UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended August 31, 1999.
Commission file Number 0-2384
International Speedway Corporation
(Exact name of registrant as specified in its charter.)
Florida, U.S.A. 59-0709342
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1801 West International Speedway Boulevard, Daytona Beach, Florida 32114-1243
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 254-2700
Indicate by check mark whether the registrant(1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date:
Class A Common Stock, - 22,830,080 shares as of September 30, 1999.
Class B Common Stock, - 30,294,633 shares as of September 30, 1999.
<PAGE>
<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. - Financial Statements
INTERNATIONAL SPEEDWAY CORPORATION
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
November 30, August 31,
1998 1999
(Unaudited)
-------------- -------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ................................... $ 38,676 $ 59,110
Short-term investments ...................................... 54,127 681
Receivables, less allowances of $100 and $650, respectively . 9,445 27,722
Inventories ................................................. 953 3,882
Prepaid expenses and other current assets ................... 5,243 15,080
---------- -----------
Total Current Assets ......................................... 108,444 106,475
Property and Equipment - at cost - less accumulated
depreciation of $65,529 and $77,491, respectively ........... 225,831 614,040
Other Assets:
Equity investments (Note 3) ................................. 44,087 11,083
Goodwill, less accumulated amortization of $1,386 and
$3,267, respectively ....................................... 38,927 546,865
Restricted investments (Note 4).............................. 53,500 96,246
Other ....................................................... 6,029 13,877
----------- -----------
142,543 668,071
----------- -----------
Total Assets ................................................. $476,818 $1,388,586
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable ............................................ $ 10,367 $ 17,068
Deferred income ............................................. 62,253 114,656
Current portion of long-term debt ........................... 598 3,185
Other current liabilities ................................... 7,736 14,521
----------- -----------
Total Current Liabilities .................................... 80,954 149,430
Long-term debt (Note 4) ...................................... 2,775 282,540
Deferred income taxes ........................................ 26,234 66,452
Minority interest ............................................ - 2,178
Commitments and contingencies
Shareholders' Equity
Class A Common Stock, $.01 par value, 80,000,000 shares
authorized; 11,529,590 and 22,774,872 issued at November 30
and August 31, respectively................................. 115 228
Class B Common Stock, $.01 par value, 40,000,000 shares
authorized; 31,573,043 and 30,349,841 issued at November 30
and August 31, respectively.................................. 316 303
Additional paid-in capital .................................. 205,089 687,321
Retained earnings ........................................... 163,201 202,237
----------- -----------
368,721 890,089
Less unearned compensation-restricted stock ................. 1,866 2,103
----------- -----------
Total Shareholders' Equity ................................... 366,855 887,986
----------- -----------
Total Liabilities and Shareholders' Equity ................... $476,818 $1,388,586
=========== ===========
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended
August 31, August 31,
1998 1999
(Unaudited) (Unaudited)
_________________________
(In Thousands, Except
Per Share Data)
<S> <C> <C>
REVENUES:
Admissions, net.................................... $ 5,184 $ 31,857
Motorsports related income......................... 9,187 22,356
Food, beverage and merchandise income ............. 3,054 11,600
Other income....................................... 397 413
___________ ___________
17,822 66,226
EXPENSES:
Direct expenses:
Prize and point fund monies
and NASCAR sanction fees....................... 2,443 8,803
Motorsports related expenses..................... 5,449 10,958
Food, beverage and merchandise expenses ......... 2,288 6,630
General and administrative expenses................ 9,020 16,608
Depreciation and amortization ..................... 3,309 6,405
___________ ___________
22,509 49,404
___________ ___________
Operating income (loss) ............................. (4,687) 16,822
Interest income ..................................... 1,462 2,070
Interest expense .................................... (77) (1,586)
Equity in net income (loss) from equity investments.. 131 (1,006)
Minority interest ................................... - 77
___________ ___________
Income (loss) before income taxes.................... (3,171) 16,377
Income taxes (benefit) .............................. (1,227) 6,742
___________ ___________
Net Income (loss) ................................... $(1,944) $ 9,635
=========== ===========
Basic earnings (loss) per share ...................... $(0.05) $ 0.21
=========== ===========
Diluted earnings (loss) per share .................... $(0.05) $ 0.20
=========== ===========
Dividends per share.................................. $ 0.00 $ 0.00
=========== ===========
Basic weighted average shares outstanding ...........40,864,391 46,917,080
=========== ===========
Diluted weighted average shares outstanding .........40,864,391 47,040,272
=========== ===========
</TABLE>
See accompanying notes.
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
Condensed Consolidated Statements of Income
<TABLE>
<CAPTION>
Nine Months Ended
August 31, August 31,
1998 1999
(Unaudited) (Unaudited)
_________________________
(In Thousands, Except
Per Share Data)
<S> <C> <C>
REVENUES:
Admissions, net................................. $ 54,432 $ 90,136
Motorsports related income...................... 50,104 72,805
Food, beverage and merchandise income .......... 18,666 29,913
Other income.................................... 1,095 1,243
___________ __________
124,297 194,097
EXPENSES:
Direct expenses:
Prize and point fund monies
and NASCAR sanction fees.................... 19,727 28,252
Motorsports related expenses.................. 22,119 32,458
Food, beverage and merchandise expenses ...... 10,396 15,995
General and administrative expenses............. 26,365 36,814
Depreciation and amortization .................. 9,593 13,936
___________ __________
88,200 127,455
___________ __________
Operating Income.................................. 36,097 66,642
Interest income .................................. 2,531 6,783
Interest expense ................................. (518) (2,511)
Equity in net loss from equity investments ....... (111) (1,472)
Minority interest ................................ - 77
Gain on sale of equity investment ................ 1,245 --
___________ __________
Income before income taxes........................ 39,244 69,519
Income taxes...................................... 14,993 27,101
___________ __________
Net Income........................................ $24,251 $ 42,418
=========== ==========
Basic earnings per share ......................... $ 0.62 $ 0.96
=========== ==========
Diluted earnings per share ....................... $ 0.62 $ 0.96
=========== ==========
Dividends per share............................... $ 0.06 $ 0.06
=========== ==========
Basic weighted average shares outstanding ........ 39,100,175 44,229,684
=========== ==========
Diluted weighted average shares outstanding ...... 39,259,164 44,355,217
=========== ==========
</TABLE>
See accompanying notes.
<PAGE>
<PAGE> International Speedway Corporation
Condensed Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON COMMON UNEARNED
STOCK STOCK ADDITIONAL COMPENSATION- TOTAL
$.01 PAR $.01 PAR PAID-IN RETAINED RESTRICTED SHAREHOLDERS'
VALUE VALUE CAPITAL EARNINGS STOCK EQUITY
-------- --------- --------- --------- ----------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT NOVEMBER 30, 1997 $ 53 $332 $ 86,437 $125,457 $(2,372) $209,907
Activity 12/1/97 - 8/31/98 - unaudited:
Net Income ........................... - -- -- 24,251 -- 24,251
Public offering - Class A Common Stock 46 - 117,654 -- -- 117,700
Cash dividends ($.06 per share) ...... -- -- -- (2,310) -- (2,310)
Change in equity investment .......... - -- 115 -- -- 115
Restricted stock granted ............. - - 680 -- (680) --
Reacquisition of previously issued
common stock ....................... - -- (57) (138) -- (195)
Conversion of Class B Common Stock to
Class A Common Stock ............... 6 (6) -- -- -- --
Forfeiture of restricted shares ...... - -- (110) -- 110 --
Income tax benefit related to restricted
stock plan ......................... - -- 492 -- -- 492
Amortization of unearned compensation. - -- -- -- 781 781
----- ----- --------- --------- -------- ---------
BALANCE AT AUGUST 31, 1998 - unaudited 105 326 205,211 147,260 (2,161) 350,741
Activity 9/1/98 - 11/30/98 - unaudited:
Net income ........................... - - -- 15,941 -- 15,941
Change in equity investment .......... - -- (122) -- -- (122)
Conversion of Class B Common Stock to
Class A Common Stock ............... 10 (10) -- -- -- --
Amortization of unearned compensation. - -- -- -- 295 295
----- ----- --------- --------- -------- ---------
BALANCE AT NOVEMBER 30, 1998 115 316 205,089 163,201 (1,866) 366,855
Activity 12/1/98 - 8/31/99 - unaudited:
Net income ........................... -- -- -- 42,418 -- 42,418
Issuance of common stock for acquisition 100 -- 480,472 -- -- 480,572
Cash dividends ($.06 per share) ...... - - -- (2,586) -- (2,586)
Restricted stock granted ............. - -- 1,035 -- (1,035) --
Change in equity investment .......... - -- (90) -- -- (90)
Reacquisition of previously issued
common stock ....................... -- -- (314) (796) -- (1,110)
Conversion of Class B Common Stock to
Class A Common Stock ............... 13 (13) -- -- -- --
Income tax benefit related to restricted
stock plan ......................... - -- 1,129 -- -- 1,129
Amortization of unearned compensation. - -- -- -- 798 798
----- ----- --------- --------- -------- ---------
BALANCE AT AUGUST 31, 1999 - unaudited $228 $303 $687,321 $202,237 $(2,103) $887,986
===== ===== ========= ========= ======== =========
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
International Speedway Corporation
Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
August 31, August 31,
1998 1999
(Unaudited) (Unaudited)
______________________________
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income...................................... $ 24,251 $ 42,418
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization .............. 9,593 13,936
Amortization of unearned compensation....... 781 798
Deferred income taxes....................... 4,138 5,070
Undistributed loss from equity investments . 111 1,472
Minority interest .......................... - (77)
Gain on sale of equity investment .......... (1,245) --
Changes in operating assets and liabilities:
Receivables................................. (6,107) (5,997)
Inventories, prepaid expenses and other
current assets ........................... (9,119) (1,496)
Other assets................................ (351) (1,372)
Accounts payable, and other current liabilities 1,571 1,492
Deferred income............................. 32,715 12,372
__________________________
Net cash provided by operating activities....... 56,338 68,616
INVESTING ACTIVITIES
Change in short-term investments, net ........ 15,863 53,946
Capital expenditures.......................... (37,667) (75,387)
Acquisition, net of cash acquired ............ - (134,274)
Equity investments ........................... (410) (11,038)
Increase in restricted investments, net ...... - (42,746)
Proceeds from sale of equity investment ...... 5,270 --
Other, net ................................... (142) (285)
__________________________
Net cash used in investing activities........... (17,086) (209,784)
FINANCING ACTIVITIES
Payment of long-term debt .................... (13,057) (74,876)
Reacquisition of previously issued
common stock................................. (195) (1,110)
Issuance of Class A Common Stock ............. 117,700 -
Proceeds from long-term debt ................. - 240,174
Cash dividends paid .......................... (2,310) (2,586)
__________________________
Net cash provided by financing activities ...... 102,138 161,602
__________________________
Net increase in cash and cash equivalents ...... 141,390 20,434
Cash and cash equivalents at beginning of period 9,974 38,676
__________________________
Cash and cash equivalents at end of period ..... $151,364 $ 59,110
==========================
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
International Speedway Corporation
Notes to Condensed Consolidated Financial Statements
November 30, 1998 and August 31, 1999
(Unaudited)
1. Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared
in compliance with Rule 10-01 of Regulation S-X and generally accepted
accounting principles but do not include all of the information and disclosures
required for complete financial statements. The statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the latest annual report on Form 10-K for International Speedway
Corporation and its wholly-owned subsidiaries (the "Company"). In management's
opinion, the statements include all adjustments which are necessary for a fair
presentation of the results for the interim periods. All such adjustments are
of a normal recurring nature. Certain reclassifications have been made to
conform to the financial presentation at August 31, 1999.
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income", became effective for the Company during the first
quarter of fiscal year 1999. The Company has no items of other comprehensive
income and therefore no additional disclosure requirements.
Because of the seasonal concentration of racing events and the acquisition in
July 1999 (Note 2), the results of operations for the three-month and nine-
month periods ended August 31, 1998 and 1999 are not indicative of the results
to be expected for the year.
2. Acquisition
On July 26, 1999, the Company, 88 Corp., (a merger subsidiary wholly-owned by
the Company), and Penske Motorsports, Inc. ("PMI") consummated an Agreement
and Plan of Merger (the "PMI Merger Agreement"). Pursuant to the PMI Merger
Agreement, PMI merged into 88 Corp. ("the PMI Merger") and became a wholly-
owned subsidiary of the Company.
In connection with and immediately preceding the PMI Merger, the Company,
Penske Performance, Inc., Penske Corporation, (the sole shareholder of Penske
Performance, Inc.), and PSH Corp., (which owned approximately 56% of the issued
and outstanding shares of PMI), consummated a separate Agreement and Plan of
Merger which resulted in the merger of PSH Corp. into the Company.
Pursuant to the Merger Agreements, the Company acquired the approximately 88%,
or 12.2 million outstanding common shares, of PMI stock that it did not already
own for approximately $129.8 million and 10,029,861 shares of the Company's
Class A Common Stock. Transaction costs, net of cash acquired in the
transaction, totaled approximately $4.5 million. The total cash and stock
consideration issued in the transaction was approximately $611.1 million.
Motorsports facilities acquired in the transaction include Michigan Speedway in
Brooklyn, Michigan; Nazareth Speedway in Nazareth, Pennsylvania; California
Speedway in San Bernardino County, California; and North Carolina Speedway in
Rockingham, North Carolina. The Company also acquired PMI's 45% interest in
Homestead-Miami Speedway, LLC ("Miami"), bringing the Company's ownership in
that facility to 90%, as well as other PMI merchandising subsidiaries. As a
result of the transaction, the Company operates 10 major motorsports facilities
across the United States.
The acquisition has been accounted for under the purchase method of accounting
and, accordingly, the results of operations of the former PMI, as well as
Miami, have been included in the Company's consolidated statements of income as
of the date of acquisition.
The transaction purchase price has been allocated to the assets and liabilities
of PMI and Miami based upon preliminary estimates of their fair market value.
Management does not believe the final valuation will differ materially from the
preliminary valuation. The excess of the purchase price over the fair value of
the net assets acquired of approximately $105.9, has been allocated, based upon
the preliminary valuation, as goodwill of approximately $508.8 million and
assembled workforce of approximately $900,000 amortized on a straight line
basis over 40 years and five years, respectively. The amount amortized during
the three months and six months ended August 31, 1999 was approximately $1.1
million.
The following unaudited pro forma financial information presents a summary of
consolidated results of operations as if the Penske merger had occurred as of
December 1, 1997 after giving effect to certain adjustments, including
depreciation, amortization of goodwill, interest income, interest expense,
equity earnings, minority interest and the related income tax effects. The pro
forma results have been prepared for comparative purposes only and do not
purport to be indicative of what would have occurred had the acquisition had
been made on that date, nor are they necessarily indicative of results which
may occur in the future.
(Proforma - unaudited)
Nine Months Ended Nine Months Ended
August 31, 1998 August 31, 1999
Total Revenues $ 223,912 $ 278,182
Net Income 23,787 35,920
Basic income per share 0.48 0.66
Diluted income per share 0.48 0.66
3. Equity Investments
On May 5, 1999, the Motorsports Alliance, LLC ("MSA") (owned 50% by the Company
and 50% by Indianapolis Motor Speedway) and the owners of Route 66 Raceway,
LLC, formed a new company, Raceway Associates, LLC, ("Raceway Associates")
which is owned 75% by MSA and 25% by the former owners of the Route 66 Raceway,
LLC. As a result of this transaction, Raceway Associates owns the 240 acre
Route 66 Raceway motorsports complex located in Joliet, Illinois, approximately
35 miles from downtown Chicago. Raceway Associates has also purchased 930
acres adjacent to the existing Route 66 complex for the proposed construction
of a 1.5 mile oval motor speedway, which will initially accommodate
approximately 75,000 spectators. The current estimate for the proposed new
superspeedway development is $125 to $130 million, $100 million of which will
be financed through equity of approximately $50 million from MSA and a
borrowing of approximately $50 million by Raceway Associates. The members of
MSA will guarantee up to $50 million in borrowings of Raceway Associates on a
pro rata basis until such time as the operations of Raceway Associates meet
certain financial criteria. Raceway Associates is currently working with local
government authorities to identify potential funding mechanisms to fund
anticipated project costs in excess of $100 million. In addition, the Company
(through MSA) may commit additional equity to fund a portion of these
additional project costs. During the nine months ended August 31, 1999, the
Company contributed approximately $11 million to MSA, approximately $9 million
of which has been applied towards the Company's portion of the capital
commitment for the acquisition of land and development of the new facility.
As a result of the PMI merger on July 26, 1999 (Note 2), the investments in PMI
and Miami are no longer equity investments, as they are included in
consolidated operations.
4. Long-Term Debt
Long-term debt consists of the following (in thousands):
November 30, August 31,
1998 1999
_____________________________________
Credit facilities $ 0 $180,500
TIF bond debt service funding
commitment, net of discount of $1,665 0 69,675
Term debt 0 30,000
Notes payable 3,373 5,550
_______ ________
3,373 285,725
Less current portion 598 3,185
________ ________
$ 2,775 $282,540
======== ========
Schedule of Payments:
1999 $ 685
2000 2,655
2001 5,165
2002 9,225
2003 5,775
Thereafter 263,885
_______
287,390
Discount 1,665
_______
$285,725
========
The Company has two Credit Facilities with financial institutions, consisting
of a $300 million Credit Facility and a $20 million Credit Facility (discussed
below). In July 1999, the Company entered into a $300 million fully-
underwritten five-year revolving Credit Facility in order to finance a portion
of the PMI acquisition (Note 2) and to refinance PMI's outstanding
indebtedness. The $300 million Credit Facility matures on March 31, 2004, and
pays interest monthly at LIBOR plus 50 to 100 basis points. At August 31,
1999, the Company had $124 million available under this Credit Facility.
The Company has an agreement with a group of banks for a $20 million Credit
Facility, letter of credit and a $30 million term loan. The Credit Facility
and term loan are collateralized by all of the assets of the Company's Miami
subsidiary. The $20 million Credit Facility, which is automatically reduced to
$15 million on December 31, 2002, matures on December 31, 2004. At August 31,
1999, the Company had $15.5 million available under this Credit Facility. The
term loan is payable in 6 annual installments, which range from $2.5 million on
December 31, 1999 to $7.0 million on December 31, 2004. Interest on the Credit
Facility and term loan is paid quarterly and accrues at LIBOR plus 150 basis
points. The Company has entered into an interest rate swap agreement that
effectively fixes the floating rate on the outstanding balances under the term
loan at 6.0% through December 31, 1999, 6.6% through December 31, 2000 and 7.1%
for the remainder of the loan period.
The Credit Facilities and term loan contain various restrictive covenants.
In January 1999, the Unified Government of Wyandotte County/Kansas City, Kansas
("Unified Government"), issued approximately $71.3 million in taxable special
obligation revenue ("TIF") bonds and approximately $24.3 million in sales tax
special obligation revenue ("STAR") bonds, in connection with the financing of
phase I construction of the speedway in Kansas. The net proceeds were
deposited into trust accounts. The STAR bonds will be retired with state and
local taxes generated within the project's boundaries, and are not an
obligation of the Company. The TIF bonds are comprised of a $21.6 million,
6.15% term bond due December 1, 2017 and a $49.7 million, 6.75% term bond due
December 1, 2027. The TIF bonds are serviced through payments by the Unified
Government, which are funded through payments made by the Company to the
Unified Government in lieu of property taxes. Principal (mandatory redemption)
payments per the Funding Commitment are payable by the Company on October 1 of
each year beginning in 1999. The semi-annual interest component of the Funding
Commitment is payable on each April 1 and October 1, beginning on April 1,
1999.
Simultaneous with the issuance of the STAR and TIF bonds in January 1999, the
Company deposited into a trust account the unexpended portion of its $77.9
million equity commitment to the Kansas project. Prior to the issuance of the
STAR and TIF bonds, the Company had spent approximately $29.9 million related
to the construction of the speedway in Kansas.
The TIF bond proceeds and the Company's equity contribution remaining in the
trust accounts are classified as restricted investments on the Company's
balance sheet. The funds held in trust have been invested in a guaranteed
investment contract earning an interest rate of approximately 4.75% with a
maturity date of April 2001.
The Company has granted a mortgage and security interest in the Kansas project
for its Funding Commitment obligation.
Total interest incurred by the Company was approximately $77,000 and $1,586,000
for the three months ended August 31, 1998 and 1999, respectively, and $518,000
and $2,511,000, for the nine months ended August 31, 1998 and 1999,
respectively. Total interest capitalized for the three months and nine months
ended August 31, 1999 was approximately $858,000 and $1,750,000, respectively.
Financing costs of approximately $7.3 million have been deferred and are
included in other assets at August 31, 1999. These costs are being amortized
on an effective yield method over the life of the related financing.
5. Related Party Disclosures and Transactions
All of the racing events that take place during the Company's fiscal year are
sanctioned by various racing organizations such as the American Historic Racing
Motorcycle Association ("AHRMA"), the American Motorcyclist Association
("AMA"), the Automobile Racing Club of America ("ARCA"), the Championship Cup
Series ("CCS"), Championship Auto Racing Teams ("CART"), the Federation
Internationale de l'Automobile ("FIA"), the Federation Internationale
Motocycliste ("FIM"), Historic Sportscar Racing ("HSR"), the International Race
of Champions ("IROC"), the Indy Racing League ("IRL"), the National Association
for Stock Car Auto Racing, Inc. ("NASCAR"), the Sports Car Club of America
("SCCA"), the Sportscar Vintage Racing Association ("SVRA"), the United States
Auto Club ("USAC"), the United States Road Racing Championship ("USRRC"), and
the World Karting Association ("WKA"). NASCAR, which sanctions some of the
Company's principal racing events, is a member of the France Family Group which
controls in excess of 60% of the combined voting power of the outstanding
stock of the Company and some members of which serve as directors and officers.
Standard NASCAR sanction agreements require racetrack operators to pay sanction
fees and prize and point fund monies for each sanctioned event conducted. The
prize and point fund monies are distributed by NASCAR to participants in the
events. Prize and point fund monies paid by the Company to NASCAR for
disbursement to competitors totaled approximately $1.9 million and $15.8
million for the three and nine-month periods ended August 31, 1998,
respectively, and approximately $8.8 million and $24.2 million for the three-
month and nine-month periods ended August 31, 1999, respectively.
6. Supplemental Disclosures of Cash Flow Information
Cash paid for income taxes and interest for the nine months ended August 31,
1998 and 1999 is as follows:
1998 1999
________________________________
(Thousands of Dollars)
Income taxes paid $ 12,385 $ 24,486
==================================
Interest paid $ 926 $ 2,583
==================================
See Note 2 for discussion of non-cash acquisition transaction.
7. Legal Proceedings
Souvenir Litigation
As described below, the Company and certain subsidiaries are parties to legal
proceedings alleging price-fixing activities in connection with the sale of
souvenirs and merchandise. These matters are collectively referred to as the
Souvenir Litigation. While the Company disputes the allegations, neither the
cost of defending the suits nor the potential damages or other remedies for
which the Company might be liable is insured.
The Company's indirect corporate subsidiary, Americrown Service Corporation
("Americrown"), is the sole defendant in a class action proceeding in the
Circuit Court of Talladega County, Alabama which was filed in October 1996. A
class consisting of persons who purchased racing souvenirs at Talladega
Superspeedway since September 1992 was certified by the court on July 30, 1998.
The suit seeks to recover at least $500 for each member of the class but does
not otherwise seek to recover compensatory or punitive damages or statutory
attorneys' fees. Americrown has moved for reconsideration of the class
certification decision. Americrown has disputed the allegations and has
defended the action fully and vigorously.
In March 1997, two purported class action companion lawsuits were filed in the
United States District Court, Northern District of Georgia, against the
Company, Americrown, and a number of other persons (including Motorsports
International Corporation, previously a subsidiary of Penske Motorsports, Inc.
which was acquired by the Company in the Penske Mergers). Both suits sought
damages and injunctive relief on behalf of all persons who purchased souvenirs
or merchandise from certain vendors at any NASCAR Winston Cup race or
supporting event in the United States during the period 1991 to present. The
two suits have been consolidated and class certification has not yet been
decided by the court. Discovery has been concluded. The Company and Americrown
have disputed the allegations and have defended the actions fully and
vigorously.
Recently Americrown, Motorsports International and the Company have entered
into Confidential Memoranda of Understanding ("MOU") to completely settle the
Souvenir Litigation, without any admission of wrongdoing on their part. Under
the terms of the MOU (which have been filed under seal with the respective
courts) the Company, Americrown and Motorsports International have agreed to
pay approximately $4.6 million in cash and to distribute souvenir merchandise
discount coupons to settle with classes which would encompass all purchasers of
souvenirs and merchandise at NASCAR Winston Cup events during the period from
January 1, 1991 to the present. The parties are in the process of attempting
to agree on the terms of formal Settlement Agreements, including the terms of
the coupon program. Such Settlement Agreements will then be subject to review
and approval by both the state and federal courts. If the Settlement Agreements
are not successfully finalized, the Company, Americrown and Motorsports
International intend to resume the vigorous defense of the actions.
The financial statements for the 1999 third quarter include an accrual of
approximately $2.8 million representing Americrown's cash portion of the
proposed Souvenir Litigation settlement. The remaining $1.8 million is
attributable to Motorsports International and was recorded as a part of the
merger purchase price. The effects of the discount coupon program will be
recognized in future periods as coupons are redeemed.
North Carolina Speedway Dissenters' Action
In connection with Penske Motorsports' acquisition of North Carolina Speedway
in 1997, certain North Carolina Speedway stockholders (constituting more
than 5% of the North Carolina Speedway shares outstanding prior to the
acquisition) exercised their right under North Carolina law to dissent to the
price paid for the common stock of North Carolina Speedway. These dissenting
shareholders were paid $16.77 per share. These dissenters have requested
$55.00 per share and have sued Penske Motorsports, Penske Acquisition, Inc. and
North Carolina Speedway in North Carolina Superior Court, Mecklenburg County,
North Carolina. Under Penske Motorsports' agreement with Mrs. DeWitt (the
former majority stockholder of North Carolina Speedway), if a dissenting
stockholder, which represents more than five percent of the North Carolina
Speedway stock, receives more consideration in a dissenters' action than Penske
Motorsports paid in connection with the acquisition of North Carolina Speedway,
all stockholders of North Carolina Speedway at the time of the acquisition,
other than Penske Motorsports and its affiliates, would receive a per share
amount equal to the award in dissenter's court less the per share amount paid
in the acquisition ($19.61 per share to stockholders other than the dissenting
shareholders). Because Penske Motorsports acquired Mrs. DeWitt's shares prior
to the completion of this acquisition, Mrs. DeWitt would not be entitled to
receive additional consideration for her shares. A negative decision with
respect to the dissenters' proceeding could materially increase the purchase
price paid for North Carolina Speedway by Penske Motorsports, which the Company
would have to pay.
Management is presently unable to further predict or quantify the outcome of
these matters.
8. Long-Term Incentive Plans
On April 1, 1998 and 1999, a total of 22,236 and 19,633 restricted shares of
the Company's Class A Common Stock, respectively, were awarded to certain
officers and managers under the Company's Long-term Incentive Plan (the "1996
Plan"). The market value of shares awarded amounted to approximately $680,000
and $1,035,000 respectively, which has been recorded as unearned compensation -
- - restricted stock, and is shown as a separate component of shareholders'
equity in the accompanying condensed consolidated balance sheets. The unearned
compensation is being amortized over the vesting period of the shares. The
total expense for restricted stock awards charged against operations during the
nine months ended August 31, 1998 and August 31, 1999 was approximately
$781,000 and $798,000, respectively.
9. Subsequent Event
On October 6, 1999, the Company sold $225 million principal amount of Senior
Notes due October 15, 2004 in a private placement. The unsecured Senior Notes
will bear interest at 7.875% and will rank equally with all of the Company's
other senior unsecured and unsubordinated indebtedness. The Company used
approximately $176 million of the net proceeds from the transaction to repay
outstanding borrowings under its $300 million Credit Facility. Pursuant to the
Credit Facility Agreement, the size of the Credit Facility automatically
reduces from $300 million to $200 million upon the Company's receipt of the
proceeds from the private placement.
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
General
The Company derives revenues primarily from (i) admissions to racing events and
motorsports activities held at its facilities, (ii) revenue generated in
conjunction with or as a result of motorsports events conducted at its
facilities, and (iii) catering, concession and merchandise made during or as a
result of such events and activities.
"Admissions" revenue includes ticket sales from all of the Company's events and
DAYTONA USA's Track Tours and Velocitorium. Admissions revenue for racing
events is recorded upon completion of the related motorsports event.
"Motorsports related income" primarily includes television and radio broadcast
rights fees, promotion and sponsorship fees, hospitality rentals (including
luxury suites, chalets and the hospitality portion of club seating),
advertising revenues, royalties from licenses of the Company's trademarks, and
track rentals. The Company currently negotiates directly with television and
cable networks for coverage of substantially all of its NASCAR televised
motorsports events. NASCAR has announced it will retain these rights and
negotiate television and ancillary media rights contracts beginning with the
2001 racing season as a result of its recent agreement with all of the
television broadcasters of these events to release their contractual rights
beginning with such racing season. The Company expects that the percentage of
television broadcast rights fees that the Company currently retains from each
contract will be the same under the future arrangement. The Company's revenues
from corporate sponsorships are paid in accordance with negotiated contracts,
with the identities of sponsors and the terms of sponsorship changing from time
to time.
"Food, beverage and merchandise income" includes revenues from concession
stands, hospitality catering and direct sales of souvenirs, programs and other
merchandise, fees paid by third party vendors for the right to sell souvenirs
and concessions at the Company's facilities, and the wholesale and retail sale
of Good Year brand racing tires for various types of racing events.
Expenses include (i) prize and point fund monies and NASCAR sanction fees, (ii)
motorsports related expenses, which include costs of competition paid to
sanctioning bodies other than NASCAR, labor, advertising and other expenses
associated with the Company's promotion of its racing events, and (iii) food,
beverage and merchandise expenses, consisting primarily of labor and costs of
goods sold.
The following table sets forth, for each of the indicated periods, certain
selected income statement data as a percentage of total revenues:
<TABLE>
<CAPTION>
Three Months ended Nine Months Ended
August 31, August 31,
1998 1999 1998 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
_________________________ _________________________
<S> <C> <C> <C> <C>
Revenues:
Admissions, net............................. 29.1% 48.1% 43.8% 46.4%
Motorsports related income.................. 51.6 33.8 40.3 37.5
Food, beverage and merchandise income....... 17.1 17.5 15.0 15.4
Other income................................ 2.2 0.6 0.9 0.7
________ ________ ________ _______
Total revenues ........................... 100.0% 100.0% 100.0% 100.0%
Expenses:
Direct expenses:
Prize and point fund monies
and NASCAR sanction fees................ 13.7 13.3 15.9 14.6
Motorsports related expenses.............. 30.6 16.5 17.8 16.7
Food, beverage and merchandise expenses... 12.8 10.0 8.4 8.2
General and administrative expenses......... 50.6 25.1 21.2 19.0
Depreciation and amortization .............. 18.6 9.7 7.7 7.2
________ ________ ________ _______
Total expenses ........................... 126.3 74.6 71.0 65.7
________ ________ ________ _______
Operating income (loss) ...................... (26.3) 25.4 29.0 34.3
Interest income .............................. 8.2 3.1 2.1 3.5
Interest expense ............................. (0.4) (2.4) (0.4) (1.3)
Equity in net loss from equity investments.... 0.7 (1.5) (0.1) (.8)
Gain on sale of equity investment ............ -- -- 1.0 -
Minority interest ............................ - 0.1 -- 0.1
________ ________ ________ _______
Income (loss) before income taxes............. (17.8) 24.7 31.6 35.8
Income tax expense (benefit) ................. (6.9) 10.1 12.1 13.9
________ ________ ________ _______
Net income (loss) ............................ (10.9%) 14.6% 19.5% 21.9%
</TABLE>
Seasonality and Quarterly Results
The Company's business has been, and is expected to remain, highly seasonal
based on the timing of major events. For example, one of Darlington Raceway's
Winston Cup Series events is traditionally held on the Sunday preceding Labor
Day. Accordingly, the revenue and expenses for that race and/or the related
supporting events may be recognized in either the fiscal quarter ending August
31 or the fiscal quarter ending November 30. Further, in July 1998 the Company
announced the postponement of the NASCAR Winston Cup Series Pepsi 400 at
Daytona from July 4, 1998 to October 17, 1998 as a result of the nationally
publicized forest fire emergency throughout the state of Florida. This event,
historically conducted in the Company's third quarter, was conducted in July in
1999.
On July 26, 1999, the Company acquired the 88% interest it did not already own
in Penske Motorsports, Inc. ("PMI"). Motorsports facilities acquired in the
transaction include Michigan Speedway in Brooklyn, Michigan; Nazareth Speedway
in Nazareth, Pennsylvania; California Speedway in San Bernardino County,
California; and North Carolina Speedway in Rockingham, North Carolina. The
Company also acquired PMI's 45% interest in Homestead-Miami Speedway, LLC
("Miami"), bringing the Company's ownership in that facility to 90%, as well as
other PMI merchandising subsidiaries. As a result of the transaction, the
Company operates 10 major motorsports facilities across the United States with
more than 800,000 seats and 400 suites (See "Acquisition"). The Company has
recognized revenues and expenses associated with acquired operations on a
consolidated basis subsequent to July 26, 1999, including a major event weekend
consisting of a NASCAR Winston Cup Series event and NASCAR Busch Series, Grand
National Division event conducted at the Michigan Speedway ("Michigan") in
August of 1999.
As a result of the prior year postponement of the Pepsi 400 at Daytona and the
acquisition of PMI, the Company conducted three Winston Cup Series races and
two Busch Series, Grand National Division races during the third quarter of
1999 compared to one Winston Cup Series race and one Busch Series, Grand
National Division race during the third quarter of 1998. Accordingly, the
Company's results of operations, as well as the margins of certain expenses in
relation to certain revenues, are not necessarily comparable on a period-to-
period basis.
Comparison of the Results for the Three and Nine Months Ended August 31, 1999 to
the Results for the Three and Nine Months Ended August 31, 1998
Admissions revenue increased approximately $26.7 million, or 514.5%, for the
three months ended August 31, 1999 as compared to the three months ended August
31, 1998. The increase in admissions income was primarily attributable to the
Pepsi 400 at Daytona and the NASCAR events held at the newly acquired Michigan
facility, both of which were not included in the Company's results during the
three months ended August 31, 1998. The aforementioned events hosted record
attendance in 1999.
Admissions revenue increased approximately $35.7 million, or 65.6%, for the nine
months ended August 31, 1999, as compared to the nine months ended August 31,
1998. This increase was primarily related to increases discussed above during
the three months ended August 31, 1999, as well as the increase in the weighted
average price of tickets sold and increased seating capacity and attendance at
the Speedweeks events held at Daytona International Speedway ("Daytona"), and,
to a lesser extent, events conducted at Talladega Superspeedway ("Talladega").
Motorsports related income increased approximately $13.2 million , or 143.3%,
during the three months ended August 31, 1999 as compared to the three months
ended August 31, 1998. This increase, primarily related to television broadcast
rights fees, luxury suite and hospitality rentals and sponsorship revenues, was
attributable to the timing of the Pepsi 400 at Daytona, Michigan's NASCAR events
and, to a lesser extent, the NASCAR events held at Watkins Glen.
Motorsports related income increased approximately $22.7 million, or 45.3%, for
the nine months ended August 31, 1999 as compared to the nine months ended
August 31, 1998. Over one-half of this increase was attributable to the
increases discussed above during the third quarter of 1999, with the remaining
increase primarily attributable to growth in television broadcast rights fees,
expanded luxury suite and hospitality facilities and increased sponsorship
revenues for the Speedweeks events at Daytona and, to a lesser extent, events at
the Company's other facilities.
Food, beverage and merchandise income increased approximately $8.5 million, or
279.8%, during the three months ended August 31, 1999 as compared to the three
months ended August 31, 1998. This increase was attributable to the timing of
the Pepsi 400 at Daytona, the merchandising activities of certain subsidiaries
acquired from PMI, which included sales of Goodyear brand racing tires, and fees
paid by third party vendors related to souvenir, concessions and catering
operations for Michigan's NASCAR events.
Food, beverage and merchandise income increased approximately $11.2 million, or
60.3%, for the nine months ended August 31, 1999 as compared to the nine months
ended August 31, 1998. The majority of the increase related to the increases
discussed above during the three months ended August 31,1999, with the remaining
increase primarily attributable to increased catering revenues from expanded
luxury suite and hospitality facilities at Daytona's Speedweeks events, and, to
a lesser extent, increased attendance and seating capacity for NASCAR events
conducted at the Company's other facilities.
Prize and point fund monies and NASCAR sanction fees increased by approximately
$6.4 million, or 260.3%, and $8.5 million, or 43.2%, for the three months and
nine months ended August 31, 1999, respectively, as compared to the same periods
of the prior year, primarily as a result of the timing of the Pepsi 400 at
Daytona and Michigan's NASCAR events. Over three-quarters of the increase for
both the three months and nine months ended August 31,1999 was due to increased
prize and point fund monies paid by NASCAR to participants in NASCAR events.
Growth in television broadcast rights fees contributed significantly to these
increases as standard NASCAR sanctioning agreements require that a specified
percentage of broadcast rights fees be paid as part of prize money.
Motorsports related expenses increased approximately $5.5 million, or 101.1%,
and $10.3 million, or 46.7%, for the three months and nine months ended August
31, 1999, respectively, as compared to the same periods of the prior year. The
increase during the three months ended August 31, 1999, was primarily related to
the timing of operating expenses for the Pepsi 400 at Daytona and Michigan's
NASCAR events. The increases during the three months ended August 31,1999
accounted for over one-half of the increase during the nine months ended August
31,1999. The remaining increase was primarily attributable to personnel costs,
hospitality services and supplies and a variety of other fan amenities and
operating expenses for Daytona's Speedweeks events and, to a lesser extent,
events conducted at the Company's other facilities.
Food, beverage and merchandise expenses increased approximately $4.3 million, or
189.8%, and $5.6 million, or 53.9%, for the three months and nine months ended
August 31, 1999, respectively, as compared to the same periods of the prior year
primarily due to increased product and personnel costs associated with
increased revenues. The increases are primarily attributable to costs
associated with the sale of Goodyear brand racing tires and the timing of costs
associated with the Pepsi 400 at Daytona.
General and administrative expenses increased approximately $7.6 million, or
84.1%, and $10.4 million, or 39.6%, for the three and nine months ended August
31, 1999 as compared to the same periods of the prior year. During the three
months ended August 31,1999, the Company recorded a charge of approximately $2.8
million related to the cash portion of a proposed settlement in the Americrown
souvenir litigation (See "Legal Proceedings"). The increase for the three months
ended August 31, 1999, as compared to the three months ended August 31, 1998, is
primarily related to the charge for the proposed settlement, general and
administrative expenses associated with the operations acquired from PMI and the
consolidation of Miami and, to a lesser extent, increases in personnel and a
variety of other general and administrative expenses. Over one-half of the
increase for the nine months ended August 31, 1999, compared to the nine months
ended August 31,1998, was related to the proposed settlement and the acquired
operations noted above. The remaining increase in expenses was primarily
attributable to personnel costs and a variety of other expenses, as well as a
bad debt reserve primarily related to a single customer incurred during the
first quarter of fiscal 1999.
Depreciation and amortization expense increased approximately $3.1 million, or
93.6%, and $4.3 million, or 45.3%, for the three months and nine months ended
August 31, 1999, respectively, as compared to the same periods of the prior
year. The depreciation of assets acquired and amortization of goodwill recorded
as a result of the PMI merger accounted for approximately three-quarters and
one-half of the increase for the three months and nine months ended August 31,
1999, respectively. The remaining increase was a result of the ongoing
expansion of the Company's facilities.
Interest income for the three months and nine months ended August 31, 1999,
increased by approximately $600,000 and $4.3 million, respectively, as compared
to the same periods of the prior year. This increase was primarily due to the
investment of the remaining proceeds of the July 1998 Class A Common Stock
Offering, including the Company's investments restricted to the funding of the
speedway in Kansas, and investment of the proceeds from the sale of taxable
special obligation revenue ("TIF") bonds issued in January 1999 by the Unified
Government of Wyandotte County/Kansas City, Kansas ("Unified Government"), to
partially fund the Kansas project (See "Future Liquidity").
Interest expense for the three months and nine months ended August 31, 1999,
increased by approximately $1.5 million and $2.0 million, respectively, as
compared to the same periods of the prior year. Interest expense in fiscal 1999
consists primarily of the interest on $176 million borrowed under the Company's
new $300 million five-year revolving Credit Facility (See "Acquisition" and
"Future Liquidity"), incurred during the three months ended August 31,1999, and
interest expense on the TIF bond debt service funding commitment, net of
capitalized interest. Interest expense in fiscal 1998 was primarily related to
the note payable associated with the acquisition of Phoenix.
Equity in net income (loss) from equity investments represents the Company's pro
rata share of the current income and losses from its equity investments and the
amortization of the Company's investment in excess of its share of the
investee's underlying net assets. During the three months and nine months ended
August 31, 1999, this included the Company's approximately 12% indirect
investment in PMI and its 45% investment in Miami through July 26, 1999, and its
50% investment in Motorsports Alliance, LLC, which is pursuing development of a
major motorsports facility in the Chicago area (See "Future Liquidity"). For
the three months and nine months ended August 31, 1998, this included the
Company's approximately 11% indirect investment in PMI, its 40% investment in
Miami, which increased to 45% in March of 1998, and its 7% investment in Grand
Prix Association of Long Beach ("Long Beach"), which was sold in March of 1998.
In March of 1998 the Company recorded an approximately $1.2 million gain on the
sale of its equity investment in Long Beach. The Company sold its investment in
conjunction with Dover Downs Entertainment, Inc.'s announced plans to merge with
Long Beach. The after tax impact of this transaction was approximately
$850,000.
Income taxes increased $8.0 million and $12.1 million for the three months and
nine months ended August 31, 1999, respectively. The Company's effective tax
rate has, and is expected to continue to, increase compared to its historical
levels primarily due to the amortization of non-deductible goodwill created in
the PMI merger.
As a result of the foregoing, the Company's net income increased approximately
$11.6 million, or 595.6%, and $18.2 million, or 74.9%, for the three months and
nine months ended August 31, 1999 as compared to the same periods in the prior
year.
Liquidity and Capital Resources
General
The Company has historically generated sufficient cash flow from operations to
fund its working capital needs and capital expenditures at existing facilities,
as well as to pay an annual cash dividend. In addition, the Company has used
the proceeds from offerings of its Class A Common Stock and, most recently,
borrowings available under its Credit Facility to fund development projects and
acquisitions. The Company had borrowings of $176 million on its new $300
million Credit Facility and a working capital deficit of $43.0 million at August
31, 1999, compared to working capital of $27.5 million at November 30, 1998,
primarily due to the acquisition of the approximately 88% interest the Company
did not already own in PMI. See "Acquisition" and "Future Liquidity".
