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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM 10-K/A
AMENDMENT NO. 1
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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(MARK ONE)
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________ to __________________
Commission file number 1-6981
NATIONAL EDUCATION CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-2774428
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2601 MAIN STREET
IRVINE, CALIFORNIA 92614
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 474-9400
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, New York Stock Exchange
$.01 par value Pacific Stock Exchange
6 1/2% Convertible Subordinated New York Stock ExchanGE
Debentures Due 2011 Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
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Page 1 of 68
Exhibit Index Appears on Page 8
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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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /x/
The aggregate market value of the registrant's voting stock held by
nonaffiliates of the registrant as of February 29, 1996, based on the closing
price for such Common Stock on the New York Stock Exchange on such date, was
$323,042,522.
The number of shares of registrant's Common Stock outstanding as of
February 29, 1996, was 35,166,818.
DOCUMENTS INCORPORATED BY REFERENCE
No documents are incorporated by reference in this Form 10-K/A
Amendment No. 1.
Cover Page 2
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
(1) Financial Statements: previously filed with National Education
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1995, filed March 19, 1996.
(2) Financial Statement Schedules: previously filed with National
Education Corporation's Annual Report on Form 10-K for the year
ended December 31, 1995, filed March 19, 1996.
(3) Exhibits: Management contracts and compensatory plans and
arrangements required to be filed as an exhibit to this Annual
Report on Form 10-K are denoted with an "**" after the Exhibit
number.
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ----
<S> <C> <C>
3.1 Restated Certificate of Incorporation of the National Education
Corporation (23) ........................................................ *
3.2 By-Laws of National Education Corporation, as amended (1)................ *
10.1 ** National Education Corporation Retirement Plan (Restated as of
January 1, 1989 and as Amended through January 1, 1992) (2).............. *
10.2 ** Advanced Systems, Incorporated 1984 Stock Option and Stock
Appreciation Rights Plan (3)............................................. *
10.3 ** 1986 Stock Option and Incentive Plan, as amended (4)..................... *
10.4 ** Amended and Restated 1990 Stock Option and Incentive Plan (5)............ *
10.5 ** Amended and Restated 1991 Directors' Stock Option and Award Plan (6)..... *
10.6 Rights Agreement, dated October 29, 1986, between National
Education Corporation and Bank of America National Trust and
Savings Association, Rights Agent (including exhibits thereto) (7)....... *
10.7 Addendum No. 1 to Rights Agreement, dated August 5, 1991 (8)............. *
10.8 Indenture, dated as of May 15, 1986, between National Education
Corporation and Continental Illinois National Bank and Trust
Company of Chicago, as Trustee (9)....................................... *
10.9 Tripartite Agreement Dated as of May 31, 1990, among National
Education Corporation, Continental Bank as Resigning Trustee, and
IBJ Schroder Bank & Trust Company as Successor Trustee (10).............. *
10.10 ** National Education Corporation Supplemental Executive Retirement
Plan, as amended (11).................................................... *
</TABLE>
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<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ----
<S> <C> <C>
10.11 ** Supplemental Benefit Plan for Non-Employee Directors (12)................... *
10.12 ** Executive Employment Agreement between National Education Corporation
and Sam Yau (13)............................................................ *
10.13 Intercompany Agreement Between National Education Corporation and
Steck-Vaughn Publishing Corporation dated June 30, 1993 (the
"Intercompany Agreement")(14)............................................... *
10.14 First Amendment to Intercompany Agreement, dated June 10, 1994 (15)......... *
10.15 Tax Sharing Agreement Between National Education Corporation and
Its Direct and Indirect Corporate Subsidiaries dated January 1,
1993 (16)................................................................... *
10.16 $13,500,000 Amended and Restated Credit Agreement among National
Education Corporation, the Banks named therein and Bankers Trust
Company as Agent, dated February 28, 1995 (the "Credit Agreement")
(Confidential treatment under Rule 24b-2 has been granted for
portions of this exhibit) (17).............................................. *
10.17 First Amendment and Limited Waiver to Credit Agreement, dated July
31, 1995 (18)............................................................... *
10.18 Second Amendment to Credit Agreement, dated December 21, 1995 (23).......... *
10.19 $10,000,000 Credit Agreement between Steck-Vaughn Company and
NationsBank of Texas, dated as of June 10, 1994 (19)........................ *
10.20 Amendment of Loan Agreement between NationsBank of Texas, N.A. and
Steck-Vaughn Company, dated September 29, 1995 (20)......................... *
10.21 Revolving Line of Credit Note and Option Agreement between National
Education Corporation and Steck-Vaughn Publishing Corporation,
dated February 28, 1995 (21)................................................ *
10.22 Renewal and Extension Agreement between National Education
Corporation and Steck-Vaughn Publishing Corporation, effective
December 31, 1995 (23)...................................................... *
10.23 First Amendment to Stock Option Agreement between National
Education Corporation and Steck-Vaughn Publishing Corporation,
effective December 31, 1995 (23).............................................*
10.24 Letter Amendment to Stock Option Agreement between National
Education Corporation and Steck-Vaughn Publishing Corporation,
dated February 1, 1996 (23)................................................. *
10.25 Debenture Conversion Agreement among National Education Corporation
and the Holders identified therein, dated August 31, 1995 (22).............. *
10.26 Credit Agreement among National Education Corporation, certain
banks and BZW Division of Barclays Bank PLC, as Agent, dated
January 19, 1996 (24) ...................................................... 9
</TABLE>
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<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ----
<S> <C> <C>
11.1 Calculation of Primary Earnings Per Share (23).............................. *
11.2 Calculation of Fully Diluted Earnings Per Share (23)........................ *
18 Letter from Price Waterhouse LLP regarding change in accounting
principles (23)............................................................. *
21 Subsidiaries of National Education Corporation (23)......................... *
23 Consent of Price Waterhouse LLP (23)........................................ *
27.1 Financial Data Schedule (23)................................................ *
</TABLE>
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* incorporated by reference from a previously filed document
** denotes management contract or compensatory plan or arrangement
(1) Incorporated by reference to Exhibit 10 filed with National
Education Corporation's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1990.
(2) Incorporated by reference to Exhibit 10.1 filed with National
Education Corporation's Annual Report on Form 10-K for the year
ended December 31, 1992, filed March 22, 1993.
(3) Incorporated by reference to Exhibit 10.15 filed with National
Education Corporation's Annual Report on Form 10-K for the year
ended December 31, 1987, filed March 30, 1988.
(4) Incorporated by reference to Exhibit 10.17 filed with National
Education Corporation's Annual Report on Form 10-K for the year
ended December 31, 1990, filed April 1, 1991.
(5) Incorporated by reference to Exhibit "B" filed with National
Education Corporation's Proxy Statement furnished in connection with
the Annual Meeting of Stockholders held June 27, 1995, filed May 22,
1995.
(6) Incorporated by reference to Exhibit "A" filed with National
Education Corporation's Proxy Statement furnished in connection with
the Annual Meeting of Stockholders held June 27, 1995, filed May 22,
1995.
(7) Incorporated by reference to Exhibit 4.1 filed with National
Education Corporation's Current Report on Form 8-K, dated October
29, 1986, filed October 30, 1986.
(8) Incorporated by reference to Exhibit 10.19 filed with National
Education Corporation's Annual Report on Form 10-K for the year
ended December 31, 1991, filed April 1, 1992.
(9) Incorporated by reference to Exhibit 4.2 filed with Amendment No. 1
to National Education Corporation's Registration Statement on Form
S-3 (No. 33-5552), filed May 16, 1986.
(10) Incorporated by reference to Exhibit 4 filed with National Education
Corporation's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1990.
(11) Incorporated by reference to Exhibit 10.17 filed with National
Education Corporation's Annual Report on Form 10-K for the year
ended December 31, 1991, filed April 1, 1992.
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(12) Incorporated by reference to Exhibit 10.18 filed with National
Education Corporation's Annual Report on Form 10-K for the year
ended December 31, 1991, filed April 1, 1992.
(13) Incorporated by reference to Exhibit 10.21 filed with National
Education Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995.
(14) Incorporated by reference to Exhibit 10.8 filed with Amendment No. 1
to Steck-Vaughn Publishing Corporation's Registration Statement on
Form S-1, (No. 33-62334), filed June 17, 1993.
(15) Incorporated by reference to Exhibit 10.23 filed with National
Education Corporation's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994, filed August 11, 1994.
(16) Incorporated by reference to Exhibit 10.9 filed with Amendment No. 1
to Steck-Vaughn Publishing Corporation's Registration Statement on
Form S-1, (No. 33-62334), filed June 17, 1993.
(17) Incorporated by reference to Exhibit 10.18 filed with National
Education Corporation's Annual Report on Form 10-K for the year
ended December 31, 1994, filed March 31, 1995.
(18) Incorporated by reference to Exhibit 10.22 filed with National
Education Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995, filed November 9, 1995.
(19) Incorporated by reference to Exhibit 10.14 filed with Steck-Vaughn
Publishing Corporation's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994, filed August 11, 1994.
(20) Incorporated by reference to Exhibit 10.24 filed with National
Education Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995, filed November 9, 1995.
(21) Incorporated by reference to Exhibit 10.12 filed with Steck-Vaughn
Publishing Corporation's Annual Report on Form 10-K for the year
ended December 31, 1994, filed March 29, 1995.
(22) Incorporated by reference to Exhibit 10.23 filed with National
Education Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995, filed November 9, 1995.
(23) Incorporated by reference to identically numbered Exhibit filed with
National Education Corporation's Annual Report on Form 10-K for the
year ended December 31, 1995, filed March 19, 1996.
(24) Filed herewith.
(b) No reports on Form 8-K were filed during the fourth quarter of 1995.
(c) The exhibits required by this Item are listed under Item 14(a)(3) above.
(d) The consolidated financial statements required by this Item are listed under
Item 14(a)(2).
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
NATIONAL EDUCATION CORPORATION Date
\
By /s/ KEITH K. OGATA July 25, 1996
--------------------------------
Keith K. Ogata
Vice President, Chief Financial
Officer and Treasurer
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EXHIBITS FILED HEREIN
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ----
<S> <C> <C>
10.26 Credit Agreement among National Education Corporation, certain
banks and BZW Division of Barclays Bank PLC, as Agent, dated
January 19, 1996............................................................. 9
</TABLE>
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EXHIBIT 10.26
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of January 19, 1996, among NATIONAL
EDUCATION CORPORATION, a Delaware corporation (the "Borrower"), the several
banks and other financial institutions from time to time parties to this
Agreement (the "Lenders") and the Agent, as agent for the Lenders hereunder.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For
purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors
of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
"Agent": BZW Division of Barclays Bank PLC, together with its
affiliates, as the arranger of the Commitments and as the agent for the
Lenders under this Agreement and the other Loan Documents.
"Aggregate Outstanding Extensions of Credit": at any time of
determination thereof, the sum of (a) the unpaid principal amount of
Loans at such time, (b) the aggregate amount available to be drawn
under all Letters of Credit outstanding at such time and (c) the
aggregate unreimbursed amount at such time of all drawings under
Letters of Credit.
