
the Representative's retirement or separation. The amount of the
deferred compensation is to be determined at the time of separation.
6. Holdings uses the services of Premier Graphics, a printing company, for
a substantial amount of the Company's printing needs. The vendor,
Premier Graphics, is owned by the aunt and uncle of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
who is a Stockholder and officer of Holdings.
Schedule 3.8-2
7. Holdings provides a Medical Reimbursement Plan to four of its key
executives. The Plan reimburses the participant for all out-of-pocket
medical expenses up to the following maximum amounts per year.
▇▇▇▇ ▇▇▇▇▇ $7,500.00
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 7,500.00
▇▇▇ ▇▇▇▇▇▇▇▇ 7,500.00
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 3,500.00
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 3,500.00
▇▇▇▇▇ ▇▇▇▇▇ 3,500.00
▇▇▇▇▇ ▇▇▇▇▇ 3,500.00
8. Contracts with retired shareholders
Holdings has an agreement related to Mr. ▇▇▇▇▇▇ ▇▇▇▇▇'▇ (former owner)
retirement in March 1993.
Sweet Insurance:
Mr. Sweet is currently receiving approximately $40,000 per year
reimbursement for life insurance.
Schedule 3.8-3
SCHEDULE 3.9
MANAGEMENT FEES AND COMPENSATION
Pursuant to the Management Consulting Agreement, dated as of September
30, 1997, between TJC Management Company ("TJC") and Universal Technical
Institute, Inc. ("COMPANY"), as amended by that certain side letter dated
September 30, 1998, that certain side letter dated September 30, 1999 (the
"SECOND SIDE LETTER") by TJC and the Company and that certain side letter, dated
March 29, 2002 among TJC, Penske ("PENSKE"), Charlesbank Capital Partners, LLC
("CHARLESBANK", and collectively with TJC and Penske, the "CONSULTANTS") and the
Company (as amended, the "MANAGEMENT AGREEMENT"), the Company is required to pay
the Consultants an annual fee, in quarterly installments, equal to the greater
of $250,000 or 2.5% of EBITDA (as defined in the Management Agreement) plus
reimbursement for reasonable out of pocket expenses. In addition, upon the
approval of the Board of Directors for certain transactions, the Company is
required to pay the Consultants an investment banking fee equal to (i) two
percent (2.0%) of the value of any assets or stock of the Company or other
entity acquired or sold by the Company or any of its Subsidiaries or Affiliates;
(ii) one percent (1.0%) of the value of any debt or equity financing consummated
by the Company, or (iii) the greater of the two fees described in (i) and (ii)
for any transaction involving both an acquisition or sale and a financing.
Schedule 3.9
SCHEDULE 3.10
BUSINESS DESCRIPTION
The business of Holdings and its Subsidiaries (including The ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Corporation) is to provide proprietary postsecondary vocational training
and education. This education and training is focused on programs in six primary
fields: (i) automotive; (ii) diesel; (iii) HVAC/R; (iv) collision repair and
refinishing; (v) motorcycle; and (vi) marine. In addition, Holdings provides
graduate training and custom-designed training programs through its Subsidiary,
Custom Training Group Inc. ("CTG").
Schedule 3.10
SCHEDULE 5.3
VIOLATIONS, CONFLICTS, BREACHES AND DEFAULTS
None
Schedule 5.3
SCHEDULES 5.4(A) AND 5.4(B)
JURISDICTIONS OF ORGANIZATION AND CAPITALIZATION
[TO BE UPDATED]
STATE/DATE SHARES SHARES SHARES IN
CORPORATION OF INCORP. AUTHORIZED SHARES ISSUED OUTSTANDING TREASURY
---------------------------------------------------------------------------------------------------------------------
Universal Technical Delaware 8,500 Comm 3,096 Comm 3,096 Comm 14.6
Institute, Inc. 9/11/97*/ 25,000 Pref 11,178 Pref A 11,178 Pref A
4,067 Pref B 4,067 Pref B
4,200 Pref C 4,200 Pref C
2,358 Pref D 2,358 Pref D
---------------------------------------------------------------------------------------------------------------------
UTI Holdings, Inc. Arizona 8/5/91 100 50 50 0
---------------------------------------------------------------------------------------------------------------------
Universal Technical Delaware 100 100 100 0
Institute of Arizona, 9/11/97
Inc.
---------------------------------------------------------------------------------------------------------------------
Universal Technical California 1,000 100 100 0
Institute of 10/03/97
California, Inc.
---------------------------------------------------------------------------------------------------------------------
Universal Technical Texas 1,000,000 1,000 1,000 0
Institute of Texas, 7/12/83
Inc.
---------------------------------------------------------------------------------------------------------------------
U.T.I. of Illinois, Inc. Illinois 1/9/87 1,000 1,000 1,000 0
---------------------------------------------------------------------------------------------------------------------
Custom Training California 1,000 1,000 1,000 0
Group, Inc. 5/8/81
---------------------------------------------------------------------------------------------------------------------
The ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Delaware 100 100 100 0
Corporation 9/11/97
---------------------------------------------------------------------------------------------------------------------
Clinton Education Delaware 100 100 100 0
Group, Inc. 9/11/97
---------------------------------------------------------------------------------------------------------------------
Universal Technical Delaware 1000 1000 1000 0
Institute of North 07/17/01
Carolina, Inc.
---------------------------------------------------------------------------------------------------------------------
----------------
*/ Lincoln Technical Institute of Arizona, Inc., d/b/a Universal
Technical Institute, an Arizona corporation incorporated on May 3,
1965, was reincorporated in Delaware merging into Universal Technical
Institute, Inc. on September 29, 1997.
Schedules 5.4(A) and 5.4(B)
SCHEDULE 5.4(D)
FOREIGN QUALIFICATIONS
Universal Technical Institute Inc. ("HOLDINGS") and its Subsidiaries
are qualified to do business in the following states: Arizona, California,
Florida, Illinois, Minnesota, Mississippi, New Jersey, New York, North Carolina,
Texas, Washington. These qualifications are based upon the residence of its
Sales Representatives and registrations within the states.
Holdings apportions its taxable income based upon payroll, property and
gross receipts from each state as compared to the total amount of payroll,
property and gross receipts for all states. In states where a Representative
lives, the apportionment is based on the payroll in that state. Certain states
where Holdings is not qualified may take the position that Holdings must be
licensed in that state if its Representatives solicit students there.
Holdings has only paid taxes for one entity in some states, and not for
the parent and all subsidiaries. This is an acceptable position in some
jurisdictions, but may not be in others. Therefore, some minimum annual
franchise taxes may be due in some jurisdictions. However, Holdings has
apportioned its revenues in all jurisdictions (except Illinois, which does not
allow apportionment).
Therefore, Holdings may not have all state, local and foreign licenses,
permits or other approvals required for the operation of its business as now
being conducted. Nevertheless, Holdings' exposure in these states is limited
since such states could only require payment for up to three years of taxes, and
Holdings' revenues in states where it is not qualified are low enough that only
the minimum franchise tax would be required. The difference in cost between
obtaining and maintaining qualification in these states and paying any potential
penalties is minimal.
Schedules 5.4(D)
SCHEDULE 5.6
INTELLECTUAL PROPERTY
INTELLECTUAL PROPERTY RIGHTS OF UNIVERSAL TECHNICAL INSTITUTE
Universal Technical Institute only has proprietary rights in teaching
manuals that it prepares. Holdings has not taken any steps to attempt to protect
these rights. Holdings does not feel that it has any other proprietary rights,
invention disclosures, drawings, designs, customer lists, proprietary know how
or information or other rights that are material to the business.
The name "Universal Technical Institute, Inc." has not been protected
nationwide with any trademark and tradename filings.
In 2000, Holdings trademarked its logo, as set forth in Annex A. In
2001, Holdings trademarked PACT (Partnership for Accelerated Career Training) as
set forth in Annex A.
Holdings currently does not have any patents.
INTELLECTUAL PROPERTY RIGHTS OF THE ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ CORPORATION AND
CLINTON EDUCATION GROUP, INC.
The ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation has proprietary rights in the following:
1. Registered service marks listed in Annex A.
2. Registered copyrights listed in Annex A.
3. Proprietary Rights in connection with the following names that are used
in connection with CHC's Business:
▇. ▇▇▇▇▇▇▇ Technical Institute
b. Motorcycle Mechanics Institute
c. Marine Mechanics Institute
4. Commercially available software used by CHC.
5. Database application used to track information on students that take
classes at the Clinton Technical Institute. This custom software was
written by an employee of CHC.
Clinton Education Group, Inc. has proprietary rights in the commercially
available software it uses.
Neither CHC nor CEG currently have any patents.
Schedule 5.6
ANNEX A
UTI TRADEMARKS(2)
REG./FILING
TRADEMARK OWNER STATUS/COUNTRY REG. NUMBER DATE
---------------------------------------------------------------------------------------------------------------------
UTI symbol Universal Technical Institute, Registered/ 2,333,820 Mar. 21, 2000
(attached as Inc. United States
Exhibit A-1)
FACT Educational services, namely, Registered/United 2,429,878 Feb. 20, 2001
conducting training classes to States
become an automotive technician and
distributing co.
Universal Technical Institute,
PACT Inc. Registered/United 2,506,017 Nov. 13, 2001
(attached as States
Exhibit A-2) Universal Technical Institute,
Inc.
PACT and Registered/United 2,511,945 Nov. 27, 2001
Design States
(attached as
Exhibit A-3)
---------------------------------------------------------------------------------------------------------------------
CHC TRADEMARKS
REG./FILING
TRADEMARK OWNER STATUS/COUNTRY REG. NUMBER DATE
---------------------------------------------------------------------------------------------------------------------
HONTECH The ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, Registered/ 1,402,546 July 22, 1986
d/b/a Motorcycle Mechanics United States
Institute
---------------------------------------------------------------------------------------------------------------------
YAMAPRO The ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, Registered/ 1,586,144 March 6, 1990
d/b/a Motorcycle Mechanics United States
Institute
---------------------------------------------------------------------------------------------------------------------
CHC COPYRIGHTS
TITLE AUTHOR OWNER REG. NUMBER REG. DATE
----------------------------------------------------------------------------------------------------------------------
The Complete Guide to Motorcycle Mechanics Motorcycle TX37379659 January 24, 1994
Motorcycle Mechanics Institute Mechanics
Institute
----------------------------------------------------------------------------------------------------------------------
----------------
(2) Universal Technical Institute, Inc. will assign the trademarks
to UTI Holdings, Inc. at Closing and such assignment shall be filed
with the U.S. Patent and Trademark office by Lender's counsel. At
Closing, UTI Holdings, Inc. will enter into an intercompany license
agreement and license the trademarks to its direct and indirect
subsidiaries and to Universal Technical Institute, Inc.
Schedule 5.6-2
TITLE AUTHOR OWNER REG. NUMBER REG. DATE
----------------------------------------------------------------------------------------------------------------------
The Complete Guide to Motorcycle Mechanics Motorcycle TX1883586 August 4, 1986
Motorcycle Mechanics Institute Mechanics
Institute
----------------------------------------------------------------------------------------------------------------------
How to Tune and Service Motorcycle Mechanics Motorcycle TX1730627 January 8, 1986
a Four-Stroke Japanese Institute Mechanics
Motorcycle Institute
----------------------------------------------------------------------------------------------------------------------
CEG COPYRIGHTS
TITLE AUTHOR OWNER REG. NUMBER REG. DATE
----------------------------------------------------------------------------------------------------------------------
Harley-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Education Clinton TX5062068 January 18, 2000
Fundamentals I Group Education
Group
----------------------------------------------------------------------------------------------------------------------
Schedule 5.6-3
SCHEDULE 5.7
INVESTIGATIONS AND AUDITS
Holdings completed an audit by the Internal Revenue Service (IRS) for the tax
year ended September 30, 1999. Deductions for meals & insurance were disallowed
which will generate an increase in tax of approximately $35,000. Additional
state income taxes for this period are estimated at less than $5,000.
No other audits are pending. No notifications have been received.
Schedule 5.7
SCHEDULE 5.8
EMPLOYEE MATTERS
Universal Technical Institute of Arizona, Inc., a wholly-owned Subsidiary of
Borrower, is a party to separate employment agreements, dated as of September
30, 1997, with each of ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. Copies of these
agreements have been previously provided to the Lenders.
Universal Technical Institute, Inc. ("Holdings") is party to the severance
agreements listed below:
1. Severance Agreement between Holdings and ▇▇▇ ▇▇▇▇▇▇▇▇, dated as of June 22,
2000.
2. Severance Agreement between Holdings and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, dated as of June 30,
2000.
3. Severance Agreement between Holdings and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, dated as of August
1, 2001.
Historical information with respect to Employee Matters for Holdings, its
Subsidiaries and the Institutions follows.
UNIVERSAL TECHNICAL INSTITUTE
At the present time, the person handling the travel arrangements for all
employees of Universal Technical Institute, Inc. and its subsidiaries is treated
as an independent contractor. It is possible that the Internal Revenue Service
may attempt to treat that person as an employee with the result that the Company
may owe taxes, penalties and interest.
THE ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ CORPORATION
There are no pending material claims pending against the Company.
Schedule 5.8
SCHEDULE 5.11
NONCONTRAVENTION
None.
Schedule 5.11
SCHEDULE 5.16
SUBORDINATED INDEBTEDNESS AND SELLER SUBORDINATED NOTES
6.55% Subordinated Note, due September 30, 2023, in the principal amount of
$4,000,000 from Universal Technical Institute, Inc. to Clinton Education Group,
Inc., an Arizona corporation.
8% Convertible Note, due June 30, 2006, in the principal amount of $5,250,000,
from Universal Technical Institute, Inc. to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$10,750,000 from Universal Technical Institute, Inc. to J/Z CBO (Delaware), LLC.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$4,650,000 from Universal Technical Institute, Inc. to JZEP.