Cash Flows
Net cash provided by operating activities was approximately $68.6 million for
the nine months ended August 31, 1999, compared to $56.3 million for the nine
months ended August 31, 1998. The difference between the Company's net income
of $42.4 million and the $68.6 million of operating cash flow was primarily
attributable to depreciation and amortization of $13.9 million, an increase in
deferred revenue of $12.4 million, and an increase in deferred income taxes of
$5.1 million, partially offset by an increase in accounts receivable of $6.0
million.
Net cash used in investing activities was $209.8 million for the nine months
ended August 31, 1999, compared to $17.1 million for the nine months ended
August 31, 1998. The Company's use of cash for investing activities reflects
$134.3 million for the cash portion of the purchase price of PMI, $75.4 million
in capital expenditures, the $42.7 million net increase in restricted
investments for the project in Kansas and $11.0 million for the Company's
investment year to date in the Chicago project, partially offset by the net
proceeds from the sale of short-term investments of $53.9 million. See "Capital
Expenditures".
Net cash provided by financing activities of $161.6 million for the nine months
ended August 31, 1999, compared to $102.1 million for the nine months ended
August 31, 1998, is related primarily to net proceeds from borrowings under the
Company's new $300 million five-year revolving Credit Facility (See
"Acquisition") and the issuance of the TIF bonds, partially offset by the
payment of a portion of the long-term debt acquired in the PMI merger
transaction.
Capital Expenditures
Capital expenditures totaled approximately $75.4 million for the nine months
ended August 31, 1999 as compared to $37.7 million for the nine months ended
August 31, 1998. Almost two-thirds of these expenditures were related to
expenditures at the Company's existing facilities, including increased seating
capacity at Daytona, Talladega, Phoenix, Darlington, Michigan and Miami, land
purchased for expansion of parking capacity and a variety of other improvements
to the Company's facilities. The remaining capital expenditures were primarily
related to the construction of the speedway in Kansas.
The Company expects to make approximately $66 million of additional capital
expenditures for approved projects at existing facilities within the next 24
months to increase grandstand seating capacity, acquire land for expansion of
parking capacity, construct luxury suites and for a variety of additional
improvements to the Company's motorsports facilities. The Company also expects
to spend an additional $10.1 million for 36 additional luxury suites at the
Kansas speedway, which is currently under construction. The balance of the
Company's capital expenditures related to the construction of the Kansas
facility will be funded from restricted investments, as discussed below.
Acquisition
On July 26, 1999, the Company, 88 Corp.(a merger subsidiary wholly-owned by the
Company), and PMI consummated an Agreement and Plan of Merger. Pursuant to the
PMI Merger Agreement, PMI merged into 88 Corp. ("the PMI Merger") and became a
wholly-owned subsidiary of the Company.
In connection with and immediately preceding the PMI Merger, the Company, Penske
Performance, Inc., Penske Corporation, (the sole shareholder of Penske
Performance, Inc.), and PSH Corp., (which owned approximately 56% of the issued
and outstanding shares of PMI), consummated a separate Agreement and Plan of
Merger which resulted in the merger of PSH Corp. into the Company.
Pursuant to the Merger Agreements, the Company acquired the approximately 88%,
or 12.2 million outstanding common shares, of PMI stock that it did not already
own for approximately $129.8 million and 10,029,861 shares of the Company's
Class A Common Stock. Transaction costs, net of cash acquired in the
transaction, totaled approximately $4.5 million. The total cash and stock
consideration issued in the transaction was approximately $611.1 million.
The acquisition has been accounted for under the purchase method of accounting
and, accordingly, the results of operations of the former PMI, as well as Miami,
have been included in the Company's consolidated statements of income since the
date of acquisition.
The transaction purchase price has been allocated to the assets and liabilities
of PMI and Miami based upon preliminary estimates of their fair market value.
Management does not believe the final valuation will differ materially from the
preliminary valuation. The excess of the purchase price over the fair value of
the net assets acquired of approximately $105.9, has been allocated, based upon
the preliminary valuation, as goodwill of approximately $508.8 million and
assembled workforce of approximately $900,000 amortized on a straight line basis
over 40 years and five years, respectively. The amount amortized during the
three months and six months ended August 31, 1999 was approximately $1.1
million.
The Company financed a portion of the Mergers and refinanced PMI's outstanding
indebtedness through a new $300 million fully-underwritten five-year revolving
Credit Facility ("Credit Facility") syndicated to a select group of lenders.
This Credit Facility replaced the Company's existing $100 million facility.
Borrowings under the Credit Facility bear interest at the applicable LIBOR rate
plus 50-100 basis points depending on certain financial criteria. At August 31,
1999, the Company's outstanding borrowings on this Credit Facility were $176
million. In addition, at August 31, 1999, the Company had a $20 million Credit
Facility, with outstanding borrowings of $4.5 million, and a $30 million term
loan outstanding which are both collateralized by the assets of the Company's
Miami subsidiary.
Future Liquidity
On October 6, 1999, the Company sold $225 million principal amount of Senior
Notes due 2004 in a private placement. The unsecured Senior Notes will bear
interest at 7.875%. The Company used approximately $176 million of the net
proceeds from the transaction to repay the outstanding borrowings under the
Credit Facility. The Company intends to use the remaining net proceeds of
approximately $47 million to partially fund the completion of certain additions
and improvements to Company's motorsports facilities and for working capital and
other general corporate purposes. Pending such uses, the Company intends to
invest the remaining proceeds in money market funds or other interest-bearing
obligations. Pursuant to the Credit Facility agreement, the size of the Credit
Facility automatically reduces from $300 million to $200 million upon the
Company's receipt of the proceeds from the private placement.
During the first quarter of 1999, the financing for the first phase of the
development of the Kansas facility, which is currently estimated to cost in
excess of $224 million, was substantially completed. In January 1999, the
Unified Government issued approximately $71.3 million in TIF bonds and
approximately $24.3 million in sales tax special obligation revenue ("STAR")
bonds. The STAR bonds are retired with state and local taxes generated within
the project's boundaries, and are not an obligation of the Company. The TIF
bonds will be serviced through payments by the Unified Government escalating
from an annual rate of approximately $4.8 million to $7.7 million, including
interest at 6.15% to 6.75%, which are funded by payments made by the Company to
the Unified Government in lieu of property taxes. In addition, the Company has
committed equity of approximately $77.9 million of which $24.4 was funded during
fiscal 1998, with the remaining $53.5 million funded in the first quarter of
fiscal 1999. The net TIF and STAR bond proceeds and the Company's equity
contribution were deposited into trustee administered accounts for the benefit
of the construction of the Kansas facility which will be owned and operated by
the Company. At August 31, 1999, the Company's $96.2 million of restricted
investments includes the funds remaining from the Company's equity contribution
and the TIF bond proceeds.
On May 5, 1999, the Motorsports Alliance, LLC ("MSA") (owned 50% by the Company
and 50% by Indianapolis Motor Speedway) and the owners of Route 66 Raceway, LLC,
formed a new company, Raceway Associates, LLC, ("Raceway Associates") which is
owned 75% by MSA and 25% by the former owners of the Route 66 Raceway. As a
result of this transaction, Raceway Associates owns the 240 acre Route 66
Raceway motorsports complex located in Joliet, Illinois, approximately 35 miles
from downtown Chicago. Raceway Associates has also purchased 930 acres adjacent
to the existing Route 66 complex for the proposed construction of a 1.5 mile
oval motor speedway, which will initially accommodate approximately 75,000
spectators. The current estimate for the proposed new superspeedway development
is $125 to $130 million, $100 million of which will be financed through equity
of approximately $50 million from MSA and a borrowing of approximately $50
million by Raceway Associates. The members of MSA will guarantee up to $50
million in borrowings of Raceway Associates on a pro rata basis until such time
as the operations of Raceway Associates meet certain financial criteria.
Raceway Associates is currently working with local government authorities to
identify potential funding mechanisms to fund anticipated project costs in
excess of $100 million. In addition, the Company (through MSA) may commit
additional equity to fund a portion of these additional project costs. During
the nine months ended August 31, 1999, the Company contributed approximately $11
million to MSA, approximately $9 million of which has been applied towards the
Company's portion of the capital commitment for the acquisition of land and
development of the new facility.
The Company believes that cash flow from operations, along with existing cash
and short-term investment balances, proceeds from the Senior Notes and available
borrowings under the Company's Credit Facilities, will be sufficient to fund i)
operations and approved capital projects at existing facilities for the
foreseeable future, ii) payments required in connection with the funding of the
Unified Government's debt service requirements related to the TIF bonds
described above prior to commencement of racing at the Speedway in Kansas, iii)
payments related to other currently existing debt service requirements, and iv)
the Company's expected equity funding requirements for the Chicago project. The
Company intends to pursue further developments and/or acquisition opportunities
(including the possible development of new motorsports facilities in Denver and
the New York metropolitan area) the timing, size and success as well as
associated potential capital commitments of which are unpredictable.
Accordingly, a material acceleration in our growth strategy could require the
Company to obtain additional capital through debt and/or equity financings.
Although there can be no assurance, the Company believes that adequate debt or
equity financing will be available on satisfactory terms.
Inflation
Management does not believe that inflation has had a material impact on
operating costs and earnings of the Company.
Impact of the Year 2000
The Year 2000 issue is the result of computer programs and other business
systems being written using two digits rather than four to represent the year.
Many of our time sensitive applications and business systems and those of our
business partners may recognize a date using "00" as the year 1900 rather than
the year 2000, which could result in system failure or disruption of operations.
The Year 2000 problem will impact us and our business partners.
An assessment of our Year 2000 exposure related to our information technology
systems has been made and the plans to resolve the related issues are being
implemented. Most of our major information technology systems have already been
updated or replaced with applications that are Year 2000 compliant in the normal
course of business. We believe we will be able to achieve Year 2000 readiness
with regard to the remainder of our information technology systems during the
fourth quarter of fiscal 1999.
We suspect that some of our non-information technology systems, such as
elevators, heating and air-conditioning systems, etc., with date sensitive
software and embedded microprocessors may be affected by the Year 2000 issue,
and evaluation of such systems is approaching completion. Current estimates
of the costs of correcting or replacing critical non-information technology
systems indicate that these costs will not be material to us.
We have also developed and implemented a plan of communication with significant
business partners in an attempt to identify and minimize disruptions to our
operations resulting from the Year 2000 issue. There can be no certainty that
the computer programs and business systems of third parties on which we rely
will not have an adverse effect on our operation . However, because of the
nature of our business, we believe at this time that a failure of our vendors,
sponsors or customers to resolve issues involving the Year 2000 problem will not
be material to us.
We anticipate completing substantially all of our Year 2000 preparation during
fiscal 1999. In the event we fall behind on our timetable for achieving Year
2000 compliance, we will need to focus additional internal resources on
completing critical projects and implementing contingency plans. We at this
time believe that we will satisfactorily resolve all significant Year 2000
problems. Current estimates of costs to correct the identified potential
problems related to the Year 2000 indicate that these costs will not exceed
$600,000. Estimates of Year 2000 related costs are based on numerous
assumptions, including the continued availability of certain resources, the
ability to correct all relevant information and non-information technology
systems and third party modification plans. There is no assurance that the
estimates will be achieved and actual costs could differ materially from
those anticipated.
Factors That May Affect Operating Results
Statements contained in this document that state the Company's or Management's
anticipations, beliefs, expectations, hopes, intentions, predictions and/or
strategies which are not purely historical fact or which apply prospectively are
"forward-looking" statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21 of the Securities Exchange Act of 1934. All forward-
looking statements contained in this document are based on information available
to the Company on the date hereof, and the Company assumes no obligation to
update any such forward-looking statements. It is important to note that the
Company's actual results could differ materially from those contained or
projected in, or even implied by, such forward-looking statements. Some of the
factors that could cause the actual results to differ materially are set forth
below. Additional information concerning these, or other, factors which could
cause actual results to differ materially from those in the forward-looking
statements is contained from time to time in the Company's other SEC filings.
Copies of those filings are available from the Company and/or the SEC.
Our Inability to Integrate Successfully the Operations of Penske Motorsports
with Our Business Could Negatively Impact Us.
There can be no assurance that we will integrate successfully the operations of
Penske Motorsports with our business. The full benefits of our business
combination with Penske Motorsports will require the integration of
administrative, finance, sales and marketing organizations, and the
implementation of appropriate operational, financial, and management systems and
controls. The integration of different businesses is a detailed and time-
consuming process and we have no experience in integrating an acquisition on the
scale of the Penske Acquisition. Our inability to achieve expected cost savings
and synergies or to otherwise integrate successfully the operations of Penske
Motorsports could have a material adverse effect on us. The Penske acquisition
involves other special risks, including:
diversion of management attention;
the incurrence of significant non-recurring expenses related to the
transaction;
difficulties in improving the operations, technologies and services
of Penske Motorsports; and
the risk of entering into markets or services where we have limited
direct prior experience.
Our Success Depends on Our Relationship with NASCAR and CART.
Our success has been and will remain dependent on maintaining a good working
relationship with NASCAR, the sanctioning body for NASCAR's Winston Cup Series,
Busch Grand National Series and Craftsman Truck Series, and CART, the
sanctioning body for the FedEx Championship Series. For the 1999 racing season,
we have sanctioning agreements to promote and market:
16 NASCAR Winston Cup Series events;
12 NASCAR Busch Grand National Series events;
6 NASCAR Craftsman Truck Series events; and
4 CART FedEx Championship Series events.
Neither NASCAR nor CART is required to continue to enter into, renew or extend
sanctioning agreements with us to promote any existing event. Moreover,
although our general growth strategy includes the possible development and/or
acquisition of additional motorsports facilities, it cannot be assured that any
sanctioning body, including NASCAR or CART, will enter into sanctioning
agreements with us to promote races at our new facilities. Failure to obtain a
sanctioning agreement for a major NASCAR or CART event could negatively affect
us. Similarly, neither NASCAR nor CART is obligated to modify their race
schedules to allow us to more efficiently schedule our races. In addition, by
sanctioning an event, neither NASCAR nor CART warrants, either expressly or by
implication, nor are they responsible for, the financial or other success of the
sanctioned event or the number or identity of vehicles or competitors
participating in the event.
We Are Dependent on Key Personnel
Our continued success will depend upon the availability and
performance of our senior management team, particularly William C. France, the
Company's Chairman of the Board and Chief Executive Officer, James C. France,
its President and Chief Operating Officer, and Lesa D. Kennedy, its Executive
Vice President (collectively the "France Family Executives"), each of whom
possesses unique and extensive industry knowledge and experience. While we
believe that our senior management team has significant depth, the
loss of any of our key personnel or our inability to attract and
retain key employees in the future could have a material adverse effect on the
Company's operations and business plans.
Uncertain Prospects of New Motorsports Facilities
Our growth strategy includes the potential acquisition and/or
development of new motorsports facilities, including the proposed Kansas
International Speedway, the proposed motorsports facility near Chicago,
Illinois. and the possible development of a motorsports facility
near New York City. Our ability to implement successfully this
element of our growth strategy will depend on a number of factors, including
(i) our ability to obtain one or more additional sanctioning agreements to
promote NASCAR Winston Cup, NASCAR Busch Series - Grand National Division or
other major events at these new facilities, (ii) the cooperation of local
government officials, (iii) our capital resources, (iv) our ability to control
construction and operating costs, and (v) our ability to hire and retain
qualified personnel. Our inability to implement our expansion plans for any
reason could adversely affect our business prospects. In addition, expenses
associated with developing, constructing and opening a new facility may have a
negative effect on our financial condition and results of operations in one or
more future reporting periods. The cost of any such transaction will depend on a
number of factors, including the facility's location, the extent of our
ownership interest and the degree of any municipal or other public support.
Moreover, although we believe that we will be able to obtain financing to fund
the acquisition, development and/or construction of additional motorsports
facilities should we implement this element of our growth strategy, there can be
no assurance that adequate debt or equity financing will be available on
satisfactory terms.
Government Regulation May Adversely Affect the Availability of Sponsorships and
Advertising.
The motorsports industry generates significant recurring revenue from the
promotion, sponsorship and advertising of various companies and their products.
Actual or proposed government regulation can negatively impact the availability
to the motorsports industry of this promotion, sponsorship and advertising
revenue. Advertising by the tobacco and alcoholic beverage industries is
generally subject to greater governmental regulation than advertising by other
sponsors of our events. In the past few years there have been several
unsuccessful governmental attempts to impose restrictions on the advertising and
promotion of cigarettes and smokeless tobacco, including sponsorship of
motorsports activities. If successfully implemented, these regulatory efforts
would have prohibited the present practice of tobacco brand name sponsorship of,
or identification with, motorsports events, entries and teams. At this point,
the ultimate outcome of these or future government regulatory and legislative
efforts to regulate the advertising and promotion of cigarettes and smokeless
tobacco is uncertain and the impact, if any, on the motorsports industry or us
is unclear. Major United States companies in the tobacco industry have entered
into various agreements with the Attorneys General of all 50 states to settle
certain state-initiated litigation against the tobacco industry. These
settlement agreements will, among other things, place limits upon the
sponsorship of motorsports activities by the tobacco industry. The actual
impact of these settlement agreements upon us has not yet been determined. We
are not aware of any proposed governmental regulation which would materially
limit the availability to motorsports of promotion, sponsorship or advertising
revenue from the alcoholic beverage industry. The combined advertising and
sponsorship revenue from the tobacco and alcoholic beverage industries accounted
for less than 2% of our pro forma fiscal 1998 revenues. In addition, the
tobacco and alcoholic beverage industries provide financial support to the
motorsports industry through, among other things, their purchase of advertising
time, their sponsorship of racing teams and their sponsorship of racing series
such as NASCAR's Winston Cup and Busch Grand National Series.
Legal Proceedings
We are parties to certain legal proceedings as described in "Part II - Other
Information". We are presently unable to predict or quantify the outcome of
these matters. But, there can be no assurance the defense of the suits, or a
possible adverse resolution, will not require material expenditures.
Certain of Our Senior Executives May Have Potential Conflicts of Interest.
William C. France and James C. France own NASCAR, and each of them, as well as
our General Counsel, spend part of their time on NASCAR's business. Similarly,
Gregory W. Penske, our new Senior Vice President - Western Operations, will not
devote all his time to our affairs. Each of these individuals spends
substantial time on our business and all of our other executive officers are
available to us on a substantially full-time basis. In addition, we strive to
ensure, and our management believes, that the terms of our transactions with
NASCAR are no less favorable to us than those which could be obtained in arms-
length negotiations. Nevertheless, certain potential conflicts of interest
between us and NASCAR exist with respect to, among other things:
the terms of any sanctioning agreements that may be awarded to us by
NASCAR;
the amount of time devoted by the employees mentioned above and
certain other of our employees to NASCAR's affairs; and
the amounts charged or paid to NASCAR for office rental,
transportation costs, shared executives, administrative expenses and
similar items.
We Operate in a Highly Competitive Environment.
As an entertainment company, our racing events face competition from other
spectator-oriented sporting events and other leisure, entertainment and
recreational activities, including professional football, basketball and
baseball. As a result, our revenues will be affected by the general popularity
of motorsports, the availability of alternative forms of recreation and changing
consumer preferences. Management believes that the primary elements of
competition in attracting motorsports spectators and corporate sponsors to a
racing event and facility are the type and caliber of promoted racing events,
facility location, sight lines, pricing and customer conveniences that
contribute to a total entertainment experience. Many sports and entertainment
businesses have resources that exceed ours.
Impact of Consumer Spending on Results
The success of our operations depends to a significant extent
upon a number of factors relating to discretionary consumer spending, including
economic conditions affecting disposable consumer income such as employment,
business conditions, interest rates and taxation. These factors can impact both
attendance at our events and the financial results of the motorsports industry's
principal sponsors. There can be no assurance that consumer spending will not be
adversely affected by economic conditions, thereby impacting our growth, revenue
and profitability.
Bad Weather Could Adversely Affect Us.
We promote outdoor motorsports events. Weather conditions affect sales of,
among other things, tickets, food, drinks and souvenirs at these events. Poor
weather conditions could have a material negative effect on us.
We May Be Held Liable for Personal Injuries.
Motorsports can be dangerous to participants and to spectators. We maintain
insurance policies that provide coverage within limits that we believe should
generally be sufficient to protect us from a large financial loss due to
liability for personal injuries sustained by persons on our property in the
ordinary course of our business. There can be no assurance, however, that the
insurance will be adequate or available at all times and in all circumstances.
Our financial condition and results of operations could be negatively affected
to the extent claims and expenses in connection with these injuries are greater
than the amount of money that can be recovered from insurance.
We Are Subject to Environmental and Land Use Laws.
We believe that our operations are in substantial compliance with all applicable
federal, state and local environmental laws and regulations. Nonetheless, if
damage to persons or property or contamination of the environment is determined
to have been caused or exacerbated by the conduct of our business or by
pollutants, substances, contaminants or wastes used, generated or disposed of by
us, we may be held liable for such damage and may be required to pay the cost of
investigation and/or remediation of such contamination or any related damage.
The amount of such liability as to which we are self-insured could be material.
State and local laws relating to the protection of the environment can also
include noise abatement laws that may be applicable to our racing events.
Changes in the provisions or application of federal, state or local
environmental laws, regulations or requirements, or the discovery of theretofore
unknown conditions, could also require additional material expenditures by us.
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company's interest income and expense are most sensitive to changes in the
general level of U.S. interest rates. In this regard, changes in U. S. interest
rates affect the interest earned on the Company's cash equivalents, short term
investments and restricted investments, as well as interest paid on its debt.
The objective of the Company's asset management activities is to provide an
adequate level of interest income and liquidity to fund operations and capital
expansion, while minimizing market risk. The Company utilizes short term
investments consisting of certificates of deposit and obligations of U.S.
Government agencies and municipal securities to minimize the interest rate risk.
The Company does not believe that its interest rate risk related to its cash
equivalents and short term investments is material due to the short term nature
of the investments.
Additionally, the Company maintains significant certificates of deposit with one
financial institution. The Company believes that it is not exposed to any
significant credit risk on its certificates of deposit due to the strength of
the financial institution and the short term nature of the certificates of
deposit.
In January 1999, the Unified Government of Wyandotte County/Kansas City, Kansas
("Unified Government") issued approximately $71.3 million in taxable special
obligation revenue ("TIF") bonds in connection with the financing of the
construction of the speedway in Kansas. The TIF bonds are serviced through
payments by the Unified Government, which are funded through payments made by
the Company to the Unified Government in lieu of property taxes. The TIF bonds
are comprised of a $21.6 million, fixed rate (6.15%) term bond due December 1,
2017 and a $49.7 million fixed rate (6.75%) term bond due December 1, 2027. The
proceeds from the TIF bonds, along with the Company's equity commitment to the
Kansas City track were deposited in a trust account and are classified as
restricted investments on the Company's balance sheet. The trust account has
invested the funds in a guaranteed investment contract earning an interest rate
of approximately 4.75%.
The Company is exposed to market risks related to fluctuations in interest rates
on its variable rate debt, which consists of borrowings of $210.5 million at
August 31, 1999 under the Company's $300.0 million and $20.0 million Credit
Facilities and term debt. The Company utilizes an interest swap agreement
covering the $20.0 million Credit Facility and the $30.0 million term loan to
fix the interest rate through the remainder of the agreement.
Generally, fixed rate debt changes in interest rates affect the fair market
value, but not earnings or cash flows. Conversely, for variable rate debt,
changes in interest rates generally do not influence fair market value, but do
affect future earnings and cash flows. The Company manages its interest
exposure by using a combination of fixed and variable rate debt. The Company
does not expect changes in interest rates to have a material effect on the
Company's results of operations or cash flows, although there can be no
assurances that interest rates will not significantly change.
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is from time to time a party to routine litigation incidental to its
business. Management does not believe that the resolution of any or all of such
litigation is likely to have a material adverse effect on the Company's
financial condition or results of operations. In addition to such routine
litigation incident to its business the Company faces exposure from other legal
proceedings as described below.
Souvenir Litigation
As described below, the Company and certain subsidiaries are parties to legal
proceedings alleging price-fixing activities in connection with the sale of
souvenirs and merchandise. These matters are collectively referred to as the
Souvenir Litigation. While we dispute the allegations, neither the cost of
defending the suits nor the potential damages or other remedies for which we
might be liable is insured.
The Company's indirect corporate subsidiary, Americrown Service Corporation
("Americrown"), is the sole defendant in a class action proceeding in the
Circuit Court of Talladega County, Alabama which was filed in October 1996. A
class consisting of persons who purchased racing souvenirs at Talladega
Superspeedway since September 1992 was certified by the court on July 30, 1998.
The suit seeks to recover at least $500 for each member of the class but does
not otherwise seek to recover compensatory or punitive damages or statutory
attorneys' fees. Americrown has moved for reconsideration of the class
certification decision. Americrown has disputed the allegations and has defended
the action fully and vigorously.
In March 1997, two purported class action companion lawsuits were filed in the
United States District Court, Northern District of Georgia, against the Company,
Americrown, and a number of other persons (including Motorsports International
Corporation, previously a subsidiary of Pe nske Motorsports, Inc. which was
acquired by the Company in the Penske Mergers). Both suits sought damages and
injunctive relief on behalf of all persons who purchased souvenirs or
merchandise from certain vendors at any NASCAR Winston Cup race or supporting
event in the United States during the period 1991 to present. The two suits
have been consolidated and class certification has not yet been decided by the
court. Discovery has been concluded. The Company and Americrown have disputed
the allegations and have defended the actions fully and vigorously.
Recently Americrown, Motorsports International and the Company have entered into
Confidential Memoranda of Understanding ("MOU") to completely settle the
Souvenir Litigation, without any admission of wrongdoing on their part. Under
the terms of the MOU (which have been filed under seal with the respective
courts) the Company, Americrown and Motorsports International have agreed to pay
approximately $4.6 million in cash and to distribute souvenir merchandise
discount coupons to settle with classes which would encompass all purchasers of
souvenirs and merchandise at NASCAR Winston Cup events during the period from
January 1, 1991 to the present. The parties are in the process of attempting to
agree on the terms of formal Settlement Agreements, including the terms of the
coupon program. Such Settlement Agreements will then be subject to review and
approval by both the state and federal courts. If the Settlement Agreements are
not successfully finalized, the Company, Americrown and Motorsports
International intend to resume the vigorous defense of the actions.
The financial statements for the 1999 third quarter include an accrual of
approximately $2.8 million representing Americrown's cash portion of the
proposed Souvenir Litigation settlement. The remaining $1.8 million is
attributable to Motorsports International and was recorded as a part of the
merger purchase price. The effects of the discount coupon program will be
recognized in future periods as coupons are redeemed.
North Carolina Speedway Dissenters' Action
In connection with Penske Motorsports' acquisition of North Carolina Speedway in
1997, certain of the North Carolina Speedway stockholders (constituting more
than 5% of the North Carolina Speedway shares outstanding prior to the
acquisition) exercised their right under North Carolina law to dissent to the
price paid for the common stock of North Carolina Speedway. These dissenting
shareholders were paid $16.77 per share. These dissenters have requested $55.00
per share and have sued Penske Motorsports, Penske Acquisition, Inc. and North
Carolina Speedway in North Carolina Superior Court, Mecklenburg County, North
Carolina. Under Penske Motorsports' agreement with Mrs. DeWitt (the former
majority stockholder of North Carolina Speedway), if a dissenting stockholder,
which represents more than five percent of the North Carolina Speedway stock,
receives more consideration in a dissenters' action than Penske Motorsports paid
in connection with the acquisition of North Carolina Speedway, all stockholders
of North Carolina Speedway at the time of the acquisition, other than Penske
Motorsports and its affiliates, would receive a per share amount equal to the
award in dissenter's court less the per share amount paid in the acquisition
($19.61 per share to stockholders other than the dissenting shareholders).
Because Penske Motorsports acquired Mrs. DeWitt's shares prior to the completion
of this acquisition, Mrs. DeWitt would not be entitled to receive additional
consideration for her shares. A negative decision with respect to the
dissenters' proceeding could materially increase the purchase price paid for
North Carolina Speedway by Penske Motorsports, which we would have to pay.
Management is presently unable to further predict or quantify the outcome of
these matters
Item 4. Submission of Matters to a Vote of Security Holders
At a special meeting of stockholders on July 26, 1999 the shareholders approved:
1. The issuance of up to 7,755,000 shares of International Speedway
Class A common stock in the merger of Penske Motorsports with and
into 88 Corp., a wholly owned subsidiary of International Speedway.
The number of votes cast for this proposal were 26,940,700.
The number of votes cast against this proposal were 132,614.
The number of votes which abstained on this proposal were 34,141.
2. The issuance of up to 5,260,000 shares of International Speedway
Class A common stock in the merger of PSH Corp., the owner of
approximately 56% of Penske Motorsports, with and into International
Speedway.
The number of votes cast for this proposal were 26,946,767.
The number of votes cast against this proposal were 127,153.
The number of votes which abstained on this proposal were 33,535.
3. An amendment to the International Speedway Amended and Restated
Articles of Incorporation to permit the International Speedway Board
to determine from time to time the number of directors who will
serve on the board.
The number of votes cast for this proposal were 26,850,291.
The number of votes cast against this proposal were 195,981.
The number of votes which abstained on this proposal were 64,933.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description of Exhibit Filing Status
1. (4)(v) $300,000,000 Credit Agreement (as amended) filed herewith
2. (4)(v) Indenture - $225,000,000 Senior Notes filed herewith
3. (27) Article 5 Fin. Data Schedule for 3rd Qtr 10-Q filed herewith
(b) Reports on Form 8-K
On June 2, 1999 the Company filed a report on Form 8-K which reported
under Item 5. that the Company had received notification of early termination of
the Hart-Scott-Rodino Act waiting period in connection with the Penske Mergers
effective June 1, 1999.
On July 1, 1999 the Company filed a report on Form 8-K which reported
under Item 5. the Company's announcement of a definitive commitment to finance
the merger with Penske Motorsports, Inc., through a $300 million fully-
underwritten five-year revolving credit facility.
On July 6, 1999 the Company filed a report on Form 8-K which reported
under Item 5. the issuance of an earnings release for the second quarter and six
months ended May 31, 1999.
On July 26, 1999 the Company filed a report on Form 8-K which reported
under Item 2. the closing of the Penske Mergers and the acquisition of the
Penske Motorsports assets. This 8-K included the following financial
statements:
Audited Year End Financial Statements of PMI (acquired business):
Consolidated Balance Sheets
December 31, 1998 and 1999
Consolidated Statements of Income
Years ended December 31, 1996, 1997 and 1998
Consolidated Statements of Shareholders' Equity
Years ended December 31, 1996, 1997 and 1998
Consolidated Statements of Cash Flows
Years ended December 31, 1996, 1997 and 1998
Notes to Consolidated Financial Statements
Interim Financial Statements of PMI (acquired business):
Consolidated Balance Sheets
December 31, 1998 and March 31, 1999
Consolidated Statements of Income
Three months ended March 31, 1998 and 1999
Consolidated Statements of Cash Flows
Three months ended March 31, 1998 and 1999
Notes to Consolidated Financial Statements
Unaudited Pro Forma Condensed Consolidated Financial Statements
Unaudited Pro Forma Condensed Consolidated Balance Sheet
February 28, 1999
Unaudited Pro Forma Condensed Consolidated Statements of Income
Three months ended February 28, 1999
Year ended November 30, 1998
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL SPEEDWAY CORPORATION
(Registrant)
Date October 15, 1999 /s/ Susan G. Schandel
_____________________________________
Susan G. Schandel, Vice President &
Chief Financial Officer
$300,000,000
CREDIT AGREEMENT
among
INTERNATIONAL SPEEDWAY CORPORATION,
as Borrower,
CERTAIN SUBSIDIARIES OF THE BORROWER,
as Guarantors,
THE LENDERS PARTIES HERETO,
SUNTRUST BANK, SOUTH FLORIDA, N.A.,
as Documentation Agent
and
FIRST UNION NATIONAL BANK,
as Administrative Agent
Dated as of July 21, 1999
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . .....1
Section 1.1 Defined Terms.. . . . . . . . . . . . . . . . .1
Section 1.2 Other Definitional Provisions.. . . . . . . . 18
Section 1.3 Accounting Terms. . . . . . . . . . . . . . . 18
ARTICLE II THE LOANS; AMOUNT AND TERMS. . . . . . . . . . ...... . 19
Section 2.1 Revolving Loans.. . . . . . . . . . . . . . . 19
Section 2.2 Swingline Loan Subfacility. . . . . . . . . . 20
Section 2.3 Letter of Credit Subfacility. . . . . . . . . 22
Section 2.4 Fees. . . . . . . . . . . . . . . . . . . . . 25
Section 2.5 Commitment Reductions.. . . . . . . . . . . . 25
Section 2.6 Prepayments.. . . . . . . . . . . . . . . . . 26
Section 2.7 Minimum Principal Amount of Tranches. . . . . 26
Section 2.8 Default Rate and Payment Dates. . . . . . . . 27
Section 2.9 Conversion Options. . . . . . . . . . . . . . 27
Section 2.10 Computation of Interest and Fees; Interest Rate
Limitation.. . . . . . . . . . . . . . . . . 27
Section 2.11 Pro Rata Treatment and Payments. . . . . . . 28
Section 2.12 Non-Receipt of Funds by the Administrative
Agent. . . . . . . . . . . . . . . . . . . . 28
Section 2.13 Inability to Determine Interest Rate.. . . . 29
Section 2.14 Illegality.. . . . . . . . . . . . . . . . . 30
Section 2.15 Requirements of Law. . . . . . . . . . . . . 30
Section 2.16 Indemnity. . . . . . . . . . . . . . . . . . 31
Section 2.17 Taxes. . . . . . . . . . . . . . . . . . . . 32
Section 2.18 Indemnification; Nature of Issuing Lender's
Duties.. . ... . . . . . . . . . . . . . . . 33
ARTICLE III REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . 35
Section 3.1 Financial Condition.. . . . . . . . . . . . . 35
Section 3.2 No Change.. . . . . . . . . . . . . . . . . . 35
Section 3.3 Corporate Existence; Compliance with Law. . . 35
Section 3.4 Corporate Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . 35
Section 3.5 No Legal Bar; No Default. . . . . . . . . . . 36
Section 3.6 No Material Litigation. . . . . . . . . . . . 36
Section 3.7 Investment Company Act. . . . . . . . . . . . 36
Section 3.8 Margin Regulations. . . . . . . . . . . . . . 36
Section 3.9 ERISA.. . . . . . . . . . . . . . . . . . . . 37
Section 3.10 Purpose of Loans.. . . . . . . . . . . . . . 37
Section 3.11 Subsidiaries.. . . . . . . . . . . . . . . . 37
Section 3.12 Ownership. . . . . . . . . . . . . . . . . . 37
Section 3.13 Indebtedness.. . . . . . . . . . . . . . . . 37
Section 3.14 Taxes. . . . . . . . . . . . . . . . . . . . 38
Section 3.15 Investments. . . . . . . . . . . . . . . . . 38
Section 3.16 No Burdensome Restrictions.. . . . . . . . . 38
Section 3.17 Brokers' Fees. . . . . . . . . . . . . . . . 38
Section 3.18 Labor Matters. . . . . . . . . . . . . . . . 38
Section 3.19 Accuracy and Completeness of Information.. . 38
Section 3.20 Year 2000 Issue. . . . . . . . . . . . . . . 39
Section 3.21 Possession of Franchises and Licenses. . . . 39
Section 3.22 Claims and Offsets.. . . . . . . . . . . . . 39
Section 3.23 Intent and Effect of Transactions. . . . . . 39
ARTICLE IV CONDITIONS PRECEDENT ...... . . . . . . . . . . . . . . 40
Section 4.1 Conditions to Closing Date and Initial Revolving
Loans. . . . . . . . . . . . . . . . . . . . 40
Section 4.2 Conditions to Initial Revolving Loans.. . . . 42
Section 4.3 Conditions to All Extensions of Credit. . . . 42
ARTICLE V AFFIRMATIVE COVENANTS ...... . . . . . . . . . . . . . . 43
Section 5.1 Financial Statements. . . . . . . . . . . . . 43
Section 5.2 Certificates; Other Information.. . . . . . . 44
Section 5.3 Payment of Obligations. . . . . . . . . . . . 45
Section 5.4 Conduct of Business and Maintenance of
Existence. .. . . . . . . . . . . . . . . . . 45
Section 5.5 Maintenance of Property; Insurance. . . . . . 45
Section 5.6 Inspection of Property; Books and Records;
Discussions. . . . . . . . . . . . . . . . . 46
Section 5.7 Notices.. . . . . . . . . . . . . . . . . . . 46
Section 5.8 Financial Covenants.. . . . . . . . . . . . . 47
Section 5.9 Additional Subsidiary Guarantors. . . . . . . 47
Section 5.10 Compliance with Law. . . . . . . . . . . . . 47
Section 5.11 Year 2000 Compliance.. . . . . . . . . . . . 47
ARTICLE VI NEGATIVE COVENANTS . . . ...... . . . . . . . . . . . . 48
Section 6.1 Indebtedness. . . . . . . . . . . . . . . . . 48
Section 6.2 Liens.. . . . . . . . . . . . . . . . . . . . 49
Section 6.3 Nature of Business. . . . . . . . . . . . . . 49
Section 6.4 Consolidation, Merger, Sale or Purchase of
Assets, etc. .. . . . . . . . . . . . . . . . 49
Section 6.5 Advances, Investments and Loans.. . . . . . . 49
Section 6.6 Issuance of Subsidiary Equity Securities. . . 50
Section 6.7 Transactions with Affiliates; Modification of
Documentation.......... . . . . . . . . . . . 50
Section 6.8 Fiscal Year; Accounting Method; Organizational
Documents. . . . . . . . . . . . . . .. . . . 50
Section 6.9 Limitation on Restricted Actions. . . . . . . 51
Section 6.10 Extraordinary Dividends and Other Payments.. 51
Section 6.11 Major Motorsports Events.. . . . . . . . . . 51
ARTICLE VII EVENTS OF DEFAULT . . . . . . . . . . . . . . ...... . 51
Section 7.1 Events of Default.. . . . . . . . . . . . . . 51
Section 7.2 Acceleration; Remedies. . . . . . . . . . . . 54
ARTICLE VIII THE AGENT. . . . . . . . . . . . . . . . . ...... . . 54
Section 8.1 Appointment.. . . . . . . . . . . . . . . . . 54
Section 8.2 Delegation of Duties. . . . . . . . . . . . . 54
Section 8.3 Exculpatory Provisions. . . . . . . . . . . . 55
Section 8.4 Reliance by Administrative Agent. . . . . . . 55
Section 8.5 Notice of Default.. . . . . . . . . . . . . . 55
Section 8.6 Non-Reliance on Administrative Agent and Other
Lenders. . . . . . . . . . . . . . . . . . . 56
Section 8.7 Indemnification.. . . . . . . . . . . . . . . 56
Section 8.8 Administrative Agent in Its Individual Capacity.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 8.9 Successor Administrative Agent. . . . . . . . 57
ARTICLE IX MISCELLANEOUS. . . . ...... . . . . . . . . . . . . . . 57
Section 9.1 Amendments and Waivers. . . . . . . . . . . . 57
Section 9.2 Notices.. . . . . . . . . . . . . . . . . . . 58
Section 9.3 No Waiver; Cumulative Remedies. . . . . . . . 59
Section 9.4 Survival of Representations and Warranties. . 59
Section 9.5 Payment of Expenses and Taxes.. . . . . . . . 59
Section 9.6 Successors and Assigns; Participations;
Purchasing Lenders.. .. . . . . . . . . . . . 60
Section 9.7 Adjustments; Set-off. . . . . . . . . . . . . 62
Section 9.8 Table of Contents and Section Headings. . . . 63
Section 9.9 Counterparts. . . . . . . . . . . . . . . . . 63
Section 9.10 Effectiveness. . . . . . . . . . . . . . . . 63
Section 9.11 Severability.. . . . . . . . . . . . . . . . 63
Section 9.12 Integration. . . . . . . . . . . . . . . . . 63
Section 9.13 Governing Law. . . . . . . . . . . . . . . . 64
Section 9.14 Consent to Jurisdiction and Service of
Process. . . . . . . . . . . . . . . . . . . 64
Section 9.15 Confidentiality. . . . . . . . . . . . . . . 64
Section 9.16 Acknowledgments. . . . . . . . . . . . . . . 65
Section 9.17 Waivers of Jury Trial. . . . . . . . . . . . 65
ARTICLE X GUARANTY. . . . . . ...... . . . . . . . . . . . . . . . 65
Section 10.1 The Guaranty.. . . . . . . . . . . . . . . . 65
Section 10.2 Bankruptcy.. . . . . . . . . . . . . . . . . 66
Section 10.3 Nature of Liability. . . . . . . . . . . . . 66
Section 10.4 Independent Obligation.. . . . . . . . . . . 66
Section 10.5 Authorization. . . . . . . . . . . . . . . . 67
Section 10.6 Reliance.. . . . . . . . . . . . . . . . . . 67
Section 10.7 Waiver.. . . . . . . . . . . . . . . . . . . 67
Section 10.8 Limitation on Enforcement. . . . . . . . . . 68
Section 10.9 Confirmation of Payment. . . . . . . . . . . 68
<PAGE>
Schedules
Schedule 2.1(a) Schedule of Lenders and Commitments
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Revolving Note
Schedule 2.2(d) Form of Swingline Note
Schedule 2.9 Form of Notice of Conversion/Extension
Schedule 2.17 Section 2.17 Certificate
Schedule 3.6 Litigation
Schedule 3.9 ERISA
Schedule 3.11 Subsidiaries
Schedule 3.14 Taxes
Schedule 3.18 Labor Matters
Schedule 5.9 Form of Joinder Agreement
Schedule 6.1(b) Indebtedness
Schedule 6.2 Permitted Liens
Schedule 6.5 Investments
Schedule 6.9 Permitted Limitations on Restricted Actions
Schedule 9.2 Schedule of Lenders' Lending Offices
Schedule 9.6(c) Form of Commitment Transfer Supplement
THIS CREDIT AGREEMENT, dated as of July 21, 1999 (the "Credit
Agreement"), among INTERNATIONAL SPEEDWAY CORPORATION, a Florida
corporation (the "Borrower"), certain Subsidiaries of the Borrower
identified as a "Guarantor" on the signature pages hereto and such other
Subsidiaries of the Borrower as may from time to time become a party
hereto (collectively, the "Guarantors;" and individually, a "Guarantor"),
the several banks and other financial institutions as may from time to
time become parties to this Credit Agreement (collectively, the
"Lenders"; and individually, a "Lender"), and FIRST UNION NATIONAL BANK,
a national banking association, as administrative agent for the Lenders
hereunder (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make loans and
other financial accommodations to the Borrower in the amount of up to
$300,000,000, as more particularly described herein;
WHEREAS, the Lenders have agreed to make such loans and other
financial accommodations to the Borrower on the terms and conditions
contained herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms.