"Agreement": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"Applicable Margin": for each Type of Loan, the rate per annum
set forth under the relevant column heading below:
<TABLE>
<CAPTION>
Base Rate Eurodollar
Loans Loans
----- -----
<S> <C>
1.75% 3.0%;
</TABLE>
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provided, that commencing with the fiscal quarter ending June 30, 1996,
the Applicable Margin shall be adjusted from time to time as described
below to the rate per annum set forth under the relevant column heading
below opposite the then applicable Coverage Ratio:
<TABLE>
<CAPTION>
Base Rate Eurodollar
Coverage Ratio Loans Loans
-------------- ----- -----
<S> <C> <C>
Greater than or
equal to 7.0:1.0 .75% 2.0%
Greater than or equal 1.0% 2.25%
to 6.0:1.0 but less
than 7.0:1.0
Greater than or equal 1.25% 2.50%
to 5.0:1.0 but less
than 6.0:1.0
Greater than or equal 1.50% 2.75%
to 4.0 to 1.0 but
less than 5.0 to 1.0
Less than 4.0 to 1.0 1.75% 3.0%
</TABLE>
Any change in the Applicable Margin required hereunder shall be deemed
to occur on the earlier of (x) the later of (1) the date the Borrower delivers
to the Lenders its preliminary financial statements for the fiscal quarter then
most recently ended and (2) the date which is ten days after the end of such
fiscal quarter and (y) the date of delivery by the Borrower of the financial
statements for such quarter required pursuant to subsection 7.1(a) or (b),
provided, however, that if the Applicable Margin shall have been adjusted based
on the preliminary financial statements, and the financial statements for such
fiscal quarter delivered pursuant to subsection 7.1(a) or (b) show:
(A) a Coverage Ratio corresponding to an Applicable Margin higher than
the Applicable Margin as so adjusted, the Applicable Margin shall be
retroactively readjusted to the date of delivery of such preliminary
financial statements for such fiscal quarter, and the Borrower shall
pay the increased interest resulting from such readjustment, with
interest on such increment at the Federal Funds Effective Rate, plus a
charge (payable on the date of such readjustment) of $150 for effecting
such adjustment, or
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(B) a Coverage Ratio corresponding to an Applicable Margin lower than
the Applicable Margin as so adjusted, the Applicable Margin shall, on
the date of delivery of such financial statements, be adjusted
prospectively to such lower Applicable Margin.
"Assignee": as defined in subsection 11.6(c).
"Assignment of Life Insurance": the Assignment of Life Insurance to be
executed and delivered by the Borrower, substantially in the form of Exhibit B,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Available Commitment": as to any Lender at any time, an amount equal
to the excess, if any, of (a) the amount of such Lender's Commitment over (b)
such Lender's Aggregate Outstanding Extensions of Credit.
"Barclays": BZW Division of Barclays Bank PLC.
"Base Rate": for any day, the higher of (i) the rate of interest
publicly announced by Barclays in New York, New York from time to time as its
prime rate (the prime rate not being intended to be the lowest rate of interest
charged by Barclays in connection with extensions of credit to debtors) and (ii)
1/2 of 1% above the Federal Funds Rate for such day.
"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"Borrowing Date": any Business Day specified in a notice pursuant to
subsection 2.2 as a date on which the Borrower requests the Lenders to make
Loans hereunder.
"Business": as defined in subsection 5.17(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.
"Cash Equivalents": (a) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date of
acquisition and overnight bank deposits of any Lender or of any commercial bank
having capital and surplus in excess of
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$500,000,000, (c) repurchase obligations of any Lender or of any commercial bank
satisfying the requirements of clause (b) of this definition, having a term of
not more than 30 days with respect to securities issued or fully guaranteed or
insured by the United States Government, (d) commercial paper of a domestic
issuer rated at least A-2 by Standard and Poor's Ratings Group ("S&P") or P-2 by
Moody's Investors Service, Inc. ("Moody's"), (e) securities with maturities of
one year or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory or
by any foreign government, the securities of which state, commonwealth,
territory, political subdivision, taxing authority or foreign government (as the
case may be) are rated at least A by S&P or A by Moody's, (f) securities with
maturities of one year or less from the date of acquisition backed by standby
letters of credit issued by any Lender or any commercial bank satisfying the
requirements of clause (b) of this definition or (g) shares of money market
mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.
"Closing Date": the date on which the conditions precedent set forth in
subsection 6.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all assets of the Loan Parties, now owned or hereinafter
acquired, upon which a Lien is purported to be created by any Security Document.
"Collateral Agent": BZW Division of Barclays Bank PLC acting in the
capacity of the Collateral Agent on behalf of the Lenders and SV pursuant to the
Intercreditor Agreements and shall include any successor Collateral Agent
appointed pursuant to this Agreement and the Intercreditor Agreement.
"Commercial L/C's": a commercial documentary Letter of Credit under
which the Issuing Bank agrees to make payments in Dollars for the account of the
Borrower, in respect of obligations of the Borrower in connection with the
purchase of goods in the ordinary course of business.
"Commitment": as to any Lender, the obligation of such Lender to make
Extensions of Credit to the Borrower hereunder in an aggregate outstanding
principal amount and/or face amount at any one time outstanding not to exceed
the amount set forth opposite such Lender's name on Schedule I, as such amount
may be reduced from time to time in accordance with the provisions of this
Agreement. Commitment.
"Commitment Percentage": as to any Lender at any time, the percentage
which such Lender's Commitment then constitutes of the aggregate Commitments
(or, at any time after the Commitments shall have expired or terminated, the
percentage which the
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aggregate outstanding amount of such Lender's Extensions of Credit constitutes
of the aggregate outstanding amount of all Extensions of Credit).
"Commitment Period": the period from and including the Closing Date to
but not including the Termination Date or such earlier date on which the
Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group which includes the Borrower and which is
treated as a single employer under Section 414 of the Code.
"Consolidated Current Assets": at a particular date, all amounts which
would, in conformity with GAAP, be included under current assets on a
consolidated balance sheet of the Borrower and its Subsidiaries as at such date.
"Consolidated Current Liabilities": at a particular date, all amounts
which would, in conformity with GAAP, be included under current liabilities on a
consolidated balance sheet of the Borrower and its Subsidiaries as at such date.
"Consolidated EBITDA": for any period, Consolidated Net Income of the
Borrower and its Subsidiaries for such period plus, without duplication and to
the extent reflected as a charge in the statement of such Consolidated Net
Income, the sum of (a) income tax expense, (b) Consolidated Interest Expense,
(c) depreciation and amortization expense, (d) any extraordinary, unusual or
non-recurring losses (including, whether or not otherwise includable as a
separate item in the statement of such Consolidated Net Income, losses on the
sales of assets outside of the ordinary course of business) and (e) other
non-cash charges to Consolidated Net Income, minus, without duplication and to
the extent reflected as income in the statement of such Consolidated Net Income,
any extraordinary, unusual or non-recurring gains (including, whether or not
otherwise includable as a separate item in the statement of such Consolidated
Net Income, gains on the sales of assets outside of the ordinary course of
business).
"Consolidated Interest Expense": for any period, interest expense of
the Borrower and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.
"Consolidated Lease Expense": for any period, the aggregate amount of
fixed and contingent rentals payable by the Borrower and its Subsidiaries for
such period with respect to leases of real and personal property, determined in
accordance with GAAP on a consolidated basis.
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"Consolidated Net Income": for any period, net after-tax income of the
Borrower and its Subsidiaries for such period determined in accordance with GAAP
on a consolidated basis.
"Consolidated Net Worth": at a particular date, all amounts which would
be included under shareholders' equity on a consolidated balance sheet of the
Borrower and its Subsidiaries determined on a consolidated basis in accordance
with GAAP as at such date.
"Consolidated Total Indebtedness": at a particular date, all
Indebtedness of the Borrower and its Subsidiaries as at such date on a
consolidated basis.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Coverage Ratio": as of any date of determination, the ratio of
Consolidated EBITDA for the 12-month period then ended minus Net Capital
Expenditures during such period to Consolidated Interest Expense for such
period.
"Default": any of the events specified in Section 9, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Subsidiary": any Subsidiary of the Borrower other than a
Foreign Subsidiary.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for
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eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the rate at
which Barclays is offered Dollar deposits at or about 10:00 A.M., New York City
time, two Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of its Eurodollar Loans are then being conducted
for delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its Eurodollar
Loan to be outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Eurodollar Loans shall
originally have been made on the same day).
"Event of Default": any of the events specified in Section 9, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Extension of Credit": the making of any Loan by any Lender and the
issuance of any Letter of Credit by the Issuing Bank.
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
quotations, for the day, of such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
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"Foreign Subsidiary": any Subsidiary of the Borrower which is organized
under the laws of any jurisdiction outside of the United States of America.
"GAAP": generally accepted accounting principles in the United States
of America consistent with those utilized in preparing the audited financial
statements referred to in subsection 5.1.
"Global Security Agreement": the Guarantee and Collateral Agreement to
be executed and delivered by the Borrower and each Loan Party, substantially in
the form of Exhibit D, as the same may be amended, supplemented or otherwise
modified from time to time.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the creation
of which the guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
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"Indebtedness": of any Person at any date, (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person under Financing Leases,
(d) all obligations of such Person in respect of acceptances issued or created
for the account of such Person, (e) all obligations of such Person in respect of
letters of credit issued for the account of such Person and (f) all liabilities
secured by any Lien on any property owned by such Person even though such Person
has not assumed or otherwise become liable for the payment thereof.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intercreditor Agreement": the Intercreditor Agreement, dated as of
January 19, 1996, by and among the Agent, SV and BZW Division of Barclays Bank
PLC, as
Collateral Agent, substantially in the form of Exhibit D.
"Intercreditor Agreements": the collective reference to (i) the
Intercreditor Agreement and (ii) the Intercreditor Pledge Agreement.
"Intercreditor Pledge Agreement": the Pledge and Security Agreement,
dated as of January 19, 1996 made by the Borrower in favor of the Agent
substantially in the form of Exhibit E.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day of
each calendar month, (b) as to any Eurodollar Loan having an Interest Period of
three months or less, the last day of such Interest Period, and (c) as to any
Eurodollar Loan having an Interest Period longer than three months, each day
which is three months or a whole multiple thereof, after the first day of such
Interest Period and the last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one,
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two, three or six months thereafter, as selected by the Borrower by
irrevocable notice to the Agent not less than three Business Days prior
to the last day of the then current Interest Period with respect
thereto;
provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless the
result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on
the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date;
(3) any Interest Period pertaining to a Eurodollar 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 a calendar month; and
(4) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Issuing Bank": Barclays Bank PLC.
"L/C Application": as defined in Section 3.1.
"L/C Commitment": $3,000,000.
"L/C Obligations": the obligations of the Borrower to reimburse the
Issuing Bank for any payments made by the Issuing Bank under any Letter of
Credit.
"L/C Participating Interest": an undivided participating interest in
the face amount of each issued and outstanding Letter of Credit and the L/C
Application relating thereto.
"Letters of Credit": the collective reference to Commercial L/C's and
Standby L/C's issued pursuant to Section 3.1.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind
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or nature whatsoever (including, without limitation, any conditional sale or
other title retention agreement and any Financing Lease having substantially the
same economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, any Notes, any L/C Applications, the
Intercreditor Agreement and the Security Documents.
"Loan Parties": the Borrower and each Subsidiary of the Borrower which
is a party to a Loan Document.
"Majority Lenders": at any time, Lenders the Commitment Percentages of
which aggregate more than 50%.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this or any of the other Loan Documents or the rights or
remedies of the Agent or the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount payable by the Borrower
and/or its Subsidiaries in excess of $1,000,000 for remedial costs, compliance
costs, compensatory damages, punitive damages, fines, penalties or any
combination thereof.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"Material Subsidiary": at any time, any Subsidiary (other than SV) (a)
the consolidated assets of which and its Subsidiaries constitute at least 5% of
the consolidated total assets of the Borrower and its Subsidiaries as at the
most recent fiscal-period-end date for which financial statements shall have
been delivered to the Lenders pursuant to subsection 7.1 or (b) the consolidated
total revenues of which and its Subsidiaries constitute at least 5% of the
consolidated total revenues of the Borrower and its Subsidiaries for the most
recently ended period of four consecutive fiscal quarters for which financial
statements shall have been delivered to the Lenders pursuant to subsection 7.1;
in the case of any Person which becomes a Subsidiary after the date hereof, the
calculations described in this definition shall be made on the assumption that
such Person shall have been a Subsidiary for all periods relevant to such
calculations.
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"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Capital Expenditures": for any period of four consecutive fiscal
quarters, the excess, if any, of (a) the sum of capital expenditures by the
Borrower and its Subsidiaries during such period over (b) the aggregate Net Cash
Proceeds from the sale by the Borrower and its Subsidiaries of capital assets
during such period.