13.5% Senior Subordinated Note, due October 31, 2006, in the principal amount of
$4,000,000 from Universal Technical Institute, Inc. to JZEP.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$2,000,000 from Universal Technical Institute, Inc. to Old ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Corporation.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$1,387,260.20 from Universal Technical Institute, Inc. to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$271,063.10 from Universal Technical Institute, Inc. to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$157,471.20 from Universal Technical Institute, Inc. to ▇▇▇▇▇ ▇▇▇▇▇▇▇.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$28,502.70 from Universal Technical Institute, Inc. to ▇▇▇▇▇▇ ▇▇▇▇▇▇.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$25,307.90 from Universal Technical Institute, Inc. to ▇▇▇▇▇▇▇ ▇▇▇▇▇.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$18,413.20 from Universal Technical Institute, Inc. to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$15,352.20 from Universal Technical Institute, Inc. to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$15,352.20 from Universal Technical Institute, Inc. to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$15,096.10 from Universal Technical Institute, Inc. to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$10,853.80 from Universal Technical Institute, Inc. to ▇▇▇▇▇ ▇▇▇▇▇.
Schedule 5.16
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$5,006.90 from Universal Technical Institute, Inc. to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$25,160.25 from Universal Technical Institute, Inc. to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
13.5% Senior Subordinated Note, due January 31, 2008, in the principal amount of
$25,160.25 from Universal Technical Institute, Inc. to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
Schedule 5.16-2
SCHEDULE 7.1
CONDITIONS TO INITIAL LOANS HEREUNDER
(A) DELIVERIES. Any documents listed below shall be duly executed, in form
and substance satisfactory to Agent, in quantities designated by Agent (except
for the Amended and Restated Notes, of which only the originals shall be signed)
and shall be delivered to Agent on or before the Second Amendment and
Restatement Date. Capitalized terms used herein shall have the meanings set
forth in the Second Amended and Restated Credit Agreement.
(1) CREDIT AGREEMENT. Second Amended and Restated Credit Agreement
and all Schedules and Exhibits thereto.
(2) LENDER ADDITION AGREEMENTS AND ASSIGNMENTS. (i) Lender
Addition Agreements (in the form of Exhibit 10.1(B) to the
Original Credit Agreement and otherwise in substance
satisfactory to Agent) evidencing such assignments by Exiting
Lenders and/or Continuing Lenders of the rights and
obligations under the Original Credit Agreement to New Lenders
as may be necessary to consummate the transactions
contemplated by the Second Amended and Restated Credit
Agreement, and (ii) evidence satisfactory to Agent of any
assignments by Exiting Lenders and/or Continuing Lenders to
Continuing Lenders of the rights and obligations under the
Original Credit Agreement to New Lenders as may be necessary
to consummate the transactions contemplated by the Second
Amended and Restated Credit Agreement.
(3) TERM NOTES. Amended and Restated Term Notes for Term Loan A
and Second Amended and Restated Term Notes for Term Loan B.
(3) REVOLVING NOTES. Revolving Notes for the Revolving Loans.
(4) SECURITY AGREEMENT. Security Agreement for Holdings; Amended
and Restated Security Agreement for Borrower and all
Non-Institution Subsidiaries and confirmation of existing
Security Agreement; a Security Agreement for each
Non-Institution Subsidiary that has not heretofore provided
one; and Copyright, Patent and/or Trademark Security
Agreements, where appropriate for each entity executing a
Security Agreement.
(5) SECURITY INTERESTS, UCC FILINGS AND STOCK CERTIFICATES.
(a) Evidence that Agent has a valid and perfected
security interest in the Collateral, subject only to
Permitted Encumbrances.
(b) Executed documents (including financing statements
under the UCC and other applicable documents under
the laws of any jurisdiction with respect to the
perfection of Liens) as Agent may deem necessary to
perfect or confirm its security interests in the
Collateral.
(c) Certificates (which certificates shall be properly
endorsed in blank for transfer or accompanied by
irrevocable undated stock powers duly endorsed in
blank) representing all of the capital stock of
Borrower and all Non-Institution Subsidiaries
pursuant to the pledge agreement.
(6) REAL PROPERTY. Not Applicable.
Schedule 7.1
(7) ENVIRONMENTAL REPORT. An environmental report delivered to
Agent.
(8) NOTICE OF BORROWING AND LETTER OF DIRECTION. A letter of
direction from Borrower to Agent describing the disbursement
of the proceeds of Incremental Term Loan A and any advance
under the Revolving Loan and any Lender Letter of Credit or
Risk Participation Agreement to be made or issued on the
Second Amendment and Restatement Date.
(9) LETTER OF DIRECTION RE FUTURE LOANS. A letter of direction
from Borrower to Agent authorizing and requesting Agent to
wire transfer proceeds of all future advances under the
Revolving Loan to a bank account designated by Borrower.
(10) INSURANCE POLICIES AND ENDORSEMENTS. Copies of insurance
certificates for Borrower and all Non-Institution Subsidiaries
together with endorsements naming Agent and Lenders, as
applicable, as lender's loss payee (with respect to all
property insurance), additional insured (with respect to all
liability insurance) or assignee (with respect to all business
interruption insurance) pursuant to an assignment agreement
acceptable to Agent.
(11) PAYOFF LETTERS. For all Subject Subordinated Indebtedness.
(12) CONSENT AND WAIVER LETTERS. As applicable.
(13) FINANCIAL STATEMENTS. Financial statements referred to in
subsection 5.5 of the Credit Agreement, and audited financial
statements (reflecting a financial condition and results
acceptable to the Agent) for the period ending September 30,
2001 of Holdings and its Subsidiaries.
(14) PRO FORMA AND PROJECTIONS.
(15) FINANCIAL CONDITION/SOLVENCY CERTIFICATE. A representation of
each of Borrower, Holdings and each other Loan Party regarding
its financial condition and solvency (after giving effect to
the Penske/Charlesbank Related Transactions), supported by the
Pro Forma and Projections for the period commencing on March
1, 2002 and concluding on March 31, 2009.
(16) CHARTER AND GOOD STANDING. Certified copies of the
certificates or articles of incorporation of Holdings,
Borrower, each Non-Institution Subsidiary and each other Loan
Party together with good standing certificates from the
respective states of incorporation and the respective states
in which the principal places of business of each is located
and from all states in which the activities of such Persons
require them to be qualified and/or licensed to do business,
each to be dated a recent date prior to the Second Amendment
and Restatement Date.
(17) BYLAWS. Copies of the bylaws of Holdings, Borrower, each
Non-Institution Subsidiary and each other Loan Party certified
as of the Closing Date by its corporate secretary or an
assistant secretary.
(18) RESOLUTIONS. Resolutions of the Boards of Directors of
Holdings, Borrower, each Non-Institution Subsidiary and each
other Loan Party authorizing and approving the execution,
delivery and performance of the Loan Documents and all
Penske/Charlesbank Related Transactions Documents to which
such Person is a party, certified as of the
Schedule 7.1-2
Second Amendment and Restatement Date by its corporate
secretary or an assistant secretary as being in full force and
effect without modification or amendment.
(19) INCUMBENCY CERTIFICATES. Signature and incumbency certificates
of the officers of each Loan Party executing the Loan
Documents delivered on the Amendment and Restatement Date.
(20) PLEDGE AGREEMENT. Amendment or Amendment and Restatement of
existing Pledge Agreements by Borrower and Holdings (each, a
"PLEDGE AGREEMENT") and delivery of stock certificate (with
endorsement) for stock of any Subsidiary of Holdings as to
which no delivery has been made heretofore.
(21) GUARANTIES. Guaranty by Holdings and confirmation of each
existing Guaranty of each Non-Institution Subsidiary.
(22) PURCHASE AGREEMENTS. Certified copy of the final Convertible
Preferred Stock Purchase Agreement, and any amendments,
modifications or waivers thereto; and all certificates, legal
opinions and letters delivered in connection with the
Convertible Preferred Stock Purchase Agreement and the
Penske/Charlesbank Related Transactions, which certificates,
legal opinions and letters shall be addressed to Agent and
Lenders or accompanied by a written authorization from the
person delivering such certificate, opinion or letter stating
that Agent and Lenders may rely on such document as though it
were addressed to them.
(23) RELATED TRANSACTIONS. Evidence that the Penske/Charlesbank
Related Transactions have been consummated in accordance with
the terms of the Convertible Preferred Stock Purchase
Agreement and related documents and all other "RELATED
AGREEMENTS" (as defined in the Convertible Preferred Stock
Purchase Agreement), all as contemplated thereby, without
material amendment or waiver except as approved in writing by
Agent and Lenders.
(24) GOVERNMENT APPROVALS. Evidence and copies of any required
prior approvals of any State or local regulating agencies
(including the Necessary Regulatory Authorities) of the
transactions contemplated by the Convertible Preferred Stock
Purchase Agreement.
(25) OPINIONS OF COUNSEL. Written opinions of (i) Mayer, Brown,
▇▇▇▇ & Maw, special New York counsel, (ii) special Arizona
counsel, (iii) special California counsel, (iv) special DOE
regulatory counsel and (v) such other counsel as Agent may
request, in each case, in form and substance satisfactory to
Agent and its counsel, dated as of the Second Amendment and
Restatement Date.
(26) SATISFACTION OF SUBJECT SUBORDINATED INDEBTEDNESS. Evidence of
satisfaction and cancellation of all evidence of such
Indebtedness.
(27) AMENDMENT OF HOLDINGS SUBORDINATED INDEBTEDNESS DOCUMENTS.
Evidence that the Holdings Subordinated Indebtedness Documents
governing the Remaining Subordinated Indebtedness shall have
been amended in a manner satisfactory to Agent and Requisite
Lenders.
(29) PRE-CLOSING SEARCHES. UCC, tax and judgment search reports
listing all effective financing statements, tax liens and
judgment liens that name Holdings or any of its
Schedule 7.1-3
Subsidiaries (or any of their respective predecessors) or any
other Loan Party as debtor, together with copies of such
financing statements, tax liens and judgment liens, the
contents of which shall be satisfactory to Agent.
(29) PREFERRED STOCK. Certified copies of certificate of
designation of Series D Preferred Stock.
(30) FEE LETTER. Fee letter among Borrower and Agent in respect of
a documentation fee.
(31) OTHER DOCUMENTS. Borrower and Holdings shall have delivered
such other documents as Agent may reasonably request.
(B) SUBSCHEDULES
(1) LITIGATION. List of any outstanding judgments, actions,
charges, claims, demands, suits, proceedings, petitions,
governmental investigations or arbitrations now pending or, to
the best knowledge of Borrower after due inquiry, threatened
against Holdings, any of its Subsidiaries, any other Loan
Party, the Companies or any or affecting any property of
Holdings, any of its Subsidiaries, any other Loan Party, the
Companies, along with status reports, annexed hereto as
Subschedule 1.
(2) EMPLOYEE BENEFIT PLANS. List of any employee benefit plans
which Holdings, any of its Subsidiaries, any other Loan Party,
the Companies or any Affiliate maintains or contributes to, or
has any current or potential obligations under, and copies of
IRS Determination Letters for each such employee benefit plan,
annexed hereto as Subschedule 2.
(3) CLOSING FEES. List of any broker's, finder's, due diligence,
structuring, debt or equity placement fees, commissions or
similar compensation payable with respect to the consummation
of the Related Transactions, annexed hereto as Subschedule 3.
(4) INVESTMENTS. List of any Investments in any Person by Holdings
or any of its Subsidiaries, annexed hereto as Subschedule 4.
(5) DERIVATIVES. List of any contracts or other relationships
entered into by Holdings or any of its Subsidiaries which
involve the exchange, transfer or modification of risks
associated with fluctuations in interest rates, currency
exchange rates or commodity prices or any similar risks
through caps, swaps, collars, futures contracts, forward
exchange contracts or any other type of derivative
arrangement, annexed hereto as Subschedule 5.
(6) BANK ACCOUNT. List of bank accounts setting forth for each
such bank account, the bank at which the account is
maintained, the account number, the purpose of the account and
the maximum balance of the account.
(7) SUBSIDIARIES. List of Holdings' and Borrowers' percentage
ownership of each of their respective Subsidiaries.
Schedule 7.1-4
The foregoing deliveries and subschedules are true, correct and complete and are
made and delivered this 29th day of March, 2002.
BORROWER:
UTI HOLDINGS, INC.
By: ____________________________
Name:
Title:
Schedule 7.1-5
SCHEDULE 7.1(B)(1)
LITIGATION
Occasionally litigation against Holdings and its Subsidiaries is threatened by
various parties as a result of incidents occurring in the ordinary course of
business. There are no material lawsuits pending with the Company.
Schedule 7.1(B)(1)
SCHEDULE 7.1(B)(2)
EMPLOYEE BENEFIT PLANS
Dental. Dental insurance is provided through MetLife. Two plans are offered
including a basic and a buy-up program. This is a pre-tax benefit.
Short term and long term disability. Jefferson Pilot Financial is the carrier
for company paid short and long term disability. Short term pays 66 and 2/3% of
base up to $500 per week. Long term disability provides 50% of base salary up to
$5,000 per month maximum. Jefferson Pilot also offers voluntary term life
insurance for the employee, spouse and dependents in varying amounts.
Vision. A voluntary discount vision program is offered through EyeMed Vision
Care.
Life and AD&D. These programs are also offered through Jefferson Pilot
Financial. Employees are eligible for one times their base salary up to $40,000
maximum.
Vacation. After completing 90 days of employment, all full-time and part-time
regular employees accrue a bi-weekly vacation benefit equal to 10 days for 90
days to four years of service, 15 days for five years to nine years of service,
and 20 days for 10 plus years of service.
Holidays. All full-time and part-time regular employees are eligible for holiday
pay. The Company observes nine paid holidays per calendar year.
Sick/Personal Time. All full-time and part-time regular employees are eligible
for a maximum of six paid days off per year to be used for hours and/or days
missed due to illness or personal reasons.
Tuition Reimbursement. The Company will provide reimbursement for the cost of
tuition, books, lab and registration fees as follows: Non-Degree Course Work:
Must directly relate to the employee's professional development within the
company. Payment is remitted at 100% if a grade of "C" or better is attained.