As used in this Credit Agreement, terms defined in the preamble to
this Credit Agreement have the meanings therein indicated, and the
following terms have the following meanings:
"Acquisition", by any Person, means the acquisition by such Person
of a majority of the Capital Stock or all or substantially all of the
Property of another Person, whether or not involving a merger or
consolidation with such Person.
"Acquisition Documents" shall mean all documents (including the
schedules and exhibits thereto) and instruments executed in connection
with the Penske Acquisitions, as such documents and instruments may be
amended, modified, supplemented or restated prior to the Closing Date.
"Additional Credit Party" shall mean each Person that becomes a
Guarantor by execution of a Joinder Agreement in accordance with
Section 5.9.
"Administrative Agent" shall have the meaning set forth in the first
paragraph of this Credit Agreement and any successors in such capacity.
"Affiliate" shall mean as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. For purposes of this definition, a
Person shall be deemed to be "controlled by" a Person if such Person
possesses, directly or indirectly, power either (a) to vote 25% or more
of the securities having ordinary voting power for the election of
directors of such Person or (b) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
All Subsidiaries shall be deemed to be Affiliates.
"Alternate Base Rate" shall mean, for any day, a rate per annum
equal to the greater of (a) the Prime Rate in effect on such day and (b)
the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
For purposes hereof: "Prime Rate" shall mean, at any time, the rate of
interest per annum publicly announced from time to time by First Union
at its principal office in Charlotte, North Carolina as its prime rate.
Each change in the Prime Rate shall be effective as of the opening of
business on the day such change in the Prime Rate occurs. The parties
hereto acknowledge that the rate announced publicly by First Union as its
Prime Rate is an index or base rate and shall not necessarily be its
lowest or best rate charged to its customers or other banks; and "Federal
Funds Effective Rate" shall mean, 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 on the next succeeding
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination shall
be conclusive in the absence of manifest error) that it is unable to
ascertain the Federal Funds Effective Rate, for any reason, including the
inability or failure of the Administrative Agent to obtain sufficient
quotations in accordance with the terms thereof, the Alternate Base Rate
shall be determined without regard to clause (b) of the first sentence
of this definition, as appropriate, until the circumstances giving rise
to such inability no longer exist. Any change in the Alternate Base Rate
due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective on the opening of business on the date of such change.
"Alternate Base Rate Loans" shall mean Loans that bear interest at
an interest rate based on the Alternate Base Rate.
"Applicable Commitment Fee Percentage" shall mean, for any day, the
rate per annum set forth below opposite the applicable Level then in
effect.
Leverage Commitment
Level Ratio Fee
I greater than 2.75 to 1.0 0.225%
II less than 2.75 to 1.0 but
greater than 2.25 to 1.0 0.200%
III less than 2.25 to 1.0 but
greater than 1.75 to 1.0 0.175%
IV less than 1.75 to 1.0 but
greater than 1.50 to 1.0 0.150%
V less than 1.50 to 1.0 0.150%
The Applicable Commitment Fee Percentage and the Commitment Fee
shall, in each case, be determined and adjusted quarterly (i) on the date
five (5) Business Days after the date on which the Administrative Agent
has received from the Borrower the quarterly financial information and
certifications required to be delivered to the Administrative Agent and
the Lenders in accordance with the provisions of Sections 5.1(b) and
5.2(b) for each of the first three fiscal quarters of each fiscal year
and (ii) on the date five (5) Business Days after the date on which the
Administrative Agent has received from the Borrower the annual financial
information and certification required to be delivered to the
Administrative Agent and the Lenders in accordance with the provisions
of Sections 5.1(a) and 5.2(b) for the last fiscal quarter of each fiscal
year (each of such dates in subparagraphs (i) and (ii) a "Fee
Determination Date"). Each Applicable Commitment Fee Percentage shall
be effective from the applicable Fee Determination Date until the next
such Fee Determination Date. The initial Applicable Commitment Fee
Percentage shall be based on the opening Leverage Ratio set forth on the
pro forma balance sheet and EBITDA calculation delivered pursuant to
Section 4.1(k) until the first Fee Determination Date occurring after
November 30, 1999. After the Closing Date, if the Borrower shall fail
to provide the annual and quarterly financial information and
certifications in accordance with the provisions of Sections 5.1(a),
5.1(b) and 5.2(b), the Applicable Commitment Fee Percentage from such Fee
Determination Date shall, on the date five (5) Business Days after the
date by which the Borrower was so required to provide such financial
information and certifications to the Administrative Agent and the
Lenders, be based on Level I until such time as such information and
certifications are provided, whereupon the Level shall be determined by
the then current Leverage Ratio.
"Applicable Margin" shall mean, for any day, the rate per annum set
forth below opposite the applicable Level then in effect, it being
understood that the Applicable Margin for LIBOR Rate Loans and Letter of
Credit Fees shall be the percentage set forth under the column "LIBOR
Rate Margin".
Leverage LIBOR Rate
Level Ratio Margin
I greater than 2.75 to 1.0 1.000%
II less than 2.75 to 1.0 but
greater than 2.25 to 1.0 0.875%
III less than 2.25 to 1.0 but
greater than 1.75 to 1.0 0.750%
IV less than 1.75 to 1.0 but
greater than 1.50 to 1.0 0.625%
V less than 1.50 to 1.0 0.500%
The Applicable Margin shall, in each case, be determined and
adjusted quarterly (i) on the date five (5) Business Days after the date
on which the Administrative Agent has received from the Borrower the
quarterly financial information and certifications required to be
delivered to the Administrative Agent and the Lenders in accordance with
the provisions of Sections 5.1(b) and 5.2(b) for each of the first three
fiscal quarters of each fiscal year and (ii) on the date five (5)
Business Days after the date on which the Administrative Agent has
received from the Borrower the annual financial information and
certification required to be delivered to the Administrative Agent and
the Lenders in accordance with the provisions of Sections 5.11(a) and
5.2(b) for the last fiscal quarter of each fiscal year (each of such
dates in subparagraphs (i) and (ii) an "Interest Determination Date").
Each Applicable Margin shall be effective from the applicable Interest
Determination Date until the next such Interest Determination Date. The
initial Applicable Margins shall be based on the opening Leverage Ratio
set forth on the pro forma balance sheet EBITDA calculation delivered
pursuant to Section 4.1(k) until the first Interest Determination Date
occurring after November 30, 1999. After the Closing Date, if the
Borrower shall fail to provide the annual and quarterly financial
information and certifications in accordance with the provisions of
Sections 5.1(a), 5.1(b) and 5.2(b), the Applicable Margin from such
Interest Determination Date shall, on the date five (5) Business Days
after the date by which the Borrower was so required to provide such
financial information and certifications to the Administrative Agent and
the Lenders, be based on Level I until such time as such information and
certifications are provided, whereupon the Level shall be determined by
the then current Leverage Ratio.
"Asset Disposition" shall mean the disposition of any or all of the
assets (including, without limitation, the Capital Stock of a Subsidiary
or any ownership interest in a joint venture) of the Borrower or any
Subsidiary whether by sale, lease, transfer or otherwise. The term
"Asset Disposition" shall not include (a) Specified Sales, (b) any Equity
Issuance or (c) the sale or disposition of machinery and equipment no
longer used or useful in the conduct of the Borrower's or any
Subsidiary's business.
"Bankruptcy Code" shall mean the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from time
to time.
"Borrower" shall have the meaning set forth in the first paragraph
of this Credit Agreement.
"Borrowing Date" shall mean, in respect of any Loan, the date such
Loan is made.
"Business Day" shall mean a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina or New
York, New York are authorized or required by law to close; provided,
however, that when used in connection with a rate determination,
borrowing or payment in respect of a LIBOR Rate Loan, the term "Business
Day" shall also exclude any day on which banks in London, England are not
open for dealings in Dollar deposits in the London interbank market.
"Capital Lease" shall mean any lease of property, real or personal,
the obligations with respect to which are required to be capitalized on
a balance sheet of the lessee in accordance with GAAP.
"Capital Stock" shall mean (a) in the case of a corporation, capital
stock, (b) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (c) in the case of a partnership,
partnership interests (whether general or limited), (d) in the case of
a limited liability company, membership interests and (e) any other
interest or participation that confers on a Person the right to receive
a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" shall mean (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency
or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) having
maturities of not more than twelve months from the date of acquisition
("Government Obligations"), (b) U.S. dollar denominated (or foreign
currency fully hedged) time deposits, certificates of deposit, Eurodollar
time deposits and Eurodollar certificates of deposit of (y) any domestic
commercial bank of recognized standing having capital and surplus in
excess of $250,000,000 or (z) any bank whose short-term commercial paper
rating from S&P is at least A-1 or the equivalent thereof or from Moody's
is at least P-1 or the equivalent thereof (any such bank being an
"Approved Bank"), in each case with maturities of not more than 364 days
from the date of acquisition, (c) U.S. dollar denominated deposits in and
cash management functions with non-Approved Banks provided that the
aggregate amount of such deposits shall not exceed $20,000,000 at any
time, (d) commercial paper and variable or fixed rate notes issued by any
Approved Bank (or by the parent company thereof) or any variable rate
notes issued by, or guaranteed by any domestic corporation rated A-1 (or
the equivalent thereof) or better by S&P or P-1 (or the equivalent
thereof) or better by Moody's and maturing within twelve months of the
date of acquisition and (e) repurchase agreements with a bank or trust
company (including a Lender) or a recognized securities dealer having
capital and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States of America.
"Chicago Agreements" shall mean the existing guaranty and keepwell
agreements executed by the Borrower for the benefit of Motorsports
Alliance LLC and/or Raceway Associates, LLC.
"Closing Date" shall mean the date of this Credit Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment" shall mean the Revolving Commitment, the LOC Commitment
and the Swingline Commitment, individually or collectively, as
appropriate.
"Commitment Fee" shall have the meaning set forth in Section 2.4(a).
"Commitment Percentage" shall mean the Revolving Commitment
Percentage and/or LOC Commitment Percentage, as appropriate.
"Commitment Period" shall mean the period from and including the
Closing Date to but not including the Revolving Commitment Termination
Date.
"Commitment Transfer Supplement" shall mean a Commitment Transfer
Supplement, substantially in the form of Schedule 9.6(c).
"Commonly Controlled Entity" shall mean 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 EBITDA" means, for any period, the sum of (a)
Consolidated Net Income for such period, plus (b) an amount which, in the
determination of Consolidated Net Income for such period, has been
deducted for (i) Consolidated Interest Expense, (ii) total federal,
state, local and foreign income, value added and similar taxes and (iii)
depreciation, amortization expense (including, without limitation, the
amortization of goodwill and finance charges, but excluding amortization
related to goodwill in connection with equity investments).
"Consolidated Funded Indebtedness" means indebtedness constituting money
borrowed by the Borrower or any of its Subsidiaries that shall have been
or should be, in accordance with GAAP, recorded or classified as a
liability, on a consolidated basis. For purposes of this definition,
indebtedness shall specifically include endorsements, Guaranty
Obligations, unfunded vested benefits and capital or financing lease
obligations, and shall specifically exclude trade accounts payable,
deferred income, current and deferred income taxes payable, capitalized
payments in lieu of property taxes in accordance with GAAP and expenses
accrued in the ordinary course of business.
"Consolidated Interest Expense" means, for any period, all interest
expense of the Borrower and its Subsidiaries including the interest
component under Capital Leases, as determined in accordance with GAAP.
Except as expressly provided otherwise, the applicable period shall be
for the four consecutive quarters ending as of the date of the most
recent annual or quarterly financial statements provided to the Lenders
pursuant to Section 5.1(a) or 5.1(b). For purposes hereof, Consolidated
Interest Expense for the first three complete fiscal quarters to occur
after the Closing Date shall be determined by annualizing Consolidated
Interest Expense such that (i) for the first complete fiscal quarter to
occur after the Closing Date, Consolidated Interest Expense for such
quarter would be multiplied by four (4), (ii) for the second complete
fiscal quarter to occur after the Closing Date, Consolidated Interest
Expense for the first two complete fiscal quarters then ending would be
multiplied by two (2) and (iii) for the third complete fiscal quarter to
occur after the Closing Date, Consolidated Interest Expense for the first
three complete fiscal quarters then ending would be multiplied by one and
one-third (1 1/3).
"Consolidated Net Income" means, for any period, net income
(excluding extraordinary items) after taxes for such period of the
Borrower and its Subsidiaries on a consolidated basis, as determined in
accordance with GAAP.
"Contractual Obligation" shall mean, as to any Person, any provision
of any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Credit Agreement" shall mean this Credit Agreement, as amended,
modified or supplemented from time to time in accordance with its terms.
"Credit Documents" shall mean this Credit Agreement, each of the
Notes, any Joinder Agreement, the Letters of Credit and the LOC
Documents.
"Credit Party" shall mean any of the Borrower and the Guarantors.
"Credit Party Obligations" shall mean, without duplication, (a) all
of the obligations of the Credit Parties to the Lenders (including the
Issuing Lender) and the Administrative Agent, whenever arising, under
this Credit Agreement, the Notes or any of the other Credit Documents
(including, but not limited to, any interest accruing after the
occurrence of a filing of a petition of bankruptcy under the Bankruptcy
Code with respect to any Credit Party, regardless of whether such
interest is an allowed claim under the Bankruptcy Code) and (b) all
liabilities and obligations, whenever arising, owing from the Credit
Parties to any Lender, or any Affiliate of a Lender, arising under any
Hedging Agreement.
"Debt Issuance" shall mean the issuance of any Indebtedness for
borrowed money by the Borrower or any of its Subsidiaries (excluding, for
purposes hereof, any Equity Issuance or any Indebtedness of the Borrower
and its Subsidiaries permitted to be incurred pursuant to Section 6.1
hereof).
"Default" shall mean any of the events specified in Section 7.1,
whether or not any requirement for the giving of notice or the lapse of
time, or both, or any other condition, has been satisfied.
"Defaulting Lender" shall mean, at any time, any Lender that, at
such time (a) has failed to make a Loan required pursuant to the terms
of this Credit Agreement, including the funding of a Participation
Interest in accordance with the terms hereof, (b) has failed to pay to
the Administrative Agent or any Lender an amount owed by such Lender
pursuant to the terms of this Credit Agreement, or (c) has been deemed
insolvent or has become subject to a bankruptcy or insolvency proceeding
or to a receiver, trustee or similar official.
"Dollars" and "$" shall mean dollars in lawful currency of the
United States of America.
"Domestic Lending Office" shall mean, initially, the office of each
Lender designated as such Lender's Domestic Lending Office shown on
Schedule 9.2; and thereafter, such other office of such Lender as such
Lender may from time to time specify to the Administrative Agent and the
Borrower as the office of such Lender at which Alternate Base Rate Loans
of such Lender are to be made.
"Domestic Subsidiary" shall mean any Subsidiary that is organized
and existing under the laws of the United States or any state or
commonwealth thereof or under the laws of the District of Columbia.
"Environmental Laws" shall mean any and all applicable foreign,
Federal, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, requirements of any Governmental
Authority or other Requirement 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
be in effect during the term of this Credit Agreement.
"Equity Issuance" shall mean any issuance by the Borrower or any
Subsidiary to any Person which is not the Borrower of (a) shares of its
Capital Stock, (b) any shares of its Capital Stock pursuant to the
exercise of options or warrants or (c) any shares of its Capital Stock
pursuant to the conversion of any debt securities to equity. The term
"Equity Issuance" shall not include any Asset Disposition, any Debt
Issuance or the issuance of common stock of the Borrower's Subsidiaries
to its officers, directors or employees in connection with stock offering
plans and other benefit plans of such Subsidiaries.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Eurodollar Reserve Percentage" shall mean for any day, the
percentage (expressed as a decimal and rounded upwards, if necessary, to
the next higher 1/100th of 1%) which is in effect for such day as
prescribed by the Federal Reserve Board (or any successor) for
determining the maximum reserve requirement (including without limitation
any basic, supplemental or emergency reserves) in respect of Eurocurrency
liabilities, as defined in Regulation D of such Board as in effect from
time to time, or any similar category of liabilities for a member bank
of the Federal Reserve System in New York City.
"Event of Default" shall mean any of the events specified in Section
7.1; provided, however, that any requirement for the giving of notice or
the lapse of time, or both, or any other condition, has been satisfied.
"Existing Facilities" shall have the meaning set forth in Section
3.10(b).
"Extension of Credit" shall mean, as to any Lender, the making of
a Loan by such Lender or the issuance of, or participation in, a Letter
of Credit by such Lender.
"Federal Funds Effective Rate" shall have the meaning set forth in
the definition of "Alternate Base Rate".
"Fee Letter" shall mean the letter agreement dated June 24, 1999
addressed to the Borrower from the Administrative Agent, as amended,
modified or otherwise supplemented.
"First Union" shall mean First Union National Bank, a national
banking association.
"France Family" shall mean the France Family Group as defined in the
Borrower's most recent quarterly or annual filing with the SEC.
"GAAP" shall mean generally accepted accounting principles in effect
in the United States of America applied on a consistent basis, subject,
however, in the case of determination of compliance with the financial
covenants set out in Section 5.8 to the provisions of Section 1.3.
"Government Acts" shall have the meaning set forth in Section 2.18.
"Governmental Authority" shall mean 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.
"Guarantor" shall mean any of the Domestic Subsidiaries identified
as a "Guarantor" on the signature pages hereto and the Additional Credit
Parties which execute a Joinder Agreement, together with their successors
and permitted assigns.
"Guaranty Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in
the ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any
other Person in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (a) to
purchase any such Indebtedness or any property constituting security
therefor, (b) to advance or provide funds or other support for the
payment or purchase of any such Indebtedness or to maintain working
capital, solvency or other balance sheet condition of such other Person
(including without limitation keep well agreements (excluding the
Homestead Keepwell Agreement), maintenance agreements, comfort letters
or similar agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (c) to lease or purchase Property,
securities or services primarily for the purpose of assuring the holder
of such Indebtedness, or (d) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount
of any Guaranty Obligation hereunder shall (subject to any limitations
set forth in the documentation related thereto) be deemed to be an amount
equal to the outstanding principal amount (or maximum principal amount,
if larger) of the Indebtedness in respect of which such Guaranty
Obligation is made.
"Guaranty" shall mean the guaranty of the Guarantors set forth in
Article X.
"Hedging Agreements" shall mean, with respect to any Person, any
agreement entered into to protect such Person against fluctuations in
interest rates, or currency or raw materials values, including, without
limitation, any interest rate swap, cap or collar agreement or similar
arrangement between such Person and one or more counterparties, any
foreign currency exchange agreement, currency protection agreements,
commodity purchase or option agreements or other interest or exchange
rate or commodity price hedging agreements.
"Homestead Keepwell Agreement" shall mean that certain Keepwell
Agreement dated as of December, 1998 with respect to Homestead - Miami
Speedway, L.L.C.
"Indebtedness" of a Person means all indebtedness (other than
indebtedness to suppliers for the purchase of products and merchandise
incurred in the ordinary course of business), including, without
limitation, (a) indebtedness for borrowed money; indebtedness for (or
deferred purchase price in connection with) the acquisition of property
or assets; indebtedness obligations evidenced by debentures, notes or
other similar instruments; reimbursement or other similar obligations
arising in connection with letters of credit, surety bonds or
reimbursement obligations therefor; and indebtedness of third parties
secured by any lien, pledge or other encumbrance on the property or
assets of the Person in question, whether or not such indebtedness is
assumed; (b) all liability by way of endorsements (other than for
collection or deposit in the ordinary course of business); (c) all
guarantees of indebtedness (including any 'keepwell' or other agreement,
contingent or otherwise, to purchase any obligation representing such
indebtedness or property constituting security therefor, or to advance
or supply funds for such purpose or to maintain working capital or any
other balance sheet or income statement condition, or otherwise to assure
a creditor against loss in respect of indebtedness or obligations of
others, or any other arrangement in substance affecting any of the
foregoing); (d) liabilities in respect of unfunded vested benefits under
plans covered by Title IV of ERISA; and (e) obligations as lessee under
leases (including synthetic leases, tax retention operating leases, off-
balance sheet loans or similar off-balance sheet financing product) which
shall have been or should be, in accordance with GAAP, recorded or
classified as capital leases or financing leases; provided that, for
purposes of this Credit Agreement, the Homestead Keepwell Agreement shall
not be Indebtedness of the Borrower.
"Insolvency" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as
used in Section 4245 of ERISA.
"Insolvent" shall mean being in a condition of Insolvency.
"Interest Coverage Ratio" means, with respect to the Borrower and
its Subsidiaries on a consolidated basis for the twelve month period
ending on the last day of any fiscal quarter of the Borrower and its
Subsidiaries, the ratio of (a) Consolidated EBITDA for such period to (b)
Consolidated Interest Expense for such period; provided, however, the
Interest Coverage Ratio may be adjusted from time to time with the mutual
consent of the Borrower and the Required Lenders to reflect the
postponement of major race events into subsequent accounting periods,
the rescheduling of major race events and the occurrence of major race
events in different fiscal accounting periods in different calendar
and/or fiscal years. For purposes of computing the Interest Coverage
Ratio for any applicable twelve month period of determination, the
acquisition of a Subsidiary during such twelve month period shall be
deemed to have occurred as of the first day of such twelve month period.
"Interest Payment Date" shall mean (a) as to any Alternate Base Rate
Loan or Swingline Loan, the last day of each November, February, May and
August and on the Revolving Commitment Termination Date, (b) as to any
LIBOR Rate Loan having an Interest Period of three months or less, the
last day of such Interest Period, and (c) as to any LIBOR Rate Loan
having an Interest Period longer than three months, the day which is
three months after the first day of such Interest Period and the last day
of such Interest Period.
"Interest Period" shall mean, with respect to any LIBOR Rate Loan,
(a) initially, the period commencing on the Borrowing Date or conversion
date, as the case may be, with respect to such LIBOR Rate Loan and ending
one, two, three or six months thereafter, as selected by the Borrower in
the notice of borrowing or notice of conversion given with respect
thereto and (b) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such LIBOR Rate Loan
and ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not less than
three Business Days prior to the last day of the then current Interest
Period with respect thereto; provided, however, (i) if any Interest
Period pertaining to a LIBOR Rate 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,
(ii) any Interest Period pertaining to a LIBOR Rate Loan that begins on
the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of the relevant
calendar month, (iii) if the Borrower shall fail to give notice as
provided above, the Borrower shall be deemed to have selected a Alternate
Base Rate Loan to replace the affected LIBOR Rate Loan, (iv) any Interest
Period in respect of any Loan that would otherwise extend beyond the
Revolving Commitment Termination Date is at least equal to the amount of
such principal amortization payment due on such date, and (v) no more
than six (6) LIBOR Rate Loans may be in effect at any time. For purposes
hereof, LIBOR Rate Loans with different Interest Periods shall be
considered as separate LIBOR Rate Loans, even if they shall begin on the
same date and have the same duration, although borrowings, extensions and
conversions may, in accordance with the provisions hereof, be combined
at the end of existing Interest Periods to constitute a new LIBOR Rate
Loan with a single Interest Period.
"Issuing Lender" shall mean First Union.
"Issuing Lender Costs" shall have the meaning set forth in Section
2.4(c).
"Joinder Agreement" shall mean a Joinder Agreement substantially in
the form of Schedule 5.9, executed and delivered by an Additional Credit
Party in accordance with the provisions of Section 5.9.
"Lender" shall have the meaning set forth in the first paragraph of
this Credit Agreement.
"Letters of Credit" shall mean any letter of credit issued by the
Issuing Lender pursuant to the terms hereof, as such Letters of Credit
may be amended, modified, extended, renewed or replaced from time to
time.
"Letter of Credit Fee" shall have the meaning set forth in Section
2.4(b).
"Leverage Ratio" means, with respect to the Borrower and its
Subsidiaries on a consolidated basis for the twelve month period ending
on the last day of any fiscal quarter, the ratio of (a) Consolidated
Funded Indebtedness on the last day of such period to (b) Consolidated
EBITDA for such period; provided, however, the Leverage Ratio may be
adjusted from time to time with the mutual consent of the Borrower and
the Required Lenders to reflect the postponement of major race events
into subsequent accounting periods, the rescheduling of major race events
and the occurrence of major race events in different fiscal accounting
periods in different calendar and/or fiscal years. For purposes of
computing the Leverage Ratio for any applicable twelve month period of
determination, the acquisition of a Subsidiary during such twelve month
period shall be deemed to have occurred as of the first day of such
twelve month period.
"LIBOR" shall mean, for any LIBOR Rate Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 A.M. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest
Period. If for any reason such rate is not available, the term "LIBOR"
shall mean, for any LIBOR Rate Loan for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) appearing on Reuters Screen LIBO Page as the London interbank offered
rate for deposits in Dollars at approximately 11:00 A.M. (London time)
two Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates (rounded upwards, if
necessary, to the nearest 1/100 of 1%). If, for any reason, neither of
such rates is available, then "LIBOR" shall mean the rate per annum at
which, as determined by the Administrative Agent, Dollars in an amount
comparable to the Loans then requested are being offered to leading banks
at approximately 11:00 A.M. London time, two (2) Business Days prior to
the commencement of the applicable Interest Period for settlement in
immediately available funds by leading banks in the London interbank
market for a period equal to the Interest Period selected.
"LIBOR Lending Office" shall mean, initially, the office of each
Lender designated as such Lender's LIBOR Lending Office shown on Schedule
9.2; and thereafter, such other office of such Lender as such Lender may
from time to time specify to the Administrative Agent and the Borrower
as the office of such Lender at which the LIBOR Rate Loans of such Lender
are to be made.
"LIBOR Market Index Rate" shall mean, for any day, the one-month
LIBOR rate for such day; provided that if such day is not a Business Day,
then for the immediately preceding Business Day.
"LIBOR Rate" shall mean a rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) determined by the
Administrative Agent pursuant to the following formula:
LIBOR
LIBOR Rate = ---------------------------------------
1.00 - Eurodollar Reserve Percentage
"LIBOR Rate Loan" shall mean Loans the rate of interest applicable
to which is based on the LIBOR Rate.
"Lien" shall mean 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 or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Capital Lease having substantially the same
economic effect as any of the foregoing).
"Loan" shall mean a Revolving Loan and/or a Swingline Loan, as
appropriate.
"LOC Commitment" shall mean the commitment of the Issuing Lender to
issue Letters of Credit and with respect to each Lender, the commitment
of such Lender to purchase participation interests in the Letters of
Credit up to such Lender's LOC Committed Amount as specified in Schedule
2.1(a).
"LOC Commitment Percentage" shall mean, for each Lender, the
percentage identified as its LOC Commitment Percentage on Schedule
2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 9.6(c).
"LOC Committed Amount" shall mean, collectively, the aggregate
amount of all of the LOC Commitments of the Lenders to issue and
participate in Letters of Credit as referenced in Section 2.3 and,
individually, the amount of each Lender's LOC Commitment as specified in
Schedule 2.1(a).
"LOC Documents" shall mean, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (a) the rights and obligations of the parties concerned or
(b) any collateral security for such obligations.
"LOC Obligations" shall mean, at any time, the sum of (a) the
maximum amount which is, or at any time thereafter may become, available
to be drawn under Letters of Credit then outstanding, assuming compliance
with all requirements for drawings referred to in such Letters of Credit
plus (b) the aggregate amount of all drawings under Letters of Credit
honored by the Issuing Lender but not theretofore reimbursed.
"Mandatory Borrowing" shall have the meaning set forth in Section
2.2(b)(ii) or Section 2.3(e), as the context may require.
"Material Adverse Effect" shall mean 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, (b) the ability of the Borrower or any Guarantor to perform its
obligations, when such obligations are required to be performed, under
this Credit Agreement, any of the Notes or any other Credit Document or
(c) the validity or enforceability of this Credit Agreement, any of the
Notes or any of the other Credit Documents or the rights or remedies of
the Administrative Agent or the Lenders hereunder or thereunder.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"NASCAR" shall mean the National Association for Stock Car Auto
Racing, Inc.
"Note" or "Notes" shall mean the Revolving Notes and/or the
Swingline Note, collectively, separately or individually, as appropriate.
"Notice of Borrowing" shall mean the written notice of borrowing as
referenced and defined in Section 2.1(b)(i) or 2.2(b)(i), as appropriate.
"Notice of Conversion" shall mean the written notice of extension
or conversion as referenced and defined in Section 2.9.
"Obligations" shall mean, collectively, Loans and LOC Obligations.
"Participant" shall have the meaning set forth in Section 9.6(b).
"Participation Interest" shall mean the purchase by a Lender of a
participation interest in Swingline Loans as provided in Section
2.2(b)(ii) or in Letters of Credit as provided in Section 2.3.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"Penske" shall mean Penske Motorsports Inc., a Delaware corporation.
"Penske Acquisitions" shall mean, collectively, (a) the Acquisition
of Penske by 88 Corp., a Delaware corporation, and the resulting merger
of Penske and 88 Corp. and (ii) the Acquisition of PSH Corp., a Delaware
corporation, by the Borrower and the resulting merger of PSH Corp. with
and into the Borrower.
"Permitted Acquisition" shall mean an Acquisition by the Borrower
or any Subsidiary of the Borrower for the fair market value of the
Capital Stock or Property acquired, provided that (a) the Capital Stock
or Property acquired in such Acquisition is related to the motorsports
entertainment industry or if not related to the motorsports entertainment
industry, the total amount of such acquisitions in any fiscal year shall
not exceed three percent (3%) of Total Shareholders' Equity (as of the
date of the most recent financial statement delivered to the
Administrative Agent and the Lenders pursuant to Section 5.1(a) or
5.1(b)); (b) in the case of an Acquisition of the Capital Stock of
another Person, the board of directors (or other comparable governing
body) of such other Person shall have duly approved such Acquisition; (c)
the representations and warranties made by the Borrower in any Credit
Document shall be true and correct in all material respects at and as if
made as of the date of such Acquisition (after giving effect thereto)
except to the extent such representations and warranties expressly relate
to an earlier date and no Default or Event of Default exists as of the
date of such Acquisition (after giving effect thereto); and (d) with
respect to any Acquisition exceeding five percent (5%) of Total
Shareholders' Equity (as of the date of the most recent financial
statements delivered to the Administrative Agent and the Lenders pursuant
to Section 5.1(a) or 5.1(b)), the Borrower shall have delivered to the
Administrative Agent a Pro Forma Compliance Certificate demonstrating
that, upon giving effect to such Acquisition on a Pro Forma Basis, the
Borrower will be in compliance with all of the financial covenants set
forth in Section 5.8.
"Permitted Investments" shall mean: (a) cash and Cash Equivalents;
(b) receivables owing to the Borrower or any of its Subsidiaries or any
receivables and advances to suppliers, in each case if created, acquired
or made in the ordinary course of business and payable or dischargeable
in accordance with customary trade terms; (c) investments in and loans
to any Credit Parties; (d) investments (including debt obligations)
received in connection with the bankruptcy or reorganization of suppliers
and customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of
business; (e) investments existing as of the Closing Date and set forth
in Schedule 6,5; (f) the Penske Acquisitions and other Permitted
Acquisitions; (g) minority investments in motorsports facilities or
related motorsports businesses so long as any such investments, in the
aggregate, do not have a Material Adverse Effect; (h) other loans,
advances and/or investments in or to non-wholly owned Subsidiaries which
are not Guarantors to the extent permitted in accordance with the proviso
set forth in clause (i) below, and (i) additional loans, advances and/or
investments of a nature not contemplated by the foregoing clauses hereof,
provided that such loans, advances and/or investments made pursuant to
this clause (i) together with clause (h) above shall not exceed an
aggregate amount of more than ten percent (10%) of the Total
Shareholder's Equity (as of the date of the most recent financial
statements delivered to the Administrative Agent and the Lenders pursuant
to Section 5.1(a) or 5.1(b)). As used herein, "investment" means all
investments, in cash or by delivery of property made, directly or
indirectly in, to or from any Person, whether by acquisition of shares
of Capital Stock, property, assets, indebtedness or other obligations or
securities or by loan advance, capital contribution or otherwise.
"Permitted Liens" means: (a) Liens existing as of the Closing Date
and set forth on Schedule 6.2; provided that (i) no such Lien shall at
any time be extended to or cover any Property other than the Property
subject thereto on the Closing Date (provided, however, that Liens on new
Property which arise in replacement of Liens on previously owned Property
to the extent that such new Property is acquired through like-kind
exchanges shall be permitted hereunder) and (ii) the principal amount of
the Indebtedness secured by such Liens shall not be extended, renewed,
refunded or refinanced; (b) Liens (other than Liens created or imposed
under ERISA) for taxes, assessments or governmental charges or levies not
yet due or Liens for taxes being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with
GAAP have been established (and as to which the Property subject to any
such Lien is not yet subject to foreclosure, sale or loss on account
thereof); (c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other Liens
imposed by law or pursuant to customary reservations or retentions of
title arising in the ordinary course of business, provided that such
Liens secure only amounts not yet due and payable or, if due and payable,
are unfiled and no other action has been taken to enforce the same or are
being contested in good faith by appropriate proceedings for which
adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof); (d) Liens
(other than Liens created or imposed under ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security,
or to secure the performance of tenders, statutory obligations, bids,
leases, government contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of
borrowed money); (e) Liens in connection with attachments or judgments
(including judgment or appeal bonds) provided that the judgments secured
shall, within 30 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall have been discharged
within 30 days after the expiration of any such stay; (f)
easements, rights-of-way, restrictions (including zoning restrictions),
minor defects or irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use of the
encumbered Property for its intended purposes; (g) Liens securing
purchase money Indebtedness (including Capital Leases), provided that any
such Lien attaches only to the Property financed and such Lien attaches
thereto concurrently with or within 90 days after the acquisition
thereof; (h) leases or subleases granted to others not interfering in any
material respect with the business of the Borrower and its Subsidiaries;
(i) any interest of title of a lessor under, and Liens arising from UCC
financing statements (or equivalent filings, registrations or agreements
in foreign jurisdictions) relating to, leases permitted by this Credit
Agreement; (j) normal and customary rights of setoff upon deposits of
cash in favor of banks or other depository institutions; (k) inchoate
Liens arising under ERISA to secure current service pension liabilities
as they are incurred under the provisions of any Plan; and (l) Liens
incurred or assumed in connection with a Permitted Acquisition.
"Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
"Plan" shall mean, at any particular time, any employee benefit plan
which is covered by Title IV of 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.
"Prime Rate" shall have the meaning set forth in the definition of
Alternate Base Rate.
"Pro Forma Basis" means, for purposes of calculating compliance with
each of the financial covenants set forth in Section 5.8 in respect of
a proposed transaction, that such transaction shall be deemed to have
occurred as of the first day of the four fiscal-quarter period ending as
of the most recent fiscal quarter end preceding the date of such
transaction with respect to which the Agent has received the information
required pursuant to Section 5.1. In connection with any calculation of
the financial covenants set forth in Section 5.8, upon giving effect to
a transaction on a Pro Forma Basis, (a) any Indebtedness incurred by the
Borrower in connection with such transaction (i) shall be deemed to have
been incurred as of the first day of the applicable period and (ii) if
such Indebtedness has a floating or formula rate, shall have an implied
rate of interest for the applicable period for purposes of this
definition determined by utilizing the rate which is or would be in
effect with respect to such Indebtedness as at the relevant date of
determination, (b) income statement items (whether positive or negative)
attributable to the Property acquired in such transaction or to the
Acquisition comprising such transaction, as applicable, shall be included
to the extent relating to the relevant period and (c) pro forma
adjustments may be included to the extent that such adjustments give
effect to events that are (i) directly attributable to such transaction,
(ii) expected to continue to be applicable to the Borrower and (iii)
factually supportable.
"Pro Forma Compliance Certificate" means if required to be provided
in accordance with the terms of this Credit Agreement, a certificate of
a Responsible Officer of the Borrower delivered to the Administrative
Agent in connection with (a) any Acquisition as referred to in the
definition of "Permitted Acquisition" set forth in this Section 1.1, (b)
any incurrence of Indebtedness as referred to in Section 6.1(d) or (c)
any Permitted Investment as referred to Section 6.5, as applicable, and
containing reasonably detailed calculations, upon giving effect to the
applicable transaction on a Pro Forma Basis, of the Leverage Ratio and
the Interest Coverage Ratio as of the most recent fiscal quarter end
preceding the date of the applicable transaction with respect to which
the Administrative Agent shall have received the financial information
required pursuant to Section 5.1.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Purchasing Lenders" shall have the meaning set forth in Section
9.6(c).
"Register" shall have the meaning set forth in Section 9.6(d).
"Reorganization" shall mean, with respect to any Multiemployer Plan,
the condition that such Plan is in reorganization within the meaning of
such term as used in Section 4241 of ERISA.
"Reportable Event" shall mean 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 PBGC Reg. Section4043.
"Required Lenders" shall mean Lenders holding in the aggregate more
than 50% of all Revolving Loans and LOC Obligations then outstanding at
such time plus the aggregate unused Revolving Commitments at such time
(treating for purposes hereof in the case of Swingline Loans and LOC
Obligations, in the case of the Swingline Lender and the Issuing Lender,
only the portion of the Swingline Loans and the LOC Obligations of the
Swingline Lender and the Issuing Lender, respectively, which is not
subject to the Participation Interests of the other Lenders and, in the
case of the Lenders other than the Swingline Lender and the Issuing
Lender, the Participation Interests of such Lenders in Swingline Loans
and LOC Obligations hereunder as direct Obligations); provided, however,
that if any Lender shall be a Defaulting Lender at such time, then there
shall be excluded from the determination of Required Lenders, Obligations
(including Participation Interests) owing to such Defaulting Lender and
such Defaulting Lender's Commitments, or after termination of the
Commitments, the principal balance of the Obligations owing to such
Defaulting Lender.
"Requirement of Law" shall mean, as to any Person, the Certificate
of Incorporation and By-laws or other organizational or governing
documents of such Person, and each 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" shall mean the Chief Executive Officer, the
Executive Vice President, the Chief Financial Officer or the Chief
Operating Officer of the Borrower.
"Revolving Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Revolving Loans in an aggregate
principal amount at any time outstanding up to such Lender's Revolving
Committed Amount as specified in Schedule 2.1(a), as such amount may be
reduced from time to time in accordance with the provisions hereof.
"Revolving Commitment Percentage" shall mean, for each Lender, the
percentage identified as its Revolving Commitment Percentage on Schedule
2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 9.6(c).
"Revolving Commitment Termination Date" shall mean July 21, 2004.
"Revolving Committed Amount" shall mean, collectively, the aggregate
amount of all Revolving Commitments as referenced in Section 2.1(a), as
such amount may be reduced from time to time in accordance with the
provisions hereof, and, individually, the amount of each Lender's
Revolving Commitment as specified on Schedule 2.1(a).
"Revolving Loans" shall have the meaning set forth in Section 2.1.
"Revolving Note" or "Revolving Notes" shall mean the promissory
notes of the Borrower in favor of each of the Lenders evidencing the
Revolving Loans provided pursuant to Section 2.1(e), individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to time.
"S&P" shall mean Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc.
"Sale Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party,
providing for the leasing to a Credit Party of any Property, whether
owned by such Credit Party as of the Closing Date or later acquired,
which has been or is to be sold or transferred by such Credit Party to
such Person or to any other Person from whom funds have been, or are to
be, advanced by such Person on the security of such Property.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Senior Note Indenture" shall mean any indenture agreement entered
into by the Borrower pursuant to which the Borrower shall issue the
Senior Notes, and all documents and instruments executed in connection
with any such indenture agreement.
"Senior Notes" shall mean the senior unsecured notes to be issued
by the Borrower which (i) do not exceed $200,000,000 in the aggregate (or
such higher amount as agreed to by the Required Lenders), (ii) rank pari
passu with the Credit Party Obligations, (iii) are guaranteed only by the
Guarantors, (iv) which have a final maturity date not less than six
months beyond the Revolving Commitment Termination Date and (v) are not
subject to covenants more restrictive than the covenants set forth
herein.
"Single Employer Plan" shall mean any Plan which is not a
Multiemployer Plan.
"Specified Sales" shall mean (a) the sale, transfer, lease or other
disposition of inventory and materials in the ordinary course of business
and (b) the sale, transfer or other disposition of Permitted Investments
described in clause (a) of the definition thereof.
"Subsidiary" shall mean, as to any Person, a corporation,
partnership, limited liability company 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 Credit
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
For purposes of this Credit Agreement, all Subsidiaries are also
Affiliates.
"Swingline Commitment" shall mean the commitment of the Swingline
Lender to make Swingline Loans in an aggregate principal amount at any
time outstanding up to the Swingline Committed Amount, and the commitment
of the Lenders to purchase participation interests in the Swingline Loans
as provided in Section 2.2(b)(ii), as such amounts may be reduced from
time to time in accordance with the provisions hereof.
"Swingline Committed Amount" shall mean the amount of the Swingline
Lender's Swingline Commitment as specified in Section 2.2(a).
"Swingline Lender" shall mean First Union, in its capacity as such.
"Swingline Loan" or "Swingline Loans" shall have the meaning set
forth in Section 2.2(a).
"Swingline Note" shall mean the promissory note of the Borrower in
favor of the Swingline Lender evidencing the Swingline Loans provided
pursuant to Section 2.2(d), as such promissory note may be amended,
modified, supplemented, extended, renewed or replaced from time to time.
"Taxes" shall have the meaning set forth in Section 2.17.
"Total Shareholders' Equity" shall mean the Total Shareholders'
Equity as shown on the Borrower's most recent consolidated financial
statements filed with the SEC.
"Tranche" shall mean the collective reference to LIBOR Rate Loans
whose Interest Periods begin and end on the same day. A Tranche may
sometimes be referred to as a "LIBOR Tranche".
"Transfer Effective Date" shall have the meaning set forth in each
Commitment Transfer Supplement.
"2.17 Certificate" shall have the meaning set forth in Section 2.17.
"Type" shall mean, as to any Loan, its nature as an Alternate Base
Rate Loan, LIBOR Rate Loan or Swingline Loan, as the case may be.
"Voting Stock" means, with respect to any Person, Capital Stock
issued by such Person the holders of which are ordinarily, in the absence
of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even though the
right so to vote has been suspended by the happening of such a
contingency.
"Year 2000 Compliant" shall have the meaning set forth in Section
3.20.
Section 1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in
this Credit Agreement shall have the defined meanings when used in
the Notes or other Credit Documents or any certificate or other
document made or delivered pursuant hereto.
