<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1997.
( ) Transition report pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934 for the transition period ___ to ___.
Commission File No. 0-28044
PENSKE MOTORSPORTS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0369517
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
13400 OUTER DRIVE WEST, DETROIT, MICHIGAN 48239-4001
(Address of principal executive offices) (including zip code)
313-592-8255
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK $0.01 PAR VALUE 14,148,340 SHARES
---------------------------- -------------------------------
CLASS OUTSTANDING AT NOVEMBER 1, 1997
This report contains __ pages.
<PAGE> 2
TABLE OF CONTENTS
PAGE NO.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Independent Accountants' Review Report 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 16
Signature 17
2
<PAGE> 3
PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1997 1996
------ ------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,864 $ 27,862
Receivables 7,198 2,365
Inventories 3,360 2,060
Prepaid expenses 1,251 1,272
------------ ------------
TOTAL CURRENT ASSETS 15,673 33,559
PROPERTY AND EQUIPMENT, net 221,316 140,402
GOODWILL, net 30,126 6,918
OTHER ASSETS 17,096 3,118
------------ ------------
TOTAL $ 284,211 $ 183,997
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 1,710 $ 1,738
Accounts payable 8,630 8,223
Accrued expenses 12,594 1,715
Deferred revenues, net 9,605 14,125
------------ -----------
TOTAL CURRENT LIABILITIES 32,539 25,801
LONG-TERM DEBT, less current portion 48,029 3,825
MINORITY INTEREST 2,020
DEFERRED REVENUES, net 922
DEFERRED TAXES 9,885 8,969
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $ .01 share:
Authorized 50,000,000 shares
Issued and outstanding 14,148,340 shares
in 1997 and 13,241,798 in 1996 141 132
Additional paid-in-capital 157,721 130,534
Retained earnings 32,954 14,736
------------ -----------
TOTAL STOCKHOLDERS' EQUITY 190,816 145,402
------------ -----------
TOTAL $ 284,211 $ 183,997
============ ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE> 4
PENSKE MOTORSPORTS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except for share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------------ ------------- ------------ -----------
<S> <C> <C> <C> <C>
REVENUES:
Speedway admissions $ 20,343 $ 10,468 $ 40,039 $ 20,248
Other speedway revenues 13,381 5,295 29,131 12,989
Merchandise, tires and accessories 10,250 8,199 26,475 18,981
------------ ------------ ------------ -----------
TOTAL REVENUES 43,974 23,962 95,645 52,218
------------ ------------ ------------ -----------
EXPENSES:
Operating 14,715 7,032 31,029 16,002
Cost of sales 6,009 4,755 15,411 11,270
Depreciation and amortization 2,840 823 5,153 2,296
Selling, general and administrative 5,115 2,031 13,398 5,144
------------ ------------ ------------ -----------
OPERATING EXPENSES 28,679 14,641 64,991 34,712
------------ ------------ ------------ -----------
OPERATING INCOME 15,295 9,321 30,654 17,506
EQUITY IN LOSS OF AFFILIATES (727) (727)
INTEREST INCOME (EXPENSE), net (766) 703 (689) 1,582
------------ ------------ ------------ -----------
INCOME BEFORE INCOME TAXES 13,802 10,024 29,238 19,088
INCOME TAXES 4,957 3,525 10,975 6,862
------------ ------------ ------------ -----------
NET INCOME $ 8,845 $ 6,499 $ 18,263 $ 12,226
============ ============ ============ ===========
NET INCOME PER SHARE $ .63 $ .50 $ 1.33
============ ============ ============
PRO FORMA NET INCOME PER SHARE (See Note 2)
$ 1.03
===========
WEIGHTED AVERAGE NUMBER OF SHARES
14,148,340 12,987,500 13,690,088
============ ============ ===========
PRO FORMA WEIGHTED AVERAGE
NUMBER OF SHARES (See Note 2)
11,822,076
===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE> 5
PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 18,263 $ 12,226
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,153 2,296
Equity in loss of affiliates 727
Changes in assets and liabilities which provided (used) cash:
Receivables (4,521) (469)
Inventories, prepaid expenses and other assets (2,851) (1,508)
Accounts payable and accrued liabilities 10,101 10,248
Deferred revenue (6,752) (8,589)
-------- --------
Net cash provided by operating activities 20,120 14,204
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of property and equipment, net (68,118) (42,468)
Acquisition of Competition Tire South, Inc. (758)
Competition Tire West, Inc. transaction (3,176)
Acquisition of equity interest in affiliates (16,024) (612)
-------- --------
Net cash used in investing activities (84,142) (47,014)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock 82,758
Proceeds from issuance of debt 42,299 13,866
Repayment of debt (2,275) (12,245)
Advances to affiliates (1,254)
-------- --------
Net cash provided by financing activities 40,024 83,125
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (23,998) 50,315
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 27,862 4,805
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,864 $ 55,120
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for interest $ 1,444 $ 93
Cash paid during the period for taxes 4,580 5,025
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Stock issued in exchange for investment in subsidiary $ 27,196
Increase in debt associated with acquisitions $ 3,738
Decrease in minority interest associated with acquisitions 1,210
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE> 6
PENSKE MOTORSPORTS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - FINANCIAL STATEMENTS. The consolidated financial statements include the
accounts of Penske Motorsports, Inc. (the Company), its wholly-owned
subsidiaries, Michigan International Speedway, Inc., Pennsylvania International
Raceway, Inc., The California Speedway Corporation, Motorsports International
Corp., Competition Tire West, Inc. (CTW) and Competition Tire South, Inc., and
its majority-owned subsidiary, North Carolina Motor Speedway, Inc. (NCMS). The
Company also owns 40% of Homestead-Miami Speedway, LLC and 7% of the Grand Prix
Association of Long Beach, Inc. All material intercompany balances and
transactions have been eliminated.
The accompanying consolidated financial statements have been prepared by
management and, in the opinion of management, contain all adjustments,
consisting of normal recurring adjustments, necessary to present fairly the
financial position of the Company as of September 30, 1997 and December 31,
1996, and the results of operations and cash flows of the Company for the three
months and nine months ended September 30, 1997 and 1996. The consolidated
financial statements should be read in conjunction with the consolidated
financial statements included in the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
Because of the seasonal concentration of racing events, the results of
operations for the three months and nine months ended September 30, 1997 and
1996 are not indicative of the results to be expected for the year.
NOTE 2 - EARNINGS PER SHARE. The pro forma net income per share for the nine
months ended September 30, 1996 reflects the weighted average number of shares
outstanding of 11,822,076, which includes the dilutive effect of the number of
shares equivalent to the $2.9 million capital distribution which was recorded
from the purchase of CTW in March 1996 (121,667 shares based on the Company's
initial public offering price of $24 per share).
NOTE 3 - PROPERTY AND EQUIPMENT. Property and equipment consists of the
following ($ in thousands):
September 30, December 31,
1997 1996
------------- ------------
Land and land improvements $ 107,879 $ 85,469
Buildings and improvements 116,744 63,685
Equipment 17,011 6,929
------------- ------------
241,634 156,083
Less accumulated depreciation 20,318 15,681
------------- ------------
$ 221,316 $ 140,402
============= ============
6
<PAGE> 7
NOTE 4 - NORTH CAROLINA MOTOR SPEEDWAY. On May 19, 1997, the Company exercised
its option to purchase the shares of the majority shareholder of NCMS in
exchange for 906,542 shares of the Company's common stock, increasing the
Company's ownership of NCMS from approximately 4.5% to approximately 70%. The
shares issued were valued at $30 per share and are reflected in the financial
statements as an increase in common stock of $9,000 and additional paid-in
capital of $27,187,000. The acquisition has been accounted for as a purchase and
NCMS has been consolidated in the financial statements since the date of
acquisition. The transaction resulted in the Company recording $23.5 million of
goodwill, which is being amortized over a period of 40 years. The minority
interest liability on the balance sheet reflects the equity of the minority
investors of NCMS.
On August 5, 1997, the Board of Directors of NCMS approved a merger and merger
agreement with the Company. The merger proposal, which offers NCMS stockholders
$19.61 per share in cash or the equivalent amount of stock of the Company, will
be submitted to the NCMS shareholders at a meeting to be held in the fourth
quarter of 1997. In August 1997, O. Bruton Smith sued the Company, NCMS and
certain directors of NCMS in an effort to enjoin the completion of the merger.
In November, 1997, Mr. Smith's motion for a preliminary injunction was denied
and his lawsuit was dismissed. Should the merger not occur, the Company will be
obligated to reimburse the former majority shareholder of NCMS for any tax
consequences that result. The impact of such reimbursement could materially
increase the Company's investment in NCMS.
NOTE 5 - ACQUISITIONS. In July 1997, the Company announced that it invested
$11.8 million for a 40% interest in Homestead-Miami Speedway, LLC, the operators
of Metro-Dade Homestead Motorsports Complex.
In August 1997, the Company acquired a 7% interest in Grand Prix Association of
Long Beach, Inc. (GPLB) for $3.9 million. GPLB owns and operates the Grand Prix
of Long Beach, California, Gateway International Raceway in Madison, Illinois,
and Memphis Motorsports Park in Millington, Tennessee.
These transactions have been accounted for under the equity method of
accounting.
NOTE 6 - NEW ACCOUNTING PRONOUNCEMENTS. The Financial Accounting Standards Board
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share", which is effective for financial statements issued after December 15,
1997, requires companies to present earnings per share on the face of the income
statement in two categories called "Basic" and "Diluted" and requires
restatement of all periods presented. The Company will adopt SFAS No. 128 during
the fourth quarter of 1997. The Company anticipates that the adoption of SFAS
No. 128 will not have a material impact on earnings per share.
SFAS No. 130, "Reporting Comprehensive Income", requires companies to classify
items of other comprehensive income by their nature in a financial statement and
to display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of a
statement of financial position. This statement is effective for fiscal years
beginning after December 15, 1997. The Company will adopt SFAS No. 130 in 1998.
7
<PAGE> 8
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Stockholders
Penske Motorsports, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of Penske
Motorsports, Inc. and subsidiaries (the "Company") as of September 30, 1997 and
the related condensed consolidated statements of income for the three month and
nine month periods ended September 30, 1997 and 1996 and of cash flows for the
nine month periods ended September 30, 1997 and 1996 included in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997. These
consolidated financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is an
expression of an opinion regarding the consolidated financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of December 31,
1996, and the related consolidated statements of income, stockholders' equity
and cash flows, for the year then ended (not presented herein); and in our
report dated January 20, 1997, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the condensed consolidated balance sheet at December 31, 1996 included in the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which such information has been derived.
/s/ Deloitte & Touche LLP
Detroit, Michigan
October 30, 1997
8
<PAGE> 9
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OVERVIEW
Penske Motorsports, Inc. (the Company) is a leading promoter and marketer of
professional motorsports in the United States. The Company owns and operates,
through its wholly-owned subsidiaries, Michigan Speedway in Brooklyn, Michigan,
Nazareth Speedway in Nazareth, Pennsylvania and California Speedway near Los
Angeles, California. The Company has a 70% interest in North Carolina Motor
Speedway, Inc. (NCMS), which operates a speedway in Rockingham, North Carolina.
The Company also owns a 40% interest in Homestead-Miami Speedway, LLC (HMS) and
a 7% interest in Grand Prix Association of Long Beach, Inc. (GPLB). In addition,
the Company sells motorsports related merchandise such as apparel, souvenirs and
collectibles through its subsidiary Motorsports International Corp. (MIC) and
Goodyear brand racing tires and accessories through its subsidiaries Competition
Tire West, Inc. (CTW) and Competition Tire South, Inc. (CTS) in the midwest and
southeastern regions of the United States.
The Company classifies its revenues as speedway admissions, other speedway
revenues, and merchandise, tires and accessories revenues. Speedway admissions
includes ticket sales for racing events held at the Company's speedways. Other
speedway revenues includes revenues from concessions sales, corporate
hospitality and sponsorship, broadcast revenues and billboard and program
advertising. Speedway admissions and other speedway revenues are generally
collected in advance and recorded as deferred revenues, net of deferred
expenses, until the completion of the related event. Merchandise, tires and
accessories revenues includes sales of motorsports related merchandise and
revenues from showcar appearance fees by MIC and sales of racing tires and
accessories by CTW and CTS. Revenues from sales of merchandise, tires and
accessories are recorded as income at the time of the sale.
The Company classifies its expenses as operating, cost of sales, depreciation
and amortization and selling, general and administrative expenses. Operating
expenses consists primarily of costs associated with conducting race events,
such as sanction fees and wages. Cost of sales relates entirely to sales of
merchandise, tires and accessories.
Revenues for the three months ended September 30, 1997 were $44.0 million, or
83.5% higher than revenues of $24.0 million for the three months ended September
30, 1996. The Company recorded net income of $8.8 million, or $.63 per share,
for the three months ended September 30, 1997, compared to net income of $6.5
million, or $.50 per share, in 1996, an increase of 36.1%. The increase in
revenues and net income in 1997 is due primarily to increased speedway
admissions and other speedway revenues resulting from the opening of California
Speedway in 1997. Merchandise, tires and accessories revenues also contributed
to higher revenues, as sales increased $2.1 million in the third quarter of 1997
as compared to 1996.
9
<PAGE> 10
For the nine months ended September 30, 1997, revenues were $95.6 million, an
increase of 83.2% over revenues of $52.2 million for the nine months ended
September 30, 1996. Net income for the nine months increased 49.4%, from $12.2
million, or $1.03 per share, in 1996 to $18.3 million, or $1.33 per share, in
1997. These increases are due primarily to the opening of California Speedway in
1997 and additional seating at its other race facilities.
In May 1997, the Company exercised its option to purchase the shares of the
majority shareholder of NCMS in exchange for 906,542 shares of the Company's
common stock valued at $30 per share. The transaction, which increased the
Company's ownership of NCMS to 70%, resulted in the Company recording goodwill
of approximately $23.5 million.
On August 5, 1997, the Board of Directors of NCMS approved a merger and merger
agreement with the Company. The merger proposal, which offers NCMS stockholders
$19.61 per share or the equivalent amount of stock of the Company, will be
submitted to the NCMS shareholders at a meeting to be held in the fourth quarter
of 1997.
In July 1997, the Company acquired a 40% interest in HMS, the operators of the
45,000 seat Metro-Dade Homestead Motorsports Complex (Homestead). This south
Florida 1.5-mile oval racing complex hosts three major racing weekends,
including the opening event of the CART PPG World Series, the Marlboro Grand
Prix of Miami. The transaction has been recorded as an equity investment in the
financial statements of the Company.
In August 1997, the Company acquired a 7% interest in GPLB for $3.9 million.
GPLB promotes the Grand Prix of Long Beach in Long Beach, California and owns
and operates Gateway International Raceway in Madison, Illinois and Memphis
Motorsports Park in Millington, Tennessee. The transaction has been recorded as
an equity investment in the financial statements of the Company.
RESULTS OF OPERATIONS
The percentage relationships between revenues and other elements of the
Company's Consolidated Statements of Income for the comparative reporting
periods were:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
----- ------- -----------------
<S> <C> <C> <C> <C>
REVENUES:
Speedway admissions 46.3% 43.7% 41.9% 38.8%
Other speedway revenues 30.4 22.1 30.4 24.9
Merchandise, tires and accessories 23.3 34.2 27.7 36.3
----- ------- ----- ------
TOTAL REVENUES 100.0 100.0 100.0 100.0
----- ------- ----- ------
EXPENSES:
Operating 33.5 29.3 32.5 30.6
Cost of sales 13.7 19.8 16.1 21.6
Depreciation and amortization 6.4 3.5 5.4 4.4
Selling, general and administrative 11.6 8.5 14.0 9.9
----- ------- ----- ------
TOTAL EXPENSES 65.2 61.1 68.0 66.5
----- ------- ----- ------
OPERATING INCOME 34.8% 38.9% 32.0% 33.5%
===== ======= ===== ======
</TABLE>
10
<PAGE> 11
SEASONALITY AND QUARTERLY RESULTS
Prior to 1997, the Company's weekend race events have been held during the
months from April to August. As a result, the Company's business has
historically been highly seasonal. In 1997, in addition to the historical
weekend events, the Company promoted events at California Speedway in June,
September and October and at North Carolina Motor Speedway in October.
Additionally, Homestead promoted an event in November. Due to the seasonal
nature of the Company's business, the results of operations for the three months
and nine months ended September 30, 1997 and 1996 are not indicative of the
results to be expected for the year.
Set forth below is summary information with respect to the Company's operations
(in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---------------------------- ----------------------------------- ----------------------------------
FIRST SECOND THIRD FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
----- ------ ----- ----- ------ ----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES $5,375 $46,296 $43,974 $3,642 $24,614 $23,962 $2,957 $2,862 $17,310 $19,197 $2,636
NET
INCOME
(LOSS) (1,511) 10,929 8,845 (990) 6,717 6,499 (1,346) (1,157) 4,237 4,812 (1,118)
EVENT
WEEKENDS - 5 3 - 4 2 - - 3 2 -
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1996.
Revenues - Revenues for the three months ended September 30, 1997 were $44.0
million, an increase of $20.0 million, or 83.5% compared to the same period in
1996 due to increases in all categories of revenues. Speedway admissions
increased $9.8 million, from $10.5 million in 1996 to $20.3 million in 1997 due
to increased attendance from the addition of the 72,000-seat California Speedway
and additional seats at Michigan Speedway (8,500). Other speedway revenues
increased $8.1 million, from $5.3 million in 1996 to $13.4 million in 1997, due
primarily to the opening of California Speedway. Sales of merchandise, tires and
accessories were $10.3 million for the quarter ended September 30, 1997,
compared to $8.2 million for the comparable period in 1996, an increase of
25.0%. This increase resulted primarily from strong demand for California
Speedway inaugural merchandise.
Operating Expenses - Operating expenses of $14.7 million, or 33.5% of revenues,
for the three months ended September 30, 1997 increased $7.7 million from $7.0
million, or 29.3% of revenues, for the three months ended September 30, 1996 due
primarily to the addition of operating expenses at California Speedway.
Cost of Sales - Cost of sales for the three months ended September 30, 1997 was
$6.0 million, or 58.6% of merchandise, tires and accessories revenues, compared
to $4.8 million, or 58.0% of those same revenues for the corresponding period of
1996.
11
<PAGE> 12
Depreciation and Amortization - Depreciation and amortization expense of $2.8
million for the three months ended September 30, 1997 increased $2.0 million
compared to the same period in 1996 due to depreciation at the newly-constructed
California Speedway, as well as additional depreciation at Michigan and Nazareth
Speedways, which each added new grandstands for the 1997 racing season, and
depreciation and goodwill amortization related to NCMS, which was purchased in
May, 1997.
Selling, General and Administrative - Selling, general and administrative
expenses of $5.1 million for the three months ended September 30, 1997 increased
$3.1 million from the same period in 1996. This increase is due mainly to
promotional costs associated with the inaugural season at California Speedway.
Interest - The Company recorded net interest expense for the three months ended
September 30, 1997 of $766,000, compared to net interest income of $703,000 in
1996. The interest income in 1996 resulted from temporarily investing the
proceeds of the Company's March 1996 initial public offering. The Company
utilized all of the proceeds of the initial public offering in 1997 and has
borrowed to fund the completion of California Speedway and investments in HMS
and GPLB.
Income Tax Expense - The effective tax rate for the three months ended September
30, 1997 is 35.9%, compared to 35.2% in 1996, due primarily to the addition of
revenues in California, which has a higher state tax.
Net Income - Net income for the three months ended September 30, 1997 was $8.8
million, an increase of $2.3 million, or 36.1%, over net income of $6.5 million
for the three months ended September 30, 1996. The increase in net income for
1997 is due primarily to increases in admissions revenues and other speedway
revenues from the opening of California Speedway, which held one event in the
third quarter, and additional seating at Michigan Speedway. These increases are
partially offset by increased expenses associated with California Speedway, the
loss related to the equity investments in HMS and GPLB and higher interest
expense.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996.
Revenues - Revenues for the nine months ended September 30, 1997 were $95.6
million, an increase of $43.4 million, or 83.2% compared to the same period in
1996 due to increases in all categories of revenues. Speedway admissions
increased $19.8 million, from $20.2 million in 1996 to $40.0 million in 1997
from the promotion of two additional events at California Speedway and
additional seats at Michigan Speedway (8,500) and Nazareth Speedway (11,000).
Other speedway revenues increased $16.1 million, from $13.0 million in 1996 to
$29.1 million in 1997, due primarily to the additional events at California
Speedway. Sales of merchandise, tires and accessories were $26.5 million for the
nine months ended September 30, 1997, compared to $19.0 million for the
comparable period in 1996, an increase of 39.5%. This increase resulted from
strong demand for California Speedway inaugural merchandise.
12
<PAGE> 13
Operating Expenses - Operating expenses increased from $16.0 million, or 30.6%
of revenues, for the nine months ended September 30, 1996 to $31.0 million, or
32.5% of revenues, in 1997, an increase of $15.0 million, due primarily to
operating costs at California Speedway, which had minimal expenses in 1996, and
from the addition of CTS, which was acquired in March 1996, to the consolidated
financial statements for all of 1997.
Cost of Sales - Cost of sales for the nine months ended September 30, 1997 was
$15.4 million, or 58.2% of merchandise, tires and accessories revenues, compared
to $11.3 million, or 59.4% of those same revenues for the corresponding period
of 1996.
Depreciation and Amortization - Depreciation and amortization expense of $5.2
million for the nine months ended September 30, 1997 increased $2.9 million
compared to the same period in 1996 due to the addition of depreciation on the
California Speedway facility, as well as additional depreciation at Michigan and
Nazareth Speedways, which added new grandstands for the 1997 racing season, and
depreciation and goodwill amortization at NCMS.
Selling, General and Administrative - Selling, general and administrative
expenses of $13.4 million for the nine months ended September 30, 1997 increased
$8.3 million from the same period in 1996. This increase is due mainly to
promotional costs associated with the opening of the California Speedway in June
1997.
Interest - Net interest expense for the nine months ended September 30, 1997 was
$689,000, compared to net interest income of $1.6 million in 1996. The Company
invested the proceeds of its March 1996 initial public offering temporarily
while California Speedway was being constructed. As of September 30, 1997, these
funds had been utilized completely and the Company has borrowed to fund the
remaining construction costs at California Speedway and the investments in HMS
and GPLB.
Income Tax Expense - The effective tax rate for the nine months ended September
30, 1997 is 37.5%, compared to 35.9% in 1996, due primarily to the addition of
revenues in California, which has a higher state tax rate, and the treatment of
CTW as a Subchapter S Corporation in the first quarter of 1996.
Net Income - Net income for the nine months ended September 30, 1997 was $18.3
million, an increase of $6.1 million, or 49.4%, over net income of $12.2 million
for the nine months ended September 30, 1996. The increase in net income for
1997 reflects the opening of California Speedway, as well as expansion and
improvements to the Company's other speedways, net of higher costs associated
with California Speedway and lower interest income, as the Company's cash
reserves have been utilized to fund completion of California Speedway and the
investments in HMS and GPLB.
13
<PAGE> 14
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has relied on cash flows from operating activities
supplemented, as necessary, by bank borrowings to finance working capital,
investments and capital expenditures. The Company has used all of the proceeds
of its March 1996 initial public offering to repay debt and to fund construction
of California Speedway.
During the third quarter of 1997, the Company consolidated and increased its
unsecured lines of credit into one line of credit with a borrowing cap of $100
million. As of September 30, 1997, the Company had drawn $42.5 million on this
line of credit to fund completion of California Speedway and the investments in
HMS and GPLB.
The Company believes it has sufficient resources from existing cash balances and
from operating activities and, if necessary, from borrowing under its line of
credit to satisfy ongoing cash requirements for the next twelve months.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical information contained herein, certain matters
discussed in this Form 10-Q are forward-looking statements which involve risks
and uncertainties, including but not limited to the Company's ability to
maintain good working relationships with the sanctioning bodies for its events
and completion of the proposed merger between the Company and NCMS, as well as
other risks and uncertainties affecting the Company's operations, such as
competition, environmental, industry sponsorships, governmental regulation,
dependence on key personnel, the Company's ability to control operational costs,
the impact of bad weather at the Company's events and those other factors
discussed in the Company's filings with the Securities and Exchange Commission.
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is hereby made to "ITEM 2. LEGAL PROCEEDINGS" in the Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997 and June
30, 1997 for a description of legal proceedings reported for the Company's
quarters ended March 31, 1997 and June 30, 1997. The companion lawsuits
referenced in such section of these reports do not state the amount of damages
being sought by the claimants.
On August 5, 1997, O. Bruton Smith, a shareholder of NCMS and the majority
shareholder of Speedway Motorsports, Inc. ("SMI"), filed a lawsuit in North
Carolina Superior Court, Mecklenburg County, against NCMS, the Company, Penske
Acquisition Corp. ("Merger Sub"), PSH Corp., a shareholder of the Company, and
Walter P. Czarnecki, Richard J. Peters, Robert H. Kurnick, Jr., Carrie B.
DeWitt, Nancy DeWitt Daugherty and Jo DeWitt Wilson, each a director of NCMS,
seeking to enjoin the consummation of a proposed merger ("Merger") of NCMS and
Merger Sub. NCMS, the Company and the other defendants in the lawsuit filed a
motion to dismiss Mr. Smith's lawsuit, and Mr. Smith filed a motion to obtain a
preliminary injunction to prohibit the Merger. The court approved a motion for
expedited discovery and set a hearing for November 5, 1997 to consider the
defendants' motion to dismiss and Mr. Smith's motion for a preliminary
injunction. Mr. Smith also filed a motion to add other shareholders of NCMS as
additional plaintiffs. At the November 5 hearing, the court denied Mr. Smith's
motion for a preliminary injunction, and dismissed his lawsuit. In his lawsuit,
Mr. Smith alleged that Ms. Carrie B. DeWitt, as a majority shareholder, owed a
duty to the minority shareholders of NCMS to sell her shares of NCMS stock in a
transaction that would result in the minority shareholders receiving the
"highest price" for their shares and that she breached this duty by selling her
shares to the Company. In addition, Mr. Smith alleged that the defendant
directors breached their fiduciary duties to NCMS and its shareholders by
approving the proposed Merger. Finally, Mr. Smith alleged that the Company's
negotiation and purchase of Ms. DeWitt's NCMS stock and the negotiation and
execution of the Merger Agreement constituted an unfair and deceptive trade
practice under North Carolina law. Mr. Smith may choose to appeal the court's
decision. Whether Mr. Smith will choose to do so and, if he does so, whether the
court's decision will be overturned cannot be predicted at this time.
15
<PAGE> 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibit Number and Description
(a)
10.1 Credit Agreement dated as of September 30, 1997 among
Penske Motorsports, Inc. and certain of its U.S. Subsidiaries,
as Borrowers, and each of the financial institutions
initially a signatory thereto, as Lenders, and First Union
National Bank, as Agent, and NationsBank, N.A., as Co-Agent.
15.1 Letter RE: unaudited interim financial information.
27.1 Financial Data Schedule
27.2 Financial Data Schedule
(b) Reports on Form 8-K
The Company was not required to file a report on Form 8-K during the
quarter ended September 30, 1997.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PENSKE MOTORSPORTS, INC.
Date: November 12, 1997 By: /s/ James H. Harris
--------------------
Its: Senior Vice President and Treasurer
(Principal Financial Officer)
17
<PAGE> 18
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
10.1 Credit Agreement dated as of September 30, 1997 among Penske
Motorsports, Inc. and certain of its U.S. Subsidiaries, as Borrowers,
and each of the financial institutions initially a signatory thereto,
as Lenders, and First Union National Bank, as Agent, and NationsBank,
N.A., as Co-Agent.