Degree Programs: The Company will provide assistance for course work required as
part of an approved degree program. The Company will provide 50% of
reimbursement upon the successful completion of each course graded "C" or
better. One year after graduation, the remaining 50% of the cost will be
reimbursed to the active employee.
401(k). This program is available to full-time employees on the first of the
month after 90 days of employment. The Company match is $.50 on the dollar up to
5% of base pay beginning January 1, 2002. The vesting schedule is 5 years and is
zero for the first year.
Profit Sharing Plan. The Company provides a profit sharing plan with a
discretionary match.
Bonus. Bonus plans are maintained for all employees as follows:
Manager bonuses are paid each December based on a percentage of base
pay and business unit achievement of targets.
Grad Block bonuses are paid monthly to Education Representatives based
on a percentage of tuition for graduates once they have exceeded what
they have been paid in up front compensation
Schedule 7.1(B)(2)
BBOP bonuses are paid quarterly to Graduate Employment Directors and
Advisors based on the number of students employed after graduation.
MPC bonuses are paid quarterly to Manufacturer Program Coordinators
based on the number of starts in the manufacturer programs at each
campus
Industry Relations Managers Bonus is paid quarterly based on the number
of starts and graduates in the assigned industry accounts
Breakthrough Bonus is paid every year in December to all employees who
do not participate in another bonus program based on business unit
achievement of targets.
Executive Medical Reimbursement. A taxable medical reimbursement program is
offered to senior executives. The program allows for reimbursement of unpaid
medical expenses up to a specified dollar amount.
Executive Premiums. The Company pays medical, dental and buy-up disability
insurance premiums for the senior executive team.
Deferred Compensation. This plan is available to senior executives and is a
non-qualified plan. The executives may elect to defer compensation and elect
investment options.
Schedule 7.1(B)(2)-2
SCHEDULE 7.1(B)(3)
CLOSING FEES
Closing fees payable in the approximate amounts as set forth below:
TJC Management Corp. $ 1,325,000.00
The Jordan Company, LLC 562,781.25
Jordan Investment Company of Illinois 112,218.75
Worldwide Training Group, LLC ("WTG") 350,000.00
Charlesbank Capital Partners, LLC ("CCP") 150,000.00
Credit Suisse First Boston (Investment Banking) 1,609,000.00
Mayer, Brown, ▇▇▇▇ & Maw (Legal) 550,000.00
Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, pllc (Legal) 107,764.07
Sacks Tierney P.A. (Legal) 1,500.00
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ 430,000.00
▇▇▇▇▇▇ ▇▇▇▇▇▇ (Management Consultant) 125,000.00
Lunkes & Associates (Management Consultant) 150,000.00
▇▇▇▇▇ ▇▇▇▇▇▇ and Company, LLP 109,227.00
Aon Risk Services, Inc. 25,000.00
Worldwide Training Group, LLC (Out of Pocket Expenses) 90,662.00
Charlesbank Capital Partners, LLC (Out of Pocket Expenses) 30,808.00
The Jordan Company, LLC (Out of Pocket Expenses) 20,000.00
Senior Financing (Amendment Fee) 1,575,000.00
Senior Financing (Documentation Fee) 50,000.00
Bank Legal 156,500.00
Bank Expenses (Environmental, Insurance, Other) 28,261.75
Amendment Fee 153,300.00
FEES ALREADY PAID BY THE COMPANY:
PriceWaterhouseCoopers (Accounting) 100,200.00
Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, pllc 23,760.00
--------------
APPROXIMATE TRANSACTION RELATED FEES AND EXPENSES: $ 7,835,982.82
Schedule 7.1(B)(3)
SCHEDULE 7.1(B)(4)
INVESTMENTS
None.
Schedule 7.1(B)(4)
SCHEDULE 7.1(B)(5)
DERIVATIVES
Neither Universal Technical Institute, Inc. nor any of its Subsidiaries are
parties to any contracts or have entered into any relationships which involve
the exchange, transfer or modification of risks associated with fluctuations in
interest rates, currency exchange rates or commodity prices or any similar risks
through caps, swaps, collars, futures contracts, forward exchange contracts or
any other type of derivative arrangement.
Schedule 7.1(B)(5)
SCHEDULE 7.1(B)(6)
BANK ACCOUNTS
BANK ONE. ARIZONA
-----------------
UTI Holdings Concentration Sweep Account #2964-6016
Universal Technical Institute Inc. General Operating Account #0628-9095
Universal Technical Institute Inc. Payroll Account #0956-6844
Universal Technical Institute Inc. Student Payables Account #0956-6887
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation (AZ Campus) Deposit Account #0631-7383
Universal Technical Institute Inc. Medical Reimbursement #2233-1177
BANK ONE, TEXAS
Universal Technical Institute of Texas, Inc. General Operating Account #1588115004
BANK ONE (CHICAGO)
U.T.I. of Illinois, Inc. Student Payables Account #4425055723406
▇▇▇▇▇ FARGO (CALIFORNIA)
Universal Technical Institute of California, Inc. Student Payables Account #0465-045904
BANK OF AMERICA (FLORIDA)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation (Florida Campus) Deposit Account #002830126729
M&I THUNDERBIRD BANK #▇▇
▇▇▇▇ ▇. ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Memorial Fund Account #▇▇-▇▇▇▇▇-▇
**********
The following are the Bank One fiduciary bank accounts (Title IV
Accounts) at the DOE. When the students make "satisfactory progress", the monies
may be withdrawn into the Company's general bank accounts. Depending upon the
time of the year, these accounts may hold as much as $1,000,000.
UTI FFELP Trust #1 (EFT Transfers) #0956-6879 Fed ID#▇▇-▇▇▇▇▇▇▇
MMI FFELP Trust #2 (EFT Transfers) #0956-6916 Fed ID#▇▇-▇▇▇▇▇▇▇
Universal Technical Institute Federal EDPMS - Phoenix #0030-3036
Universal Technical Institute Federal EDPMS - Houston #0030-3132
MMI Federal EDPMS #2824-8147
Universal Technical Institute Federal Trust Fund - Phoenix #0956-6924
Universal Technical Institute Federal Trust Fund - Houston #0956-6676
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Federal Trust Fund #2238-3831
SLM Financial Account #2828-8739
Universal Technical Institute ▇▇▇ ▇▇▇▇▇ #0630-0397
Schedule 7.1(B)(6)
SCHEDULE 7.1(B)(7)
SUBSIDIARIES
Universal Technical Institute, Inc.
owns 100% of
UTI Holdings, Inc.
which, in turn, owns 100% of the following:
Universal Technical Institute of Arizona, Inc.*
Universal Technical Institute of California, Inc.
Universal Technical Institute of Texas, Inc.
U. T. I. of Illinois, Inc.
Universal Technical Institute of North Carolina, Inc.
Custom Training Group, Inc.
The ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation (Delaware)
Clinton Education Group, Inc. (Delaware)**
----------------------------------
* Subsidiaries in italics are Institution Subsidiaries.
** A shell corporation for future acquisitions.
Schedule 7.1(B)(7)
SCHEDULE 10.1(A)
PRO FORMA / PROJECTIONS
Attached hereto are the projections prepared by the Company. These projections
represent a reasonable estimate by the Company of the future performance of
Universal Technical Institute and its subsidiaries after giving effect to the
discontinuance of NTT and PTA.
See attached.
Schedule 10.1(A)
THE JORDAN COMPANY
RECAPITALIZATION -- PENSKE -- MANAGEMENT BANK CASE
Assumes Transaction Closed 9/30/01
Dollars in Thousands)
1. TRANSACTION ASSUMPTIONS
SOURCES:
Bank Revolver $ 4,500 (1)
Bank Term A 20,000
Bank Term B 30,000
Sub. Debt. (Hold. Co.) 0
Sr. Red. Pref. (Hold Co.) 0
Other Sr. Pref. (Hold Co.) 0
Jr. Conv. Pref. (Hold Co.) 45,500 (2)
Common Stk. (Hold Co.) 0
Cash on B/S 0
---------
Total $ 100,000
=========
USES:
Pay Down Bank Debt $ 69,152
Pay Down Sub Debt 23,400
PIK Interest 1,850
Accrued Fees 2,000
Fees & Expenses 3,500 (3)
Working Capital 99
---------
Total $ 100,000
=========
---------------
(1) Revolver Commitment = $ 20,000
Avg. Seasonal Balance = $ 0
(2) Purchased by New Investor. Convertible at: 42.5%
(3) Annual fee amortization (7 years): $ 500
FINANCING ASSUMPTIONS:
CLOSE RATE PAYMENT LIBOR +
---------- ------- -------
Bank Revolver 6.250% Cash 3.25% Float (5)
Bank Term A 6.250% Cash 3.25% Float (5)
Bank Term B 6.750% Cash 3.75% Float (5)
Sub. Debt (Hold. Co.) (4) 8.000% Cash 5.00% Fixed
Sr. Red. Pref. (Hold Co.) 7.500% Cum. 4.50% Fixed
Other Sr. Pref. (Hold Co.) 6.000% Cum. 3.00% Fixed
Jr. Conv. Pref. (Hold Co.) 7.500% Cum. 4.50% Fixed
---------------
(4) Sub Debt % PIK 0.000%
Sub Debt % Cash 8.000%
(5) Based on pricing grid, subject to change based on leverage.
PRO FORMA CAPITAL STRUCTURE:
x EBITDA
----------------------------------
$ AMOUNT PERCENT 2001 LTM (▇) ▇▇▇▇ ▇▇▇▇
-------- ------- ---- --- ---- ----
OPCO.
Bank Revolver $ 4,500 3.57% 0.21 x 0.19 x 0.19 x 0.18 x
Bank Term A 20,000 15.87% 1.16 x 1.05 x 1.03 x 0.98 x
Bank Term B 30,000 23.80% 2.57 x 2.34 x 2.29 x 2.18 x
-------- ------ ----- ---- ---- ----
Total Debt OpCo. $ 54,500 43.24% 2.57 x 2.34 x 2.29 x 2.18 x
HOLDCO.
Sub Debt (Hold Co.) $ 6,616 5.25% 2.88 x 2.62 x 2.56 x 2.45 x
Sr. Red. Pref. (Hold Co.) 0 0.00%
Other Sr. Pref. (Hold Co.) 19,414 15.40%
Jr. Conv. Pref. (Hold Co.) 45,500 36.10%
Common Stk. (Hold Co.) 0 0.00%
-------- ------
Total Equity OpCo. $ 71,530 56.76%
-------- ------
Total Capitalization $126,030 100.00%
======== ======
DEBT MULTIPLES:
OPCO TOTAL
---- -----
Total Debt $ 54,500 $ 61,116
Less Cash (7) (3,452) (3,452)
---------- ----------
Net Debt $ 51,049 $ 57,665
========== ==========
Net Debt/2001 EBITDA 2.41 x 2.72 x
Net Debt/ LTM EBITDA (6) 2.19 x 2.47 x
Net Debt/2002 EBITDA 2.14 x 2.42 x
Net Debt/2003 EBITDA 2.04 x 2.31 x
MARKET ASSUMPTIONS:
LIBOR at Close 3.00%
Federal Income Tax Rate 35.00%
State Income Tax Rate 6.00%
Cash on Balance Sheet - LIBOR less 1.00%
----------
(6) LTM EBITDA is through November 2001.
(7) Cash is a pro forma value after the transaction.