"Net Cash Proceeds": with respect to any sale of assets or issuance of
securities or incurrence by the Borrower or any of its Subsidiaries of any
Indebtedness for borrowed money of the Borrower, an amount equal to the gross
cash proceeds of such sale, issuance or incurrence, net of the following
amounts: (i) reasonable attorneys' fees, accountants' fees, brokerage,
consultant and other customary fees, underwriting commissions and other fees and
expenses actually incurred in connection with such sale, issuance or incurrence,
(ii) taxes paid or reasonably estimated to be payable as a result thereof, after
taking into account all available deductions and credits in connection with such
sale, (iii) appropriate amounts to be provided by the Borrower or any of its
Subsidiaries as a reserve in accordance with GAAP as in effect from time to
time, against any liabilities associated with such sale and retained by the
Borrower or such Subsidiary, as the case may be, after such sale, and (iv) in
the case of a sale or sale and leaseback of or involving an asset subject to a
Lien securing (a) any Indebtedness, payments made and installment payments
required to be made to repay such Indebtedness, including payments in respect of
principal, interest and prepayment premiums and penalties to the extent such
amounts are not paid to the Borrower with respect to such sale.
"Non-Excluded Taxes": as defined in subsection 4.10(a).
"Notes": the Revolving Credit Notes.
"Participant": as defined in subsection 11.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
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"Properties": as defined in subsection 5.17(a).
"Reimbursement Obligation": the obligation of the Borrower to reimburse
the Issuing Bank pursuant to subsection 3.5(a) for amounts drawn under Letters
of Credit.
"Register": as defined in subsection 11.6(d).
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section
2615.
"Required Lenders": at any time, Lenders the Commitment Percentages of
which aggregate at least 66-2/3%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": any of the chief executive officer and the
president of the Borrower or, with respect to financial matters, the chief
financial officer of the Borrower.
"Revolving Credit Loans": as defined in subsection 2.1(a).
"Revolving Credit Note": as defined in subsection 4.3(e).
"Security Documents": the collective reference to the Global Security
Agreement, the Assignment of Life Insurance, the Intercreditor Pledge Agreement
and all other security documents hereafter delivered to the Agent granting a
Lien on any asset or assets of any Person to secure the obligations and
liabilities of the Borrower hereunder and under any of the other Loan Documents
or to secure any guarantee of any such obligations and liabilities.
"Single Employer Plan": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
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"Solvent" and "Solvency": with respect to any Person on a particular
date, that on such date, (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair salable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured, (c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature, and (d) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute an unreasonably small capital.
"Standby L/C": an irrevocable letter of credit under which the Issuing
Bank agrees to make payments in Dollars for the account of the Borrower, in
respect of obligations of the Borrower incurred pursuant to contracts made or
performances undertaken or to be undertaken by the Borrower or any of its
Subsidiaries.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Borrower.
"SV": Steck-Vaughn Publishing Corporation, a Delaware corporation.
"SV Stock Option": the option granted by the Borrower to SV to purchase
290,000 shares of SV's outstanding common stock from the Borrower for an
exercise price $6.50 per share, which option expires on March 31, 1997.
"Termination Date": January 19, 1998.
"Transferee": as defined in subsection 11.6(f).
"Type": as to any Loan, its nature as a Base Rate Loan or a Eurodollar
Loan.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Notes or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not
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defined in subsection 1.1 and accounting terms partly defined in subsection 1.1,
to the extent not defined, shall have the respective meanings given to them
under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Lender severally agrees to make revolving credit loans
("Revolving Credit Loans") to the Borrower from time to time during the
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Commitment Percentage of the then outstanding
L/C Obligations, does not exceed the amount of such Lender's Commitment. During
the Commitment Period the Borrower may use the Commitments by borrowing,
prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all
in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) Base Rate Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Agent in accordance with subsections 2.2 and 2.4,
provided that no Revolving Credit Loan shall be made as a Eurodollar Loan after
the day that is one month or 30 days, respectively, prior to the Termination
Date.
2.2 Procedure for Revolving Credit Borrowing. The Borrower may borrow
under the Commitments during the Commitment Period on any Business Day, provided
that the Borrower shall give the Agent irrevocable notice (which notice must be
received by the Agent prior to 12:00 P.M., New York City time, (a) three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Revolving Credit Loans are to be initially Eurodollar Loans, or (b)
one Business Day prior to the requested Borrowing Date, otherwise), specifying
(i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether
the borrowing is to be of Eurodollar Loans, Base Rate Loans or a combination
thereof and (iv) if the borrowing is to be entirely or partly of Eurodollar
Loans, the respective amounts of each such Type of Loan and the respective
lengths of the initial Interest Periods therefor; provided, further, that any
borrowing made on the Closing Date shall be of Base Rate Loans only and shall
require only same day notice to the Agent. Each borrowing of Eurodollar Loans
under the Commitments shall be in an amount equal to $500,000 or a whole
multiple of $100,000 in excess thereof. Each borrowing of Base Rate Loans under
the Commitments shall be in an amount equal to $100,000 or a whole multiple
thereof. Upon receipt of any such notice from
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the Borrower, the Agent shall promptly notify each Lender thereof. Each Lender
will make the amount of its pro rata share of each borrowing available to the
Agent for the account of the Borrower at the office of the Agent specified in
subsection 11.2 prior to 11:00 A.M., New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Agent. Such
borrowing will then be made available to the Borrower by the Agent crediting the
account of the Borrower on the books of such office with the aggregate of the
amounts made available to the Agent by the Lenders and in like funds as received
by the Agent.
2.3 Optional Prepayments. The Borrower may on the last day of any
Interest Period with respect thereto, in the case of Eurodollar Loans, or at any
time and from time to time, in the case of Base Rate Loans, prepay the Loans, in
whole or in part, without premium or penalty, upon at least one Business Days'
irrevocable notice to the Agent, specifying the date and amount of prepayment
and whether the prepayment is of Eurodollar Loans, Base Rate Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of any such notice the Agent shall promptly notify each
Lender thereof. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, together with any
amounts payable pursuant to subsection 4.11.
2.4 Mandatory Prepayments. If SV shall exercise its rights under the SV
Stock Option, the Borrower shall cause SV to make payment of the purchase price
directly to the Agent, which shall apply the amount so received to prepay the
Loans, and the Commitments shall be reduced by an amount equal to the amount so
prepaid. Any such prepayment shall be accompanied by payment of accrued interest
on the amount prepaid and any amounts payable pursuant to subsection 4.11.
2.5 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to Base Rate Loans by giving the
Agent at least two Business Days' prior irrevocable notice of such election,
provided that any such conversion of Eurodollar Loans may only be made on the
last day of an Interest Period with respect thereto. The Borrower may elect from
time to time to convert Base Rate Loans to Eurodollar Loans by giving the Agent
at least three Business Days' prior irrevocable notice of such election. Any
such notice of conversion to Eurodollar Loans shall specify the length of the
initial Interest Period or Interest Periods therefor. Upon receipt of any such
notice the Agent shall promptly notify each Lender thereof. All or any part of
outstanding Eurodollar Loans or Base Rate Loans may be converted as provided
herein, provided that (i) no Loan may be converted into a Eurodollar Loan when
any Event of Default has occurred and is continuing and the Agent has or the
Required Lenders have determined that such a conversion is not appropriate and
(ii) no Loan may be converted into a Eurodollar Loan after the date that is one
month prior to the Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
notice to the Agent, in accordance with the applicable provisions of the term
"Interest Period" set forth in subsection 1.1, of the length of the next
Interest Period to be applicable to such Loans, provided that no
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Eurodollar Loan may be continued as such (i) when any Event of Default has
occurred and is continuing and the Agent has or the Required Lenders have
determined that such a continuation is not appropriate or (ii) after the date
that is one month prior to, the Termination Date and provided, further, that if
the Borrower shall fail to give such notice or if such continuation is not
permitted such Loans shall be automatically converted to Base Rate Loans on the
last day of such then expiring Interest Period.
2.6 Minimum Amounts and Maximum Number of Eurodollar Tranches. All
borrowings, conversions and continuations of Eurodollar Loans hereunder and all
selections of Interest Periods hereunder shall be in such amounts and be made
pursuant to such elections so that, after giving effect thereto, the aggregate
principal amount of the Loans comprising each Eurodollar Tranche shall be equal
to $500,000 or a whole multiple of $100,000 in excess thereof and in no event
shall there be more than ten Eurodollar Tranches outstanding at any time.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the
Issuing Bank, in reliance on the agreements of the other Lenders set forth in
subsection 3.3, agrees to issue Letters of Credit for the account of the
Borrower on any Business Day during the Commitment Period in such form as may be
approved from time to time by the Issuing Bank; provided that the Issuing Bank
shall have no obligation to issue any Letter of Credit if, after giving effect
to such issuance, (1) the L/C Obligations would exceed the L/C Commitment or (2)
the Available Commitment would be less than zero.
3.2 Issuance of Letters of Credit. (a) The Borrower may from time to
time request the Issuing Bank to issue a Standby L/C or a Commercial L/C for the
account of the Borrower by delivering to the Issuing Bank, with a copy to the
Agent at its address specified in subsection 11.2, a letter of credit
application in the Issuing Bank's then customary form (an "L/C Application")
completed to the satisfaction of the Issuing Bank, together with the proposed
form of such Letter of Credit (which shall comply with the applicable
requirements of paragraph (b) below) and such other certificates, documents and
other papers and information as the Issuing Bank may reasonably request.
(b) Each Standby L/C and Commercial L/C issued hereunder shall, among
other things, (i) be denominated in Dollars, (ii) be in such form requested by
the Borrower from the Issuing Bank as shall be acceptable to the Issuing Bank in
its sole reasonable discretion, (iii) be subject to the Uniform Customs and to
the extent not inconsistent therewith, the laws of the State of New York, and
(iv) have an expiry date occurring not later than the earlier of (A) one year
after the date of issuance of such Letter of Credit and (B) the Termination
Date.
3.3 Participating Interests in Letters of Credit. The Issuing Bank
agrees to allot and does allot, to itself and each other Lender, and each Lender
severally and irrevocably agrees to take and does take in each Standby L/C and
Commercial L/C and the related L/C
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Application, an L/C Participating Interest in a percentage equal to such
Lender's Commitment Percentage.
3.4 Procedure for Opening Letters of Credit. To the extent the Agent
has not previously notified the Banks, the Agent will notify each Bank after the
end of each calendar month of any L/C Applications received by the Issuing Bank
(and copied to the Agent) during such month. Upon receipt of any L/C Application
from the Borrower, the Issuing Bank will process such L/C Application, and the
other certificates, documents and other papers delivered to it in connection
therewith, in accordance with its customary procedures and, subject to the terms
and conditions hereof, shall promptly open such Letter of Credit by issuing the
original of such Letter of Credit to the beneficiary thereof and by furnishing a
copy thereof to the Borrower and, after the end of the calendar month in which
such Letter of Credit was opened, to the other Banks, provided that no such
Letter of Credit shall be issued if the proviso to subsection 2.1(a) would be
violated thereby or if after giving effect to the issuance of any Letters of
Credit the aggregate L/C Obligations would exceed the L/C Commitment.
3.5 Payment in Respect of Letters of Credit. (a) The Borrower agrees
forthwith upon demand by the Issuing Bank and otherwise in accordance with the
terms of the L/C Application executed by the Borrower relating thereto, (i) to
reimburse the Issuing Bank for any payment made by the Issuing Bank under any
Letter of Credit issued for the Borrower's account (which reimbursement may be
made with the proceeds of Loans made in accordance with the provisions of this
Agreement) and (ii) to pay interest on any unreimbursed portion of any such
payment from the date of such payment until reimbursement in full thereof at a
rate per annum equal to (A) prior to the date which is one Business Day after
the day on which the Issuing Bank demands reimbursement from the Borrower for
such payment, the rate of interest that would be in effect for Base Rate Loans
at such time and (B) on such date and thereafter, the rate of interest that
would be in effect for overdue Base Rate Loans at such time pursuant to
subsection 4.4(c).