15.1 Letter RE: unaudited interim financial information.
27.1 Financial Data Schedule
27.2 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.1
$100,000,000
CREDIT AGREEMENT
Dated as of September 30, 1997
among
PENSKE MOTORSPORTS, INC.,
and
Certain of its U.S. Subsidiaries,
as Borrowers,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THOSE ASSIGNEES
PURSUANT TO SECTION 13.6 HEREOF,
as Lenders,
NATIONSBANK, N.A., as Co-Agent
and
FIRST UNION NATIONAL BANK,
as Agent
<PAGE> 2
TABLE OF CONTENTS
Page
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 General Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms and Determinations. . . . . . . . . . . . . . . 18
1.3 Other Definitional Terms. . . . . . . . . . . . . . . . . . . . 18
ARTICLE II LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1 Revolving Loans. . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . 21
2.3 Optional and Mandatory Prepayments; Reduction of Commitments.. . 22
2.4 Payments and Computations. . . . . . . . . . . . . . . . . . . . 22
2.5 Maintenance of Account. . . . . . . . . . . . . . . . . . . . . 23
2.6 Statement of Account. . . . . . . . . . . . . . . . . . . . . . 23
2.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.8 Sharing of Payments. . . . . . . . . . . . . . . . . . . . . . . 25
2.9 Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . . . 25
2.10 Extensions and Conversions. . . . . . . . . . . . . . . . . . . 26
ARTICLE III LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . 26
3.1 Issuance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.2 Notice and Reports. . . . . . . . . . . . . . . . . . . . . . . 27
3.3 Participation. . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.4 Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.5 Repayment with Revolving Loans. . . . . . . . . . . . . . . . . 28
3.6 Renewal, Extension. . . . . . . . . . . . . . . . . . . . . . . 29
3.7 Uniform Customs and Practices. . . . . . . . . . . . . . . . . . 29
3.8 Indemnification; Nature of Issuing Bank's Duties. . . . . . . . 30
3.9 Responsibility of Issuing Bank. . . . . . . . . . . . . . . . . 31
3.10 Conflict with Letter of Credit Documents. . . . . . . . . . . . 31
ARTICLE IV INTEREST AND FEES. . . . . . . . . . . . . . . . . . . . . . 31
4.1 Interest on Loans. . . . . . . . . . . . . . . . . . . . . . . . 31
4.2 Interest After Event of Default. . . . . . . . . . . . . . . . . 32
4.3 Unused Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.4 Upfront Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.5 Letter of Credit Fees. . . . . . . . . . . . . . . . . . . . . . 32
4.6 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . 33
4.7 Indemnification in Certain Events. . . . . . . . . . . . . . . . 33
4.8 Inability To Determine Interest Rate. . . . . . . . . . . . . . 34
4.9 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.10 Funding Indemnity. . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
i
<PAGE> 3
ARTICLE V CONDITIONS PRECEDENT...........................................35
5.1 Closing Conditions...............................................35
5.2 Conditions to All Loans..........................................37
ARTICLE VI REPRESENTATIONS AND WARRANTIES................................38
6.1 Organization; Power; Qualification...............................38
6.2 Subsidiaries and Capitalization..................................38
6.3 Authorization of Agreement, Credit Documents and Borrowing.......39
6.4 Compliance of Credit Agreement, Credit Documents and
Borrowing with Laws, Etc. .......................................39
6.5 Compliance with Law; Governmental Approvals......................39
6.6 Tax Returns and Payments.........................................39
6.7 Intellectual Property Matters....................................40
6.8 Environmental Matters............................................40
6.9 ERISA............................................................41
6.10 Margin Stock....................................................42
6.11 Government Regulation...........................................42
6.12 Employee Relations..............................................42
6.13 Financial Statements............................................42
6.14 Solvency........................................................43
6.15 Titles to Properties............................................43
6.16 Debt and Liens..................................................43
6.17 Litigation......................................................43
6.18 Absence of Defaults.............................................43
6.19 Accuracy and Completeness of Information........................44
6.20 Burdensome Provisions...........................................44
6.21 Insurance.......................................................44
6.22 No Material Adverse Change......................................44
6.23 Survival of Representations and Warranties, Etc. ...............44
ARTICLE VII AFFIRMATIVE COVENANTS.........................................45
7.1 Financial Statements and Projections.............................45
7.2 Officer's Compliance Certificate.................................46
7.3 Notice of Litigation and Other Matters...........................46
7.4 Accuracy of Information..........................................47
7.5 Preservation of Corporate Existence and Related Matters..........47
7.6 Maintenance of Property..........................................47
7.7 Insurance........................................................48
7.8 Accounting Methods and Financial Records.........................48
7.9 Payment and Performance of Obligations...........................48
7.10 Compliance With Laws, Approvals and Agreements..................48
7.11 Environmental Management........................................48
7.12 Compliance with ERISA...........................................49
7.13 Conduct of Business.............................................49
7.14 Visits and Inspections..........................................49
7.15 North Carolina Motor Speedway, Inc. ............................50
ii
<PAGE> 4
7.16 Subsidiaries.................................................. 50
7.17 Material Contracts............................................ 50
7.18 Further Assurances............................................ 50
ARTICLE VIII FINANCIAL COVENANTS ....................................... 50
8.1 Consolidated Senior Leverage Ratio............................. 51
8.2 Consolidated Leverage Ratio.................................... 51
8.3 Consolidated Interest Coverage Ratio........................... 51
8.4 Consolidated Funded Debt to Consolidated Capitalization Ratio.. 51
8.5 Consolidated Tangible Net Worth................................ 51
ARTICLE IX NEGATIVE COVENANTS .......................................... 51
9.1 Limitations on Indebtedness.................................... 52
9.2 Limitations on Liens........................................... 53
9.3 Limitations on Loans, Advances, Investments and Acquisitions... 53
9.4 Limitations on Mergers and Liquidation......................... 54
9.5 Limitations on Sale of Assets.................................. 54
9.6 Transactions with Affiliates................................... 55
9.7 Certain Accounting Changes..................................... 55
9.8 Amendments; Payments and Prepayments of Subordinated Debt...... 55
9.9 Restrictive Agreements......................................... 56
9.10 Limitations on Restricted Payments............................ 56
9.11 Sale and Leaseback............................................ 56
9.12 Licenses, Etc................................................. 56
9.13 Other Limitations............................................. 56
9.14 Corporate Changes............................................. 57
ARTICLE X EVENTS OF DEFAULT AND REMEDIES ............................... 57
10.1 Events of Default............................................. 57
10.2 Remedies...................................................... 58
ARTICLE XI TERMINATION ................................................. 59
ARTICLE XII THE AGENT .................................................. 60
12.1 Appointment of Agent.......................................... 60
12.2 Nature of Duties of Agent..................................... 60
12.3 Lack of Reliance on Agent..................................... 60
12.4 Certain Rights of the Agent................................... 61
12.5 Reliance by Agent............................................. 61
12.6 Indemnification of Agent...................................... 61
12.7 The Agent in its Individual Capacity.......................... 62
12.8 Holders of Revolving Notes.................................... 62
12.9 Successor Agent............................................... 62
12.10 Actions with Respect to Defaults............................. 63
12.11 Delivery of Information...................................... 63
iii
<PAGE> 5
12.12 Co-Agent...................................................... 63
ARTICLE XIII MISCELLANEOUS............................................... 63
13.1 Waivers........................................................ 64
13.2 JURY TRIAL..................................................... 64
13.3 GOVERNING LAW.................................................. 64
13.4 Arbitration; Consent to Jurisdiction and Service of Process.... 64
13.5 Notices........................................................ 65
13.6 Assignability.................................................. 66
13.7 Information.................................................... 68
13.8 Payment of Expenses; Indemnification........................... 69
13.9 Entire Agreement, Successors and Assigns....................... 70
13.10 Amendments, Etc............................................... 70
13.11 Nonliability of Agent and Lenders............................. 71
13.12 Independent Nature of Lenders' Rights......................... 71
13.13 Counterparts.................................................. 71
13.14 Effectiveness................................................. 71
13.15 Severability.................................................. 71
13.16 Headings Descriptive.......................................... 71
13.17 Maximum Rate.................................................. 71
13.18 Right of Setoff............................................... 72
13.19 Concerning Joint and Several Liability of the Borrowers....... 72
13.20 Power of Attorney............................................. 75
13.21 DAMAGES....................................................... 75
iv
<PAGE> 6
EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Officer's Compliance Certificate
Exhibit C Form of Revolving Note
Exhibit D Form of Notice of Borrowing
Exhibit E [reserved]
Exhibit F Form of Notice of Account Designation
Exhibit G Form of Notice of Extension/Conversion
Exhibit H Form of Borrower Joinder Agreement
SCHEDULES
Schedule 1.1A Lenders and Commitments
Schedule 1.1B Excluded Contingent Obligations
Schedule 6.2 Subsidiaries
Schedule 6.8 Environmental Disclosures
Schedule 6.12 Employee Relations
Schedule 6.16 Existing Indebtedness and Liens
Schedule 6.17 Litigation
Schedule 9.3 Investments
Schedule 9.6 Transactions with Affiliates
v
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of September 30, 1997 among
PENSKE MOTORSPORTS, INC., a Delaware corporation (the "Company"), CALIFORNIA
SPEEDWAY CORPORATION, a Delaware corporation, COMPETITION TIRE SOUTH, INC., a
Delaware corporation, COMPETITION TIRE WEST, INC., a Michigan corporation,
MICHIGAN INTERNATIONAL SPEEDWAY, INC., a Michigan corporation, MOTORSPORTS
INTERNATIONAL CORP., a Pennsylvania corporation, and PENNSYLVANIA INTERNATIONAL
RACEWAY, INC., a Pennsylvania corporation (collectively referred to as the
"Subsidiary Borrowers" or individually referred to as a "Subsidiary Borrower")
(hereinafter, the Company and the Subsidiary Borrowers collectively referred to
as the "Borrowers" or individually referred to as a "Borrower"), each of those
financial institutions identified as Lenders on Schedule 1.1A hereto (together
with each of their successors and assigns, referred to individually as a
"Lender" and, collectively, as the "Lenders"), and FIRST UNION NATIONAL BANK
("FUNB"), acting in the manner and to the extent described in Article XII
hereof (in such capacity, the "Agent") and NATIONSBANK, N.A., as Co-Agent (in
such capacity, the "Co-Agent").
W I T N E S S E T H:
WHEREAS, the Borrowers wish to obtain a revolving credit facility to
finance capital expenditures, to refinance existing debt and to provide
financing for permitted acquisitions; and
WHEREAS, upon the terms and subject to the conditions set forth herein,
the Lenders are willing to make loans and advances to the Borrowers;
NOW, THEREFORE, the Borrowers, the Lenders and the Agent hereby agree as
follows:
ARTICLE I
DEFINITIONS.
1.1 GENERAL DEFINITIONS.
As used herein, the following terms shall have the meanings herein specified:
"Affiliate" shall mean any entity which directly or indirectly controls,
is controlled by, or is under common control with, any Borrower or any
Subsidiary. For purposes of this definition, "control" shall mean the
possession, directly or indirectly, of the power to (i) vote ten percent (10%)
or more of the securities having ordinary voting power for the election of
directors of such Person, or (ii) direct or cause the direction of management
and policies of a business, whether
<PAGE> 8
through the ownership of voting securities, by contract or otherwise
and either alone or in conjunction with others or any group.
"Agent" shall mean FUNB as provided in the preamble to this Credit
Agreement or any successor to FUNB.
"Agent's Fees" shall mean the fees payable by the Borrowers to the Agent
as described in the Fee Letter.
"Applicable Law" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all Governmental Authorities and all
orders and decrees of all courts and arbitrators.
"Applicable Percentage" shall mean for LIBOR Loans, Letters of Credit,
Base Rate Loans and Unused Fees, the appropriate applicable percentages
corresponding to the Consolidated Leverage Ratio in effect as of the most
recent Calculation Date as shown below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Tier Levels Consolidated Leverage Applicable Applicable Applicable
Ratio Percentage for Percentage for Base Percentage for
LIBOR Loans and Rate Loans Unused Fee
Letters of Credit
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I Greater than or equal 1.25% 0% .25%
to 3.50 to 1.00
- --------------------------------------------------------------------------------------------
II Greater than or equal 1.00% 0% .225%
to 3.00 to 1.00 but
less than 3.50 to
1.00
- --------------------------------------------------------------------------------------------
III Greater than or equal .75% 0% .175%
to 2.00 to 1.00 but
less than 3.00 to
1.00
- --------------------------------------------------------------------------------------------
IV Less than 2.00 to 1.00 .50% 0% .15%
- --------------------------------------------------------------------------------------------
</TABLE>
The Applicable Percentages shall be determined and adjusted quarterly on the
date (each a "Calculation Date") five Business Days after the date on which the
Agent receives the quarterly officer's certificate provided by the Company in
accordance with the provisions of Section 7.2; provided, however, that (i) the
initial Applicable Percentages shall be based on Tier Level IV (as shown above)
and shall remain at Tier Level IV until the first Calculation Date subsequent
to the Closing Date, and, thereafter, the Tier Level shall be determined by the
then current Consolidated Leverage Ratio; provided, further, that if the
Company issues Subordinated Debt in an amount of $100,000,000 or more upon
terms and conditions reasonably acceptable to the Required Lenders, then the
Applicable Percentages for LIBOR Loans with respect to Tier Levels I, II and
III shall be reduced by .125% respectively, and (ii) if the Company fails to
provide the officer's certificate to the Agent for any fiscal quarter as
required by and within the time limits set forth in Section 7.2, the Applicable
Percentages from the applicable date of such failure shall be based on Tier
Level I until five Business Days after an appropriate officer's certificate is
2
<PAGE> 9
provided, whereupon the Tier Level shall be determined by the then current
Consolidated Leverage Ratio. Except as set forth above, each Applicable
Percentage shall be effective from one Calculation Date until the next
Calculation Date.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by an assigning Lender and an assignee Lender, accepted by the
Agent, in accordance with Section 13.6(f), in the form attached hereto as
Exhibit A.
"Base Rate" shall mean, for any day, the rate per annum (rounded upwards,
if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the
greater of (i) the Federal Funds Rate in effect on such day plus 1/2 of 1% or
(ii) the Prime Rate in effect on such day. If for any reason the Agent shall
have determined (which determination shall be conclusive absent manifest error)
that it is unable after due inquiry to ascertain the Federal Funds Rate for any
reason, including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Base Rate shall be
determined without regard to clause (i) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such change in
the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" shall mean any Revolving Loan bearing interest at a rate
determined by reference to the Base Rate.
"Benefit Plan" shall mean a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which any
Borrower, any Subsidiary or any ERISA Affiliate is, or within the immediately
preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA.
"Borrower" and "Borrowers" shall have the meaning given such terms in the
preamble of this Credit Agreement.
"Business Day" shall mean any day other than a Saturday, a Sunday, a legal
holiday or a day on which banking institutions are authorized or required by
law or other governmental action to close in Charlotte, North Carolina or New
York, New York; provided that in the case of LIBOR Loans, such day is also a
day on which dealings between banks are carried on in U.S. dollar deposits in
the London interbank market.
"Capital Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
"Capital Stock" shall mean (i) in the case of a corporation, capital
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a partnership, partnership
interests (whether general or limited), (iv) in the case of a limited liability
company, membership interests and (v) any other interest in the nature of
equity or participation therein that confers on a
3
<PAGE> 10
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued or
directly and fully guaranteed or insured by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than one
year from the date of acquisition, (ii) time deposits or certificates of
deposit of any commercial bank incorporated under the laws of the United States
or any state thereof, of recognized standing having capital and unimpaired
surplus in excess of $1,000,000,000 and whose short-term commercial paper
rating at the time of acquisition is at least A-1 or the equivalent thereof by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") ,or at
least P-1 or the equivalent thereof by Moody's Investors Service, Inc. (any
such bank, an "Approved Bank"), with such deposits or certificates having
maturities of not more than one year from the date of acquisition, (iii)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (i) and (ii) above entered into
with any Approved Bank, (iv) commercial paper or finance company paper issued
by any Person incorporated under the laws of the United States or any state
thereof and rated at least A-1 or the equivalent thereof by S&P or at least P-1
or the equivalent thereof by Moody's Investors Service, Inc., and in each case
maturing not more than one year after the date of acquisition, and (v)
investments in money market funds that are registered under the Investment
Company Act of 1940, which have net assets of at least $1,000,000,000 and at
least 85% of whose assets consist of securities and other obligations of the
type described in clauses (i) through (iv) above. All such Cash Equivalents
must be denominated solely for payment in U.S. Dollars.
"Change of Control" shall mean (i) any "person" or "group" of persons
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as
amended) shall obtain ownership or control after the Closing Date on a fully
diluted basis, in one or more series of transactions, of more than thirty
percent (30%) of the Capital Stock and thirty percent (30%) of the voting power
of the Company entitled to vote in the election of members of the board of
directors of the Company at any time that Holdings shall own less than a
majority of the Capital Stock and the voting power of the Company entitled to
vote in the election of members of the board of directors of the Company, (ii)
individuals who at the beginning of any period of two (2) consecutive calendar
years constituted the board of directors of the Company (together with any new
directors whose election by the board of directors or whose nomination for
election by the Company's shareholders was approved by a vote of at least
two-thirds of the members of the board of directors at the beginning of such
period or whose election or nomination for election was previously so approved)
shall cease for any reason to constitute a majority of the members of the board
of directors of the Company then in office, (iii) the sale, lease, transfer,
conveyance or other disposition (other than by way of merger or consolidation)
in one or a series of related transactions, of all or substantially all of the
assets of the Company and its subsidiaries taken as a whole to any such
"person" (other than to the Company or a Wholly-Owned Subsidiary), (iv) the
merger or consolidation of the Company with or into another corporation or the
merger of another corporation with or into the Company with the effect that
immediately after such transaction any "person" or "group" of persons or
entities shall have become the beneficial owner of securities of the surviving
corporation of such merger or consolidation representing a
4
<PAGE> 11
majority of the combined voting power of the outstanding securities of
the surviving corporation ordinarily having the right to vote in the election of
directors, or (v) the adoption of a plan relating to the liquidation or
dissolution of the Company.
"Closing" shall mean the consummation of the making of the initial loan or
advance by the Lenders to the Borrowers under this Credit Agreement.
"Closing Date" shall mean the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to time.
"Commitment" of any Lender shall mean the Revolving Credit Commitment of
such Lender.
"Consolidated or consolidated" with reference to any term defined herein,
shall mean that term as applied to the accounts of the Company and all
Subsidiaries, consolidated in accordance with GAAP.
"Consolidated Capital Expenditures" shall mean, for any applicable period
of computation, an amount equal to the consolidated aggregate expenditures of
the Company and its Subsidiaries during such fiscal period for the acquisition
(including the acquisition by Capital Lease) or improvement of capital assets,
as determined in accordance with GAAP.
"Consolidated Capitalization" shall mean, for any applicable period of
computation, the sum of Consolidated Tangible Net Worth plus Consolidated
Funded Debt minus loans and advances outstanding to officers, directors and
employees, for the Company and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any applicable period of
computation, the sum of (i) Consolidated Net Income for such period, but
excluding therefrom all extraordinary non-recurring items of income or loss,
plus (ii) the aggregate amount of depreciation and amortization charges made in
calculating Consolidated Net Income for such period, plus (iii) aggregate
Consolidated Interest Expense for such period, plus (iv) the aggregate amount
of all income taxes reflected on the consolidated statements of income of the
Company and its Subsidiaries for such period.
"Consolidated Funded Debt" shall mean, for any applicable period of
computation, all Funded Debt of the Company and its Subsidiaries on a
consolidated basis, determined in accordance with GAAP.
"Consolidated Interest Coverage Ratio" shall mean, as of the last day of
each fiscal quarter of the Company, the ratio of Consolidated EBITDA (computed
for the four fiscal quarters then ending) to Consolidated Interest Expense
(computed for the four fiscal quarters then ending).
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"Consolidated Interest Expense" shall mean, for any applicable period of
computation, interest expense on Consolidated Funded Debt of the Company and
its Subsidiaries for such period, as determined in accordance with GAAP.
"Consolidated Leverage Ratio" shall mean, as of the last day of each
fiscal quarter of the Company, the ratio of Consolidated Funded Debt (computed
as of the last day of such fiscal quarter) to Consolidated EBITDA (computed for
the four fiscal quarterly periods then ending).
"Consolidated Net Income" shall mean, the consolidated net income (or net
deficit) of the Company and its Subsidiaries for any period, after deduction of
all expenses, taxes and other proper charges, all as determined in accordance
with GAAP.
"Consolidated Senior Debt" shall mean, Funded Debt of the Company and its
Subsidiaries on a consolidated basis which is not Subordinated Debt.
"Consolidated Senior Leverage Ratio" shall mean, as of the last day of
each fiscal quarter of the Company, the ratio of Consolidated Senior Debt
(computed as of the last day of such fiscal quarter) to Consolidated EBITDA
(computed for the four fiscal quarterly periods then ending).
"Consolidated Tangible Net Worth" shall mean, at any date of
determination, Consolidated Total Assets (but excluding therefrom for the
purposes hereof, capitalized interest, debt discount and expense, goodwill,
patents, trademarks, copyrights, franchises, licenses, amounts due from
officers and directors (other than loans, advances or other obligations not in
excess of $500,000 in the aggregate outstanding at any one time), shareholders
and Affiliates (other than amounts due in connection with transactions
expressly permitted under the terms of Section 9.6) and any other items which
would be treated as intangibles under GAAP) less the Consolidated Total
Liabilities of the Company and its Subsidiaries, as determined in accordance
with GAAP.
"Consolidated Total Assets" shall mean, at any date of determination, the
total assets of the Company and its Subsidiaries at such date as set forth on a
Consolidated balance sheet of the Company and its Subsidiaries prepared in
accordance with GAAP.
"Consolidated Total Liabilities" shall mean, at any date of determination,
the total liabilities of the Company and its Subsidiaries at such date as set
forth on a Consolidated balance sheet of the Company and its Subsidiaries
prepared in accordance with GAAP.
"Contingent Obligation" shall mean, at any date of determination, any
obligation, contingent or otherwise, of a Person pursuant to which such Person
has directly or indirectly guaranteed any Indebtedness or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of any such Person (a)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep well, to purchase assets, goods, securities
or services, to take-or-pay, or to
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maintain financial statement condition or otherwise) or (b) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided, that the term
Contingent Obligation shall not include endorsements for collection or deposit
in the ordinary course of business.
"Credit Agreement" shall mean this credit agreement, dated as of the date
hereof, as the same may be modified, amended, extended, restated or
supplemented from time to time.
"Credit Documents" shall mean, collectively, this Credit Agreement, the
Revolving Notes, the Letters of Credit, and all other documents, agreements,
instruments, opinions and certificates executed and delivered in connection
herewith or therewith, as the same may be modified, amended, extended, restated
or supplemented from time to time.
"Default" shall mean an event, condition or default which, with the giving
of notice, the passage of time or both would be an Event of Default.
"Defaulting Lender" shall have the meaning given to such term in Section
2.1(d)(ii).
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health, natural resources or the environment,
including, but not limited to, requirements pertaining to the manufacture,
processing, distribution, use, treatment, storage, disposal, transportation,
handling, reporting, licensing, permitting, investigation, removal or
remediation of Hazardous Materials or liability resulting from the release or
threatened release of Hazardous Materials into the environment. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), the
Hazardous Material Transportation Act (33 U.S.C. Section 1251 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 201 et seq.), the Clean
Air Act (42 U.S.C. Section 7401 et. seq.), the Toxic substances control Act
(15 U.S.C. Section 2601 et seq.), the Safe Drinking Water Act (42 U.S.C.
Section 300f et seq.), the Federal Insecticide, Fungicide and Rodentizide Act
(7 U.S.C. Section 136 et seq.), the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. Section 11001 et seq., as amended), the
Environmental Protection Agency's regulations relating to underground storage
tanks (40 C.F.R. Parts 280 and 281), and the Occupational Safety and Health Act
(29 U.S.C. Section 651 et seq.), analogous state statutes and the rules and
regulations promulgated under the foregoing, as such statutes may be amended or
supplemented from time to time as well as the common law as it pertains to
Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
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<PAGE> 14
"ERISA Affiliate" shall mean any Person who together with the Borrower is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Eurodollar Reserve Percentage" shall mean for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation
D of the Board of Governors of the Federal Reserve System (or any successor),
as such regulation may be amended from time to time or any successor
regulation, as the maximum reserve requirement (including, without limitation,
any basic, supplemental, emergency, special, or marginal reserves) applicable
with respect to Eurocurrency liabilities as that term is defined in Regulation
D (or against any other category of liabilities that includes deposits
by reference to which the interest rate of LIBOR Loans is determined), whether
or not any Lender has any Eurocurrency liabilities subject to such reserve
requirement at that time. LIBOR Loans shall be deemed to constitute
Eurocurrency liabilities and as such shall be deemed subject to reserve
requirements without benefits of credits for proration, exceptions or offsets
that may be available from time to time to a Lender. The LIBOR Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event(s) of Default" shall have the meaning provided for in Article X.
"Excluded Taxes" shall have the meaning given to such term in Section 2.7
(a).
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
rate per annum equal, for each day during such period, to the weighted average
of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the quotations for
such day on such transactions received by the Agent from three Federal Funds
brokers of recognized standing selected by it.
"Fees" shall mean, collectively, the Upfront Fees, the Unused Fee, the
Letter of Credit Fee and the Issuing Bank Fees payable hereunder.
"First Union" shall mean First Union National Bank, having its principal
office in Charlotte, North Carolina, and its successors and permitted assigns.
"Fiscal Year" means the fiscal year of the Company and its Subsidiaries
ending on December 31.
"Foreign Lender" shall have the meaning given to such term in Section
2.7(a).
"Funded Debt" shall mean, with respect to any Person, without duplication,
(a) all Indebtedness of such Person other than Indebtedness of the types
referred to in clause (e), (f), (g), (i), (k), (l) and (m) of the definition of
"Indebtedness" set forth in this Section 1.1, (b) all Indebtedness of another
Person of the type referred to in clause (a) above secured by (or for which
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<PAGE> 15
the holder of such Funded Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (c) all Contingent Obligations
(excluding, for purposes hereof, the Contingent Obligations identified on
Schedule 1.1B hereto) of such Person with respect to Indebtedness of the type
referred to in clause (a) above of another Person and (d) Indebtedness of the
type referred to in clause (a) above of any partnership or unincorporated joint
venture in which such Person is legally obligated or has a reasonable
expectation of being liable with respect thereto (excluding, for purposes
hereof, the Indebtedness of any such partnership or unincorporated joint venture
which is not majority-owned by such Person as of the Closing Date until such
time, if ever, that such entity becomes majority-owned by such Person).
"Funding Bank" shall have the meaning given to such term in Section 4.7.
"GAAP" shall mean generally accepted accounting principles in the United
States applied on a consistent basis and subject to the terms of Section 1.2.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Hazardous Materials" means any substances or materials (a) which are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Environmental Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health, natural resources or the environment and are or become regulated by any
Governmental Authority, (c) the presence of which require investigation,
removal or remediation under any Environmental Law or common law, (d) the
discharge or emission or release of which requires a permit or license
under any Environmental Law or other Governmental Approval, (e) which constitute
a nuisance, a trespass or pose a health or safety hazard to persons, plants,
animals or neighboring properties either currently or in the past or in the
future, (f) which contain, without limitation, asbestos, polychlorinated
biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum
derived substances or waste, crude oil nuclear fuel, natural gas or synthetic
gas, or (g) which are materials described in clauses (a) through (f) above and
are contained in or intended for containment in underground or aboveground
storage tanks, whether empty, filled or partially filled with any such
substances.
"Highest Lawful Rate" shall mean, at any given time during which any
Obligations shall be outstanding hereunder, the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the indebtedness under this Credit
Agreement, under the laws of the State of North Carolina (or the law of any
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<PAGE> 16
other jurisdiction whose laws may be mandatorily applicable notwithstanding
other provisions of this Credit Agreement and the other Credit Documents), or
under applicable federal laws which may presently or hereafter be in effect and
which allow a higher maximum nonusurious interest rate than under North
Carolina or such other jurisdiction's law, in any case after taking into
account, to the extent permitted by applicable law, any and all relevant
payments or charges under this Credit Agreement and any other Credit Documents
executed in connection herewith, and any available exemptions, exceptions and
exclusions.
"Holdings" shall mean PSH Corp., a Delaware corporation.
"Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers entered
into in the ordinary course of business), (d) all obligations of such Person
issued or assumed as the deferred purchase price of property or services
purchased by such Person (other than trade debt incurred in the ordinary course
of business and due within six months of the incurrence thereof) which would
appear as liabilities on a balance sheet of such Person, (e) all obligations of
such Person under take-or-pay or similar arrangements or under commodities
agreements, (f) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production from,
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all Contingent Obligations of any such
Person (excluding, for purposes hereof, the Contingent Obligations identified
on Schedule 1.1B hereto), (h) the principal portion of all obligations of such
Person under Capital Leases, (i) all obligations of such Person under Interest
Rate Protection Agreements, (j) the maximum amount of all standby letters of
credit issued or bankers' acceptances facilities created for the account of
such Person and, without duplication, all drafts drawn thereunder (to the
extent unreimbursed), (k) all preferred Capital Stock issued by such Person and
required by the terms thereof to be redeemed, or for which mandatory sinking
fund payments are due, prior to the Maturity Date, (l) with respect to the
Borrower or any of its Subsidiaries, the principal portion of all obligations
of such Person under off-balance sheet financing arrangements and (m) the
Indebtedness of any partnership or unincorporated joint venture in which such
Person is legally obligated or has a reasonable expectation of being liable
with respect thereto (excluding, for purposes hereof, the Indebtedness of any
such partnership or unincorporated joint venture which is not majority-owned by
such Person as of the Closing Date until such time, if ever, that such entity
becomes majority-owned by such person).
"Interest Period" shall mean, as to LIBOR Loans, a period of (a) not less
than seven (7) days and no more than thirty (30) days thereafter and (b) one
(1) month, two (2) months, three (3) months or six (6) months, as selected by
the Borrowers, commencing on the date of the borrowing (including continuations
and conversions thereof); provided, however, (i) if any Interest Period would
end on a day which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business
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Day falls in the next succeeding calendar month, then on the next preceding
Business Day), (ii)no Interest Period shall extend beyond the Maturity Date,
(iii) any Interest Period with respect to a LIBOR Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the relevant calendar month at the end of
such Interest Period.
"Interest Rate Protection Agreement" shall mean any interest rate
protection agreement, foreign currency exchange agreement, commodity purchase
or option agreement or other interest or exchange rate or commodity price
hedging agreements between any Borrower and any Lender, or any affiliate of a
Lender.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute thereto and all rules and
regulations promulgated thereunder.
"Investment" in any Person shall mean (i) the acquisition (whether for
cash, property, services, assumption of Indebtedness, securities or otherwise,
but exclusive of the acquisition of inventory, supplies, equipment and other
assets used or consumed in the ordinary course of business of the applicable
Borrower and Consolidated Capital Expenditures not otherwise prohibited
hereunder) of assets, shares of capital stock, bonds, notes, debentures,
partnership, joint ventures or other ownership interests or other securities of
such Person, (ii) any deposit (other than deposits made in connection with the
purchase of equipment or other assets in the ordinary course of business) with,
or advance, loan or other extension of credit (other than sales of inventory on
credit in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms) to, such Person or (iii) any other
capital contribution to or investment in such Person, including, without
limitation, any obligation incurred for the benefit of such Person. In
determining the aggregate amount of Investments outstanding at any particular
time, (i) the amount of any Investment represented by a guaranty shall be taken
at not less than the principal amount of the obligations guaranteed and still
outstanding; (ii) there shall be deducted in respect of each such Investment
any amount received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution); (iii)
there shall not be deducted in respect of any Investment any amounts received
as earnings on such Investment, whether as dividends, interest or otherwise;
and (iv) there shall not be deducted from the aggregate amount of Investments
any decrease in the market value thereof.