Schedule 10.1(A)-2
2. INCOME STATEMENT
Years Ended September 30,
ACTUAL
-----------------------------------
1998 1999 2000 2001
------- ------- ------- --------
Net Sales $66,226 $78,540 $92,701 $110,386
Cost of Goods Sold 15,288 19,827 25,517 34,384
------- ------- ------- --------
Gross Profit 50,938 58,713 67,184 76,002
SG&A 43,127 50,412 54,592 59,275
------- ------- ------- --------
Adjusted EBITA $ 7,811 $ 8,301 $12,592 $ 16,727
Step-Up Depreciation (Book-40 Years)
Amort of Trans. Fees
Amort of Goodwill
Nascar Start-Up
TJC/Penske/Charlesbank Management/Director Fees
EBIT
Interest Expense
Interest (Income)
Bank Fees
Pre-Tax Income
Income Taxes
Net Income
Cash Pref. Dividend
Cum. Pref. Dividend
Net Income after Dividends
EBITDA CALCULATION:
Adjusted EBITA $ 7,811 $ 8,301 $12,592 $ 16,727
Add: Depreciation 2,015 2,546 3,288 4,477
------- ------- ------- --------
Adjusted EBITDA $ 9,826 $10,847 $15,880 $ 21,204
Less: CapEx 3,069 5,737 3,935 5,732
------- ------- ------- --------
FCF $ 6,757 $ 5,110 $11,945 $ 15,472
======= ======= ======= ========
PROJECTED
------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009
-------- -------- -------- -------- -------- -------- -------- --------
Net Sales $123,316 $142,018 $161,896 $185,240 $211,473 $232,620 $251,230 $266,304
Cost of Goods Sold 37,105 43,134 49,724 56,198 64,211 70,949 76,625 81,223
-------- -------- -------- -------- -------- -------- -------- --------
Gross Profit 86,211 98,884 112,172 129,042 147,262 161,671 174,605 185,081
SG&A 66,812 79,263 89,354 102,214 113,511 126,386 136,627 144,815
-------- -------- -------- -------- -------- -------- -------- --------
Adjusted EBITA $ 19,399 $ 19,621 $ 22,818 $ 26,828 $ 33,751 $ 35,285 $ 37,978 $ 40,266
Step-Up Depreciation (Book-40 Years) 0 0 0 0 0 0 0 0
Amort of Trans. Fees 500 500 500 500 500 500 500 0
Amort of Goodwill 0 0 0 0 0 0 0 0
Nascar Start-Up 1,814 0 0 0 0 0 0 0
TJC/Penske/Charlesbank Management/Director Fees 696 724 807 911 1,089 1,173 1,255 1,325
-------- -------- -------- -------- -------- -------- -------- --------
EBIT $ 16,389 $ 18,397 $ 21,511 $ 25,417 $ 32,162 $ 33,612 $ 36,222 $ 38,941
Interest Expense 4,414 4,707 4,933 4,843 4,649 4,262 3,349 1,852
Interest (Income) (80) (197) (483) (885) (1,509) (2,306) (3,017) (3,635)
Bank Fees 129 148 142 137 130 123 117 111
-------- -------- -------- -------- -------- -------- -------- --------
Pre-Tax Income $ 11,926 $ 13,739 $ 16,919 $ 21,322 $ 28,893 $ 31,534 $ 35,773 $ 40,614
Income Taxes 4,639 5,345 6,582 8,294 11,239 12,267 13,916 15,799
-------- -------- -------- -------- -------- -------- -------- --------
Net Income $ 7,287 $ 8,395 $ 10,338 $ 13,028 $ 17,654 $ 19,267 $ 21,857 $ 24,815
Cash Pref. Dividend 0 0 0 0 0 0 0 0
Cum. Pref. Dividend 4,577 4,577 4,577 4,577 4,577 4,577 4,577 4,577
-------- -------- -------- -------- -------- -------- -------- --------
Net Income after Dividends $ 2,709 $ 3,817 $ 5,760 $ 8,450 $ 13,076 $ 14,690 $ 17,280 $ 20,238
======== ======== ======== ======== ======== ======== ======== ========
EBITDA CALCULATION:
Adjusted EBITA $ 19,399 $ 19,621 $ 22,818 $ 26,828 $ 33,751 $ 35,285 $ 37,978 $ 40,266
Add: Depreciation 4,450 5,355 5,449 5,614 5,802 7,624 8,233 8,727
-------- -------- -------- -------- -------- -------- -------- --------
Adjusted EBITDA $ 23,849 $ 24,976 $ 28,267 $ 32,442 $ 39,553 $ 42,908 $ 46,211 $ 48,994
Less: CapEx 6,065 5,729 6,254 5,498 5,873 6,373 6,873 7,373
-------- -------- -------- -------- -------- -------- -------- --------
FCF $ 17,784 $ 19,247 $ 22,013 $ 26,944 $ 33,680 $ 36,535 $ 39,338 $ 41,621
======== ======== ======== ======== ======== ======== ======== ========
Schedule 10.1(A)-3
3. RATIO ANALYSIS
ACTUAL
---------------------------------
1998 1999 2000 2001
---- ---- ---- ----
Net Sales Growth -- 18.59% 18.03% 19.08%
Gross Margin 76.92% 74.76% 72.47% 68.85%
EBITDA Margin 14.84% 13.81% 17.13% 19.21%
EBITA Margin 11.79% 10.57% 13.58% 15.15%
FCF Margin 10.20% 6.51% 12.89% 14.02%
PROJECTED
---------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009
---- ---- ---- ---- ---- ---- ---- ----
Net Sales Growth 11.71% 15.17% 14.00% 14.42% 14.16% 10.00% 8.00% 6.00%
Gross Margin 69.91% 69.63% 69.29% 69.66% 69.64% 69.50% 69.50% 69.50%
EBITDA Margin 19.34% 17.59% 17.46% 17.51% 18.70% 18.45% 18.39% 18.40%
EBITA Margin 15.73% 13.82% 14.09% 14.48% 15.96% 15.17% 15.12% 15.12%
FCF Margin 14.42% 13.55% 13.60% 14.55% 15.93% 15.71% 15.66% 15.63%
INTEREST COVERAGE:
------------------
PRO FORMA
----------------------------------
EBITDA/Bank Int. Exp. 2.58 x 2.84 x 4.16 x 5.56 x
EBITDA/Opco Cash Int. Exp. 2.23 x 2.46 x 3.60 x 4.80 x
EBITDA/Total Cash Interest Exp. 2.23 x 2.46 x 3.60 x 4.80 x
Bank Debt/EBITDA 5.55 x 5.02 x 3.43 x 2.57 x
Opco Debt / EBITDA 5.55 x 5.02 x 3.43 x 2.57 x
Total Debt / EBITDA 6.22 x 5.63 x 3.85 x 2.88 x
INTEREST COVERAGE:
------------------
EBITDA/Bank Int. Exp. 6.25 x 6.07 x 6.48 x 7.52 x 9.60 x 11.50 x 16.39 x 37.05 x
EBITDA/Opco Cash Int. Exp. 5.40 x 5.31 x 5.73 x 6.70 x 8.51 x 10.07 x 13.80 x 26.46 x
EBITDA/Total Cash Interest Exp. 5.40 x 5.31 x 5.73 x 6.70 x 8.51 x 10.07 x 13.80 x 26.46 x
Bank Debt/EBITDA 2.05 x 1.86 x 1.52 x 1.18 x 0.81 x 0.52 x 0.17 x 0.00 x
Opco Debt / EBITDA 2.33 x 2.13 x 1.76 x 1.38 x 0.98 x 0.67 x 0.32 x 0.00 x
Total Debt / EBITDA 2.33 x 2.13 x 1.76 x 1.38 x 0.98 x 0.67 x 0.32 x 0.00 x
Schedule 10.1(A)-4
4. CASH FLOW STATEMENT
PROJECTED
----------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009
---- ---- ---- ---- ---- ---- ---- ----
OPERATING SOURCES:
Net Income after Dividends $ 2,709 $ 3,817 $ 5,760 $ 8,450 $13,076 $14,690 $17,280 $20,238
Cum. Dividends 4,577 4,577 4,577 4,577 4,577 4,577 4,577 4,577
Depreciation 4,450 5,355 5,449 5,614 5,802 7,624 8,233 8,727
Amort of Trans. Fees 500 500 500 500 500 500 500 0
Amort of Goodwill 0 0 0 0 0 0 0 0
PIK Interest 0 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- ------- -------
Total Sources $12,237 $14,250 $16,287 $19,142 $23,956 $27,391 $30,591 $33,542
OPERATING USES:
Increase in Working Capital $ 320 $ 331 $ 324 $ 243 $ 221 $ 177 $ 201 $ 201
Capital Expenditures 6,065 5,729 6,254 5,498 5,873 6,373 6,873 7,373
------- ------- ------- ------- ------- ------- ------- -------
Total Uses $ 6,385 $ 6,060 $ 6,578 $ 5,741 $ 6,094 $ 6,550 $ 7,074 $ 7,574
------- ------- ------- ------- ------- ------- ------- -------
CUMULATIVE
Cash Flow From Operations $ 5,852 $ 8,189 $ 9,709 $13,401 $17,862 $20,841 $23,517 $25,969 ----------
$125,339
DEBT/PREF. AMORTIZATION (BORROWINGS):
Bank Term A 850 2,200 3,200 4,450 5,950 3,350 0 0
Bank Term B 150 300 300 300 300 6,400 14,250 8,000
Sub. Debt (Hold. Co.) 0 0 0 0 0 0 0 6,616
Sr. Red. Pref. (Hold Co.) 0 0 0 0 0 0 0 0
Other Sr. Pref. (Hold Co.) 0 0 0 0 0 0 0 0
Jr. Conv. Pref. (Hold Co.) 0 0 0 0 0 0 0 0
Capital Leases 554 508 332 10 5 0 0 0
------- ------- ------- ------- ------- ------- ------- -------
Total Mandatory Amortization/Interest Hldg. Co. $ 1,554 $ 3,008 $ 3,832 $ 4,760 $ 6,255 $ 9,750 $14,250 $14,616
Cash Bal. After Debt Amortization $ 4,298 $ 5,181 $ 5,877 $ 8,641 $11,607 $11,091 $ 9,267 $11,353
Add: Beginning Cash Bal. 3,452 3,249 8,431 14,308 22,949 34,555 45,646 54,913
------- ------- ------- ------- ------- ------- ------- -------
Cash Avail. Before Revolver $ 7,749 $ 8,431 $14,308 $22,949 $34,555 $45,646 $54,913 $66,265
Revolver Borrowings $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Revolver (Amortization) (4,500) 0 0 0 0 0 0 0
Additional Bank Term A Amortization 0 0 0 0 0 0 0 0
Additional Bank Term B Amortization 0 0 0 0 0 0 0 0
Additional Sr Sub Debt Amortization 0 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- ------- -------
Ending Cash Balance $ 3,249 $ 8,431 $14,308 $22,949 $34,555 $45,646 $54,913 $66,265
======= ======= ======= ======= ======= ======= ======= =======
Schedule 10.1(A)-5
5. BALANCE SHEET
September 30,
ACTUAL (1) PROJECTED
------------------------ RECAP PROFORMA ---------------------
2000 2001 ADJ.'S 2001 2002 2003
---- ---- ------ ---- ---- ----
Assets:
Cash & Equivalents $ 2,792 $ 3,353 $ 99 $ 3,452 $ 3,249 $ 8,431
Accounts Receivable 65,381 73,251 0 73,251 84,463 97,273
Prepaid Student Acquisition Costs 6,885 8,780 0 8,780 10,174 11,716
Prepaid Expenses and other Current Assets 2,317 2,242 0 2,242 2,466 2,840
--------- --------- --------- --------- --------- ---------
Total Current Assets 77,375 87,626 99 87,725 100,352 120,260
Net Prop., Plant & Equip. 14,806 17,077 0 17,077 18,692 19,066
Existing Goodwill 21,150 20,578 0 20,578 20,578 20,578
Trans. Costs 0 0 3,500 3,500 3,000 2,500
Investments 0 0 0 0 0 0
Other Assets 5,176 5,969 0 5,969 5,969 5,969
--------- --------- --------- --------- --------- ---------
Total Assets 118,507 131,250 3,599 134,849 148,591 168,373
========= ========= ========= ========= ========= =========
Liabilities & Equity
Accounts Payable 8,826 14,135 0 14,135 15,249 16,249
Deferred Revenues 73,782 76,623 0 76,623 88,171 101,543
Other Current Liabilities 1,329 3,111 0 3,111 2,960 2,982
--------- --------- --------- --------- --------- ---------
Total Current Liabilities 83,937 93,869 0 93,869 106,379 120,774
Revolver/Existing Debt 73,916 69,152 (64,652) 4,500 0 0
Bank Term A 0 0 20,000 20,000 19,150 16,950
Bank Term B 0 0 30,000 30,000 29,850 29,550
Sub. Debt (Hold. Co.) 29,526 30,016 (23,400) 6,616 6,616 6,616
Capital Leases 1,852 1,409 0 1,409 855 347
Other L.T. Liabilities (2) 10,844 11,516 (3,850) 7,667 7,667 7,667
--------- --------- --------- --------- --------- ---------
Total Liabilities 200,075 205,962 (41,902) 164,061 170,517 181,904
Sr. Red. Pref. (Hold Co.) 0 0 0 0 0 0
Other Sr. Pref. (Hold Co.) 18,296 19,414 0 19,414 20,579 21,744
Jr. Conv. Pref. (Hold Co.) 0 0 45,500 45,500 48,913 52,325
Common Stock 0 0 0 0 0 0
Retained Earnings (99,864) (94,126) 0 (94,126) (91,417) (87,599)
--------- --------- --------- --------- --------- ---------
Total Equity (81,568) (74,712) 45,500 (29,212) (21,925) (13,531)
--------- --------- --------- --------- --------- ---------
Total Liabilities & Equity $ 118,507 $ 131,250 $ 3,599 $ 134,849 $ 148,591 $ 168,373
========= ========= ========= ========= ========= =========
PROJECTED
---------------------------------------------------------------------
2004 2005 2006 2007 2008 2009
---- ---- ---- ---- ---- ----
Assets:
Cash & Equivalents $ 14,308 $ 22,949 $ 34,555 $ 45,646 $ 54,913 $ 66,265
Accounts Receivable 110,888 126,877 144,845 159,329 172,075 182,400
Prepaid Student Acquisition Costs 13,356 15,282 17,447 19,191 20,726 21,970
Prepaid Expenses and other Current Assets 3,238 3,705 4,229 4,652 5,025 5,326
--------- --------- --------- --------- --------- ---------
Total Current Assets 141,790 168,813 201,076 228,819 252,739 275,961
Net Prop., Plant & Equip 19,871 19,755 19,826 18,575 17,215 15,861
Existing Goodwill 20,578 20,578 20,578 20,578 20,578 20,578
Trans. Costs 2,000 1,500 1,000 500 0 0
Investments 0 0 0 0 0 0
Other Assets 5,969 5,969 5,969 5,969 5,969 5,969
--------- --------- --------- --------- --------- ---------
Total Assets 190,208 216,615 248,449 274,441 296,501 318,369
========= ========= ========= ========= ========= =========
Liabilities & Equity
Accounts Payable 17,029 18,091 19,351 20,410 21,203 21,808
Deferred Revenues 115,756 132,447 151,203 166,324 179,629 190,407
Other Current Liabilities 3,319 3,705 4,124 4,420 4,773 5,060
--------- --------- --------- --------- --------- ---------
Total Current Liabilities 136,103 154,243 174,678 191,153 205,606 217,275
Revolver/Existing Debt 0 0 0 0 0 0
Bank Term A 13,750 9,300 3,350 0 0 0
Bank Term B 29,250 28,950 28,650 22,250 8,000 0
Sub. Debt (Hold. Co.) 6,616 6,616 6,616 6,616 6,616 0
Capital Leases 15 5 0 0 0 0
Other L.T. Liabilities (2) 7,667 7,667 7,667 7,667 7,667 7,667
--------- --------- --------- --------- --------- ---------
Total Liabilities 193,401 206,780 220,961 227,686 227,888 224,941
Sr. Red. Pref. (Hold Co.) 0 0 0 0 0 0
Other Sr. Pref. (Hold Co.) 22,909 24,073 25,238 26,403 27,568 28,733
Jr. Conv. Pref. (Hold Co.) 55,738 59,150 62,563 65,975 69,388 72,800
Common Stock 0 0 0 0 0 0
Retained Earnings (81,839) (73,389) (60,312) (45,623) (28,343) (8,105)
--------- --------- --------- --------- --------- ---------
Total Equity (3,193) 9,835 27,488 46,755 68,613 93,428
--------- --------- --------- --------- --------- ---------
Total Liabilities & Equity $ 190,208 $ 216,615 $ 248,449 $ 274,441 $ 296,501 $ 318,369
========= ========= ========= ========= ========= =========
---------------------------
(1) FY 2000 adjusted to exclude the net assets of discontinued operations.