(b) In the event that the Issuing Bank makes a payment under any Letter
of Credit and is not reimbursed in full therefor, forthwith upon demand of the
Issuing Bank, and otherwise in accordance with the terms of the L/C Application
relating to such Letter of Credit, the Issuing Bank will promptly notify each
other Lender. Forthwith upon its receipt of any such notice, each other Lender
will transfer to the Issuing Bank, in immediately available funds, an amount
equal to such other Lender's Commitment Percentage of the L/C Obligation arising
from such unreimbursed payment.
(c) Whenever, at any time after the Issuing Bank has made a payment
under any Letter of Credit and has received from any other Lender such other
Lender's Commitment Percentage of the L/C Obligation arising therefrom, the
Issuing Bank receives any reimbursement on account of such L/C Obligation or any
payment of interest on account thereof, the Issuing Bank will distribute to such
other Lender its pro rata share thereof in like funds as received; provided,
however, that in the event that the receipt by the Issuing Bank of such
reimbursement or such payment of interest (as the case may be) is required to be
returned, such
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other Lender will return to the Issuing Bank any portion thereof previously
distributed by the Issuing Bank to it in like funds as such reimbursement or
payment is required to be returned by the Issuing Bank.
3.6 Letter of Credit Fees. (a) In lieu of any letter of credit
commissions and fees provided for in any L/C Application relating to Letters of
Credit (other than amendment and negotiation fees), the Borrower agrees to pay
to the Agent, (i) for the account of the Participating Banks (including the
Issuing Bank with respect to its own L/C Participating Interest in any Letter of
Credit issued by it), with respect to the undrawn face amount of each Letter of
Credit, a fee of 2.75% per annum from time to time; provided that, when the
Applicable Margin for Eurodollar Loans is equal to or less than 2.50%, the
Letter of Credit Fee shall be equal to the Applicable Margin and (ii) for the
account of the Issuing Bank in respect thereof, a fee of 1/4 of 1% per annum
based on the undrawn face amount thereof from time to time, each such fee to be
payable quarterly in arrears, on the last day of March, June, September and
December. Fees will be based on the actual number of days elapsed in a 360-day
year.
3.7 Further Assurances. The Borrower hereby agrees, from time to time,
to do and perform any and all acts and to execute any and all further
instruments reasonably requested by the Issuing Bank more fully to effect the
purposes of this Agreement with respect to the issuance of Letters of Credit
hereunder.
3.8 Obligations Absolute. The payment obligations of the Borrower under
this Agreement with respect to the Letters of Credit shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including, without limitation, the following
circumstances:
(a) the existence of any claim, set-off, defense or other right which
the Borrower or any of its Subsidiaries may have at any time against any
beneficiary, or any transferee, of any Letter of Credit (or any Persons for whom
any such beneficiary or any such transferee may be acting), the Issuing Bank in
respect thereof, the Agent or any Lender, or any other Person, whether in
connection with this Agreement, the Loan Documents, the transactions
contemplated herein, or any unrelated transaction;
(b) any statement or any other document presented under any Letter of
Credit proving to be forged, fraudulent or invalid or any statement therein
being untrue or inaccurate in any respect;
(c) payment by the Issuing Bank under any Letter of Credit against
presentation of a draft or certificate which does not comply with the terms of
such Letter of Credit or is insufficient in any respect, except where such
payment constitutes gross negligence or wilful misconduct on the part of the
Issuing Bank; or
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(d) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing, except for any such circumstances or happening
constituting gross negligence or wilful misconduct on the part of the Issuing
Bank.
3.9 Assignments. No Lender's participation in any Letter of Credit or
any of its rights or duties hereunder shall be subdivided, assigned or
transferred (other than in connection with a transfer of part or all of such
Lender's Commitment in accordance with Section 11.6(c)) without the prior
written consent of the Issuing Bank. Such consent may be given or withheld
without the consent or agreement of any other Lenders. Notwithstanding the
foregoing, a Lender may subparticipate its L/C Participating Interest pursuant
to Section 11.6(b) without obtaining the prior written consent of the Issuing
Bank.
3.10 Participations. Each Lender's obligation to purchase participating
interests pursuant to Section 3.2 shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right which such Lender may
have against the Issuing Bank, the Borrower or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of an Event of Default; (iii) any
adverse change in the condition (financial or otherwise) of the Borrower; (iv)
any breach of this Agreement by the Borrower or any other Lender; or (v) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing.
SECTION 4. GENERAL PROVISIONS
4.1 Fees. (a) The Borrower agrees to pay to the Agent for the account
of each Lender a commitment fee for the period from and including the first day
of the Commitment Period to the Termination Date, computed at the rate of 3/8ths
of 1% per annum on the average daily amo unt of the Available Commitment of such
Lender during the period for which payment is made, payable quarterly in arrears
on the last day of each March, June, September and December and on the
Termination Date or such earlier date as the Commitments shall terminate as
provided herein, commencing on the first of such dates to occur after the date
hereof.
(b) The Borrower shall pay to the Agent the fees set forth in the fee
letter dated December 18, 1995 from the Agent to the Borrower.
4.2 Termination or Reduction of Commitments. The Borrower shall have
the right, upon not less than five Business Days' notice to the Agent, to
terminate the Commitments or, from time to time, to reduce the amount of the
Commitments. Any such reduction shall be in an amount equal to $1,000,000 or a
whole multiple of $500,000 thereof and shall reduce permanently the Commitments
then in effect. If, as a consequence of it having available proceeds from the
issuance subsequent to the date hereof of any Indebtedness to a Lender other
than Barclays Bank PLC, the Borrower terminates the Commitments or reduces the
Commitments by 66% or more, the Borrower shall pay to the Agent for the account
of each
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Lender a termination fee of (i) if such termination or reduction occurs during
the period from the Closing Date until the first anniversary of the Closing
Date, 2%, or (ii) if such termination or reduction occurs during the period from
the first anniversary of the Closing Date until the Termination Date, 1%, of the
aggregate amount of the Commitments terminated or reduced.
4.3 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Agent for the account of each Lender the
then unpaid principal amount of each Revolving Credit Loan of such Lender on the
Termination Date (or such earlier date on which the Revolving Credit Loans
become due and payable pursuant to Section 9). The Borrower hereby further
agrees to pay interest on the unpaid principal amount of the Loans from time to
time outstanding from the date thereof until payment in full thereof at the
rates per annum, and on the dates, set forth in subsection 4.4.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Agent shall maintain the Register pursuant to subsection
11.6(d), and a subaccount therein for each Lender, in which shall be recorded
(i) the amount of each Revolving Credit Loan and Letter of Credit made
hereunder, the Type thereof and each Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder and (iii) both the amount of
any sum received by the Agent hereunder from the Borrower and each Lender's
share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsections 4.3(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of the
Borrower to repay (with applicable interest) the Loans made to such Borrower by
such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Agent by any
Lender, the Borrower will execute and deliver to such Lender a promissory note
of the Borrower evidencing the Revolving Credit Loans of such Lender,
substantially in the form of Exhibit A with appropriate insertions as to date
and principal amount (a "Revolving Credit Note").
4.4 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.
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(c) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon, (iii) any commitment fee or (iv) any other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), the principal of the Loans and any such overdue
interest, commitment fee or other amount shall bear interest at a rate per annum
which is (x) in the case of principal, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this subsection plus
2% or (y) in the case of any such overdue interest, commitment fee or other
amount, the rate described in paragraph (b) of this subsection plus 2%, in each
case from the date of such non-payment until such overdue principal, interest,
commitment fee or other amount is paid in full (as well after as before
judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this subsection
shall be payable from time to time on demand.
4.5 Computation of Interest and Fees. (a) Commitment fees and, whenever
it is calculated on the basis of the Base Rate, interest shall be calculated on
the basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed; and, otherwise, interest shall be calculated on the basis of a 360-day
year for the actual days elapsed. The Agent shall as soon as practicable notify
the Borrower and the Lenders of each determination of a Eurodollar Rate. Any
change in the interest rate on a Loan resulting from a change in the Base Rate
or the Eurocurrency Reserve Requirements shall become effective as of the
opening of business on the day on which such change becomes effective. The Agent
shall as soon as practicable notify the Borrower and the Lenders of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and
the Lenders in the absence of manifest error. The Agent shall, at the request of
the Borrower, deliver to the Borrower a statement showing the quotations used by
the Agent in determining any interest rate pursuant to subsection 4.4(a) or (c).
4.6 Inability to Determine Interest Rate. If prior to the first day of
any Interest Period:
(a) the Agent shall have determined (which determination shall
be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b) the Agent shall have received notice from the Majority
Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
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the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the Lenders as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Loans requested to be made on the first day of such Interest Period
shall be made as Base Rate Loans, (y) any Loans that were to have been converted
on the first day of such Interest Period to Eurodollar Loans shall be converted
to or continued as Base Rate Loans and (z) any outstanding Eurodollar Loans,
shall be converted, on the first day of such Interest Period, to Base Rate
Loans. Until such notice has been withdrawn by the Agent, no further Eurodollar
Loans shall be made or continued as such, nor shall the Borrower have the right
to convert Loans to Eurodollar Loans.
4.7 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower
from the Lenders hereunder, each payment by the Borrower on account of any
commitment fee hereunder and any reduction of the Commitments of the Lenders
shall be made pro rata according to the respective Commitment Percentages of the
Lenders. Each payment (including each prepayment) by the Borrower on account of
principal of and interest on the Loans shall be made pro rata according to the
respective outstanding principal amounts of the Loans then held by the Lenders.
All payments (including prepayments) to be made by the Borrower hereunder,
whether on account of principal, interest, fees or otherwise, shall be made
without set off or counterclaim and shall be made prior to 12:00 Noon, New York
City time, on the due date thereof to the Agent, for the account of the Lenders,
at the Agent's office specified in subsection 11.2, in Dollars and in
immediately available funds. The Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day, and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(b) Unless the Agent shall have been notified in writing by any Lender
prior to a borrowing that such Lender will not make the amount that would
constitute its Commitment Percentage of such borrowing available to the Agent,
the Agent may assume that such Lender is making such amount available to the
Agent, and the Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to the
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Agent, on demand, such amount with interest thereon at a rate equal to
the daily average Federal Funds Effective Rate for the period until such Lender
makes such amount immediately available to the Agent. A certificate of the Agent
submitted to any Lender with respect to any amounts owing under this subsection
shall be conclusive in the absence of manifest error. If such Lender's
Commitment Percentage of such borrowing is not made available to the Agent by
such Lender within three Business Days of such Borrowing Date, the Agent shall
also be entitled to recover such amount with interest thereon at the rate per
annum applicable to Base Rate Loans hereunder, on demand, from the Borrower.
Nothing in this paragraph shall be deemed to relieve any Lender from
its obligations to make Loans to the Borrower pursuant to the terms of this
Agreement or to prejudice any rights that the Borrower may have against any
Lender in connection with any default by such Lender in its obligations
hereunder.
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4.8 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be cancelled and (b)
such Lender's Loans then outstanding as Eurodollar 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 Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to subsection 4.11.
4.9 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note, any Letter of Credit, any L/C
Application or any Eurodollar Loan made by it, or change the basis of
taxation of payments to such Lender in respect thereof (except for
Non-Excluded Taxes covered by subsection 4.10 and changes in the rate
of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition; and the
result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or issuing
or participating in Letters of Credit or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, the
Borrower shall promptly pay such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or
reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under any Letter of Credit to a
level below that which such Lender or such
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corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, the Borrower shall promptly pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Borrower (with a copy
to the Agent) of the event by reason of which it has become so entitled,
provided that such Lender shall not be entitled to claim any such additional
amount that is due and payable in respect of any date which is more than ninety
days prior to the date upon which such Lender shall so notify the Borrower
thereof. A certificate as to any additional amounts payable pursuant to this
subsection submitted by such Lender to the Borrower (with a copy to the Agent)
shall be conclusive in the absence of manifest error. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
4.10 Taxes. (a) All payments made by the Borrower under this Agreement
and any Notes shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Agent or any Lender as a result of a
present or former connection between the Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any Note). If any such non-excluded taxes, levies, imposts,
duties, charges, fees deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to the Agent or any Lender
hereunder or under any Note, the amounts so payable to the Agent or such Lender
shall be increased to the extent necessary to yield to the Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement,
provided, however, that the Borrower shall not be required to increase any such
amounts payable to any Lender that is not organized under the laws of the United
States of America or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this subsection. Whenever any Non-Excluded
Taxes are payable by the Borrower, as promptly as possible thereafter the
Borrower shall send to the Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Agent the required receipts or other required documentary evidence,
the Borrower shall indemnify the Agent and the Lenders for any incremental
taxes, interest or penalties that may become payable by the Agent or any Lender
as a result of any such failure. The agreements in this subsection shall survive
the
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termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) deliver to the Borrower and the Agent (A) two duly
completed copies of United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be, and (B) an
Internal Revenue Service Form W-8 or W-9, or successor applicable form,
as the case may be;
(ii) deliver to the Borrower and the Agent two further copies
of any such form or certification on or before the date that any such
form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower 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 Borrower and the Agent.
Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to subsection 11.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection, provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender
from which the related participation shall have been purchased.
4.11 Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. 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 continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such
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Interest Period (or, in the case of a failure to borrow, convert or continue,
the Interest Period that would have commenced on the date of such failure) in
each case at the applicable rate of interest for such Loans provided for herein
(excluding, however, the Applicable Margin included therein, if any) 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 interbank eurodollar market. This
covenant shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
4.12 Change of Lending Office. Each Lender agrees that if it
makes any demand for payment under subsection 4.9 or 4.10(a), or if any adoption
or change of the type described in subsection 4.8 shall occur with respect to
it, it will use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its sole discretion) to designate a
different lending office if the making of such a designation would reduce or
obviate the need for the Borrower to make payments under subsection 4.9 or
4.10(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 4.8.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to the Agent and each Lender
that:
5.1 Financial Condition. (a) The consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at December 31, 1994 and the
related consolidated statements of income and of cash flows for the fiscal year
ended on such date, reported on by Price Waterhouse LLP, copies of which have
heretofore been furnished to each Lender, present fairly the consolidated
financial condition of the Borrower and its consolidated Subsidiaries as at such
date, and the consolidated results of their operations and their consolidated
cash flows for the fiscal year then ended; (b) the unaudited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at September
30, 1995 and the related unaudited consolidated statements of income and of cash
flows for the three-month and nine-month periods ending on such date, certified
by a Responsible Officer, copies of which have heretofore been furnished to each
Lender, are complete and correct and present fairly the consolidated financial
condition of the Borrower and its consolidated Subsidiaries as at such date, and
the consolidated results of their operations and their consolidated cash flows
for the three month period then ended (subject to normal year-end adjustments).
All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein). Neither the
Borrower nor any of its consolidated Subsidiaries had, at the date of the most
recent balance sheet referred to above, any material Guarantee Obligation,
contingent liability or liability for taxes, or any long-term lease or unusual
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forward or long-term commitment, including, without limitation, any interest
rate or foreign currency swap or exchange transaction, which is not reflected in
the foregoing statements or in the notes thereto. During the period from
September 30, 1995 to and including the date hereof there has been no sale,
transfer or other disposition by the Borrower or any of its consolidated
Subsidiaries of any material part of its business or property (other than any of
the foregoing relating to any part of its business or property reflected as
discontinued operations on the Borrower's September 30, 1995 consolidated
balance sheet referenced to above) and no purchase or other acquisition of any
business or property (including any capital stock of any other Person) material
in relation to the consolidated financial condition of the Borrower and its
consolidated Subsidiaries at September 30, 1995.
5.2 No Change. (a) Since September 30, 1995 there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect, and (b) during the period from September 30, 1995 to
and including the date hereof no dividends or other distributions have been
declared, paid or made upon the Capital Stock of the Borrower nor has any of the
Capital Stock of the Borrower been redeemed, retired, purchased or otherwise
acquired for value by the Borrower or any of its Subsidiaries.
5.3 Corporate Existence; Compliance with Law. Each of the
Borrower and its Subsidiaries and each Loan Party (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal right, to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
5.4 Corporate Power; Authorization; Enforceable Obligations.
The Borrower and each Loan Party has the corporate power and authority, and the
legal right, to make, deliver and perform the Loan Documents to which it is a
party and to borrow hereunder and has taken all necessary corporate action to
authorize, in the case of the Borrower, the borrowings on the terms and
conditions of this Agreement and any Notes and to authorize the execution,
delivery and performance of the Loan Documents to which it is a party. Except
for any filing or notice necessary to perfect any Lien executed by the Security
Documents, no consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Loan Documents to which the
Borrower or any Loan Party is a party. This Agreement has been, and each other
Loan Document to which it is a party will be, duly executed and delivered on
behalf of the Borrower and each Loan Party. This Agreement constitutes, and each
other Loan Document to which it is a party when executed and delivered will
constitute, a legal, valid and binding obligation of the Borrower and each Loan
Party enforceable against it in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar
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laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
5.5 No Legal Bar. The execution, delivery and performance of
the Loan Documents, the borrowings hereunder and the use of the proceeds thereof
will not violate any Requirement of Law or Contractual Obligation of the
Borrower or of any of its Subsidiaries and will not result in, or require, the
creation or imposition of any Lien on any of its or their respective properties
or revenues pursuant to any such Requirement of Law or Contractual Obligation.
5.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) which could reasonably be
expected to have a Material Adverse Effect.
5.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
5.8 Ownership of Property; Liens. Each of the Borrower and its
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other property, and none of such property is
subject to any Lien except as permitted by subsection 8.3.
5.9 Intellectual Property. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does the
Borrower know of any valid basis for any such claim. The use of such
Intellectual Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
5.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
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5.11 Taxes. Each of the Borrower and its Subsidiaries has
filed or caused to be filed all tax returns which, to the knowledge of the
Borrower, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge.
5.12 Federal Regulations. No part of the proceeds of any Loans
will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation G or Regulation
U of the Board of Governors of the Federal Reserve System as now and from time
to time hereafter in effect. If requested by any Lender or the Agent, the
Borrower will furnish to the Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form G-1 or FR Form U-1
referred to in said Regulation G or Regulation U, as the case may be.
5.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits. Neither the Borrower nor any Commonly Controlled Entity
has had a complete or partial withdrawal from any Multiemployer Plan, and
neither the Borrower nor any Commonly Controlled Entity would become subject to
any liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
5.14 Investment Company Act; Other Regulations. The Borrower
is not an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
The Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
5.15 Subsidiaries. The Subsidiaries of the Borrower listed on
Schedule 5.15 constitute all the Material Subsidiaries of the Borrower on the
date hereof.
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5.16 Purpose of Loans. The proceeds of the Loans shall be used
by the Borrower for general corporate purposes in the ordinary course of
business and to refinance existing Indebtedness.
5.17 Environmental Matters.
(a) To the best knowledge of the Borrower, the facilities and
properties owned, leased or operated by the Borrower or any of its Subsidiaries
(the "Properties") do not contain, and have not previously contained, any
Materials of Environmental Concern in amounts or concentrations which (i)
constitute or constituted a violation of, or (ii) could reasonably be expected
to give rise to liability under, any Environmental Law except in either case
insofar as such violation or liability, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Environmental Amount.
(b) To the best knowledge of the Borrower, the Properties and
all operations at the Properties are in compliance, and have in the last five
years been in compliance, in all material respects with all applicable
Environmental Laws, and there is no contamination at, under or about the
Properties or violation of any Environmental Law with respect to the Properties
or the business operated by the Borrower or any of its Subsidiaries (the
"Business") which could materially interfere with the continued operation of the
Properties or materially impair the fair saleable value thereof.
(c) Neither the Borrower nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Business, nor
does the Borrower have knowledge or reason to believe that any such notice will
be received or is being threatened except insofar as such notice or threatened
notice, or any aggregation thereof, does not involve a matter or matters that is
or are reasonably likely to result in the payment of a Material Environmental
Amount.
(d) To the best knowledge of the Borrower, Materials of
Environmental Concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location which could
reasonably be expected to give rise to liability under, any Environmental Law,
nor have any Materials of Environmental Concern been generated, treated, stored
or disposed of at, on or under any of the Properties in violation of, or in a
manner that could reasonably be expected to give rise to liability under, any
applicable Environmental Law except insofar as any such violation or liability
referred to in this paragraph, or any aggregation thereof, is not reasonably
likely to result in the payment of a Material Environmental Amount.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
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<PAGE> 32
Environmental Law with respect to the Properties or the Business except insofar
as such proceeding, action, decree, order or other requirement, or any
aggregation thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount.
(f) To the best knowledge of the Borrower, there has been no
release or threat of release of Materials of Environmental Concern at or from
the Properties, or arising from or related to the operations of the Borrower or
any Subsidiary in connection with the Properties or otherwise in connection with
the Business, in violation of or in amounts or in a manner that could reasonably
give rise to liability under Environmental Laws except insofar as any such
violation or liability referred to in this paragraph, or any aggregation
thereof, is not reasonably likely to result in the payment of a Material
Environmental Amount.
(g) To the best knowledge of the Borrower, each of the
representations and warranties set forth in subsections 5.17(a) through (f) is
true and correct with respect to each parcel of real property owned or operated
by the Borrower or any of its Subsidiaries (other than the Properties) except to
the extent that the facts and circumstances giving rise to any such failure to
be so true and correct is not reasonably likely to result in the payment of a
Material Environmental Amount.
5.18 Solvency. The Borrower is, and after giving effect to the
incurrence of all Indebtedness and obligations being incurred in connection
herewith and therewith will be, Solvent.
5.19 Material Leases. Set forth on Schedule 5.19 attached
hereto is a complete and correct list of all material leases to which the
Borrower or any of its Subsidiaries is a party.
5.20 Real Property. Set forth on Schedule 5.20 attached hereto
is a complete and correct list of all real property owned by the Borrower or any
of its Subsidiaries.
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Initial Extension of Credit. The agreement
of each Lender to make the initial Extension of Credit requested to be made by
it is subject to the satisfaction, immediately prior to or concurrently with the
making of such Extension of Credit on the Closing Date, of the following
conditions precedent:
(a) Loan Documents. The Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the
Borrower, with a counterpart for each Lender and (ii) the Global
Security Agreement, executed and delivered by a duly authorized officer
of each Material Subsidiary (other than any Foreign Subsidiary), with a
counterpart or a conformed copy for each Lender.
(b) Related Agreements. The Agent shall have received the
Revolving Line of Credit Note of the Borrower dated February 28, 1995
and the SV Stock Option
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<PAGE> 33
documentation and all such documents or instruments as may be
reasonably requested by the Agent, including, without limitation, a
copy of any debt instrument, security agreement or other material
contract to which the Borrower, or its Subsidiaries may be a party.
(c) Corporate Proceedings of the Borrower. The Agent shall
have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Agent, of the
Board of Directors of the Borrower authorizing (i) the execution,
delivery and performance of this Agreement and the other Loan Documents
to which it is a party, (ii) the borrowings contemplated hereunder and
(iii) the granting by it of the Liens created pursuant to the Security
Documents, certified by the Secretary or an Assistant Secretary of the
Borrower as of the Closing Date, which certificate shall be in form and
substance satisfactory to the Agent and shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(d) Borrower Incumbency Certificate. The Agent shall have
received, with a counterpart for each Lender, a Certificate of the
Borrower, dated the Closing Date, as to the incumbency and signature of
the officers of the Borrower executing any Loan Document satisfactory
in form and substance to the Agent, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of the
Borrower.
(e) Corporate Proceedings of Subsidiaries. The Agent shall
have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Agent, of the
Board of Directors of each Subsidiary of the Borrower which is a party
to a Loan Document authorizing (i) the execution, delivery and
performance of the Loan Documents to which it is a party and (ii) the
granting by it of the Liens created pursuant to the Security Documents
to which it is a party, certified by the Secretary or an Assistant
Secretary of each such Subsidiary as of the Closing Date, which
certificate shall be in form and substance satisfactory to the Agent
and shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded.