(b) The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Credit Agreement shall refer to
this Credit Agreement as a whole and not to any particular provision
of this Credit Agreement, and Section, subsection, Schedule and
Exhibit references are to this Credit Agreement unless otherwise
specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
Section 1.3 Accounting Terms.
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder
shall be prepared in accordance with GAAP applied on a basis consistent
with the most recent audited consolidated financial statements of the
Borrower delivered to the Lenders; provided that, if the Borrower
notifies the Administrative Agent that it wishes to amend any covenant
in Section 5.8 to eliminate the effect of any change in GAAP on the
operation of such covenant (or if the Administrative Agent notifies the
Borrower that the Required Lenders wish to amend Section 5.8 for such
purpose), then the Borrower's compliance with such covenant shall be
determined on the basis of GAAP in effect immediately before the relevant
change in GAAP became effective, until either such notice is withdrawn
or such covenant is amended in a manner satisfactory to the Borrower and
the Required Lenders.
The Borrower shall deliver to the Administrative Agent and each
Lender at the same time as the delivery of any annual or quarterly
financial statements given in accordance with the provisions of Section
5.1, (a) a description in reasonable detail of any material change in the
application of accounting principles employed in the preparation of such
financial statements from those applied in the most recently preceding
quarterly or annual financial statements as to which no objection shall
have been made in accordance with the provisions above and (b) a
reasonable estimate of the effect on the financial statements on account
of such changes in application.
ARTICLE II
THE LOANS; AMOUNT AND TERMS
Section 2.1 Revolving Loans.
(a) Revolving Commitment. During the Commitment Period,
subject to the terms and conditions hereof, each Lender severally
agrees to make revolving credit loans ("Revolving Loans") to the
Borrower from time to time for the purposes hereinafter set forth;
provided, however, that (i) with regard to each Lender individually,
the sum of such Lender's share of outstanding Revolving Loans plus
such Lender's Revolving Commitment Percentage of Swingline Loans
plus such Lender's LOC Commitment Percentage of LOC Obligations
shall not exceed such Lender's Revolving Commitment Percentage of
the aggregate Revolving Committed Amount, and (ii) with regard to
the Lenders collectively, the sum of the aggregate amount of
outstanding Revolving Loans plus Swingline Loans plus LOC
Obligations shall not exceed the Revolving Committed Amount. For
purposes hereof, the aggregate amount available hereunder shall be
THREE HUNDRED MILLION DOLLARS ($300,000,000) (which amount shall be
reduced to TWO HUNDRED MILLION DOLLARS ($200,000,000) with a
corresponding reduction in each Lender's Commitment as set forth on
Schedule 2.1(a) upon the issuance of the Senior Notes, and as such
aggregate maximum amount may be further reduced from time to time
as provided in Section 2.5, the "Revolving Committed Amount").
Revolving Loans may consist of Alternate Base Rate Loans or LIBOR
Rate Loans, or a combination thereof, as the Borrower may request,
and may be repaid and reborrowed in accordance with the provisions
hereof. LIBOR Rate Loans shall be made by each Lender at its LIBOR
Lending Office and Alternate Base Rate Loans at its Domestic Lending
Office.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request
a Revolving Loan borrowing by written notice (or telephone
notice promptly confirmed in writing which confirmation may be
by fax) to the Administrative Agent not later than 12:00 Noon
(Charlotte, North Carolina time) on the Business Day prior to
the date of requested borrowing in the case of Alternate Base
Rate Loans, and on the third Business Day prior to the date of
the requested borrowing in the case of LIBOR Rate Loans. Each
such request for borrowing shall be irrevocable and shall
specify (A) that a Revolving Loan is requested, (B) the date
of the requested borrowing (which shall be a Business Day),
(C) the aggregate principal amount to be borrowed, (D) whether
the borrowing shall be comprised of Alternate Base Rate Loans,
LIBOR Rate Loans or a combination thereof, and if LIBOR Rate
Loans are requested, the Interest Period(s) therefor. A form
of Notice of Borrowing (a "Notice of Borrowing") is attached
as Schedule 2.1(b)(i). If the Borrower shall fail to specify
in any such Notice of Borrowing (I) an applicable Interest
Period in the case of a LIBOR Rate Loan, then such notice
shall be deemed to be a request for an Interest Period of one
month, or (II) the type of Revolving Loan requested, then such
notice shall be deemed to be a request for an Alternate Base
Rate Loan hereunder. The Administrative Agent shall give
notice to each Lender promptly upon receipt of each Notice of
Borrowing, the contents thereof and each such Lender's share
thereof.
(ii) Minimum Amounts. Each Revolving Loan borrowing
that is a LIBOR Rate Loan shall be in a minimum aggregate
amount of $3,000,000 and integral multiples of $1,000,000 in
excess thereof (or the remaining amount of the Revolving
Committed Amount, if less). Each Revolving Loan borrowing
that is a Alternate Base Rate Loan shall be in a minimum
aggregate amount of $1,000,000 and integral multiples of
$250,000 in excess thereof (or the remaining amount of the
Revolving Committed Amount, if less).
(iii) Advances. Each Lender will make its
Revolving Commitment Percentage of each Revolving Loan
borrowing available to the Administrative Agent for the
account of the Borrower at the office of the Administrative
Agent specified in Schedule 9.2, or at such other office as
the Administrative Agent may designate in writing, by 1:00
P.M. (Charlotte, North Carolina time) on the date specified in
the applicable Notice of Borrowing in Dollars and in funds
immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrower by the
Administrative Agent by the close of business on the date
specified in the applicable Notice of Borrowing by crediting
the account of the Borrower on the books of such office with
the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent.
(c) Repayment. The principal amount of all Revolving Loans
shall be due and payable in full on the Revolving Commitment
Termination Date.
(d) Interest. Subject to the provisions of Section 2.8,
Revolving Loans shall bear interest as follows:
(i) Alternate Base Rate Loans. During such periods
as Revolving Loans shall be comprised of Alternate Base Rate
Loans, each such Alternate Base Rate Loan shall bear interest
at a per annum rate equal to the Alternate Base Rate; and
(ii) LIBOR Rate Loans. During such periods as
Revolving Loans shall be comprised of LIBOR Rate Loans, each such
LIBOR Rate Loan shall bear interest at a per annum rate equal to the
sum of the LIBOR Rate plus the Applicable Margin.
Interest on Revolving Loans shall be payable in arrears on each
Interest Payment Date.
(e) Revolving Notes. Each Lender's Revolving Commitment
Percentage of the Revolving Loans shall be evidenced by a duly
executed promissory note of the Borrower to such Lender in
substantially the form of Schedule 2.1(e).
Section 2.2 Swingline Loan Subfacility.
(a) Swingline Commitment. During the Commitment Period,
subject to the terms and conditions hereof, the Swingline Lender,
in its individual capacity, agrees to make certain revolving credit
loans to the Borrower (each a "Swingline Loan" and, collectively,
the "Swingline Loans") for the purposes hereinafter set forth;
provided, however, (i) the aggregate amount of Swingline Loans
outstanding at any time shall not exceed TEN MILLION DOLLARS
($10,000,000) (the "Swingline Committed Amount"), and (ii) the sum
of the aggregate amount of outstanding Revolving Loans plus
Swingline Loans plus LOC Obligations shall not exceed the Revolving
Committed Amount. Swingline Loans hereunder may be repaid and
reborrowed in accordance with the provisions hereof.
(b) Swingline Loan Borrowings.
(i) Notice of Borrowing and Disbursement. The
Swingline Lender will make Swingline Loans available to the
Borrower on any Business Day upon request made by the Borrower
not later than 12:00 Noon (Charlotte, North Carolina time) on
such Business Day. A notice of request for Swingline Loan
borrowing shall be made in the form of Schedule 2.1(b)(i) with
appropriate modifications. Swingline Loan borrowings
hereunder shall be made in minimum amounts of $100,000 and in
integral amounts of $100,000 in excess thereof.
(ii) Repayment of Swingline Loans. Each Swingline
Loan borrowing shall be due and payable on the Revolving Commitment
Termination Date. The Swingline Lender may, at any time, in
its sole discretion, by written notice to the Borrower and the
Administrative Agent, demand repayment of its Swingline Loans
by way of a Revolving Loan borrowing, in which case the
Borrower shall be deemed to have requested a Revolving Loan
borrowing comprised entirely of LIBOR Rate Loans (with
Interest Periods selected by the Borrower) in the amount of
such Swingline Loans; provided, however, that, in the
following circumstances, any such demand shall also be deemed
to have been given one Business Day prior to each of (A) the
Revolving Commitment Termination Date, (B) the occurrence of
any Event of Default described in Section 7.1(e), (iii) upon
acceleration of the Credit Party Obligations hereunder,
whether on account of an Event of Default described in Section
7.1(e) or any other Event of Default, and (iv) the exercise of
remedies in accordance with the provisions of Section 7.2
hereof (each such Revolving Loan borrowing made on account of
any such deemed request therefor as provided herein being
hereinafter referred to as a "Mandatory Borrowing"). Each
Lender hereby irrevocably agrees to make such Revolving Loans
promptly upon any such request or deemed request on account of
each Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the same such date
notwithstanding (I) the amount of Mandatory Borrowing may not
comply with the minimum amount for borrowings of Revolving
Loans otherwise required hereunder, (II) whether any
conditions specified in Section 4.2 are then satisfied, (III)
whether a Default or an Event of Default then exists, (IV)
failure of any such request or deemed request for Revolving
Loans to be made by the time otherwise required in Section
2.1(b)(i), (V) the date of such Mandatory Borrowing, or (VI)
any reduction in the Revolving Committed Amount or termination
of the Revolving Commitments immediately prior to such
Mandatory Borrowing or contemporaneously therewith. In the
event that any Mandatory Borrowing cannot for any reason be
made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code with respect to the Borrower), then
each Lender hereby agrees that it shall forthwith purchase (as
of the date the Mandatory Borrowing would otherwise have
occurred, but adjusted for any payments received from the
Borrower on or after such date and prior to such purchase)
from the Swingline Lender such participations in the
outstanding Swingline Loans as shall be necessary to cause
each such Lender to share in such Swingline Loans ratably
based upon its respective Revolving Commitment Percentage
(determined before giving effect to any termination of the
Commitments pursuant to Section 7.2), provided that (A) all
interest payable on the Swingline Loans shall be for the
account of the Swingline Lender until the date as of which the
respective participation is purchased, and (B) at the time any
purchase of participations pursuant to this sentence is
actually made, the purchasing Lender shall be required to pay
to the Swingline Lender interest on the principal amount of
such participation purchased for each day from and including
the day upon which the Mandatory Borrowing would otherwise
have occurred to but excluding the date of payment for such
participation, at the rate equal to, if paid within two (2)
Business Days of the date of the Mandatory Borrowing, the
Federal Funds Effective Rate, and thereafter at a rate equal
to the Alternate Base Rate.
(c) Interest on Swingline Loans. Subject to the provisions
of Section 2.8, Swingline Loans shall bear interest at a per annum
rate equal to the LIBOR Market Index Rate plus the Applicable Margin
for Revolving Loans that are LIBOR Rate Loans. Interest on
Swingline Loans shall be payable in arrears on each Interest Payment
Date.
(d) Swingline Note. The Swingline Loans shall be evidenced
by a duly executed promissory note of the Borrower to the Swingline
Lender in the original amount of the Swingline Committed Amount and
substantially in the form of Schedule 2.2(d).
Section 2.3 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and
of the LOC Documents, if any, and any other terms and conditions
which the Issuing Lender may reasonably require, during the
Commitment Period the Issuing Lender shall issue, and the Lenders
shall participate in, Letters of Credit for the account of the
Borrower from time to time upon request in a form acceptable to the
Issuing Lender; provided, however, that (i) the aggregate amount of
LOC Obligations shall not at any time exceed FIFTEEN MILLION DOLLARS
($15,000,000) (the "LOC Committed Amount"), (ii) the sum of the
aggregate amount of Revolving Loans plus Swingline Loans plus LOC
Obligations shall not at any time exceed the Revolving Committed
Amount, (iii) all Letters of Credit shall be denominated in U.S.
Dollars and (iv) Letters of Credit shall be issued for lawful
corporate purposes and may be issued as standby letters of credit,
including in connection with workers' compensation and other
insurance programs. Except as otherwise expressly agreed upon by
all the Lenders, no Letter of Credit shall have an original expiry
date more than twelve (12) months from the date of issuance;
provided, however, so long as no Default or Event of Default has
occurred and is continuing and subject to the other terms and
conditions to the issuance of Letters of Credit hereunder, the
expiry dates of Letters of Credit may be extended annually or
periodically from time to time on the request of the Borrower or by
operation of the terms of the applicable Letter of Credit to a date
not more than twelve (12) months from the date of extension;
provided, further, that no Letter of Credit, as originally issued
or as extended, shall have an expiry date extending beyond the
Revolving Commitment Termination Date. Each Letter of Credit shall
comply with the related LOC Documents. The issuance and expiry date
of each Letter of Credit shall be a Business Day. Any Letters of
Credit issued hereunder shall be in a minimum original face amount
of $50,000. First Union shall be the Issuing Lender on all Letters
of Credit issued after the Closing Date.
(b) Notice and Reports. The request for the issuance of a
Letter of Credit shall be submitted to the Issuing Lender at least
five (5) Business Days prior to the requested date of issuance. The
Issuing Lender will promptly upon request provide to the
Administrative Agent for dissemination to the Lenders a detailed
report specifying the Letters of Credit which are then issued and
outstanding and any activity with respect thereto which may have
occurred since the date of any prior report, and including therein,
among other things, the account party, the beneficiary, the face
amount, expiry date as well as any payments or expirations which may
have occurred. The Issuing Lender will further provide to the
Administrative Agent promptly upon request copies of the Letters of
Credit. The Issuing Lender will provide to the Administrative Agent
promptly upon request a summary report of the nature and extent of
LOC Obligations then outstanding.
(c) Participations. Each Lender upon issuance of a Letter
of Credit shall be deemed to have purchased without recourse a risk
participation from the Issuing Lender in such Letter of Credit and
the obligations arising thereunder and any collateral relating
thereto, in each case in an amount equal to its LOC Commitment
Percentage of the obligations under such Letter of Credit and shall
absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to the Issuing
Lender therefor and discharge when due, its LOC Commitment
Percentage of the obligations arising under such Letter of Credit.
Without limiting the scope and nature of each Lender's participation
in any Letter of Credit, to the extent that the Issuing Lender has
not been reimbursed as required hereunder or under any LOC Document,
each such Lender shall pay to the Issuing Lender its LOC Commitment
Percentage of such unreimbursed drawing in same day funds on the day
of notification by the Issuing Lender of an unreimbursed drawing
pursuant to the provisions of subsection (d) hereof. The obligation
of each Lender to so reimburse the Issuing Lender shall be absolute
and unconditional and shall not be affected by the occurrence of a
Default, an Event of Default or any other occurrence or event. Any
such reimbursement shall not relieve or otherwise impair the
obligation of the Borrower to reimburse the Issuing Lender under any
Letter of Credit, together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any
Letter of Credit, the Issuing Lender will promptly notify the
Borrower and the Administrative Agent. The Borrower shall reimburse
the Issuing Lender on the day of drawing under any Letter of Credit
(either with the proceeds of a Swingline Loan or Revolving Loan
obtained hereunder or otherwise) in same day funds as provided
herein or in the LOC Documents. If the Borrower shall fail to
reimburse the Issuing Lender as provided herein, the unreimbursed
amount of such drawing shall bear interest at a per annum rate equal
to the Alternate Base Rate plus two percent (2%). Unless the
Borrower shall immediately notify the Issuing Lender and the
Administrative Agent of its intent to otherwise reimburse the
Issuing Lender, the Borrower shall be deemed to have requested a
Swingline Loan, or if and to the extent Swingline Loans shall not
be available, a Revolving Loan in the amount of the drawing as
provided in subsection (e) hereof, the proceeds of which will be
used to satisfy the reimbursement obligations. The Borrower's
reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of any rights of
set-off, counterclaim or defense to payment the Borrower may claim
or have against the Issuing Lender, the Administrative Agent, the
Lenders, the beneficiary of the Letter of Credit drawn upon or any
other Person, including without limitation any defense based on any
failure of the Borrower to receive consideration or the legality,
validity, regularity or unenforceability of the Letter of Credit.
The Issuing Lender will promptly notify the other Lenders of the
amount of any unreimbursed drawing and each Lender shall promptly
pay to the Administrative Agent for the account of the Issuing
Lender in Dollars and in immediately available funds, the amount of
such Lender's LOC Commitment Percentage of such unreimbursed
drawing. Such payment shall be made on the day such notice is
received by such Lender from the Issuing Lender if such notice is
received at or before 2:00 P.M. (Charlotte, North Carolina time),
otherwise such payment shall be made at or before 12:00 Noon
(Charlotte, North Carolina time) on the Business Day next succeeding
the day such notice is received. If such Lender does not pay such
amount to the Issuing Lender in full upon such request, such Lender
shall, on demand, pay to the Administrative Agent for the account
of the Issuing Lender interest on the unpaid amount during the
period from the date of such drawing until such Lender pays such
amount to the Issuing Lender in full at a rate per annum equal to,
if paid within two (2) Business Days of the date of drawing, the
Federal Funds Effective Rate and thereafter at a rate equal to the
Alternate Base Rate. Each Lender's obligation to make such payment
to the Issuing Lender, and the right of the Issuing Lender to
receive the same, shall be absolute and unconditional, shall not be
affected by any circumstance whatsoever and without regard to the
termination of this Credit Agreement or the Commitments hereunder,
the existence of a Default or Event of Default or the acceleration
of the Credit Party Obligations hereunder and shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Repayment with Revolving Loans. On any day on which the
Borrower shall have requested, or been deemed to have requested, (i)
a Swingline Loan borrowing to reimburse a drawing under a Letter of
Credit, the Swingline Lender shall make the Swingline Loan advance
pursuant to the terms of the request or deemed request in accordance
with the provisions for Swingline Loan advances hereunder, or (ii)
a Revolving Loan to reimburse a drawing under a Letter of Credit,
the Administrative Agent shall give notice to the Lenders that a
Revolving Loan has been requested or deemed requested in connection
with a drawing under a Letter of Credit, in which case a Revolving
Loan borrowing comprised entirely of Alternate Base Rate Loans (each
such borrowing, a "Mandatory Borrowing") shall be immediately made
(without giving effect to any termination of the Commitments
pursuant to Section 7.2) pro rata based on each Lender's respective
Revolving Commitment Percentage (determined before giving effect to
any termination of the Commitments pursuant to Section 7.2) and in
the case of both clauses (i) and (ii) the proceeds thereof shall be
paid directly to the Issuing Lender for application to the
respective LOC Obligations. Each Lender hereby irrevocably agrees
to make such Revolving Loans immediately upon any such request or
deemed request on account of each Mandatory Borrowing in the amount
and in the manner specified in the preceding sentence and on the
same such date notwithstanding (i) the amount of Mandatory Borrowing
may not comply with the minimum amount for borrowings of Revolving
Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 4.2 are then satisfied, (iii) whether a Default
or an Event of Default then exists, (iv) failure for any such
request or deemed request for Revolving Loan to be made by the time
otherwise required in Section 2.1(b), (v) the date of such Mandatory
Borrowing, or (vi) any reduction in the Revolving Committed Amount
after any such Letter of Credit may have been drawn upon. In the
event that any Mandatory Borrowing cannot for any reason be made on
the date otherwise required above (including, without limitation,
as a result of the commencement of a proceeding under the Bankruptcy
Code with respect to the Borrower), then each such Lender hereby
agrees that it shall forthwith fund (as of the date the Mandatory
Borrowing would otherwise have occurred, but adjusted for any
payments received from the Borrower on or after such date and prior
to such purchase) its Participation Interests in the outstanding LOC
Obligations; provided, further, that in the event any Lender shall
fail to fund its Participation Interest on the day the Mandatory
Borrowing would otherwise have occurred, then the amount of such
Lender's unfunded Participation Interest therein shall bear interest
payable to the Issuing Lender upon demand, at the rate equal to, if
paid within two (2) Business Days of such date, the Federal Funds
Effective Rate, and thereafter at a rate equal to the Alternate Base
Rate.
(f) Modification, Extension. The issuance of any supplement,
modification, amendment, renewal, or extension to any Letter of
Credit shall, for purposes hereof, be treated in all respects the
same as the issuance of a new Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender shall
have the Letters of Credit be subject to The Uniform Customs and
Practice for Documentary Credits, as published as of the date of
issue by the International Chamber of Commerce (the "UCP"), in which
case the UCP may be incorporated therein and deemed in all respects
to be a part thereof.
Section 2.4 Fees.
(a) Commitment Fee. In consideration of the Revolving
Commitment, the Borrower agrees to pay to the Administrative Agent
for the ratable benefit of the Lenders a commitment fee (the
"Commitment Fee") in an amount equal to the Applicable Commitment
Fee Percentage per annum on the average daily unused portion of the
Revolving Committed Amount (with LOC Obligations constituting usage
of the Revolving Committed Amount). The Commitment Fee shall be
payable quarterly in arrears on the last day of each November,
February, May and August.
(b) Letter of Credit Fees. In consideration of the LOC
Commitments, the Borrower agrees to pay to the Issuing Lender a fee
(the "Letter of Credit Fee") equal to the Applicable Margin per
annum on the average daily maximum amount available to be drawn
under each Letter of Credit from the date of issuance to the date
of expiration. In addition to such Letter of Credit Fee, the
Issuing Lender may charge, and retain for its own account without
sharing by the other Lenders, an additional facing fee of one-eighth
of one percent (1/8%) per annum on the average daily maximum amount
available to be drawn under each such Letter of Credit issued by it.
The Issuing Lender shall promptly pay over to the Administrative
Agent for the ratable benefit of the Lenders (including the Issuing
Lender) the Letter of Credit Fee. The Letter of Credit Fee shall
be payable quarterly in arrears on the 15th day following the last
day of each calendar quarter for the prior calendar quarter.
(c) Issuing Lender Costs. In addition to the Letter of
Credit Fees payable pursuant to subsection (b) hereof, the Borrower
shall pay to the Issuing Lender for its own account without sharing
by the other Lenders the reasonable and customary costs from time
to time of the Issuing Lender with respect to the amendment,
transfer, administration, cancellation and conversion of, and
drawings under, such Letters of Credit (collectively, the "Issuing
Lender Costs").
(d) Administrative Fee. The Borrower agrees to pay to the
Administrative Agent the annual administrative fee as described in
the Fee Letter.
Section 2.5 Commitment Reductions.
(a) Voluntary Reductions. The Borrower shall have the right
to terminate or permanently reduce the unused portion of the
Revolving Committed Amount at any time or from time to time upon not
less than five Business Days' prior notice to the Administrative
Agent (which shall notify the Lenders thereof as soon as
practicable) of each such termination or reduction, which notice
shall specify the effective date thereof and the amount of any such
reduction which shall be in a minimum amount of $5,000,000 or a
whole multiple of $1,000,000 in excess thereof and shall be
irrevocable and effective upon receipt by the Administrative Agent,
provided that no such reduction or termination shall be permitted
if after giving effect thereto, and to any prepayments of the
Revolving Loans made on the effective date thereof, the sum of the
then outstanding aggregate principal amount of the Revolving Loans
plus Swingline Loans plus LOC Obligations would exceed the Revolving
Committed Amount.
(b) Revolving Commitment Termination Date. The Revolving
Commitment, the LOC Commitment and the Swingline Commitment shall
automatically terminate on the Revolving Commitment Termination
Date.
(c) Mandatory Reduction. On the date the proceeds of the
Senior Notes become available to the Borrower a mandatory prepayment
pursuant to Section 2.6(b) shall be made and the Revolving Committed
Amount shall be automatically reduced to $200,000,000 with each
Lender's Commitment to be reduced as set forth on Schedule 2.1(a).
Section 2.6 Prepayments.
(a) Optional Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part from time to time; provided, however,
that each partial prepayment of Revolving Loans shall be in a minimum
principal amount of $1,000,000 and integral multiples of $100,000 in
excess thereof and each prepayment of Swingline Loans shall be in a
minimum principal amount of $100,000 and integral multiples of $100,000
in excess thereof. The Borrower shall give three Business Days'
irrevocable notice in the case of LIBOR Rate Loans and one Business Day's
irrevocable notice in the case of Alternate Base Rate Loans, to the
Administrative Agent (which shall notify the Lenders thereof as soon as
practicable).
(b) Mandatory Prepayments. If at any time, the aggregate
principal amount of Loans shall exceed the Revolving Committed Amount,
the Borrower shall immediately make payment on the Loans in an amount
sufficient to eliminate the deficiency. If at the time of the issuance
of the Senior Notes the aggregate principal amount of the Loans shall
exceed $200,000,000, the Borrower shall make a payment on the Loans at
the time the proceeds of the Senior Notes become available to the
Borrower in an amount sufficient to eliminate such excess.
(c) Application. Unless otherwise specified by the Borrower,
prepayments made hereunder shall be applied first to Revolving Loans
which are Alternate Base Rate Loans, then to Revolving Loans which are
LIBOR Rate Loans in direct order of Interest Period maturities. All
prepayments under Section 2.6(a) shall be subject to Section 2.16, but
otherwise without premium or penalty. Interest on the principal amount
prepaid shall be payable on the next occurring Interest Payment Date that
would have occurred had such Loan not been prepaid or, at the request of
the Administrative Agent, interest on the principal amount prepaid shall
be payable on any date that a prepayment is made hereunder through the
date of prepayment. Amounts prepaid on the Swingline Loan and the
Revolving Loans may be reborrowed in accordance with the terms hereof.
Section 2.7 Minimum Principal Amount of Tranches.
All borrowings, payments and prepayments in respect of Revolving
Loans shall be in such amounts and be made pursuant to such elections so
that after giving effect thereto the aggregate principal amount of the
Revolving Loans comprising any Tranche shall not be less than $3,000,000
or a whole multiple of $1,000,000 in excess thereof.
Section 2.8 Default Rate and Payment Dates.
Upon the occurrence, and during the continuance, of an Event of
Default, at the Required Lender's option, (i) the Borrower shall no
longer have the option to request LIBOR Rate Loans or Swingline Loans and
(ii) the principal of and, to the extent permitted by law, interest on
the Loans and any other amounts owing hereunder or under the other Credit
Documents shall bear interest, payable on demand, at a per annum rate 2%
greater than the rate which would otherwise be applicable (or if no rate
is applicable, whether in respect of interest, fees or other amounts,
then the Alternate Base Rate plus 2%).
Section 2.9 Conversion Options.
(a) The Borrower may, in the case of Revolving Loans, elect
from time to time to convert Alternate Base Rate Loans to LIBOR Rate
Loans by giving the Administrative Agent at least three Business
Days' prior irrevocable written notice of such election. A form of
Notice of Conversion/Extension is attached as Schedule 2.9. If the
date upon which an Alternate Base Rate Loan is to be converted to
a LIBOR Rate Loan is not a Business Day, then such conversion shall
be made on the next succeeding Business Day and during the period
from such last day of an Interest Period to such succeeding Business
Day such Loan shall bear interest as if it were an Alternate Base
Rate Loan. All or any part of outstanding Alternate Base Rate Loans
may be converted as provided herein, provided that (i) no Loan may
be converted into a LIBOR Rate Loan when any Default or Event of
Default has occurred and is continuing and (ii) partial conversions
shall be in an aggregate principal amount of $3,000,000 or a whole
multiple of $1,000,000 in excess thereof.
(b) Any LIBOR Rate Loans may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance
by the Borrower with the notice provisions contained in Section
2.9(a); provided, that no LIBOR Rate Loan may be continued as such
when any Default or Event of Default has occurred and is continuing.
If the Borrower shall fail to give timely notice of an election to
continue a LIBOR Rate Loan, or the continuation of LIBOR Rate Loans
is not permitted hereunder, such LIBOR Rate Loans shall be
automatically converted to Alternate Base Rate Loans at the end of
the applicable Interest Period with respect thereto.
Section 2.10 Computation of Interest and Fees; Interest Rate
Limitation.
(a) Interest payable hereunder with respect to Alternate Base
Rate Loans shall be calculated on the basis of a year of 365 days
(or 366 days, as applicable) for the actual days elapsed. All other
fees, interest and all other amounts payable hereunder shall be
calculated on the basis of a 360 day year for the actual days
elapsed. The Administrative Agent shall as soon as practicable
notify the Borrower and the Lenders of each determination of a LIBOR
Rate on the Business Day of the determination thereof. Any change
in the interest rate on a Loan resulting from a change in the
Alternate Base Rate shall become effective as of the opening of
business on the day on which such change in the Alternate Base Rate
shall become effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective
date and the amount of each such change.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Credit
Agreement shall be conclusive and binding on the Borrower and the
Lenders in the absence of manifest error. The Administrative Agent
shall, at the request of the Borrower, deliver to the Borrower a
statement showing the computations used by the Administrative Agent
in determining any interest rate.
(c) Notwithstanding anything to the contrary contained in any
of the Credit Documents, if any specified interest rate shall exceed
the maximum rate permitted by applicable law as in effect from time
to time, the Borrower shall pay interest at the highest permissible
rate, which rate shall change as and when the highest permissible
rate shall change. If the Borrower makes an interest payment under
any of the Credit Documents that exceeds the maximum amount of
interest permitted by applicable law, the excess of such payment
above the maximum amount that lawfully may be paid shall be refunded
to the Borrower or, at the Borrower's option, credited toward the
payment of principal due under such Credit Document (as directed by
the Borrower); or, if the Borrower makes an interest payment that
exceeds the maximum amount of interest permitted by applicable law
and all principal thereunder shall have been previously or thereby
paid in full, such payment shall be deemed to have been the result
of mathematical error and the Administrative Agent shall refund to
the Borrower the amount of such payment that is in excess of the
amount that lawfully may be paid.
Section 2.11 Pro Rata Treatment and Payments.
Each borrowing of Revolving Loans and any reduction of the Revolving
Commitments shall be made pro rata according to the respective Commitment
Percentages of the Lenders. Each payment under this Credit Agreement or
any Note shall be applied, first, to any fees then due and owing by the
Borrower pursuant to Section 2.4, second, to interest then due and owing
in respect of the Notes of the Borrower and, third, to principal then due
and owing hereunder and under the Notes of the Borrower. Each payment
on account of any fees pursuant to Section 2.4 shall be made pro rata in
accordance with the respective amounts due and owing (except as to the
portion of the Letter of Credit Fee retained by the Issuing Lender and
the Issuing Lender Fees). Each optional prepayment of principal of the
Loans shall be applied to the Loans as the Borrower may designate (to be
applied pro rata among the Lenders); provided, that prepayments made
pursuant to Section 2.14 shall be applied in accordance with such
section. Each mandatory prepayment on account of principal of the Loans
shall be applied in accordance with Section 2.6(b). All payments
(including prepayments) to be made by the Borrower of principal, interest
and fees shall be made without defense, set-off or counterclaim (except
as provided in Section 2.17(b)) and shall be made to the Administrative
Agent for the account of the Lenders at the Administrative Agent's office
specified on Schedule 9.2 in Dollars and in immediately available funds
not later than 1:00 P.M. (Charlotte, North Carolina time) on the date
when due. The Administrative Agent shall distribute such payments to the
Lenders entitled thereto promptly upon receipt in like funds as received.
If any payment hereunder (other than payments on the LIBOR Rate Loans)
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. If any payment on a LIBOR Rate
Loan becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day
unless the result of such extension would be to extend such payment into
another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
Section 2.12 Non-Receipt of Funds by the Administrative Agent.
(a) Unless the Administrative Agent shall have been notified
in writing by a Lender prior to the date a Loan is to be made by such
Lender (which notice shall be effective upon receipt) that such Lender
does not intend to make the proceeds of such Loan available to the
Administrative Agent, the Administrative Agent may assume that such
Lender has made such proceeds available to the Administrative Agent on
such date, and the Administrative Agent may in reliance upon such
assumption (but shall not be required to) make available to the Borrower
a corresponding amount. If such corresponding amount is not in fact made
available to the Administrative Agent, the Administrative Agent shall be
able to recover such corresponding amount from such Lender. If such
Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent will
promptly notify the Borrower, and the Borrower shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative
Agent shall also be entitled to recover from the Lender or the Borrower,
as the case may be, interest on such corresponding amount in respect of
each day from the date such corresponding amount was made available by
the Administrative Agent to the Borrower to the date such corresponding
amount is recovered by the Administrative Agent at a per annum rate equal
to (i) from the Borrower at the applicable rate for the applicable
borrowing pursuant to the Notice of Borrowing and (ii) from a Lender at
the Federal Effective Funds Rate.
(b) Unless the Administrative Agent shall have been notified
in writing by the Borrower, prior to the date on which any payment
is due from it hereunder (which notice shall be effective upon
receipt) that the Borrower does not intend to make such payment, the
Administrative Agent may assume that such Borrower has made such
payment when due, and the Administrative Agent may in reliance upon
such assumption (but shall not be required to) make available to
each Lender on such payment date an amount equal to the portion of
such assumed payment to which such Lender is entitled hereunder, and
if the Borrower has not in fact made such payment to the
Administrative Agent, such Lender shall, on demand, repay to the
Administrative Agent the amount made available to such Lender. If
such amount is repaid to the Administrative Agent on a date after
the date such amount was made available to such Lender, such Lender
shall pay to the Administrative Agent on demand interest on such
amount in respect of each day from the date such amount was made
available by the Administrative Agent to such Lender to the date
such amount is recovered by the Administrative Agent at a per annum
rate equal to the Federal Funds Effective Rate.
(c) A certificate of the Administrative Agent submitted to
the Borrower or any Lender with respect to any amount owing under
this Section 2.12 shall be conclusive in the absence of manifest
error.
Section 2.13 Inability to Determine Interest Rate.
Notwithstanding any other provision of this Credit Agreement, if (a)
at the time of the request for a LIBOR Rate Loan, the Administrative
Agent shall reasonably determine (which determination shall be conclusive
and binding absent manifest error) that, by reason of circumstances
affecting the relevant market, reasonable and adequate means do not exist
for ascertaining LIBOR for such Interest Period, or (b) the Required
Lenders shall reasonably determine (which determination shall be
conclusive and binding absent manifest error) that the LIBOR Rate does
not adequately and fairly reflect the cost to such Lenders of funding
LIBOR Rate Loans that the Borrower has requested be outstanding as a
LIBOR Tranche during such Interest Period, the Administrative Agent shall
forthwith give telephone notice of such determination, confirmed in
writing, to the Borrower, and the Lenders at least two Business Days
prior to the first day of such Interest Period. Unless the Borrower
shall have notified the Administrative Agent upon receipt of such
telephone notice that it wishes to rescind or modify its request
regarding such LIBOR Rate Loans, any Loans that were requested to be made
as LIBOR Rate Loans shall be made as Alternate Base Rate Loans and any
Loans that were requested to be converted into or continued as LIBOR Rate
Loans shall be converted into Alternate Base Rate Loans. Until any such
notice has been withdrawn by the Administrative Agent, no further Loans
shall be made as, continued as, or converted into, LIBOR Rate Loans for
the Interest Periods so affected.
Section 2.14 Illegality.
Notwithstanding any other provision of this Credit Agreement, if the
adoption of or any change in any Requirement of Law or in the
interpretation or application thereof by the relevant Governmental
Authority to any Lender shall make it unlawful for such Lender or its
LIBOR Lending Office to make or maintain LIBOR Rate Loans as contemplated
by this Credit Agreement or to obtain in the interbank eurodollar market
through its LIBOR Lending Office the funds with which to make such Loans,
(a) such Lender shall promptly notify the Administrative Agent and the
Borrower thereof, (b) the commitment of such Lender hereunder to make
LIBOR Rate Loans or continue LIBOR Rate Loans as such shall forthwith be
suspended until the Administrative Agent shall give notice that the
condition or situation which gave rise to the suspension shall no longer
exist, and (c) such Lender's Loans then outstanding as LIBOR Rate Loans,
if any, shall be converted on the last day of the Interest Period for
such Loans or within such earlier period as required by law as Alternate
Base Rate Loans. The Borrower hereby agrees promptly to pay any Lender,
within 15 days after its demand, any additional amounts necessary to
compensate such Lender for actual and direct costs (but not including
anticipated profits) reasonably incurred by such Lender in making any
repayment in accordance with this Section including, but not limited to,
any interest or fees payable by such Lender to lenders of funds obtained
by it in order to make or maintain its LIBOR Rate Loans hereunder. A
certificate as to any additional amounts payable pursuant to this Section
submitted by such Lender, through the Administrative Agent, to the
Borrower shall be conclusive in the absence of manifest error. Each
Lender agrees to use reasonable efforts (including reasonable efforts to
change its LIBOR Lending Office) to avoid or to minimize any amounts
which may otherwise be payable pursuant to this Section; provided,
however, that such efforts shall not cause the imposition on such Lender
of any additional costs or legal or regulatory burdens deemed by such
Lender in its sole discretion to be material.
Section 2.15 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 such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit or any
application relating thereto, any LIBOR Rate Loan made by it,
or change the basis of taxation of payments to such Lender in
respect thereof (except for 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 LIBOR 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 of making or maintaining LIBOR Rate Loans or the Letters
of Credit or to reduce any amount receivable hereunder or under any
Note, then, in any such case, the Borrower shall promptly pay such
Lender, within 15 days after its demand, any additional amounts
necessary to compensate such Lender for such additional cost or
reduced amount receivable which such Lender reasonably deems to be
material as determined by such Lender with respect to its LIBOR Rate
Loans or Letters of Credit. A certificate as to any additional
amounts payable pursuant to this Section submitted by such Lender,
through the Administrative Agent, to the Borrower shall be
conclusive in the absence of manifest error. Each Lender agrees to
use reasonable efforts (including reasonable efforts to change its
Domestic Lending Office or LIBOR Lending Office, as the case may be)
to avoid or to minimize any amounts which might otherwise be payable
pursuant to this paragraph of this Section; provided, however, that
such efforts shall not cause the imposition on such Lender of any
additional costs or legal or regulatory burdens deemed by such
Lender to be material.
(b) If any Lender shall have reasonably 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 central bank or
Governmental Authority made subsequent to the date hereof does or
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 to a level below that which such Lender or
such 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 reasonably deemed by such Lender to be material, then from
time to time, within fifteen (15) days after demand by such Lender,
the Borrower shall pay to such Lender such additional amount as
shall be certified by such Lender as being required to compensate
it for such reduction. Such a certificate as to any additional
amounts payable under this Section submitted by a Lender (which
certificate shall include a description of the basis for the
computation), through the Administrative Agent, to the Borrower
shall be conclusive absent manifest error.
(c) The agreements in this Section 2.15 shall survive the
termination of this Credit Agreement and payment of the Notes and
all other amounts payable hereunder.
Section 2.16 Indemnity.
The Borrower hereby agrees to indemnify each Lender and to hold such
Lender harmless from any funding loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Borrower in
payment of the principal amount of or interest on any Loan by such Lender
in accordance with the terms hereof, (b) default by the Borrower in
accepting a borrowing after the Borrower has given a notice in accordance
with the terms hereof, (c) default by the Borrower in making any
prepayment after the Borrower has given a notice in accordance with the
terms hereof, and/or (d) the making by the Borrower of a prepayment of
a Loan, or the conversion thereof, on a day which is not the last day of
the Interest Period with respect thereto, in each case including, but not
limited to, any such loss or expense arising from interest or fees
payable by such Lender to lenders of funds obtained by it in order to
maintain its Loans hereunder. A certificate as to any additional amounts
payable pursuant to this Section submitted by any Lender, through the
Administrative Agent, to the Borrower (which certificate must be
delivered to the Administrative Agent within thirty days following such
default, prepayment or conversion) shall be conclusive in the absence of
manifest error. The agreements in this Section shall survive termination
of this Credit Agreement and payment of the Notes and all other amounts
payable hereunder.
Section 2.17 Taxes.
(a) All payments made by the Borrower hereunder or under any
Note will be, except as provided in Section 2.17(b), made free and
clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any
Governmental Authority or by any political subdivision or taxing
authority thereof or therein with respect to such payments (but
excluding any tax imposed on or measured by the net income or
profits of a Lender pursuant to the laws of the jurisdiction in
which it is organized or the jurisdiction in which the principal
office or applicable lending office of such Lender is located or any
subdivision thereof or therein) and all interest, penalties or
similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges
being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, the Borrower agrees to pay the full amount of
such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Credit Agreement or
under any Note, after withholding or deduction for or on account of
any Taxes, will not be less than the amount provided for herein or
in such Note. The Borrower will furnish to the Administrative Agent
as soon as practicable after the date the payment of any Taxes is
due pursuant to applicable law certified copies (to the extent
reasonably available and required by law) of tax receipts evidencing
such payment by the Borrower. The Borrower agrees to indemnify and
hold harmless each Lender, and reimburse such Lender upon its
written request, for the amount of any Taxes so levied or imposed
and paid by such Lender.
(b) Each Lender that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) agrees to
deliver to the Borrower and the Administrative Agent on or prior to
the Closing Date, or in the case of a Lender that is an assignee or
transferee of an interest under this Credit Agreement pursuant to
Section 9.6(d) (unless the respective Lender was already a Lender
hereunder immediately prior to such assignment or transfer), on the
date of such assignment or transfer to such Lender, (i) if the
Lender is a "bank" within the meaning of Section 881(c)(3)(A) of the
Code, two accurate and complete original signed copies of Internal
Revenue Service Form 4224 or 1001 (or successor forms) certifying
such Lender's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this
Credit Agreement and under any Note, or (ii) if the Lender is not
a "bank" within the meaning of Section 881(c)(3)(A) of the Code,
either Internal Revenue Service Form 1001 or 4224 as set forth in
clause (i) above, or (x) a certificate substantially in the form of
Schedule 2.17 (any such certificate, a "2.17 Certificate") and (y)
two accurate and complete original signed copies of Internal Revenue
Service Form W-8 (or successor form) certifying such Lender's
entitlement to an exemption from United States withholding tax with
respect to payments of interest to be made under this Credit
Agreement and under any Note. In addition, each Lender agrees that
it will deliver upon the Borrower's request updated versions of the
foregoing, as applicable, whenever the previous certification has
become obsolete or inaccurate in any material respect, together with
such other forms as may be required in order to confirm or establish
the entitlement of such Lender to a continued exemption from or
reduction in United States withholding tax with respect to payments
under this Credit Agreement and any Note. Notwithstanding anything
to the contrary contained in Section 2.17(a), but subject to the
immediately succeeding sentence, (x) each Borrower shall be
entitled, to the extent it is required to do so by law, to deduct
or withhold Taxes imposed by the United States (or any political
subdivision or taxing authority thereof or therein) from interest,
fees or other amounts payable hereunder for the account of any
Lender which is not a United States person (as such term is defined
in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes to the extent that such Lender has not provided to the
Borrower U.S. Internal Revenue Service Forms that establish a
complete exemption from such deduction or withholding and (y) the
Borrower shall not be obligated pursuant to Section 2.17(a) hereof
to gross-up payments to be made to a Lender in respect of Taxes
imposed by the United States if (I) such Lender has not provided to
the Borrower the Internal Revenue Service Forms required to be
provided to the Borrower pursuant to this Section 2.17(b) or (II)
in the case of a payment, other than interest, to a Lender described
in clause (ii) above, to the extent that such Forms do not establish
a complete exemption from withholding of such Taxes.