"Issuing Bank" shall mean First Union.
"Joinder Agreement" shall mean a Joinder Agreement substantially in the
form of Exhibit H.
"Issuing Bank Fees" shall have the meaning given to such term in Section
4.5(b).
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"Lender" shall have the meaning given to such term in the preamble of this
Credit Agreement.
"Letter of Credit Documents" shall mean, with respect to any Letter of
Credit, such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (i) the
rights and obligations of the parties concerned or at risk or (ii) any
collateral security for such obligations.
"Letter of Credit Committed Amount" shall have the meaning given to such
term in Section 3.1.
"Letter of Credit Fee" shall have the meaning given to such term in
Section 4.5(a).
"Letter of Credit Obligations" shall mean, at any time, the sum of (i) the
aggregate undrawn amount of all Letters of Credit outstanding at such time,
plus (ii) the aggregate amount of all drawings under Letters of Credit for
which the Issuing Bank has not at such time been reimbursed, plus (iii) without
duplication, the aggregate amount of all payments made by each Lender to the
Issuing Bank with respect to such Lender's participation in Letters of Credit
as provided in Section 3.3 for which the Borrowers have not at such time
reimbursed the Lenders, whether by way of a Revolving Loan or otherwise.
"Letters of Credit" shall mean all stand-by letters of credit issued by
the Issuing Bank for the account of the Borrowers, and all amendments,
renewals, extensions or replacements thereof.
"LIBOR Loan" shall mean a Revolving Loan bearing interest based at a rate
determined by reference to the LIBOR Rate.
"LIBOR Rate" shall mean, for the Interest Period for each LIBOR Loan
comprising part of the same borrowing (including conversions, extensions and
renewals), a per annum interest rate determined pursuant to the following
formula:
LIBOR Rate = London Interbank Offered Rate
----------------------------------
1 - Eurodollar Reserve Percentage
"Lien(s)" shall mean any lien, claim, charge, pledge, security interest,
deed of trust, mortgage, or other encumbrance.
"Loans" shall mean the Revolving Loans, individually or collectively, as
appropriate.
"London Interbank Offered Rate" shall mean, with respect to any LIBOR Loan
for the Interest Period applicable thereto, the rate of interest per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in Dollars at approximately 11:00 A.M. (London
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time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Telerate Page 3750, the applicable rate shall be the
arithmetic mean of all such rates. If, for any reason, such rate is not
available, the term "London Interbank Offered Rate" shall mean, with respect to
any LIBOR Loan for the Interest Period applicable thereto, the rate of interest
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
on Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates.
Notwithstanding the foregoing, for any Interest Period of not less than seven
(7) days but no more than thirty (30) days selected by the Borrowers, the London
Interbank Offered Rate shall be determined on the basis of an Interest Period
equal to thirty (30) days.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of the Borrowers, taken as a whole, (b) the
Borrowers' ability to perform their respective obligations under the Credit
Documents, or (c) the rights and remedies of the Lenders hereunder, in each
case as determined by the Agent in its reasonable discretion.
"Maturity Date" shall mean the fifth anniversary of the Closing Date.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA and (i) which is, or within the immediately
preceding six (6) years was, contributed to by any Borrower, any Subsidiary or
any ERISA Affiliate or (ii) with respect to which any Borrower or any
Subsidiary may incur any liability.
"Notes" shall mean the Revolving Notes.
"Notice of Account Designation" shall have the meaning assigned thereto in
Section 2.5.
"Notice of Borrowing" shall have the meaning given to such term in Section
2.1(d)(i).
"Notice of Extension/Conversion" shall have the meaning given to such term
in Section 2.10.
"Obligations" shall mean the Loans, any other loans and advances or
extensions of credit made or to be made by any Lender to any Borrower, or to
others for any Borrower's account in each case pursuant to the terms and
provisions of this Credit Agreement, together with interest thereon (including
interest which would be payable as post-petition interest in connection with
any bankruptcy or similar proceeding) and, including, without limitation, any
reimbursement obligation or indemnity of the Borrowers on account of Letters of
Credit and all other Letter of Credit Obligations, and all indebtedness, fees,
liabilities and obligations which may at any time be owing by any Borrower to
any Lender in each case pursuant to this Credit Agreement or any other Credit
Document, whether now in existence or incurred by a Borrower from time to time
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hereafter, whether unsecured or secured by pledge, Lien upon or security
interest in any of a Borrower's assets or property or the assets or property of
any other Person, whether such indebtedness is absolute or contingent, joint or
several, matured or unmatured, direct or indirect and whether such Borrower is
liable to such Lender for such indebtedness as principal, surety, endorser,
guarantor or otherwise. Obligations shall also include any other indebtedness
owing to any Lender by any Borrower under this Credit Agreement and the other
Credit Documents, any Borrower's liability to any Lender pursuant to this
Credit Agreement as maker or endorser of any promissory note or other
instrument for the payment of money, any Borrower's liability to any Lender
pursuant to this Credit Agreement or any other Credit Document under any
instrument of guaranty or indemnity, or arising under any guaranty,
endorsement or undertaking which any Lender may make or issue to others for any
such Borrower's account pursuant to this Credit Agreement, including any
accommodation extended with respect to applications for Letters of Credit, and
all liabilities and obligations owing from any Borrower to any Lender, or any
affiliate of a Lender, arising under Interest Rate Protection Agreements entered
into for the purpose of hedging interest rate risk under this Credit Agreement
and the other Credit Documents.
"Other Taxes" shall have the meaning given to such term in Section 2.7(c).
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Permitted Liens" shall mean:
(a) Liens for taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of
ERISA or Environmental Laws) not yet due or as to which the period of
grace (not to exceed thirty (30) days), if any, related thereto has not
expired or which are being contested in good faith and by appropriate
proceedings if adequate reserves are maintained to the extent required by
GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals
incurred in the ordinary course of business, (i) which are not overdue
for a period of more than thirty (30) days or (ii) which are being
contested in good faith and by appropriate proceedings if adequate
reserves are maintained to the extent required by GAAP;
(c) Liens consisting of deposits or pledges made in the ordinary
course of business (i) in connection with or to secure a payment of,
obligations under workers' compensation, unemployment insurance or
similar legislation or (ii) to secure the performance of letters of
credit, bids, tenders, sales contracts, leases, statutory obligations,
surety, appeal and performance bonds and other similar obligations, in
each case not incurred in connection with the borrowing of money or the
payment of the deferred purchase price of property;
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(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use
of real property, which in the aggregate are not substantial in amount
and which do not, in any case, materially detract from the value of such
property or impair the use thereof in the ordinary conduct of business;
(e) Liens in favor of the Agent on behalf of the Lenders, if any;
(f) Liens securing purchase money indebtedness permitted under
Section 9.1(h) in an amount not to exceed $1,000,000 at any time
outstanding; provided, that each Lien attaches only to the asset being
purchased or leased and does not exceed 100% of the purchase price or
fair market value of such asset at the time of acquisition;
(g) attachment, judgment and similar Liens arising in connection
with court proceedings other than any such Lien which would create an
Event of Default under Sections 10.1(k); and
(h) Liens existing as of the Closing Date and set forth on Schedule
6.16.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated organization,
association, corporation, institution, entity, party or government (including
any division, agency or department thereof), and, as applicable, the
successors, heirs and assigns of each.
"Plan" shall mean any employee benefit plan, program or arrangement,
whether oral or written, maintained or contributed to by any Borrower or any
Subsidiary, or with respect to which any Borrower or any such Subsidiary may
incur liability.
"Prime Rate" shall mean the rate which First Union announces from time to
time as its prime lending rate, as in effect from time to time. The Prime Rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. First Union (and its affiliates) may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
"Reportable Event" shall mean any of the events described in Section 4043
of ERISA and the regulations thereunder.
"Required Lenders" shall mean, at any time, Lenders which are then in
compliance with their obligations hereunder (as determined by the Agent) and
holding in the aggregate at least 51% of (i) the Revolving Credit Commitments
(and participation interests therein) or (ii) if the Commitments have been
terminated, the outstanding Revolving Loans and participation interests
(including the participation interests of the Issuing Bank in any Letters of
Credit).
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"Responsible Financial Officer" shall mean, with respect to the Company or
any other Borrower, its President or CEO or its Senior Vice President
responsible for financial and accounting matters.
"Responsible Officer" shall mean, with respect to the Company or any other
Borrower, any officer having the title of Senior Vice President or higher.
"Restricted Payment" shall mean (i) any cash dividend or other cash
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any Borrower or any Subsidiary, as the case may be, now or
hereafter outstanding, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of Capital Stock of any Borrower or any Subsidiary now or
hereafter outstanding by such Borrower or any Subsidiary, as the case may be,
except for any redemption, retirement, sinking funds or similar payment payable
solely in such shares of that class of stock or in any class of stock junior to
that class, (iii) any cash payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire any shares of any class of Capital Stock of any
Borrower or any Subsidiary now or hereafter outstanding, or (iv) any payment to
any Affiliate of any Borrower except to the extent expressly permitted in this
Credit Agreement.
"Revolving Credit Commitment" shall mean, with respect to each Lender, the
commitment of such Lender in an aggregate principal amount at any time
outstanding of up to such Lender's Revolving Commitment Percentage of the
Revolving Committed Amount, (i) to make Revolving Loans in accordance with the
provisions of Section 2.1(a), and (ii) to purchase Participation Interests in
Letters of Credit in accordance with the provisions of Section 3.3.
"Revolving Credit Commitment Percentage" shall mean, for any Lender, the
percentage identified as its Revolving Credit Commitment Percentage on Schedule
1.1A, as such percentage may be modified in connection with any assignment made
in accordance with the provisions of Section 13.6.
"Revolving Credit Committed Amount" shall mean the aggregate revolving
credit line extended by the Lenders to the Borrowers for Revolving Loans and
Letters of Credit pursuant to and in accordance with the terms of this Credit
Agreement, in an amount up to $100,000,000, as such revolving credit line may
be reduced from time to time in accordance with Sections 2.3(c) and 2.3(d).
"Revolving Loans" shall have the meaning given to such term in Section
2.1(b) and shall include Base Rate Loans and LIBOR Loans.
"Revolving Notes" shall have the meaning given to such term in Section
2.1(c).
"Subordinated Debt" shall mean unsecured Indebtedness incurred by the
Company, which, in each case, is expressly subordinated and made junior to the
payment and performance in full of the Obligations and contains terms and
conditions satisfactory to the Required Lenders.
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"Subsidiary" shall mean, as to any Person, (a) any corporation more than
50% of whose Capital Stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time, any class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time owned by such Person directly or indirectly
through Subsidiaries, (b) any partnership, association, joint venture or other
entity in which such Person directly or indirectly through Subsidiaries has
more than a 50% interest in the total capital, total income and/or total
ownership interests of such entity at any time and (c) any partnership in which
such Person is a general partner.
"Subsidiary Borrower" and "Subsidiary Borrowers" shall have the meaning
given such terms in the preamble of this Credit Agreement.
"Taxes" shall mean any federal, state, local or foreign income, sales,
use, transfer, payroll, personal, property, occupancy, franchise or other tax,
levy, impost, fee, imposition, assessment or similar charge, together with any
interest or penalties thereon.
"Unused Fee" shall mean the fee required to be paid to the Agent for the
benefit of the Lenders at the end of each calendar quarter as partial
compensation for extending the Revolving Credit Commitment Amount to the
Borrowers, and shall be determined by multiplying (a) the positive difference,
if any, between (i) the Revolving Credit Commitment Amount in effect at such
time and (ii) the average daily Revolving Loans of the Borrowers and the Letter
of Credit Obligations outstanding during such calendar quarter by (b) the
Applicable Percentage then in effect for the number of days in said calendar
quarter.
"Unused Fee Calculation Period" shall have the meaning given to such term
in Section 4.3.
"Unused Revolving Credit Committed Amount" shall mean, for any period, the
amount by which (a) the then applicable Revolving Credit Committed Amount
exceeds (b) the daily average sum for such period of (i) the outstanding
aggregate principal amount of all Revolving Loans plus (ii) the outstanding
aggregate principal amount of all Letter of Credit Obligations.
"Voting Stock" shall mean, with respect to any Person, Capital Stock
issued by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
"Wholly-Owned" means, with respect to a Subsidiary, a Subsidiary in which
all of the shares of capital stock or other ownership interests are owned or
controlled, directly or indirectly, by the Borrower and/or one or more of its
Wholly-Owned Subsidiaries.
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1.2 ACCOUNTING TERMS AND DETERMINATIONS
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section
7.1, consistent with the financial statements as at December 31, 1996);
provided, however, if (a) the Company shall object to determining such
compliance on such basis at the time of delivery of such financial statements
due to any change in GAAP or the rules promulgated with respect thereto or (b)
the Agent or the Required Lenders shall so object in writing within 60 days
after delivery of such financial statements, then such calculations shall be
made on a basis consistent with the most recent financial statements delivered
by the Company to the Lenders as to which no such objection shall have been
made.
1.3 OTHER DEFINITIONAL TERMS.
Terms not otherwise defined herein which are defined in the Uniform
Commercial Code as in effect in the State of North Carolina (the "Code") shall
have the meanings given them in the Code. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Credit Agreement
shall refer to the Credit Agreement as a whole and not to any particular
provision of this Credit Agreement, unless otherwise specifically provided.
References in this Credit Agreement to "Articles", "Sections", "Schedules" or
"Exhibits" shall be to Articles, Sections, Schedules or Exhibits of or to this
Credit Agreement unless otherwise specifically provided. Any of the terms
defined in Section 1.1 may, unless the context otherwise requires, be used in
the singular or plural depending on the reference. "Include", "includes" and
"including" shall be deemed to be followed by "without limitation" whether or
not they are in fact followed by such words or words of like import.
"Writing", "written" and comparable terms refer to printing, typing and other
means of reproducing words in a visible form. References to any agreement or
contract are to such agreement or contract as amended, modified or supplemented
from time to time in accordance with the terms hereof and thereof. References
to any Person include the successors and permitted assigns of such Person.
References "from" or "through" any date mean, unless otherwise specified, "from
and including" or "through and including", respectively. References to any
times herein shall refer to Eastern Standard time or, if then in effect,
Eastern Daylight time.
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ARTICLE II
LOANS
2.1 REVOLVING LOANS.
(a) Commitment. Subject to the terms and conditions hereof and in
reliance upon the representations and warranties set forth herein, each of the
Lenders severally agrees to lend to the Borrowers at any time or from time to
time on or after the Closing Date and before the Maturity Date, such Lender's
Revolving Credit Commitment Percentage of the Revolving Loans as may be
requested or deemed requested by the Borrowers.
(b) Loans.
(i) The Lenders agree, subject to the terms and conditions of this
Credit Agreement, from time to time, to make loans and advances to the
Borrowers hereunder on a revolving basis. Such loans and advances to the
Borrowers (each, a "Revolving Loan"; and collectively, the "Revolving
Loans") shall not in the aggregate exceed the Revolving Credit Committed
Amount then in effect minus Letter of Credit Obligations outstanding.
(ii) No Lender shall be obligated at any time to make available to
the Borrowers its Revolving Credit Commitment Percentage of any requested
Revolving Loan if such amount plus its Revolving Credit Commitment
Percentage of all Revolving Loans and its Revolving Credit Commitment
Percentage of all Letter of Credit Obligations then outstanding would
exceed such Lender's Revolving Credit Commitment at such time. The
aggregate balance of Revolving Loans and the aggregate amount of all
Letter of Credit Obligations outstanding shall not at any time exceed the
Revolving Credit Committed Amount.
(c) Revolving Notes. The obligations to repay the Revolving Loans and to
pay interest thereon shall be evidenced by a separate promissory note of the
Borrowers for each Lender in substantially the form of Exhibit C attached
hereto (the "Revolving Notes"), with appropriate insertions, one Revolving Note
being payable to the order of each Lender in a principal amount equal to such
Lender's Revolving Credit Commitment and representing the obligations of the
Borrowers to pay such Lender the amount of such Lender's Revolving Credit
Commitment or, if less, the aggregate unpaid principal amount of all Revolving
Loans made by such Lender hereunder, plus interest accrued thereon, as set
forth herein. The Borrowers irrevocably authorize each Lender to make or cause
to be made appropriate notations on its Revolving Note, or on a record
pertaining thereto, reflecting Revolving Loans and repayments thereof. The
outstanding amount of the Revolving Loans set forth on such Lender's Revolving
Note or record shall be prima facie evidence of the principal amount thereof
owing and unpaid to such Lender, but the failure to make such notation or
record, or any error in such notation or record shall not limit or otherwise
affect the obligations of the Borrowers hereunder or under any Revolving Note
to make payments of principal of or interest on any Revolving Note when due.
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(d) Borrowings under Revolving Notes.
(i) Each request for borrowings hereunder shall be made by notice in
the form attached hereto as Exhibit D from the Company on behalf of the
Borrowers to the Agent (the "Notice of Borrowing"), given not later than
11:00 a.m. (A) on the Business Day on which the proposed borrowing is
requested to be made for Revolving Loans that will be Base Rate Loans and
(B) three Business Days prior to the date of the requested borrowing of
Revolving Loans that will be LIBOR Loans; provided, however, that no
LIBOR Loans shall be available to the Borrowers until the third Business
Day after the Closing Date. Each Notice of Borrowing shall be given by
either telephone, telecopy, telex or cable, and, if requested by the
Agent, confirmed in writing if by telephone, setting forth (1) the
requested date of such borrowing, (2) the aggregate amount of such
requested borrowing, (3) whether such Revolving Loans will be Base Rate
Loans or the LIBOR Loans, and if appropriate, the applicable Interest
Period and (4) certification by the Company on behalf of the Borrowers
that they have complied in all respects with Section 5, all of which
shall be specified in such manner as is necessary to comply with all
limitations on Revolving Loans outstanding hereunder. Each Notice of
Borrowing shall be irrevocable by and binding on the Borrowers. Each
Base Rate Loan shall be in a minimum principal amount of $500,000 and
integral multiples of $100,000 in excess thereof (or the remaining amount
of the Revolving Credit Committed Amount, if less). Each LIBOR Loan
shall be in a minimum principal amount of $3,000,000 and integral
multiples of $1,000,000 in excess thereof; provided that no more than
five (5) LIBOR Loans shall be outstanding hereunder at any one time.
Revolving Loans may be repaid and reborrowed in accordance with the
provisions hereof.
The Agent shall give to each Lender prompt notice (but in no event
later than 2:00 p.m. on the date of the Agent's receipt of notice from
the Borrowers) of each Notice of Borrowing by telecopy, telex or cable
(other than any Notice of Borrowing which will be funded by the Agent in
accordance with subsection (d)(ii) below). No later than 3:00 p.m. on
the date on which a borrowing is requested to be made pursuant to the
applicable Notice of Borrowing, each Lender will make available to the
Agent at the address of the Agent set forth on the signature pages
hereto, in immediately available funds, its Revolving Credit Commitment
Percentage of such borrowing requested to be made. Unless the Agent
shall have been notified by any Lender prior to the date of borrowing
that such Lender does not intend to make available to the Agent its
portion of the borrowing to be made on such date, the Agent may assume
that such Lender will make such amount available to the Agent on such
date of borrowing and the Agent may, in reliance upon such assumption,
make available the amount of the borrowing to be provided by such Lender.
Upon fulfillment of the conditions set forth in Section 5 for such
borrowing, the Agent will make such funds available to the Borrowers at
the account specified by the Borrowers in such Notice of Borrowing.
(ii) If the amounts described in subsection (d)(i) of this Section
2.1 are not in fact made available to the Agent by a Lender (such Lender
being hereinafter referred to as a
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"Defaulting Lender") and the Agent has made such amount available to the
Borrowers, the Agent shall be entitled to recover such corresponding
amount on demand from such Defaulting Lender. If such Defaulting Lender
does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrowers and the Borrowers
shall immediately (but in no event later than five Business Days after
such demand) pay such corresponding amount to the Agent. The Agent shall
also be entitled to recover from such Defaulting Lender and the
Borrowers, (A) interest on such corresponding amount in respect of each
day from the date such corresponding amount was made available by the
Agent to the Borrowers to the date such corresponding amount is recovered
by the Agent, at a rate per annum equal to either (1) if paid by such
Defaulting Lender, the overnight Federal Funds Rate or (2) if paid by the
Borrowers, the then applicable rate of interest, calculated in accordance
with Section 4.1, plus (B) in each case, an amount equal to any costs
(including legal expenses) and losses incurred as a result of the failure
of such Defaulting Lender to provide such amount as provided in this
Credit Agreement. Nothing herein shall be deemed to relieve any Lender
from its obligation to fulfill its commitments hereunder or to prejudice
any rights which the Borrowers may have against any Lender as a result of
any default by such Lender hereunder, including, without limitation, the
right of the Borrowers to seek reimbursement from any Defaulting Lender
for any amounts paid by the Borrowers under clause (B) above on account
of such Defaulting Lender's default.
(iii) The failure of any Lender to make the Revolving Loan to be
made by it as part of any borrowing shall not relieve any other Lender of
its obligation, if any, hereunder to make its Revolving Loan on the date
of such borrowing, but no Lender shall be responsible for the failure of
any other Lender to make the Revolving Loan to be made by such other
Lender on the date of any borrowing.
(iv) Each Lender shall be entitled to earn interest at the then
applicable rate of interest, calculated in accordance with Article IV, on
outstanding Revolving Loans which it has funded to the Agent from the
date such Lender funded such Revolving Loan to, but excluding, the date
on which such Lender is repaid with respect to such Revolving Loan.
(v) Notwithstanding the obligation of the Borrowers to send written
confirmation of a Notice of Borrowing made by telephone if and when
requested by the Agent, in the event that the Agent agrees to accept a
Notice of Borrowing made by telephone, such telephonic Notice of
Borrowing shall be binding on the Borrowers whether or not written
confirmation is sent by the Borrowers or requested by the Agent. The
Agent may act prior to the receipt of any requested written confirmation,
without any liability whatsoever, based upon telephonic notice believed
by the Agent in good faith to be from a Borrower or its agents. The
Agent's records of the terms of any telephonic Notices of Borrowing shall
be conclusive on the Borrowers in the absence of gross negligence or
willful misconduct on the part of the Agent in connection therewith.
2.2 [INTENTIONALLY OMITTED].
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2.3 OPTIONAL AND MANDATORY PREPAYMENTS; REDUCTION OF COMMITMENTS.
(a) The aggregate balance of Revolving Loans and Letter of Credit
Obligations outstanding at any time in excess of the Revolving Credit Committed
Amount shall be immediately due and payable without the necessity of any notice
or demand.
(b) The Borrowers shall have the right to prepay the Revolving Loans in
whole or in part from time to time on any Business Day without premium or
penalty; provided, however, that (i) Revolving Loans that are LIBOR Loans may
only be prepaid on three Business Days' prior written notice to the Agent
received prior to 11:00 A.M. specifying the applicable Revolving Loans to be
prepaid; (ii) any prepayment of Revolving Loans that are LIBOR Loans will be
subject to Section 4.10; (iii) each such partial prepayment of Revolving Loans
shall be (A) in the case of Revolving Loans that are LIBOR Loans, in a minimum
principal amount of $3,000,000 and in integral multiples of $1,000,000 in
excess thereof and (B) in the case of Revolving Loans that are Base Rate Loans,
prepayments may be made on the same Business Day if notice shall have been
received prior to 11:00 A.M. and shall be in a minimum principal amount of
$500,000 and integral multiples of $100,000 in excess thereof. Subject to the
foregoing terms, amounts prepaid hereunder shall be applied as the Borrowers
may elect; provided that if the Borrowers shall fail to specify application of
a voluntary prepayment then such prepayment shall be applied first to Base Rate
Loans and then to LIBOR Loans in direct order of Interest Period maturities.
(c) On the Maturity Date, the Revolving Credit Commitment of each Lender
shall automatically reduce to zero and may not be reinstated and all of the
Revolving Loans and unreimbursed Letter of Credit Obligations shall be due and
payable.
(d) The Company may permanently reduce the Revolving Credit Committed
Amount, in whole or in part, at any time and from time to time upon five (5)
Business Days' prior written notice to the Agent; provided that each partial
reduction shall be in an aggregate amount at least equal to $5,000,000 and in
integral multiples of $1,000,000 above such amount. The Agent shall promptly
notify each affected Lender of receipt by the Agent of any notice from the
Borrower pursuant to this Section 2.3(d).
(e) General. The Borrowers shall pay to the Agent for the account of the
Lenders in accordance with the terms of Section 4.3, on the date of each
termination or reduction of the Revolving Credit Committed Amount, the Unused
Fee accrued through the date of such termination or reduction on the amount of
the Revolving Credit Committed Amount so terminated or reduced.
2.4 PAYMENTS AND COMPUTATIONS.
(a) The Borrowers shall make each payment hereunder and under the
Revolving Notes not later than 2:00 p.m. on the day when due. Payments made by
the Borrowers shall be in U.S. Dollars to the Agent at its address referred to
in Section 13.5 in immediately available funds. Payments made with respect to
the Revolving Loans shall be applied to repay Revolving Loans consisting of
Base Rate Loans first and then Revolving Loans consisting of LIBOR Loans.
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As soon as practicable after the Agent receives payment from the Borrowers, the
Agent will cause to be distributed like funds relating to the payment of
principal, interest, or Fees (other than amounts payable to the Agent to
reimburse the Agent and the Issuing Bank for fees and expenses payable solely
to them pursuant to Article IV) or expenses payable to the Agent and the
Lenders in accordance with Section 13.8, ratably to the Lenders, and like funds
relating to the payment of any other amounts payable to such Lender, in each
case to be distributed and applied in accordance with the terms of Section 2.9.
(b) Except as otherwise provided herein with respect to LIBOR Loans, any
payments falling due under this Credit Agreement on a day other than a Business
Day shall be due and payable on the next succeeding Business Day and shall
accrue interest at the applicable interest rate provided for in this Credit
Agreement to but excluding such Business Day. Except as expressly provided
otherwise herein, all computations of interest and fees shall be made on the
basis of actual number of days elapsed over a year of 360 days, except with
respect to computation of interest on Base Rate Loans which (unless the Base
Rate is determined by reference to the Federal Funds Rate) shall be calculated
based on a year of 365 or 366 days, as appropriate.
2.5 MAINTENANCE OF ACCOUNT.
The Borrowers hereby irrevocably authorize the Agent to disburse proceeds
of each borrowing requested hereunder to the deposit account of the Borrowers'
identified on the most recent Notice of Account Designation substantially in
the form of Exhibit F hereto (a "Notice of Account Designation") delivered by
the Company to the Agent or as may be agreed upon by the Company and the Agent
from time to time.
2.6 STATEMENT OF ACCOUNT
After the end of each calendar quarter the Agent shall send the Borrowers
a statement showing the accounting for the charges, loans, advances and other
transactions occurring between the Lenders and the Borrowers during that month.
2.7 TAXES.
(a) Any and all payments by the Borrowers hereunder or under the Revolving
Notes to or for the benefit of any Lender shall be made, in accordance with
Section 2.4, free and clear of and without deduction for any and all present or
future Taxes, deductions, charges or withholdings and all liabilities with
respect thereto, excluding, in the case of each such Lender and the Agent,
Taxes imposed on or measured by the Agent's or any Lender's net income or
receipts (any such excluded Taxes, collectively, "Excluded Taxes"). If any
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Revolving Note to or for the benefit of any
Lender or the Agent, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions of Taxes (including deductions of
Taxes applicable to additional sums payable under this Section 2.7) such Lender
or the Agent, as the case may be, receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Borrower shall make
such deductions and (iii) such
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Borrower shall pay the full amount so deducted to the relevant taxation
authority or other authority in accordance with applicable law; provided,
however, that such Borrower shall be under no obligation to increase the sum
payable to any Lender not organized under the laws of the United States or a
state thereof (a "Foreign Lender") by an amount equal to the amount of the
United States tax required to be withheld under United States law from the sums
paid to such Foreign Lender, if such withholding is caused by the failure of
such Foreign Lender to be engaged in the active conduct of a trade or business
in the United States or all amounts of interest and fees to be paid to such
Foreign Lender hereunder are not effectively connected with such trade or
business within the meaning of United States Treasury Regulation 1.1441-4(a).
(b) Each Foreign Lender agrees that it will deliver to the Borrowers and
the Agent (i) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor applicable form(s), as the case may be,
and (ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable
form(s). Each such Lender also agrees to deliver to the Borrowers and the
Agent two further copies of the said Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms or other manner of certification, as the case may
be, on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrowers, and such extensions or renewals
thereof as may reasonably be requested by the Borrowers or the Agent, unless in
any such case an event (including, without limitation, any change in treaty,
law or regulation) has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms inapplicable or which
would prevent such Lender from duly completing and delivering any such form
with respect to it and such Lender so advises the Borrowers and the Agent.
Such Lender shall certify (A) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Credit Agreement without deduction or
withholding of any United States federal income taxes and (B) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax.
(c) In addition, the Borrowers agree to pay any present or future stamp,
documentary, privilege, intangible or similar taxes or any other excise or
property taxes, charges or similar levies that arise at any time or from time
to time (other than Excluded Taxes) (i) from any payment made under any and all
Credit Documents, (ii) from the transfer of the rights of any Lender under any
Credit Documents to any other Lender or Lenders or (iii) from the execution or
delivery by any Borrower of, or from the filing or recording or maintenance of,
or otherwise with respect to, any and all Credit Documents (hereinafter
referred to as "Other Taxes").