(f) Subsidiary Incumbency Certificates. The Agent shall have
received, with a counterpart for each Lender, a certificate of each
Subsidiary of the Borrower which is a Loan Party, dated the Closing
Date, as to the incumbency and signature of the officers of such
Subsidiaries executing any Loan Document, satisfactory in form and
substance to the Agent, executed by the President or any Vice President
and the Secretary or any Assistant Secretary of each such Subsidiary.
(g) Corporate Documents. The Agent shall have received, with a
counterpart for each Lender, true and complete copies of the
certificate of incorporation and by-laws of each Loan Party, certified
as of the Closing Date as complete and correct copies thereof by the
Secretary or an Assistant Secretary of such Loan Party.
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<PAGE> 34
(h) Fees. The Agent shall have received the fees to be
received on the Closing Date referred to in subsection 4.1.
(i) Legal Opinions. The Agent shall have received, with a
counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Irell & Manella,
counsel to the Borrower and the other Loan Parties,
substantially in the form of Exhibit F;
(ii) the executed legal opinion of Philip C.
Maynard, general counsel of the Borrower, substantially in the
form of Exhibit G;
(iii) the executed legal opinion of Amster,
Rothstein & Ebenstein, intellectual property counsel,
substantially in the form of Exhibit H.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Agent may reasonably
require.
(j) Pledged Stock; Stock Powers. The Agent shall have received
the certificates representing the shares pledged pursuant to the Global
Security Agreement and the Intercreditor Pledge Agreement, together
with an undated stock power for each such certificate executed in blank
by a duly authorized officer of the pledgor thereof, each endorsed in
blank by a duly authorized officer of the pledgor thereof.
(k) Actions to Perfect Liens. The Agent shall have received
such duly executed financing statements on form UCC-1 as are necessary
or, in the opinion of the Agent, desirable to perfect the Liens created
by the Security Documents.
(l) Lien Searches. The Agent shall have received the results
of a recent search by a Person satisfactory to the Agent, of the
Uniform Commercial Code, judgment and tax lien filings which may have
been filed with respect to personal property of the Borrower and each
Material Subsidiary (other than Foreign Subsidiaries), and the results
of such search shall be satisfactory to the Agent.
(m) Insurance. The Agent shall have received evidence in form
and substance satisfactory to it that all of the requirements of
subsection 7.5 hereof and Section 5.2 of the Global Security Agreement
shall have been satisfied.
(n) Intercreditor Agreements. The Agent shall have received
the Intercreditor Agreements, each executed and delivered by duly
authorized officers of each party thereto.
(o) Acknowledgements and Consents. The Agent shall have
received an acknowledgement and consent, in the form attached to the
Global Security Agreement,
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<PAGE> 35
executed and delivered by a duly authorized officer of each issuer of
stock pledged pursuant to the Global Security Agreement.
6.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any Extension of Credit requested to be made by it on any
date (including, without limitation, its initial Extension of Credit) is subject
to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrower and each Loan party
in or pursuant to the Loan Documents shall be true and correct in all
material respects on and as of such date as if made on and as of such
date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Extension of Credit requested to be made on such date.
(c) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement and the other Loan
Documents shall be satisfactory in form and substance to the Agent, and
the Agent shall have received such other documents and legal opinions
in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date thereof that the conditions contained in
this subsection have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect or any amount is owing to any Lender or the Agent hereunder or
under any other Loan Document, the Borrower shall and (except in the case of
delivery of financial information, reports and notices) shall cause each of its
Subsidiaries to:
7.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower, a copy of the
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related consolidated
statements of income and retained earnings and of cash flows for such
year, setting forth in each case in comparative form the figures for
the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the
35
<PAGE> 36
scope of the audit, by Price Waterhouse LLP or other independent
certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each
fiscal year of the Borrower, the unaudited consolidated balance sheet
of the Borrower and its consolidated Subsidiaries as at the end of such
quarter and the related unaudited consolidated statements of income and
of cash flows of the Borrower and its consolidated Subsidiaries for
such quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures for
the previous year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
7.2 Certificates; Other Information. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in
such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a certificate of a
Responsible Officer (i) stating that, to the best of such Officer's
knowledge, the Borrower during such period has observed or performed
all of its covenants and other agreements, and satisfied every
condition, contained in this Agreement and the other Loan Documents to
be observed, performed or satisfied by it, and that such Officer has
obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) showing in detail the figures
and calculations supporting such statement in respect of subsection 8.1
as of the end of each fiscal quarter and fiscal year and in respect of
subsections 8.7 and 8.9 as of the end of each fiscal year;
(c) not later than thirty days prior to the end of each fiscal
year of the Borrower, a copy of the projections by the Borrower of the
operating budget and cash flow budget of the Borrower and its
Subsidiaries for the succeeding fiscal year, such projections to be
accompanied by a certificate of a Responsible Officer to the effect
that such projections have been prepared on the basis of sound
financial planning practice and that such Officer has no reason to
believe they are incorrect or misleading in any material respect;
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<PAGE> 37
(d) within five days after the same are sent, copies of all
financial statements and reports which the Borrower sends to its
stockholders, and within five days after the same are filed, copies of
all financial statements and reports which the Borrower may make to, or
file with, the Securities and Exchange Commission or any successor or
analogous Governmental Authority; and
(e) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
7.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be.
7.4 Conduct of Business and Maintenance of Existence. Continue
to engage in business of the same general type as now conducted by it and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business except as otherwise
permitted pursuant to subsection 8.5; comply with all Contractual Obligations
and Requirements of Law except to the extent that failure to comply therewith
could not, in the aggregate, be reasonably expected to have a Material Adverse
Effect.
7.5 Maintenance of Property; Insurance. Keep all property
useful and necessary in its business in good working order and condition;
maintain the insurance required pursuant to the Global Security Agreement on the
assets covered thereby and maintain with financially sound and reputable
insurance companies insurance on all its other property in at least such amounts
and against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business;
and furnish to each Lender at least annually, full information as to the
insurance carried.
7.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time upon reasonable prior notice and as often as may reasonably be desired and
to discuss the business, operations, properties and financial and other
condition of the Borrower and its Subsidiaries with officers and employees of
the Borrower and its Subsidiaries and with its independent certified public
accountants.
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7.7 Notices. Promptly give notice to the Agent and each Lender
of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental
Authority, which in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any
of its Subsidiaries in which the amount involved is $1,000,000 or more
and not covered by insurance or in which injunctive or similar relief
is sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required contribution to a
Plan, the creation of any Lien in favor of the PBGC or a Plan or any
withdrawal from, or the termination, Reorganization or Insolvency of,
any Multiemployer Plan or (ii) the institution of proceedings or the
taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of,
any Plan; and
(e) any material adverse change in the business, operations,
property, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
7.8 Environmental Laws. (a) Comply with, and ensure compliance
by all tenants and subtenants, if any, with, all applicable Environmental Laws
and obtain and comply in all material respects with and maintain, and ensure
that all tenants and subtenants obtain and comply in all material respects with
and maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws except to the extent that
failure to do so could not be reasonably expected to have a Material Adverse
Effect.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested
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<PAGE> 39
in good faith by appropriate proceedings and the pendency of such proceedings
could not be reasonably expected to have a Material Adverse Effect.
7.9 Key Man Insurance. Within 90 days following the date
hereof (i) obtain key man life insurance on the life of Mr. Sam Yau in an
aggregate amount of $5,000,000 on terms satisfactory to the Agent and (ii)
deliver to the Agent, with a counterpart for each Lender, a duly executed copy
of the Assignment of Life Insurance, together with a satisfactory
acknowledgement by the relevant insurer of the Lien created thereby; and at all
times thereafter maintain such life insurance in full force and effect.
7.10 Further Assurances. Upon the request of the Agent,
promptly perform or cause to be performed any and all acts and execute or cause
to be executed any and all documents (including, without limitation, financing
statements and continuation statements) for filing under the provisions of the
Uniform Commercial Code or any other Requirement of Law which are necessary or
advisable to maintain in favor of the Agent, for the benefit of the Lenders,
Liens on the Collateral that are duly perfected in accordance with all
applicable Requirements of Law. Without limiting the generality of the
foregoing, the Borrower shall, within 60 days following the Closing Date, take
or cause to be taken all actions necessary to cause a Lien on 65% of the Capital
Stock of each of Intertext Group Ltd. (England) and NETG Applied Learning, Ltd.
(United Kingdom) to be duly created and perfected in accordance with all
applicable laws and a legal opinion with respect thereto (in form and substance
and from a firm, satisfactory to the Agent) to be delivered to the Agent.
7.11 Additional Collateral. (a) With respect to any assets
acquired after the Closing Date by the Borrower or any of its Domestic
Subsidiaries which is a Material Subsidiary that are intended to be subject to
the Lien created by any of the Security Documents but which are not so subject
(other than (x) any assets described in paragraph (b) or (c) of this subsection
and (z) immaterial assets a Lien on which cannot be perfected by filing UCC-1
financing statements), promptly (and in any event within 30 days after the
acquisition thereof): (i) execute and deliver to the Agent such amendments to
the relevant Security Documents or such other documents as the Agent shall deem
necessary or advisable to grant to the Agent, for the benefit of the Lenders, a
Lien on such assets, (ii) take all actions deemed necessary or advisable by the
Agent to cause such Lien to be duly perfected in accordance with all applicable
Requirements of Law, including, without limitation, the filing of financing
statements in such jurisdictions as may be requested by the Agent, and (iii) if
reasonably requested by the Agent, deliver to the Agent legal opinions relating
to the matters described in clauses (i) and (ii) immediately preceding, which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Agent. Without limiting the generality of the foregoing, the
Borrower shall take or cause to be taken all actions necessary to cause the
representation set forth in Section 4.8(b) of the Global Security Agreement to
be true and correct at all times.
(b) With respect to any Person that, subsequent to the Closing
Date, becomes a Material Subsidiary (other than a Foreign Subsidiary), promptly
upon the request of the Agent: (i) become a party to the Global Security
Agreement to grant to the Agent, for the benefit of the
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<PAGE> 40
Lenders, a Lien on the Capital Stock of such Material Subsidiary which is owned
by the Borrower or any of its Subsidiaries, (ii) deliver to the Agent the
certificates representing such Capital Stock, together with undated stock powers
executed and delivered in blank by a duly authorized officer of the Borrower or
such Material Subsidiary, as the case may be, (iii) cause such new Material
Subsidiary (A) to become a party to the Global Security Agreement and (B) to
take all actions deemed necessary or advisable by the Agent to cause the Lien
created by the Global Security Agreement to be duly perfected in accordance with
all applicable Requirements of Law, including, without limitation, the filing of
financing statements in such jurisdictions as may be requested by the Agent and
(iv) if reasonably requested by the Agent, deliver to the Agent legal opinions
relating to the matters described in clauses (i), (ii) and (iii) immediately
preceding, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Agent.
(c) With respect to any Person that, subsequent to the Closing
Date, becomes a Foreign Subsidiary which is a Material Subsidiary, promptly upon
the request of the Agent: (i) execute and deliver to the Agent a new pledge
agreement or such amendments to the Global Security Agreement to grant to the
Agent, for the benefit of the Lenders, a Lien on the Capital Stock of such
Material Subsidiary which is owned by the Borrower or any of its Subsidiaries
(provided that in no event shall more than 65% of the Capital Stock of any such
Material Subsidiary be required to be so pledged), (ii) deliver to the Agent any
certificates representing such Capital Stock, together with undated stock powers
executed and delivered in blank by a duly authorized officer of the Borrower or
such Material Subsidiary, as the case may be, and take or cause to be taken all
such other actions under local law as may be deemed necessary or advisable by
Agent to perfect such Lien on such Capital Stock and (iii) if reasonably
requested by the Agent, deliver to the Agent legal opinions relating to the
matters described in clauses (i) and (ii) immediately preceding, which opinions
shall be in form and substance, and from counsel, reasonably satisfactory to the
Agent.