(2) Includes a $4 million "shadow note" which is offset by a $4 million
subscription receivable from ▇▇▇▇ ▇▇▇▇▇.
Schedule 10.1(A)-6
6. REVENUE, CGS, S,G & A, AND W.C. ASSUMPTIONS
Years Ended December 31,
ACTUAL PROJECTED
----------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ----
Net Sales 66,226 78,540 92,701 110,386 123,316 142,018
Growth Rate NA 18.59% 18.03% 19.08% 11.71% 15.17%
Cost of Goods 15,288 19,827 25,517 34,384
Less:
Primary Adjustment 0 0 0 0
Other Adjustments 0 0 0 0
--------- --------- ---------- ---------- ---------- ----------
Adj. Cost of Goods 15,288 19,827 25,517 34,384 37,105 43,134
As % of Net Sales 23.08% 25.24% 27.53% 31.15% 30.09% 30.37%
SG&A 43,127 50,412 54,592 59,934 68,626 77,763
Less:
Nascar Start-Up Adjustment (257) (1,814) 0
Other "EBITDA" Adjustments (1) (402) 0 0
Plus: Expense Reserve (2) 0 1,500
---------- ---------- ----------
Adj. SG&A $ 43,127 $ 50,412 $ 54,592 $ 59,275 $ 66,812 $ 79,263
As % of Net Sales 65.12% 64.19% 58.89% 53.70% 54.18% 55.81%
TJC/Penske/Charlesbank Mgt./Director Fees 696 724
Cost of Unused Line (1/2% of unused balance) 46 65
Agent's Administration Fee 50 50
Non-DOE L/C Fee (assumes $1.0 million @ 3.25%) 33 33
---------- ----------
Bank Fees 129 148
Total Cap. Ex. 3,069 5,737 3,935 5,732 6,065 5,729
Total Depreciation 2,015 2,546 3,288 4,477 4,450 5,355
Step-Up P,P & E (Book - 40 Years) 0 0
--------- --------- ---------- ---------- ---------- ----------
Total Depreciation $ 2,015 $ 2,546 $ 3,288 $ 4,477 $ 4,450 $ 5,355
Base Dep./Cap Exp. 0.7 0.4 0.8 0.8 0.7 0.9
Working Capital Assumptions
Days in A/R (Rev.) 257.4 242.2 250.0 250.0
Prepaid Student Acquisitions (% of Sales) 7.43% 7.95% 8.25% 8.25%
Prepaid Expenses (% of Sales) 2.50% 2.03% 2.00% 2.00%
Days in A/P (CGS) 126.2 150.0 150.0 137.5
Def. Rev. (% of Sales) 79.59% 69.41% 71.50% 71.50%
Other Current Liabilities (% of Sales) 1.43% 2.82% 2.40% 2.10%
Net Work. Cap. (3) ($ 9,354) ($ 9,596) ($ 9,276) ($ 8,945)
W.C./Revenue -10.09% -8.69% -7.52% -6.30%
Inc. in Net W.C. ---------- (242) 320 331
PROJECTED
-----------------------------------------------------
2004 2005 2006 2007
---- ---- ---- ----
Net Sales 161,896 185,240 211,473 232,620
Growth Rate 14.00% 14,42% 14.16% 10.00%
Cost of Goods
Less:
Primary Adjustment
Other Adjustments
---------- ------------ ---------- ----------
Adj. Cost of Goods 49,724 56,198 64,211 70,949
As % of Net Sales 30.71% 30.34% 30.36% 30.50%
SG&A 86,854 98,214 107,011 118,636
Less:
Nascar Start-Up Adjustment 0 0 0 0
Other "EBITDA" Adjustments (1) 0 0 0 0
Plus: Expense Reserve (2) 2,500 4,000 6,500 7,750
---------- ------------ ---------- ----------
Adj. SG&A $ 89,354 $ 102,214 $ 113,511 $ 126,386
As % of Net Sales 55.19% 55.18% 53.68% 54.33%
TJC/Penske/Charlesbank Mgt./Director Fees 807 911 1,089 1,173
Cost of Unused Line (1/2% of unused balance) 60 54 48 40
Agent's Administration Fee 50 50 50 50
Non-DOE L/C Fee (assumes $1.0 million @ 3.25%) 33 33 33 33
---------- ------------ ---------- ----------
Bank Fees 142 137 130 123
Total Cap. Ex 6,254 5,498 5,873 6,373
Total Depreciation 5,449 5,614 5,802 7,624
Step-Up P,P & E (Book - 40 Years) 0 0 0 0
---------- ------------ ---------- ----------
Total Depreciation $ 5,449 $ 5,614 $ 5,802 $ 7,624
Base Dep./Cap Exp. 0.9 1.0 1.0 1.2
Working Capital Assumptions
Days in A/R (Rev.) 250.0 250.0 250.0 250.0
Prepaid Student Acquisitions (% of Sales) 8.25% 8.25% 8.25% 8.25%
Prepaid Expenses (% of Sales) 2.00% 2.00% 2.00% 2.00%
Days in A/P (CGS) 125.0 117.5 110.0 105.0
Def. Rev. (% of Sales) 71.50% 71.50% 71.50% 71.50%
Other Current Liabilities (% of Sales) 2.05% 2.00% 1.95% 1.90%
Net Work. Cap. (3) ($ 8,621) ($ 8,379) ($ 8,158) ($ 7,981)
W.C./Revenue -5.33% -4.52% -3.86% -3.43%
Inc. in Net W.C. 324 243 221 177
-----------------------------------
(1) Adjustments to "EBITDA", as per credit agreement. Primarily relates to TJC
management fees.
(2) Represents an extra expense reserve taken versus the projections in the CSFB
information. Such reserve is taken to discount the Company's "sale
projections".
(3) Net Working Capital = (A/R + Prepaid Student Acquisition Costs + Prepaid
Expenses) - (A/P + Deferred Revenues + Other Current Liabilities)
Schedule 10.1(A)-7
7. DEBT & PREFERRED AMORTIZATION
Libor - End of Year 3.00% 3.75% 5.00% 5.50% 6.00%
Cash Balances 2.00% 2.75% 4.00% 4.50% 5.00%
Bank Revolver At Close 2002 2003 2004 2005
-------- -------- -------- -------- --------
Total Capacity $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000
Less: Borrowings O/S 4,500 4,500 0 0 0
Less: Title IV L/C 6,250 6,982 8,041 9,166
-------- -------- -------- -------- --------
Total Excess 15,500 9,250 13,018 11,959 10,834
L/C Fees @ 3.25% (based on current pricing) $ 203 $ 227 $ 261 $ 298
Rate 6.25% 7.00% 8.25% 8.75% 9.25%
Beginning Principal $ 4,500 $ 4,500 $ 0 $ 0 $ 0
Borrowings 0 0 0 0
Amortization (4,500) 0 0 0
-------- -------- -------- -------- --------
Ending Principal $ 4,500 $ 0 $ 0 $ 0 $ 0
======== ======== ======== ======== ========
Interest (Includes L/C Fees) $ 352 $ 227 $ 261 $ 298
Seasonal Revolver Component
Average Balance $ 0 $ 0 $ 0 $ 0 $ 0
======== ======== ======== ======== ========
Seasonal Interest $ 0 $ 0 $ 0 $ 0
Bank Term A At Close 2002 2003 2004 2005
-------- -------- -------- -------- --------
Rate 6.25% 7.00% 8.25% 8.75% 9.25%
Beginning Principal $ 20,000 $ 20,000 $ 19,150 $ 16,950 $ 13,750
Amortization (850) (2,200) (3,200) (4,450)
Optional Amortization 0 0 0 0
-------- -------- -------- -------- --------
Ending Principal $ 20,000 $ 19,150 $ 16,950 $ 13,750 $ 9,300
======== ======== ======== ======== ========
Interest $ 1,325 $ 1,460 $ 1,441 $ 1,238
Bank Term B At Close 2002 2003 2004 2005
-------- -------- -------- -------- --------
Rate 6.75% 7.50% 8.75% 9.25% 9.75%
Beginning Principal $ 30,000 $ 30,000 $ 29,850 $ 29,550 $ 29,250
Amortization (150) (300) (300) (300)
Optional Amortization 0 0 0 0
-------- -------- -------- -------- --------
Ending Principal $ 30,000 $ 29,850 $ 29,550 $ 29,250 $ 28,950
======== ======== ======== ======== ========
Interest $ 2,138 $ 2,425 $ 2,660 $ 2,779
Capital Leases At Close 2002 2003 2004 2005
-------- -------- -------- -------- --------
Rate NA NA NA NA NA
Beginning Principal $ 1,409 $ 1,409 $ 855 $ 347 $ 15
Amortization (554) (508) (332) (10)
Optional Amortization 0 0 0 0
-------- -------- -------- -------- --------
Ending Principal $ 1,409 $ 855 $ 347 $ 15 $ 5
======== ======== ======== ======== ========
Interest $ 70 $ 65 $ 42 $ 0
Libor - End of Year 6.50% 7.00% 7.00% 7.00%
Cash Balances 5.50% 6.00% 6.00% 6.00%
Bank Revolver 2006 2007 2008 2009
-------- -------- -------- -------
Total Capacity $ 20,000 $ 20,000 $ 20,000 $20,000
Less: Borrowings O/S 0 0 0 0
Less: Title IV L/C 10,488 11,973 13,171 14,225
-------- -------- -------- -------
Total Excess 9,512 8,027 6,829 5,775
L/C Fees @ 3.25% (based on current pricing) $ 341 $ 389 $ 428 $ 462
Rate 9.75% 10.25% 10.25% 10.25%
Beginning Principal $ 0 $ 0 $ 0 $ 0
Borrowings 0 0 0 0
Amortization 0 0 0 0
-------- -------- -------- -------
Ending Principal $ 0 $ 0 $ 0 $ 0
======== ======== ======== =======
Interest (Includes L/C Fees) $ 341 $ 389 $ 428 $ 462
Seasonal Revolver Component
Average Balance $ 0 $ 0 $ 0 $ 0
======== ======== ======== =======
Seasonal Interest $ 0 $ 0 $ 0 $ 0
Bank Term A 2006 2007 2008 2009
-------- -------- -------- -------
Rate 9.75% 10.25% 10.25% 10.25%
Beginning Principal $ 9,300 $ 3,350 $ 0 $ 0
Amortization (5,950) (3,350) 0 0
Optional Amortization 0 0 0 0
-------- -------- -------- -------
Ending Principal $ 3,350 $ 0 $ 0 $ 0
======== ======== ======== =======
Interest $ 884 $ 335 $ 0 $ 0
Bank Term B 2006 2007 2008 2009
-------- -------- -------- -------
Rate 10.25% 10.75% 10.75% 10.75%
Beginning Principal $ 28,950 $ 28,650 $ 22,250 $ 8,000
Amortization (300) (6,400) (14,250) (8,000)
Optional Amortization 0 0 0 0
-------- -------- -------- -------
Ending Principal $ 28,650 $ 22,250 $ 8,000 $ 0
======== ======== ======== =======
Interest $ 2,895 $ 3,008 $ 2,392 $ 860
Capital Leases 2006 2007 2008 2009
-------- -------- -------- -------
Rate NA NA NA NA
Beginning Principal $ 5 $ 0 $ 0 $ 0
Amortization (5) 0 0 0
Optional Amortization 0 0 0 0
-------- -------- -------- -------
Ending Principal $ 0 $ 0 $ 0 $ 0
======== ======== ======== =======
Interest $ 0 $ 0 $ 0 $ 0
Schedule 10.1(A)-8
8. DEBT & PREFERRED AMORTIZATION (CONTINUED)
Sub Debt (Hold Co.) At Close 2002 2003 2004 2005 2006 2007 2008 2009
-------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Rate 8.00% 8.00% Cash
Beginning Principal 0.00% PIK $ 6,616 $ 6,616 $ 6,616 $ 6,616 $ 6,616 $ 6,616 $ 6,616 $ 6,616 $ 6,616
Amortization 0 0 0 0 0 0 0 (6,616)
Optional Amortization 0 0 0 0 0 0 0 0
PIK Interest 0 0 0 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- -------- --------
Ending Principal $ 6,616 $ 6,616 $ 6,616 $ 6,616 $ 6,616 $ 6,616 $ 6,616 $ 6,616 $ 0
======== ======== ======== ======== ======== ======== ======== ======== ========
Cash Interest 529 529 529 529 529 529 529 529
Total Interest $ 529 $ 529 $ 529 $ 529 $ 529 $ 529 $ 529 $ 529
Sr. Red. Pref. (Hold Co.) At Close 2002 2003 2004 2005 2006 2007 2008 2009
-------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Rate 7.50% Cum.
Beginning Principal $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Amortization 0 0 0 0 0 0 0 0
PIK Dividend 0 0 0 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- -------- --------
Ending Principal $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
======== ======== ======== ======== ======== ======== ======== ======== ========
Cash Dividend $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other Sr. Pref. (Hold Co.) At Close 2002 2003 2004 2005 2006 2007 2008 2009
-------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Rate 6.00% Cum.
Beginning Principal $ 19,414 $ 19,414 $ 20,579 $ 21,744 $ 22,909 $ 24,073 $ 25,238 $ 26,403 $ 27,568
Amortization 0 0 0 0 0 0 0 0
Cumulative Dividend 1,165 1,165 1,165 1,165 1,165 1,165 1,165 1,165
-------- -------- -------- -------- -------- -------- -------- -------- --------
Ending Principal $ 19,414 $ 20,579 $ 21,744 $ 22,909 $ 24,073 $ 25,238 $ 26,403 $ 27,568 $ 28,733
======== ======== ======== ======== ======== ======== ======== ======== ========
Cash Dividend $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Jr. Conv. Pref. (Hold Co.) At Close 2002 2003 2004 2005 2006 2007 2008 2009
--------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Rate 7.50% Cum.
