UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2 )*
KinderCare Learning Centers, Inc.
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
494521 30 5
------------------------------------------------
(CUSIP Number)
KCLC Acquisition Corp., KLC Associates, L.P.,
KKR Associates (KLC) L.P., KKR-KLC L.L.C.,
KKR Partners II, L.P., KKR Associates L.P.
c/o Kohlberg Kravis Roberts & Co., L.P.
9 West 57th Street, New York, N.Y. 10019 (212) 750-8300
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
February 13, 1997
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 494521 30 5
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1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
KCLC ACQUISITION CORP.
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2 Check the Appropriate Box If a Member of a Group* a. |_|
b. |_|
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3 SEC Use Only
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4 Source of Funds*
AF, OO (see item 3)
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5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Item
2(d) or 2(e) |_|
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6 Citizenship or Place of Organization
Delaware
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7 Sole Voting Power
Number of
Shares 0
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 0
Person --------------------------------------------------------
With 9 Sole Dispositive Power
0
--------------------------------------------------------
10 Shared Dispositive Power
0
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
0 (See Item 7 above)
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12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
0 (see Item 7 above)
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14 Type of Reporting Person*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
2
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SCHEDULE 13D
CUSIP No. 494521 30 5
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
KLC ASSOCIATES, LP.
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2 Check the Appropriate Box If a Member of a Group* a. |_|
b. |_|
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3 SEC Use Only
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4 Source of Funds*
AF, OO (see item 3)
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5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Item
2(d) or 2(e) |_|
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6 Citizenship or Place of Organization
Delaware
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7 Sole Voting Power
Number of
Shares 7,727,105 (See Item 5)
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 0
Person --------------------------------------------------------
With 9 Sole Dispositive Power
7,727,105 (See Item 5)
--------------------------------------------------------
10 Shared Dispositive Power
0
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
7,727,105 (See Item 5)
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12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
83.9 (See Item 5)
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14 Type of Reporting Person*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
3
<PAGE>
SCHEDULE 13D
CUSIP No. 494521 30 5
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
KKR ASSOCIATES (KLC) L.P.
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2 Check the Appropriate Box If a Member of a Group* a. |_|
b. |_|
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3 SEC Use Only
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4 Source of Funds*
OO (see item 3)
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5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Item
2(d) or 2(e) |_|
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6 Citizenship or Place of Organization
Delaware
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7 Sole Voting Power
Number of
Shares 0
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 7,727,105 (See Item 5)
Person --------------------------------------------------------
With 9 Sole Dispositive Power
0
--------------------------------------------------------
10 Shared Dispositive Power
7,727,105 (See Item 5)
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
7,727,105 (See Item 5)
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
83.9 (See Item 5)
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14 Type of Reporting Person*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
4
<PAGE>
SCHEDULE 13D
CUSIP No. 494521 30 5
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
KKR-KLC L.L.C.
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2 Check the Appropriate Box If a Member of a Group* a. |_|
b. |_|
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3 SEC Use Only
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4 Source of Funds*
OO (see item 3)
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5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Item
2(d) or 2(e) |_|
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6 Citizenship or Place of Organization
Delaware
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7 Sole Voting Power
Number of
Shares 0
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 7,727,105 (See Item 5)
Person --------------------------------------------------------
With 9 Sole Dispositive Power
0
--------------------------------------------------------
10 Shared Dispositive Power
7,727,105 (See Item 5)
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
7,727,105 (See Item 5)
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
83.9 (See Item 5)
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14 Type of Reporting Person*
OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
5
<PAGE>
SCHEDULE 13D
CUSIP No. 494521 30 5
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
KKR PARTNERS II, L.P.
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2 Check the Appropriate Box If a Member of a Group* a. |_|
b. |_|
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3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
AF, OO (see item 3)
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5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Item
2(d) or 2(e) |_|
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6 Citizenship or Place of Organization
Delaware
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7 Sole Voting Power
Number of
Shares 101,842 (See Item 5)
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 0
Person --------------------------------------------------------
With 9 Sole Dispositive Power
101,842 (See Item 5)
--------------------------------------------------------
10 Shared Dispositive Power
0
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
101,842 (See Item 5)
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12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
1.1 (See Item 3)
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14 Type of Reporting Person*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
6
<PAGE>
SCHEDULE 13D
CUSIP No. 494521 30 5
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
KKR ASSOCIATES L.P.