SECTION 8. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect or any amount is owing to any Lender or the Agent hereunder or
under any other Loan Document, the Borrower shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly:
8.1 Financial Condition Covenants.
(a) Maintenance of Current Ratio. Permit the ratio of
Consolidated Current Assets to Consolidated Current Liabilities as at the end of
any fiscal quarter to be less than 1.5:1.0.
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<PAGE> 41
(b) Maintenance of Net Worth. Permit Consolidated Net Worth at
any time during any period set forth below to be less than the amount set forth
opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Period Amount
<S> <C>
First Quarter 1996 $ 4,500,000
Second Quarter 1996 $ 6,500,000
Third Quarter 1996 $ 9,500,000
Fourth Quarter 1996 $13,500,000
First Quarter 1997 $17,500,000
Second Quarter 1997 $21,500,000
Third Quarter 1997 $25,500,000
Fourth Quarter 1997 $29,500,000;
</TABLE>
provided, that in determining compliance with this covenant, the Consolidated
Net Worth of the Borrower and its Subsidiaries at any date shall be (a)
increased by an amount (not to exceed $500,000 in any fiscal year) equal to the
aggregate amount of translation losses from the beginning of such fiscal year
reflected on the consolidated balance sheet of the Borrower and its Subsidiaries
at such date and (b) decreased by an amount (not to exceed $500,000 in any
fiscal year) equal to the aggregate amount of translation gains from the
beginning of such fiscal year reflected on such consolidated balance sheet.
(c) Consolidated Total Indebtedness to Consolidated EBITDA
Ratio. Permit the ratio of Consolidated Total Indebtedness at the end of any
fiscal quarter set forth below to Consolidated EBITDA for the period of four
consecutive fiscal quarters then ending to be greater than the ratio set forth
opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ratio
<S> <C>
First Quarter 1996 4.10:1.0
Second Quarter 1996 3.25:1.0
Third Quarter 1996 3.00:1.0
Fourth Quarter 1996 2.75:1.0
First Quarter 1997 2.50:1.0
Second Quarter 1997 2.50:1.0
Third Quarter 1997 2.50:1.0
Fourth Quarter 1997 2.50:1.0
</TABLE>
provided, that for purposes of determining compliance with this covenant for the
end of the first fiscal quarter of 1996 only, Consolidated EBITDA for the fourth
fiscal quarter of 1995 shall be increased by $3,500,000 provided further that
all subsequent covenant calculations shall use consolidated EBITDA for the
fourth fiscal quarter of 1995 without such increase.
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<PAGE> 42
(d) Interest Coverage. Permit for any period of four
consecutive fiscal quarters ending at the end of any fiscal quarter set forth
below the ratio of (i) Consolidated EBITDA for such period minus Net Capital
Expenditures for such period to (ii) Consolidated Interest Expense for such
period to be less than the ratio set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ratio
<S> <C>
First Quarter 1996 1.65:1.0
Second Quarter 1996 2.50:1.0
Third Quarter 1996 2.50:1.0
Fourth Quarter 1996 2.50:1.0
First Quarter 1997 2.50:1.0
Second Quarter 1997 2.50:1.0
Third Quarter 1997 2.50:1.0
Fourth Quarter 1997 2.50:1.0
</TABLE>
provided, that for purposes of determining compliance with this covenant for the
end of the first fiscal quarter of 1996 only, Consolidated EBITDA for the fourth
fiscal quarter of 1995 shall be increased by $3,500,000 provided further that
all subsequent covenant calculations shall use consolidated EBITDA for the
fourth fiscal quarter of 1995 without such increase.
8.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness of the Borrower to any Subsidiary (excluding
SV) and of any Subsidiary to the Borrower or any other Subsidiary
(excluding SV); provided, however, that the intercompany loan from SV
to the Borrower outstanding as of the Closing Date in the aggregate
principal amount of $10,000,000 shall be permitted on the condition
that it will be repaid in full by the Borrower and the commitment
thereunder will be terminated on or before March 31, 1996.
(c) Indebtedness outstanding on the date hereof and listed on
Schedule 8.2 and any refinancings refundings, renewals or extensions
thereof;
(d) Indebtedness of a corporation which becomes a Subsidiary
after the date hereof, provided that (i) such indebtedness existed at
the time such corporation became a Subsidiary and was not created in
anticipation thereof and (ii) immediately after giving effect to the
acquisition of such corporation by the Borrower no Default or Event of
Default shall have occurred and be continuing; and
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<PAGE> 43
(e) Indebtedness of the Borrower and any of its Subsidiaries
incurred to finance the acquisition of fixed or capital assets (whether
pursuant to a loan, a Financing Lease or otherwise) in the ordinary
course of business.
8.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP (or, in the case of Foreign Subsidiaries, generally accepted
accounting principles in effect from time to time in their respective
jurisdictions of incorporation);
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule
8.3, securing Indebtedness permitted by the proviso to subsection
8.2(b) and by subsection 8.2(c), provided that no such Lien is spread
to cover any additional property after the Closing Date and that the
amount of Indebtedness secured thereby is not increased;
(g) Liens created pursuant to the Security Documents; and
(h) Liens securing Indebtedness of the Borrower and its
Subsidiaries permitted by subsection 8.2(e) incurred to finance the
acquisition of fixed or capital assets, provided that (i) such Liens
shall be created substantially simultaneously with the acquisition of
such fixed or capital assets, (ii) such Liens do not at any time
encumber
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<PAGE> 44
any property other than the property financed by such Indebtedness,
(iii) the amount of Indebtedness secured thereby is not increased and
(iv) the principal amount of Indebtedness secured by any such Lien
shall at no time exceed 100% of the fair value (as determined in good
faith by the board of directors of the Borrower) of such property at
the time it was acquired.
8.4 Limitation on Guarantee Obligations. Create, incur, assume
or suffer to exist any Guarantee Obligation except:
(a) the Letters of Credit
(b) Guarantee Obligations in existence on the date hereof and
listed on Schedule 8.4;
8.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or with or into any
one or more wholly owned Subsidiaries of the Borrower (provided that
the wholly owned Subsidiary or Subsidiaries shall be the continuing or
surviving corporation); and
(b) any wholly owned Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or any other wholly owned
Subsidiary of the Borrower.
8.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person other than the
Borrower or any wholly owned Subsidiary, except:
(a) the sale or other disposition of any property in the
ordinary course of business;
(b) the sale or discount without recourse of accounts
receivable arising in the ordinary course of business in connection
with the compromise or collection thereof; and
(c) issuances of options and/or shares pursuant to employee
stock option and incentive award plans; and
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<PAGE> 45
(d) as permitted by subsection 8.5(b).
8.7 Limitation on Leases. Permit Consolidated Lease Expense
for any fiscal year of the Borrower to exceed $12,000,000.
8.8 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock of the Borrower) on, or
make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Borrower or any
warrants or options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Subsidiary.
8.9 Limitation on Capital Expenditures. Make or commit to make
(by way of the acquisition of securities of a Person or otherwise) any
expenditure in respect of the purchase or other acquisition of fixed or capital
assets (excluding any such asset acquired in connection with normal replacement
and maintenance programs properly charged to current operations) except for
expenditures in the ordinary course of business not exceeding (a) $14,000,000 in
the aggregate during the Commitment Period for the Borrower and its Subsidiaries
or (b) $10,000,000 in the aggregate for the Borrower and its Subsidiaries during
any fiscal year of the Borrower.
8.10 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person,
except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) acquisitions of Capital Stock or business units of other
Persons the aggregate consideration for which does not exceed
$40,000,000, provided that each such acquisition shall be subject to:
(a) Consolidated Net Income having been positive for the two most
recently completed fiscal quarters of the Borrower for which financial
statements shall have been delivered pursuant to subsection 7.1; (b)
delivery by the Borrower to each Lender of a certificate showing
compliance with the provisions of subsections 8.1, 8.7 and 8.9 after
giving pro-forma effect to such acquisition as of the date of the
Borrower's most recently available quarterly consolidated financial
statements; (c) the acquired Person or business unit are engaged in the
same general line of business as the Borrower and its Subsidiaries as
of the Closing Date; (d) the Agent having received at least 15 Business
Days notice of Borrower's intention to make such acquisition; (e) the
Required Lenders having granted their approval thereof (which approval
shall not be unreasonably
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<PAGE> 46
withheld) and (f) any Loans to finance such acquisition being in
compliance with Regulation U;
(d) loans to employees, officers and directors in connection
with and within the scope of stock option or incentive award plans; and
(e) loans and advances to employees of the Borrower or its
Subsidiaries for travel, entertainment and relocation expenses in the
ordinary course of business in an aggregate amount for the Borrower and
its Subsidiaries not to exceed $125,000 at any one time outstanding;
(f) loans and investments by the Borrower to and in its
Subsidiaries (other than SV) and loans and investments by any
Subsidiary in the Borrower and any other Subsidiaries (other than SV);
(g) investments in preferred stock in accordance with the
investment policy guidelines attached hereto on Schedule 8.10, the
aggregate cost of which does not at any time exceed $3,000,000;and
(h) the intercompany loans from SV to the Borrower outstanding
at any time the aggregate principal amount of $10,000,000; provided,
that such loan will be repaid in full by the Borrower and the
commitment thereunder will be terminated on or before March 31, 1996.
8.11 Limitation on Transactions with Affiliates. Enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrower's or such Subsidiary's business and (c) upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
8.12 Limitation on Changes in Fiscal Year. Permit the fiscal
year of the Borrower to end on a day other than December 31.
8.13 Limitation on Negative Pledge Clauses. Enter into with
any Person any agreement, other than (a) this Agreement, and (b) any industrial
revenue bonds, purchase money mortgages or Financing Leases permitted by this
Agreement (in which cases, any prohibition or limitation shall only be effective
against the assets financed thereby), which prohibits or limits the ability of
the Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired.
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<PAGE> 47
8.14 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Borrower and its Subsidiaries are engaged on the date of this Agreement or
which are directly related thereto.
SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
or Reimbursement Obligation when due in accordance with the terms
thereof or hereof; or the Borrower shall fail to pay any interest on
any Loan, or any other amount payable hereunder, within five days after
any such interest or other amount becomes due in accordance with the
terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document
or which is contained in any certificate, document or financial or
other statement furnished by it at any time under or in connection with
this Agreement or any such other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 8,
Section 5 of the Assignment of Life Insurance and Sections 5.6, 5.8(b)
and 5.9(a) of the Global Security Agreement; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default
in any payment of principal of or interest of any Indebtedness (other
than the Loans) or in the payment of any Guarantee Obligation, beyond
the period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness or Guarantee
Obligation was created, if the aggregate amount of the Indebtedness
and/or Guarantee Obligations in respect of which such default or
defaults shall have occurred is at least $500,000; or (ii) default in
the observance or performance of any other agreement or condition
relating to any such Indebtedness or Guarantee Obligation or contained
in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit
the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required,
47
<PAGE> 48
such Indebtedness to become due prior to its stated maturity or such
Guarantee Obligation to become payable; or
(f) (i) The Borrower or any of its Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for
it or for all or any substantial part of its assets, or the Borrower or
any of its Subsidiaries shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against the Borrower
or any of its Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days;
or (iii) there shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against
all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) the Borrower or any of its Subsidiaries shall
take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) the Borrower or any of its
Subsidiaries shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
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<PAGE> 49
(h) One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $500,000 or more,
and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the
entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any
reason, to be in full force and effect, or the Borrower or any other
Loan Party which is a party to any of the Security Documents shall so
assert or (ii) the Lien created by any of the Security Documents shall
cease to be enforceable and of the same effect and priority purported
to be created thereby; or
(j) (i) Any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of the
Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, of securities of the Borrower representing 20% or more of
the combined voting power of all securities of the Borrower entitled to
vote in the election of directors, other than securities having such
power only by reason of the happening of a contingency (other than
Richard C. Blum Associates, Inc. and its Affiliates); or (ii) during
any period of up to 12 consecutive months, commencing before or after
the date of this Agreement, individuals who at the beginning of such
12-month period were directors of the Borrower shall cease for any
reason to constitute a majority of the Board of Directors; or (iii) any
Person or two or more Persons acting in concert shall have acquired by
contract or otherwise, or shall have entered into a contract or
arrangement which upon consummation shall result in its or their
acquisition of or control over, securities of the Borrower representing
20% or more of the combined voting power or all securities of the
Borrower entitled to vote in the election of the directors, other than
securities having such power only by reason of the happening of a
contingency;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement (including without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Agent may, or upon the request of the Required
Lenders, the Agent shall, by notice to the Borrower declare the Commitments to
be terminated forthwith, whereupon the Commitments shall immediately terminate;
and (ii) with the consent of the Required Lenders, the Agent may, or upon the
request of the Required Lenders, the Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement (including without limitation, all amounts of
L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder) to be
due and payable forthwith, whereupon the same shall immediately become due and
payable.