(d) The Borrowers will indemnify each Lender and the Agent for the full
amount of Taxes (including, without limitation and without duplication, any
Taxes imposed by any jurisdiction on amounts payable under this Section 2.7),
subject to (i) the exclusion set out in the first sentence of Section 2.7(a),
(ii) the provisions of Section 2.7(b), and (iii) the provisions of the proviso
set forth in Section 2.7(a), and will indemnify each Lender and the Agent for
the full amount of Other Taxes (including, without limitation and without
duplication, any Taxes imposed by any jurisdiction on amounts payable under
this Section 2.7) paid by such Lender or the Agent (on its own behalf or on
behalf of any Lender), as the case may be, in respect of payments made or to be
made hereunder, and any liability (including penalties, interest and
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expenses) arising solely therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. Payment of this
indemnification shall be made within 30 days from the date such Lender or the
Agent, as the case may be, makes written demand therefor.
(e) Within 30 days after the date of any payment of Taxes or Other Taxes,
the applicable Borrower shall furnish to the Agent, at its address referred to
in Section 13.5, the original or certified copy of a receipt evidencing payment
thereof.
(f) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in this Section 2.7 shall survive the payment in full of all Obligations
hereunder and under the Revolving Notes.
2.8 SHARING OF PAYMENTS.
If any Lender shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set-off or otherwise) on account of the
Revolving Loans made by it or its participation in Letters of Credit in excess
of its pro rata share of such payment as provided for in this Credit Agreement,
such Lender shall forthwith purchase from the other Lenders such participations
in the Revolving Loans made by them or in their participation in Letters of
Credit as shall be necessary to cause such purchasing Lender to share such
excess payment with all Lenders in accordance with their respective ratable
shares as provided for in this Credit Agreement; provided, however, that if all
or any portion of such excess is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and each such Lender
shall repay to the purchasing Lender the purchase price to the extent of such
recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in
respect to the total amount so recovered. The Borrowers agree that any Lender
so purchasing a participation from another Lender pursuant to this Section 2.8
may, to the fullest extent permitted by law, exercise all of its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrowers in the amount
of such participation.
2.9 PRO RATA TREATMENT.
Each Revolving Loan, each payment or prepayment of principal of any
Revolving Loan or reimbursement obligations arising from drawings under Letters
of Credit, each payment of interest on the Revolving Loans, each payment of the
Unused Fee, each payment of the Letter of Credit Fee, each reduction of the
Revolving Credit Commitment and each conversion or extension of any Revolving
Loan, shall be allocated pro rata among the Lenders in accordance with the
respective principal amounts of their outstanding Revolving Loans and their
participation interests in the Letters of Credit; provided, however, that the
foregoing fees payable hereunder to the Lenders shall be allocated to each
Lender based on such Lender's Revolving Credit Commitment Percentage.
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2.10 EXTENSIONS AND CONVERSIONS.
Subject to the terms of Article V, the Borrowers shall have the option, on
any Business Day, to extend existing LIBOR Loans into a subsequent permissible
Interest Period, to convert Base Rate Loans into LIBOR Loans, or to convert
LIBOR Loans into Base Rate Loans; provided, however, that (i) except as
provided in Section 4.10, LIBOR Loans may be converted into Base Rate Loans
only on the last day of the Interest Period applicable thereto, (ii) LIBOR
Loans may be extended, and Base Rate Loans may be converted into LIBOR Loans,
only if no Default or Event of Default is in existence on the date of extension
or conversion, (iii) Revolving Loans extended as, or converted into, LIBOR
Loans shall be subject to the terms of the definition of "Interest Period" and
shall be in such minimum amounts as provided in Section 2.1(d)(i), and (iv) no
more than five (5) separate LIBOR Loans shall be outstanding hereunder at any
time. Each such extension or conversion shall be effected by the Company, on
behalf of the Borrowers, by giving a written notice in the form of Exhibit G
hereto (a "Notice of Extension/Conversion") (or telephone notice promptly
confirmed in writing) to the Agent prior to 11:00 A.M. on the Business Day of,
in the case of the conversion of a LIBOR Loan into a Base Rate Loan, and on the
third Business Day prior to, in the case of the extension of a LIBOR Loan as,
or conversion of a Base Rate Loan into, a LIBOR Loan, the date of the proposed
extension or conversion, specifying the date of the proposed extension or
conversion, the Revolving Loans to be so extended or converted, the types of
Revolving Loans into which such Revolving Loans are to be converted and, if
appropriate, the applicable Interest Periods with respect thereto. Each
request for extension or conversion shall constitute a representation and
warranty by the Borrowers of the matters specified in Article V. In the event
the Borrowers fail to request extension or conversion of any LIBOR Loan in
accordance with this Section, or any such conversion or extension is not
permitted or required by this Section, then such Revolving Loan shall be
automatically converted into a Base Rate Loan at the end of the Interest Period
applicable thereto. The Agent shall give each Lender notice as promptly as
practicable of any such proposed extension or conversion affecting any
Revolving Loan.
ARTICLE III
LETTERS OF CREDIT
3.1 ISSUANCE.
Subject to the terms and conditions hereof and of the Letter of Credit
Documents, if any, and any other terms and conditions which the Issuing Bank
may reasonably require, the Lenders will participate in the issuance by the
Issuing Bank from time to time of such Letters of Credit in Dollars from the
Closing Date until the Maturity Date as the Borrowers may request, in a form
acceptable to the Issuing Bank; provided, however, that (a) the Letter of
Credit Obligations outstanding shall not at any time exceed TEN MILLION DOLLARS
($10,000,000) (the "Letter of Credit Committed Amount") and (b) the sum of the
aggregate principal amount of outstanding Revolving Loans plus Letter of Credit
Obligations outstanding shall not at any time
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exceed the Revolving Credit Committed Amount. No Letter of Credit shall (x)
have an original expiry date more than one year from the date of issuance or
(y) as originally issued or as extended, have an expiry date extending beyond
the Maturity Date. Each Letter of Credit shall comply with the related Letter
of Credit Documents. The issuance and expiry date of each Letter of Credit
shall comply with the related Letter of Credit Documents. The issuance and
expiry date of each Letter of Credit shall be a Business Day.
3.2 NOTICE AND REPORTS.
The request for the issuance of a Letter of Credit shall be submitted by
the Borrowers to the Issuing Bank at least three (3) Business Days prior to the
requested date of issuance. The Issuing Bank will, upon request, disseminate
to each of the Lenders a detailed report specifying the Letters of Credit which
are then issued and outstanding and any activity with respect thereto which may
have occurred since the date of the prior report, and including therein, among
other things, the beneficiary, the face amount and the expiry date as well as
any payment or expirations which may have occurred.
3.3 PARTICIPATION.
Each Lender, upon issuance of a Letter of Credit, shall be deemed to have
purchased without recourse a risk participation from the Issuing Bank in such
Letter of Credit and the obligations arising thereunder, in each case in an
amount equal to its Revolving Credit Commitment Percentage of such Letter of
Credit, and shall absolutely, unconditionally and irrevocably assume, as
primary obligor and not as surety, and be obligated to pay to the Issuing Bank
therefor and discharge when due, its Revolving Credit Commitment Percentage of
the obligations arising under such Letter of Credit. Without limiting the
scope and nature of each Lender's participation in any Letter of Credit, to the
extent that the Issuing Bank has not been reimbursed as required hereunder or
under any such Letter of Credit, each such Lender shall pay to the Issuing Bank
its Revolving Credit Commitment Percentage of such unreimbursed drawing in same
day funds on the day of notification by the Issuing Bank of an unreimbursed
drawing pursuant to the provisions of Section 3.4. The obligation of each
Lender to so reimburse the Issuing Bank shall be absolute and unconditional and
shall not be affected by the occurrence of a Default, an Event of Default or
any other occurrence or event. Any such reimbursement shall not relieve or
otherwise impair the obligation of the Borrowers to reimburse the Issuing Bank
under any Letter of Credit, together with interest as hereinafter provided.
3.4 REIMBURSEMENT.
In the event of any drawing under any Letter of Credit, the Issuing Bank
will promptly notify the Borrowers. Unless the Borrowers shall immediately
notify the Issuing Bank that the Borrowers intend to otherwise reimburse the
Issuing Bank for such drawing, the Borrowers shall be deemed to have requested
that the Lenders make a Revolving Loan in the amount of the drawing as provided
in Section 3.5 on the related Letter of Credit, the proceeds of which will be
used to satisfy the related reimbursement obligations. The Borrowers promise
to reimburse the Issuing Bank on the day of drawing under any Letter of Credit
(either with the proceeds of a
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Revolving Loan obtained hereunder or otherwise) in same day funds. If the
Borrowers shall fail to reimburse the Issuing Bank as provided hereinabove, the
unreimbursed amount of such drawing shall bear interest at a per annum rate
equal to the Base Rate plus the sum of (i) the Applicable Percentage for Base
Rate Loans and (ii) two percent (2%). The Borrowers' reimbursement obligations
hereunder shall be absolute and unconditional under all circumstances
irrespective of any rights of setoff, counterclaim or defense to payment the
Borrowers may claim or have against the Issuing Bank, the Agent, the Lenders,
the beneficiary of the Letter of Credit drawn upon or any other Person,
including without limitation any defense based on any failure of the Borrowers
to receive consideration or the legality, validity, regularity or
unenforceability of the Letter of Credit. The Issuing Bank will promptly
notify the other Lenders of the amount of any unreimbursed drawing and each
Lender shall promptly pay to the Agent for the account of the Issuing Bank in
Dollars and in immediately available funds, the amount of such Lender's
Revolving Credit Commitment Percentage of such unreimbursed drawing. Such
payment shall be made on the Business Day such notice is received by such
Lender from the Issuing Bank if such notice is received at or before 2:00 P.M.
otherwise such payment shall be made at or before 12:00 Noon on the Business
Day next succeeding the day such notice is received. If such Lender does not
pay such amount to the Issuing Bank in full upon such request, such Lender
shall, on demand, pay to the Agent for the account of the Issuing Bank interest
on the unpaid amount during the period from the date of such drawing until such
Lender pays such amount to the Issuing Bank in full at a rate per annum equal
to, if paid within two (2) Business Days of the date that such Lender is
required to make payments of such amount pursuant to the preceding sentence,
the Federal Funds Rate and thereafter at a rate equal to the Base Rate. Each
Lender's obligation to make such payment to the Issuing Bank, and the right of
the Issuing Bank to receive the same, shall be absolute and unconditional,
shall not be affected by any circumstance whatsoever and without regard to the
termination of this Credit Agreement or the Commitments hereunder, the
existence of a Default or Event of Default or the acceleration of the
obligations of the Borrowers hereunder and shall be made without any offset,
abatement, withholding or reduction whatsoever. Simultaneously with the making
of each such payment by a Lender to the Issuing Bank, such Lender shall,
automatically and without any further action on the part of the Issuing Bank or
such Lender, acquire a participation in an amount equal to such payment
(excluding the portion of such payment constituting interest owing to the
Issuing Bank) in the related unreimbursed drawing portion of the Letter of
Credit Obligation and in the interest thereon and in the related Letter of
Credit Documents, and shall have a claim against the Borrowers with respect
thereto.
3.5 REPAYMENT WITH REVOLVING LOANS.
On any day on which the Borrowers shall have requested, or been deemed to
have requested, a Revolving Loan advance to reimburse a drawing under a standby
Letter of Credit, the Agent shall give notice to the Lenders that a Revolving
Loan has been requested or deemed requested by the Borrowers to be made in
connection with a drawing under a Letter of Credit, in which case a Revolving
Loan advance comprised of Base Rate Loans (or LIBOR Loans to the extent the
Borrower has complied with the procedures of Section 2.1(d)(i) with respect
thereto) shall be immediately made to the Borrowers by all Lenders
(notwithstanding any termination of the Commitments pursuant to Section 10.2)
pro rata based on the respective Revolving Credit
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Commitment Percentages of the Lenders (determined before giving effect to any
termination of the Commitments pursuant to Section 10.2) and the proceeds
thereof shall be paid directly by the Agent to the Issuing Bank for application
to the respective Letter of Credit Obligations. Each such Lender hereby
irrevocably agrees to make its Revolving Credit Commitment Percentage of each
such Revolving Loan immediately upon any such request or deemed request in the
amount, in the manner and on the date specified in the preceding sentence
notwithstanding (i) the amount of such borrowing may not comply with the
minimum amount for advances of Revolving Loans otherwise required hereunder,
(ii) whether any conditions specified in Article V are then satisfied, (iii)
whether a Default or an Event of Default then exists, (iv) failure for any such
request or deemed request for Revolving Loan to be made by the time otherwise
required hereunder, (v) whether the date of such borrowing is a date on which
Revolving Loans are otherwise permitted to be made hereunder or (vi) any
termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Revolving Loan
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a bankruptcy or
insolvency proceeding with respect to any Borrower), then each such Lender
hereby agrees that it shall forthwith purchase (as of the date such borrowing
would otherwise have occurred, but adjusted for any payments received from the
Borrowers on or after such date and prior to such purchase) from the Issuing
Bank such participation in the outstanding Letter of Credit Obligations as
shall be necessary to cause each such Lender to share in such Letter of Credit
Obligations ratably (based upon the respective Revolving Credit Commitment
Percentages of the Lenders (determined before giving effect to any termination
of the Commitments pursuant to Section 10.2)), provided that at the time any
purchase of participation pursuant to this sentence is actually made, the
purchasing Lender shall be required to pay to the Issuing Bank, to the extent
not paid to the Issuing Bank by the Borrowers in accordance with the terms of
Section 3.4, interest on the principal amount of participation purchased for
each day from and including the day upon which such borrowing would otherwise
have occurred to but excluding the date of payment for such participation, at
the rate equal to, if paid within two (2) Business Days of the date of the
Revolving Loan advance, the Federal Funds Rate, and thereafter at a rate equal
to the Base Rate.
3.6 RENEWAL, EXTENSION.
The renewal or extension of any Letter of Credit shall, for purposes
hereof, be treated in all respects the same as the issuance of a new Letter of
Credit hereunder.
3.7 UNIFORM CUSTOMS AND PRACTICES.
The Issuing Bank may have the Letters of Credit be subject to The Uniform
Customs and Practice for Documentary Credits, as published as of the date of
issue by the International Chamber of Commerce (the "UCP"), in which case the
UCP may be incorporated therein and deemed in all respects to be a part
thereof.
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3.8 INDEMNIFICATION; NATURE OF ISSUING BANK'S DUTIES.
(a) In addition to its other obligations under this Article III, the
Borrowers hereby agree to protect, indemnify, pay and save the Issuing Bank
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys' fees) that
the Issuing Bank may incur or be subject to as a consequence, direct or
indirect, of (A) the issuance of any Letter of Credit or (B) the failure of the
Issuing Bank to honor a drawing under a Letter of Credit as a result of any act
or omission, whether rightful or wrongful, of any present or future de jure or
de facto government or governmental authority (all such acts or omissions,
herein called "Government Acts").
(b) As between the Borrowers and the Issuing Bank, the Borrowers shall
assume all risks of the acts, omissions or misuse of any Letter of Credit by
the beneficiary thereof. The Issuing Bank shall not be responsible: (i) for
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii)
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, that may prove to be
invalid or ineffective for any reason; (iii) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in cipher; (iv)
for any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under a Letter of Credit or of the proceeds thereof;
and (v) for any consequences arising from causes beyond the control of the
Issuing Bank, including, without limitation, any Government Acts. None of the
above shall affect, impair, or prevent the vesting of the Issuing Bank's rights
or powers hereunder.
(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Bank, under or in connection with any Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not put such Issuing
Bank under any resulting liability to any Borrower. It is the intention of the
parties that this Credit Agreement shall be construed and applied to protect
and indemnify the Issuing Bank against any and all risks involved in the
issuance of the Letters of Credit, all of which risks are hereby assumed by the
Borrowers, including, without limitation, any and all Government Acts. The
Issuing Bank shall not, in any way, be liable for any failure by the Issuing
Bank or anyone else to pay any drawing under any Letter of Credit as a result
of any Government Acts or any other cause beyond the control of the Issuing
Bank.
(d) Nothing in this Section 3.8 is intended to limit the reimbursement
obligations of the Borrower contained in Section 3.4 above. The obligations of
the Borrowers under this Section 3.8 shall survive the termination of this
Credit Agreement. No act or omission of any current or prior beneficiary of a
Letter of Credit shall in any way affect or impair the rights of the Issuing
Bank to enforce any right, power or benefit under this Credit Agreement.
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(e) Notwithstanding anything to the contrary contained in this Section
3.8, the Borrowers shall have no obligation to indemnify the Issuing Bank in
respect of any liability incurred by the Issuing Bank (i) arising solely out of
the gross negligence or willful misconduct of the Issuing Bank, as determined
by a court of competent jurisdiction, or (ii) caused by the Issuing Bank's
failure to pay under any Letter of Credit after presentation to it of a request
strictly complying with the terms and conditions of such Letter of Credit, as
determined by a court of competent jurisdiction, unless such payment is
prohibited by any law, regulation, court order or decree.
3.9 RESPONSIBILITY OF ISSUING BANK.
It is expressly understood and agreed that the obligations of the Issuing
Bank hereunder to the Lenders are only those expressly set forth in this Credit
Agreement and that the Issuing Bank shall be entitled to assume that the
conditions precedent set forth in Article V have been satisfied unless it shall
have acquired actual knowledge that any such condition precedent has not been
satisfied; provided, however, that nothing set forth in this Article III shall
be deemed to prejudice the right of any Lender to recover from the Issuing Bank
any amounts made available by such Lender to the Issuing Bank pursuant to this
Article III in the event that it is determined by a court of competent
jurisdiction that the payment with respect to a Letter of Credit constituted
gross negligence or willful misconduct on the part of the Issuing Bank.
3.10 CONFLICT WITH LETTER OF CREDIT DOCUMENTS.
In the event of any conflict between this Credit Agreement and any Letter
of Credit Document (including any letter of credit application), this Credit
Agreement shall control.
ARTICLE IV
INTEREST AND FEES
4.1 INTEREST ON LOANS.
Subject to the provisions of Section 4.2, interest on the Revolving Loans
shall be payable (a) for Base Rate Loans, quarterly in arrears as of the end of
each calendar quarter and the interest rate shall be equal to the Base Rate
plus the Applicable Percentage on the average balances of the Base Rate Loans
owing to the Lenders in the Borrowers' Revolving Loan accounts at the close of
business for each day during each calendar quarter and (b) for LIBOR Loans, on
the last day of the applicable Interest Period (and with respect to any LIBOR
Loan with an Interest Period of 6 months, on the date 3 months after the making
of such LIBOR Loan and on the last day of the applicable Interest Period) and
the interest rate shall be equal to the LIBOR Rate plus the Applicable
Percentage on the outstanding amount of each such LIBOR Loan. In the event of
any change in the Base Rate, the rate hereunder shall change, effective as of
the day the Base Rate changes. The interest rates hereunder for Loans shall be
calculated based on a 360 day year for the actual number of days elapsed except
with respect to computation
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of interest on Base Rate Loans which (unless the Base Rate is determined by
reference to the Federal Funds Rate) shall be calculated based on a year of 365
or 366 days, as appropriate.
4.2 INTEREST AFTER EVENT OF DEFAULT.
Interest on any amount of matured principal under the Revolving Loans, and
interest on the amount of principal under the Revolving Loans outstanding as of
the date an Event of Default occurs, and at all times thereafter until the
earlier of the date upon which (a) all Obligations have been paid and satisfied
in full or (b) such Event of Default shall have been cured or waived, shall be
payable on demand at a rate equal to the rate at which the Revolving Loans are
then bearing interest pursuant to Section 4.1 above, plus two percent (2%). In
the event of any change in said applicable interest rate, the rate hereunder
shall change, effective as of the day the applicable interest rate changes, so
as to remain two percent (2%) above the then applicable interest rate. Interest
shall be payable on any other amount due hereunder and shall accrue at the Base
Rate, plus two percent (2%) from the date due until paid in full. The rates
hereunder shall be calculated based on a 360 day year for the actual number of
days elapsed except with respect to computation of interest at the Base Rate
which (unless the Base Rate is determined by reference to the Federal Funds
Rate) shall be calculated based on a year of 365 or 366 days, as appropriate.
4.3 UNUSED FEE.
In consideration of the Revolving Commitments of the Lenders hereunder,
the Borrowers agree to pay to the Agent for the account of each Lender a fee
(the "Unused Fee") on the Unused Revolving Credit Committed Amount computed at
a per annum rate for each day during the applicable Unused Fee Calculation
Period (hereinafter defined) at a rate equal to the Applicable Percentage in
effect from time to time. The Unused Fee shall commence to accrue on the
Closing Date and shall be due and payable in arrears on the last business day
of each March, June, September and December (and any date that the Revolving
Credit Committed Amount is reduced as provided in Section 2.3 and the Maturity
Date) for the immediately preceding quarter (or portion thereof) (each such
quarter or portion thereof for which the Unused Fee is payable hereunder being
herein referred to as an "Unused Fee Calculation Period"), beginning with the
first of such dates to occur after the Closing Date.
4.4 UPFRONT FEES.
The Borrowers agree to pay to the Agent, for the pro rata benefit of the
Lenders, in immediately available funds on or before the Closing Date an
upfront fee (the "Upfront Fee") equal to $50,000.
4.5 LETTER OF CREDIT FEES.
(a) Letter of Credit Fee. With respect to outstanding Letters of Credit
hereunder, the Borrowers promise to pay to the Agent for the account of each
Lender a fee (the "Letter of Credit Fee") on such Lender's Revolving Credit
Commitment of the average daily maximum amount available to be drawn under each
such outstanding Letter of Credit computed at a per annum rate
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for each day from the date of issuance to the date of expiration equal to the
Applicable Percentage for LIBOR Loans. The Letter of Credit Fee will be
payable quarterly in arrears on the last day of each calendar quarter.
(b) Issuing Bank Fees. In addition to the Letter of Credit Fee payable
pursuant to clause (a) above, the Borrowers promise to pay to the Issuing Bank
for its own account without sharing by the other Lenders the letter of credit
fronting and negotiation fees and the customary charges from time to time of
the Issuing Bank with respect to the issuance, amendment, transfer,
administration, cancellation and conversion of, and drawings under, such
Letters of Credit (collectively, the "Issuing Bank Fees") equal to one-eighth
of one percent (1/8%) of the amount of each such Letter of Credit. The Issuing
Bank Fees will be payable quarterly in arrears on the last day of each calendar
quarter.
4.6 [INTENTIONALLY OMITTED].
4.7 INDEMNIFICATION IN CERTAIN EVENTS.
If after the Closing Date, either (a) any change in or in the
interpretation of any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to FUNB or any
other banking or financial institution from whom any of the Lenders borrow
funds or obtain credit (a "Funding Bank") or any of the Lenders, or (b) a
Funding Bank or any of the Lenders complies with any future guideline or
request from any central bank or other governmental authority or (c) a Funding
Bank or any of the Lenders determines that the adoption of any applicable law,
rule or regulation regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof has or would have the effect described below, or a
Funding Bank or any of the Lenders complies with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, and in the case of any event set
forth in this clause (iii), such adoption, change or compliance has or would
have the direct or indirect effect of reducing the rate of return on any of the
Lenders' capital as a consequence of its obligations hereunder to a level below
that which such Lender could have achieved but for such adoption, change or
compliance (taking into consideration the Funding Bank's or Lenders' policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material, and the result of any of the foregoing events described in clauses
(a), (b) or (c) is or results in an increase in the cost to any of the Lenders
of funding or maintaining the Revolving Credit Committed Amount, the Revolving
Loans or the Letters of Credit, then the Borrowers shall from time to time upon
demand by the Agent, pay to the Agent additional amounts sufficient to
indemnify the Lenders against such increased cost. A certificate as to the
amount of such increased cost shall be submitted to the Borrowers by the Agent
and shall be conclusive and binding absent manifest error.
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4.8 INABILITY TO DETERMINE INTEREST RATE.
If prior to the first day of any Interest Period, (a) the Agent shall have
determined in good faith (which determination shall be conclusive and binding
upon the Borrowers absent manifest error) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the LIBOR Rate for such Interest Period, (b) the Agent has
received notice from the Required Lenders that the LIBOR Rate determined or to
be determined for such Interest Period will not adequately and fairly reflect
the cost to such Lenders of making or maintaining their LIBOR Loans during such
Interest Period, or (c) Dollar deposits in the principal amounts of the LIBOR
Loans to which such Interest Period is to be applicable are not generally
available in the London interbank market, the Agent shall give telecopy or
telephonic notice thereof to the Borrowers and the Lenders as soon as
practicable thereafter, and will also give prompt written notice to the
Borrowers when such conditions no longer exist. If such notice is given (i)
any LIBOR Loans requested to be made on the first day of such Interest Period
shall be made as Base Rate Loans, (ii) any Revolving Loans that were to have
been converted on the first day of such Interest Period to or continued as
LIBOR Loans shall be converted to or continued as Base Rate Loans and (iii)
each outstanding LIBOR Loan shall be converted, on the last day of the
then-current Interest Period thereof, to Base Rate Loans. Until such notice
has been withdrawn by the Agent, no further LIBOR Loans shall be made or
continued as such, nor shall the Borrowers have the right to convert Base Rate
Loans to LIBOR Loans.
4.9 ILLEGALITY.
Notwithstanding any other provision herein, if the adoption of or any
change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other governmental authority or in
the interpretation or application thereof occurring after the Closing Date
shall make it unlawful for any Lender to make or maintain LIBOR Loans as
contemplated by this Credit Agreement, (a) such Lender shall promptly give
written notice of such circumstances to the Borrowers and the Agent (which
notice shall be withdrawn whenever such circumstances no longer exist), (b) the
commitment of such Lender hereunder to make LIBOR Loans, continue LIBOR Loans
as such and convert a Base Rate Loan to LIBOR Loans shall forthwith be canceled
and, until such time as it shall no longer be unlawful for such Lender to make
or maintain LIBOR Loans, such Lender shall then have a commitment only to make
a Base Rate Loan when a LIBOR Loan is requested and (c) such Lender's Revolving
Loans then outstanding as LIBOR Loans, if any, shall be converted automatically
to Base Rate Loans on the respective last days of the then current Interest
Periods with respect to such Revolving Loans or within such earlier period as
required by law. If any such conversion of a LIBOR Loan occurs on a day which
is not the last day of the then current Interest Period with respect thereto,
the Borrowers shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 4.10.
4.10 FUNDING INDEMNITY.
The Borrowers, jointly and severally, promise to indemnify each Lender and
to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur (other than
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through such Lender's gross negligence or willful misconduct) as a consequence
of (a) default by the Borrowers in making a borrowing of, conversion into or
extension of LIBOR Loans after the Borrowers have given a notice requesting the
same in accordance with the provisions of this Credit Agreement, (b) default by
the Borrowers in making any prepayment of a LIBOR Loan after the Borrowers have
given a notice thereof in accordance with the provisions of this Credit
Agreement, and (c) the making of a prepayment of LIBOR Loans on a day which is
not the last day of an Interest Period with respect thereto. With respect to
Revolving Loans that are LIBOR Loans, such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
extended, for the period from the date of such prepayment or of such failure to
borrow, convert or extend to the last day of the applicable Interest Period
(or, in the case of a failure to borrow, convert or extend, the Interest Period
that would have commenced on the date of such failure) in each case at the
applicable rate of interest for such LIBOR Loans provided for herein over (ii)
the amount of interest (as reasonably determined by such Lender) which would
have accrued to such Lender on such amount by placing such amount on deposit
for a comparable period with leading banks in the London interbank market.
This covenant shall survive the termination of this Credit Agreement and the
payment of the Revolving Loans and all other amounts payable hereunder.
ARTICLE V
CONDITIONS PRECEDENT
The obligation of the Lenders to make any Revolving Loan or of the Issuing
Bank to issue any Letter of Credit hereunder is subject to the satisfaction of,
or waiver of, prior to or concurrently with the making of such Revolving Loan
or issuance of such Letter of Credit the following conditions precedent:
5.1 CLOSING CONDITIONS.
(a) Executed Loan Documents. This Credit Agreement, the Notes and each
other Credit Document shall have been duly authorized and executed by the
parties thereto, shall be in full force and effect and the Borrowers shall have
delivered original counterparts thereof to the Agent.
(b) Closing Certificates; etc.
(i) Officer's Certificate of the Borrowers. The Agent shall have
received a certificate from a Responsible Financial Officer of the
Company, on behalf of each Borrower, in form and substance satisfactory
to the Lenders, to the effect that (i) to the best of his knowledge, all
representations and warranties of the Borrowers contained in this Credit
Agreement and the other Credit Documents are true, correct and complete;
(ii) the Borrowers are not in violation of any of the covenants contained
in this Credit Agreement and the other Credit Documents; (iii) after
giving effect to the transactions contemplated by this Credit Agreement,
no Default or Event of Default has occurred and
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is continuing; and (iv) that the Borrowers have satisfied each of the
closing conditions described herein.
(ii) Certificate of Secretary or Assistant Secretary of the
Borrowers. The Agent shall have received a certificate of the secretary
or an assistant secretary of each Borrower certifying that attached
thereto is a true and complete copy of the charter documents of such
Borrower, and all amendments thereto, certified as of a recent date by
the appropriate Governmental Authority in its jurisdiction of
incorporation; that attached thereto is a true and complete copy of the
bylaws of such Borrower, as in effect on the date of such certification;
that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Borrower authorizing the
borrowings contemplated hereunder and the execution, delivery and
performance of this Credit Agreement and the other Credit Documents and,
as to the incumbency and genuineness of the signature of each officer of
such Borrower executing the Credit Documents to which it is a party.