Beginning Principal $ 45,500 $ 45,500 $ 48,913 $ 52,325 $ 55,738 $ 59,150 $ 62,563 $ 65,975 $ 69,388
Amortization 0 0 0 0 0 0 0 0
Cumulative Dividend 3,413 3,413 3,413 3,413 3,413 3,413 3,413 3,413
-------- -------- -------- -------- -------- -------- -------- -------- --------
Ending Principal $ 45,500 $ 48,913 $ 52,325 $ 55,738 $ 59,150 $ 62,563 $ 65,975 $ 69,388 $ 72,800
======== ======== ======== ======== ======== ======== ======== ======== ========
Cumulative Dividend $ 3,413 $ 3,413 $ 3,413 $ 3,413 $ 3,413 $ 3,413 $ 3,413 $ 3,413
Total Accumulated Dividends $ 3,413 $ 6,825 $ 10,238 $ 13,650 $ 17,063 $ 20,475 $ 23,888 $ 27,300
Schedule 10.1(A)-9
9. COVERAGE RATIO ANALYSIS
Projected
Proforma ---- ---- ---- ---- ---- ---- ---- ----
2001 2002 2003 2004 2005 2006 2007 2008 2009
---- ---- ---- ---- ---- ---- ---- ---- ----
Bank Debt Interest $3,815 $3,815 $4,112 $4,362 $4,314 $4,119 $3,732 $2,820 $1,322
Other Opco Cash Interest 599 599 594 571 529 529 529 529 529
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Cash Interest $4,414 $4,414 $4,707 $4,933 $4,843 $4,649 $4,262 $3,349 $1,852
====== ====== ====== ====== ====== ====== ====== ====== ======
Cash Dividends $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Tax-Effected Cash Dividends (1) $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Total Cash Interest and Cash Dividend (1) $4,414 $4,414 $4,707 $4,933 $4,843 $4,649 $4,262 $3,349 $1,852
Operating Company Cash Interest $4,414 $4,414 $4,707 $4,933 $4,843 $4,649 $4,262 $3,349 $1,852
PIK Interest Expense $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Projected
Proforma ---- ---- ---- ---- ---- ---- ---- ----
2001 2002 2003 2004 2005 2006 2007 2008 2009
---- ---- ---- ---- ---- ---- ---- ---- ----
EBITDA/Total Cash Interest 4.80 x 5.40 x 5.31 x 5.73 x 6.70 x 8.51 x 10.07 x 13.80 x 26.46 x
EBITDA-CapEx/Total Cash Interest 3.51 x 4.03 x 4.09 x 4.46 x 5.56 x 7.25 x 8.57 x 11.75 x 22.48 x
EBITDA/Bank Interest 5.56 x 6.25 x 6.07 x 6.48 x 7.52 x 9.60 x 11.50 x 16.39 x 37.05 x
EBITDA-CapEx/Bank Interest 4.06 x 4.66 x 4.68 x 5.05 x 6.25 x 8.18 x 9.79 x 13.95 x 31.48 x
EBITDA/OpCo. Cash Interest 4.80 x 5.40 x 5.31 x 5.73 x 6.70 x 8.51 x 10.07 x 13.80 x 26.46 x
EBITDA-CapEx/OpCo. Cash Int. 3.51 x 4.03 x 4.09 x 4.46 x 5.56 x 7.25 x 8.57 x 11.75 x 22.48 x
EBITDA/Total Int. + Cash Div. (1) 4.80 x 5.40 x 5.31 x 5.73 x 6.70 x 8.51 x 10.07 x 13.80 x 26.46 x
EBITDA-CapEx/Total Int. + Cash Div. (1) 3.51 x 4.03 x 4.09 x 4.46 x 5.56 x 7.25 x 8.57 x 11.75 x 22.48 x
------------------
(1) Cash Dividend has been tax effected assuming the effective tax rate.
Schedule 10.1(A)-10
10. CAPITALIZATION
Dollar Amount:
At Close 2002 2003 2004 2005 2006 2007 2008 2009
-------- ---- ---- ---- ---- ---- ---- ---- ----
Bank Revolver $ 4,500 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Bank Term A 20,000 19,150 16,950 13,750 9,300 3,350 0 0 0
Bank Term B 30,000 29,850 29,550 29,250 28,950 28,650 22,250 8,000 0
Sub Debt (Hold Co.) 6,616 6,616 6,616 6,616 6,616 6,616 6,616 6,616 0
--------- --------- --------- --------- -------- -------- -------- -------- --------
Total Debt $ 61,116 $ 55,616 $ 53,116 $ 49,616 $ 44,866 $ 38,616 $ 28,866 $ 14,616 $ 0
Sr. Red. Pref. (Hold Co.) 0 0 0 0 0 0 0 0 0
Other Sr. Pref. (Hold Co.) 19,414 20,579 21,744 22,909 24,073 25,238 26,403 27,568 28,733
Jr. Conv. Pref. (Hold Co.) $ 45,500 $ 48,913 $ 52,325 $ 55,738 $ 59,150 $ 62,563 $ 65,975 $ 69,388 $ 72,800
Common Stk. (Hold Co.) (94,126) (91,417) (87,599) (81,839) (73,389) (60,312) (45,623) (28,343) (8,105)
--------- --------- --------- --------- -------- -------- -------- -------- --------
Total Equity ($ 29,212) ($ 21,925) ($ 13,531) ($ 3,193) $ 9,835 $ 27,488 $ 46,755 $ 68,613 $ 93,428
--------- --------- --------- --------- -------- -------- -------- -------- --------
Total Capitalization $ 31,904 $ 33,691 $ 39,585 $ 46,423 $ 54,701 $ 66,104 $ 75,621 $ 83,229 $ 93,428
========= ========= ========= ========= ======== ======== ======== ======== ========
Percentage of Total Capital:
At Close 2002 2003 2004 2005 2006 2007 2008 2009
-------- ---- ---- ---- ---- ---- ---- ---- ----
Bank Revolver 14.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Bank Term A 62.7% 56.8% 42.8% 29.6% 17.0% 5.1% 0.0% 0.0% 0.0%
Bank Term B 94.0% 88.6% 74.6% 63.0% 52.9% 43.3% 29.4% 9.6% 0.0%
Sub Debt (Hold Co.) 20.7% 19.6% 16.7% 14.3% 12.1% 10.0% 8.7% 7.9% 0.0%
------ ------ ------ ------ ------ ----- ----- ----- -----
Total Debt 191.6% 165.1% 134.2% 106.9% 82.0% 58.4% 38.2% 17.6% 0.0%
Sr. Red. Pref. (Hold Co.) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Other Sr. Pref. (Hold Co.) 60.9% 61.1% 54.9% 49.3% 44.0% 38.2% 34.9% 33.1% 30.8%
Jr. Conv. Pref. (Hold Co.) 142.6% 145.2% 132.2% 120.1% 108.1% 94.6% 87.2% 83.4% 77.9%
Common Stk. (Hold Co.) -295.0% -271.3% -221.3% -176.3% -134.2% -91.2% -60.3% -34.1% -8.7%
------ ------ ------ ------ ------ ----- ----- ----- -----
Total Equity -91.6% -65.1% -34.2% -6.9% 18.0% 41.6% 61.8% 82.4% 100.0%
------ ------ ------ ------ ------ ----- ----- ----- -----
Total Capitalization 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ====== ====== ===== ===== ===== =====
Schedule 10.1(A)-11
11. TERMINAL VALUES
8.0 x EBITDA Multiple 2002 2003 2004 2005
---------------------------------- --------- ---------- ---------- ----------
EBITDA $ 23,849 $ 24,976 $ 28,267 $ 32,442
Multiple 8.0 x 8.0 x 8.0 x 8.0 x
--------- --------- --------- ---------
Enterprise Value $190,792 $199,808 $226,136 $259,536
Less: Debt ($ 55,616) ($ 53,116) ($ 49,616) ($ 44,866)
Convertible Pref. (45,500) (45,500) (45,500) (45,500)
Acc. Dividends (3,413) (6,825) (10,238) (13,650)
Less: Sr. Red. Pref. (Hold Co.) 0 0 0 0
Less: Other Sr. Pref. (Hold Co. (20,579) (21,744) (22,909) (24,073)
Plus: Conversion 45,500 45,500 45,500 45,500
Add: Cash 3,249 8,431 14,308 22,949
--------- --------- --------- ---------
Common Equity Value $114,434 $126,554 $157,682 $199,895
========= ========= ========= =========
8.0 x EBITDA Multiple 2006 2007 2008 2009
---------------------------------- --------- ---------- ---------- ----------
EBITDA $ 39,553 $ 42,908 $ 46,211 $ 48,994
Multiple 8.0 x 8.0 x 8.0 x 8.0 x
--------- --------- --------- --------
Enterprise Value $316,424 $343,266 $369,688 $391,949
Less: Debt ($ 38,616) ($ 28,866) ($ 14,616) $ 0
Convertible Pref. (45,500) (45,500) (45,500) (45,500)
Acc. Dividends (17,063) (20,475) (23,888) (27,300)
Less: Sr. Red. Pref. (Hold Co.) 0 0 0 0
Less: Other Sr. Pref. (Hold Co. (25,238) (26,403) (27,568) (28,733)
Plus: Conversion 45,500 45,500 45,500 45,500
Add: Cash 34,555 45,646 54,913 66,265
--------- --------- --------- --------
Common Equity Value $270,063 $313,168 $358,529 $402,181
========= ========= ========= ========
9.0 x EBITDA Multiple 2002 2003 2004 2005
---------------------------------- --------- ---------- ---------- ----------
EBITDA $ 23,849 $ 24,976 $ 28,267 $ 32,442
Multiple 9.0 x 9.0 x 9.0 x 9.0 x
--------- --------- --------- ---------
Enterprise Value $214,641 $224,784 $254,403 $291,978
Less: Debt ($ 55,616) ($ 53,116) ($ 49,616) ($ 44,866)
Convertible Pref. (45,500) (45,500) (45,500) (45,500)
Acc. Dividends (3,413) (6,825) (10,238) (13,650)
Less: Sr. Red. Pref. (Hold Co.) 0 0 0 0
Less: Other Sr. Pref. (Hold Co. (20,579) (21,744) (22,909) (24,073)
Plus: Conversion 45,500 45,500 45,500 45,500
Add: Cash 3,249 8,431 14,308 22,949
--------- --------- --------- ---------
Common Equity Value $138,283 $151,530 $185,949 $232,337
========= ========= ========= =========
9.0 x EBITDA Multiple 2006 2007 2008 2009
---------------------------------- --------- ---------- ---------- ----------
EBITDA $ 39,553 $ 42,908 $ 46,211 $ 48,994
Multiple 9.0 x 9.0 x 9.0 x 9.0 x
--------- --------- --------- --------
Enterprise Value $355,977 $386,175 $415,899 $440,943
Less: Debt ($38,616) ($ 28,866) ($ 14,616) $ 0
Convertible Pref. (45,500) (45,500) (45,500) (45,500)
Acc. Dividends (17,063) (20,475) (23,888) (27,300)
Less: Sr. Red. Pref. (Hold Co.) 0 0 0 0
Less: Other Sr. Pref. (Hold Co. (25,238) (26,403) (27,568) (28,733)
Plus: Conversion 45,500 45,500 45,500 45,500
Add: Cash 34,555 45,646 54,913 66,265
--------- --------- --------- --------
Common Equity Value $309,616 $356,077 $404,740 $451,175
========= ========= ========= ========
10.0 x EBITDA Multiple 2002 2003 2004 2005
---------------------------------- --------- ---------- ---------- ----------
EBITDA $ 23,849 $ 24,976 $ 28,267 $ 32,442
Multiple 10.0 x 10.0 x 10.0 x 10.0 x
--------- --------- --------- ---------
Enterprise Value $238,490 $249,760 $282,670 $324,420
Less: Debt ($ 55,616) ($ 53,116) ($ 49,616) ($ 44,866)
Convertible Pref. (45,500) (45,500) (45,500) (45,500)
Acc. Dividends (3,413) (6,825) (10,238) (13,650)
Less: Sr. Red. Pref. (Hold Co.) 0 0 0 0
Less: Other Sr. Pref. (Hold Co. (20,579) (21,744) (22,909) (24,073)
Plus: Conversion 45,500 45,500 45,500 45,500
Add: Cash 3,249 8,431 14,308 22,949
--------- --------- --------- ---------
Common Equity Value $162,132 $176,506 $214,216 $264,779
========= ========= ========= =========
10.0 x EBITDA Multiple 2006 2007 2008 2009
---------------------------------- --------- ---------- ---------- ----------
EBITDA $ 39,553 $ 42,908 $ 46,211 $ 48,994
Multiple 10.0 x 10.0 x 10.0 x 10.0 x
--------- --------- --------- --------
Enterprise Value $395,530 $429,083 $462,110 $489,936
Less: Debt ($ 38,616) ($ 28,866) ($ 14,616) $ 0
Convertible Pref. (45,500) (45,500) (45,500) (45,500)
Acc. Dividends (17,063) (20,475) (23,888) (27,300)
Less: Sr. Red. Pref. (Hold Co.) 0 0 0 0
Less: Other Sr. Pref. (Hold Co. (25,238) (26,403) (27,568) (28,733)
Plus: Conversion 45,500 45,500 45,500 45,500
Add: Cash 34,555 45,646 54,913 66,265
--------- --------- --------- --------
Common Equity Value $349,169 $398,985 $450,951 $500,169
========= ========= ========= ========
Schedule 10.1(A)-12
12. TAX CALCULATION
2002 2003 2004 2005
-------- -------- -------- -------
Pre-Tax Income $ 11,926 $ 13,739 $ 16,919 $ 21,322
Add: Intangible Amortization 0 0 0 0
Add: Existing Intangible Amortization 0 0 0 0
Add: Step-Up Depreciation 0 0 0 0
-------- -------- -------- --------
Taxable Earnings $ 11,926 $ 13,739 $ 16,919 $ 21,322
Less: Deductible Intangible Amortization 0 0 0 0
-------- -------- -------- --------
$ 11,926 $ 13,739 $ 16,919 $ 21,322
Beginning NOL (1) $ 0 $ 0 $ 0 $ 0
Use of NOL 0 0 0 0
Contribution to NOL 0 0 0 0
Ending NOL 0 0 0 0
-------- -------- -------- --------
After NOL Taxable Earnings $ 11,926 $ 13,739 $ 16,919 $ 21,322
States Taxes @ 6.00% $ 716 $ 824 $ 1,015 $ 1,279
Federal Taxes @ 35.00% 3,924 4,520 5,566 7,015
-------- -------- -------- --------
Total Taxes $ 4,639 $ 5,345 $ 6,582 $ 8,294
======== ======== ======== ========
2006 2007 2008 2009
-------- ------- ------- -------
Pre-Tax Income $ 28,893 $31,534 $35,773 $40,614
Add: Intangible Amortization 0 0 0 0
Add: Existing Intangible Amortization 0 0 0 0
Add: Step-Up Depreciation 0 0 0 0
-------- ------- ------- -------
Taxable Earnings $ 28,893 $31,534 $35,773 $40,614
Less: Deductible Intangible Amortization 0 0 0 0
-------- ------- ------- -------
$ 28,893 $31,534 $35,773 $40,614
Beginning NOL (1) $ 0 $ 0 $ 0 $ 0
Use of NOL 0 0 0 0
Contribution to NOL 0 0 0 0
Ending NOL 0 0 0 0
-------- ------- ------- -------
After NOL Taxable Earnings $ 28,893 $31,534 $35,773 $40,614
States Taxes @ 6.00% $ 1,734 $ 1,892 $ 2,146 $ 2,437
Federal Taxes @ 35.00% 9,506 10,375 11,769 13,362
-------- ------- ------- -------
Total Taxes $ 11,239 $12,267 $13,916 $15,799
======== ======= ======= =======
-----------------
(1) As of 9/30/01, the Company had a NOL of $8.3 million. However, for purposes
of this analysis, usage of this NOL has been excluded.