Notwithstanding anything to the contrary contained in the preceding
sentence or elsewhere in this Section 2.17, the Borrower agrees to
pay additional amounts and to indemnify each Lender in the manner
set forth in Section 2.17(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of
any amounts deducted or withheld by it as described in the
immediately preceding sentence as a result of any changes after the
Closing Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof,
relating to the deducting or withholding of Taxes.
(c) Each Lender agrees to use reasonable efforts (including
reasonable efforts to change its Domestic Lending Office or LIBOR
Lending Office, as the case may be) to avoid or to minimize any
amounts which might otherwise be payable pursuant to this Section;
provided, however, that such efforts shall not cause the imposition
on such Lender of any additional costs or legal or regulatory
burdens deemed by such Lender in its sole discretion to be material.
(d) If the Borrower pays any additional amount pursuant to
this Section 2.17 with respect to a Lender, such Lender shall use
reasonable efforts to obtain a refund of tax or credit against its
tax liabilities on account of such payment; provided that such
Lender shall have no obligation to use such reasonable efforts if
either (i) it is in an excess foreign tax credit position or (ii)
it believes in good faith, in its sole discretion, that claiming a
refund or credit would cause adverse tax consequences to it. In the
event that such Lender receives such a refund or credit, such Lender
shall pay to the Borrower an amount that such Lender reasonably
determines is equal to the net tax benefit obtained by such Lender
as a result of such payment by the Borrower. In the event that no
refund or credit is obtained with respect to the Borrower's payments
to such Lender pursuant to this Section 2.17, then such Lender shall
upon request provide a certification that such Lender has not
received a refund or credit for such payments. Nothing contained
in this Section 2.17 shall require a Lender to disclose or detail
the basis of its calculation of the amount of any tax benefit or any
other amount or the basis of its determination referred to in the
proviso to the first sentence of this Section 2.17 to the Borrower
or any other party.
(e) The agreements in this Section 2.17 shall survive the
termination of this Credit Agreement and the payment of the Notes
and all other amounts payable hereunder.
Section 2.18 Indemnification; Nature of Issuing Lender's Duties.
(a) In addition to its other obligations under Section 2.3,
the Borrower hereby agrees to protect, indemnify, pay and save each
Issuing Lender harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) that the Issuing Lender may
incur or be subject to as a consequence, direct or indirect, of (i)
the issuance of any Letter of Credit or (ii) the failure of the
Issuing Lender to honor a drawing under a Letter of Credit as a
result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or governmental
authority (all such acts or omissions, herein called "Government
Acts").
(b) As between the Borrower and the Issuing Lender, the
Borrower shall assume all risks of the acts, omissions or misuse of
any Letter of Credit by the beneficiary thereof. The Issuing Lender
shall not be responsible: (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any
Letter of Credit, even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or
forged; (ii) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (iii) for failure of the beneficiary of
a Letter of Credit to comply fully with conditions required in order
to draw upon a Letter of Credit; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they
be in cipher; (v) for errors in interpretation of technical terms;
(vi) for any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under a Letter of
Credit or of the proceeds thereof; and (vii) for any consequences
arising from causes beyond the control of the Issuing Lender,
including, without limitation, any Government Acts. None of the
above shall affect, impair, or prevent the vesting of the Issuing
Lender's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Lender, under or in connection with any
Letter of Credit or the related certificates, if taken or omitted
in good faith, shall not put such Issuing Lender under any resulting
liability to the Borrower. It is the intention of the parties that
this Credit Agreement shall be construed and applied to protect and
indemnify the Issuing Lender against any and all risks involved in
the issuance of the Letters of Credit, all of which risks are hereby
assumed by the Borrower, including, without limitation, any and all
risks of the acts or omissions, whether rightful or wrongful, of any
Government Authority. The Issuing Lender shall not, in any way, be
liable for any failure by the Issuing Lender or anyone else to pay
any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Issuing Lender.
(d) Nothing in this Section 2.18 is intended to limit the
reimbursement obligation of the Borrower contained in Section 2.3(d)
hereof. The obligations of the Borrower under this Section 2.18
shall survive the termination of this Credit Agreement. No act or
omissions of any current or prior beneficiary of a Letter of Credit
shall in any way affect or impair the rights of the Issuing Lender
to enforce any right, power or benefit under this Credit Agreement.
(e) Notwithstanding anything to the contrary contained in
this Section 2.18, the Borrower shall have no obligation to
indemnify any Issuing Lender in respect of any liability incurred
by such Issuing Lender arising out of the gross negligence or
willful misconduct of the Issuing Lender (including action not taken
by an Issuing Lender), as determined by a court of competent
jurisdiction.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Credit Agreement and to
make the Extensions of Credit herein provided for, each of the Credit
Parties hereby represents and warrants to the Administrative Agent and
to each Lender that:
Section 3.1 Financial Condition.
The balance sheets and the related statements of income and of cash
flows of the Borrower and its Subsidiaries for fiscal year 1998 audited
by Ernst & Young LLP are complete and correct in all material respects
and present fairly the financial condition of the Borrower and its
Subsidiaries on a consolidated basis as of the date of such financial
statements. To the best of the Borrower's knowledge after reasonable
investigation, the balance sheets and related statements of income and
of cash flows of Penske and its Subsidiaries for fiscal year 1998 audited
by Deloitte & Touche LLP are complete and correct in all material
respects and present fairly the financial condition of Penske and its
Subsidiaries on a consolidated basis as of the date of such financial
statements. 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 disclosed
therein). To the best of the Borrower's knowledge after reasonable
investigation, the unaudited balance sheet and the related statement of
income of PSH and its Subsidiaries are complete and accurate in all
material respects and present fairly the financial condition of PSH and
its Subsidiaries on a consolidated basis.
Section 3.2 No Change.
Since November 30, 1998 (and after delivery of annual audited
financial statements in accordance Section 5.1(a), from the date of the
most recently delivered annual audited financial statements) there has
been no development or event which has had or could reasonably be
expected to have a Material Adverse Effect and the Credit Parties have
incurred no material liabilities other than those incurred in the
ordinary course of business which are not disclosed on Schedule 6.1(b).
Section 3.3 Corporate Existence; Compliance with Law.
Each of the Borrower and its Subsidiaries (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction
of its organization, (b) has the requisite power and authority and the
legal right to own and operate all its material property, to lease the
material property it operates as lessee and to conduct the business in
which it is currently engaged, (c) is duly qualified to conduct business
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 except to the extent that the failure to so
qualify or be in good standing could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect and (d) is in compliance
with all Requirements of Law (including without limitation, Environmental
Laws), except to the extent that the failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
Section 3.4 Corporate Power; Authorization; Enforceable
Obligations.
Each of the Credit Parties has the full power and authority and the
legal right to make, deliver and perform the Credit Documents to which
it is party and has taken all necessary limited liability company or
corporate action to authorize the execution, delivery and performance by
it of the Credit Documents to which it is party. 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
or performance of any Credit Document by any Credit Party (other than
those which have been obtained) or with the validity or enforceability
of any Credit Document against the Credit Parties. Each Credit Document
has been duly executed and delivered on behalf of the Credit Parties that
are a party thereto. Each Credit Document constitutes a legal, valid and
binding obligation of the Credit Parties that are a party thereto,
enforceable against such Credit Parties in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at
law).
Section 3.5 No Legal Bar; No Default.
The execution, delivery and performance of the Credit Documents, the
borrowings thereunder and the use of the proceeds of the Loans will not
violate any Requirement of Law or any Contractual Obligation of the
Borrower or its Subsidiaries (except those as to which waivers or
consents have been obtained), 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 Requirement of Law or Contractual
Obligation other than the Liens arising under or contemplated in
connection with the Credit Documents. 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.
Section 3.6 No Material Litigation.
Except as set forth in Schedule 3.6, no litigation, investigation
or proceeding (including without limitation, any environmental
proceeding) of or before any arbitrator or Governmental Authority is
pending or, to the best knowledge of the Credit Parties, 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 the Credit
Documents or any Loan or any of the transactions contemplated hereby, or
(b) which, if adversely determined, could reasonably be expected to have
a Material Adverse Effect.
Section 3.7 Investment Company Act.
None of the Credit Parties is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
Section 3.8 Margin Regulations.
No part of the proceeds of any Loan hereunder will be used directly
or indirectly for any purpose which violates, or which would be
inconsistent with, the provisions of Regulation T, U or X of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. The Borrower and its Subsidiaries taken as a group
do not own "margin stock" except as identified in the financial
statements referred to in Section 3.1 and, following the application of
the proceeds of each Loan, the aggregate value of all "margin stock"
owned by the Borrower and its Subsidiaries taken as a group does not
exceed 25% of the value of their assets.
Section 3.9 ERISA.
Except as set forth in Schedule 3.9, 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, except to
the extent that any such occurrence or failure to comply would not
reasonably be expected to have a Material Adverse Effect. No termination
of a Single Employer Plan has occurred resulting in any liability that
has remained underfunded, and no Lien in favor of the PBGC or a Plan has
arisen, during such five-year period which could reasonably be expected
to have a Material Adverse Effect. 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
by an amount which, as determined in accordance with GAAP, could
reasonably be expected to have a Material Adverse Effect. Neither the
Borrower nor any Commonly Controlled Entity is currently subject to any
liability for a complete or partial withdrawal from a Multiemployer Plan
which could reasonably be expected to have a Material Adverse Effect.
Section 3.10 Purpose of Loans.
The proceeds of the Loans hereunder shall be used solely by the
Borrower to (a) finance the cash portion of the Penske Acquisitions, (b)
refinance existing Indebtedness of the Borrower and Penske (collectively,
the "Existing Facilities") and to pay certain fees and expenses related
thereto, and (c) provide for working capital and other general corporate
purposes of the Credit Parties, including track development, Permitted
Investments and Permitted Acquisitions. The Letters of Credit shall be
used only for transactions entered into by the Borrower for general
corporate purposes.
Section 3.11 Subsidiaries.
Set forth on Schedule 3.11 is a complete and accurate list of all
Subsidiaries of the Borrower. Information on the attached Schedule
includes state of incorporation, the number and percentage of shares of
each class of Capital Stock or other equity interests outstanding, and
the number and effect, if exercised, of all outstanding options,
warrants, rights of conversion or purchase and similar rights.
Section 3.12 Ownership.
Each of the Borrower and its Subsidiaries is the owner of, and has
good and marketable title to, all of its respective assets necessary to
operate its business in the ordinary course, except as may be permitted
pursuant Section 6.13 hereof, and none of such assets is subject to any
Lien other than Permitted Liens.
Section 3.13 Indebtedness.
Except as otherwise permitted under Section 6.1, the Borrower and
its Subsidiaries have no Indebtedness.
Section 3.14 Taxes.
Each of the Borrower and its Subsidiaries has filed, or caused to
be filed, all material tax returns (federal, state, local and foreign)
required to be filed and paid (a) all amounts of taxes shown thereon to
be due (including interest and penalties) and (b) all other taxes, fees,
assessments and other governmental charges (including mortgage recording
taxes, documentary stamp taxes and intangibles taxes) owing by it, except
for such taxes (i) which are not yet delinquent, (ii) that are being
contested in good faith and by proper proceedings or (iii) which are not
material, and against which adequate reserves are being maintained in
accordance with GAAP. Neither the Borrower nor any of its Subsidiaries
is aware as of the Closing Date of any proposed tax assessments against
it or any of its Subsidiaries which could reasonably be expected to have
a Material Adverse Effect. Except as set forth on Schedule 3.14, there
are no outstanding agreements or waivers extending the statutory period
of limitation applicable to any tax return required to be filed with
respect to any of the Credit Parties.
Section 3.15 Investments.
All Investments of each of the Borrower and its Subsidiaries are
Permitted Investments.
Section 3.16 No Burdensome Restrictions.
None of the Borrower or any of its Subsidiaries is a party to any
agreement or instrument or subject to any other obligation or any charter
or corporate restriction or any provision of any applicable law, rule or
regulation which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
Section 3.17 Brokers' Fees.
None of the Borrower or any of its Subsidiaries has any obligation
to any Person in respect of any finder's, broker's, investment banking
or other similar fee in connection with any of the transactions
contemplated under the Credit Documents other than the closing and other
fees payable pursuant to this Credit Agreement and the Penske
Acquisitions.
Section 3.18 Labor Matters.
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of the Borrower or any of its Subsidiaries as of
the Closing Date, other than as set forth in Schedule 3.18 hereto, and
none of the Borrower or any of its Subsidiaries (a) has suffered any
strikes, walkouts, work stoppages or other material labor difficulty
within the last five years, other than as set forth in Schedule 3.18
hereto or (b) has knowledge of any potential or pending strike, walkout
or work stoppage.
Section 3.19 Accuracy and Completeness of Information.
All factual information heretofore, contemporaneously or hereafter
furnished by or on behalf of the Borrower or any of its Subsidiaries to
the Administrative Agent or any Lender for purposes of or in connection
with this Credit Agreement or any other Credit Document, or any
transaction contemplated hereby or thereby, is or will be, at the time
it is provided, true and accurate in all material respects and not
incomplete by omitting to state any material fact necessary to make such
information not misleading. There is no fact now known to the Borrower
or any of its Subsidiaries which has, or could reasonably be expected to
have, a Material Adverse Effect which fact has not been set forth herein,
in the financial statements of the Borrower and its Subsidiaries
furnished to the Administrative Agent and/or the Lenders, or in any
certificate, opinion or other written statement made or furnished by the
Borrower to the Administrative Agent and/or the Lenders.
Section 3.20 Year 2000 Issue.
Any reprogramming and related testing required to permit the proper
functioning of the Credit Parties' material computer systems in and
following the year 2000 will be completed in all material respects prior
to December 1, 1999 (that is, the Credit Parties will be "Year 2000
Compliant"), and the cost to the Credit Parties of such reprogramming and
testing will not result in a Default or Event of Default or a Material
Adverse Effect. Except for such reprogramming referred to in the
preceding sentence as may be necessary, the computer and management
information systems of the Credit Parties are and, with ordinary course
upgrading and maintenance, will continue for the term of this Credit
Agreement to be, adequate for the conduct of its business as reasonably
determined by the Borrower.
Section 3.21 Possession of Franchises and Licenses.
Each of the Borrower and its Subsidiaries possesses all material
franchises, certificates, licenses, permits and other authorizations
from Governmental Authorities, free from material restrictions, that
are necessary in any material respect for the ownership, maintenance
or operation of its properties and the conduct of its business as
presently conducted, and each of the Borrower and its Subsidiaries is
not in material violation of any thereof.
Section 3.22 Claims and Offsets.
There is no defense, setoff or counterclaim against payment of
principal of or interest under the Notes or against any other amounts
due or that may become due under the Credit Documents. To the extent
permitted by applicable law, each of the Credit Parties hereby forever
waives, releases and discharges all defenses, setoffs, counterclaims
or claims of any nature, if any, whether known or unknown, held by
such Credit Party against any of the Lenders, any of their Affiliates,
any of their officers, directors, shareholders, agents, attorneys and
employees, and their respective successors, assigns, heirs and legal
representatives.
Section 3.23 Intent and Effect of Transactions.
The transactions contemplated by this Credit Agreement and the other
Credit Documents:
(a) Are not made or incurred with the intent to hinder, delay or
defraud any Person to whom any of the Credit Parties has been, is now or
may hereafter become indebted;
(b) Do not render any of the Credit Parties insolvent, nor are any
of the Credit Parties insolvent at the time the transactions provided for
herein and the other Credit Documents are entered into;
(c) Do not leave any of the Credit Parties with unreasonably small
capital with which to engage in its business, or in any business or
transaction in which it intends to engage; and
(d) Are not entered into with the intent to incur, or with the
belief that any of the Credit Parties would incur, debts that would be
beyond its ability to pay as such debts mature.
Section 3.24 Senior Debt Status.
The Credit Party Obligations constitute "senior indebtedness" for
purposes of the Senior Note Indenture.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions to Closing Date and Initial Revolving
Loans.
This Credit Agreement shall become effective upon, and the
obligation of each Lender to make the initial Revolving Loans on the
Closing Date is subject to, the satisfaction of the following conditions
precedent:
(a) Execution of Credit Agreement. The Administrative Agent
shall have received (i) counterparts of this Credit Agreement,
executed by a duly authorized officer of each party hereto and (ii)
for the account of each Lender, Revolving Notes and for the account
of the Swingline Lender, a Swingline Note, executed by a duly
authorized officer of the Borrower.
(b) Authority Documents. The Administrative Agent shall have
received the following:
(i) Articles of Incorporation. Copies of the
articles of incorporation or other charter documents, as applicable,
of each Credit Party certified to be true and complete as of a
recent date by the appropriate governmental authority of the
state of its incorporation.
(ii) Resolutions. Copies of resolutions of the board
of directors of each Credit Party approving and adopting the
Credit Documents, the transactions contemplated therein and
authorizing execution and delivery thereof, certified by an
officer of such Credit Party as of the Closing Date to be true
and correct and in force and effect as of such date.
(iii) Bylaws. A copy of the bylaws of each
Credit Party certified by an officer of such Credit Party as of the
Closing Date to be true and correct and in force and effect as
of such date.
(iv) Good Standing. Copies of (A) certificates of
good standing, existence or its equivalent with respect to each
Credit Party certified as of a recent date by the appropriate
governmental authorities of the state of incorporation and
each other state in which the failure to so qualify and be in
good standing could reasonably be expected to have a Material
Adverse Effect on the business or operations of the Borrower
and its Subsidiaries in such state and (B) a certificate
indicating payment of all corporate franchise taxes certified
as of a recent date by the appropriate governmental taxing
authorities.
(v) Incumbency. An incumbency certificate of each
Credit Party certified by a secretary or assistant secretary
to be true and correct as of the Closing Date.
(c) Legal Opinions of Counsel. The Administrative Agent
shall have received an opinion of Glenn R. Padgett, assistant
general counsel for the Credit Parties, dated the Closing Date and
addressed to the Administrative Agent and the Lenders, in form and
substance acceptable to the Administrative Agent.
(d) Fees and Expenses. The Administrative Agent shall have
received all fees and expenses owed by the Borrower to the
Administrative Agent and its legal counsel.
(e) Litigation. There shall not exist any pending litigation
or investigation affecting or relating to the Borrower or any of its
Subsidiaries or this Credit Agreement and the other Credit Documents
that in the reasonable judgment of the Administrative Agent could
reasonably be expected to have a Material Adverse Effect that has
not been settled, dismissed, vacated, discharged or terminated prior
to the Closing Date.
(f) Corporate Structure. The corporate capital and ownership
structure of the Borrower and its Subsidiaries shall be as described
in Schedule 3.11.
(g) Government Consent. The Administrative Agent shall have
received evidence that all governmental, shareholder and material
third party consents and approvals (including Hart-Scott-Rodino
clearance) necessary in connection with the financings and other
transactions contemplated hereby and in connection with the Penske
Acquisitions have been obtained and all applicable waiting periods
have expired without any action being taken by any authority that
could restrain, prevent or impose any material adverse conditions
on such transactions or Acquisitions or that could seek or threaten
any of the foregoing.
(h) Compliance with Laws. The financings and other
transactions contemplated hereby shall be in material compliance
with all material applicable laws and regulations (including all
applicable securities and banking laws, rules and regulations).
(i) Bankruptcy. There shall be no bankruptcy or insolvency
proceedings with respect to the Borrower or any of its Subsidiaries.
(j) Financial Statements. The Administrative Agent shall
have received copies of the financial statements referred to in
Section 3.1 hereof, each in form and substance reasonably
satisfactory to it.
(k) Pro Forma Balance Sheet and EBITDA Calculation. The
Administrative Agent shall have received a pro form balance sheet
as of the Closing Date and a pro forma EBITDA calculation of the
Borrower and its Subsidiaries for the period commencing on July 1,
1998 through June 30, 1999 after giving effect to the Penske
Acquisitions
(l) Material Contracts. The Administrative Agent shall have
received and reviewed all material contracts (including, without
limitation, the Acquisition Documents) and agreements of the
Borrower and its Subsidiaries as reported to the Securities Exchange
Commission, the terms and conditions of which shall be satisfactory
to the Administrative Agent in its reasonable discretion.
(m) Year 2000 Evidence. The Administrative Agent shall have
received evidence that the representation set forth in Section 3.20
is true and correct in all material respects.
(n) No Material Adverse Change. There shall not have
occurred any material adverse change in the business, properties,
prospects, operations, condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole or Penske and its
Subsidiaries taken as whole.
(o) Additional Matters. All other documents and legal
matters in connection with the transactions contemplated by this
Credit Agreement and the Penske Acquisitions shall be reasonably
satisfactory in form and substance to the Administrative Agent and
its counsel.
Section 4.2 Conditions to Initial Revolving Loans.
The obligation of each Lender to make the initial Revolving Loans
on the Closing Date is subject to, the satisfaction of the following
additional conditions precedent:
(a) Repayment of Existing Indebtedness. All existing
Indebtedness for borrowed money of the Borrower and its Subsidiaries
(including the Existing Facilities, but excluding the existing
Indebtedness listed on Schedule 6.1(b)) shall have been repaid in
full and terminated and the Administrative Agent shall have received
such evidence of such repayment and termination as the
Administrative Agent may reasonably require.
(b) Penske Acquisitions.
(i) The Penske Acquisitions shall have been
consummated on terms consistent with the Acquisition Documents, as
reviewed by the Lenders.
(ii) The Administrative Agent shall have received
evidence that the Borrower shall have had a sufficient number
of shares of PSH and Penske tendered to it to obtain voting
control of PSH and Penske.
(iii) The Administrative Agent shall have received complete
executed copies of the Acquisition Documents (and all schedules and
exhibits thereto), certified to be true and correct copies, and to
not have been amended prior to the date of such certification except
as attached to such certificate, by a Responsible Officer of the
Borrower.
(c) Satisfaction of Section 4.1 Conditions. The
conditions set forth in Section 4.1 shall have been satisfied.
Section 4.3 Conditions to All Extensions of Credit.
The obligation of each Lender to make any Extension of Credit
hereunder is subject to the satisfaction of the following conditions
precedent on the date of making such Extension of Credit:
(a) Representations and Warranties. The representations and
warranties made by the Credit Parties herein or which are contained
in any certificate furnished at any time under or in connection
herewith shall be true and correct in all material respects on and
as of the date of such Extension of Credit as if made on and as of
such date.
(b) No Default or Event of Default. No Event of Default, nor
any Default that can be cured with the payment of money, shall have
occurred and be continuing on such date or after giving effect to
the Extension of Credit to be made on such date unless such Default
or Event of Default shall have been waived in accordance with this
Credit Agreement.
(c) Compliance with Commitments. Immediately after giving
effect to the making of any such Extension of Credit (and the
application of the proceeds thereof), (i) the sum of the aggregate
principal amount of outstanding Revolving Loans plus Swingline Loans
plus LOC Obligations shall not exceed the Revolving Committed
Amount, (ii) the LOC Obligations shall not exceed the LOC Committed
Amount and (iii) the Swingline Loans shall not exceed the Swingline
Commitment.
(d) Additional Conditions to Revolving Loans. If such Loan
is made pursuant to Section 2.1, all conditions set forth in such
Section shall have been satisfied.
(e) Additional Conditions to Swingline Loan. If such Loan
is made pursuant to Section 2.2, all conditions set forth in such
Section shall have been satisfied.
(f) Additional Conditions to Letters of Credit. If such
Extension of Credit is made pursuant to Section 2.3, all conditions
set fort in such Section shall have been satisfied.
Each request for an Extension of Credit and each acceptance by the
Borrower of any such Extension of Credit shall be deemed to constitute
a representation and warranty by the Borrower as of the date of such
Extension of Credit that the applicable conditions in paragraphs (a)
through (f) of this Section have been satisfied.
ARTICLE V
AFFIRMATIVE COVENANTS
The Credit Parties hereby covenant and agree that on the Closing
Date, and thereafter for so long as this Credit Agreement is in effect
and until the Commitments have terminated, no Note remains outstanding
and unpaid and the Credit Party Obligations, together with interest,
Commitment Fees and all other amounts owing to the Administrative Agent
or any Lender hereunder, are paid in full, the Credit Parties shall, and
shall cause each of their Subsidiaries (other than in the case of
Sections 5.1 or 5.2 hereof), to:
Section 5.1 Financial Statements.
Furnish to the Administrative Agent and each of the Lenders:
(a) Annual Financials. As soon as available, but in any
event within ninety (90) days after the end of each fiscal year of
the Borrower, the Borrower shall furnish a copy of the consolidated
financial statements of the Borrower prepared in accordance with
GAAP, consistently applied, together with an unqualified letter of
an independent certified public accounting firm selected by the
Borrower and acceptable to the Required Lenders and such other
information as may be reasonably requested by the Required Lenders.
Such statements shall include a balance sheet, a statement of income
and expenses, a statement of cash flow and such other and further
reports and schedules as may reasonably be requested by the Required
Lenders, including without limitation verification of the Borrower's
compliance with the financial covenants set forth in Section 5.8.
Such statements shall be certified as to their correctness by a
Responsible Officer of Borrower.
(b) Quarterly Financials. As soon as available, but in
any event, within forty-five (45) days after the end of each
fiscal quarter of the Borrower (other than the last fiscal
quarter of each fiscal year), the Borrower shall furnish to each
Lender a copy of the unaudited management-prepared quarterly
consolidated financial statements of the Borrower, prepared in
accordance with GAAP, consistently applied. Such statements
shall include a balance sheet, a statement of income and
expenses, a statement of cash flow and such other and further
reports and schedules as may reasonably be requested by the
Required Lenders, and verification of the Borrower's compliance
with the financial covenants set forth in Section 5.8. Such
statements shall also be certified as to their correctness by a
Responsible Officer of the Borrower.
Section 5.2 Certificates; Other Information.
Furnish to the Administrative Agent and each of the Lenders:
(a) concurrently with the delivery of the financial
statements referred to in Section 5.1(a) above, 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 violation of the financial
covenants contained in Section 5.8, except as specified in such
certificate;
(b) concurrently with the delivery of the financial
statements referred to in Sections 5.1(a) and 5.1(b) above, a
certificate of a Responsible Officer stating that, to the best of
such Responsible Officer's knowledge, each of the Credit Parties
during such period observed or performed in all material respects
all of its covenants and other agreements, and satisfied in all
material respects every condition, contained in this Credit
Agreement to be observed, performed or satisfied by it, that no
financial statement accompanying such certificate contains any
untrue statement or omits to state a material fact necessary to make
the facts contained therein not misleading and that such Responsible
Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate and such certificate shall
include the calculations in reasonable detail required to indicate
compliance with Section 5.8 as of the last day of such period;
(c) within ten (10) days after the same are sent, filed or
distributed, copies of (i) all reports (other than those otherwise
provided pursuant to Section 5.1 and those which are of a
promotional nature) and other financial information which the
Borrower sends to its shareholders, (ii) copies of all financial
statements and non-confidential reports which the Borrower may make
to or file with the SEC or any successor or analogous Governmental
Authority and (iii) all official press releases distributed by the
investor relations department of the Borrower that may be of general
interest to the investment community and other public announcements
of financial results (such as earnings, etc.) made by the Borrower;
provided, however, unless a Default or an Event of Default shall
have occurred and be continuing, the Borrower shall not be required
to furnish any tax return information to the Administrative Agent
and the Lenders.
(d) within ninety (90) days after the end of each fiscal year
of the Borrower, a certificate containing information regarding the
amount of all Asset Dispositions and Investments made pursuant to
subsections (f) and (g) of the definition of Permitted Investments
unless such information has previously been disclosed in the
financial statements delivered pursuant to Section 5.1 or 5.2;
(e) promptly upon receipt thereof, a copy of any other report
or "management letter" submitted by independent accountants to the
Borrower or any of its Subsidiaries in connection with any annual,
interim or special audit of the books of such Person;
(f) after the occurrence and during the continuation of an
Event of Default, access to the unaudited consolidating financial
statements of the Borrower and its Subsidiaries at the offices of
the Borrower; and
(g) promptly, such additional financial and other information
as the Administrative Agent, on behalf of any Lender, may from time
to time reasonably request.
Section 5.3 Payment of Obligations.
Pay, discharge or otherwise satisfy at or before maturity or before
they become delinquent, as the case may be, in accordance with industry
practice (subject, where applicable, to specified grace periods) all its
material obligations of whatever nature (including, without limitation,
taxes assessments and governmental charges or levies) and any additional
costs that are imposed as a result of any failure to so pay, discharge
or otherwise satisfy such obligations, except when the amount or validity
of such obligations and costs is currently being contested in good faith
by appropriate proceedings and reserves, if applicable, in conformity
with GAAP with respect thereto have been provided on the books of the
Borrower or its Subsidiaries, as the case may be.
Section 5.4 Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as now
conducted by it on the Closing Date and preserve, renew and keep in full
force and effect its corporate, partnership or limited liability company
existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct
of its business; comply with all Contractual Obligations and Requirements
of Law applicable to it except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
Section 5.5 Maintenance of Property; Insurance.
(a) Keep all material property useful and necessary in its
business in good working order and condition (ordinary wear and tear
and obsolescence excepted);
(b) Maintain with financially sound and reputable insurance
companies insurance on all its material property in at least such
amounts and against at least such risks as are usually insured
against in the same general area by companies engaged in the same
or a similar business (including, without limitation, hazard and
other relevant coverage); and furnish to the Administrative Agent,
upon written request, full information as to the insurance carried;
provided, however, that the Borrower and its Subsidiaries may
maintain self insurance plans to the extent companies of similar
size and in similar businesses do so.
Section 5.6 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 businesses
and activities; and except as limited by the Credit Agreement or any
Confidentiality Agreement executed by any Lender, permit, during regular
business hours and upon reasonable notice by the Administrative Agent or
any Lender, the Administrative Agent or any Lender to visit and inspect
any of its properties and examine and make abstracts from any of its
books and records (other than materials protected by the attorney-client
privilege and materials which the Borrower may not disclose without
violation of a confidentiality obligation binding upon it) at any
reasonable time 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.
Section 5.7 Notices.
Give prompt notice in writing to the Administrative Agent (which
shall promptly transmit such notice to each Lender) of:
(a) the occurrence of any Default or Event of Default;
(b) the occurrence of any default or event of default under
any Contractual Obligation of the Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material
Adverse Effect;
(c) any litigation, or any investigation or proceeding known
to the Borrower or any of its Subsidiaries, affecting the Borrower
or any of its Subsidiaries which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect;
(d) (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 (other than a Permitted Lien) 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, any Credit Party, 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 other development or event which could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement
of a Responsible Officer setting forth details of the occurrence referred
to therein and stating what action the Credit Parties propose to take
with respect thereto. In the case of any notice of a Default or Event
of Default, the Borrower shall specify that such notice is a Default or
Event of Default notice on the face thereof.
Section 5.8 Financial Covenants.
Commencing on the day immediately following the Closing Date, the
Borrower shall, and shall cause each of its Subsidiaries to, comply with
the following financial covenants:
(a) Leverage Ratio. The Leverage Ratio, as of the last day
of each fiscal quarter of the Borrower, shall be less than or equal
to 3.25 to 1.0.
(b) Interest Coverage Ratio. The Interest Coverage Ratio,
as of the last day of each fiscal quarter of the Borrower, shall be
greater than or equal to 3.0 to 1.0.
Section 5.9 Additional Subsidiary Guarantors.
The Credit Parties will cause each of their Domestic
Subsidiaries, whether newly formed, after acquired or otherwise
existing (except as to certain Subsidiaries existing as of the date
hereof which are expressly prohibited by a Contractual Obligation from
guaranteeing the Credit Party Obligations and except for non-wholly
owned Subsidiaries of the Borrower which are designated by the
Borrower from time to time), to promptly become a Guarantor hereunder
by way of execution of a Joinder Agreement.
Section 5.10 Compliance with Law.
The Borrower will, and will cause each of its Subsidiaries to,
comply with all laws, rules, regulations and orders, and all
applicable restrictions imposed by all Governmental Authorities Law
(including without limitation, Environmental Laws), applicable to it
and its Property if noncompliance with any such law, rule, regulation,
order or restriction could reasonably be expected to have a Material
Adverse Effect.
Section 5.11 Year 2000 Compliance.
The Borrower will promptly notify the Administrative Agent in the
event that it discovers or determines that any computer application
(including those of its suppliers, vendors and customers) that is
material to its or any of its Subsidiaries' business and operations
(taken as a whole) will not be Year 2000 Compliant, except to the extent
that such failure could not reasonably be expected to have a Material
Adverse Effect.
Section 5.12 Penske Acquisitions.
As soon as practicable, but in any event within ten (10) Business
Days after the Closing Date, the Borrower shall have caused each of
the wholly-owned entities acquired in connection with the Penske
Acquisitions to have become a Guarantor hereunder by way of execution
of a Joinder Agreement and the Borrower shall have delivered all other
documentation required hereunder and as reasonably requested by the
Administrative Agent relating thereto.
ARTICLE VI
NEGATIVE COVENANTS
Each of the Credit Parties hereby covenants and agrees that on the
Closing Date, and thereafter for so long as this Credit Agreement is in
effect and until the Commitments have terminated, no Note remains
outstanding and unpaid and the Credit Party Obligations, together with
interest, Commitment Fees and all other amounts owing to the
Administrative Agent or any Lender hereunder, are paid in full, unless
the Required Lenders shall otherwise consent in writing, such Credit
Party will not, nor will it permit any of its Subsidiaries to, either
directly or indirectly:
Section 6.1 Indebtedness.
Incur, create, assume or permit to exist any other indebtedness or
liability on account of borrowed money, represented by any notes, bonds,
debentures or similar obligations, or on account of the deferred purchase
price of any property, or any other deposits, advance or progress
payments under contracts, except:
(a) Indebtedness arising or existing under this Credit
Agreement and the other Credit Documents;
(b) Indebtedness of the Borrower and its Subsidiaries
existing as of the Closing Date (and set forth in Schedule 6.1(b)
hereto) and renewals, refinancings and extensions thereof in a
principal amount not in excess of that outstanding as of the date
of such renewal, refinancing or extension;
(c) Indebtedness and obligations owing under Hedging
Agreements relating to the Loans hereunder and other Hedging
Agreements entered into in order to manage existing or anticipated
interest rate, exchange rate or commodity price risks and not for
speculative purposes;
(d) Indebtedness of the Borrower and its Subsidiaries
incurred after the Closing Date consisting of Capital Leases or
Indebtedness incurred to provide all or a portion of the purchase
price or cost of construction of an asset provided that (i) such
Indebtedness when incurred shall not exceed the purchase price or
cost of construction of such asset, (ii) no such Indebtedness shall
be refinanced for a principal amount in excess of the principal
balance outstanding thereon at the time of such refinancing and
(iii) with respect to any such Indebtedness exceeding five percent
(5%) of Total Shareholders' Equity (as of the date of the most
recent financial statements delivered to the Administrative Agent
and the Lenders pursuant to Section 5.1(a) or 5.1(b)), the Borrower
shall have delivered to the Administrative Agent a Pro Forma
Compliance Certificate demonstrating that, upon giving effect to the
incurrence of such Indebtedness on a Pro Forma Basis, the Leverage
Ratio shall be less than or equal to 3.25 to 1.0;
(e) Indebtedness evidenced by the Senior Notes;
(f) Indebtedness of the Borrower the repayment of which is
subordinated to the payment of the Indebtedness arising or existing
under this Credit Agreement and the other Credit Documents provided
the terms of such subordination and all other terms and provisions
relating to such Indebtedness (including, without limitation, the
terms relating to the interest rate, maturity, amortization and
covenants of such Indebtedness) are reasonably satisfactory to the
Required Lenders; and
(g) other unsecured Indebtedness of the Borrower; provided
that such Indebtedness is not senior in right of payment to the
payment of the Indebtedness arising or existing under this Credit
Agreement and the other Credit Documents and such Indebtedness does
not exceed ten percent (10%) of the Total Shareholders' Equity (as
shown on its most recent consolidated financial statements filed
with the SEC).
Section 6.2 Liens.
Contract, create, incur, assume or permit to exist any Lien with
respect to any of their respective property or assets of any kind
(whether real or personal, tangible or intangible), whether now owned or
hereafter acquired, except for Permitted Liens.
Section 6.3 Nature of Business.
Alter the character of their business in any material respect from
that conducted as of the Closing Date.
Section 6.4 Consolidation, Merger, Sale or Purchase of
Assets, etc.
(a) Dissolve, liquidate or wind up their affairs or enter
into any transaction of merger or consolidation; provided, however
that (i) the Borrower may merge or consolidate with any Subsidiary
so long as the Borrower shall be the continuing or surviving
corporation, (ii) any Domestic Subsidiary of the Borrower may be
merged with or into any other Domestic Subsidiary of the Borrower
(iii) the Borrower or any Subsidiary of the Borrower may merge with
any other Person in connection with a Permitted Acquisition if the
Borrower or such Subsidiary shall be the continuing or surviving
corporation.
(b) Make any Asset Dispositions (including, without
limitation, any Sale-Leaseback Transaction) other than (i) the sale
of inventory in the ordinary course of business for fair
consideration, (ii) the sale or disposition of machinery, equipment
and other assets no longer used or useful in the conduct of
Borrower's or any such Subsidiary's business, or (iii) such other
Asset Dispositions (excluding for purposes hereof, any sale or other
disposition of Capital Stock of a Credit Party), provided that (A)
the consideration for such assets disposed of represents the fair
market value of such assets at the time of such Asset Disposition;
and (B) the cumulative net book value of all Asset Dispositions by
the Borrower and any of its Subsidiaries during any single fiscal
year shall not exceed 15% of the Total Shareholders' Equity
determined as of the end of the most recently completed fiscal year;
(c) Acquire all or substantially all of the assets or
business of any Person except in connection with a Permitted
Acquisition.
Section 6.5 Advances, Investments and Loans.
Lend money or extend credit or make advances to any Person, or
purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, or otherwise make an
Investment in, any Person except for Permitted Investments; provided that
(a) immediately before and after giving effect to any Permitted
Investment, no Default or Event of Default shall exist and (b) with
respect to any Permitted Investment exceeding five percent (5%) of Total
Shareholders' Equity (as of the date of the most recent financial
statements delivered to the Administrative Agent and the Lenders pursuant
to Section 5.1(a) or 5.1(b)), the Borrower shall have delivered to the
Administrative Agent a Pro Forma Compliance Certificate demonstrating
that, upon giving effect to such Permitted Investment on a Pro Forma
Basis, the Borrower will be in compliance with all of the financial
covenants set forth in Section 5.8.
Section 6.6 Issuance of Subsidiary Equity Securities.
Issue, sell, transfer, pledge or otherwise dispose of any shares
of Capital Stock or other equity or ownership interests ("Equity
Interests") in any Subsidiary, except (a) in connection with the sale
of all of the Capital Stock of a Subsidiary pursuant to a transaction
permitted by Section 6.4(b), (b) the issuance, sale or transfer of
Equity Interests by a Subsidiary (the "Issuing Subsidiary") to the
Borrower or a Subsidiary of the Borrower that owns such Issuing
Subsidiary and (c) as needed to qualify directors under applicable
law.
Section 6.7 Transactions with Affiliates; Modification of
Documentation..
(a) Except as permitted in subsection (e) of the definition
of Permitted Investments, enter into or permit to exist any transaction
or series of transactions, whether or not in the ordinary course of
business, with any officer, director, shareholder, Subsidiary or
Affiliate other than (i) customary fees and expenses paid to directors,
(ii) where such transactions are on terms and conditions substantially
as favorable as would be obtainable in a comparable arm's-length
transaction with a Person other than an officer, director, shareholder,
Subsidiary or Affiliate, (iii) the Homestead Keepwell Agreement and the
Chicago Agreements and (iv) provided that no Default or Event of Default
shall result therefrom, transactions involving payments to the France
family individually (or family-related entities controlled by France
family members) or to NASCAR in the ordinary course of business in
accordance with past practices of the Credit Parties.
(b) Permit the Borrower or any Subsidiary to, if any Default
or Event of Default has occurred and is continuing or would be
directly or indirectly caused as a result thereof, after the
issuance thereof, amend or modify (or permit the amendment or
modification of) any of the terms of any Indebtedness if such
amendment or modification would add or change any terms in a manner
adverse to the issuer of such Indebtedness, or shorten the final
maturity or average life to maturity or require any payment to be
made sooner than originally scheduled or increase the interest rate
applicable thereto or change any subordination provision thereof
Section 6.8 Fiscal Year; Accounting Method; Organizational
Documents.
Unless required by applicable law, change its fiscal year or method
of accounting or amend, modify or change its articles of incorporation
in any manner adverse to the Lenders (or corporate charter or other
similar organizational document) or bylaws (or other similar document)
without the prior written consent of the Required Lenders.
Section 6.9 Limitation on Restricted Actions.
Except as set forth on Schedule 6.9, create or permit to exist
any restriction of any kind on the ability of any Subsidiary to (a)
pay dividends or make any other distributions to the Borrower or any
of its Subsidiaries, (b) pay Indebtedness owed to the Borrower or any
of its Subsidiaries, (c) make loans or advances to the Borrower or any
of its Subsidiaries or (d) transfer any of its properties or assets to
the Borrower or any of its Subsidiaries.
Section 6.10 Extraordinary Dividends and Other Payments.
(a) Directly or indirectly purchase, redeem or otherwise retire
any Capital Stock in advance of a regularly scheduled date for such
retirement, or apply or set apart any of its assets therefor, other
than repurchases, redemptions or retirements in connection with the
Borrower's long-term incentive compensation plans approved by the
Borrower's shareholders and on file with the SEC, (b) make any other
extraordinary distribution (by reduction of capital or otherwise) in
respect of any such Capital Stock (other than ordinary dividends and
transfers expressly contemplated herein), or agree to do any of the
foregoing, (c) open market repurchases of Capital Stock of the
Borrower in an aggregate amount during the term of this Agreement not
to exceed 10% of Total Shareholders' Equity (determined as of the date
of the most recent financial statements delivered pursuant to Section
5.1(a) and 5.1(b)) or (d) make any loan or other payment (other than
(i) salary and other payments expressly permitted herein, (ii)
payments of Indebtedness permitted by Section 6.1, (iii) payments
owing under the Homestead Keepwell Agreement and the Chicago
Agreements and (iv) payments owing to any Affiliate).