(iii) Certificates of Good Standing and Tax Clearance. The Agent
shall have received long-form certificates as of a recent date of the
good standing of each Borrower under the laws of its respective
jurisdiction of organization and qualification and, to the extent
customarily provided by such taxing authorities and to the extent
reasonably available, a certificate of the relevant taxing authority of
its jurisdiction of organization certifying that such Person has filed
required tax returns and owes no delinquent taxes.
(iv) Opinions of Counsel. The Agent shall have received favorable
opinions of counsel to the Borrowers addressed to the Lenders with
respect to the Borrowers, the Credit Documents and such other matters as
the Lenders shall request.
(c) Consents; No Adverse Claim.
(i) Governmental and Third Party Approvals. All necessary
approvals, authorizations and consents, if any be required, of any Person
and of all Governmental Authorities and courts having jurisdiction with
respect to the transactions contemplated by this Credit Agreement and the
other Credit Documents shall have been obtained.
(ii) No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any Governmental Authority to enjoin, restrain or
prohibit, or to obtain substantial damages in respect of, or which is
related to or arises out of, this Credit Agreement or the other Credit
Documents or the consummation of the transactions contemplated hereby or
thereby, or which, in the Lenders' reasonable discretion, would make it
inadvisable to consummate the transactions contemplated by this Credit
Agreement and the other Credit Documents.
(iii) No Material Adverse Change. Since December 31, 1996, there
shall not have occurred any material adverse change in the business
condition (financial or otherwise) and operations or properties of the
Borrowers, taken as a whole, or any event,
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condition or state of facts that will or could be reasonably expected to
have a Material Adverse Effect.
(iv) No Event of Default. No Default or Event of Default shall have
occurred and be continuing.
(d) Financial Matters.
(i) Financial Statements. The Lenders shall have received the most
recent annual audited and interim unaudited Consolidated financial
statements of the Company and its Subsidiaries or, in the event no such
financial statements are available, such other financial information as
shall be acceptable to the Lenders in their sole discretion.
(ii) Payment at Closing. There shall have been paid by the
Borrowers to the Agent, on behalf of the Lenders, the fees, set forth or
referenced in Section 4.4 (to the extent required to be paid on or prior
to the Closing Date) and any other accrued and unpaid fees due hereunder
(including, without limitation, legal fees and expenses) .
(e) Syndication. Completion of the syndication of the credit facility in
an amount not less than $80,000,000.
(f) Due Diligence. Completion by the Agent to its satisfaction of its
business, financial, legal, and accounting due diligence review of the
Borrowers.
(g) Miscellaneous. All documents, opinions, certificates and other
instruments and all proceedings in connection with the transactions
contemplated by this Credit Agreement shall be reasonably satisfactory in form
and substance to the Lenders.
5.2 CONDITIONS TO ALL LOANS.
The obligations of the Lenders to make any Loan is subject to the
satisfaction of the following conditions precedent on the relevant borrowing
date:
(a) Continuation of Representations and Warranties. The representations
and warranties contained in Article VI shall be true and correct on and as of
such borrowing date with the same effect as if made on and as of such date
(except to the extent such representations and warranties are expressly made as
of a specified date, in which event such representations and warranties shall
be true and correct in all material respects as of such specified date).
(b) No Existing Default. No Default or Event of Default shall have
occurred and be continuing hereunder on the borrowing date with respect to such
Loan or after giving effect to the Loans to be made on such date.
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(c) Material Adverse Change.
(i) No material adverse change, or development reasonably likely to
have a Material Adverse Effect, shall have occurred, (ii) no occurrence
or event which is reasonably likely to have a Material Adverse Effect
shall have occurred and be continuing and (iii) on or prior to the
Closing Date, there shall not have occurred a substantial impairment of
the financial markets generally which, in the opinion of the Required
Lenders, has materially and adversely affected the transactions
contemplated hereby.
(d) On the date of the making of any Revolving Loan, the Agent shall have
received a Notice of Borrowing to the extent such Notice of Borrowing is
required to be given with respect to the making of such Revolving Loan.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Credit Agreement and the
Issuing Bank to issue the Letters of Credit, and to make available the credit
facilities contemplated hereby, each Borrower hereby represents and warrants to
the Lenders and the Issuing Bank as of the date hereof, the Closing Date and on
the date of each extension of credit hereunder, as follows:
6.1 ORGANIZATION; POWER; QUALIFICATION.
Each of the Borrowers is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation,
has the power and authority to own its properties and to carry on its business
as now being and hereafter proposed to be conducted and is duly qualified and
authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification and
authorization, except where the failure to be so qualified and authorized could
not reasonably be expected to have a Material Adverse Effect.
6.2 SUBSIDIARIES AND CAPITALIZATION.
Each Subsidiary of each Borrower as of the date hereof is listed on
Schedule 6.2. All outstanding shares of capital stock of the Subsidiaries have
been duly authorized and validly issued and are fully paid and nonassessable.
Except as otherwise provided on Schedule 6.2, each of the Subsidiaries of each
Borrower is Wholly-Owned by such Borrower. As of the date hereof, there are no
outstanding stock purchase warrants, subscriptions, options, securities,
instruments or other rights of any type or nature whatsoever, which are
convertible into, exchangeable for or otherwise provide for the issuance of
capital stock of any Subsidiary.
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6.3 AUTHORIZATION OF AGREEMENT, CREDIT DOCUMENTS AND BORROWING.
Each of the Borrowers has the corporate right, power and authority and has
taken all necessary corporate and other action to authorize the execution,
delivery and performance of this Credit Agreement and each of the other Credit
Documents to which it is a party in accordance with their respective terms.
This Credit Agreement and each of the other Credit Documents have been duly
executed and delivered by the duly authorized officers of each Borrower, and
each such document constitutes the legal, valid and binding obligation of such
Borrower, enforceable in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
state or federal debtor relief laws from time to time in effect which affect
the enforcement of creditors' rights in general and the availability of
equitable remedies.
6.4 COMPLIANCE OF CREDIT AGREEMENT, CREDIT DOCUMENTS AND
BORROWING WITH LAWS, ETC.
The execution, delivery and performance by each Borrower of the Credit
Documents to which each such Person is a party, in accordance with their
respective terms, the borrowings hereunder and the transactions contemplated
hereby do not and will not, by the passage of time, the giving of notice or
otherwise, (i) require any Governmental Approval or violate any Applicable Law
relating to such Borrower, (ii) conflict with, result in a breach of or
constitute a default under the charter documents, bylaws or other
organizational documents of such Borrower or any material indenture, agreement
or other instrument to which such Person is a party or by which any of its
properties may be bound or any Governmental Approval relating to such Person or
(iii) result in or require the creation or imposition of any Lien upon or with
respect to any property now owned or hereafter acquired by such Person other
than Liens arising under the Credit Documents.
6.5 COMPLIANCE WITH LAW; GOVERNMENTAL APPROVALS.
Each of the Borrowers (i) has all Governmental Approvals required by any
Applicable Law for it to conduct its business, each of which is in full force
and effect, is final and not subject to review on appeal and is not the subject
of any pending or, to the best of its knowledge, threatened attack by direct or
collateral proceeding and (ii) is in compliance with each Governmental Approval
applicable to it and all other Applicable Laws relating to it or any of its
respective properties, except in each case under clause (i) and (ii) above to
the extent that (A) such requirement or compliance is contested in good faith
by appropriate proceedings or (B) the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
6.6 TAX RETURNS AND PAYMENTS.
Each of the Borrowers has duly filed or caused to be filed all federal,
state, local and other tax returns required by Applicable Law to be filed, and
has paid, or made adequate provision for the payment of, all federal, state,
local and other taxes, assessments and governmental charges or levies upon it
and its property, income, profits and assets which are due
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and payable, except for any such taxes or charges being contested in good faith
by appropriate proceedings. No Governmental Authority has asserted any Lien or
other claim against any Borrower with respect to unpaid taxes which has not
been discharged or resolved. The charges, accruals and reserves on the books
of each Borrower in respect of federal, state, local and other taxes are in the
judgment of such Borrower adequate, and such Borrower does not anticipate any
material additional taxes or assessments for any year or portion thereof.
6.7 INTELLECTUAL PROPERTY MATTERS.
Each of the Borrowers owns or possesses all lawful rights to use all
franchises, licenses, patents, patent rights or licenses, patent applications,
copyrights, copyright applications, trademarks, trademark rights, trade names,
trade name rights and rights with respect to the foregoing which are necessary
in any material respect to conduct its business. To the knowledge of each
Borrower, no event has occurred which permits, or after notice or lapse of time
or both would permit, the revocation or termination of any such rights, and
neither such Borrower nor any Subsidiary thereof is liable to any Person for
infringement under Applicable Law with respect to any such rights as a result
of its business operations.
6.8 ENVIRONMENTAL MATTERS.
(i) To the best knowledge of the Borrowers, except for the matters
set forth on Schedule 6.8, the properties of the Borrowers do not contain
any Hazardous Materials in amounts or concentrations which (A) constitute
a violation of, or (B) could give rise to material liability under,
applicable Environmental Laws or (C) could trigger investigation,
removal, remediation or other response activities under any Environmental
Laws;
(ii) To the best knowledge of the Borrowers, except for the matters
set forth on Schedule 6.8, the properties of the Borrowers, and all
operations conducted in connection therewith, are in compliance with all
applicable Environmental Laws, and to the best knowledge of the
Borrowers, except for the matters set forth on Schedule 6.8, there are no
Hazardous Materials at or under the properties of the Borrowers, or such
operations thereon in violation of applicable Environmental Laws or which
could materially interfere with the continued operation of such
properties or which damage or could damage natural resources on such
properties in violation of any applicable Environmental Laws or
materially impair the fair saleable value thereof;
(iii) Except as set forth on Schedule 6.8, none of the properties of
the Borrowers or its Subsidiaries contains any Hazardous Materials in
amounts or concentrations which (A) constitute a violation of, or (B)
could give rise to material liability under, applicable Environmental
Laws or (C) could trigger investigation, removal, remediation or other
response activities under any Environmental Laws;
(iv) Except as set forth on Schedule 6.8, all properties of the
Borrowers and all operations conducted in connection therewith are in
compliance with all applicable
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Environmental Laws, and there are no Hazardous Materials at or under such
properties or such operations in violation of applicable Environmental
Laws or which could materially interfere with the continued operation of
such properties or which damage or could damage natural resources on such
properties in violation of any applicable Environmental Laws, or, if such
properties are owned by any such Person, materially impair the fair
saleable value thereof;
(v) None of the Borrowers has received any notice of material
violation, alleged violation, noncompliance, liability or potential
liability regarding environmental matters or compliance with
Environmental Laws which remain unresolved with regard to any of their
properties or the operations conducted in connection therewith, nor does
any Borrower have knowledge or reason to believe that any other such
notice will be received or is being threatened;
(vi) Hazardous Materials have not been transported or disposed of
from the properties of the Borrowers in violation of, or in a manner or
to a location which could give rise to material liability of any Borrower
under, Environmental Laws, nor to the best knowledge of any Borrower
other than as set forth on Schedule 6.8, have any Hazardous Materials
been generated, treated, stored or disposed of at, on or under any of
such properties in material violation of, or in a manner that could give
rise to material liability of any Borrower under, any applicable
Environmental Laws;
(vii) No judicial proceedings or governmental or administrative
action is pending, or to the best knowledge of the Borrowers, threatened,
under any Environmental Law to which any Borrower is or will be named as
a party with respect to such properties or operations conducted in
connection therewith, nor, except as set forth on Schedule 6.8, are there
any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to such properties
or such operations; and
(viii) There has been no release, or to the best knowledge of the
Borrowers, threat of release, of Hazardous Materials at or from such
properties, in violation of or in amounts or in a manner that could give
rise to material liability of the Borrowers under Environmental Laws.
6.9 ERISA.
The Borrowers and each of their ERISA Affiliates are in material
compliance with all applicable provisions of ERISA and the regulations and
published interpretations thereunder with respect to all Employee Benefit Plans
except for any required amendments for which the remedial amendment period as
defined in Section 401(b) of the Code has not yet expired. Each Plan that is
intended to be qualified under Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified, and each trust related to
such plan has been determined to be exempt under Section 501(a) of the Code.
No Reportable Event has occurred as to which the Borrowers or any of their
ERISA Affiliates were required to file a report with the
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PBGC and no liability (including without limitation any withdrawal liability
under Section 4201 of ERISA) has been incurred by the Borrowers or any of their
ERISA Affiliates which remains unsatisfied for any taxes or penalties with
respect to any Plan.
6.10 MARGIN STOCK.
None of the Borrowers is engaged principally or as one of its activities
in the business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" (as each such term is defined or used in
Regulations G and U of the Board of Governors of the Federal Reserve System).
No part of the proceeds of any of the Loans or Letters of Credit will be used
for purchasing or carrying margin stock or for any purpose which violates, or
which would be inconsistent with, the provisions of Regulation G, T, U or X of
such Board of Governors.
6.11 GOVERNMENT REGULATION.
None of the Borrowers is an "investment company" or a company "controlled"
by an "investment company" (as each such term is defined or used in the
Investment Company Act of 1940, as amended) and none of the Borrowers is, or
after giving effect to any Loan or Letters of Credit will be, subject to
regulation under the Public Utility Holding Company Act of 1935 or the
Interstate Commerce Act, each as amended, or any other Applicable Law which
limits its ability to incur or consummate the transactions contemplated hereby.
6.12 EMPLOYEE RELATIONS.
Each of the Borrowers has a stable work force in place and is not, except
as set forth on Schedule 6.12, party to any collective bargaining agreement nor
has any labor union been recognized as the representative of its employees.
The Borrowers know of no pending, threatened or contemplated strikes, work
stoppage or other collective labor disputes involving its employees.
6.13 FINANCIAL STATEMENTS.
The audited Consolidated balance sheet of the Company and its Subsidiaries
as of December 31, 1996, and the related statements of income and retained
earnings and cash flows for the Fiscal Year then ended and unaudited
Consolidated balance sheet of the Company and its Subsidiaries as of June 30,
1997, and related unaudited interim statements of income and retained earnings
and cash flows for the fiscal period then ended, copies of which have been
furnished to the Lender, fairly present in all material respects the assets,
liabilities and financial position of the Company and its Subsidiaries as at
such dates, and the results of the operations and changes of financial position
for the periods then ended. All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
except as may be otherwise disclosed therein or in the notes thereto (subject
in the case of the interim statements to year-end audit adjustments). As of
the date hereof, the Company and its Subsidiaries have no Indebtedness,
obligation or other unusual forward or long-term
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commitment which is not fairly reflected in the foregoing financial statements
or in the notes thereto in accordance with GAAP.
6.14 SOLVENCY.
As of the Closing Date and after giving effect to each Loan and Letter of
Credit made hereunder, the Company and its Subsidiaries, taken as a whole, and
each Borrower, individually, is and will be Solvent.
6.15 TITLES TO PROPERTIES.
Each of the Borrowers has such title to the real property owned by it as
is necessary to the conduct of its business and valid and legal title to all of
its personal property and assets reflected on the balance sheets of the Company
and its Subsidiaries described in Section 6.13 or in any financial statements
hereafter delivered pursuant to Section 7.1, except such assets which have been
disposed of by the Company or its Subsidiaries subsequent to such date in the
ordinary course of business or as otherwise expressly permitted hereunder.
6.16 DEBT AND LIENS.
Schedule 6.16 is a complete and correct list, as of the date hereof, of
each item of Indebtedness of the Borrowers in excess of $100,000 and each Lien
securing such Indebtedness, each of which is permitted under the terms of
Sections 9.1 and 9.2, respectively. Each of the Borrowers and their
Subsidiaries have performed and are in compliance with all of the terms of such
Indebtedness and Liens and all instruments and agreements relating thereto, and
no default or event of default, or event or condition which with notice or
lapse of time or both would constitute such a default or event of default on
the part of any Borrower or any of its Subsidiaries exists with respect to any
such Indebtedness or Liens. None of the properties and assets of any of
Borrower or any of its Subsidiaries thereof is subject to any Lien, except for
Permitted Liens.
6.17 LITIGATION.
Except as set forth on Schedule 6.17, there are no actions, suits or
proceedings pending nor, to the best knowledge of the Borrowers, threatened
against or in any other way relating adversely to or affecting the Borrowers or
any of their respective properties in any court or before any arbitrator of any
kind or before or by any Governmental Authority, that, if adversely determined,
might reasonably be expected to have a Material Adverse Effect.
6.18 ABSENCE OF DEFAULTS.
No event has occurred or is continuing which constitutes a Default or an
Event of Default, or which constitutes, or which with the passage of time or
giving of notice or both would constitute, a default or event of default by any
Borrower under any judgment, decree or order by which such Borrower or any of
its properties may be bound or which would require such Borrower to make any
payment thereunder prior to the scheduled maturity date therefor.
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6.19 ACCURACY AND COMPLETENESS OF INFORMATION.
All information set forth in the Credit Documents, the financial
statements of the Borrowers and the offering document of the Borrowers and
other syndication materials prepared in connection with this Credit Agreement
and all other information, reports and other papers and data produced by or on
behalf of the Borrowers and furnished to the Lenders by a Responsible Officer
were, at the time the same were so furnished and taken as a whole, true and
correct in all material respects to the extent necessary to give the recipient
a true and accurate knowledge of the subject matter. All such information
furnished to the Lenders by the Borrowers in connection with the negotiation,
preparation or execution of this Credit Agreement or any of the Credit
Documents, taken as a whole, does not contain any untrue statement of a
material fact or omit to state a fact necessary in order to make the statements
contained therein not materially misleading. The Borrowers are not aware of
any facts which they have not disclosed in writing to the Lenders which have a
Material Adverse Effect, or insofar as the Borrowers can now foresee, could
reasonably be expected to have a Material Adverse Effect.
6.20 BURDENSOME PROVISIONS.
None of the Borrowers is a party to any indenture, agreement, lease or
other instrument, or subject to any corporate or partnership restriction,
Governmental Approval or Applicable Law which is so unusual or burdensome as in
the foreseeable future could be reasonably expected to have a Material Adverse
Effect. The Borrowers do not presently anticipate that future expenditures
needed to meet the provisions of any statutes, orders, rules or regulations of
a Governmental Authority will be so burdensome as to have a Material Adverse
Effect.
6.21 INSURANCE.
The properties of the Borrowers are insured with financially sound and
reputable insurance companies in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Borrowers
operate.
6.22 NO MATERIAL ADVERSE CHANGE.
Since December 31 ,1996, there has been no material adverse change in the
business, condition (financial or otherwise), operations or properties of the
Company and its Subsidiaries, taken as a whole, or any event, condition or
state of facts that will or could be reasonably expected to have a Material
Adverse Effect.
6.23 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.
All representations and warranties set forth in this Article VI and all
representations and warranties contained in any certificate, or any of the
Credit Documents (including but not limited to any such representation or
warranty made in or in connection with any amendment thereto)
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shall constitute representations and warranties made under this Credit
Agreement. All representations and warranties made under this Credit Agreement
shall be made or deemed to be made at and as of the Closing Date, shall survive
the Closing Date and shall not be waived by the execution and delivery of this
Credit Agreement, any investigation made by or on behalf of the Lenders or any
borrowing hereunder.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until termination of this Credit Agreement and payment and satisfaction of
all Obligations due hereunder, each Borrower, as applicable, agrees that it
will, unless the Required Lenders shall have otherwise consented in writing, do
the following:
7.1 FINANCIAL STATEMENTS AND PROJECTIONS.
The Company will furnish to the Agent and the Lenders the following
information within the following time periods:
(a) Quarterly Financial Statements. As soon as practicable and in any
event within forty-five (45) days after the end of each of the first three (3)
fiscal quarters of the Company, an unaudited Consolidated balance sheet of the
Company and its Subsidiaries as of the close of such fiscal quarter and
unaudited Consolidated statements of income, retained earnings and cash flows
for the fiscal quarter then ended and that portion of the Fiscal Year then
ended, including the notes thereto, all in reasonable detail setting forth in
comparative form the corresponding figures for the preceding Fiscal Year and
prepared by the Company in accordance with GAAP and, if applicable, containing
disclosure of the effect on the financial position or results of operations of
any change in the application of accounting principles and practices during the
period, and certified by a Responsible Financial Officer of the Company to
present fairly in all material respects the financial condition of the Company
and its Subsidiaries as of their respective dates and the results of operations
of the Company and its Subsidiaries for the respective periods then ended,
subject to normal year end adjustments.
(b) Annual Financial Statements. As soon as practicable and in any event
within one hundred twenty (120) days after the end of each Fiscal Year, an
audited Consolidated balance sheet of the Company and its Subsidiaries as of
the close of such Fiscal Year and audited Consolidated statements of income,
retained earnings and cash flows for the Fiscal Year then ended, including the
notes thereto, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year and prepared by an
independent certified public accounting firm reasonably acceptable to the
Lenders in accordance with GAAP and, if applicable, containing disclosure of
the effect on the financial position or results of operations of any change in
the application of accounting principles and practices during the year, and
accompanied by a report thereon by such certified public accountants that is
not qualified with respect to scope limitations imposed by the Company or any
of its Subsidiaries or with respect to
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accounting principles followed by the Company or any of its Subsidiaries not in
accordance with GAAP.
(c) Information Filed with the SEC. To the extent not delivered pursuant
to Section 7.1(a) or (b), promptly but in any event within ten (10) Business
Days after the filing thereof, a copy of (i) each report or other filing made
by the Company or its Subsidiaries with the SEC and required by the SEC to be
delivered to the shareholders of the Company, and (ii) each report made by the
Company or any of its Subsidiaries to the SEC on Form 8-K and each final
registration statement of the Company or any of its Subsidiaries filed with the
SEC.
(d) Other Financial Information. Promptly upon receipt thereof, copies of
all reports, if any, submitted to the Company or its Board of Directors by its
independent public accountants in connection with their auditing function,
including, without limitation, any management report and any management
responses thereto and such other information regarding the operations, business
affairs and financial condition of the Company or any of its Subsidiaries as
the Lenders may reasonably request.
7.2 OFFICER'S COMPLIANCE CERTIFICATE.
At each time financial statements are delivered pursuant to Section 7.1
(a) or (b), the Company will provide a certificate of a Responsible Financial
Officer of the Company in the form of Exhibit B attached hereto (an "Officer's
Compliance Certificate"):
(a) stating that such officer has reviewed such financial statements and
such statements fairly present in all material respects the financial condition
of the Company and its Subsidiaries as of the dates indicated and the results
of its operations and cash flows for the periods indicated;
(b) stating that to the best of such officer's knowledge, based on a
reasonable examination sufficient to enable him to make an informed statement,
no Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default and its nature, when it occurred, whether it
is continuing and the steps being taken by the Borrowers with respect to such
Default or Event of Default; and
(c) setting forth as at the end of such fiscal quarter or Fiscal Year, as
the case may be, the calculations required to establish whether or not the
Company and its Subsidiaries were in compliance with the financial covenants
set forth in Article VIII hereof as at the end of each respective period, and
the calculation of the Applicable Percentage for LIBOR Loans and Unused Fee as
at the end of each respective period.
7.3 NOTICE OF LITIGATION AND OTHER MATTERS.
Promptly (but in no event later than ten (10) days after an officer of any
Borrower obtains knowledge thereof), provide telephonic and written notice of:
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(a) the commencement of all proceedings and investigations by or before
any Governmental Authority and all actions and proceedings in any court or
before any arbitrator against or involving any Borrower or any of its
respective properties, assets or businesses which in any such case could
reasonably be expected to have a Material Adverse Effect;
(b) any notice of any violation received by any Borrower from any
Governmental Authority including, without limitation, any notice of violation
of Environmental Laws which in any such case could reasonably be expected to
have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or threatens to result in,
a strike or other work action against any Borrower which in any such case could
reasonably be expected to have a Material Adverse Effect;
(d) any Reportable Event or "prohibited transaction", as such term is
defined in Section 406 of ERISA or Section 4975 of the Code, in connection with
any Employee Benefit Plan or any trust created thereunder which could
reasonably be expected to result in liability of any Borrower or any ERISA
Affiliate in an aggregate amount exceeding $5,000,000, along with a description
of the nature thereof, what action the applicable Borrower has taken, is taking
or proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or the PBGC
with respect thereto; and
(e) any event which makes any of the representations set forth in Section
6.1 inaccurate in any material respect.
7.4 ACCURACY OF INFORMATION.
Ensure that all written information, reports, statements and other papers
and data furnished by or on behalf of the Borrowers to the Lenders (other than
financial forecasts) whether pursuant to this Article VII or any other
provision of this Credit Agreement or any of the other Credit Documents, shall
be, at the time the same is so furnished, and taken as a whole, true and
correct in all material respects to the extent necessary to give the Lenders
true and accurate knowledge of the subject matter based on the Borrowers'
knowledge thereof.
7.5 PRESERVATION OF CORPORATE EXISTENCE AND RELATED MATTERS.
Except as permitted by Section 9.4, preserve and maintain its separate
corporate existence and all rights, franchises, licenses and privileges
necessary to the conduct of its business and qualify and remain qualified as a
foreign corporation and authorized to do business in each jurisdiction in which
it is required to be so qualified, except where the failure to be so qualified
and authorized could not reasonably be expected to have a Material Adverse
Effect.
7.6 MAINTENANCE OF PROPERTY.
Protect and preserve all properties useful in and material to its
business, including copyrights, patents, trade names and trademarks; maintain
in good working order and condition
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all buildings, equipment and other tangible real and personal property; and
from time to time make or cause to be made all renewals, replacements and
additions to such property necessary for the conduct of its business, so that
the business carried on in connection therewith may be properly and
advantageously conducted at all times.
7.7 INSURANCE.
Maintain insurance with financially sound and reputable insurance
companies against such risks and in such amounts as are customarily maintained
by similar businesses and as may be required by Applicable Law, and on the
Closing Date and from time to time thereafter deliver to the Agent upon its
request a detailed list of the insurance then in effect, stating the names of
the insurance companies, the amounts and rates of the insurance, the dates of
the expiration thereof and the properties and risks covered thereby.
7.8 ACCOUNTING METHODS AND FINANCIAL RECORDS.
Maintain a system of accounting, and keep such books, records and accounts
(which shall be true and complete in all material respects) as may be required
or as may be necessary to permit the preparation of financial statements in
accordance with GAAP and in material compliance with the regulations of any
Governmental Authority having jurisdiction over it or any of its properties.
7.9 PAYMENT AND PERFORMANCE OF OBLIGATIONS.
Pay and perform all obligations under this Credit Agreement and the other
Credit Documents, and pay or perform (a) all taxes, assessments and other
governmental charges that may be levied or assessed upon it or any of its
property and (b) all other Indebtedness in accordance with its terms (subject
to any applicable subordination provisions); provided, that the Borrowers may
contest any item described in clause (a) and (b) of this Section 7.9 in good
faith so long as adequate reserves are maintained with respect thereto in
accordance with GAAP.
7.10 COMPLIANCE WITH LAWS, APPROVALS AND AGREEMENTS.
Observe and remain in compliance with all Applicable Laws; maintain in
full force and effect all Governmental Approvals; and observe and remain in
compliance with all material agreements, in each case applicable to the conduct
of its business and in each case except to the extent the failure to do so
could not reasonably be expected to have a Material Adverse Effect.
7.11 ENVIRONMENTAL MANAGEMENT.
In addition to and without limiting the generality of Section 7.10, (a)
comply with, and ensure such compliance by all tenants, subtenants and other
occupants of the properties of the Borrowers for whatever reason, if any, with,
all applicable Environmental Laws and obtain and comply with and maintain, and
ensure that all tenants, subtenants and other occupants of such properties for
whatever reason obtain and comply with and maintain, any and all licenses,
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approvals, notifications, registrations or permits required by applicable
Environmental Laws; (b) promptly conduct and complete, or cause to be conducted
and completed, all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws, and
promptly comply with all lawful orders and directives of any Governmental
Authority regarding Environmental Laws (including, without limitation, any such
orders and directives pertaining to the matters set forth on Schedule 6.8); and
(c) defend, indemnify and hold harmless the Lenders, their affiliates,
employees, agents, officers, directors, successors and assigns from and against
any claims, demands, penalties, fines, liabilities, settlements, damages, costs
and expenses of whatever kind or nature known or unknown, contingent or
otherwise, arising out of, or in any way relating to the violation of,
noncompliance with or liability under any Environmental Laws applicable to the
operations of the Borrowers, or the current, future or former ownership or
operation of such properties, activities thereon and actions taken in relation
thereto including, without limitation, all liability now existing or which may
arise in the future as a result of the release, transportation or disposal of
any Hazardous Material from such properties to or at any location, or any
orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorneys' and consultants' fees,
investigation and laboratory fees, response costs, court costs and litigation
expenses, except to the extent that any of the foregoing arise out of the gross
negligence or willful misconduct of the party seeking indemnification therefor.
7.12 COMPLIANCE WITH ERISA.
In addition to and without limiting the generality of Section 7.10, (a)
comply in all material respects with all applicable provisions of ERISA and the
regulations and published interpretations thereunder with respect to all Plans,
(b) not take any action or fail to take action the result of which could be a
material liability to the PBGC or to a Plan, and not participate in any
prohibited transaction that could result in any material civil penalty under
ERISA or tax under the Code and (c) furnish to the Lenders upon any Lender's
request such additional information about any Plan as may be reasonably
requested by such Lender.
7.13 CONDUCT OF BUSINESS.
Engage only in businesses in substantially the same fields as the
businesses conducted on the Closing Date and in lines of business reasonably
related thereto.