Schedule 10.1(A)-13
SCHEDULE 10.1(B)
SEPTEMBER 1999 CAPITAL CONTRIBUTION
STOCKHOLDER CONTRIBUTION
------------
Whites' Family Company LLC 156.87944
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 143.51712
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustees
▇▇▇▇▇▇▇ Investments Limited Partnership
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 31.65980
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ 9.89540
▇▇▇▇▇▇ ▇▇▇▇▇▇ 8.31140
▇▇▇▇▇▇▇ ▇▇▇▇▇ 8.31140
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 7.91540
▇▇▇▇▇ ▇▇▇▇▇▇▇ 7.91540
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 6.33140
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 3.97100
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 3.97059
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 3.57435
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 1.98230
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1.76500
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
UTI Tax-Deferred Trust dd 2/24/97
JZEP 252.00000
UTI/TJC VOTING TRUST (b)
Leucadia Investors, Inc. 63.00000
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ Revocable Trust 39.46950
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 39.46950
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 33.83100
A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 25.20000
▇▇▇▇ ▇. Max 25.20000
The ▇▇▇▇▇▇ Family Trust
▇▇▇▇ ▇. ▇▇▇▇▇▇ 18.90000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 3.78000
▇▇▇▇ ▇▇▇▇▇▇▇▇ Profit Sharing Plan & Trust 2.52000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇. Profit Sharing Plan & Trust 0.63000
---------
TOTALS 900.00000
=========
Schedule 10.1(B)
PREFERRED
STOCKHOLDER SERIES C
--------------- ----------
UTI SHAREHOLDERS
Whites' Family Company LLC 732.10420
▇▇▇▇ ▇. ▇▇▇▇▇
-------------
TOTAL WHITE 732.10420
-------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 540.33034
-------------
TOTAL ▇▇▇▇▇▇▇ 540.33034
-------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ -
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ -
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ -
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ -
▇▇▇▇▇ ▇▇▇▇▇ 26.27171
▇▇▇▇▇▇ ▇▇▇▇▇▇ 25.62888
▇▇▇▇▇▇▇ ▇▇▇▇▇ -
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 9.93851
▇▇▇▇▇ ▇▇▇▇▇▇▇ -
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 10.77974
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ -
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 4.02941
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 16.67700
▇▇▇▇▇▇▇ ▇▇▇▇▇ -
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 9.25074
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 8.23500
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ -
UTI Tax-Deferred Trust dd 2/24/99 464.75447
-------------
TOTAL UTI SHARES INCL. WHITE & ▇▇▇▇▇▇▇ 1,848.00000
-------------
THE JORDAN COMPANY & JZEP
JZEP Preferred Holdings Limited 1,176.00000
JZEP
UTI/TJC Voting Trust
Jordan Industries, Inc. 1,176.00000
-------------
TOTAL TJC & JZEP 2,352.00000
-------------
-------------
TOTAL 4,200.00000
=============
Schedule 10.1(B)-2
EXECUTION VERSION
AMENDMENT NO. 1 TO SECOND AMENDMENT AND
RESTATEMENT OF CREDIT AGREEMENT
AMENDMENT NO. 1, dated as of September __, 2002 (this "AMENDMENT"), to the
SECOND AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT, dated as of March 29, 2002
(the "ORIGINAL CREDIT AGREEMENT"), among UTI HOLDINGS, INC., an Arizona
corporation, as Borrower ("BORROWER") and UNIVERSAL TECHNICAL INSTITUTE, INC., a
Delaware corporation, as Parent ("HOLDINGS"), the lenders signatory thereto from
time to time (the "LENDERS"), ▇▇▇▇▇▇ FINANCIAL, INC., a Delaware corporation (in
its individual capacity, "▇▇▇▇▇▇"), for itself as a Lender and as Agent for the
Lenders (the "AGENT"). Terms defined in the Original Credit Agreement and not
otherwise defined herein shall have the meanings assigned thereto in the
Original Credit Agreement.
PRELIMINARY STATEMENT
(1) Borrower and Holdings have requested that the Lenders agree to amend
the Original Credit Agreement to allow Borrower and Holdings to
guarantee the obligations of Institution Subsidiaries under certain
operating leases entered into in the ordinary course of business by
such Institution Subsidiaries; and
(2) The Lenders are willing to agree to so amend the Original Credit
Agreement but only on and subject to the terms and conditions provided
herein;
NOW, THEREFORE, in consideration of the premises set forth herein and for other
good and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), Borrower, Holdings and the Lenders hereby agree as follows:
(1) Subject to the satisfaction of the conditions set forth in Section 2
hereof, Section 3.4 of the Original Credit Agreement shall be and
hereby is amended as follows:
(a) the word "and" is hereby deleted from the end of clause (M);
(b) the period at the end of clause (N) is hereby replaced with ";
and"; and
(c) the following shall be added as clause (O):
"(O) arising from any guarantee by Borrower or Holdings of
the obligations of an Institution Subsidiary under
any operating lease of premises constituting a campus
operated by such Institution Subsidiary entered into
in the ordinary course of business by such
Institution Subsidiary."
(2) The foregoing amendments contained in this Amendment shall become
effective (the "EFFECTIVE DATE") upon the satisfaction in full of the
following conditions:
(a) this Amendment shall have been executed and delivered by each
of the Requisite Lenders, Borrower and Holdings;
(b) each Person who has guaranteed the Obligations shall have
executed a consent to this Amendment in the form provided
below;
(c) there shall be continuing no Default or Event of Default
(after giving effect to the amendments contemplated by this
Amendment); and
(d) all representations and warranties of the Borrower contained
in this Amendment and in the Original Credit Agreement shall
be true and correct in all material respects as of the date
hereof and as of the Effective Date, except to the extent such
representations and warranties relate to a specific date.
(3) Each of Borrower and Holdings hereby represents and warrants as
follows:
(a) this Amendment has been duly authorized and executed by each
such Person, and the Original Credit Agreement, as amended by
this Amendment, is the legal, valid and binding obligation of
each such Person, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable
bankruptcy, moratorium and similar laws affecting the rights
of creditors in general; and
(b) each of Borrower and Holdings repeats and restates the
representations and warranties made by it and contained in the
Original Credit Agreement as of the date of this Amendment and
as of the Effective Date, except to the extent such
representations and warranties relate to a specific date.
(4) This Amendment is being delivered in the State of New York and shall be
a contract made under and governed by the laws of the State of New York
applicable to contracts made and to be wholly performed within the
State of New York.
(5) Each of Borrower and Holdings hereby ratify and confirm the Original
Credit Agreement as amended hereby, and agree that, as amended hereby,
the Original Credit Agreement remains in full force and effect.
(6) Each of Borrower and Holdings agree that all Loan Documents to which
each such Person is a party remain in full force and effect
notwithstanding the execution and delivery of this Amendment.
(7) This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all of such counterparts together shall
constitute but one and the same instrument. Delivery of an executed
counterpart hereof by facsimile shall be as effective as delivery of a
manually executed counterpart hereof.
(8) All references in the Loan Documents to the "Credit Agreement" and in
the Original Credit Agreement as amended hereby to "this Agreement,"
"hereof," "herein" or the like shall mean and refer to the Original
Credit Agreement as amended by this Amendment (as well as by all
subsequent amendments, restatements, modifications and supplements
thereto).
-2-
IN WITNESS WHEREOF, this Amendment No. 1 to the Second Amendment and Restatement
of Credit Agreement has been duly executed as of the date first written above.
UTI HOLDINGS, INC.,
as Borrower
By:_________________________
Name
Title:
UNIVERSAL TECHNICAL INSTITUTE, INC.,
as Parent
By:_________________________
Name
Title:
▇▇▇▇▇▇ FINANCIAL, INC.,
as Agent and Lender
By:_________________________
Name
Title:
ANTARES CAPITAL CORPORATION,
as Lender
By:_________________________
Name
Title:
THE ROYAL BANK OF SCOTLAND PLC,
as Lender
By:_________________________
Name
Title:
-3-
JPMORGAN CHASE BANK,
AS TRUSTEE OF THE ANTARES FUNDING TRUST
CREATED UNDER A TRUST AGREEMENT DATED AS OF
NOVEMBER 30, 1999,
as Lender
By:_________________________
Name
Title:
MARINER CDO 2002, LTD.,
as Lender
By:_________________________
Name
Title:
Each of the undersigned hereby consents to the execution and delivery by
Borrower and Holdings of the foregoing Amendment No. 1 and agrees that each Loan
Document to which it is a party remains in full force and effect and that such
execution and delivery is not a defense to the obligations of the undersigned
under any such Loan Document.
CUSTOM TRAINING GROUP, INC. CLINTON EDUCATION GROUP, INC.
By:_________________________ By:__________________________
Name Name
Title: Title:
-4-
EXECUTION COPY
AMENDMENT NO. 2 TO SECOND AMENDMENT AND
RESTATEMENT OF CREDIT AGREEMENT
AMENDMENT NO. 2, dated as of March 3, 2003 (this "AMENDMENT"), to the SECOND
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT, dated as of March 29, 2002 (as
previously amended by Amendment No. 1, dated as of September 25, 2002, the
"ORIGINAL CREDIT AGREEMENT"), among UTI HOLDINGS, INC., an Arizona corporation,
as Borrower ("BORROWER") and UNIVERSAL TECHNICAL INSTITUTE, INC., a Delaware
corporation, as Parent ("HOLDINGS"), (the lenders signatory thereto from time to
time (the "LENDERS"), ▇▇▇▇▇▇ FINANCIAL, INC., a Delaware corporation (in its
individual capacity, "▇▇▇▇▇▇"), for itself as a Lender and as Agent for the
Lenders (the "AGENT"). Terms defined in the Original Credit Agreement and not
otherwise defined herein shall have the meanings assigned thereto in the
Original Credit Agreement.
PRELIMINARY STATEMENT
(1) Borrower and Holdings have requested that the Lenders agree to amend
the Original Credit Agreement (a) to allow Universal Technical
Institute of Arizona, Inc., a Delaware corporation that is an
Institution Subsidiary, to act as lessee under an operating lease for
the Borrower's corporate headquarters and (b) to allow Holdings to
guarantee such obligation; and
(2) The Lenders are willing to agree to so amend the Original Credit
Agreement but only on and subject to the terms and conditions provided
herein;
NOW, THEREFORE, in consideration of the premises set forth herein and for other
good and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), Borrower, Holdings and the Lenders hereby agree as follows;
(1) Subject to the satisfaction of the conditions set forth in Section 2
hereof, the Original Credit Agreement shall be and hereby is amended as
follows:
(a) Clause (O) of Section 3.4 is hereby amended and restated in
its entirety to read as follows:
"(O) arising from any guarantee (i) by Borrower or
Holdings of the obligations of an Institution
Subsidiary under any operating lease of premises
constituting a campus operated by such Institution
Subsidiary entered into in the ordinary course of
business by such Institution Subsidiary and (ii) by
Holdings of the obligations of Arizona as lessee
under the operating lease for Borrower's corporate
headquarters located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,";
(b) Section 3.10 is hereby amended by adding the following phrase
between the phrases "and its Subsidiaries" and "and its
performance from time to time" in the second sentence thereof;
", any assumption of a Contingent Obligation permitted under
Section 3.4"; and
(c) Section 10.1 shall be amended as follows:
(i) the following defined term shall be added in its
correct alphabetical position:
"'ARIZONA' means Universal Technical Institute of
Arizona, Inc., a Delaware corporation that is an
Institution Subsidiary."; and
(ii) the definition of "Institution Subsidiary" in Section
10.1 is hereby amended by adding the following before
the period at the end thereof;
", except that Arizona shall constitute an
Institution Subsidiary notwithstanding its being the
lessee under the operating lease for Borrower's
corporate headquarters located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇".