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<PAGE> 50
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Agent an amount equal to the aggregate
then undrawn and unexpired amount of such Letters of Credit. The Borrower hereby
grants to the Agent, for the benefit of the Issuing Bank and the L/C
Participants, a security interest in such cash collateral to secure all
obligations of the Borrower under this Agreement and the other Loan Documents.
Amounts held in such cash collateral account shall be applied by the Agent to
the payment of drafts drawn under such Letters of Credit, and the unused portion
thereof after all such Letters of Credit shall have expired or been fully drawn
upon, if any, shall be applied to repay other obligations of the Borrower
hereunder and under the Notes. After all such Letters of Credit shall have
expired or been fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other obligations of the Borrower hereunder and under the
Notes shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower. The Borrower shall execute and
deliver to the Agent, for the account of the Issuing Bank and the L/C
Participants, such further documents and instruments as the Agent may request to
evidence the creation and perfection of the within security interest in such
cash collateral account.
Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
SECTION 10. THE AGENT
10.1 Appointment. Each Lender hereby irrevocably designates
and appoints the Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes the Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
10.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
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<PAGE> 51
10.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
10.4 Reliance by Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Loan Documents
in accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
10.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give notice thereof to the Lenders. The
Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders; provided that unless and
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 in the
best interests of the Lenders.
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10.6 Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
10.7 Indemnification. The Lenders agree to indemnify the Agent
in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Commitment Percentages in effect on the date on which
indemnification is sought (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with their Commitment Percentages immediately
prior to such date), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Loans) be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of, the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Loans and all
other amounts payable hereunder.
10.8 Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower as though the Agent were not the Agent
hereunder and under the other Loan Documents. With respect to the Loans made by
it, the Agent shall have the same rights and powers under this
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Agreement and the other Loan Documents as any Lender and may exercise the same
as though it were not the Agent, and the terms "Lender" and "Lenders" shall
include the Agent in its individual capacity.
10.9 Successor Agent. The Agent may resign as Agent upon 10
days' notice to the Lenders. If the Agent shall resign as Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, which successor agent
shall be approved by the Borrower, whereupon such successor agent shall succeed
to the rights, powers and duties of the Agent, and the term "Agent" shall mean
such successor agent effective upon such appointment and approval, and the
former Agent's rights, powers and duties as Agent shall be terminated, without
any other or further act or deed on the part of such former Agent or any of the
parties to this Agreement or any holders of the Loans. After any retiring
Agent's resignation as Agent, the provisions of this Section 10 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement and the other Loan Documents.
10.10 Intercreditor Agreement, Intercreditor Pledge and
Collateral Agent. Each Lender hereby authorizes the Agent to enter into the
Intercreditor Agreement on behalf of and for the benefit of that Lender. Each
Lender hereby acknowledges and consents to and agrees to be bound by the terms
of the Intercreditor Agreement and hereby authorizes and empowers the Agent to
take all actions under, and to act on behalf of and for the benefit of that
Lender for all purposes under, the Intercreditor Agreement. Each Lender hereby
authorizes the Collateral Agent to enter into the Intercreditor Pledge Agreement
and acknowledges and consents to the Intercreditor Pledge Agreement and agrees
to be bound thereby and hereby authorizes and empowers the Collateral Agent to
act on behalf of and for the benefit of that Lender for all purposes under the
Intercreditor Pledge Agreement; provided, however that the Agent shall not enter
into or consent to any amendment, modification, or waiver of any provisions
contained in the Intercreditor Agreement without the prior consent of the
Lenders. Each Lender agrees that no Lender shall have any right individually to
realize on the security granted by the Intercreditor Pledge Agreement, it being
understood and agreed that such rights and remedies may be exercised by the
Collateral Agent for the benefit of the Banks and Agent and the parties to the
Intercreditor agreement upon the terms of the Intercreditor Pledge Agreement and
the Intercreditor Agreement.
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Agreement nor any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Required Lenders may, or, with the written consent of the
Required Lenders, the Agent may, from time to time, (a) enter into with the
Borrower written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lenders
or of the Borrower hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders or the Agent,
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as the case may be, may specify in such instrument, any of the requirements of
this Agreement or the other Loan Documents or any Default or Event of Default
and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (i) reduce the amount or extend the
scheduled date of maturity of any Loan or of any installment thereof, or reduce
the stated rate of any interest or fee payable hereunder or extend the scheduled
date of any payment thereof or increase the amount or extend the expiration date
of any Lender's Commitment, in each case without the consent of each Lender
affected thereby, or (ii) amend, modify or waive any provision of this
subsection or reduce the percentage specified in the definition of Required
Lenders or Majority Lenders, or consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement and the other
Loan Documents or release all or substantially all of the Collateral, in each
case without the written consent of all the Lenders, or (iii) amend, modify or
waive any provision of Section 10 without the written consent of the then Agent.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Borrower, the
Lenders, the Agent and all future holders of the Loans. In the case of any
waiver, the Borrower, the Lenders and the Agent shall be restored to their
former positions and rights hereunder and under the other Loan Documents, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
11.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Borrower and the Agent, and as set forth in Schedule
I in the case of the other parties hereto, or to such other address as may be
hereafter notified by the respective parties hereto:
The Borrower: National Education Corporation
18400 Von Karman Avenue
Irvine, California 92715-1594
Attention: Keith Ogata, Vice President, CFO & Treasurer
Fax: (714) 474-9488
The Agent: BZW Division of Barclays Bank PLC
222 Broadway
New York, New York 10038
Attention: John Giannone, Director
Fax: (212) 412-7511
provided that any notice, request or demand to or upon the Agent or the Lenders
pursuant to subsection 2.2, 2.3, 2.5, 4.2 or 4.6 shall not be effective until
received.
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11.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
11.5 Payment of Expenses and Taxes. The Borrower agrees (a) to
pay or reimburse the Agent for all its out-of-pocket costs and expenses incurred
in connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Agent, (b) to pay or reimburse each Lender and
the Agent for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the other Loan
Documents and any such other documents, including, without limitation, the fees
and disbursements of counsel (including the allocated fees and expenses of
in-house counsel) to each Lender and of counsel to the Agent, (c) to pay,
indemnify, and hold each Lender and the Agent harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender and
the Agent harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement, the
other Loan Documents and any such other documents, including, without
limitation, any of the foregoing relating to the violation of, noncompliance
with or liability under, any Environmental Law applicable to the operations of
the Borrower, any of its Subsidiaries or any of the Properties (all the
foregoing in this clause (d), collectively, the "indemnified liabilities"),
provided, that the Borrower shall have no obligation hereunder to the Agent or
any Lender with respect to indemnified liabilities arising from (i) the gross
negligence or willful misconduct of the Agent or any such Lender or (ii) legal
proceedings commenced against the Agent or any such Lender by any security
holder or creditor thereof arising out of and based upon rights afforded any
such security holder or creditor solely in its capacity as such. The agreements
in this subsection shall survive repayment of the Loans and all other amounts
payable hereunder.
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11.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Agent and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Lender, any Commitment of such Lender or any other interest
of such Lender hereunder and under the other Loan Documents. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents. The Borrower agrees that if amounts outstanding under
this Agreement are due or unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in subsection 11.7(a) as fully as if it were a
Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of subsections 4.9, 4.10, 4.11 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it was a Lender; provided that, in the case of subsection 4.10, such
Participant shall have complied with the requirements of said subsection and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such subsection than the transferor Lender would have
been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time and from
time to time assign to any Lender or any affiliate thereof or, with the consent
of the Borrower and the Agent (which in each case shall not be unreasonably
withheld), to an additional bank or financial institution ("an Assignee") all or
any part of its rights and obligations under this Agreement and the other Loan
Documents pursuant to an Assignment and Acceptance, substantially in the form of
Exhibit J, executed by such Assignee, such assigning Lender (and, in the case of
an Assignee that is not then a Lender or an affiliate thereof, by the Borrower
and the Agent) and delivered to the Agent for its acceptance and recording in
the Register, provided that, in the case of any such assignment to an additional
bank or financial institution, the sum of the aggregate principal amount of the
Loans, the aggregate amount of the L/C Obligations and the aggregate amount of
the Available Commitment being assigned and, if such assignment is of less than
all of the rights and obligations of the assigning Lender, the sum of the
aggregate principal amount of the Loans, the
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aggregate amount of the L/C Obligations and the aggregate amount of the
Available Commitment remaining with the assigning Lender are each not less than
10% of the aggregate principal amount of the Loans, the aggregate amount of the
L/C Obligations and the aggregate amount of the Available Commitment of all the
Lenders then outstanding (or such lesser amount as may be agreed to by the
Borrower and the Agent). Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Commitment as set forth therein,
and (y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this 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 Agreement,
such assigning Lender shall cease to be a party hereto). Notwithstanding any
provision of this paragraph (c) and paragraph (e) of this subsection, the
consent of the Borrower shall not be required, and, unless requested by the
Assignee and/or the assigning Lender, new Notes shall not be required to be
executed and delivered by the Borrower, for any assignment which occurs at any
time when any of the events described in Section 9(f) shall have occurred and be
continuing.
(d) The Agent, on behalf of the Borrower, shall maintain at
the address of the Agent referred to in subsection 11.2 a copy of each
Assignment and Acceptance delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Lenders and the Commitment of,
and principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Lenders may (and, in the case of any Loan or
other obligation hereunder not evidenced by a Note, shall) treat each Person
whose name is recorded in the Register as the owner of a Loan or other
obligation hereunder as the owner thereof for all purposes of this Agreement and
the other Loan Documents, notwithstanding any notice to the contrary. Any
assignment of any Loan or other obligation hereunder not evidenced by a Note
shall be effective only upon appropriate entries with respect thereto being made
in the Register. The Register shall be available for inspection by the Borrower
or any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Borrower and the Agent)
together with payment to the Agent of a registration and processing fee of
$3,000, the Agent shall (i) promptly accept such Assignment and Acceptance and
(ii) on the effective date determined pursuant thereto record the information
contained therein in the Register and give notice of such acceptance and
recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee
any and all financial information in such Lender's possession concerning the
Borrower and its Affiliates which has been delivered to such Lender by or on
behalf of the Borrower pursuant to this Agreement or which has been
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delivered to such Lender by or on behalf of the Borrower in connection with such
Lender's credit evaluation of the Borrower and its Affiliates prior to becoming
a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
11.7 Adjustments; Set-off. (a) If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its Loans, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 9(f), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans or the Reimbursement Obligations owing to
it, or interest thereon, such benefitted Lender shall purchase for cash from the
other Lenders a participating interest in such portion of each such other
Lender's Loan or the Reimbursement Obligations owing to it, or shall provide
such other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share the
excess payment or benefits of such collateral or proceeds ratably with each of
the Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Agent after any such set-off and
application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such set-off and application.
11.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of the
copies of this Agreement signed by all the parties shall be lodged with the
Borrower and the Agent.
11.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and
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any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
11.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
11.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
11.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any
judgement in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United States
of America for the Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in subsection 11.2 or
at such other address of which the Agent shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
11.13 Acknowledgements. The Borrower hereby acknowledges that:
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(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and
the relationship between Agent and Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders.
11.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
NATIONAL EDUCATION CORPORATION
By:_____________________________________
Title:
BZW DIVISION OF BARCLAYS BANK PLC
as Agent and as a Lender
By:_____________________________________
Title:
60