Section 6.11 Major Motorsports Events.
Voluntarily change the scope and magnitude of major motorsports
events conducted at facilities controlled by the Borrower or any of its
Subsidiaries except to the extent that any such change could not
reasonably be expected to have a Material Adverse Effect.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) The Borrower shall fail to pay any principal on any Note
when due in accordance with the terms thereof or hereof; or the
Borrower shall fail to reimburse the Issuing Lender for any LOC
Obligations within two Business Days after such LOC Obligations
become due in accordance with the terms hereof; or the Borrower
shall fail to pay any interest on any Note or any fee or other
amount payable hereunder when due in accordance with the terms
thereof or hereof; or any Guarantor shall fail to pay on the
Guaranty in respect of any of the foregoing or in respect of any
other Guaranty Obligations hereunder; or
(b) Any representation or warranty made or deemed made herein
or in any of the other Credit Documents or which is contained in any
certificate, document or financial or other statement furnished at
any time under or in connection with this Credit Agreement shall
prove to have been incorrect, false or misleading in any material
respect on or as of the date made or deemed made or reaffirmed; or
(c) (i) Any Credit Party shall fail to perform, comply with
or observe any term, covenant or agreement applicable to it
contained in Section 5.7(a), Section 5.8 or Article VI hereof; or
(ii) any Credit Party shall fail to comply with any other covenant
contained in this Credit Agreement or the other Credit Documents or
any other agreement, document or instrument among any Credit Party,
the Administrative Agent and the Lenders or executed by any Credit
Party in favor of the Administrative Agent or the Lenders (other
than as described in Sections 7.1(a) or 7.1(c)(i) above), and in the
event such breach or failure to comply is capable of cure, is not
cured within thirty (30) days of its occurrence; or
(d) The occurrence of an event of default under the Homestead
Keepwell Agreement or any Chicago Agreement; or
(e) The Borrower or any of its Subsidiaries shall (i) default
in any payment of principal of or interest on any Indebtedness in
a principal amount outstanding of at least $5,000,000 in the
aggregate for the Borrower and any of its Subsidiaries beyond the
period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness was created;
or (ii) default in the observance or performance of any other
agreement or condition relating to any Indebtedness in a principal
amount outstanding of at least $5,000,000 in the aggregate for the
Borrower and its Subsidiaries 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
Indebtedness (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, such Indebtedness to become due prior to its
stated maturity; 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 Subsidiary shall make a
general assignment for the benefit of its creditors; or (ii) there
shall be commenced against the Borrower or any Subsidiary 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 Subsidiary 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 Subsidiary 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 Subsidiary 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) One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving in the aggregate
a liability (to the extent not paid when due or covered by
insurance) of $5,000,000 or more and all such judgments or decrees
shall not have been paid and satisfied, vacated, discharged, stayed
or bonded pending appeal within 30 days from the entry thereof; or
(h) (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 (other than a Permitted Lien) shall arise on
the assets of any Credit Party 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) any Credit Party 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, any
Multiemployer Plan or (vi) any other similar 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 have a
Material Adverse Effect; or
(i) (i) the France Family shall fail to own capital stock of
the Borrower which represents a majority of the voting power of the
Borrower or (ii) during any period of up to 24 consecutive months,
commencing after the Closing Date, individuals who at the beginning
of such 24 month period were directors of the Borrower (together
with any new director whose election by the Borrower's Board of
Directors or whose nomination for election by the Borrower's
shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the directors of the Borrower then in
office; or
(j) The Guaranty or any provision thereof shall cease to be
in full force and effect or any Guarantor or any Person acting by
or on behalf of any Guarantor shall deny or disaffirm any
Guarantor's obligations under the Guaranty; or
(k) Any other Credit Document shall fail to be in full force
and effect or to give the Administrative Agent and/or the Lenders
the rights, powers and privileges purported to be created thereby
(except as such documents may be terminated or no longer in force
and effect in accordance with the terms thereof, other than those
indemnities and provisions which by their terms shall survive); or
(l) There shall occur and be continuing any Event of Default
under and as defined in Senior Note Indenture or the Credit Party
Obligations shall cease to be classified as "senior indebtedness"
under the Senior Note Indenture.
Section 7.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, then, and in any such
event, (a) if such event is an Event of Default specified in Section
7.1(f) above, automatically the Commitments shall immediately terminate
and the Loans (with accrued interest thereon), and all other amounts
under the Credit Documents (including without limitation the maximum
amount of all contingent liabilities under Letters of Credit) 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 written consent of the Required Lenders, the Administrative
Agent may, or upon the written request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the written consent of the Required
Lenders, the Administrative Agent may, or upon the written request of the
Required Lenders, the Administrative Agent shall, by notice of default
to the Borrower, declare the Loans (with accrued interest thereon) and
all other amounts owing under this Credit Agreement and the Notes to be
due and payable forthwith and direct the Borrower to pay to the
Administrative Agent cash collateral as security for the LOC Obligations
for subsequent drawings under then outstanding Letters of Credit an
amount equal to the maximum amount of which may be drawn under Letters
of Credit then outstanding, whereupon the same shall immediately become
due and payable.
ARTICLE VIII
THE AGENT
Section 8.1 Appointment.
Each Lender hereby irrevocably designates and appoints First Union
National Bank as the Administrative Agent of such Lender under this
Credit Agreement, and each such Lender irrevocably authorizes First Union
National Bank, as the Administrative Agent for such Lender, to take such
action on its behalf under the provisions of this Credit Agreement and
to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Credit
Agreement, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Credit Agreement, the Administrative 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 Credit Agreement or otherwise exist against the
Administrative Agent.
Section 8.2 Delegation of Duties.
The Administrative Agent may execute any of its duties under this
Credit Agreement by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such
duties. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by
it with reasonable care. Without limiting the foregoing, the
Administrative Agent may appoint one of its affiliates as its agent to
perform the functions of the Administrative Agent hereunder relating to
the advancing of funds to the Borrower and distribution of funds to the
Lenders and to perform such other related functions of the Administrative
Agent hereunder as are reasonably incidental to such functions.
Section 8.3 Exculpatory Provisions.
Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (a) liable
for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Credit Agreement (except for its or such
Person's own gross negligence or willful misconduct) or (b) responsible
in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any of the Credit Parties or any
officer thereof contained in this Credit Agreement or in any certificate,
report, statement or other document referred to or provided for in, or
received by the Administrative Agent under or in connection with, this
Credit Agreement or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any of the Credit Documents or for any
failure of any of the Credit Parties to perform its obligations hereunder
or thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance
or performance by the Credit Parties of any of the agreements contained
in, or conditions of, this Credit Agreement, or to inspect the
properties, books or records of the Credit Parties.
Section 8.4 Reliance by Administrative Agent.
The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or
conversation believed by it in good faith 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 Credit Parties), independent accountants and
other experts selected by the Administrative Agent. The Administrative
Agent may deem and treat the payee of any Note as the owner thereof for
all purposes unless (a) a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent and
(b) the Administrative Agent shall have received the written agreement
of such assignee to be bound hereby as fully and to the same extent as
if such assignee were an original Lender party hereto, in each case in
form satisfactory to the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under
this Credit Agreement 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 Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting,
under any of the Credit Documents in accordance with a request of the
Required Lenders or all of the Lenders, as may be required under this
Credit Agreement, 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 Notes.
Section 8.5 Notice of Default.
The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder
unless the Administrative Agent has received notice from a Lender or a
Credit Party referring to this Credit Agreement, describing such Default
or Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give prompt notice thereof to the
Lenders. The Administrative Agent shall take such action with respect
to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided, however, that unless and until the
Administrative Agent shall have received such directions, the
Administrative 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 except to the extent that this Credit Agreement expressly
requires that such action be taken, or not taken, only with the consent
or upon the authorization of the Required Lenders, or all of the Lenders,
as the case may be.
Section 8.6 Non-Reliance on Administrative Agent and Other
Lenders.
Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-
in-fact or affiliates has made any representation or warranty to it and
that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Credit Parties, shall be deemed to
constitute any representation or warranty by the Administrative Agent to
any Lender. Each Lender represents to the Administrative Agent that it
has, independently and without reliance upon the Administrative 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 Credit Parties and made its own decision to make
its Loans hereunder and enter into this Credit Agreement. Each Lender
also represents that it will, independently and without reliance upon the
Administrative 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 Credit Agreement, 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
Credit Parties. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative
Agent hereunder, the Administrative 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 Credit Parties which may
come into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
Section 8.7 Indemnification.
The Lenders agree to indemnify the Administrative Agent in its
capacity hereunder (to the extent not reimbursed by the Credit Parties
and without limiting the obligation of the Credit Parties to do so),
ratably according to their respective Commitment Percentages in effect
on the date on which indemnification is sought under this Section, 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 Notes) be imposed
on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of any Credit Document 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
Administrative Agent under or in connection with any of the foregoing;
provided, however, 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 to the extent
resulting from the Agent's gross negligence or willful misconduct, as
determined by a court of competent jurisdiction. The agreements in this
Section 8.7 shall survive the termination of this Credit Agreement and
payment of the Notes and all other amounts payable hereunder.
Section 8.8 Administrative Agent in Its Individual Capacity.
The Administrative Agent and its affiliates may make loans to,
accept deposits from and generally engage in any kind of business with
the Credit Parties as though the Administrative Agent were not the
Administrative Agent hereunder. With respect to its Loans made or
renewed by it and any Note issued to it, the Administrative Agent shall
have the same rights and powers under this Credit Agreement as any Lender
and may exercise the same as though it were not the Administrative Agent,
and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.
Section 8.9 Successor Administrative Agent.
The Administrative Agent may resign as Administrative Agent upon 30
days' prior notice to the Borrower and the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this
Credit Agreement and the Notes, 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 Administrative
Agent, and the term "Administrative Agent" shall mean such successor
agent effective upon such appointment and approval, and the former
Agent's rights, powers and duties as Administrative Agent shall be
terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Credit
Agreement or any holders of the Notes. After any retiring Agent's
resignation as Administrative Agent, the provisions of this Section 8.9
shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Credit Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendments and Waivers.
Neither this Credit Agreement, nor any of the Notes, nor any of the
other Credit Documents, nor any terms hereof or thereof may be amended,
supplemented, waived or modified except in accordance with the provisions
of this Section nor may be released except as specifically provided
herein or in accordance with the provisions of this Section 9.1. The
Required Lenders may, or, with the written consent of the Required
Lenders, the Administrative Agent may, from time to time, (a) enter into
with the Credit Parties written amendments, supplements or modifications
hereto and to the other Credit Documents for the purpose of adding any
provisions to this Credit Agreement or the other Credit Documents or
changing in any manner the rights of the Lenders or of the Credit Parties
hereunder or thereunder or (b) waive, on such terms and conditions as the
Required Lenders may specify in such instrument, any of the requirements
of this Credit Agreement or the other Credit Documents or any Default or
Event of Default and its consequences; provided, however, that no such
waiver and no such amendment, waiver, supplement, modification or release
shall:
(i) reduce the amount or extend the scheduled date of
maturity of any Loan or Note or any installment thereon, or
reduce the stated rate of any interest or fee payable
hereunder (other than interest at the increased post-default
rate) 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 written consent
of each Lender directly affected thereby, or
(ii) amend, modify or waive any provision of this
Section 9.1 or reduce the percentage specified in the
definition of Required Lenders or release all or substantially
all of the Guarantors from their obligations hereunder,
without the written consent of all the Lenders, or
(iii) amend, modify or waive any provision of
Article VIII without the written consent of the then
Administrative Agent, or
(iv) amend, modify or waive any provision of the Credit
Documents requiring consent, approval or request of the
Required Lenders or all Lenders, without the written consent
of the Required Lenders or all of the Lenders as the case may
be and, provided, further, that no amendment, waiver or
consent affecting the rights or duties of the Administrative
Agent or the Issuing Lender under any Credit Document shall in
any event be effective, unless in writing and signed by the
Administrative Agent and/or the Issuing Lender, as applicable,
in addition to the Lenders required hereinabove to take such
action.
Any such waiver, any such amendment, supplement or modification and
any such release shall apply equally to each of the Lenders and shall be
binding upon the Credit Parties, the Lenders, the Administrative Agent
and all future holders of the Notes. In the case of any waiver, the
Credit Parties, the Lenders and the Administrative Agent shall be
restored to their former position and rights hereunder and under the
outstanding Loans and Notes and other Credit Documents, and any Default
or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.
Notwithstanding any of the foregoing to the contrary, the consent
of the Credit Parties shall not be required for any amendment,
modification or waiver of the provisions of Article VIII (other than the
provisions of Section 8.9); provided, however, that the Administrative
Agent will provide written notice to the Credit Parties of any such
amendment, modification or waiver. In addition, the Credit Parties and
the Lenders hereby authorize the Administrative Agent to modify this
Credit Agreement by unilaterally amending or supplementing Schedule
2.1(a) from time to time in the manner requested by any Credit Party, the
Administrative Agent or any Lender in order to reflect any assignments
or transfers of the Loans as provided for hereunder; provided, however,
that the Administrative Agent shall promptly deliver a copy of any such
modification to the Credit Parties and each Lender.
Notwithstanding the fact that the consent of all the Lenders is
required in certain circumstances as set forth above, (x) each Lender is
entitled to vote as such Lender sees fit on any bankruptcy reorganization
plan that affects the Loans, and each Lender acknowledges that the
provisions of Section 1126(c) of the Bankruptcy Code supersedes the
unanimous consent provisions set forth herein and (y) the Required
Lenders may consent to allow a Credit Party to use cash collateral in the
context of a bankruptcy or insolvency proceeding.
Section 9.2 Notices.
Except as otherwise provided in Article II, all notices, requests
and demands to or upon the respective parties hereto to be effective
shall be in writing (including by telecopy), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or
made (a) when delivered by hand, (b) when transmitted via telecopy (or
other facsimile device) to the number set out herein, (c) the day
following the day on which the same has been delivered prepaid (or
pursuant to an invoice arrangement) to a reputable national overnight air
courier service, or (d) the third Business Day following the day on which
the same is sent by certified or registered mail, postage prepaid, in
each case addressed to the respective parties hereto as set forth on
Schedule 9.2, or to such other address as may be hereafter notified by
the respective parties hereto and any future holders of the Notes:
Section 9.3 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of
the Administrative Agent or any Lender, any right, remedy, power or
privilege hereunder 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.
Section 9.4 Survival of Representations and Warranties.
All representations and warranties made hereunder and in any
document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this
Credit Agreement and the Notes and the making of the Loans, provided that
all such representations and warranties shall terminate on the date upon
which the Commitments have been terminated and all amounts owing
hereunder and under any Notes have been paid in full.
Section 9.5 Payment of Expenses and Taxes.
The Borrower agrees (a) to pay or reimburse the Administrative Agent
for all its reasonable out-of-pocket costs and expenses incurred in
connection with the development, preparation, negotiation, printing and
execution of, and any amendment, supplement or modification to, this
Credit Agreement and the other Credit Documents and any other documents
prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby,
together with the reasonable fees and disbursements of counsel to the
Administrative Agent, (b) to pay or reimburse each Lender and the
Administrative Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Credit Agreement, the Notes and any such other documents, including,
without limitation, the reasonable fees and disbursements of counsel to
the Administrative Agent and to the Lenders (including reasonable
allocated costs of in-house legal counsel), and (c) on demand, to pay,
indemnify, and hold each Lender and the Administrative 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 similar 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, the Credit Documents and any such other documents, and
(d) to pay, indemnify, and hold each Lender and the Administrative Agent
and their Affiliates 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 the Credit Documents and any such other documents and
the use, or proposed use, of proceeds of the Loans (all of the foregoing,
collectively, the "indemnified liabilities"); provided, however, that the
Borrower shall not have any obligation hereunder to the Administrative
Agent or any Lender with respect to indemnified liabilities arising from
the gross negligence or willful misconduct of the Administrative Agent
or such Lender, as the case may be, as determined by a court of competent
jurisdiction. The agreements in this Section 9.5 shall survive repayment
of the Loans, Notes and all other amounts payable hereunder.
Section 9.6 Successors and Assigns; Participations;
Purchasing Lenders.
(a) This Credit Agreement shall be binding upon and inure to
the benefit of the Credit Parties, the Lenders, the Administrative
Agent, all future holders of the Notes and their respective
successors and assigns, except that the Credit Parties may not
assign or transfer any of its rights or obligations under this
Credit Agreement or the other Credit Documents 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 Note
held by such Lender, any Commitment of such Lender, or any other
interest of such Lender hereunder, in each case in minimum amounts
of $5,000,000 (or, if such participation is to an Affiliate of such
Lender, such lesser amount as agreed to by the Borrower). In the
event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under this Credit Agreement
to the other parties to this Credit Agreement shall remain
unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such
Note for all purposes under this Credit Agreement, and the Credit
Parties and the Administrative Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's
rights and obligations under this Credit Agreement. No Lender shall
transfer or grant any participation under which the Participant
shall have rights to approve any amendment to or waiver of this
Credit Agreement or any other Credit Document except to the extent
such amendment or waiver would (i) extend the scheduled maturity of
any Loan or Note or any installment thereon in which such
Participant is participating, or reduce the stated rate or extend
the time of payment of interest or fees thereon (except in
connection with a waiver of interest at the increased post-default
rate) or reduce the principal amount thereof, or increase the amount
of the Participant's participation over the amount thereof then in
effect (it being understood that a waiver of any Default or Event
of Default shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall
be permitted without consent of any participant if the Participant's
participation is not increased as a result thereof), (ii) release
all or substantially all of the Guarantors from their obligations
under the Guaranty or (iii) consent to the assignment or transfer
by the Borrower of any of its rights and obligations under this
Credit Agreement. In the case of any such participation, the
Participant shall not have any rights under this Credit Agreement
or any of the other Credit Documents (the Participant's rights
against such Lender in respect of such participation to be those set
forth in the agreement executed by such Lender in favor of the
Participant relating thereto) and all amounts payable by the
Borrower hereunder shall be determined as if such Lender had not
sold such participation, provided that each Participant shall be
entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.5 with
respect to its participation in the Commitments and the Loans
outstanding from time to time; provided, that no Participant shall
be entitled to receive any greater amount pursuant to such Sections
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,
sell or assign to any Affiliate thereof or with the consent of the
Administrative Agent and, so long as no Event of Default or Default
that can be cured with the payment of money has occurred and is
continuing, the Borrower (which consent shall not be unreasonably
withheld or delayed), to one or more other Lenders, banks or
financial institutions ("Purchasing Lenders"), all or any part of
its rights and obligations under this Credit Agreement and the Notes
in minimum amounts of $5,000,000 with respect to its Revolving
Commitment and its Revolving Loans (or, if less, the entire amount
of such Lender's obligations), pursuant to a Commitment Transfer
Supplement, executed by such Purchasing Lender and such transferor
Lender (and the Administrative Agent and, so long as no Event of
Default or Default that can be cured with the payment of money has
occurred and is continuing, the Borrower), and delivered to the
Administrative Agent for its acceptance and recording in the
Register; provided, however, if the Borrower refuses to grant its
consent to any such sale or assignment and fails to obtain a
substitute purchaser reasonably satisfactory to the selling Lender
and the Administrative Agent within thirty (30) days after such
refusal, the Borrower shall be deemed to have granted its consent
to such sale or assignment. Upon such execution, delivery,
acceptance and recording, from and after the Transfer Effective Date
specified in such Commitment Transfer Supplement, (x) the Purchasing
Lender thereunder shall be a party hereto and, to the extent
provided in such Commitment Transfer Supplement, have the rights and
obligations of a Lender hereunder with a Commitment as set forth
therein, and (y) the transferor Lender thereunder shall, to the
extent provided in such Commitment Transfer Supplement, be released
from its obligations under this Credit Agreement (and, in the case
of a Commitment Transfer Supplement covering all or the remaining
portion of a transferor Lender's rights and obligations under this
Credit Agreement, such transferor Lender shall cease to be a party
hereto). Such Commitment Transfer Supplement shall be deemed to
amend this Credit Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of Commitment Percentages arising from the
purchase by such Purchasing Lender of all or a portion of the rights
and obligations of such transferor Lender under this Credit
Agreement and the Notes. On or prior to the Transfer Effective Date
specified in such Commitment Transfer Supplement, the Borrower shall
execute and deliver to the Administrative Agent in exchange for the
Notes delivered to the Administrative Agent pursuant to such
Commitment Transfer Supplement new Notes to the order of such
Purchasing Lender in an amount equal to the Commitment assumed by
it pursuant to such Commitment Transfer Supplement and, unless the
transferor Lender has not retained a Commitment hereunder, new Notes
to the order of the transferor Lender in an amount equal to the
Commitment retained by it hereunder. Such new Notes shall be dated
the Closing Date and shall otherwise be in the form of the Notes
replaced thereby. The Notes surrendered by the transferor Lender
shall be returned by the Administrative Agent to the Borrower marked
"canceled".
(d) The Administrative Agent shall maintain at its address
referred to in Section 9.2 a copy of each Commitment Transfer
Supplement 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
Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register as the owner of the Loan recorded
therein for all purposes of this Credit Agreement. 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 a duly executed Commitment Transfer
Supplement, together with payment to the Administrative Agent by the
transferor Lender or the Purchasing Lender, as agreed between them,
of a registration and processing fee of $3,000 for each Purchasing
Lender listed in such Commitment Transfer Supplement and the Notes
subject to such Commitment Transfer Supplement, the Administrative
Agent shall (i) accept such Commitment Transfer Supplement, (ii)
record the information contained therein in the Register and (iii)
give prompt notice of such acceptance and recordation to the Lenders
and the Borrower.
(f) The Credit Parties authorize each Lender to disclose to
any Participant or Purchasing Lender (each, a "Transferee") and any
prospective Transferee any and all financial information in such
Lender's possession concerning the Credit Parties and their
Affiliates which has been delivered to such Lender by or on behalf
of the Borrower pursuant to this Credit Agreement or which has been
delivered to such Lender by or on behalf of the Credit Parties in
connection with such Lender's credit evaluation of the Credit
Parties and their Affiliates prior to becoming a party to this
Credit Agreement, in each case subject to Section 9.15 and in each
case subject to the prior consent of the Borrower, such consent not
to be unreasonably withheld.
(g) At the time of each assignment pursuant to this Section
9.6 to a Person which is not already a Lender hereunder and which
is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Lender shall provide to the Borrower and the
Administrative Agent the appropriate Internal Revenue Service Forms
(and, if applicable, a 2.17 Certificate) described in Section 2.17.
(h) Nothing herein shall prohibit any Lender from pledging
or assigning any of its rights under this Credit Agreement
(including, without limitation, any right to payment of principal
and interest under any Note) to any Federal Reserve Bank in
accordance with applicable laws.
Section 9.7 Adjustments; Set-off.
(a) Each Lender agrees that if any Lender (a "benefited
Lender") shall at any time receive any payment of all or part of its
Loans, or interest thereon, in respect thereof (whether voluntarily
or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 7.1(f), or otherwise) in a greater
proportion than any such payment to any other Lender, if any, in
respect of such other Lender's Loans, or interest thereon, such
benefited Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's
Loan, as shall be necessary to cause such benefited Lender to share
the excess payment 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 benefited Lender, such
purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest. The
Borrower agrees that each Lender so purchasing a portion of another
Lender's Loans may exercise all rights of payment (including,
without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders
provided by law (including, without limitation, other rights of set-
off), each Lender shall have the right, without prior notice to the
Credit Parties, any such notice being expressly waived by the Credit
Parties to the extent permitted by applicable law, upon the
occurrence of any Event of Default, to setoff and appropriate and
apply 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 any Credit Party, or any part
thereof in such amounts as such Lender may elect, against and on
account of the obligations and liabilities of the such Credit Party
to such Lender hereunder and claims of every nature and description
of such Lender against such Credit Party, in any currency, whether
arising hereunder, under the Notes or under any documents
contemplated by or referred to herein or therein, as such Lender may
elect, whether or not such Lender has made any demand for payment
and although such obligations, liabilities and claims may be
contingent or unmatured. The aforesaid right of set-off may be
exercised by such Lender against such Credit Party or against any
trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver or execution, judgment or attachment
creditor of such Credit Party, or against anyone else claiming
through or against such Credit Party or any such trustee in
bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have
been exercised by such Lender prior to the occurrence of any Event
of Default. Each Lender agrees promptly to notify the applicable
Credit Party and the Administrative Agent after any such set-off and
application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off
and application.
Section 9.8 Table of Contents and Section Headings.
The table of contents and the Section and subsection headings herein
are intended for convenience only and shall be ignored in construing this
Credit Agreement.
Section 9.9 Counterparts.
This Credit Agreement may be executed by one or more of the parties
to this Credit Agreement on any number of separate counterparts, and all
of said counterparts taken together shall be deemed to constitute one and
the same instrument. A set of the copies of this Credit Agreement signed
by all the parties shall be lodged with the Borrower and the
Administrative Agent.
Section 9.10 Effectiveness.
This Credit Agreement shall become effective on the date on which
all of the parties have signed a copy hereof (whether the same or
different copies) and shall have delivered the same to the Administrative
Agent pursuant to Section 9.2 or, in the case of the Lenders, shall have
given to the Administrative Agent written, telecopied or telex notice
(actually received) at such office that the same has been signed and
mailed to it.
Section 9.11 Severability.
Any provision of this Credit Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 9.12 Integration.
This Credit Agreement and the Notes represent the agreement of the
Credit Parties, the Administrative Agent and the Lenders with respect to
the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent, the Credit
Parties or any Lender relative to the subject matter hereof not expressly
set forth or referred to herein or in the Notes.
Section 9.13 Governing Law.
This Credit Agreement and the Notes and the rights and obligations
of the parties under this Credit Agreement and the Notes shall be
governed by, and construed and interpreted in accordance with, the law
of the State of North Carolina.
Section 9.14 Consent to Jurisdiction and Service of Process.
All judicial proceedings brought against any Credit Party with
respect to this Credit Agreement, any Note or any of the other Credit
Documents may be brought in any state or federal court of competent
jurisdiction in the State of North Carolina, and, by execution and
delivery of this Credit Agreement, each of the Credit Parties accepts,
for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts
and irrevocably agrees to be bound by any final judgment rendered thereby
in connection with this Credit Agreement from which no appeal has been
taken or is available. Each of the Credit Parties irrevocably agrees
that all service of process in any such proceedings in any such court may
be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to it at its
address set forth in Section 9.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto, such
service being hereby acknowledged by each of the Credit Parties to be
effective and binding service in every respect. Each of the Credit
Parties, the Administrative Agent and the Lenders irrevocably waives any
objection, including, without limitation, any objection to the laying of
venue or based on the grounds of forum non conveniens which it may now
or hereafter have to the bringing of any such action or proceeding in any
such jurisdiction. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of
any Lender to bring proceedings against any Credit Party in the court of
any other jurisdiction.
Section 9.15 Confidentiality.
The Administrative Agent and each Lender party to this Credit
Agreement as of the date hereof have each executed a Confidentiality
Agreement with the Borrower. Each Purchasing Lender agrees to execute
a Confidentiality Agreement with the Borrower in the same form as the
Confidentiality Agreement executed by its transferor Lender or in a
modified form acceptable to the Borrower. The Administrative Agent and
each of the Lenders agree it will use its best efforts not to disclose
without the prior consent of the Borrower (other than to its employees,
affiliates, auditors or counsel or to another Lender) any information
with respect to the Borrower and its Subsidiaries which is furnished
pursuant to this Credit Agreement, any other Credit Document or any
documents contemplated by or referred to herein or therein and which is
designated by the Borrower to the Lenders in writing as confidential or
as to which it is otherwise reasonably clear such information is not
public, except that any Lender may disclose any such information (a) as
has become generally available to the public other than by a breach of
this Section 9.15, (b) as may be required or appropriate in any report,
statement or testimony submitted to any municipal, state or federal
regulatory body having or claiming to have jurisdiction over such Lender
or to the Federal Reserve Board or the Federal Deposit Insurance
Corporation or the OCC or the NAIC or similar organizations (whether in
the United States or elsewhere) or their successors, (c) as may be
required or appropriate in response to any summons or subpoena or any
law, order, regulation or ruling applicable to such Lender, (d) to any
prospective Participant or assignee in connection with any contemplated
transfer pursuant to Section 9.6, provided that such prospective
transferee shall have been made aware of this Section 9.15 and shall have
agreed to be bound by its provisions as if it were a party to this Credit
Agreement or (e) to Gold Sheets and other similar bank trade
publications; such information to consist of deal terms and other
information regarding the credit facilities evidenced by this Credit
Agreement customarily found in such publications.
Section 9.16 Acknowledgments.
Each of the Credit Parties hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of each Credit Document;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to such Credit Party arising out
of or in connection with this Credit Agreement and the relationship
between Administrative Agent and Lenders, on one hand, and such
Credit Party, on the other hand, in connection herewith is solely
that of debtor and creditor; and
(c) no joint venture exists among the Lenders or among the
Borrower and the Lenders.
Section 9.17 Waivers of Jury Trial.
THE CREDIT PARTIES AND THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
ARTICLE X
GUARANTY
Section 10.1 The Guaranty.
In order to induce the Lenders to enter into this Credit
Agreement and to extend credit hereunder and in recognition of the
direct benefits to be received by the Guarantors from the Extensions
of Credit hereunder, each of the Guarantors hereby agrees with the
Administrative Agent and the Lenders as follows: the Guarantor hereby
unconditionally and irrevocably jointly and severally guarantees as
primary obligor and not merely as surety the full and prompt payment
when due, whether upon maturity, by acceleration or otherwise, of any
and all indebtedness of the Borrower to the Administrative Agent and
the Lenders. If any or all of the indebtedness of the Borrower to the
Administrative Agent and the Lenders becomes due and payable
hereunder, each Guarantor unconditionally promises to pay such
indebtedness to the Administrative Agent and the Lenders, or order, on
demand, together with any and all reasonable expenses which may be
incurred by the Administrative Agent or the Lenders in collecting any
of the indebtedness. The word "indebtedness" is used in this Article
X in its most comprehensive sense and includes any and all advances,
debts, obligations and liabilities of the Borrower arising in
connection with this Credit Agreement, in each case, heretofore, now,
or hereafter made, incurred or created, whether voluntarily or
involuntarily, absolute or contingent, liquidated or unliquidated,
determined or undetermined, whether or not such indebtedness is from
time to time reduced, or extinguished and thereafter increased or
incurred, whether the Borrower may be liable individually or jointly
with others, whether or not recovery upon such indebtedness may be or
hereafter become barred by any statute of limitations, and whether or
not such indebtedness may be or hereafter become otherwise
unenforceable.
Notwithstanding any provision to the contrary contained herein or
in any other of the Credit Documents, to the extent the obligations of
a Guarantor shall be adjudicated to be invalid or unenforceable for
any reason (including, without limitation, because of any applicable
state or federal law relating to fraudulent conveyances or transfers)
then the obligations of each such Guarantor hereunder shall be limited
to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the
Bankruptcy Code).
Section 10.2 Bankruptcy.
Additionally, each of the Guarantors unconditionally and
irrevocably guarantees jointly and severally the payment of any and
all indebtedness of the Borrower to the Lenders whether or not due or
payable by the Borrower upon the occurrence of any of the events
specified in Section 7.1(e), and unconditionally promises to pay such
indebtedness to the Administrative Agent for the account of the
Lenders, or order, on demand, in lawful money of the United States.
Each of the Guarantors further agrees that to the extent that the
Borrower or a Guarantor shall make a payment or a transfer of an
interest in any property to the Administrative Agent or any Lender,
which payment or transfer or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, or otherwise
is avoided, and/or required to be repaid to the Borrower or a
Guarantor, the estate of the Borrower or a Guarantor, a trustee,
receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then to the extent of such
avoidance or repayment, the obligation or part thereof intended to be
satisfied shall be revived and continued in full force and effect as
if said payment had not been made.
Section 10.3 Nature of Liability.
The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the indebtedness
of the Borrower whether executed by any such Guarantor, any other
guarantor or by any other party, and no Guarantor's liability
hereunder shall be affected or impaired by (a) any direction as to
application of payment by the Borrower or by any other party, or (b)
any other continuing or other guaranty, undertaking or maximum
liability of a guarantor or of any other party as to the indebtedness
of the Borrower, or (c) any payment on or in reduction of any such
other guaranty or undertaking, or (d) any dissolution, termination or
increase, decrease or change in personnel by the Borrower, or (e) any
payment made to the Administrative Agent or the Lenders on the
indebtedness which the Administrative Agent or such Lenders repay the
Borrower pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and each of
the Guarantors waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
Section 10.4 Independent Obligation.
The obligations of each Guarantor hereunder are independent of
the obligations of any other guarantor or the Borrower, and a separate
action or actions may be brought and prosecuted against each Guarantor
whether or not action is brought against any other guarantor or the
Borrower and whether or not any other Guarantor or the Borrower is
joined in any such action or actions.
Section 10.5 Authorization.
Each of the Guarantors authorizes the Administrative Agent and
each Lender without notice or demand (except as shall be required by
applicable statute and cannot be waived), and without affecting or
impairing its liability hereunder, from time to time to (a) renew,
compromise, extend, increase, accelerate or otherwise change the time
for payment of, or otherwise change the terms of the indebtedness or
any part thereof in accordance with this Credit Agreement, including
any increase or decrease of the rate of interest thereon, (b) take and
hold security from any guarantor or any other party for the payment of
this Guaranty or the indebtedness and exchange, enforce waive and
release any such security, (c) apply such security and direct the
order or manner of sale thereof as the Administrative Agent and the
Lenders in their discretion may determine and (d) release or
substitute any one or more endorsers, guarantors, the Borrower or
other obligors.
Section 10.6 Reliance.
It is not necessary for the Administrative Agent or the Lenders
to inquire into the capacity or powers of the Borrower or the
officers, directors, members, partners or agents acting or purporting
to act on its behalf, and any indebtedness made or created in reliance
upon the professed exercise of such powers shall be guaranteed
hereunder.
Section 10.7 Waiver.
(a) Each of the Guarantors waives any right (except as
shall be required by applicable statute and cannot be waived) to
require the Administrative Agent or any Lender to (i) proceed
against the Borrower, any other guarantor or any other party,
(ii) proceed against or exhaust any security held from the
Borrower, any other guarantor or any other party, or (iii) pursue
any other remedy in the Administrative Agent's or any Lender's
power whatsoever. Each of the Guarantors waives any defense
based on or arising out of any defense of the Borrower, any other
guarantor or any other party other than payment in full of the
indebtedness, including without limitation any defense based on
or arising out of the disability of the Borrower, any other
guarantor or any other party, or the unenforceability of the
indebtedness or any part thereof from any cause, or the cessation
from any cause of the liability of the Borrower other than
payment in full of the indebtedness. Without limiting the
generality of the provisions of this Article X, each of the
Guarantors hereby specifically waives the benefits of N.C. Gen.
Stat. Section 26-7 through 26-9, inclusive. The Administrative Agent
or any of the Lenders may, at their election, foreclose on any
security held by the Administrative Agent or a Lender by one or
more judicial or nonjudicial sales, whether or not every aspect
of any such sale is commercially reasonable (to the extent such
sale is permitted by applicable law), or exercise any other right
or remedy the Administrative Agent and any Lender may have
against the Borrower or any other party, or any security, without
affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the indebtedness has been paid.
Each of the Guarantors waives any defense arising out of any such
election by the Administrative Agent and each of the Lenders,
even though such election operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of
the Guarantors against the Borrower or any other party or any
security.
(b) Each of the Guarantors waives all presentments,
demands for performance, protests and notices, including without
limitation notices of nonperformance, notice of protest, notices
of dishonor, notices of acceptance of this Guaranty, and notices
of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for
being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon
the risk of nonpayment of the indebtedness and the nature, scope
and extent of the risks which such Guarantor assumes and incurs
hereunder, and agrees that neither the Administrative Agent nor
any Lender shall have any duty to advise such Guarantor of
information known to it regarding such circumstances or risks.
(c) Each of the Guarantors hereby agrees it will not
exercise any rights of subrogation which it may at any time
otherwise have as a result of this Guaranty (whether contractual,
under Section 509 of the U.S. Bankruptcy Code, or otherwise) to
the claims of the Lenders against the Borrower or any other
guarantor of the indebtedness of the Borrower owing to the
Lenders (collectively, the "Other Parties") and all contractual,
statutory or common law rights of reimbursement, contribution or
indemnity from any Other Party which it may at any time otherwise
have as a result of this Guaranty until such time as the Loans
hereunder shall have been paid and the Commitments have been
terminated. Each of the Guarantors hereby further agrees not to
exercise any right to enforce any other remedy which the
Administrative Agent and the Lenders now have or may hereafter
have against any Other Party, any endorser or any other guarantor
of all or any part of the indebtedness of the Borrower and any
benefit of, and any right to participate in, any security or
collateral given to or for the benefit of the Lenders to secure
payment of the indebtedness of the Borrower until such time as
the Loans hereunder shall have been paid and the Commitments have
been terminated.
Section 10.8 Limitation on Enforcement.
The Lenders agree that this Guaranty may be enforced only by the
action of the Administrative Agent acting upon the instructions of the
Required Lenders and that no Lender shall have any right individually
to seek to enforce or to enforce this Guaranty, it being understood
and agreed that such rights and remedies may be exercised by the
Administrative Agent for the benefit of the Lenders under the terms of
this Credit Agreement. The Lenders further agree that this Guaranty
may not be enforced against any director, officer, employee or
stockholder of the Guarantors.
Section 10.9 Confirmation of Payment.
The Administrative Agent and the Lenders will, upon request after
payment of the indebtedness and obligations which are the subject of
this Guaranty and termination of the Commitments relating thereto,
confirm to the Borrower, the Guarantors or any other Person that such
indebtedness and obligations have been paid and the Commitments
relating thereto terminated, subject to the provisions of Section
10.2.
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement
to be duly executed and delivered by its proper and duly authorized officers as
of the day and year first above written.
BORROWER: INTERNATIONAL SPEEDWAY CORPORATION
By: /s/ Glenn R. Padgett
----------------------------------
Title: Glenn R. Padgett, Assistant Secretary
GUARANTORS: CHICAGO HOLDINGS, INC.
EVENT EQUIPMENT LEASING, INC.
EVENT SUPPORT CORPORATION
GREAT WESTERN SPORTS, INC.
MIAMI SPEEDWAY CORP.
NEW YORK INTERNATIONAL SPEEDWAY
CORPORATION
NORTH AMERICAN TESTING COMPANY
PHOENIX SPEEDWAY CORP.
SEASONAL SERVICES, INC.
SOUTH CAROLINA INTERNATIONAL SPEEDWAY
CORPORATION
WATKINS GLEN INTERNATIONAL, INC.
88 CORP.
By: /s/ Glenn R. Padgett
------------------------------------
Title: Glenn R. Padgett, Assistant Secretary
AMERICROWN SERVICE CORPORATION
ISC PROPERTIES, INC.
By: /s/ Glenn R. Padgett
-----------------------------------
Title: Glenn R. Padgett, Secretary
[Signature Pages Continue]
ADMINISTRATIVE AGENT
AND LENDERS: FIRST UNION NATIONAL BANK,
as Administrative Agent and as a Lender
By: /s/ Glenn F. Edwards
---------------------------------
Title: Senior Vice President
SUNTRUST BANK, SOUTH FLORIDA, N.A.,
By: /s/ W. David Wisdom
---------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Gaye C. Plunkett
---------------------------------
Title: Gaye C. Plunkett, Vice President
CITICORP USA, INC.
By: /s/ Townsend U. Weekes, Jr.
---------------------------------
Title: Townsend U. Weekes, Jr. Attorney-in-fact
<PAGE>
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "First Amendment") dated as
of September 23, 1999, is to that Credit Agreement dated as of July 21, 1999 (as
may be subsequently amended and modified from time to time, the "Credit
Agreement"; terms used but not otherwise defined herein shall have the meanings
provided in the Credit Agreement), by and among INTERNATIONAL SPEEDWAY
CORPORATION, a Florida corporation (the "Borrower"), the Guarantors identified
therein, the several banks and other financial institutions identified therein
(the "Lenders") and FIRST UNION NATIONAL BANK, as agent for the Lenders
thereunder (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Lenders have established a $300,000,000 credit facility for
the benefit of the Borrower pursuant to the terms of the Credit Agreement;
WHEREAS, the Borrower wishes to amend the Credit Agreement to modify
certain provisions contained therein;
WHEREAS, the Required Lenders have agreed to the requested amendment on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
A. The Credit Agreement is amended in the following respect:
1. The definition of "Revolving Commitment Termination Date" in
Section 1.1 of the Credit Agreement is hereby deleted in its entirety and
the following substituted therefor:
"Revolving Commitment Termination Date" shall mean March 31, 2004.
B. Except as modified hereby, all of the terms and provisions of the
Credit Agreement (and Exhibits) remain in full force and effect.
C. This First Amendment may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original and it
shall not be necessary in making proof of this First Amendment to produce or
account for more than one such counterpart.
D. This First Amendment and the Credit Agreement, as amended hereby,
shall be deemed to be contracts made under, and for all purposes shall be
construed in accordance with the laws of the State of North Carolina.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this First Amendment to be duly executed and delivered as of the date and year
first above written.
BORROWER: INTERNATIONAL SPEEDWAY CORPORATION
By: /s/ Glenn R. Padgett
----------------------------------
Title: Glenn R. Padgett, Assistant Secretary
GUARANTORS: CHICAGO HOLDINGS, INC.
EVENT EQUIPMENT LEASING, INC.
EVENT SUPPORT CORPORATION
GREAT WESTERN SPORTS, INC.
MIAMI SPEEDWAY CORP.
NEW YORK INTERNATIONAL SPEEDWAY
CORPORATION
NORTH AMERICAN TESTING COMPANY
PHOENIX SPEEDWAY CORP.
SEASONAL SERVICES, INC.
SOUTH CAROLINA INTERNATIONAL SPEEDWAY
CORPORATION
WATKINS GLEN INTERNATIONAL, INC.
88 CORP.
By: /s/ Glenn R. Padgett
------------------------------------
Title: Glenn R. Padgett, Assistant Secretary
AMERICROWN SERVICE CORPORATION
ISC PROPERTIES, INC.
By: /s/ Glenn R. Padgett
------------------------------------
Title: Glenn R. Padgett, Secretary
[Signature Pages Continue]
ADMINISTRATIVE AGENT
AND LENDERS: FIRST UNION NATIONAL BANK,
as Administrative Agent and as a Lender
By: /s/ Kent Davis
------------------------------------
Title: Vice President
SUNTRUST BANK, SOUTH FLORIDA, N.A.,
By: /s/ W. David Wisdom
------------------------------------
Title: Vice President
BANK ONE, NA
formerly known as
The First National Bank of Chicago
By: /s/ Brian T. Burke
------------------------------------
Title: Officer
CITICORP USA, INC.