7.14 VISITS AND INSPECTIONS.
Permit representatives of the Lenders, from time to time, to visit and
inspect its properties; inspect, audit and make extracts from its books,
records and files, including, but not limited to, management letters prepared
by independent accountants; and discuss with its principal officers, and its
independent accountants, its business, assets, liabilities, financial
condition, results of operations and business prospects; provided, that all
such visits and inspections shall be at reasonable times during ordinary
business hours, with reasonable notice to the Company.
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7.15 NORTH CAROLINA MOTOR SPEEDWAY, INC.
Upon North Carolina Motor Speedway, Inc. becoming a Wholly-Owned
Subsidiary of the Company, (a) cause North Carolina Motor Speedway, Inc. to
execute and deliver to the Agent, on behalf of the Lenders, a Joinder Agreement
substantially in the form of Exhibit H hereto and (b) cause to be delivered to
the Agent, on behalf of the Lenders, such other documents with respect to such
Joinder Agreement as the Agent, on behalf of the Lenders, shall reasonably
request, including without limitation, officers' certificates, financial
statements, opinions of counsel, board resolutions, charter documents,
certificates of existence and authority to do business and any other closing
certificates and documents of the type described in Section 5.1(b).
7.16 SUBSIDIARIES.
Concurrently with the creation or acquisition of any new Subsidiary (a)
cause such Subsidiary to execute and deliver to the Agent, on behalf of the
Lenders, a Joinder Agreement substantially in the form of Exhibit H hereto and
(b) cause to be delivered to the Agent, on behalf of the Lenders, such other
documents with respect to such Joinder Agreement as the Agent, on behalf of the
Lenders, shall reasonably request, including without limitation, officers'
certificates, financial statements, opinions of counsel, board resolutions,
charter documents, certificates of existence and authority to do business and
any other closing certificates and documents of the type described in Section
5.1(b).
7.17 MATERIAL CONTRACTS.
Perform each of its obligations under each of its material contracts, the
failure of which to perform could have a Material Adverse Effect.
7.18 FURTHER ASSURANCES.
Make, execute and deliver all such additional and further acts, things,
deeds and instruments as the Required Lenders may reasonably require to
document and consummate the transactions contemplated hereby and to vest
completely in and insure the Lenders their rights under this Credit Agreement,
the Notes, and the other Credit Documents.
ARTICLE VIII
FINANCIAL COVENANTS
Until termination of this Credit Agreement and payment and satisfaction of
all Obligations due hereunder, each Borrower agrees that, unless the Required
Lenders shall have otherwise consented in writing, the Borrowers will not:
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8.1 CONSOLIDATED SENIOR LEVERAGE RATIO.
Permit, as of the end of each fiscal quarter for the periods shown below,
the Consolidated Senior Leverage Ratio to exceed:
Closing Date through September 30, 1999 3.50:1.0
October 1, 1999 through September 30, 2000 3.25:1.0
October 1, 2000 and thereafter 3.00:1.0
8.2 CONSOLIDATED LEVERAGE RATIO.
Permit, as of the end of each fiscal quarter for the periods shown below,
the Consolidated Leverage Ratio to exceed:
Closing Date through September 30, 1999 4.00:1.0
October 1, 1999 through September 30, 2000 3.75:1.0
October 1, 2000 and thereafter 3.50:1.0
8.3 CONSOLIDATED INTEREST COVERAGE RATIO.
Permit, as of any fiscal quarter end, the Consolidated Interest Coverage
Ratio for such fiscal quarter to be less than 3.00 to 1. 00.
8.4 CONSOLIDATED FUNDED DEBT TO CONSOLIDATED CAPITALIZATION RATIO.
Permit, at any time, the ratio of Consolidated Funded Debt to Consolidated
Capitalization to exceed .50:1.00.
8.5 CONSOLIDATED TANGIBLE NET WORTH.
Permit, at any time, Consolidated Tangible Net Worth of the Company and
its Subsidiaries to be less than the sum of (a) $100,000,000 plus (b) fifty
percent (50%) of cumulative Consolidated Net Income for each fiscal quarter
occurring after the Closing Date plus (c) one hundred percent (100%) of the
aggregate net proceeds derived from the sale of Capital Stock of the Company or
any of its Subsidiaries issued after the Closing Date, plus one dollar ($1.00).
ARTICLE IX
NEGATIVE COVENANTS
Until termination of the Credit Agreement and payment and satisfaction of
all Obligations due hereunder, each Borrower agrees that, unless the Required
Lenders shall have otherwise consented in writing, it will not and will not
permit any other Borrower to:
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9.1 LIMITATIONS ON INDEBTEDNESS.
Create, incur, assume or suffer to exist any Indebtedness except:
(a) Indebtedness in respect of the Obligations;
(b) Indebtedness incurred in connection with Interest Rate Protection
Agreement entered into in order to manage existing or anticipated interest rate
risks and not for speculative purposes upon terms and conditions reasonably
satisfactory to the Required Lenders;
(c) Contingent Obligations in favor of the Agent on behalf of the
Lenders;
(d) Indebtedness for borrowed money owing by any Borrower to any other
Borrower;
(e) Subordinated Debt; provided, that such Subordinated Debt (i) is
unsecured, (ii) contains no restrictions or covenants in respect of the
financial performance of the Company and its Subsidiaries which are more
extensive or restrictive than those contained herein, (iii) contains no
restrictions or covenants limiting the ability of any Borrower to grant Liens
for the benefit of the Lenders, and (iv) is otherwise satisfactory in form and
substance to the Required Lenders;
(f) Indebtedness described on Schedule 6.16 attached hereto and any
refinancings of such Indebtedness; provided, that the aggregate principal
amount of such Indebtedness is not increased, the scheduled maturity dates of
such Indebtedness are not shortened and such refinancing is on terms and
conditions no more restrictive than the terms and conditions of the
Indebtedness being refinanced;
(g) other Indebtedness for borrowed money; provided, that (i) such
Indebtedness is unsecured, (ii) such Indebtedness contains no restrictions or
covenants in respect of the financial performance of the Company and its
Subsidiaries which are more extensive or restrictive than those contained
herein, (iii) such Indebtedness contains no restrictions or covenants limiting
the ability of any Borrower to incur or continue to incur the Obligations in
accordance with the terms of this Credit Agreement, (iv) there is then existing
no Default or Event of Default, (v) a description of such Indebtedness shall
have been delivered to the Agent, on behalf of the Lenders within a reasonable
time prior to the closing thereof and a true and complete copy of all documents
executed in connection therewith shall have been provided to the Agent, on
behalf of the Lenders promptly upon the closing thereof and (vi) no Default or
Event of Default will otherwise be caused or occasioned thereby; and
(h) purchase money indebtedness (including Capital Leases) hereafter
incurred by the Borrowers to finance the purchase of fixed assets provided,
that (i) the total of all such Indebtedness for all such Persons taken together
shall not exceed an aggregate principal amount of $1,000,000 at any time
outstanding (ii) such Indebtedness when incurred shall not exceed the purchase
price of the asset(s) financed; and (iii) no such Indebtedness shall be
refinanced for a
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principal amount in excess of the principal balance outstanding thereon at the
time of such refinancing.
9.2 LIMITATIONS ON LIENS.
Create, incur, assume or suffer to exist, any Lien on or with respect to
any of its assets or properties (including shares of capital stock of any
Subsidiary), real or personal, whether now owned or hereafter acquired, except
for Permitted Liens.
9.3 LIMITATIONS ON LOANS, ADVANCES, INVESTMENTS AND ACQUISITIONS.
Purchase, own, invest in or otherwise acquire, directly or indirectly, any
capital stock, interests in any partnership or joint venture, evidence of
Indebtedness or other obligation or security, substantially all or a portion of
the business or assets of any other Person or any other investment or interest
whatsoever in any other Person; or make or permit to exist, directly or
indirectly, any loans, advances or extensions of credit to, or any Investment
in cash or by delivery of property in, any Person; or enter into, directly or
indirectly, any commitment or option in respect of the foregoing except:
(a) Investments, loans, advances or extensions of credit by a
Borrower in or to another Borrower, together with the other existing loans,
advances and investments described on Schedule 9.3;
(b) Investments in Cash Equivalents;
(c) loans and advances to employees for travel, relocation and
business expenses in the ordinary course of business in an aggregate amount not
to exceed $250,000;
(d) deposits for utilities, security deposits, leases and similar
prepaid expenses incurred in the ordinary course of business;
(e) loans to employees pursuant to employee stock purchase plans
established in the ordinary course of business and approved by the board of
directors of each Borrower;
(f) trade accounts created in the ordinary course of business;
(g) Investments by any Borrower in the form of acquisitions of all or
substantially all of the business or a division or line of business (whether by
the acquisition of capital stock, assets or any combination thereof) of any
other Person if each such acquisition meets all of the following requirements:
(i) the applicable Borrower shall be the surviving Person and no Change in
Control or other Event of Default shall have been effected thereby, (ii) the
Company shall have demonstrated pro forma compliance with each covenant
contained in Article VIII and Sections 9.1 and 9.2 hereof prior to consummating
the acquisition, (iii) a description of the acquisition shall have been
delivered to the Lenders within a reasonable time prior to the consummation of
the acquisition and (iv) a Joinder Agreement executed by the Person acquired
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in connection with such acquisition shall be delivered to the Agent on behalf of
the Lenders, upon the consummation thereof in accordance with Section 7.16 if
such acquired Person is a Subsidiary;
(h) Investments in Affiliates existing as of the Closing Date and in
Grand Prix of Long Beach, Inc., so long as (i) the Company shall have
demonstrated pro forma compliance with each covenant contained in Article VIII
and Sections 9.1 and 9.2 hereof prior to consummating each such Investment, (ii)
a description of each Investment shall have been delivered to the Lenders within
a reasonable time prior to the consummation of such Investment and (iii) no
Event of Default exists or would exist immediately before or immediately after
consummating each such Investment; provided, however, that the Borrowers shall
not be permitted to make Investments in North Carolina Motor Speedway, Inc. in
excess of $15,000,000 in the aggregate until such time as North Carolina Motor
Speedway, Inc. has become a Borrower hereunder pursuant to Section 7.15.; and
(i) additional Investments in an aggregate amount not to exceed
$25,000,000 at any one time, so long as (i) the Company shall have demonstrated
pro forma compliance with each covenant contained in Article VIII and Sections
9.1 and 9.2 hereof prior to consummating each such Investment and (ii) no Event
of Default exists or would exist immediately before or immediately after
consummating each such Investment.
9.4 LIMITATIONS ON MERGERS AND LIQUIDATION.
Merge, consolidate or enter into any similar combination with any other
Person or liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution) except:
(a) any Wholly-Owned Subsidiary may merge into the Person such
Wholly-Owned Subsidiary was formed to acquire in connection with an acquisition
permitted by Section 9.3(g) or (h); and
(b) any Borrower may merge with any Person as long as such Borrower is
the surviving Person and no Default or Event of Default shall have occurred
before and after giving effect to such merger.
9.5 LIMITATIONS ON SALE OF ASSETS.
Convey, sell, lease, assign, transfer or otherwise dispose of any of
its property, business or assets (including, without limitation, the sale of any
receivables and leasehold interests and any sale-leaseback or similar
transaction), whether now owned or hereafter acquired, except:
(a) the sale or other disposition of assets no longer necessary in the
business of the applicable Borrower;
(b) the sale of inventory in the ordinary course of business;
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(c) sale-leaseback transactions permitted by Section 9.11;
(d) the sale or other disposition by any Borrower of its business or
assets to another Borrower, provided that both before and after giving effect to
such sale no Default or Event of Default shall have occurred and be continuing;
and
(e) any other sale or disposition of assets in any Fiscal Year having a
fair market value not to exceed an aggregate amount equal to ten percent (10%)
of Consolidated Tangible Net Worth determined as of the end of the most recent
Fiscal Year then ended.
9.6 TRANSACTIONS WITH AFFILIATES.
Except as otherwise permitted under this Credit Agreement, directly or
indirectly: (a) make any loan or advance to, or purchase or assume any note or
other obligation to or from, any of its officers, directors, shareholders or
other Affiliates (except as permitted by Section 9.3(h)) in an amount in excess
of $500,000 in the aggregate outstanding at any one time, or to or from any
member of the immediate family of any of its officers, directors, shareholders
or other Affiliates, or, except in accordance with the terms of clause (b)
below, subcontract any operations to any of its Affiliates, or (b) enter into,
or be a party to, any transaction with any of its Affiliates, except pursuant to
the reasonable requirements of its business and upon fair and reasonable terms
that are no less favorable to it than it would obtain in a comparable arm's
length transaction with a Person not its Affiliate, other than the types of
transactions with Affiliates described in Schedule 9.6 hereto.
9.6 CERTAIN ACCOUNTING CHANGES.
Change its Fiscal Year end, or make any change in its accounting
treatment and reporting practices except as required by GAAP.
9.8 AMENDMENTS; PAYMENTS AND PREPAYMENTS OF SUBORDINATED DEBT.
(a) Amend or modify (or permit the modification or amendment of) any
of the terms or provisions of any Subordinated Debt, except for amendments and
modifications with respect to such Subordinated Debt approved by the Agent and
Required Lenders in their reasonable discretion that do not (i) shorten the
maturity (or weighted average life to maturity) of such Subordinated Debt, (ii)
increase the interest rate or premium applicable to such Subordinated Debt,
(iii) provide collateral security for such Subordinated Debt, (iv) cause any
covenants or undertakings of the applicable Borrower or defaults or events of
default in respect of such Subordinated Debt to be more restrictive than prior
to such amendment or modification or (v) result in any changes to any of the
subordination provisions applicable to such Subordinated Debt; or
(b) cancel or forgive, make any voluntary or optional payment or
prepayment on, or redeem or acquire for value (including without limitation by
way of depositing with any trustee
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with respect thereto money or securities before due for the purpose of paying
when due) any Subordinated Debt.
9.9 RESTRICTIVE AGREEMENTS.
Enter into any agreement after the Closing Date evidencing Indebtedness
which contains any covenants more restrictive than the provisions of Articles
VII, VIII and IX hereof, or which restricts, limits or otherwise encumbers its
ability to incur Liens on or with respect to any of its assets or properties
other than the assets or properties securing such Indebtedness.
9.10 LIMITATIONS ON RESTRICTED PAYMENTS.
Make a Restricted Payment, other than to pay dividends from any
Subsidiary to any Borrower; provided, however, that (a) any Borrower may make
Restricted Payments to Holdings and (b) the Company may pay periodic dividends
to its public shareholders and repurchase shares of its Capital Stock so long
as, in each case, (i) the Company shall have demonstrated that the Borrowers
shall be in compliance with each covenant contained in Article VIII and Sections
9.1 and 9.2 hereof immediately prior to and immediately after giving effect to
the making of any such Restricted Payments and (ii) no other Default or Event of
Default shall have occurred before or after giving effect to the making of any
such Restricted Payments.
9.11 SALE AND LEASEBACK.
Enter into any arrangement, directly or indirectly, whereby any
Borrower shall sell or transfer any property owned by it to a Person (other than
another Borrower) in order then or thereafter to lease such property or lease
other property which such Borrower intends to use for substantially the same
purpose as the property being sold or transferred. Notwithstanding the foregoing
provisions of this Section 9.11, the Borrowers may sell or transfer property
owned by them as described in the preceding sentence provided that the aggregate
current market value of all assets so sold or transferred (in each case
determined at the time of such sale or transfer) shall not at any time exceed
$5,000,000.
9.12 LICENSES, ETC.
Enter into licenses of, or otherwise restrict the use of, any patents,
trademarks or copyrights which would prevent any Borrower from selling,
transferring, encumbering or otherwise disposing of any such patent, trademark
or copyright.
9.13 OTHER LIMITATIONS.
Create or otherwise cause, incur, assume, suffer or permit to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Person to (a) pay dividends or make any other distribution
on any of such Person's capital stock, (b) pay any Indebtedness owed to the
Borrowers, (c) make loans or advances to any other Borrower or (d) transfer any
of its property to any other Borrower, except for encumbrances or restrictions
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existing under or by reason of (i) customary non-assignment provisions in any
lease governing a leasehold interest, (ii) any agreement or other instrument of
a Person existing at the time it becomes a Borrower; provided that such
encumbrance or restriction is not applicable to any other Person, or any
property of any other Person, other than such Person becoming a Borrower and was
not entered into in contemplation of such Person becoming a Borrower and (iii)
this Credit Agreement and the other Credit Documents.
9.14 CORPORATE CHANGES.
Merge, consolidate or otherwise alter or modify any Borrower's charter
documents, by-laws or any operating agreement, structure, status or existence.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
10.1 EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute an Event
of Default hereunder:
(a) failure of any Borrower to pay (i) any interest or Fees hereunder
within three (3) Business Days of when due hereunder, in each case whether at
stated maturity, by acceleration, or otherwise, (ii) any principal of the
Revolving Loans or the Letter of Credit Obligations when due, whether at stated
maturity, by acceleration or otherwise or (iii) any expenses hereunder within
ten (10) Business Days after receipt by the Borrowers of notice from the Agent
or any applicable Lender that such expenses are payable;
(b) any representation or warranty, contained in this Credit
Agreement, the other Credit Documents or any other agreement, document,
instrument or certificate among any Borrower, the Agent and the Lenders or
executed by any Borrower in favor of the Agent or the Lenders shall prove untrue
in any material respect on the date as of which it was made or was deemed to
have been made;
(c) failure of any Borrower to perform, comply with or observe any
term, covenant or agreement applicable to it contained in Sections 7.3(e), 7.13,
7.14, 7.15, 7.16 or 7.17 or Article VIII or Article IX;
(d) failure to comply with any other covenant, contained in this
Credit Agreement, the other Credit Documents or any other agreement, document,
instrument or certificate among any Borrower, the Agent and the Lenders or
executed by any Borrower in favor of the Agent or the Lenders, and in the event
such breach or failure to comply is capable of cure, is not cured within thirty
(30) days of its occurrence;
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(e) dissolution, liquidation, winding up or cessation of any Borrower
or any Borrower's business, or the failure of any Borrower to meet its debts as
they mature, or the calling of a meeting of any Borrower's creditors for
purposes of compromising any Borrower's debt;
(f) the commencement by or against any Borrower of any bankruptcy,
insolvency, arrangement, reorganization, receivership or similar proceedings
under any federal or state law and, in the event any such proceeding is
commenced against any Borrower, such proceeding is not dismissed within sixty
(60) days;
(g) the occurrence of a Change in Control;
(h) the occurrence of a default or event of default (in each case
which shall continue beyond the expiration of any applicable grace periods)
under, or the occurrence of any event that would permit the acceleration of the
maturity of any note, agreement or instrument evidencing (i) any Subordinated
Debt or (ii) any other Indebtedness of any Borrower and the aggregate principal
amount of all such other Indebtedness with respect to which a default or an
event of default has occurred, or the maturity of which is permitted to be
accelerated, exceeds $5,000,000;
(i) any covenant, agreement or obligation of any party contained in or
evidenced by any of the Credit Documents shall cease to be enforceable in
accordance with its terms, or any party (other than the Agent or the Lenders) to
any Credit Document shall deny or disaffirm its obligations under any of the
Credit Documents, or any Credit Document shall be canceled, terminated, revoked
or rescinded without the express prior written consent of the Agent, or any
action or proceeding shall have been commenced by any Person (other than the
Agent or any Lender) seeking to cancel, revoke, rescind or disaffirm the
obligations of any party to any Credit Document, or any court or other
governmental authority shall issue a judgment, order, decree or ruling to the
effect that any of the obligations of any party to any Credit Document are
illegal, invalid or unenforceable;
(j) (i) any holder of Subordinated Debt alleges (or any governmental
authority with applicable jurisdiction determines) that the Subordinated Debt is
not subordinated to any of the Obligations or (ii) the subordination provisions
in any agreement relating to Subordinated Debt shall, in whole or in part,
terminate, cease to be effective or cease to be legally valid, binding and
enforceable as to any holder of the Subordinated Debt; or
(k) a warrant or writ of attachment or execution or similar process
shall be issued against any Borrower or its property which exceeds $5,000,000
and such warrant or process shall continue undischarged or unstayed for a period
of thirty (30) days.
10.2 REMEDIES.
Upon the occurrence of an Event of Default which has not been cured by
the Borrowers or waived by the Agent at the direction of the Required Lenders,
the Agent shall, upon the
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written, telecopied or telex request of the Required Lenders, and by delivery of
written notice to the Borrowers from the Agent, take any or all of the following
actions, without prejudice to the rights of the Agent, any Lender or the holder
of any Revolving Note to enforce its claims against any Borrower: (a) declare
all Obligations to be immediately due and payable (except with respect to any
Event of Default set forth in Section 10.1(e) or (f) in which case all
Obligations shall automatically become immediately due and payable without the
necessity of any notice or other demand) without presentment, demand, protest or
any other action or obligation of the Agent or any Lender, (b) immediately
terminate this Credit Agreement and the Commitments hereunder and/or (c)
exercise any other remedies available under this Credit Agreement or at law. The
enumeration of the foregoing rights is not intended to be exhaustive and the
exercise of any right shall not preclude the exercise of any other rights, all
of which shall be cumulative.
In addition, upon demand by the Agent or the Required Lenders after the
occurrence of any Event of Default, the Borrowers shall deposit with the Agent
for the benefit of the Lenders with respect to each Letter of Credit then
outstanding, promptly upon such demand, cash or Cash Equivalents in an amount
equal to the greatest amount for which such Letter of Credit may be drawn. Such
deposit shall be held by the Agent for the benefit of the Issuing Bank and the
other Lenders as security for, and to provide for the payment of, outstanding
Letters of Credit.
If at any time after acceleration of the maturity of the Revolving
Loans, the Borrowers shall pay all arrears of interest and all payments on
account of principal of the Revolving Loans which shall have become due
otherwise than by acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Credit
Agreement) and all Events of Default and Defaults (other than nonpayment of
principal of and accrued interest on the Revolving Loans and other Obligations
due and payable solely by virtue of acceleration) shall be remedied or waived,
then by written notice to the Borrowers, the Lenders holding in the aggregate at
least 67% of the outstanding Revolving Loans and participation interests in the
Letters of Credit (the "Supermajority Lenders"), may elect, in the sole
discretion of such Supermajority Lenders, to rescind and annul the acceleration
and its consequences; but such action shall not affect any subsequent Default or
Event of Default or impair any right or remedy consequent thereon. The
provisions of the preceding sentence are intended merely to bind the Lenders to
a decision which may be made at the election of the Supermajority Lenders; they
are not intended to benefit the Borrowers and do not give the Borrowers the
right to require the Lenders to rescind or annul any acceleration hereunder,
even if the conditions set forth herein are met.
ARTICLE XI
TERMINATION
Except as otherwise provided in Article X of this Credit Agreement, the
Revolving Credit Commitments made hereunder shall terminate on the Maturity Date
and all then outstanding Revolving Loans shall be immediately due and payable in
full and all outstanding Letters of Credit shall immediately terminate. Unless
sooner demanded, all Obligations shall become due
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and payable as of any termination hereunder or under Article X. All of the
Agent's and the Lenders' rights hereunder shall continue after any termination
until all Obligations have been paid and satisfied in full.
ARTICLE XII
THE AGENT
12.1 APPOINTMENT OF AGENT.
(a) Each Lender hereby designates FUNB as Agent to act as herein
specified. Each Lender hereby irrevocably authorizes, and each holder of any
Revolving Note or participation in any Letter of Credit by the acceptance of a
Revolving Note or participation shall be deemed irrevocably to authorize, the
Agent to take such action on its behalf under the provisions of this Credit
Agreement and the Revolving Notes and any other instruments and agreements
referred to herein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Agent by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Agent shall hold all payments of principal, interest,
Fees, charges and expenses received pursuant to this Credit Agreement or any
other Credit Document for the ratable benefit of the Lenders. The Agent may
perform any of its duties hereunder by or through its agents or employees.
(b) The provisions of this Article XII are solely for the benefit of
the Agent and the Lenders, and none of the Borrowers shall have any rights as a
third party beneficiary of any of the provisions hereof (other than Section
12.9). In performing its functions and duties under this Credit Agreement, the
Agent shall act solely as agent of the 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 any Borrower.
12.2 NATURE OF DUTIES OF AGENT.
The Agent shall have no duties or responsibilities except those
expressly set forth in this Credit Agreement. Neither the Agent nor any of its
officers, directors, employees or agents shall be liable for any action taken or
omitted by it as such hereunder or in connection herewith, unless caused by its
or their gross negligence or willful misconduct. The duties of the Agent shall
be mechanical and administrative in nature; the Agent shall not have by reason
of this Credit Agreement a fiduciary relationship in respect of any Lender; and
nothing in this Credit Agreement, expressed or implied, is intended to or shall
be so construed as to impose upon the Agent any obligations in respect of this
Credit Agreement except as expressly set forth herein.
12.3 LACK OF RELIANCE ON AGENT.
(a) Independently and without reliance upon the Agent, each Lender, to
the extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of
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the financial or other condition and affairs of each Borrower in connection with
the taking or not taking of any action in connection herewith and (ii) its own
appraisal of the creditworthiness of each Borrower, and, except as expressly
provided in this Credit Agreement, the 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, whether coming into
its possession before the making of the Revolving Loans or at any time or times
thereafter.
(b) The Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability,
collectability, priority or sufficiency of this Credit Agreement or the
Revolving Notes or the financial or other condition of any Borrower. The 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 Credit
Agreement or the Revolving Notes, or the financial condition of any Borrower, or
the existence or possible existence of any Default or Event of Default, unless
specifically requested to do so in writing by any Lender.
12.4 CERTAIN RIGHTS OF THE AGENT.
The Agent shall have the right to request instructions from the
Required Lenders or, as required, each of the Lenders. If the Agent shall
request instructions from the Required Lenders with respect to any act or action
(including the failure to act) in connection with this Credit Agreement, the
Agent shall be entitled to refrain from such act or taking such action unless
and until the Agent shall have received instructions from the Required Lenders,
and the Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders.
12.5 RELIANCE BY AGENT.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex teletype or telecopier message, cablegram, radiogram, order or other
documentary, teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper person. The
Agent may consult with legal counsel (including counsel for the Borrowers with
respect to matters concerning the Borrowers), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
12.6 INDEMNIFICATION OF AGENT.
To the extent the Agent is not reimbursed and indemnified by the
Borrowers, each Lender will reimburse and indemnify the Agent, in proportion to
its respective Commitment, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
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nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in performing its duties hereunder, in any way relating to or arising out
of this Credit Agreement, provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.
12.7 THE AGENT IN ITS INDIVIDUAL CAPACITY.
With respect to its obligation to lend under this Credit Agreement, the
Revolving Loans made by it and the Revolving Notes issued to it, its
participation in Letters of Credit issued hereunder, and all of its rights and
obligations as a Lender hereunder and under the other Credit Documents, the
Agent shall have the same rights and powers hereunder as any other Lender or
holder of a Revolving Note or participation interests and may exercise the same
as though it was not performing the duties specified herein; and the terms
"Lenders", "Required Lenders", "Holders of Revolving Notes", or any similar
terms shall, unless the context clearly otherwise indicates, include the Agent
in its individual capacity. The Agent may accept deposits from, lend money to,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrowers or any Affiliate of the
Borrowers as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Borrowers for services in
connection with this Credit Agreement and otherwise without having to account
for the same with the Lenders.
12.8 HOLDERS OF REVOLVING NOTES.
The Agent may deem and treat the payee of any Revolving Note as the
owner thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Revolving
Note, shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Revolving Note or of any Revolving Note or Revolving Notes
issued in exchange therefor.
12.9 SUCCESSOR AGENT.
(a) The Agent may, upon five (5) Business Days' notice to the Lenders
and the Borrowers, resign at any time (effective upon the appointment of a
successor Agent pursuant to the provisions of this Section 12.9(a)) by giving
written notice thereof to the Lenders and the Borrowers. Upon any such
resignation, the Required Lenders shall have the right, upon five (5) days'
notice, to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within thirty (30) days after the retiring Agent's giving of notice of
resignation, then, upon five (5) days' notice , the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent, which shall be a bank or a
trust company or other financial institution which maintains an office in the
United States, or a commercial bank organized under the laws of the United
States of America or of any State thereof, or any affiliate of such bank or
trust company or other financial institution which is engaged in the banking
business, having a combined capital and surplus of at least $500,000,000.
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Notwithstanding anything herein to the contrary, any successor Agent (whether
appointed by the Required Lenders or the Agent) shall have been approved in
writing by the Company (such approval not to be unreasonably withheld).
(b) Upon the acceptance of any appointment as Agent hereunder 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
this Credit Agreement. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article XII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this Credit
Agreement.
12.10 ACTIONS WITH RESPECT TO DEFAULTS.
In addition to the Agent's right to take actions on its own accord as
permitted under this Credit Agreement, the Agent shall take such action with
respect to a Default or Event of Default as shall be directed by the Required
Lenders; provided that, until the Agent shall have received such directions, the
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 and in the best interests of the Lenders.
12.11 DELIVERY OF INFORMATION.
The Agent shall not be required to deliver to any Lender originals or
copies of any documents, instruments, notices, communications or other
information received by the Agent from the Borrowers, any Subsidiary, the
Required Lenders, any Lender or any other Person under or in connection with
this Credit Agreement or any other Credit Document except (i) as specifically
provided in this Credit Agreement or any other Credit Document and (ii) as
specifically requested from time to time in writing by any Lender with respect
to a specific document instrument, notice or other written communication
received by and in the possession of the Agent at the time of receipt of such
request and then only in accordance with such specific request.
12.12 CO-AGENT.
The Co-Agent shall have no duties, responsibilities or other
obligations under this Credit Agreement in its capacity as Co-Agent.
ARTICLE XIII
MISCELLANEOUS
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13.1 WAIVERS.