(2) The foregoing amendments contained in this Amendment shall become
effective (the "EFFECTIVE DATE") upon the satisfaction in full of the
following conditions:
(a) this Amendment shall have been executed and delivered by each
of the Requisite Lenders, Borrower and Holdings;
(b) each Person who has guaranteed the Obligations shall have
executed a consent to this Amendment in the form provided
below;
(c) there shall be continuing no Default or Event of Default
(after giving effect to the amendments contemplated by this
Amendment); and
(d) all representations and warranties of the Borrower contained
in this Amendment and in the Original Credit Agreement shall
be true and correct in all material respects as of the date
hereof and as of the Effective Date, except to the extent such
representations and warranties relate to a specific date.
(3) Each of Borrower and Holdings hereby represents and warrants as
follows:
(a) this Amendment has been duly authorized and executed by each
such Person, and the Original Credit Agreement, as amended by
this Amendment, is the legal, valid and binding obligation of
each such Person, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable
bankruptcy, moratorium and similar laws affecting the rights
of creditors in general; and
(b) each of Borrower and Holdings repeats and restates the
representations and warranties made by it and contained in the
Original Credit Agreement as of the date of this Amendment and
as of the Effective Date, except to the extent such
representations and warranties relate to a specific date.
(4) This Amendment is being delivered in the State of New York and shall be
a contract made under and governed by the laws of the State of New York
applicable to contracts made and to be wholly performed within the
State of New York.
-2-
(5) Each of Borrower and Holdings hereby ratify and confirm the Original
Credit Agreement as amended hereby, and agree that, as amended hereby,
the Original Credit Agreement remains in full force and effect.
(6) Each of Borrower and Holdings agree that all Loan Documents to which
each such Person is a party remain in full force and effect
notwithstanding the execution and delivery of this Amendment.
(7) This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all of such counterparts together shall
constitute but one and the same instrument. Delivery of an executed
counterpart hereof by facsimile shall be as effective as delivery of a
manually executed counterpart hereof.
(8) All references in the Loan Documents to the "Credit Agreement" and in
the Original Credit Agreement as amended hereby to "this Agreement,"
"hereof," "herein" or the like shall mean and refer to the Original
Credit Agreement as amended by this Amendment (as well as by all
subsequent amendments, restatements, modifications and supplements
thereto).
[Remainder of page left blank intentionally; signatures on following pages.]
-3-
IN WITNESS WHEREOF, this Amendment No. 2 to the Second Amendment and Restatement
of Credit Agreement has been duly executed as of the date first written above.
UTI HOLDINGS, INC., UNIVERSAL TECHNICAL INSTITUTE, INC.,
as Borrower as Parent
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------- ---------------------------
Name ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Name ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: CHIEF FINANCIAL OFFICER Title: CHIEF FINANCIAL OFFICER
▇▇▇▇▇▇ FINANCIAL, INC., ANTARES CAPITAL CORPORATION,
as Agent and Lender as Lender
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------- ---------------------------
Name ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Name ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: VICE PRESIDENT Title: DIRECTOR
THE ROYAL BANK OF SCOTLAND PLC, JPMORGAN CHASE BANK,
as Lender AS TRUSTEE OF THE ANTARES FUNDING
TRUST CREATED UNDER A TRUST AGREEMENT
/s/ Una ▇. ▇▇▇▇ DATED AS OF NOVEMBER 30, 1999,
--------------------------- as Lender
Name UNA ▇. ▇▇▇▇
Title: VICE PRESIDENT /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
MARINER CDO 2002, LTD., Name ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
as Lender Title: OFFICER
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
Name ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: DIRECTOR
SIGNATURE PAGE TO AMENDMENT NO. 2 TO
SECOND AMENDMENT AND RESTATEMENT
OF UTI CREDIT AGREEMENT
Each of the undersigned hereby consents to the execution and delivery by
Borrower and Holdings of the foregoing Amendment No. 2 and agrees that each Loan
Document to which it is a party remains in full force and effect and that such
execution and delivery is not a defense to the obligations of the undersigned
under any such Loan Document.
CUSTOM TRAINING GROUP, INC. CLINTON EDUCATION GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------- ---------------------------
Name ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Name ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: CHIEF FINANCIAL OFFICER Title: CHIEF FINANCIAL OFFICER
SIGNATURE PAGE TO AMENDMENT NO. 2 TO
SECOND AMENDMENT AND RESTATEMENT
OF UTI CREDIT AGREEMENT
EXECUTION VERSION
AMENDMENT NO. 3 TO SECOND AMENDMENT AND
RESTATEMENT OF CREDIT AGREEMENT
AMENDMENT NO. 3, dated as of July 16, 2003 (this "AMENDMENT"), to the SECOND
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT, dated as of March 29, 2002 (as
previously amended by Amendment No. 1, dated as of September 25, 2002 and
Amendment No. 2, dated as of March 3, 2003, the "CREDIT AGREEMENT"), among UTI
HOLDINGS, INC., an Arizona corporation, as Borrower ("BORROWER") and UNIVERSAL
TECHNICAL INSTITUTE, INC., a Delaware corporation, as Parent ("HOLDINGS"), the
lenders signatory thereto from time to time (the "LENDERS"), ▇▇▇▇▇▇ FINANCIAL,
INC., a Delaware corporation (in its individual capacity, "▇▇▇▇▇▇"), for itself
as a Lender and as Agent for the Lenders (the "AGENT"). Terms defined in the
Credit Agreement and not otherwise defined herein shall have the meanings
assigned thereto in the Credit Agreement.
PRELIMINARY STATEMENT
(1) Borrower and Holdings have requested that the Lenders agree to amend
the Credit Agreement as provided herein; and
(2) The Lenders are willing to agree to so amend the Credit Agreement but
only on and subject to the terms and conditions provided herein;
NOW, THEREFORE, in consideration of the premises set forth herein and for other
good and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), Borrower, Holdings, Agent and the Lenders hereby agree as
follows:
(1) Subject to the satisfaction of the conditions set forth in Section 3
hereof, the Credit Agreement shall be and hereby is amended as follows:
(a) Section 1.1(B)(1) is hereby amended as follows:
(i) by replacing the amount "$20,000,000" in the first
sentence with "$30,000,000";
(ii) by replacing the amount "$10,000,000" in the second
sentence with "$15,000,000"; and
(iii) by replacing the amount "$15,000,000" in the second
sentence with "$22,500,000" in lieu thereof.
(b) Section 1.2(A) is hereby amended by revising the Pricing Table
appearing therein in its entirety to read as follows:
"PRICING TABLE
BASE RATE MARGIN LIBOR MARGIN
------------------------------ -------------------------------
OBLIGATIONS LOANS
OTHER THAN OTHER THAN
TOTAL DEBT TO TTM EBITDA TERM LOAN B TERM LOAN B TERM LOAN B TERM LOAN B
------------------------- ----------- -------------- ------------- -------------
> 3.00x 2.25% 2.75% 3.50% 4.00%
> 2.50 and < or = 3.00x 2.00% 2.50% 3.25% 3.75%
> 2.00 and < or = 2.50x 1.75% 2.25% 3.00% 3.50%
> 1.50 and < or = 2.00x 1.50% 2.00% 2.75% 3.25%
< or = l.50x 1.25% 1.75% 2.50% 3.00%"
(c) Clause (2) of Section 1.2(B) is hereby amended in its entirety
to read as follows:
"(2) (a)until the Second Amendment and Restatement Date,
three-eighths of one percent (0.375%) per annum and (b) from
and after the Second Amendment and Restatement Date, (i)
one-half of one percent (0.500%) per annum when the sum
indicated in part (b) of clause (1) of this Section 1.2(B) is
50% or more of the Revolving Loan Commitment and (ii)
three-quarters of one percent (0.750%) per annum when such sum
is less than 50% of the Revolving Loan Commitment".
(d) Section 3.5 is hereby amended by inserting the following text
after the semicolon at the end of subsection (D):
"provided that, notwithstanding the foregoing, Holdings may,
on or before August 31, 2003, prepay the outstanding principal
amount on the Sharp Note in a single payment not to exceed
$7,010,660;".
(e) Section 4.1 is hereby amended as follows:
(i) by replacing the amount "$9,000,000" in the first
sentence of such section with "$30,000,000"; and
(ii) by replacing the amount "$3,000,000" in the second
sentence of such section with "$10,000,000".
(f) Section 4.8(H) is hereby amended by replacing the percentage
"70%" appearing twice therein with the percentage "60%".
(g) The signature pages for the following Lenders are hereby
amended to change the amount of each such Lenders' "Commitment
to make Revolving Loans" as follows:
-2-
(i) for ▇▇▇▇▇▇ Financial, Inc., by replacing the amount
$8,571,428.57 with $12,857,142.86;
(ii) for Antares Capital Corporation, by replacing the
amount $5,714,285.71 with $8,571,428.57; and
(iii) for The Royal Bank of Scotland, by replacing the
amount $5,714,285.71 with $8,571,428.57.
(2) On or before the Effective Date, Borrower will prepay the Loans in an
amount equal to $15,000,000. Borrower and Agent hereby agree, pursuant
to Section 1.5(A) of the Credit Agreement, that all of such prepayment
shall be applied to prepay Term Loan B against all remaining
installments in the inverse order thereof. Borrower and Agent further
agree that such prepayment shall be deducted from EBITDA for the
purpose of calculating Excess Cash Flow (as calculated on Exhibit
1.5(B)) for the fiscal year ended September 31, 2003.
(3) The foregoing amendments contained in this Amendment shall become
effective (the "EFFECTIVE DATE") upon the satisfaction in full of the
following conditions:
(a) this Amendment shall have been executed and delivered by each
of the Lenders, Borrower and Holdings;
(b) each Person who has guaranteed the Obligations shall have
executed a consent to this Amendment in the form provided
below;
(c) there shall be continuing no Default or Event of Default
(after giving effect to the amendments contemplated by this
Amendment); and
(d) all representations and warranties of the Borrower contained
in this Amendment and in the Credit Agreement shall be true
and correct in all material respects as of the date hereof and
as of the Effective Date, except to the extent such
representations and warranties relate to a specific date.
(4) Each of Borrower and Holdings hereby represents and warrants as
follows:
(a) this Amendment has been duly authorized and executed by each
such Person, and the Credit Agreement, as amended by this
Amendment, is the legal, valid and binding obligation of each
such Person, enforceable in accordance with its terms, except
as such enforceability may be limited by applicable
bankruptcy, moratorium and similar laws affecting the rights
of creditors in general;
(b) each of Borrower and Holdings repeats and restates the
representations and warranties made by it and contained in the
Credit Agreement as of the date of this Amendment and as of
the Effective Date, except to the extent such representations
and warranties relate to a specific date; and
(c) as of July 10, 2003, (i) the aggregate outstanding principal
balance of Term Loan A is $17,625,000, (ii) the aggregate
outstanding principal balance of Term Loan B is $29,625,000,
(iii) the aggregate outstanding principal balance of the
Revolving Loans is $13,600,000, which consists wholly of
outstanding Lender Letters of Credit (including $7,600,000 of
DOE Letters of Credit and $6,000,000 of Non-DOE Letters of
Credit).
-3-
Each of such amounts are owed by the Borrower to the Lenders
without defense of any kind.
(5) This Amendment is being delivered in the State of New York and shall be
a contract made under and governed by the laws of the State of New York
applicable to contracts made and to be wholly performed within the
State of New York.
(6) Each of Borrower and Holdings hereby ratify and confirm the Credit
Agreement as amended hereby, and agree that, as amended hereby, the
Credit Agreement remains in full force and effect.
(7) Each of Borrower and Holdings agree that all Loan Documents to which
each such Person is a party remain in full force and effect
notwithstanding the execution and delivery of this Amendment.
(8) This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all of such counterparts together shall
constitute but one and the same instrument. Delivery of an executed
counterpart hereof by facsimile shall be as effective as delivery of a
manually executed counterpart hereof.
(9) All references in the Loan Documents to the "Credit Agreement" and in
the Credit Agreement as amended hereby to "this Agreement," "hereof,"
"herein" or the like shall mean and refer to the Credit Agreement as
amended by this Amendment (as well as by all subsequent amendments,
restatements, modifications and supplements thereto).
[Remainder of page left blank intentionally; signatures on following pages.]
-4-
IN WITNESS WHEREOF, this Amendment No. 3 to the Second Amendment and Restatement
of Credit Agreement has been duly executed as of the date first written above.
UTI HOLDINGS, INC., UNIVERSAL TECHNICAL INSTITUTE, INC.,
as Borrower as Parent
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------- ---------------------------
Name ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Name ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: CFO, SECRETARY Title: CFO, SECRETARY
▇▇▇▇▇▇ FINANCIAL, INC., ANTARES CAPITAL CORPORATION,
as Agent and Lender as Lender
/s/ ▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------- ---------------------------
Name ▇▇▇▇ ▇▇▇▇▇▇ Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: MD Title: DIRECTOR
THE ROYAL BANK OF SCOTLAND PLC, JPMORGAN CHASE BANK,
as Lender AS TRUSTEE OF THE ANTARES FUNDING TRUST
CREATED UNDER A TRUST AGREEMENT DATED
/s/ Una ▇. ▇▇▇▇ AS OF NOVEMBER 30, 1999,
--------------------------- as Lender
Name UNA ▇. ▇▇▇▇
Title: VICE PRESIDENT /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
MARINER CDO 2002, LTD., Name ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
as Lender Title: OFFICER
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: DIRECTOR
SIGNATURE PAGE TO AMENDMENT NO. 3 TO
SECOND AMENDMENT AND RESTATEMENT
OF UTI CREDIT AGREEMENT
Each of the undersigned hereby consents to the execution and delivery by
Borrower and Holdings of the foregoing Amendment No. 3 and agrees that each Loan
Document to which it is a party remains in full force and effect and that such
execution and delivery is not a defense to the obligations of the undersigned
under any such Loan Document.
CUSTOM TRAINING GROUP, INC. CLINTON EDUCATION GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------- ---------------------------
Name ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Name ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: CFO, SECRETARY Title: CFO, SECRETARY
SIGNATURE PAGE TO AMENDMENT NO. 3 TO
SECOND AMENDMENT AND RESTATEMENT
OF UTI CREDIT AGREEMENT