By: /s/ James Buchanan
------------------------------------
Title:
<PAGE>
CONSENT
THIS CONSENT (the "Consent") dated as of October 5, 1999, is to that
Credit Agreement dated as of July 21, 1999 (as amended by that First Amendment
to Credit Agreement dated as of September 23, 1999 and as may be subsequently
amended and modified from time to time, the "Credit Agreement"; terms used but
not otherwise defined herein shall have the meanings provided in the Credit
Agreement), by and among INTERNATIONAL SPEEDWAY CORPORATION, a Florida
corporation (the "Borrower"), the Guarantors identified therein, the several
banks and other financial institutions identified therein (the "Lenders") and
FIRST UNION NATIONAL BANK, as agent for the Lenders thereunder (in such
capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Lenders have established a $300,000,000 credit facility for
the benefit of the Borrower pursuant to the terms of the Credit Agreement;
WHEREAS, the Borrower wishes to increase the amount of Senior Notes which
the Borrower may issue pursuant to the terms of the Credit Agreement from
$200,000,000 to $225,000,000 and has requested that the Required Lenders consent
to such increase as provided for in the definition of "Senior Notes";
WHEREAS, the Required Lenders have agreed to increase the amount of Senior
Notes which the Borrower may issue to $225,000,000 on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
A. Pursuant to the terms of the definition of "Senior Notes", the
Required Lenders hereby consent to the increase in the amount of Senior Notes
which the Borrower may issue from $200,000,000 to $225,000,000.
B. Except as modified hereby, all of the terms and provisions of the
Credit Agreement (and Exhibits) remain in full force and effect.
C. This Consent may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original and it shall
not be necessary in making proof of this Consent to produce or account for more
than one such counterpart.
D. This Consent and the Credit Agreement, as modified hereby, shall be
deemed to be contracts made under, and for all purposes shall be construed in
accordance with the laws of the State of North Carolina.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Consent to be duly executed and delivered as of the date and year first
above written.
BORROWER: INTERNATIONAL SPEEDWAY CORPORATION
By: /s/ Glenn R. Padgett
-----------------------------------
Title: Glenn R. Padgett, Assistant Secretary
GUARANTORS: CHICAGO HOLDINGS, INC.
EVENT EQUIPMENT LEASING, INC.
EVENT SUPPORT CORPORATION
GREAT WESTERN SPORTS, INC.
MIAMI SPEEDWAY CORP.
NEW YORK INTERNATIONAL SPEEDWAY
CORPORATION
NORTH AMERICAN TESTING COMPANY
PHOENIX SPEEDWAY CORP.
SEASONAL SERVICES, INC.
SOUTH CAROLINA INTERNATIONAL SPEEDWAY
CORPORATION
WATKINS GLEN INTERNATIONAL, INC.
88 CORP.
By: /s/ Glenn R. Padgett
-------------------------------------
Title: Glenn R. Padgett, Assistant Secretary
AMERICROWN SERVICE CORPORATION
ISC PROPERTIES, INC.
By: /s/ Glenn R. Padgett
-------------------------------------
Title: Glenn R. Padgett, Secretary
[Signature Pages Continue]
ADMINISTRATIVE AGENT
AND LENDERS: FIRST UNION NATIONAL BANK,
as Administrative Agent and as a Lender
By: /s/ Kent Davis
--------------------------------------
Title: Vice President
SUNTRUST BANK, SOUTH FLORIDA, N.A.,
By: /s/ W. David Wisdom
--------------------------------------
Title: Vice President
BANK ONE, NA
formerly known as
The First National Bank of Chicago
By: /s/ Brian T. Burke
---------------------------------------
Title: Officer
CITICORP USA, INC.
By: /s/ James Buchanan
---------------------------------------
Title:
INTERNATIONAL SPEEDWAY CORPORATION
$225,000,000
7 % SENIOR NOTES DUE 2004
_________________________________
INDENTURE
Dated as of October 6, 1999
_________________________________
FIRST UNION NATIONAL BANK,
Trustee
<PAGE>
INDENTURE, dated as of October 6, 1999, between International Speedway
Corporation, a corporation organized and existing under the laws of the State
of Florida (herein called the "Company"), having its principal executive
office at 1801 West International Speedway Boulevard, Daytona Beach, Florida
32114, the Guarantors named on the signature pages hereto (collectively, the
"Guarantors"), and First Union National Bank, a national banking association
duly organized and existing under the laws of the United States of America, as
Trustee (herein called the "Trustee").
Recitals
The Company, Guarantors and the Trustee agree as follows for the benefit
of each other and for the equal and ratable benefit of the Holders of the 7 %
Senior Notes due 2004 (the "Notes"):
ARTICLE I
Definitions and Other Provisions
of General Application
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any computation required or
permitted hereunder shall mean such accounting principles as are generally
accepted at the date of such computation;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may
be, of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"Additional Assets" means (i) any property or assets (other than
indebtedness and Capital Stock) in a Related Business, including improvements
to existing assets, used by the Company or a Restricted Subsidiary in a
Related Business; (ii) Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by the Company
or another Restricted Subsidiary; provided, however, that any such Restricted
Subsidiary is primarily engaged in a Related Business; (iii) Capital Stock
constituting an additional equity interest in any Person that at such time is a
Restricted Subsidiary that is not a wholly-owned subsidiary; or (iv) the costs
of improving or developing any property owned by the Company or a Restricted
Subsidiary that is used in a Related Business.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Attributable Debt" means, in respect of a Sale and Leaseback Transaction
and as of any particular time, the present value (discounted at the rate of
interest implicit in the terms of the lease involved in such Sale and
Leaseback Transaction, as determined in good faith by the Company) of the
obligation of the lessee thereunder for net rental payments (excluding, however,
any amounts required to be paid by such lessee, whether or not designated as
rent or additional rent, on account of maintenance and repairs, services,
insurance, taxes, assessments, water rates or similar charges or any amounts
required to be paid by such lessee thereunder contingent upon monetary inflation
or the amount of sales, maintenance and repairs, insurance, taxes, assessments,
water rates or similar charges) during the remaining term of such lease
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate the
Notes.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for relief of debtors.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in that Place of Payment are authorized or
obligated by law or executive order to close.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any
preferred stock, but excluding any debt securities convertible into such
equity.
"Commission" means the Securities and Exchange Commission, from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Stock" includes any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company and which is not subject to redemption by the Company.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall
mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable
to the remaining term of the Notes that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining
term of the Notes.
"Comparable Treasury Price" means, with respect to any Redemption Date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such Redemption Date, as set forth in the daily
statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is
not published or does not contain such prices on such business day, (A) the
average of the Reference Treasury Dealer Quotations (as defined below) for
such Redemption Date, after excluding the highest and lowest such Referenced
Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such quotations.
"Consolidated Net Tangible Assets" means the aggregate amount of assets
(less applicable reserves and other properly deductible items) after deducting
therefrom (a) all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, and (b) all current
liabilities, all as reflected in the Company's most recent consolidated
balance sheet contained in the Company's most recent consolidated financial
statements filed with the Commission prior to the time as of which "Consolidated
Net Tangible Assets" shall be determined.
"Corporate Trust Office" means the designated corporate trust office of
the Trustee at which at any particular time its corporate trust business shall
be administered, presently such office is 225 Water Street, 3rd Floor,
Jacksonville, Florida 32702, Attn: Corporate Trust Department.
"Corporation" means any corporation, partnership, joint venture,
association, joint stock company, business trust, trust, unincorporated
organization, limited liability company or other entity.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Credit Facility" means the debt facility pursuant to that certain Credit
Agreement among the Company, certain Subsidiaries of the Company, the Lenders
signatory thereto, SunTrust Bank, South Florida, N.A., as Documentation Agent
and First Union National Bank, as Administrative Agent, dated as of July 21,
1999, as the same may be amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
"Custodian" means Trustee, as custodian with respect to the Notes in
global form, or any successor entity thereto.
"Debt" means with respect to any Person, any indebtedness of such Person:
in respect of borrowed money; evidenced by bonds, notes, debentures, or
similar instruments or letters of credit (or reimbursement agreements in respect
thereof); in respect of bankers acceptances; representing capital lease
obligations; in respect of the balance deferred and unpaid of the bargained
for consideration or purchase price in respect of the acquisition of any
property, except such balance that constitutes an accrued expense or trade
payable; or representing obligations under interest rate swap, cap or collar
agreements or other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in the form of one or more Global Notes, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Notes as contemplated by Section 305.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Global Note" means each Note that evidences all or part of the Notes and
bears the legend set forth in Section 204.
"Guarantee" means any guarantee of all or any part of any indebtedness
other than by endorsement of negotiable instruments for collection in the
ordinary course of business, direct or indirect, in any manner, including,
without limitation, by way of a pledge of assets or through letters of credit
or reimbursement agreements in respect thereof.
"Guarantors" means each of:
(1) the Company's Subsidiaries existing on the date of this
Indenture that have executed this Indenture; and
(2) any other Subsidiary that executes a Note Guarantee in
accordance with the provisions of this Indenture;
and their respective successors and assigns.
"Holder" means a Person in whose name a Note is registered.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Trustee after consultation with the Company.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on such Note.
"Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.
"Lien" means any mortgage, pledge, security interest, lien or other
encumbrance.
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 4 of the Registration Rights Agreement.
"Maturity", when used with respect to any Note, means the date on which
the principal of such Note or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Non-U.S. person" means a person who is not a U.S. Person, as defined in
Regulation S.
"Notes" has the meaning stated in the recital of this Indenture and more
particularly means any Notes authenticated and delivered under this Indenture.
"Note Guarantee" means a Guarantee of the Notes by a Guarantor.
"Notice of Default" means a written notice of the kind specified in
Section 501(4) or 501(5).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or a Vice President, and by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 1004 shall be the
principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be reasonably acceptable to the
Trustee.
"Outstanding", when used with respect to the Notes, means, as of the date
of determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(1) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(2) Notes for whose payment or redemption money in the necessary amount
has been theretofore deposited with the Trustee or any Paying Agent (other
than the Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the Holders of such
Notes; provided that, if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(3) Notes as to which Defeasance has been effected pursuant to Section
1302; and
(4) Notes which have been paid pursuant to Section 306 or in exchange
for or in lieu of which other Notes have been authenticated and delivered
pursuant to this Indenture, other than any such Notes in respect of which
there shall have been presented to the Trustee proof satisfactory to it that
such Notes are held by a bona fide purchaser in whose hands such Notes are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, Notes owned by the Company or any other
obligor upon the Notes or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only Notes which the Trustee knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on, or any Liquidated Damages with
respect to, any Notes on behalf of the Company.
"Person" means any individual, Corporation or government or any agency
or political subdivision thereof.
"Place of Payment", when used with respect to the Notes, means the place
or places where the principal of and any premium and interest on, or any
Liquidated Damages with respect to, the Notes are payable as specified as
contemplated by Section 305.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note, and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
"Principal Property" means any single racetrack facility or business unit
located within the United States of America (other than its territories and
possessions) and owned or operated by, or leased to, the Company or any
Subsidiary, the book value of the property and equipment of which (as shown,
net of depreciation, on the books of the owner or owners thereof) is not less
than 4% of the Consolidated Net Tangible Assets as shown on the most recent
consolidated financial statements of the Company filed with the Commission,
except (a) any such facility (i) owned or operated or leased jointly or in
common with one or more Persons other than the Company and its Subsidiaries,
in which the interest of the Company and its Subsidiaries does not exceed 50%,
or (ii) which the Board of Directors determines by Board Resolution in good
faith is not of material importance to the total business conducted, or assets
owned, by the Company and its Subsidiaries as an entirety, or (b) any portion
of any such facility which the Board of Directors determines by Board
Resolution in good faith not to be of material importance to the use or
operation thereof.
"Private Placement Legend" shall have the meaning specified in
Section 205.
"Qualified Institutional Buyer" or "QIB" shall have the meaning specified
in Rule 144A under the Securities Act.
"Redemption Date", when used with respect to any Note to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Reference Treasury Dealers" means Salomon Smith Barney Inc., First Union
Capital Markets Corp., Banc One Capital Markets, Inc., Raymond James &
Associates, Inc. and SunTrust Equitable Securities and their successors. If
any Reference Treasury Dealer shall cease to be a primary U.S. Government
securities dealer, the Company will designate in writing to the Trustee
another nationally recognized investment banking firm that is a primary U.S.
Government securities dealer.
"Reference Treasury Dealer Quotations" means, with respect to the
Reference Treasury Dealers and any Redemption Date, the average, as determined
by the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by the Reference Treasury Dealers, at 5:00 p.m., New
York City time, on the third business day preceding that Redemption Date.
"Register of Notes" shall have the meaning specified in Section 305.
"Registrar" shall have the meaning specified in Section 305.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the date of this Indenture, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Notes means April 1, or October 1 next preceding the applicable
Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Related Business" means any business related, ancillary or complementary
(as determined in good faith by the Board of Directors) to the business of the
Company and its Restricted Subsidiaries on the date of this Indenture.
"Remaining Scheduled Payments" means, with respect to the Notes to be
redeemed, the remaining scheduled payments of principal of and interest on
those Notes that would be due after the related Redemption Date but for that
redemption; provided, however, that if such Redemption Date is not an Interest
Payment Date with respect to the Notes to be redeemed, the amount of the next
succeeding schedule interest payment on those Notes will be reduced by the
amount of interest accrued on such Notes to such Redemption Date.
"Restricted Security" shall have the meaning specified in Rule 144 of the
Securities Act.
"Restricted Subsidiary" means any Subsidiary substantially all the
property of which is located, or substantially all of the business of which is
carried on, within the United States of America (other than its territories
and possessions) which shall at the time, directly or indirectly through one or
more Subsidiaries or in combination with one or more other Subsidiaries, own,
operate or be a lessee of a Principal Property.
"Rule 144A" means Rule 144A under the Securities Act.
"Sale and Leaseback Transaction" has the meaning specified in Section
1009.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Note or any installment
of principal thereof or interest thereon, means the date specified in such
Note as the fixed date on which the principal of such Note or such installment
of principal or interest is due and payable.
"Subsidiary" means as to any Person, a Corporation or other entity of
which the shares of stock or other ownership interests have 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 or other entity are
at the time owned, or management of which is otherwise controlled, directly or
indirectly, through one or more intermediaries, or both, by such Person. For
purposes of this Indenture, all Subsidiaries are also Affiliates of the
Company.
"Treasury Rate" means, with respect to any Redemption Date, the rate per
annum equal to the semiannual equivalent yield to maturity (computed as of the
second business day immediately preceding that Redemption Date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for that Redemption Date.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that
in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Trustee" shall
mean or include each Person who is then a Trustee hereunder.
"U.S. Government Obligation" has the meaning specified in Section 1304.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of
an Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth
in this Indenture.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include,
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he or she
has made such examination or investigation as is necessary to enable him or
her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon: (x) a certificate of
public officials; or (y) a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given, made or
taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and (subject to Section 601) conclusive in favor
of the Trustee and the Company, if made in the manner provided in this
Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
a certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such
instrument or writing acknowledged to him or her the execution thereof. Where
such execution is by a signer acting in a capacity other than his or her
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his or her authority. The fact and date of the execution
of any such instrument or writing, or the authority of the Person executing
the same, may also be proved in any other manner which the Trustee deems
sufficient.
The ownership of Notes shall be proved by the Register of Notes.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Note shall bind every future Holder of the
same Note and the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Note.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Notes entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Notes, provided that the Company may not set a record date for, and
the provisions of this paragraph shall not apply with respect to, the giving
or making of any notice, declaration, request or direction referred to in the
next paragraph. If any record date is set pursuant to this paragraph, the
Holders of Outstanding Notes on such record date, and no other Holders, shall
be entitled to take the relevant action, whether or not such Holders remain
Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
(defined below) by Holders of the requisite principal amount of Outstanding
Notes on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be cancelled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Notes on the date such action is taken. Promptly after
any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by
Holders and the applicable Expiration Date to be given to the Trustee in writing
and to each Holder of Notes in the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Notes entitled to join in the giving or
making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 502, (iii) any request to institute proceedings
referred to in Section 507(2) or (iv) any direction referred to in Section 512.
If any record date is set pursuant to this paragraph, the Holders of Outstanding
Notes on such record date, and no other Holders, shall be entitled to join in
such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Notes on such record
date. Nothing in this paragraph shall be construed to prevent the Trustee from
setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be cancelled
and of no effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Notes on the date such action is taken. Promptly after any record
date is set pursuant to this paragraph, the Trustee, at the Company's expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Notes in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of
the proposed new Expiration Date is given to the other party hereto in writing,
and to each Holder of Notes in the manner set forth in Section 106, on or prior
to the existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to this Section, the party hereto
which set such record date shall be deemed to have initially designated the
180th day after such record date as the Expiration Date with respect thereto,
subject to its right to change the Expiration Date as provided in this
paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than
the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Note may do so with regard to
all or any part of the principal amount of such Note or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
Section 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Department, or
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to
it at the address of its principal office specified in the first paragraph of
this instrument or at any other address previously furnished in writing to the
Trustee by the Company, Attention: Chief Financial Officer.
Section 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at its address as it appears in the Register of Notes,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Section 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act which is required under such Act to be a part of
and govern this Indenture, the latter provision shall control. If any provision
of this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Section 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company, and by any
Guarantors, shall bind their respective successors and assigns, whether so
expressed or not.
Section 110. Separability Clause.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 111. Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall give
to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
Section 112. Governing Law.
This Indenture and the Notes shall be governed by and construed in
accordance with the law of the State of New York.
Section 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Note shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of the Notes (other
than a provision of any Note which specifically states that such provision
shall apply in lieu of this Section)) payment of interest or principal (and
premium, if any) need not be made at such Place of Payment on such date, but
may be made on the next succeeding Business Day at such Place of Payment with
the same force and effect as if made on the Interest Payment Date or
Redemption Date, at the Stated Maturity.
ARTICLE II
Form of Notes
Section 201. Form Generally.
The Notes shall be in substantially the form set forth in this Article,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such legends, letters, numbers or other marks of identification and such
legends or endorsements placed thereon as may be required to comply with the
rules of any securities exchange or Depositary therefor or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution thereof.
The definitive Notes shall be printed, lithographed or engraved on steel
engraved borders or may be produced in any other manner, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
Section 202. Form of Face of Note.
___________________________________________________________
___________________________________________________________________________
No. _________ $___________
International Speedway Corporation, a corporation duly organized and
existing under the laws of the State of Florida (herein called the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
__________________, or registered assigns, the principal sum of
__________________ Dollars on October 15, 2004, and to pay interest thereon and
Liquidated Damages, if any, from October 6, 1999 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually in arrears on April 15 and October 15 in each year, commencing
April 15, 2000, at the rate of 7.875% per annum, until the principal hereof is
paid or made available for payment, provided that any principal and premium, and
any such installment of interest and any Liquidated Damages, which is overdue
shall bear interest at the rate of 8.875% per annum (to the extent that the
payment of such interest shall be legally enforceable), from the dates such
amounts are due until they are paid or made available for payment, and such
interest shall be payable on demand. The Company's obligation to pay interest
hereunder shall include post-petition interest in any proceeding under any
Bankruptcy Law. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the April 1 or October 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Notes not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture.
Payment of the principal of (and premium and Liquidated Damages, if any)
and interest on this Note will be made at the office or agency of the Company
maintained for that purpose within or without the City and State of New York,
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts provided,
however, that at the option of the Company payment of interest and Liquidated
Damages, if any, may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Register of Notes.
Event Equipment Leasing, Inc., a Florida corporation, Event Support
Corporation, a Florida corporation, North American Testing Company, a Florida
corporation, ISC Properties, Inc., a Florida corporation, Seasonal Services,
Inc., a Florida corporation, Great Western Sports, Inc., an Arizona
corporation, Phoenix Speedway Corp., a Delaware corporation, Watkins Glen
International, Inc., a Delaware corporation, South Carolina International
Speedway Corporation, a South Carolina corporation, Americrown Service
Corporation, a South Carolina corporation, Chicago Holdings, Inc., a Nevada
corporation, New York International Speedway Corp., a Delaware corporation,
Miami Speedway Corp., a Nevada corporation, Michigan International Speedway,
Inc., a Michigan corporation, Rocky Mountain Speedway Corporation, a Colorado
corporation, California Speedway Corporation, a Delaware corporation, 88
Corp.,
a Delaware corporation, North Carolina Speedway, Inc., a North Carolina
corporation, Regiment, Inc., a North Carolina corporation, Pennsylvania
International Raceway, Inc., a Pennsylvania corporation, Motorsport
International Corp., a Pennsylvania corporation, Competition Tire South, Inc.,
a Delaware corporation, Competition Tire West, Inc., a Delaware corporation
(collectively, the Guarantors, which term includes any successors under the
Indenture herein after referred to and any Subsidiary of the Company that
provides a Note Guarantee pursuant to the Indenture), have jointly and
severally, fully and unconditionally guaranteed the payment of the principal
of, premium and interest on, and Liquidated Damages, if any, with respect to,
the Notes.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have
the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory
for any purpose.
In Witness Whereof, the Company has caused this instrument to be executed
by its duly authorized officer.
Dated: October 6, 1999 INTERNATIONAL SPEEDWAY CORPORATION
By:
Name:
Title:
Section 203. Form of Reverse of Note.
This Note is one of a duly authorized issue of Notes of the Company
(herein called the "Notes"), issued and to be issued under an Indenture, dated
as of October 6, 1999 (herein called the "Indenture", which term shall have
the meaning assigned to it in such instrument), between the Company, the
Guarantors named in the signature pages thereto and First Union National Bank,
as Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture), and reference is hereby made to the Indenture and
all indentures supplemental thereto for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Guarantors, the Trustee, and the Holders of the Notes and of the terms upon
which the Notes are, and are to be, authenticated and delivered. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. To the extent any provision of this Note conflicts
with the express provisions of the Indenture, the provisions of the Indenture
shall govern and be controlling. The Notes are general obligations of the
Company limited to $225 million in aggregate principal amount.
The Notes are subject to redemption upon not less than 30 days' and not
more than 60 days' notice by mail at any time or from time to time, as a whole
or in part, at the election of the Company, at Redemption Prices equal to the
greater of (1) 100% of the principal amount of the Notes to be redeemed or (2)
the sum of the present values of the Remaining Scheduled Payments on the Notes
to be redeemed, discounted, on a semiannual basis (assuming a 360-day
consisting of twelve 30-day months), at a rate equal to the sum of the
applicable Treasury Rate plus 30 basis points. All accrued and unpaid
interest on the Notes to be redeemed shall be paid to the Redemption Date but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of the Notes, or one or more Predecessor
Notes, of record at the close of business on the relevant Record Dates referred
to on the face hereof, all as provided in the Indenture.
In the event of redemption of this Note in part only, a new Note or Notes
of like tenor for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Note or certain restrictive covenants and Events
of Default with respect to this Note, in each case upon compliance with
certain conditions set forth in the Indenture.
If an Event of Default shall occur and be continuing, the principal of
the Notes may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes to be affected under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of more than 50% in principal amount of the Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the Notes at the time
Outstanding, on behalf of the Holders of all Notes, to waive compliance by the
Company with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange here for or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
As provided in and subject to the provisions of the Indenture, the Holder
of this Note shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at
the time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and provided to the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of Notes at the time Outstanding a
direction inconsistent with such request, and Trustee shall have failed to
institute any such proceeding, for 60 days after receipt of such notice,
request and provision of indemnity. The foregoing shall not apply to any suit
instituted by the Holder of this Note for the enforcement of: (i) any payment
of principal hereof or any premium or interest hereon or (ii) any payment of
any Liquidated Damages with respect to this Note, on or after the respective
due dates expressed herein or thereof.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and
interest on, and Liquidated Damages, if any, with respect to, this Note at the
times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Register of Notes,
upon surrender of this Note for registration of transfer at the office or
agency of the Company in any Place of Payment, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by, the Holder hereof or its attorney
duly authorized in writing, and thereupon one or more new Notes and of like
tenor, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in minimum
denominations of $100,000 and integral multiple of $1,000 in excess thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, the Notes are exchangeable for a like aggregate principal amount of
Notes of like tenor of a different authorized denomination, as requested by
the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Notes shall have all the rights set forth in the
Registration Rights Agreement dated as of October 6, 1999, among the Company
and the other parties named on the signature pages thereof.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
Section 204. Form of Legend for Global Notes and Schedule of Exchanges of
Interests in the Global Note.
Every Global Note authenticated and delivered hereunder shall bear a
legend in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
NOTE REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Every Global Note authenticated and delivered hereunder shall contain a
"Schedule of Exchanges of Interests in the Global Note" in form and substance
satisfactory to the Company and the Trustee.
Section 205. Private Placement Legend.
Each Note (including each Global Note) (and all Notes issued in exchange
therefor or substitution thereof) that constitutes a "Restricted Security"
under the Securities Act and the Regulations promulgated thereunder shall bear
a legend ("Private Placement Legend") in substantially the following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
NOTE, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) (THE
"RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY OR ANY
SUBSIDIARY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSE (E) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO
REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS NOTE IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
Section 206. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Notes referred to in the within-mentioned Indenture.
FIRST UNION NATIONAL BANK, As Trustee
By
Authorized Signatory
Section 207. Form of Assignment.
Any Note constituting a Restricted Security shall have the Assignment
Form set forth on Exhibit A attached to the Note. Any Note not constituting
a Restricted Security shall have the Assignment Form set forth on Exhibit B
attached to the Note.
ARTICLE III
The Notes
Section 301. Amount.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture shall be $225,000,000 (except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Section 304, 305, 306, 906 or 1107
and except for any Notes which, pursuant to Section 303, are deemed never to
have been authenticated and delivered hereunder).
Section 302. Denominations.
The Notes shall be issuable only in fully registered form without
coupons, and only in minimum denominations of $100,000 and in integral
multiples of $1,000 in excess thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Notes shall be executed on behalf of the Company by its Chairman of
the Board, its Vice Chairman of the Board, its President or one of its Vice
Presidents, or by any other duly authorized officer. The signature of any of
these officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Notes executed by the Company to the
Trustee for authentication, together with a Company Order for the
authentication and delivery of such Notes, and the Trustee in accordance with
the Company Order shall authenticate and deliver such Notes.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by
the Trustee by manual signature, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder. Notwithstanding the foregoing, if any
Note shall have been authenticated and delivered hereunder but never issued
and sold by the Company, and the Company shall deliver such Note to the Trustee
for cancellation as provided in Section 309, for all purposes of this Indenture
such Note shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
Section 304. Temporary Note.
Pending the preparation of definitive Notes, the Company may execute, and
upon Company Order the Trustee shall authenticate and deliver, temporary Notes
which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.
If temporary Notes are issued, the Company will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of
definitive Notes, the temporary Notes shall be exchangeable for definitive Notes
of such series upon surrender of the temporary Notes at the office or agency of
the Company in a Place of Payment, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Notes, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor one or more
definitive Notes of the same series, of any authorized denominations and of
like tenor and aggregate principal amount. Until so exchanged, the temporary
Notes shall in all respects be entitled to the same benefits under this
Indenture as definitive Notes of such series and tenor.
Section 305. Registration; Registrar and Paying Agent; Registration of
Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register of Notes (the register maintained in such office and in any
other office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the "Register of Notes") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Notes and of transfers of Notes. The Trustee
is hereby appointed "Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided.
The Company shall maintain an office or agency where the Notes may be
presented for payment ("Paying Agent").
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depository with respect to the Global Notes.
The Company may appoint one or more co-Registrars and one or more
additional Paying Agents, and the term "Registrar" includes any co-Registrar
and the term "Paying Agent" includes any additional Paying Agent.
The Company initially appoints the Trustee to act as the Paying Agent and
to act as Custodian with respect to the Global Notes. The Corporate Trust
Offices of the Trustee in New York, New York and Jacksonville, Florida shall
be the initial "Places of Payment". The office of any additional Paying Agent
shall also be a Place of Payment.
Subject to the provisions of Clauses (1) - (7) of this Section 305, upon
surrender for registration of transfer of any Notes at the office or agency of
the Company in a Place of Payment, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes, of any authorized denominations and of
like tenor and aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same series, of any authorized denominations and of like tenor and
aggregate principal amount, upon surrender of the Notes to be exchanged at
such office or agency. Whenever any Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Notes which the Holder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Each Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Registrar duly executed, by the Holder
thereof or its attorney duly authorized in writing, and shall also be
accompanied by such certifications with respect to the transferee and the method
by which the transferor elects to effect the transfer, as the Company and the
Registrar shall require in their sole and absolute discretion.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Notes other than exchanges
pursuant to Section 304, 906 or 1107 not involving any transfer.
If the Notes are to be redeemed in part, the Company shall not be
required (A) to issue, register the transfer of or exchange any Notes during
a period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of any such Notes selected for redemption
under Section 1103 and ending at the close of business on the day of such
mailing, or (B) to register the transfer of or exchange any Note so selected
for redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part.
Any Holder of any Global Note shall, by acceptance of such Global Note,
agree that transfers of beneficial interests in such Global Notes may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent) and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry.
The provisions of Clauses (1), (2), (3), (4), (5), (6) and (7) below
shall apply only to Global Notes:
(1) Each Global Note authenticated under this Indenture shall be
registered in the name of the Depositary or a nominee thereof and delivered to
such Depositary or a nominee thereof or Custodian therefor, and each such
Global Note shall constitute a single Note for all purposes of this Indenture.
Members of, or participants in, the Depositary ("Agent Members") shall have no
rights under this Indenture with respect to any Global Note held on their
behalf by the Depositary, or the Trustee as its Custodian, or under the Global
Notes, and the Depositary may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner of the Global Notes
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary, or impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Note.
(2) Transfers of the Global Notes shall be limited to transfers in
whole, but not in part, to the Depositary, its successors or their respective
nominees. Interests of beneficial owners in any Global Note may be
transferred or exchanged for physical Notes in accordance with the rules and
procedures of the Depositary and the provisions of Section 312. In addition,
physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in any Global Note if (i) the Depositary notifies
the Company that it is unwilling or unable to continue as Depositary for the
Global Note or has ceased to be a clearing agency registered under the
Exchange Act, and a successor depositary is not appointed by the Company within
90 days of such notice or (ii) an Event of Default has occurred and is
continuing and the Registrar has received a request from the Depositary to issue
physical Notes.
(3) In connection with any transfer or exchange of a portion of the
beneficial interest in the Global Note to beneficial owners pursuant to
Clause (2) of this Section 305, the Registrar shall (if one or more physical
Notes are to be issued) reflect on its books and records the date and a
decrease in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more physical Notes of like tenor and amount.
(4) In connection with the transfer of the entire Global Note to
beneficial owners pursuant to Clause (2) of this Section 305, the Global Note
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depositary in exchange for its beneficial
interest in the Global Note, an equal aggregate principal amount of Notes
Registered of authorized denominations.
(5) Any Note Registered constituting a Restricted Security delivered
in exchange for an interest in the Global Note pursuant to Clauses (3) or (4)
of this Section 305 shall, except as otherwise provided by Clauses 1 (A) (x)
and (3) of Section 312, bear the legend regarding transfer restrictions
applicable set forth in Section 205.
(6) The Holder of the Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
(7) Every Note authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Note or any portion
thereof, whether pursuant to this Section, Section 304, 306, 906 or 1107 or
otherwise, shall be authenticated and delivered in the form of, and shall be,
a Global Note, unless such Note is registered in the name of a Person other
than the Depositary for such Global Note or a nominee thereof.
Section 306. Mutilated, Destroyed, Lost and Stolen Notes.
If any mutilated Note is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Note of the same series and of like tenor and principal amount and bearing
a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Note and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of the
same series and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or
is about to become due and payable, the Company in its discretion may, instead
of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 307. Payment of Interest; Liquidated Damages; Interest Rights
Preserved.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Note (or one or more Predecessor Notes) is registered at the
close of business on the Regular Record Date for such interest.
The Trustee shall be entitled to rely upon the information contained in
any notice (including dates and computations) delivered by the Company which
purports to be given under Section 4(b) of the Registration Rights Agreement
in determining the amount of Liquidated Damages payable under Section 4(a)
thereof; provided however, that nothing herein shall relieve the Company of
its obligations to make any payments due under the Registration Rights
Agreement.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Notes (or their respective Predecessor Notes)
are registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Note and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid
in respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this Clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days prior
to the date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name and
at the expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be given to
each Holder of Notes in the manner set forth in Section 106, not less than 10
days prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the Notes
(or their respective Predecessor Notes) are registered at the close of
business on such Special Record Date and shall no longer be payable pursuant to
the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the Notes
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which such Notes may be listed, and upon such notice as
may be required by such exchange, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this Clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note delivered
under this Indenture upon registration of transfer of or in exchange for or in
lieu of any other Note shall carry the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Note.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of principal of and any premium and (subject to
Section 307) any interest on, and Liquidated Damages, if any, with respect to,
such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
Section 309. Cancellation.
All Notes surrendered for payment, redemption, registration of transfer
or exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have acquired in
any manner whatsoever, and may deliver to the Trustee (or to any other Person
for delivery to the Trustee) for cancellation any Notes previously
authenticated hereunder which the Company has not issued and sold, and all
Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall
be authenticated in lieu of or in exchange for any Notes cancelled as provided
in this Section, except as expressly permitted by this Indenture. All
cancelled Notes held by the Trustee shall be disposed of as directed by a
Company Order.
Section 310. Computation of Interest.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months.
Section 311. CUSIP Number.
The company in issuing the Notes may use one or more "CUSIP" numbers, and
if so, the appropriate CUSIP number(s) shall be included in all notices of
redemption or exchange as a convenience to Holders; provided that any such
notice may state that no representation is made by the Trustee as to the
correctness or accuracy of any CUSIP number(s) printed in the notice or on the
Notes, and that reliance may be placed only on the other identification
numbers printed on the Notes. The Company shall promptly notify the Trustee of
any change in the CUSIP number.
Section 312. Special Transfer Provisions.
(1) Transfers to Non-QIB Institutional Accredited Investors and Non-
U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person.
(A) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
legend required by Section 205 hereof, if (x) the requested transfer is
after October 6, 2000 and the transferor certifies that the Restricted
Security was not acquired from the Company or an Affiliate of the Company
less than two years prior to the date of the proposed transfer or (y) (i)
in the case of a transfer to an Institutional Accredited Investor which
is not a QIB (excluding Non-U.S. Persons), the proposed transferee has
delivered to the Registrar a certificate substantially in the form of
Exhibit C hereto or (ii) in the case of a transfer to a Non-U.S. Person,
the proposed transferor has delivered to the Registrar a certificate
substantially in the form of Exhibit D hereto; and
(B) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (A) above and (y)
instructions given in accordance with the Depositary's and the
Registrar's procedures, whereupon (i) the Registrar shall reflect on its
books and records the date and (if the transfer does not involve a
transfer of outstanding physical Notes) a decrease in the principal
amount of the Global Note in an amount equal to the principal amount of
the beneficial interest in the Global Note to be transferred, and (ii)
the Company shall execute and the Trustee shall authenticate and deliver
one or more physical Notes of like tenor and amount.
(2) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(A) the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box provided
for on the form of Note stating, or has otherwise advised the Company and
the Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Note stating, or has otherwise
advised the Company and the Registrar in writing, that it is purchasing
the Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is
a Q.B. within the meaning of Rule 144A, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as it has requested
pursuant to Rule 144A or has determined not to request such information
and that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A; and
(B) if the proposed transferee is an Agent Member, and the Notes
to be transferred consist of Notes Registered which after transfer are
to be evidenced by an interest in the Global Note, upon receipt by the
Registrar of instructions given in accordance with the Depositary's and
the Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the Global
Note in an amount equal to the principal amount of the physical Notes to
be transferred, and the Trustee shall cancel the physical Notes so
transferred.
(3) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the legend the Registrar shall
deliver Notes that do not bear the legend. Upon the registration of transfer,
exchange or replacement of Notes bearing the legend the Registrar shall
deliver
only Notes that bear the legend unless the circumstance contemplated by
paragraph 1 (A) (x) of this Section 312 exist or there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of
the Act.
(4) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the legend, and
agrees that it will transfer such Note only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 305 or this Section 312
for a period of three years. The Company shall have the right to inspect and
make copies of all such letters, notices or other written communications at any
reasonable time upon the giving of reasonable written notice to the Registrar.
ARTICLE IV
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Notes herein expressly provided for), and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Notes theretofore authenticated and delivered (other than
(i) Notes which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all such Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for that
purpose money in an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for principal and any premium and Liquidated Damages, if any,
and interest to the date of such deposit (in the case of Notes which have become
due and payable) or to the Stated Maturity or Redemption Date, as the case may
be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations
of the Trustee to any Authenticating Agent under Section 614 and, if money
shall have been deposited with the Trustee pursuant to subclause (B) of Clause
(1) of this Section, the obligations of the Trustee under Section 402 and the
last paragraph of Section 1003 shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal, and any premium
and Liquidated Damages, if any, and interest for whose payment such money has
been deposited with the Trustee.
ARTICLE V
Remedies
Section 501. Events of Default.
"Event of Default", wherever used herein with respect to Notes, means any
one of the following events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon, or Liquidated Damages
with respect to, the Notes when the same becomes due and payable, and
continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of or any premium on the
Notes at its Maturity; or
(3) default in the performance, or breach, of any covenant or warranty
of the Company or any Restricted Subsidiary in this Indenture (other than a
covenant or warranty a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and continuance of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Notes a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(4) except as permitted by this Indenture, any Note Guarantee shall be
held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect, or any Guarantor, or any Person
acting on behalf of any Guarantor, shall deny or disaffirm its obligations
under its Note Guarantee; or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company or any Restricted
Subsidiary in an involuntary case or proceeding under any applicable federal
or state bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company or any Restricted Subsidiary a bankrupt
or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Company or any Restricted Subsidiary under any applicable federal or state law,
or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or any Restricted Subsidiary or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60
consecutive days; or
(6) the commencement by the Company or any Restricted Subsidiary of a
voluntary case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to
the entry of a decree or order for relief in respect of the Company or any
Restricted Subsidiary in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable federal or state law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any Restricted
Subsidiary or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it in writing
of its inability to pay its debts generally as they become due, or the taking
of corporate action by the Company in furtherance of any such action.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 501(5) or 501(6)) with respect to the Notes occurs and is continuing,
then in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Notes may declare the principal amount of
all the Notes to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such
declaration such principal amount (or specified amount) shall become immediately
due and payable. If an Event of Default specified in Section 501(5) or 501 (6)
with respect to the Notes occurs, the principal amount of all the Notes shall
automatically, and without any declaration or other action on the part of the
Trustee or any Holder, become immediately due and payable.
At any time after such a declaration of acceleration with respect to the
Notes has been made and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter in this Article provided,
the Holders of a majority in principal amount of the Outstanding Notes, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay:
(A) all overdue interest on, and Liquidated Damages, if any, with
respect to, the Notes,
(B) the principal of (and premium, if any, on) the Notes which
have become due otherwise than by such declaration of acceleration and
any interest thereon at the rate or rates prescribed therefor in the
Notes,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest and Liquidated Damages, if any, at the
rate or rates prescribed therefor in the Notes, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to the Notes, other than the
non-payment of the principal of the Notes which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section
513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(1) default is made in the payment of any interest on, or Liquidated
Damages, if any, with respect to, the Notes when such interest or Liquidated
Damages becomes due and payable and such default continues for a period of 30
days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) the Notes at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of the Notes, the whole amount then due and payable on the Notes for
principal and any premium and interest and Liquidated Damages, if any, and, to
the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal and premium and on any overdue interest and on
any Liquidated Damages, at the rate or rates prescribed therefor in the Notes,
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection (including any costs and expenses incurred
in any bankruptcy proceeding), including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If an Event of Default with respect to the Notes occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of the Notes by such appropriate
judicial proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any covenant
or agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any other
obligor upon the Notes), its property or its creditors, the Trustee shall be
entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys
or other property payable or deliverable on any such claims and to distribute
the same; and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section
607.
No provision of this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
Section 505. Trustee May Enforce Claims Without Possession of
the Notes.
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Notes in respect of which such judgment
has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any
premium or interest, upon presentation of the Notes and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully
paid:
First: To the payment of all amounts due the Trustee under Section 607;
and
Second: To the payment of the amounts then due and unpaid on the Notes
for principal, any premium, interest, and Liquidated Damages, if any, in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the amounts
due and payable on such Notes for principal, any premium, interest, and
Liquidated Damages, if any, respectively.
Section 507. Limitation on Suits.
No Holder of any Note shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment
of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Notes;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Notes shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(3) such Holder or Holders have provided to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and provision of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Notes;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatsoever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all of such Holders.
Section 508. Unconditional Right of Holders to Receive Payment.
Notwithstanding any other provision in this Indenture, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on, and Liquidated Damages, if any with respect to, such Note on the
respective Stated Maturities expressed in such Note (or, in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement
of any such payment, and such rights shall not be impaired without the consent
of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee
or to such Holder, then and in every such case, subject to any determination
in such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as
though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Notes to
exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default
or an acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Holders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by the Holders, as the
case may be.
Section 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding Notes
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the Notes, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Notes may on behalf of the Holders of all the Notes waive any past
default hereunder and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on
or any Liquidated Damages with respect to, any Note, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
Section 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, a court may require any party litigant in such
suit to file an undertaking to pay the costs of such suit, and may assess
costs against any such party litigant, in the manner and to the extent provided
in the Trust Indenture Act; provided that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the
Company or by the Trustee.
Section 515. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE VI
The Trustee
Section 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its
duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
Section 602. Notice of Defaults.
If a default occurs hereunder with respect to the Notes, the Trustee
shall give the Holders of the Notes notice of such default as and to the
extent provided by the Trust Indenture Act; provided, however, that in the case
of any default of the character specified in Section 501(4) with respect to the
Notes, no such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default with respect to the Notes.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
provided to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally or by agent
or attorney; and
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 604. Not Responsible for Recitals or Issuance of the Notes.
The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Notes. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of the Notes or the proceeds thereof.
Section 605. May Hold Notes.
The Trustee, any Authenticating Agent, any Paying Agent, any Registrar
or any other agent of the Company, in its individual or any other capacity,
may become the owner or pledgee of the Notes and, subject to Sections 608 and
613, may otherwise deal with the Company with the same rights it would have if
it were not Trustee, Authenticating Agent, Paying Agent, Registrar or such other
agent.
Section 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under
no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
Section 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The provisions of this Section 607 shall survive the termination of this
Indenture and the resignation or removal of the Trustee.