Each Borrower hereby waives due diligence, demand, presentment and
protest and any notices thereof as well as notice of nonpayment. No delay or
omission of the Agent or the Lenders to exercise any right or remedy hereunder,
whether before or after the happening of any Event of Default, shall impair any
such right or shall operate as a waiver thereof or as a waiver of any such Event
of Default. No single or partial exercise by the Agent or the Lenders of any
right or remedy shall preclude any other or further exercise thereof, or
preclude any other right or remedy.
13.2 JURY TRIAL.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER, THE AGENT AND
THE LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF THIS CREDIT AGREEMENT, THE CREDIT DOCUMENTS OR ANY
OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
13.3 GOVERNING LAW.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS CREDIT AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NORTH CAROLINA WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
13.4 ARBITRATION; CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
(a) Upon demand of any party hereto, whether made before or after
institution of any judicial action, any dispute, claim or controversy arising
out of or connected herewith or with the Credit Documents ("Disputes") shall be
resolved by binding arbitration as provided herein. Disputes may include,
without limitation, tort claims, counterclaims, claims brought as class actions
and claims arising herefrom or from Credit Documents executed in the future.
Arbitration shall be conducted under the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association and Title 9 of the U.S. Code. All arbitration hearings shall be
conducted in Charlotte, Mecklenburg County, North Carolina, or such other place
as agreed to in writing by the parties. A judgment upon the award may be entered
in any court having jurisdiction, and all decisions shall be in writing. The
panel from which all arbitrators are selected shall be comprised of licensed
attorneys having at least ten years' experience representing parties in secured
lending transactions. Notwithstanding the foregoing, this arbitration provision
does not apply to disputes under or related to interest protection agreements.
(b) Notwithstanding the preceding binding arbitration provision, the
Agent, on behalf of the Lenders, preserves certain remedies that may be
exercised during a Dispute. The Agent, on behalf of the Lenders, shall have the
right to proceed in any court of proper jurisdiction or by
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self help to exercise or prosecute the following remedies, as applicable: (i)
all rights to foreclose against any real or personal property or other security
by exercising a power of sale granted in the Credit Documents or under
applicable law, (ii) all rights of self help including peaceful occupation of
real property and collection of rents, set-off and peaceful possession of
personal property, (iii) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment and appointment of
receiver, (iv) when applicable, a judgment by confession of judgment and (v)
other remedies. Preservation of these remedies does not limit the power of an
arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
(c) By execution and delivery of this Credit Agreement, each of the
parties hereto accepts, for itself and in connection with its properties,
generally and unconditionally, the non-exclusive jurisdiction relating to any
arbitration proceedings conducted under the Arbitration Rules in Charlotte,
Mecklenburg County, North Carolina and irrevocably agrees to be bound by any
final judgment rendered thereby in connection with this Credit Agreement from
which no appeal has been taken or is available. Each of the parties hereto
irrevocably agrees that all process in any such arbitration proceedings or
otherwise may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to it at its
address set forth in Section 13.5 or at such other address of which such party
shall have been notified pursuant thereto, such service being hereby
acknowledged by each party hereto to be effective and binding service in every
respect. Each party hereto irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens which it may now or hereafter have to the bringing of any
such action or proceeding in any such jurisdiction. Nothing herein shall affect
the right to serve process in any other manner permitted by law or shall limit
the right of any party to bring proceedings against the Borrower or any party
hereto in any court or pursuant to arbitration proceedings in any other
jurisdiction.
13.5 NOTICES.
Except as otherwise provided herein, all notices and correspondences
hereunder shall be in writing and sent by certified or registered mail return
receipt requested, or by overnight delivery service, with all charges prepaid,
if to the Agent, then to First Union National Bank, One First Union Center, 301
South College Street, DC-5, Charlotte, North Carolina 28288-0737, Attention:
Doug Burnett, Agency Services, if to the Borrowers, then to Company at Penske
Motorsports, Inc., c/o Penske Corporation, 13400 Outer Drive, West, Detroit,
Michigan 48239-4001, Attention: President, and to any Lender, at the address set
forth beneath the signature of such Lender contained in the signature pages
hereto, or by facsimile transmission, promptly confirmed in writing sent by
first class mail, if to the Agent, at (704)383-0288, and if to the Borrowers at
(313)592-7332 and if to any Lender at the facsimile number set forth beneath the
signature of such Lender contained herein. All such notices and correspondence
shall be deemed given (i) if sent by certified or registered mail, three (3)
Business Days after being postmarked, (ii) if sent by overnight delivery
service, when received at the above stated addresses or when delivery is refused
and (iii) if sent by facsimile transmission, when receipt of such transmission
is acknowledged; provided that notices to the Agent shall not be effective until
received.
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13.6 ASSIGNABILITY.
(a) No Borrower shall have the right to assign this Credit Agreement
or any interest therein except with the prior written consent of the Lenders.
(b) Notwithstanding subsection (c) of this Section 13.6, nothing
herein shall restrict, prevent or prohibit any Lender from (i) pledging its
Loans hereunder to a Federal Reserve Bank in support of borrowings made by such
Lender from such Federal Reserve Bank or (ii) granting assignments or
participations in such Lender's Loans and/or Commitments hereunder to its parent
company and/or to any affiliate of such Lender or to any existing Lender or
affiliate thereof. Any Lender may make, carry or transfer Revolving Loans at, to
or for the account of, any of its branch offices or the office of an affiliate
of such Lender except to the extent such transfer would result in increased
costs to the Borrowers.
(c) Each Lender may, with the consent of the Agent and, prior to the
occurrence of an Event of Default hereunder, the Company (such consent not to be
unreasonably withheld or delayed), but without the consent of any other Lender,
assign to one or more banks or other financial institutions all or a portion of
its rights and obligations under this Credit Agreement and the Revolving Notes;
provided that (i) for each such assignment, the parties thereto shall execute
and deliver to the Agent, for its acceptance and recording in the Register (as
defined below), an Assignment and Acceptance, together with any Revolving Note
or Revolving Notes subject to such assignment and a processing and recordation
fee of $3,500 to be paid by the assignee, (ii) no such assignment shall be for
less than $5,000,000 of a Lender's Commitment (or the remaining amount of such
Lender's Commitment, if less) and (iii) if such assignee is a Foreign Lender,
all of the requirements of Section 2.7(b) shall have been satisfied as a
condition to such assignment. Upon such execution and delivery of the Assignment
and Acceptance to the Agent, from and after the date specified as the effective
date in the Assignment and Acceptance (the "Acceptance Date"), (x) the assignee
thereunder shall be a party hereto, and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, such assignee shall have the rights and obligations of a Lender
hereunder and (y) the assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (other than any rights it may have pursuant to
Section 13.8 which will survive) and be released from its obligations under this
Credit Agreement (and, in the case of an Assignment and Acceptance covering all
or the remaining portion of an assigning Lender's rights and obligations under
this Credit Agreement, such Lender shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance, the
assignee thereunder confirms and agrees as follows: (i) other than as provided
in such Assignment and Acceptance, the assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Credit
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the Revolving Notes or any other
instrument or document furnished pursuant hereto, (ii) such assigning Lender
makes no
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representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrowers or the performance or observance by the
Borrowers of any of its obligations under this Credit Agreement or any other
instrument or document furnished pursuant hereto, (iii) such assignee confirms
that it has received a copy of this Credit Agreement, together with copies of
the financial statements referred to in Section 7.1 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance, (iv) such assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Credit Agreement, (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Credit Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Credit Agreement are required
to be performed by it as a Lender.
(e) The Agent shall maintain at its address referred to in Section
13.5 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amount of the Revolving Loans owing to, each
Lender from time to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this Credit
Agreement. The Register and copies of each Assignment and Acceptance shall be
available for inspection by the Borrowers or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, together with the Revolving Note or Revolving Notes subject to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit A hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrowers. Within five (5)
Business Days after its receipt of such notice, the Borrowers shall execute and
deliver to the Agent in exchange for the surrendered Revolving Note or Revolving
Notes (which the assigning Lender agrees to promptly deliver to the Company) a
new Revolving Note or Revolving Notes to the order of the assignee in an amount
equal to the Commitment or Commitments assumed by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained a Commitment or
Commitments hereunder, a new Revolving Note or Revolving Notes to the order of
the assigning Lender in an amount equal to the Commitment or Commitments
retained by it hereunder. Such new Revolving Note or Revolving Notes shall
re-evidence the indebtedness outstanding under the old Revolving Notes or
Revolving Notes and shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Revolving Note or Revolving
Notes, shall be dated the Closing Date and shall otherwise be in substantially
the form of the Revolving Note or Revolving Notes subject to such assignments.
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(g) Each Lender may sell participations (without the consent of the
Agent, the Borrowers or any other Lender) to one or more parties in or to all or
a portion of its rights and obligations under this Credit Agreement (including,
without limitation, all or a portion of its Commitments, the Revolving Loans
owing to it and the Revolving Note or Revolving Notes held by it); provided that
(i) such Lender's obligations under this Credit Agreement (including, without
limitation, its Commitments to the Borrowers hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Lender shall remain the holder
of any such Revolving Note for all purposes of this Credit Agreement, (iv) the
Borrowers, the Agent, and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Credit Agreement and (v) such Lender shall not transfer,
grant, assign or sell any participation under which the participant shall have
rights to approve any amendment or waiver of this Credit Agreement except to the
extent such amendment or waiver would (A) extend the final maturity date or the
date for the payments of any installment of fees or principal or interest of any
Revolving Loans or Letter of Credit reimbursement obligations in which such
participant is participating, (B) reduce the amount of any installment of
principal of the Revolving Loans or Letter of Credit reimbursement obligations
in which such participant is participating, (C) except as otherwise expressly
provided in this Credit Agreement, reduce the interest rate applicable to the
Revolving Loans or Letter of Credit reimbursement obligations in which such
participant is participating, or (D) except as otherwise expressly provided in
this Credit Agreement, reduce any Fees payable hereunder.
(h) Each Lender agrees that, without the prior written consent of the
Borrowers and the Agent, it will not make any assignment or sell a participation
hereunder in any manner or under any circumstances that would require
registration or qualification of, or filings in respect of, any Revolving Loan,
Revolving Note or other Obligation under the securities laws of the United
States of America or of any jurisdiction.
(i) In connection with the efforts of any Lender to assign its rights
or obligations or to participate interests, such Lender may disclose any
information in its possession regarding the Borrowers.
13.7 INFORMATION.
The Borrowers hereby agree that the Agent and the Lenders may exchange
any information concerning the Borrowers, including, without limitation,
information relating to the creditworthiness of the Borrowers in the possession
or control of the Agent or the Lenders, as the case may be: (i) with any of
their respective affiliates, counsel or other representatives; provided,
however, that any such exchange, and the nature, manner and extent thereof may
be limited pursuant to any written confidentiality agreement governing the
obligations of the Agent or the Lenders or such affiliate, as the case may be,
with respect to such information; provided, further, that neither the Agent nor
any of the Lenders shall in any event furnish any such information to any
competitor of the Borrowers or any customer of the Borrowers or any Person known
by the Agent or any Lender to be contemplating an acquisition of any capital
stock or assets of the Borrowers or any agent or affiliate of any of the
foregoing, except with the prior written consent
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of the Borrowers or as required by applicable law or judicial order; (ii) with
any regulatory authority having jurisdiction over any Lender or (iii) with any
other person, in connection with the exercise of the Lender's rights hereunder
or, under any of the other Credit Documents. The Borrowers further agree and
consent to the Agent's disclosure of information relating to this transaction to
Gold Sheets and other similar bank trade publications. Such information will
consist of deal terms and other information customarily found in such
publications.
13.8 PAYMENT OF EXPENSES; INDEMNIFICATION.
The Borrowers agree to: (a) pay all reasonable out-of-pocket costs and
expenses of (i) the Agent in connection with (A) the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the other
Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of special
counsel to the Agent and the reasonable fees and expenses of counsel for the
Agent in connection with collateral issues), and (B) any amendment, waiver or
consent relating hereto and thereto including, but not limited to, any such
amendments, waivers or consents resulting from or related to any work-out,
renegotiation or restructure relating to the performance by the Borrowers under
this Credit Agreement and (ii) the Agent and the Lenders in connection with
enforcement of the Credit Documents and the documents and instruments referred
to therein, including, without limitation, in connection with any such
enforcement, the reasonable fees and disbursements of counsel for the Agent and
each of the Lenders. The Borrowers shall and hereby agree to indemnify, defend
and hold harmless the Agent, the Issuing Bank and each of the Lenders and their
respective directors, officers, agents, employees and counsel from and against
(a) any and all losses, claims, damages, liabilities, deficiencies, judgments or
expenses incurred by any of them (except to the extent that it is finally
judicially determined to have resulted from their own gross negligence or
willful misconduct) arising out of or by reason of any litigation,
investigation, claim or proceeding which arises out of or is in any way related
to (i) this Credit Agreement, any Letter of Credit or the transactions
contemplated thereby, (ii) any actual or proposed use by any Borrower of the
proceeds of the Revolving Loans or (iii) the Agent's, the Issuing Bank's or the
Lenders' entering into this Credit Agreement, the other Credit Documents or any
other agreements and documents relating hereto, including, without limitation,
amounts paid in settlement, court costs and the fees and disbursements of
counsel incurred in connection with any such litigation, investigation, claim or
proceeding or any advice rendered in connection with any of the foregoing and
(b) any such losses, claims, damages, liabilities, deficiencies, judgments or
expenses incurred in connection with any remedial or other action taken by any
Borrower or any of the Lenders in connection with compliance by any Borrower or
any of the Subsidiaries, or any of their respective properties, with any
federal, state or local environmental laws, acts, rules, regulations, orders,
directions, ordinances, criteria or guidelines. If and to the extent that the
obligations of any Borrower hereunder are unenforceable for any reason, such
Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations which is permissible under applicable law. The
Borrowers' obligations hereunder shall survive any termination of this Credit
Agreement and the other Credit Documents and the payment in full of the
Obligations, and are in addition to, and not in substitution of, any other of
their obligations set forth in this Credit Agreement. In addition, the Borrowers
shall, upon demand, pay to the Agent and any Lender all costs and expenses
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(including the reasonable fees and disbursements of counsel and other
professionals) paid or incurred by the Agent, the Issuing Bank or such Lender in
(i) enforcing or defending its rights under or in respect of this Credit
Agreement, the other Credit Documents or any other document or instrument now or
hereafter executed and delivered in connection herewith, (ii) in collecting the
Revolving Loans and (iii) obtaining any legal, accounting or other advice in
connection with any of the foregoing.
13.9 ENTIRE AGREEMENT, SUCCESSORS AND ASSIGNS.
This Credit Agreement along with the other Credit Documents and the Fee
Letter constitutes the entire agreement among the Borrowers, the Agent and the
Lenders, supersedes any prior agreements among them, and shall bind and benefit
the Borrowers and the Lenders and their respective successors and permitted
assigns.
13.10 AMENDMENTS, ETC.
No amendment or waiver of any provision of this Credit Agreement or any
other Credit Document, nor consent to any departure by any Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Lenders, or if the Lenders shall not be parties thereto, by the
parties thereto and consented to by the Required Lenders, and each such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided that no amendment, waiver
or consent shall unless in writing and signed by all the Lenders, do any of the
following: (a) increase the Commitments of the Lenders or subject the Lenders to
any additional obligations, (b) except as otherwise expressly provided in this
Credit Agreement, reduce the principal of, or interest on, any Revolving Note or
any Letter of Credit reimbursement obligations or any fees hereunder, (c)
postpone any date fixed for any payment in respect of principal of, or interest
on, any Revolving Note or any Letter of Credit reimbursement obligations or any
fees hereunder, (d) change the percentage of the Commitments, or any minimum
requirement necessary for the Lenders or the Required Lenders to take any action
hereunder, (e) amend or waive this Section 13.10, or change the definition of
Required Lenders, (f) release any Borrower from being a party to this Credit
Agreement, (g) extend any expiry date of any Letter of Credit beyond the
Maturity Date and (h) change or waive any conditions precedent to closing
contained in Section 5.1 and, provided, further, that no amendment, waiver or
consent affecting the rights or duties of the Agent or the Issuing Bank under
any Credit Document shall in any event be effective, unless in writing and
signed by the Agent and/or the Issuing Bank, as applicable, in addition to the
Lenders required hereinabove to take such action. Notwithstanding any of the
foregoing to the contrary, the consent of the Borrowers shall not be required
for any amendment, modification or waiver of the provisions of Article XII
(other than the provisions of Section 12.9). In addition, the Borrowers and the
Lenders hereby authorize the Agent to modify this Credit Agreement by
unilaterally amending or supplementing Schedule 1.1A from time to time in the
manner requested by the Borrowers, the Agent or any Lender in order to reflect
any assignments or transfers of the Revolving Loans as provided for hereunder;
provided, however, that the Agent shall promptly deliver a copy of any such
modification to the Borrowers and each Lender.
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<PAGE> 77
13.11 NONLIABILITY OF AGENT AND LENDERS.
The relationship between any Borrower on the one hand and the Lenders
and the Agent on the other hand shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary responsibilities to
any Borrower. Neither the Agent nor any Lender undertakes any responsibility to
any Borrower to review or inform such Borrower of any matter in connection with
any phase of such Borrower's business or operations.
13.12 INDEPENDENT NATURE OF LENDERS' RIGHTS.
The amounts payable at any time hereunder to each Lender under such
Lender's Revolving Note or Revolving Notes shall be a separate and independent
debt.
13.13 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts and
by the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
13.14 EFFECTIVENESS.
This Credit Agreement shall become effective on the date on which all
of the parties have signed a copy hereof (whether the same or different copies)
and shall have delivered the same to the Agent pursuant to Section 13.5 or, in
the case of the Lenders, shall have given to the Agent written, telecopied or
telex notice (actually received) at such office that the same has been signed
and mailed to it.
13.15 SEVERABILITY.
In case any provision in or obligation under this Credit Agreement or
the Revolving Notes or the other Credit Documents 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.
13.16 HEADINGS DESCRIPTIVE.
The headings of the several sections and subsections of this Credit
Agreement, and the Table of Contents, are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Credit Agreement.
13.17 MAXIMUM RATE.
Notwithstanding anything to the contrary contained elsewhere in this
Credit Agreement or in any other Credit Document, the Borrowers, the Agent and
the Lenders hereby agree that all
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<PAGE> 78
agreements among them under this Credit Agreement and the other Credit
Documents, whether now existing or hereafter arising and whether written or
oral, are expressly limited so that in no contingency or event whatsoever shall
the amount paid, or agreed to be paid, to the Agent or any Lender for the use,
forbearance, or detention of the money loaned to any Borrower and evidenced
hereby or thereby or for the performance or payment of any covenant or
obligation contained herein or therein, exceed the Highest Lawful Rate. If due
to any circumstance whatsoever, fulfillment of any provisions of this Credit
Agreement or any of the other Credit Documents at the time performance of such
provision shall be due shall exceed the Highest Lawful Rate, then,
automatically, the obligation to be fulfilled shall be modified or reduced to
the extent necessary to limit such interest to the Highest Lawful Rate, and if
from any such circumstance any Lender should ever receive anything of value
deemed interest by applicable law which would exceed the Highest Lawful Rate,
such excessive interest shall be applied to the reduction of the principal
amount then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to the applicable
Borrower. All sums paid or agreed to be paid to the Agent or any Lender for the
use, forbearance, or detention of the Obligations and other indebtedness of the
Borrowers to the Agent or any Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of such indebtedness until payment in full so that the actual rate of
interest on account of all such indebtedness does not exceed the Highest Lawful
Rate throughout the entire term of such indebtedness. The terms and provisions
of this Section shall control every other provision of this Credit Agreement and
all agreements among the Borrowers, the Agent and the Lenders.
13.18 RIGHT OF SETOFF.
In addition to and not in limitation of all rights of offset that any
Lender or other holder of a Revolving Note may have under applicable law, each
Lender or other holder of a Revolving Note shall, if any Event of Default has
occurred and is continuing and whether or not such Lender or such holder has
made any demand or the Obligations of any Borrower are matured, have the right
to appropriate and apply to the payment of the Obligations of such Borrower all
deposits (general or special, time or demand, provisional or final) then or
thereafter held by and other indebtedness or property then or thereafter owing
by such Lender or any affiliate thereof or other holder. Any amount received as
a result of the exercise of such rights shall be reallocated among the Lenders
as set forth in Section 2.8.
13.19 CONCERNING JOINT AND SEVERAL LIABILITY OF THE BORROWERS.
(a) Each of the Borrowers is accepting joint and several liability
hereunder in consideration of the financial accommodation to be provided by the
Lenders under this Credit Agreement, for the mutual benefit, directly and
indirectly, of each of the Borrowers and in consideration of the undertakings of
each of the Borrowers to accept joint and several liability for the obligations
of each of them.
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<PAGE> 79
(b) Each of the Borrowers jointly and severally hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers with respect to the payment and
performance of all of the Obligations, it being the intention of the parties
hereto that all the Obligations shall be the joint and several obligations of
each of the Borrowers without preferences or distinction among them.
(c) If and to the extent that any of the Borrowers shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each such
event, the other Borrowers will make such payment with respect to, or perform,
such Obligation.
(d) The obligations of each Borrower under the provisions of this
Section 13.19 constitute full recourse obligations of such Borrower, enforceable
against it to the full extent of its properties and assets, irrespective of the
validity, regularity or enforceability of this Credit Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided herein, each Borrower
hereby waives notice of acceptance of its joint and several liability, notice of
any Revolving Loan made under this Credit Agreement, notice of occurrence of any
Event of Default, or of any demand for any payment under this Credit Agreement,
notice of any action at any time taken or omitted by any Lender under or in
respect of any of the Obligations, any requirement of diligence and, generally,
all demands, notices and other formalities of every kind in connection with this
Credit Agreement. Each Borrower hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any of the Obligations,
the acceptance of any partial payment thereon, any waiver, consent or other
action or acquiescence by any Lender at any time or times in respect of any
default by any Borrower in the performance or satisfaction of any term,
covenant, condition or provision of this Credit Agreement, any and all other
indulgences whatsoever by any Lender in respect of any of the Obligations, and
the taking, addition, substitution or release, in whole or in part, at any time
or times, of any security for any of the Obligations or in part, at any time or
times, of any security for any of the Obligations or the addition, substitution
or release, in whole or in part, of any Borrower. Without limiting the
generality of the foregoing, each Borrower assents to any other action or delay
in acting or failure to act on the part of any Lender, including, without
limitation, any failure strictly or diligently to assert any right or to pursue
any remedy or to comply fully with the applicable laws or regulations thereunder
which might, but for the provisions of this Section 13.19, afford grounds for
terminating, discharging or relieving such Borrower, in whole or in part, from
any of its obligations under this Section 13.19, it being the intention of each
Borrower that, so long as any of the Obligations remain unsatisfied, the
obligations of such Borrower under this Section 13.19 shall not be discharged
except by performance and then only to the extent of such performance. The
Obligations of each Borrower under this Section 13.19 shall not be diminished or
rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Borrower
or any Lender. The joint and several liability of the Borrowers hereunder shall
continue in full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name, membership,
constitution or place of formation of any Borrower or any Lender.
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<PAGE> 80
(f) The provisions of this Section 13.19 are made for the benefit of
the Lenders and their respective successors and assigns, and may be enforced by
any such Person from time to time against any of the Borrowers as often as
occasion therefor may arise and without requirement on the part of any Lender
first to marshal any of its claims or to exercise any of its rights against any
of the other Borrowers or to exhaust any remedies available to it against any of
the other Borrowers or to resort to any other source or means of obtaining
payment of any of the Obligations or to elect any other remedy. The provisions
of this Section 13.19 shall remain in effect until all the Obligations shall
have been paid in full or otherwise fully satisfied. If at any time, any
payment, or any part thereof, made in respect of any of the Obligations, is
rescinded or must otherwise be restored or returned by any Lender upon the
insolvency, bankruptcy or reorganization of any of the Borrowers, or otherwise,
the provisions of this Section 13.19 will forthwith be reinstated in effect, as
though such payment had not been made.
(g) Notwithstanding any provision to the contrary contained herein or
in any other of the Credit Documents, to the extent the joint obligations of a
Borrower shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations of each
Borrower hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including, without
limitation, the federal Bankruptcy Code).
(h) The Borrowers hereby agree, as among themselves, that if any
Borrower shall become an Excess Funding Borrower (as defined below), each other
Borrower shall, on demand of such Excess Funding Borrower (but subject to the
next sentence hereof and to subsection (B) below), pay to such Excess Funding
Borrower an amount equal to such Borrower's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Borrower) of such Excess Payment
(as defined below). The payment obligation of any Borrower to any Excess Funding
Borrower under this Section 13.19(h) shall be subordinate and subject in right
of payment to the prior payment in full of the obligations of such Borrower
under the other provisions of this Credit Agreement, and such Excess Funding
Borrower shall not exercise any right or remedy with respect to such excess
until payment and satisfaction in full of all of such obligations. For purposes
hereof, (i) "Excess Funding Borrower" shall mean, in respect of any Obligations
arising under the other provisions of this Credit Agreement (hereafter, the
"Joint Obligations"), a Borrower that has paid an amount in excess of its Pro
Rata Share of the Joint Obligations; (ii) "Excess Payment" shall mean, in
respect of any Joint Obligations, the amount paid by an Excess Funding Borrower
in excess of its Pro Rata Share of such Joint Obligations; and (iii) "Pro Rata
Share", for the purposes of this Section 13.19(h), shall mean, for any Borrower,
the ratio (expressed as a percentage) of (A) the amount by which the aggregate
present fair saleable value of all of its assets and properties exceeds the
amount of all debts and liabilities of such Borrower (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of such Borrower hereunder) to (B) the amount by which the aggregate
present fair saleable value of all assets and other properties of such Borrower
and all of the other Borrowers exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of such Borrower and the
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other Borrowers hereunder) of such Borrower and all of the other Borrowers, all
as of the Closing Date (if any Borrower becomes a party hereto subsequent to the
Closing Date, then for the purposes of this Section 13.19(h) such subsequent
Borrower shall be deemed to have been a Borrower as of the Closing Date and the
information pertaining to, and only pertaining to, such Borrower as of the date
such Borrower became a Borrower shall be deemed true as of the Closing Date).
13.30 POWER OF ATTORNEY.
Each of the Subsidiary Borrowers appoints each of James H. Harris,
Senior Vice President and Treasurer and Peter E. Mogk, Assistant Treasurer, of
the Company, to be its attorneys ("its Attorneys") and in its name and on its
behalf and as its act and deed or otherwise to sign all documents and carry out
all such acts as are necessary or appropriate in connection with executing any
Notice of Borrowing or any Notice of Extension/Conversion (the "Documents") in
connection with this Credit Agreement, provided that such Documents are in
substantially the form provided therefor in the applicable exhibits hereto. This
Power of Attorney shall be valid for the duration of the term of this Credit
Agreement. Each of the Subsidiary Borrowers hereby undertakes to ratify
everything which either of its Attorneys shall do in order to execute the
Documents mentioned herein.
13.21 DAMAGES.
EACH BORROWER HEREBY WAIVES ANY RIGHT TO CLAIM PUNITIVE OR
CONSEQUENTIAL DAMAGES IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF
THIS CREDIT AGREEMENT, THE CREDIT DOCUMENTS OR ANY OTHER AGREEMENTS OR
TRANSACTIONS RELATED HERETO OR THERETO EXCEPT FOR ANY ACTION OR PROCEEDING
ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT OR ANY
LENDER.
[Remainder of Page Intentionally Left Blank]
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<PAGE> 82
IN WITNESS WHEREOF the parties hereto have caused this Credit Agreement to
be executed and delivered by their proper and duly authorized officers as of
the date set forth above.
BORROWERS: PENSKE MOTORSPORTS, INC.
By: /s/ Gregory W. Penske
------------------------------------
Name: Gregory W. Penske
----------------------------------
Title: President & CEO
---------------------------------
CALIFORNIA SPEEDWAY CORPORATION
By: /s/ Gregory W. Penske
------------------------------------
Name: Gregory W. Penske
----------------------------------
Title: President
---------------------------------
COMPETITION TIRE SOUTH, INC.
By: /s/ Gregory W. Penske
------------------------------------
Name: Gregory W. Penske
----------------------------------
Title: Assistant Secretary
---------------------------------
COMPETITION TIRE WEST, INC.
By: /s/ Gregory W. Penske
------------------------------------
Name: Gregory W. Penske
----------------------------------
Title: Assistant Secretary
---------------------------------
MICHIGAN INTERNATIONAL SPEEDWAY, INC.
By: /s/ Gregory W. Penske
------------------------------------
Name: Gregory W. Penske
----------------------------------
Title: Assistant Secretary
---------------------------------
<PAGE> 83
MOTORSPORTS INTERNATIONAL CORP.
By: /s/ Gregory W. Penske
------------------------------------
Name: Gregory W. Penske
----------------------------------
Title: President
---------------------------------
PENNSYLVANIA INTERNATIONAL RACEWAY, INC.