Section 608. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject
to the provisions of, the Trust Indenture Act and this Indenture.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be one (and only one) Trustee hereunder with
respect to the Notes. Each Trustee shall be a Person that is eligible pursuant
to the Trust Indenture Act to act as such and has a combined capital and
surplus of at least $100,000,000. If any such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section and
to the extent permitted by the Trust Indenture Act, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published. If at any
time the Trustee with respect to the Notes shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
The Trustee may resign at any time with respect to the Notes by giving
written notice thereof to the Company. If the instrument of acceptance by a
successor Trustee required by Section 611 shall not have been delivered to the
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Notes.
The Trustee may be removed at any time with respect to the Notes by Act
of the Holders of a majority in principal amount of the Outstanding Notes,
delivered to the Trustee and to the Company.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall
fail to resign after written request therefor by the Company or by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation, conservation
or liquidation, then, in any such case, (A) the Company by a Board Resolution
may remove the Trustee with respect to the Notes, or (B) subject to Section
514, any Holder who has been a bona fide Holder of a Note for at least six
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee with
respect to all Notes and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Notes, the Company, by a Board Resolution, shall promptly
appoint a successor Trustee or Trustees with respect to the Notes (it being
understood that any such successor Trustee may be appointed with respect to
all Notes and that at any time there shall be only one Trustee with respect to
all Notes) and shall comply with the applicable requirements of Section 611. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Notes
shall be appointed by Act of the Holders of a majority in principal amount of
the Outstanding Notes, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment in accordance with the applicable
requirements of Section 611, become the successor Trustee with respect to the
Notes and to that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee with respect to the Notes shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
required by Section 611, any Holder who has been a bona fide Holder of a Note
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Notes.
The Company shall give notice of each resignation and each removal of the
Trustee with respect to the Notes each appointment of a successor Trustee with
respect to the Notes to all Holders of Notes in the manner provided in Section
106. Each notice shall include the name of the successor Trustee with respect
to the Notes and the address of its Corporate Trust Office.
Section 611. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee with respect
to all Notes, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.
Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
Any Corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any Corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
Corporation succeeding to all or substantially all of the bond administration
portion of the corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such Corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Notes shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes.
Section 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Notes), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect
to the Notes which shall be authorized to act on behalf of the Trustee to
authenticate Notes issued upon original issue and upon exchange, registration
of transfer or partial redemption thereof or pursuant to Section 306, and
Notes so authenticated shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Notes by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating
Agent. Each Authenticating Agent shall be acceptable to the Company and shall at
all times be a Corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time an Authenticating
Agent shall cease to be eligible in accordance with the provisions of this
Section, such Authenticating Agent shall resign immediately in the manner and
with the effect specified in this Section.
Any Corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any Corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such Corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Notes. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.
If an appointment with respect to the Notes is made pursuant to this
Section, the Notes may have endorsed thereon, in addition to the Trustee's
certificate of authentication, an alternative certificate of authentication in
the following form:
This is one of the Notes referred to in the within-mentioned Indenture.
,
As Trustee
By
As Authenticating Agent
By
Authorized Officer
ARTICLE VII
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than January 15 and July 15 in each year,
a list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders of the Notes as of the preceding January 1 or July 1,
as the case may be, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished;
excluding from any such list names and addresses received by the Trustee in
its capacity as Registrar.
Section 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Registrar. The
Trustee may destroy any list furnished to it as provided in Section 701 upon
receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Notes, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
Every Holder of Notes, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any agent
of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.
Section 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than July 1 in each calendar
year, commencing in 2000.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any Notes
are listed, with the Commission and with the Company. The Company will notify
the Trustee when any Notes are listed on any stock exchange.
Section 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant to the Trust Indenture Act; provided that
any such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed
with the Trustee within 15 days after the same is so required to be filed with
the Commission.
ARTICLE VIII
Successors
Section 801. Merger, Consolidation, or Sale of Assets.
Neither the Company nor any Subsidiary may, directly or indirectly: (i)
consolidate with or merge into any other Person; or (ii) convey, transfer or
lease its properties and assets substantially as an entirety to any Person,
and the Company and its Subsidiaries shall not permit any Person to consolidate
with or merge into the Company or any Subsidiary or convey, transfer or lease
its properties and assets substantially as an entirety to the Company or any
of its Subsidiaries, unless:
(1) in case the Company or any Subsidiary (subject to Section 1205
hereof) shall consolidate with or merge into another Person or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, the Person formed by such consolidation or into which the Company or any
Subsidiary is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company or any Subsidiary
substantially as an entirety shall be a Corporation shall be organized and
validly existing under the laws of the United States of America, any state
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of
and any premium and interest on, and Liquidated Damages, if any, with respect
to, all the Notes and the performance or observance of every covenant of this
Indenture on the part of the Company or any Subsidiary to be performed or
observed by such consolidation or into which the Company or any Subsidiary
shall have been merged or by the Person which shall have acquired the
Company's or any Subsidiary's assets;
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or any Subsidiary
as a result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of
Default, shall have happened and be continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company or any
Restricted Subsidiary would become subject to a Lien which would not be
permitted by this Indenture, the Company or such successor Person, as the case
may be, shall take such steps as shall be necessary effectively to secure the
Notes equally and ratably with (or prior to) all indebtedness secured thereby;
and
(4) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Section 802. Successor Substituted.
Upon any consolidation of the Company or any Subsidiary with, or merger
of the Company or any Subsidiary into, any other Person or any conveyance,
transfer or lease of the properties and assets of the Company or any
Subsidiary substantially as an entirety in accordance with Section 801, the
successor Person formed by such consolidation or into which the Company or such
Subsidiary is merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company or any Subsidiary under this Indenture with the same
effect as if such successor Person had been named as the Company or a
Subsidiary herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under
this Indenture and the Notes.
ARTICLE IX
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company herein and in
the Notes; or
(2) to add to the covenants of the Company for the benefit of the
Holders of the Notes or to surrender any right or power herein conferred upon
the Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of the Notes; or
(4) to add to or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of the Notes
in bearer form, registrable or not registrable as to principal, and with or
without interest coupons, or to permit or facilitate the issuance of the Notes
in uncertificated form; or
(5) to secure the Notes or one or more Note Guarantees; or
(6) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
(7) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Notes pursuant to the requirements
of Section 611; or
(8) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Indenture, provided that such action pursuant to this Clause (8)
shall not adversely affect the interests of the Holders of the Notes in any
material respect; or
(9) to allow any Subsidiary to Guarantee the Notes.
Section 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of more than 50% in principal amount of
the Outstanding Notes affected by such supplemental indenture, by Act of said
Holders delivered to the Company and the Trustee, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture
or of modifying in any manner the rights of the Holders of the Notes under
this Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note affected thereby,
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Note, or the date any Liquidated Damages
shall be due and payable with respect to any Note, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon the
redemption thereof or the rate at which any Liquidated Damages are payable
with respect thereto, or reduce the amount of the principal of, or change any
Place of Payment where, or the coin or currency in which, any Note or any
premium or interest thereon or any Liquidated Damages with respect thereto, is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of redemption,
on or after the Redemption Date or, in the case of any Liquidated Damages, the
date the same are due and payable), or
(2) reduce the percentage in principal amount of the Outstanding Notes,
the consent of whose Holders is required for any such supplemental indenture,
or the consent of whose Holders is required for any waiver (of compliance with
certain provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1011, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Note affected thereby; provided,
however, that this clause shall not be deemed to require the consent of any
Holder with respect to changes in the references to "the Trustee" and
concomitant changes in this Section and Section 1011, or the deletion of this
proviso, in accordance with the requirements of Section 611, or
(4) release any Guarantor from any of its obligations under any Note
Guarantee or this Indenture, except pursuant to the express terms of this
Indenture.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
Section 906. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for
in such supplemental indenture. If the Company shall so determine, new Notes
so modified as to conform, in the opinion of the Trustee and the Company, to
any such supplemental indenture may be prepared and executed by the Company
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
ARTICLE X
Covenants
Section 1001. Payment of Notes.
The Company covenants and agrees for the benefit of the Holders of the
Notes that it will duly and punctually pay the principal of and any premium
and interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on the Notes in accordance with the terms of the Notes and
this Indenture. The Company shall pay all Liquidated Damages, if any, in the
same manner on the dates and in the amounts set forth in the Registration Rights
Agreement.
Section 1002. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, the City of New
York, and in each Place of Payment an office or agency (which may be an office
of the Trustee or an agent of the Trustee, Registrar or co-registrar) where
the Notes may be presented or surrendered for payment, where the Notes may be
surrendered for registration of transfer or exchange and where the Notes and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
Section 1003. Money for Note Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to the Notes, it will, on or before each due date of the principal of or any
premium or interest on, or Liquidated Damages, if any, with respect to, any of
the Notes, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and any premium and interest and
Liquidated Damages so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly notify
the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any Notes,
it will, prior to each due date of the principal of or any premium or interest
on, or Liquidated Damages, if any, with respect to, any Notes, deposit with a
Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent for any Notes other than the
Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent will (1) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company (or any other obligor upon the
Notes) in the making of any payment in respect of the Notes, upon the written
request of the Trustee, forthwith pay to the Trustee all sums held in trust by
such Paying Agent for payment in respect of the Notes.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or any premium or
interest on, or Liquidated Damages, if any, with respect to, any Note and
remaining unclaimed for two years after such principal, premium or interest or
Liquidated Damages has become due and payable shall be paid to the Company on
Company Request, or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in each Place of
Payment, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
Section 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers
thereof the Company is in default in the performance and observance of any of
the terms, provisions and conditions of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
Section 1005. Existence.
Subject to Article VIII, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
Section 1006. Maintenance of Properties.
The Company will cause all properties used or useful in the conduct of
its business or the business of any Subsidiary to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
Section 1007. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, could
reasonably be expected by law to become a lien upon the property of the
Company or any Subsidiary, unless the obligation secured by such lien is
otherwise permitted under Section 1008 hereof; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.
Section 1008. Limitation on Liens.
(1) Except as otherwise provided in Section 1008(2), the Company shall
not, and shall not permit any Restricted Subsidiary to, issue, assume or
guarantee any Debt secured by a Lien upon any Principal Property of the
Company or of any Restricted Subsidiary or upon any shares of stock or Debt of
any Restricted Subsidiary (whether such Principal Property, shares of stock or
Debt are now owned or hereafter acquired) without in any such case effectively
providing concurrently with the issuance, assumption or guaranty of any such
Debt that the Notes (together with, if the Company shall so determine, any
other indebtedness of or guaranty by the Company or such Restricted Subsidiary
then existing or thereafter created which is not subordinate to the Notes)
shall be secured equally and ratably with (or, at the option of the Company,
prior to) such Debt, so long as such Debt shall be so secured; provided,
however, that nothing in this Section 1008 shall prevent, restrict or apply to
(and there shall be excluded from secured Debt in any computation under this
Section 1008) Debt secured by:
(A) Liens on property, shares of stock or indebtedness of any
Corporation existing at the time such Corporation becomes a Restricted
Subsidiary or arising thereafter (i) otherwise than in connection with
the borrowing of money arranged thereafter and (ii) pursuant to
contractual commitments entered into prior to and not in contemplation
of such Corporation's becoming a Restricted Subsidiary;
(B) Liens on any property (including shares of stock or Debt)
existing at the time of acquisition thereof (including acquisition
through merger or consolidation) or securing the payment of all or any
part of the purchase price or construction cost thereof or securing any
Debt incurred prior to, at the time of or within 180 days after, the
acquisition of such property, shares of stock or Debt or the completion
of any such construction, whichever is later, for the purpose of
financing all or any part of the purchase price or construction costs
thereof (provided such Liens are limited to such property, improvements
thereon and the land upon which such property and improvements are
located and any other property not then constituting a Principal
Property);
(C) Liens on any property to secure all or any part of the cost
of development, operations, construction, alteration, repair or
improvement of all of any part of such property, or to secure Debt
incurred prior to, at the time of or within 180 days after, the
completion of such development, operation, construction, alteration,
repair or improvement, whichever is later, for the purpose of financing
all of any part of such cost (provided such Liens are limited to such
property, improvements thereon and the land upon which such property and
improvements are located and any other property not then constituting a
Principal Property);
(D) Liens which secure Debt owing by a Restricted Subsidiary to
the Company or to another Restricted Subsidiary or by the Company to a
Restricted Subsidiary;
(E) Liens securing indebtedness of a Corporation which becomes
a successor of the Company or any Subsidiary in accordance with the
provisions of Article VIII;
(F) Liens on property of the Company or a Restricted Subsidiary
in favor of the United States of America or any state thereof, or any
department agency or instrumentality or political subdivision of the
United States of America or any State thereof, or in favor of any other
country or any political subdivision thereof, to secure partial,
progress, advance or other payments pursuant to any contract or statute
or to secure any indebtedness incurred for the purpose of financing all
or any part of the purchase price or the cost of construction of the
property subject to such Liens, or in favor of any trustee or mortgagee
for the benefit of holders of indebtedness of any such entity incurred
for any such purpose;
(G) Liens existing at the date of this Indenture; and
(H) any extension, renewal or replacement (or successive
extension, renewals or replacements), in whole or in part, of any Lien
referred to in the foregoing Clauses (A) to (G), inclusive, or of any
Debt secured thereby; provided that such extension, renewal or
replacement Lien shall be limited to all or any part of the same property
that secured the Lien extended, renewed or replaced (plus any
improvements on such property) and shall secure no larger amount of Debt
than that existing at the time of such extension, renewal or replacement.
(2) Notwithstanding the foregoing provisions of this Section 1008, the
Company and any one or more Restricted Subsidiaries may issue, assume or
guarantee Debt secured by a Lien which would otherwise be subject to the
foregoing restrictions if at the time it does so (the "Incurrence Time") the
aggregate amount of such Debt plus all other Debt of the Company and its
Restricted Subsidiaries secured by a Lien which would otherwise be subject to
the foregoing restrictions (not including Debt permitted to be secured under
Clauses (A) through (H) of Section 1008(1)), plus the aggregate Attributable
Debt (determined as of the Incurrence Time) of Sale and Leaseback Transactions
(other than Sale and Leaseback Transactions permitted by Section 1009(1))
entered into after the date of this Indenture and in existence at the
Incurrence Time (less the aggregate amount of proceeds of such Sale and
Leaseback Transactions which shall have been applied in accordance with
Section 1009(3)), does not exceed 15% of Consolidated Net Tangible Assets.
Section 1009. Limitations on Sale and Leaseback Transactions.
The Company shall not itself, and shall not permit any Restricted
Subsidiary to, enter into any arrangements after the date of this Indenture
with any bank, insurance company or other lender or investor (other than the
Company or another Restricted Subsidiary) providing for the leasing as lessee
by the Company or by any such Restricted Subsidiary of any Principal Property
(except a lease for a temporary period not to exceed three years (inclusive of
renewals) by the end of which it is intended the use of such Principal
Property by the lessee will be discontinued), which was or is owned by the
Company or a Restricted Subsidiary and which has been or is to be sold or
transferred by the Company or a Restricted Subsidiary more than 180 days after
the completion of construction and commencement of full operation thereof by the
Company or such Restricted Subsidiary, to such lender or investor or to any
Person to whom funds have been or are to be advanced by such lender or investor
on the security of such Principal Property (herein called a "Sale and Leaseback
Transaction") unless:
(1) the Company or such Restricted Subsidiary would (at the time of
entering into such arrangement) be entitled pursuant to Clauses (A) through
(G) of Section 1009(1), without equally and ratably securing the Notes, to
issue, assume or guarantee indebtedness secured by a Lien on such Principal
Property; or
(2) the Attributable Debt of the Company and its Restricted
Subsidiaries in respect of such Sale and Leaseback Transaction and all other
Sale and Leaseback Transactions entered into after the date of this Indenture
(other than such Sale and Leaseback Transactions as are permitted by Section
1009(1) or (3)), plus the aggregate principal amount of Debt secured by Liens
on Principal Properties then outstanding (excluding any such Debt secured by
Liens covered in subdivisions (A) through (H) of Section 1008(1)) which do not
equally and ratably secure the Notes, would not exceed 15% of Consolidated Net
Tangible Assets; or (3) the Company, within 180 days after the sale or
transfer: (A) applies or causes a Restricted Subsidiary to apply an amount
equal to the greater of the net proceeds of such sale or transfer or the fair
market value of the Principal Property so sold and leased back at the time of
entering into such Sale and Leaseback Transaction (in either case as
determined by the Board of Directors) to the retirement of the Notes or other
indebtedness of the Company (other than indebtedness subordinated to the Notes)
or indebtedness of a Restricted Subsidiary, for money borrowed, having a stated
maturity more than 12 months from the date of such application or which is
extendible at the option of the obligor thereon to a date more than 12 months
from the date of such application, provided that the amount to be so applied
shall be reduced by (i) the principal amount of Notes delivered within 180
days after such sale or transfer to the Trustee for retirement and cancellation,
and (ii) the principal amount of any such indebtedness of the Company or a
Restricted Subsidiary other than Notes voluntarily retired by the Company or
a Restricted Subsidiary within 180 days after such sale or transfer; or (B)
invest an equal amount, or the amount not so applied pursuant to Clause (A) of
this Section 1009(2), in Additional Assets (including investments in
Additional Assets by a Restricted Subsidiary). Notwithstanding the foregoing, no
retirement referred to in this Section 1009(2) may be affected by payment at
Maturity.
Notwithstanding the foregoing, where the Company or any Restricted Subsidiary
is the lessee in any Sale and Leaseback Transaction, Attributable Debt shall
not include any Debt resulting from the guarantee by the Company or any other
Restricted Subsidiary of the lessee's obligation thereunder.
Section 1010. Additional Note Guarantees.
If the Company or any of its Subsidiaries acquires or creates another
Subsidiary after the date of the Indenture and that Subsidiary becomes a
guarantor or obligor under the Credit Facility, then the newly acquired or
created Subsidiary shall simultaneously become a Guarantor and execute a
supplemental indenture and deliver an Opinion of Counsel to the Trustee.
Section 1011. Waiver of Certain Covenants.
The Company may not in any particular instance comply with any term,
provision or condition set forth in any covenant provided pursuant to Section
901(2) for the benefit of the Holders of the Notes if before the time for such
compliance the Holders of at least 50% in principal amount of the Outstanding
Notes of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
ARTICLE XI
Redemption of Notes
Section 1101. Applicability of Article; Redemption Price.
The Notes shall be redeemable before their Stated Maturity at the option
of the Company at any time form time to time in accordance with their terms
and in accordance with this Article. The Redemption Price ("Redemption Price")
for the Notes to be redeemed shall be equal to the greater of (1) 100% of the
principal amount of the Notes to be redeemed or (2) the sum of the present
values of the Remaining Scheduled Payment on the Notes to be redeemed,
discounted, on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months), at a rate equal to the sum of the applicable Treasury
Rate plus 30 basis points.
Section 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Notes shall be evidenced by a
Board Resolution. In case of any redemption at the election of the Company of
less than all the Notes, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of
the principal amount of the Notes to be redeemed and, if applicable, of the
tenor of the Notes to be redeemed.
Section 1103. Selection by Trustee of Notes to Be Redeemed.
If less than all the Notes are to be redeemed, the particular Notes to
be redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Trustee from the Outstanding Notes not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of a portion of the
principal amount of any Note, provided that the unredeemed portion of the
principal amount of any Note shall be in an authorized denomination (which
shall not be less than the minimum authorized denomination) for such Note.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption as aforesaid and, in case of any Notes selected for
partial redemption as aforesaid, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Notes redeemed or to be redeemed only in part, to the portion
of the principal amount of such Notes which has been or is to be redeemed.
Section 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Notes to be redeemed, at its address appearing in the Note
Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed, and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note.
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Note to be redeemed and, that interest thereon will
cease to accrue on and after said date,
(5) the name and address of the Paying Agent and the place or places
where each of the Notes is to be surrendered for payment of the Redemption
Price,
(6) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(7) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
Notice of redemption of the Notes to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be
irrevocable. Any Company request to the Trustee to give such notice shall be in
the form of an Officer's Certificate setting forth the information to be stated
in such notice as provided in the preceding Clauses (1)-(7) of this Section
1104.
Section 1105. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued and unpaid interest on, and any
unpaid Liquidated Damages with respect to all the Notes which are to be
redeemed on that date.
Section 1106. Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after the Redemption Date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Notes shall cease to bear interest. Upon surrender of
any such Note for redemption in accordance with said notice, such Note shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, installments of interest
whose Stated Maturity is on or prior to the Redemption Date will be payable to
the Holders of such Notes, or one or more Predecessor Notes, registered as such
at the close of business on the relevant Record Dates according to their terms
and the provisions of Section 307.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the Note.
Section 1107. Notes Redeemed in Part.
Any Note which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or its attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Note without service
charge, a new Note or Notes and of like tenor, of any authorized denomination
as requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Note so
surrendered.
ARTICLE XII
Note Guarantees
Section 1201. Note Guarantees.
Subject to the provisions of Section 1204 hereof, each Guarantor hereby
jointly and severally, fully, unconditionally and irrevocably guarantees the
Notes and obligations of the Company hereunder and thereunder, and the
obligations of each other Guarantor hereunder and thereunder, and guarantees
to each Holder of a Note authenticated and delivered by the Trustee to the
Trustee on behalf of such Holder, that: (a) the principal of (and premium and
Liquidated Damages, if any) and the interest on the Notes will be paid in full
when due, whether at Stated Maturity, by acceleration, call for redemption or
otherwise (including, without limitation, the amount that would become due but
for the operation of the automatic stay for the operation of the automatic
stay under Section 362(a) of the Federal Bankruptcy Code), together with
interest on the overdue principal, if any, and interest on any overdue interest,
to the extent lawful, and all other obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be paid in full or performed, all in
accordance with the terms hereof and thereof, and (b) in case of any extension
of time of payment or renewal of any Notes or of any such other obligations,
the same will be paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at Stated Maturity, by acceleration
or otherwise. Each of the Note Guarantees shall be a guarantee of payment and
not of collection.
Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same,
any waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a Guarantor.
Each Guarantor hereby waives the benefits of diligence, presentment,
demand for payment, filing of claims with a court in the event of insolvency
or bankruptcy of the Company, any right to require a proceeding first against
the Company or any other Person, protest, notice and all demands whatsoever
and covenants that the Note Guarantee of such Guarantor will not be discharged
as to any Note except by complete performance of the obligations contained in
such Note and such Note Guarantee or as provided for in this Indenture. Each of
the Guarantors hereby agrees that, in the event of a default in payment of
principal (or premium or Liquidated Damages, if any) or interest on such Note,
whether at its Stated Maturity, by acceleration, call for redemption, purchase
or otherwise, legal proceedings may be instituted by the Trustee on behalf of,
or by, the Holder of such Note, subject to the terms and conditions set forth
in this Indenture, directly against each of the Guarantors to enforce such
Guarantor's Note Guarantee without first proceeding against the Company or any
other Guarantor. Each Guarantor agrees that if, after the occurrence and
during the continuance of an Event of Default, the Trustee or any of the
Holders are prevented by applicable law from exercising their respective
rights to accelerate the maturity of the Notes, to collect interest on the
Notes, or to enforce or exercise any other right or remedy with respect to the
Notes, such Guarantor will pay to the Trustee for the account of the Holders,
upon demand therefor, the amount that would otherwise have been due and payable
had such rights and remedies been permitted to be exercised by the Trustee or
any of the Holders.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company or any Guarantor, or any custodian, trustee, liquidator
or other similar official acting in relation to either the Company or any
Guarantor, any amount paid by any of them to the Trustee or such Holder, the
Note Guarantee of each of the Guarantors, to the extent theretofore at, as
discharged, shall be reinstated in full force and effect. Each Guarantor
further agrees that, as between each Guarantor, on the one hand, and the
Holders and the Trustee, on the other hand, (1) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article V hereof
for the purposes of the Note Guarantee of such Guarantor, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (2) in the event of any acceleration of
such obligations as provided in Article V hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by each Guarantor
for the purpose of the Note Guarantee of such Guarantor.
Section 1202. Execution and Delivery of Note Guarantee.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Note Guarantee set forth in
this Indenture on behalf of each of the Guarantors.
Section 1203. Severability.
In case any provision of any Note Guarantee shall be invalid, illegal or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section 1204. Limitation of Guarantor's Liability.
Each Guarantor and by its acceptance hereof each Holder confirms that it
is the intention of all such parties that the Note Guarantee of such Guarantor
not constitute a fraudulent transfer or conveyance for purposes of the Federal
Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law or the provisions of its
local law relating to fraudulent transfer or conveyance. To effectuate the
foregoing intention, the Trustee, the Holders and the Guarantors hereby
irrevocably agree that the obligations of such Guarantor under its Note
Guarantee shall be limited to the maximum amount that will not, after giving
effect to all other contingent and fixed liabilities of such Guarantor and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Note Guarantee, result in the
obligations of such Guarantor under its Note Guarantee constituting a fraudulent
transfer or conveyance.
Section 1205. Releases.
Any Guarantor will be released and relieved of any obligations under its
Note Guarantee, (i) in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor (including by way of merger
or consolidation) to a Person that is not (either before or after giving
effect to such transaction) a Restricted Subsidiary of the Company, if the sale
or other disposition of all or substantially all of the assets of that Guarantor
complies with the provisions of this Indenture, or (ii) in connection with any
sale of all of the Capital Stock of a Guarantor to a Person that is not
(either before or after giving effect to such transaction) a Restricted
Subsidiary of the Company, or (iii) upon dissolution or liquidation in
accordance with the provisions of this Indenture, or (iv) upon written request
by the Company to the Trustee, at such time as the Lenders under the Credit
Facility have unconditionally released such Guarantor from its obligations
(whether as primary obligor or guarantor) under the Credit Facility. Upon
delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition or other
requirements set forth above was made by the Company or have occurred in
accordance with the provisions of this Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release of any Guarantor
from its obligations under its Note Guarantee.
Any Guarantor not released from its obligations under its Note Guarantee
shall, subject to the provisions of Section 1204 hereof, remain liable for
the full amount of principal of and interest on the Notes and for the other
obligations of any Guarantor under this Indenture as provided in this Article
XII.
Section 1206. Benefits Acknowledged.
Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and
that its guarantee and waivers pursuant to its Guarantee are knowingly made in
contemplation of such benefits.
Section 1207. Contribution.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantor agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under this
Guarantee, such Funding Guarantor shall be entitled, subject to Section 1204
hereof, to a contribution from all other Guarantors in a pro rata amount based
on the Net Assets (defined below) of each Guarantor (including the Funding
Guarantor) for all payments, damages and expenses incurred by that Funding
Guarantor in discharging the Company's obligations with respect to the Notes
or any other Guarantor's Obligations with respect to this Guarantee. The term
"Net Assets" shall mean the amount by which the fair value of the properties
and assets of the referenced Guarantor exceeds the total amount of
liabilities, including contingent liabilities, but excluding liabilities under
such Guarantor's Note Guarantee.
Section 1208. Waiver of Subrogation.
Subject to the provisions of Section 1207 hereof, each Guarantor hereby
irrevocably waives any claim or other rights which it may now or hereafter
acquire against the Company or other Guarantors that arise from the existence,
payment, performance or enforcement of such Guarantor's obligations, under
this Guarantee and this Indenture, including, without limitation. any right of
subrogation, reimbursement, exoneration, indemnification, and any right to
participate in any claim or remedy of any Holder of Notes against the Company
or other Guarantors, whether or not such claim, remedy or right arises in
equity, or under contract, statute or common law, including, without
limitation, the right to take or receive from the Company or other Guarantors,
directly or indirectly, in cash or other property or by setoff or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to any Guarantor in violation of the preceding sentence
and the Notes shall not have been paid in full, such amount shall have been
deemed to have been paid to such Guarantor for the benefit of, and held in
trust for the benefit of, the Holders of the Notes, and shall forthwith be
paid to the Trustee to be credited and applied in accordance with the terms of
this Indenture. Each Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this
Indenture and that the waiver set forth in this Section 1208 is knowingly made
in contemplation of such benefits.
ARTICLE XIII
Defeasance and Covenant Defeasance
Section 1301. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may elect, at its option at any time, to have Section 1302
or Section 1303 applied to the Notes upon compliance with the conditions set
forth below in this Article. Any such election shall be evidenced by a Board
Resolution.
Section 1302. Defeasance and Discharge.
Upon the Company's exercise of its option to have this Section 1302
applied to the Notes, the Company and the Guarantors shall be deemed to have
been discharged from their obligations with respect to such Notes and the Note
Guarantees as provided in this Section on and after the date the conditions
set forth in Section 1304 are satisfied (hereinafter called "Defeasance"). For
this purpose, such Defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by the Notes and to
have satisfied all its other obligations under the Notes and this Indenture
insofar as the Notes are concerned (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same), subject to
the following which shall survive until otherwise terminated or discharged
hereunder: (1) the rights of Holders of the Notes to receive, solely from the
trust fund described in Section 1304 and as more fully set forth in such
Section, payments in respect of the principal of and any premium and interest
on, and Liquidated Damages, if any, with respect to, the Notes when payments
are due, (2) the Company's obligations with respect to the Notes under
Sections 304, 305, 306, 1002 and 1003, (3) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and (4) this Article. Subject to
compliance with this Article, the Company may exercise its option to have this
Section applied to the Notes notwithstanding the prior exercise of its option
to have Section 1303 applied to the Notes.
Section 1303. Covenant Defeasance.
Upon the Company's exercise of its option to have this Section 1303
applied to the Notes, (1) the Company shall be released from its obligations
under Section 801(3), Sections 1006 through 1009, inclusive, and any covenants
provided pursuant to Section 901(2) for the benefit of the Holders of the
Notes and (2) the occurrence of any event specified in Section 501(3) (with
respect to any of Section 801(3), Sections 1006 through 1009, inclusive, and any
such covenants provided pursuant to Section 901(2)) shall be deemed not to be or
result in an Event of Default, in each case with respect to the Notes as
provided in this Section on and after the date the conditions set forth in
Section 1304 are satisfied (hereinafter called "Covenant Defeasance"). For
this purpose, such Covenant Defeasance means that, with respect to the Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such Section (to the extent
so specified in respect of Section 501(3)), whether directly or indirectly by
reason of any reference elsewhere herein to any such Section or by reason of
any reference in any such Section to any other provision herein or in any
other document, but the remainder of this Indenture and such Notes shall be
unaffected thereby.
Section 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section 1302
or Section 1303 to any Notes:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically pledged as security for,
and dedicated solely to, the benefits of the Holders of the Notes, (A) money in
an amount, or (B) U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of any payment,
money in an amount, or (C) a combination thereof, in each case sufficient, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge, and which shall be applied by the Trustee (or any such other
qualifying trustee) to pay and discharge, the principal of and any premium and
interest on and Liquidated Damages, if any, with respect to, the Notes on the
Stated Maturity of the Notes, in accordance with the terms of this Indenture and
the Notes. As used herein, "U.S. Government Obligation" means (x) any security
which is (i) a direct obligation of the United States of America for the
payment of which the full faith and credit of the United States of America is
pledged or (ii) an obligation of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case (i) or (ii),
is not callable or redeemable at the option of the issuer thereof, and (y) any
depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any U.S. Government Obligation
which is specified in Clause (x) above and held by such bank for the account
of the holder of such depositary receipt, or with respect to any specific
payment of principal of or interest on any U.S. Government Obligation which is
so specified and held, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depositary receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of principal
or interest evidenced by such depositary receipt.
(2) In the event of an election to have Section 1302 apply to the
Notes, the Company shall have delivered to the Trustee an Opinion of Counsel
stating that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the date of this
instrument, there has been a change in the applicable Federal income tax law,
in either case (A) or (B) to the effect that, and based thereon such opinion
shall confirm that, the Holders of the Notes will not recognize gain or loss
for Federal income tax purposes as a result of the deposit, Defeasance and
discharge to be effected with respect to such Notes and will be subject to
Federal income tax on the same amount, in the same manner and at the same
times as would be the case if such deposit, Defeasance and discharge were not to
occur.
(3) In the event of an election to have Section 1303 apply to the
Notes, the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that the Holders of the Notes will not recognize gain or loss
for Federal income tax purposes as a result of the deposit and Covenant
Defeasance to be effected with respect to the Notes and will be subject to
Federal income tax on the same amount, in the same manner and at the same times
as would be the case if such deposit and Covenant Defeasance were not to occur.
(4) The Company shall have delivered to the Trustee an Officer's
Certificate to the effect that the Notes if then listed on any securities
exchange, will be delisted as a result of such deposit.
(5) No event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to the Notes shall have occurred and
be continuing at the time of such deposit or, with regard to any such event
specified in Sections 501(5) and (6), at any time on or prior to the 91st day
after the date of such deposit (it being understood that this condition shall
not be deemed satisfied until after such 91st day).
(6) Such Defeasance or Covenant Defeasance shall not cause the Trustee
to have a conflicting interest within the meaning of the Trust Indenture Act
(assuming all Notes are in default within the meaning of such Act).
(7) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering or delaying or defrauding creditors of
the Company or others.
(8) Such Defeasance or Covenant Defeasance shall not result in a breach
or violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound.
(9) Such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit constituting an investment company within the
meaning of the Investment Company Act unless such trust shall be registered
under such Act or exempt from registration thereunder.
(10) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
Section 1305. Deposited Money and U.S. Government Obligations to Be Held
in Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (solely for purposes of
this Section and Section 1306, the Trustee and any such other trustee are
referred to collectively as the "Trustee") pursuant to Section 1304 in respect
of the Notes shall be held in trust and applied by the Trustee, in accordance
with the provisions of the Notes and this Indenture, to the payment, either
directly or through any such Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Holders of the Notes,
of all sums due and to become due thereon in respect of principal and any
premium and interest and Liquidated Damages, if any, but money so held in
trust need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1304 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of Outstanding Notes.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 1304
with respect to the Notes which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect the Defeasance or Covenant
Defeasance, as the case may be, with respect to the Notes.
Section 1306. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Notes by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the obligations under this
Indenture and such Notes from which the Company has been discharged or
released pursuant to Section 1302 or 1303 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Notes, until such time as the Trustee or Paying Agent is permitted to apply all
money held in trust pursuant to Section 1305 with respect to such Notes in
accordance with this Article; provided, however, that if the Company makes any
payment of principal of or any premium or interest on, or any Liquidated Damages
with respect to, any such Note following such reinstatement of its obligations,
the Company shall be subrogated to the rights (if any) of the Holders of the
Notes to receive such payment from the money so held in trust.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
In Witness Whereof, the parties hereto have caused this Indenture to be
duly executed all as of the day and year first above written.
INTERNATIONAL SPEEDWAY CORPORATION
By: /s/ Glenn R. Padgett
Name: Glenn R.Padgett
Title: Assistant Secretary
{Signatures Continue Next Page}
<PAGE>
GUARANTORS
AMERICROWN SERVICE CORPORATION
COMPETITION TIRE SOUTH, INC.
COMPETITION TIRE WEST, INC.
ISC PROPERTIES, INC.
MOTORSPORT INTERNATIONAL
CORP.
NORTH CAROLINA SPEEDWAY, INC.
PENNSYLVANIA INTERNATIONAL
RACEWAY, INC.
REGIMENT, INC.
Each by its duly authorized officer:
By: /s/ Glenn R. Padgett
--------------------------------
Glenn R. Padgett
Secretary
Of the Guarantors listed above
88 CORP.
CALIFORNIA SPEEDWAY CORPORATION
CHICAGO HOLDINGS, INC.
EVENT EQUIPMENT LEASING, INC.
EVENT SUPPORT CORPORATION
GREAT WESTERN SPORTS, INC.
MIAMI SPEEDWAY CORP.
MICHIGAN INTERNATIONAL SPEEDWAY,
INC.
NEW YORK INTERNATIONAL SPEEDWAY
CORP.
NORTH AMERICAN TESTING COMPANY
PHOENIX SPEEDWAY CORP.
ROCKY MOUNTAIN SPEEDWAY
CORPORATION
SEASONAL SERVICES, INC.
SOUTH CAROLINA INTERNATIONAL
SPEEDWAY CORPORATION
WATKINS GLEN INTERNATIONAL, INC.
Each by its duly authorized officer:
By: /s/ Glenn R. Padgett
--------------------------------
Glenn R. Padgett
Assistant Secretary
Of the Guarantors listed above
{Signatures Continue Next Page}
FIRST UNION NATIONAL BANK, as Trustee
By: /s/ Christopher P. Tracy
-------------------------------
Name: Christopher P. Tracy
Title: Trust Officer
<PAGE>
EXHIBIT A
ASSIGNMENT FORM
If you, the Holder, want to assign this Note, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint, ____________________, agent to transfer this Note
on the books of the Company. The agent may substitute another to act for
him.
Date: ________________________ Sign:
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933,
as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) October 6, 2001, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with
the transfer and that this Note is being transferred:
[Check One]
(1) to the Company or a subsidiary thereof; or
(2) pursuant to and in compliance with Rule 144A under the Securities Act;
or
(3) to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(4) outside the United states to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act; or
(5) pursuant to the exemption from registration provided by Rule 144
under the Securities Act; or
(6) pursuant to an effective registration statement under the
Securities Act; or
(7) pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Notes evidenced by this certificate in the name of any person other
than the registered Holder thereof, provided that if box (2),(3), (4), (5)
or (7) is checked, the Company or the Trustee may require, prior to
registering any such transfer of the Notes, in its sole discretion, such
legal opinions, certifications (including an investment letter in the case
of box (3) or (4)) and other information as the Trustee or the Company has
reasonably requested to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.
If none of the foregoing boxes is checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer
of registration set forth herein and in Section 312 of the Indenture shall
have been satisfied.
Date: __________________ Signed:
(Sign exactly as your name appears on the
other side of this Note)
Signature Guarantee:
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities
Act and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company
as the undersigned has requested pursuant to Rule 144A or has determined not
to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim
the exemption from registration provided by Rule 144A.
Date: __________________ Signed:
Executive Officer
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
If you, the Holder, want to assign this Note. fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address
and zip code and social
security or tax ID number of
assignee)
and irrevocably appoint, ________________________, agent to transfer this
Note on the books of the Company. The agent may substitute another to act
for him.
Date: ___________________ Signed:
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:
<PAGE>
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investor
______________, _____
First Union National Bank
____________________________
____________________________
____________________________
Attention: Corporate Trust Department
Re: International Speedway Corporation (the "Company")
7 % Senior
Notes due 2004 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed purchase of $____________ aggregate
principal amount of the Notes, we confirm that:
1. We have received a copy of the Offering Memorandum (the
"Offering Memorandum"), dated October 6, 1999, relating to the Notes and
such other information as we deem necessary in order to make our investment
decision. We acknowledge that we have read and agreed to the matters stated
on page (ii) of the Offering Memorandum and in the section entitled "Notice
to Investors" of the Offering Memorandum, including the restrictions on
distribution of the Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
dated as of October 6, 1999 relating to the Notes (the "Indenture") and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities
Act").
3. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered
or sold within the United States or to, or for the account or benefit of,
U.S. Persons except as permitted in the following sentence. We agree, on
our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated. that if we should sell or otherwise transfer any Notes
we will do so only (i) to the Company or any subsidiary thereof, (ii) inside
the United States in accordance with Rule 144A under the Securities Act to a
institutional buyer" (as defined in Rule 144A under the Securities Act),
(iii) inside the United States to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on
its behalf by a U.S. broker-dealer) to you a signed letter containing
certain representatives and agreements relating to the restrictions on
transfer of the Notes, substantially in the form of this letter, (iv)
outside the United States in accordance with Rule 904 of Regulation S under
the Securities Act, (v) pursuant to the exemption from registration provided
by Rule 144 under the Securities Act (if available), or (vi) pursuant to an
effective registration statement under the Securities Act, and we further
agree to provide to any person purchasing any of the Notes from us a notice
advising such purchaser that resales of the Notes are restricted as stated
herein.
4. We are not acquiring the Notes for or on behalf of, and will not
transfer the Notes to, any pension or welfare plan (as defined in Section 3
of the Employee Retirement Income Security Act of 1974), except as permitted
in the section entitled "Notice to Investors" of the Offering Memorandum.
5. We understand that, on any proposed resale of any Notes, we will
be required to furnish to you and the Company such certification, legal
opinions and other information as you and the Company may reasonably require
to confirm that the proposed sale complies with the foregoing restrictions.
We further understand that the Notes purchased by us will bear a legend to
the foregoing effect.
6. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
and have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to bear
the economic risk of our or their investment, as the case may be.
7. We are acquiring the Notes purchased by us for our own account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You, the Company and the Initial Purchasers (as defined in the
Offering Memorandum); are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
Authorized Signature
<PAGE>
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
_____________, _____
First Union National Bank
____________________________
____________________________
____________________________
Attention: Corporate Trust Department
Re: International Speedway Corporation (the "Company")
7 % Senior Notes
due 2004 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $________________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Aa
of 1933, as amended (the "Securities Act"), and, accordingly, we represent
that:
1. the offer of the Notes was not made to a person in the United
States;
2. either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting-on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the facilities
of a designated off-shore securities market and neither we nor any person
acting on our behalf knows that the transaction has been pre-arranged with a
buyer in the United States;
3. no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
4. the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
5. we have advised the transferee of the transfer restrictions
applicable to the Notes.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly- yours,
(Name of Transferor]
By:
Authorized Signature
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE ACCOMPANYING CONDENSED CONSOLIDATED BALANCE SHEET OF INTERNATIONAL
SPEEDWAY CORPORATION AS OF AUGUST 31, 1999, AND THE RELATED CONDENSED
CONSOLIDATED STATEMENTS OF INCOME, SHAREHOLDERS' EQUITY AND CASH FLOWS FOR THE
NINE-MONTH PERIOD ENDED AUGUST 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> Nov-30-1999
<PERIOD-START> Dec-01-1998
<PERIOD-END> Aug-31-1999
<PERIOD-TYPE> 9-MOS
<CASH> 59,110
<SECURITIES> 681
<RECEIVABLES> 28,372
<ALLOWANCES> 650
<INVENTORY> 3,882
<CURRENT-ASSETS> 106,475
<PP&E> 691,531
<DEPRECIATION> 77,491
<TOTAL-ASSETS> 1,388,586
<CURRENT-LIABILITIES> 149,430
<BONDS> 0
0
0
<COMMON> 531
<OTHER-SE> 887,455
<TOTAL-LIABILITY-AND-EQUITY> 1,388,586
<SALES> 192,854
<TOTAL-REVENUES> 194,097
<CGS> 76,705
<TOTAL-COSTS> 76,705
<OTHER-EXPENSES> 50,750
<LOSS-PROVISION> 401
<INTEREST-EXPENSE> 2,511
<INCOME-PRETAX> 69,519
<INCOME-TAX> 27,101
<INCOME-CONTINUING> 42,418
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,418
<EPS-BASIC> .96
<EPS-DILUTED> .96
</TABLE>