By: /s/ Gregory W. Penske
------------------------------------
Name: Gregory W. Penske
----------------------------------
Title: Assistant Secretary
---------------------------------
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<PAGE> 84
AGENTS AND LENDERS: FIRST UNION NATIONAL BANK,
as Agent and as a Lender
By: ____________________________________
Name: __________________________________
Title: _________________________________
Lending Office
Address: One First Union Center, 5th Floor
301 S. College Street
Charlotte, NC 28288
Attention: Doug Burnett, Agency Services
Telephone: (704) 374-2698
Facsimile: (704) 383-0288
Address for Notices:
One First Union Center, 5th Floor
301 S. College Street
Charlotte, NC 28288
Attention: Doug Burnett, Agency Services
Telephone: (704) 374-2698
Facsimile: (704) 383-0288
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<PAGE> 85
NATIONSBANK, N.A.,
as Co-Agent and as Lender
By: ____________________________________
Name: __________________________________
Title: _________________________________
Lending Office
Address: NC1-001-15-05
101 N. Tryon Street
Charlotte, NC 28255
Attention: Tia Bailey
Telephone: (704) 386-5181
Facsimile: (704) 386-8694
Address for Notices:
233 South Wacker Drive
Sears Tower, Suite 2800
Chicago, IL 60606
Attention: Valerie Mills
Telephone: (312) 234-5649
Facsimile: (312) 234-5619
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<PAGE> 86
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: ____________________________________
Name: __________________________________
Title: _________________________________
Lending Office
Address: 231 South LaSalle Street, 9th Floor
Chicago, IL 60697
Attention: Steve Ahrenholz
Telephone: (312) 828-1291
Facsimile: (312) 987-0303
Address for Notices:
231 South LaSalle Street, 9th Floor
Chicago, IL 60697
Attention: Steve Ahrenholz
Telephone: (312) 828-1291
Facsimile: (312) 987-0303
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<PAGE> 87
COMERICA BANK
By: ____________________________________
Name: __________________________________
Title: _________________________________
Lending Office
Address: 500 Woodward Avenue
6th Floor, Mail Code 3240
Detroit, MI 48226
Attention: Andrew Craig
Telephone: (313) 222-5619
Facsimile: (313) 222-3503
Address for Notices:
500 Woodward Avenue
6th Floor, Mail Code 3240
Detroit, MI 48226
Attention: Andrew Craig
Telephone: (313) 222-5619
Facsimile: (313) 222-3503
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<PAGE> 88
SOCIETE GENERALE
By: ____________________________________
Name: __________________________________
Title: _________________________________
Lending Office
Address: Societe Generale
1221 Avenue of the Americas
New York, NY 10020
Attention: John Wagner
Telephone: (212) 278-6736
Facsimile: (212) 278-6178
Address for Notices:
Societe Generale
1221 Avenue of the Americas
New York, NY 10020
Attention: John Wagner
Telephone: (212) 278-6736
Facsimile: (212) 278-6178
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<PAGE> 89
EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
THIS ASSIGNMENT AND ACCEPTANCE dated as of ________, 199_ is entered into
between ________________ ("Assignor") and ____________________ ("Assignee").
Reference is made to the Credit Agreement, dated as of September 30, 1997
(together with all modifications, renewals or replacements, the "Credit
Agreement"), among Penske Motorsports, Inc., certain other borrowing entities
party thereto, the financial institutions party thereto, NationsBank, N.A., as
Co-Agent and First Union National Bank, as Agent. Terms defined in the Credit
Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below, the interests
set forth below (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth below in the Commitments of the Assignor on the effective
date of the assignment designated below (the "Effective Date") and the Loans
and other extensions of credit owing to the Assignor which are outstanding on
the Effective Date, together with unpaid interest accrued on the assigned Loans
and other extensions of credit to the Effective Date and the amount, if any,
set forth below of the Fees accrued to the Effective Date for the account of
the Assignor. Each of the Assignor and the Assignee hereby makes and agrees to
be bound by all the representations, warranties and agreements set forth in
Section 13.6(d) of the Credit Agreement, a copy of which has been received by
each such party. From and after the Effective Date (i) the Assignee, if it is
not already a Lender under the Credit Agreement, shall be a party to and be
bound by the provisions of the Credit Agreement and, to the extent of the
interests assigned by this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
of the interests assigned by this Assignment and Acceptance, relinquish its
rights (other than any rights it may have pursuant to Section 13.8 of the
Credit Agreement which will survive) and be released from its obligations under
the Credit Agreement (and, in the case of an assignment of all or the remaining
portion of the Assignor's rights and obligations under the Credit Agreement,
the Assignor shall cease to be a party to the Credit Agreement).
2. The Assignor represents and warrants to the Assignee that (i) it is the
legal and beneficial owner of the interest being assigned hereby free and clear
of any adverse claim and (ii) it is legally authorized to enter into this
Assignment and Acceptance.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of North Carolina.
4. Terms of Assignment
(a) Date of Assignment:
(b) Legal Name of Assignor:
(c) Legal Name of Assignee:
(d) Effective Date of Assignment:
<PAGE> 90
(e) Revolving Credit Commitment
of Assignee after Assignment $________
(f) Revolving Credit Commitment Percentage
of Assignee after Assignment ______%
(g) Revolving Loans of Assignee after Assignment $________
(h) Revolving Credit Commitment
of Assignor after Assignment $________
(i) Revolving Credit Commitment Percentage
of Assignor after Assignment ______%
(j) Revolving Loans of Assignor after Assignment $________
The terms set forth above
are hereby agreed to:
____________________, as Assignor
By:___________________________
Title:________________________
_____________________, as Assignee
By:___________________________
Title:________________________
CONSENTED TO:
FIRST UNION NATIONAL BANK,
as Agent
By:___________________________
Title:__________________________
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EXHIBIT B
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
[Letterhead of Company]
____________, 199__
First Union National Bank,
as Agent for the Lenders
One First Union Center
301 South College Street, 5th Floor
Charlotte, North Carolina 28288
Ladies and Gentlemen:
I hereby certify to you as follows:
(a) I am the duly elected [Title] of Penske Motorsports, Inc., a Delaware
corporation (the "Company"). Capitalized but undefined terms used in this
Certificate shall have the meanings assigned to them in the Credit Agreement,
dated as of September 30, 1997 (together with all modifications, renewals or
replacements, the "Credit Agreement"), among the Company, certain other
borrowing entities parties thereto (together with the Company, the
"Borrowers"), the financial institutions parties thereto, NationsBank, N.A., as
Co-Agent, and you, as Agent.
(b) I have reviewed the terms of the Credit Agreement, and have made, or
have caused to be made under my supervision, a review in reasonable detail of
the transactions and the condition of the Borrowers during the immediately
preceding [month] [fiscal quarter] [fiscal year].
(c) The review described in paragraph (b) above did not disclose the
existence during or at the end of such period, and I have no knowledge of the
existence as of the date hereof, of any condition or event which constitutes a
Default or an Event of Default, except as hereinafter set forth. Described in
a separate attachment to this Certificate are (i) detailed calculations
demonstrating compliance by the Borrowers with the financial covenants
contained in Section 8 of the Credit Agreement and (ii) the exceptions, if any,
to this paragraph (c) (listing, in detail, the nature of the condition or
event, the period during which it has existed and the action which the Company
or applicable Borrower has taken, is taking, or proposes to take with respect
to such condition or event).
I further certify that, based on the review described in paragraph (b)
above, neither the Company, any other Borrower nor any of the Subsidiaries at
any time during or at the end of such period, except as specifically described
in paragraph (j) below, did any of the following:
(d) Changed its respective corporate name, or transacted business under
any trade name, style, or fictitious name, other than those previously
described to you and set forth in the Credit Agreement.
(e) Changed the location of its chief executive office, or changed the
location of or disposed of any of its assets (other than as permitted under the
Credit Agreement).
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<PAGE> 92
(f) Changed its capital structure (other than as permitted under the
Credit Agreement).
(g) Permitted or suffered to exist any Liens or encumbrances on any of its
properties, whether real or personal, other than as specifically permitted in
the Credit Agreement.
(h) Received any notices of any kind from any federal, state or local
agency, tribunal or other authority regulating or having responsibility for any
environmental matters.
(i) Became aware of, obtained knowledge of, or received notification of,
any breach or violation of any material covenant contained in any instrument or
agreement in respect of indebtedness for money borrowed by any of the Borrowers
or any of the Subsidiaries.
(j) [List exceptions, if any, to paragraphs (d) through (i) above].
The foregoing certifications are made and delivered this ____ day of
___________, 199__.
Very truly yours,
PENSKE MOTORSPORTS, INC.
By:__________________________
Name:
Title:
-4-
<PAGE> 93
Schedule A
[set forth evidence of compliance with financial covenants showing the
calculations therefor in reasonable detail]
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<PAGE> 94
EXHIBIT C
FORM OF REVOLVING NOTE
$________________ September 30, 1997
FOR VALUE RECEIVED, each of the undersigned, PENSKE MOTORSPORTS INC., a
Delaware corporation (the "Company"), and CALIFORNIA SPEEDWAY CORPORATION, a
Delaware corporation, COMPETITION TIRE SOUTH, INC., a Delaware corporation,
COMPETITION TIRE WEST, INC., a Michigan corporation, MICHIGAN INTERNATIONAL
SPEEDWAY, INC., a Michigan corporation, MOTORSPORTS INTERNATIONAL CORP., a
Pennsylvania corporation, PENNSYLVANIA INTERNATIONAL RACEWAY, INC., a
Pennsylvania corporation (collectively, the "Subsidiary Borrowers" and together
with the Company, collectively, the "Borrowers") promises to pay to the order
of [Payee Lender] (the "Lender") at c/o First Union National Bank, as Agent for
the Lender, One First Union Center, 301 South College Street, 5th Floor,
Charlotte, North Carolina 28288 in lawful money of the United States of
America and in immediately available funds, the principal amount of
_____________ Million Dollars ($____________), or such lesser amount as may
then constitute the unpaid aggregate principal amount of all Revolving Loans
made by the Lender pursuant to the Credit Agreement (as defined below), at the
times set forth in the Credit Agreement, but no later than the Maturity Date.
The Borrowers further agree to pay interest at said office, in like money,
on the unpaid principal amount owing hereunder from time to time outstanding
from the date of disbursement on the dates and at the rates specified in
Article 4 of the Credit Agreement.
This promissory note is one of the Revolving Notes referred to in the
Credit Agreement, dated as of September 30, 1997 (together with all
modifications, renewals or replacements, the "Credit Agreement"), among the
Company, the Subsidiary Borrowers, the Lender, certain other financial
institutions parties thereto, and First Union National Bank, as agent
("Agent"), and is subject to, and entitled to, all provisions and benefits
thereof and is subject to optional and mandatory prepayment in whole or in part
as provided therein. Capitalized terms used herein without definition shall
have the meanings given to such terms in the Credit Agreement. The Credit
Agreement, among other things, provides as of the date hereof, for the making
of Revolving Loans by the Lender to the Borrowers from time to time in an
aggregate amount not to exceed at any time outstanding the U.S. dollar amount
first above mentioned.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement which have not been cured or waived by the Agent at the
direction of the Required Lenders, the Agent shall, upon the written,
telecopied or telex request of the Required Lenders, and by delivery of written
notice to the Company from the Agent, take any or all of the following actions,
without prejudice to the rights of the Agent, the Lender or any holder of this
promissory note to enforce its claims against the Company and the Subsidiary
Borrowers: (a) declare all Obligations due hereunder to be immediately due and
payable (except with respect to any Event of Default set forth in Section
10.1(e) or (f) of the Credit Agreement, in which case all Obligations due
hereunder shall automatically become immediately due and payable without the
necessity of any notice or other demand) without presentment, demand, protest
or any other action or obligation of the Lender; and (b) immediately terminate
the Credit Agreement and the Commitments thereunder.
-6-
<PAGE> 95
The Borrowers hereby waive presentment, demand, protest and notice of any kind.
No failure to exercise, and no delay in exercising any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS PROMISSORY NOTE SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NORTH CAROLINA WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF.
PENSKE MOTORSPORTS, INC.,
a Delaware corporation
By:_________________________________________
Name:
Title:
CALIFORNIA SPEEDWAY CORPORATION,
a Delaware corporation
By:_________________________________________
Name:
Title:
COMPETITION TIRE SOUTH, INC.,
a Delaware corporation
By:_________________________________________
Name:
Title:
COMPETITION TIRE WEST, INC.,
a Michigan corporation
By:_________________________________________
Name:
Title:
MICHIGAN INTERNATIONAL SPEEDWAY, INC.,
a Michigan corporation
By:_________________________________________
Name:
Title:
MOTORSPORTS INTERNATIONAL CORP.,
a Pennsylvania corporation
By:______________________________________
Name:
Title:
-7-
<PAGE> 96
PENNSYLVANIA INTERNATIONAL RACEWAY, INC.,
a Pennsylvania corporation
By:______________________________________
Name:
Title:
-8-
<PAGE> 97
EXHIBIT D
FORM OF NOTICE OF BORROWING
_________, 199__
First Union National Bank
as Agent for the Lenders
One First Union Center
301 South College Street, 5th Floor
Charlotte, North Carolina 28288
Attention: [________________]
Ladies and Gentlemen:
The undersigned, Penske Motorsports, Inc., a Delaware corporation (the
"Company"), on behalf of itself and on behalf of the other borrowing entities
parties to the Credit Agreement, dated as of September 30, 1997, among the
Company, the Subsidiary Borrowers, certain financial institutions parties
thereto, NationsBank, N.A., as co-agent and First Union National Bank, as agent
(together with all modifications, renewals or replacements, the "Credit
Agreement"; capitalized terms used herein shall have the meanings given such
terms in the Credit Agreement), hereby gives you notice, irrevocably, pursuant
to Section 2.1(d) of the Credit Agreement that the Company hereby requests, on
behalf of the Borrowers, borrowings under the Credit Agreement, and in that
connection sets forth below the information relating to such borrowings (the
"Proposed Borrowings") as required by Sections 2.1(d) of the Credit Agreement:
- -----------------------------------------------------------------------------
Interest Interest
Borrower Date of Borrowing Amount Rate Period
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
The requested funds shall be made available to the following accounts in
the amounts set forth below:
The Company hereby certifies, on behalf of the Borrowers, that the
following statements are true on the date hereof, and will be true on the date
of the Proposed Borrowing:
(A) the representations and warranties contained in the Credit Agreement
and in each other document executed in connection therewith are true and
correct in all material respects before and after giving effect to the Proposed
Borrowings and to the application of the proceeds therefrom, as though made on
and as of such date, except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date);
(B) no event has occurred and is continuing, or would result from such
Proposed Borrowings or from the application of the proceeds therefrom, which
constitutes a Default or an Event of Default;
(C) all of the other conditions to the Proposed Borrowings set forth in
Article 5 of the Credit Agreement have been fulfilled; and
-9-
<PAGE> 98
(D) the Proposed Borrowings satisfy all limitations set forth in the
Credit Agreement.
If notice of this Proposed Borrowing has been given previously by
telephone, then this notice should be considered a written confirmation of such
telephone notice as required by Section 2.1(d) of the Credit Agreement.
PENSKE MOTORSPORTS, INC.
By:_________________________________
Name:
Title:
-10-
<PAGE> 99
EXHIBIT E
[RESERVED]
-11-
<PAGE> 100
EXHIBIT F
NOTICE OF ACCOUNT DESIGNATION
Dated __________________
First Union National Bank
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attn: Syndication Agency Services
Ladies and Gentlemen:
This Notice of Account Designation is delivered to you by Penske
Motorsports, Inc. (the "Company"), a corporation organized under the laws of
Delaware, under Section 2.5 of the Credit Agreement dated as of September 30,
1997 (as amended, restated or otherwise modified, the "Credit Agreement") by
and among the Borrowers, party thereto, the Lenders party thereto, First Union
National Bank, as Agent and NationsBank, N.A., as Co-Agent.
The Agent is hereby authorized to disburse all Loan proceeds into the
following account(s):
[INSERT Name of Bank/
ABA Routing Number/
and Account Number]
IN WITNESS WHEREOF, the undersigned has executed this Notice of Account
Designation this ____________ day of _________________, 19__.
[CORPORATE SEAL] ________________________________
By:_____________________________
Name:
Title:
-12-
<PAGE> 101
EXHIBIT G
FORM OF NOTICE OF EXTENSION/CONVERSION
___________, 199__
First Union National Bank,
as Agent for the Lenders
One First Union Center
301 South College Street, 5th Floor
Charlotte, North Carolina 28288
Attention: [_______________]
Ladies and Gentlemen:
The undersigned, Penske Motorsports, Inc., a Delaware corporation (the
"Company"), on behalf of itself and the other borrowing entities parties to the
Credit Agreement, dated as of September 30, 1997, among the Company, the
Subsidiary Borrowers, certain financial institutions parties thereto,
NationsBank, N.A., as co-agent and First Union National Bank, as agent
(together with all modifications, renewals or replacements, the "Credit
Agreement"; capitalized terms used herein shall have the meanings given such
terms in the Credit Agreement). The Company, on behalf of the Borrowers,
hereby gives you notice, irrevocably, pursuant to Section 2.10 of the Credit
Agreement that the Borrowers hereby request extensions and/or conversions under
the Credit Agreement, and in that connection set forth below the information
relating to such extensions and/or conversions (the "Extensions/Conversions")
as required by Section 2.10 of the Credit Agreement:
<TABLE>
<CAPTION>
Interest Interest
Borrower Date of Borrowing Amount Rate Period
<C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
The Company, on behalf of the Borrowers, hereby certifies that the
following statements are true on the date hereof, and will be true on the date
of the Extension/Conversion:
(A) the representations and warranties contained in the Credit Agreement
and in each other document executed in connection therewith are true and
correct in all material respects before and after giving effect to the
Extensions/Conversions and to the application of the proceeds therefrom, as
though made on and as of such date, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and
accurate on and as of such earlier date);
(B) no event has occurred and is continuing, or would result from such
Extensions/Conversions or from the application of the proceeds therefrom, which
constitutes a Default or an Event of Default;
(C) all of the other conditions to the Extensions/Conversions set forth in
Article 2 of the Credit Agreement have been fulfilled; and
(D) the Extensions/Conversions satisfy all limitations set forth in the
Credit Agreement.
-13-
<PAGE> 102
If notice of these Extensions/Conversions has been given previously by
telephone, then this notice should be considered a written confirmation of such
telephone notice as required by Section 2.10 of the Credit Agreement.
PENSKE MOTORSPORTS, INC.
By:______________________________
Name:
Title:
-14-
<PAGE> 103
EXHIBIT H
FORM OF BORROWER JOINDER AGREEMENT
THIS BORROWER JOINDER AGREEMENT (the "Agreement"), dated as of _______,
19__, is by and among , a (the "Applicant Borrower"), Penske Motorsports, Inc.,
a Delaware corporation (the "Company") and FIRST UNION NATIONAL BANK, in its
capacity as Agent (the "Agent") under that certain Credit Agreement (as amended
and modified, the "Credit Agreement") dated as of September 30, 1997 by and
among the Company and certain related borrowing entities (the "Borrowers"), the
Lenders party thereto, NationsBank, N.A., as Co-Agent, and the Agent. All of
the defined terms in the Credit Agreement are incorporated herein by reference.
The Applicant Borrower has indicated its desire to become a Borrower
pursuant to the terms of the Credit Agreement.
Accordingly the Applicant Borrower hereby agrees as follows with the
Agent, for the benefit of the Lenders:
1. The Applicant Borrower hereby acknowledges, agrees and confirms that,
by its execution of this Agreement, the Applicant Borrower will be deemed to be
a party to the Credit Agreement and a "Borrower" for all purposes of the Credit
Agreement and the other Credit Documents, and shall have all of the obligations
of a Borrower thereunder as if it has executed the Credit Agreement and the
other Credit Documents. The Applicant Borrower hereby ratifies, as of the date
hereof, and agrees to be bound by, all of the terms, provisions and conditions
contained in the Credit Agreement and in the Credit Documents, including
without limitation (i) all of the representations and warranties of the Credit
Parties set forth in Section 6 of the Credit Agreement, as supplemented from
time to time in accordance with the term thereof, and (ii) all of the
affirmative and negative covenants set forth in Sections 7, 8, and 9 of the
Credit Agreement.
2. The Company confirms that all of its and its Subsidiaries' obligations
under the Credit Agreement are, and upon the Applicant Borrower becoming a
Borrower shall continue to be, in full force and effect. The Company further
confirms that immediately upon the Applicant Borrower becoming a Borrower the
term "Obligations", as used in the Credit Agreement, shall include all
Obligations of such Applicant Borrower under the Credit Agreement and under
each other Credit Document.
3. The Applicant Borrower hereby agrees that upon becoming a Borrower it
will assume all Obligations of a Borrower as set forth in the Credit Agreement.
By its execution of this Agreement, the Applicant Borrower appoints each of
__________________, [title] and _________________, [title], of the Company, to
be its attorneys ("its Attorneys") and in its name and on its behalf and as its
act and deed or otherwise to sign all documents and carry out all such acts as
are necessary or appropriate in connection with executing any Notice of
Borrowing or any Notice of Extension/Conversion (the "Documents") in connection
with the Credit Agreement, provided that such Documents are in substantially
the form provided therefor in the applicable exhibits thereto. This Power of
Attorney shall be valid for the duration of the term of the Credit Agreement.
The Applicant Borrower hereby undertakes to ratify everything which either of
its Attorneys shall do in order to execute the Documents mentioned herein.
-15-
<PAGE> 104
4. Each of the Company and the Applicant Borrower agrees that at any time
and from time to time, upon the written request of the Agent, it will execute
and deliver such further documents and do such further acts and things
as the Agent may reasonably request in order to effect the purposes of this
Agreement.
5. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.
6. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the Applicant Borrower and the Company have each
caused this Borrower Joinder Agreement to be duly executed by its authorized
officers, and the Agent, for the benefit of the Lenders, has caused the same to
be accepted by its authorized officer, as of the day and year first above
written.
<<APPLICANT BORROWER>>
By:
--------------------
Name:
------------------
Title:
-----------------
PENSKE MOTORSPORTS, INC.
By:
--------------------
Name:
------------------
Title:
-----------------
FIRST UNION NATIONAL BANK,
as Agent
By:
--------------------
Name:
------------------
Title:
-----------------
-16-
<PAGE> 105
SCHEDULE A
to
Borrower Joinder Agreement
Schedules to Credit Agreement
(to be updated as necessary)
-17-
<PAGE> 106
SCHEDULE 1.1A
LENDERS AND COMMITMENTS
<TABLE>
<CAPTION>
REVOLVING CREDIT REVOLVING CREDIT
LENDER COMMITMENT COMMITMENT PERCENTAGE
- ------ ------------------------- -------------------------
<S> <C> <C>
First Union National Bank $ 20,000,000 20%
NationsBank, N.A. $ 20,000,000 20%
Bank of America, NT & SA $ 20,000,000 20%
Comerica Bank $ 20,000,000 20%
Societe Generale $ 20,000,000 20%
TOTAL $100,000,000 100%
</TABLE>
<PAGE> 107
SCHEDULE 1.1B
-------------
to
Credit Agreement
among
Penske Motorsports, Inc.
and Certain Subsidiaries, as Borrowers
and
First Union Bank of North Carolina, as Agent for the
$100,000,000 Credit Facility
EXCLUDED CONTINGENT OBLIGATIONS
-------------------------------
Keepwell Agreement dated August 29, 1997 in favor of First Union National Bank
related to indebtedness of Homestead-Miami Speedway, LLC.
Guaranty of Payment and Performance Agreement dated May 15, 1997 between Penske
Motorsports, Inc. and Brand Banking and Trust (United Carolina Bank) in the
amount of $6,000,000.
-19-
<PAGE> 108
SCHEDULE 6.2
to
Credit Agreement
among
Penske Motorsports, Inc.
and Certain Subsidiaries, as Borrowers
and
First Union Bank of North Carolina, as Agent for the
$100,000,000 Credit Facility
SUBSIDIARIES
Wholly-Owned
- - California Speedway Corporation, a Delaware corporation
- - Competition Tire South, Inc., a Delaware corporation
- - Competition Tire West, Inc., a Michigan corporation
- - Michigan International Speedway, Inc., a Michigan corporation
- - Motorsports International Corp., a Pennsylvania corporation
- - Pennsylvania International Raceway, Inc., a Pennsylvania corporation
70% Owned
- - North Carolina Motor Speedway, a North Carolina corporation
-20-
<PAGE> 109
SCHEDULE 6.8
to
Credit Agreement
among
Penske Motorsports, Inc.
and Certain Subsidiaries, as Borrowers
and
First Union Bank of North Carolina, as Agent for the
$100,000,000 Credit Facility
ENVIRONMENTAL DISCLOSURES
All environmental matters discussed in the Company's reports as filed with the
Securities and Exchange Commission.
-21-
<PAGE> 110
SCHEDULE 6.12
to
Credit Agreement
among
Penske Motorsports, Inc.
and Certain Subsidiaries, as Borrowers
and
First Union Bank of North Carolina, as Agent for the
$100,000,000 Credit Facility
EMPLOYEE RELATIONS
NONE
-22-
<PAGE> 111
SCHEDULE 6.16
to
Credit Agreement
among
Penske Motorsports, Inc.
and Certain Subsidiaries, as Borrowers
and
First Union Bank of North Carolina, as Agent for the
$100,000,000 Credit Facility
EXISTING INDEBTEDNESS AND LIENS
INDEBTEDNESS
Entity Nature of Agreement
------ -------------------
Penske Motorsports, Inc. Obligations maturing in 2000 of
approx. $1,650,000 related to the
Company's purchase of Competition
Tire business
Pledge in favor of First Union
National Bank of Company's
Partnership Interest in
Homestead-Miami Speedway, LLC
(HMS) related to indebtedness of
HMS.
Obligations due under a $20
million Revolving Credit Agreement
with First Union National Bank.*
Obligations due under a $40
million Revolving Credit Agreement
with NationsBank, N.A.*
PSH Reimbursement Agreement
dated May 15, 1997 relating to
Letter of Credit issued by First
Union National Bank.
Michigan International Speedway, Inc. Obligations maturing in 1998 of
approx. $450,000 for the purchase
of land.
Pennsylvania International Speedway Obligations maturing in 2006 of
approx. $1,210,000 for the
purchase of land.
- ----------------------------------
*Obligations to be paid at closing
-23-
<PAGE> 112
Entity Nature of Agreement
------ -------------------
North Carolina Motor Speedway Obligations due under a $5.5 million
debt facility with Branch
Banking and Trust Company (United
Carolina Bank).
$600,000 Line of Credit with Branch
Banking and Trust Company (United
Carolina Bank).
LIENS
Penske Motorsports, Inc. interest in Homestead-Miami.
Liens on Homestead-Miami Speedway facility and all other assets.
Liens on North Carolina Motor Speedway assets as security relating to its debt
facility.
<PAGE> 113
SCHEDULE 6.17
to
Credit Agreement
among
Penske Motorsports, Inc.
and Certain Subsidiaries, as Borrowers
and
First Union Bank of North Carolina, as Agent, for the
$100,000,000 Credit Facility
LITIGATION
----------
All litigation matters disclosed in the Company's reports as filed with
the Securities and Exchange Commission.
-24-
<PAGE> 114
SCHEDULE 9.3
to
Credit Agreement
among
Penske Motorsports, Inc.
and Certain Subsidiaries, as Borrowers
and
First Union Bank of North Carolina, as Agent for the
$100,000,000 Credit Facility
INVESTMENTS
7% interest in Grand Prix Association of Long Beach Inc.
40% interest in Homestead-Miami Speedway, LLC
-25-
<PAGE> 115
SCHEDULE 9.6
to
Credit Agreement
among
Penske Motorsports, Inc.
and Certain Subsidiaries, as Borrowers
and
First Union Bank of North Carolina, as Agent
$100,000,000 Credit Facility
TRANSACTIONS WITH AFFILIATES
Transactions generally of the nature described in the Company's Proxy
Statement and other periodic reports filed with the Securities Exchange
Commission.
-26-
<PAGE> 1
EXHIBIT 15.1
November 11, 1997
Penske Motorsports, Inc.
13400 Outer Drive, West
Detroit, Michigan 48239
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Penske Motorsports, Inc. for the periods ended September 30, 1997
and 1996, as indicated in our report dated October 30, 1997; because we did not
perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997, is
incorporated by reference in Registration Statement No. 333-692 on Form S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ Deloitte & Touche LLP
Detroit, Michigan
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING CONDENSED CONSOLIDATED BALANCE SHEET OF PENSKE MOTORSPORTS, INC. AS
OF SEPTEMBER 30, 1997 AND THE RELATED CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,864
<SECURITIES> 0
<RECEIVABLES> 7,198
<ALLOWANCES> 0
<INVENTORY> 3,360
<CURRENT-ASSETS> 15,673
<PP&E> 241,634
<DEPRECIATION> 20,318
<TOTAL-ASSETS> 284,211
<CURRENT-LIABILITIES> 30,829
<BONDS> 49,739
0
0
<COMMON> 141
<OTHER-SE> 190,675
<TOTAL-LIABILITY-AND-EQUITY> 284,211
<SALES> 10,250
<TOTAL-REVENUES> 43,974
<CGS> 6,009
<TOTAL-COSTS> 28,679
<OTHER-EXPENSES> 727
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 766
<INCOME-PRETAX> 13,802
<INCOME-TAX> 4,957
<INCOME-CONTINUING> 8,845
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,845
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING CONDENSED CONSOLIDATED BALANCE SHEET OF PENSKE MOTORSPORTS, INC. AS
OF SEPTEMBER 30, 1997 AND THE RELATED CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,864
<SECURITIES> 0
<RECEIVABLES> 7,198
<ALLOWANCES> 0
<INVENTORY> 3,360
<CURRENT-ASSETS> 15,673
<PP&E> 241,634
<DEPRECIATION> 20,318
<TOTAL-ASSETS> 284,211
<CURRENT-LIABILITIES> 30,829
<BONDS> 49,739
0
0
<COMMON> 141
<OTHER-SE> 190,675
<TOTAL-LIABILITY-AND-EQUITY> 284,211
<SALES> 26,475
<TOTAL-REVENUES> 95,645
<CGS> 15,411
<TOTAL-COSTS> 64,991
<OTHER-EXPENSES> 727
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 689
<INCOME-PRETAX> 29,238
<INCOME-TAX> 10,975
<INCOME-CONTINUING> 18,263
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,263
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.33
</TABLE>