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2 Check the Appropriate Box If a Member of a Group* a. |_|
b. |_|
- --------------------------------------------------------------------------------
3 SEC Use Only
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4 Source of Funds*
AF, OO (see item 3)
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Item
2(d) or 2(e) |_|
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6 Citizenship or Place of Organization
New York
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7 Sole Voting Power
Number of
Shares 0
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 101,842 (See Item 5)
Person --------------------------------------------------------
With 9 Sole Dispositive Power
0
--------------------------------------------------------
10 Shared Dispositive Power
101,842 (See Item 5)
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
101,842 (See Item 5)
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
1.1 (See Item 3)
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
7
<PAGE>
AMENDMENT NO. 2 TO SCHEDULE 13D
The Statement on Schedule 13D, as previously amended (the "Schedule 13D"),
relating to the common stock, par value $.01 per share (the "Issuer Common
Stock"), of KinderCare Learning Centers, Inc., a Delaware corporation (the
"Issuer"), as previously filed by the Reporting Persons, consisting of KCLC
Acquisition Corp. ("Newco"), KLC Associates, L.P. ("KLC Associates"), KKR
Associates (KLC) L.P. ("KKR Associates KLC") and KKR-KLC L.L.C. ("KKR-KLC LLC"),
is hereby amended and supplemented with respect to the items set forth below,
including the addition of KKR Partners II, L.P. ("KKR Partners II", together
with KLC Associates, the "Partnerships"), a Delaware limited partnership of
which KKR Associates L.P., a New York limited partnership ("KKR Associates"), is
the general partner, and KKR Associates as Reporting Persons for which this
joint filing is made. Capitalized terms used without definition have the
meanings ascribed to such terms in the Schedule 13D.
Item 2. Identity and Background.
This statement is being filed jointly by KKR-KLC LLC, KKR Associates
(KLC), KKR Associates, the Partnerships and Newco. The agreement among the
Reporting Persons relating to the joint filing of this statement is attached as
Exhibit 1 hereto. As a result of the transactions more fully detailed in Item 4
herein, as amended, Newco was merged out of existence, ceased to be the
beneficial owner of more than five percent of Issuer Common Stock, and thus
ceased to be a Reporting Person.
8
<PAGE>
The address of the principal business and office of each of the
Partnerships is 9 West 57th Street, New York, New York 10019.
Each of KKR Associates (KLC) and KKR-KLC LLC is principally engaged in the
business of investing through partnerships in the Issuer and potentially other
companies. KKR Associates is principally engaged in the business of investing
through partnerships in the Issuer and other companies. The address of the
principal business and office of each of KKR Associates (KLC), KKR Associates
and KKR-KLC LLC is 9 West 57th Street, New York, New York 10019.
Messrs. Henry R. Kravis and George R. Roberts are the managing members of
KKR-KLC LLC and general partners of KKR Associates. Messrs. Kravis and Roberts
are each United States citizens, and the present principal occupation or
employment of each is as a managing member of KKR & Co. L.L.C., which is the
general partner of Kohlberg Kravis Roberts & Co., L.P. ("KKR"), a private
investment firm, the addresses of which are 9 West 57th Street, New York, New
York 10019 and 2800 Sand Hill Road, Suite 200, Menlo Park, California 94025. The
other members of KKR-KLC LLC and other general partners of KKR Associates are
Messrs. Robert I. MacDonnell, Paul E. Raether, Michael W. Michelson, James H.
Greene, Jr., Michael T. Tokarz, Perry Golkin, Clifton S. Robbins, Scott M.
Stuart and Edward A. Gilhuly. The business address of each of Messrs. Kravis,
Raether, Golkin, Tokarz, Robbins and Stuart is 9 West 57th Street, New York, New
York 10019; the business address of each of Messrs. Roberts, MacDonnell,
Michelson, Greene and Gilhuly is 2800 Sand Hill Road, Suite 200, Menlo Park,
California 94025.
During the last five years, neither the Reporting Persons nor, to the best
knowledge of the Reporting Persons, any of the other persons
9
<PAGE>
named in this Item 2: (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors); or (ii) was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Considerations
The amount and sources of funds used in connection with the Merger (as
defined in Item 4) and related transactions consisted of (i) borrowings of
$390.0 million under a Senior Secured Credit Facility, with the institutions and
on the terms set forth in Exhibit 4 attached hereto, (ii) the issuance of
$300,000,000 aggregate principal amount of 9.50% Senior Subordinated Notes due
2009, on the terms set forth in Exhibits 2 and 3 attached hereto and (iii) the
contribution of $148.75 million in equity by the Partnerships. These amounts
include funds for certain Merger-related expenses that are expected to be paid
in the future.
Item 4. Purpose of Transaction
As previously reported in the Reporting Persons' Schedule 13D, on October
3, 1996 Newco and the Issuer entered into an Agreement and Plan of Merger which
was amended as of December 27, 1996 (the "Merger Agreement"), providing for the
merger (the "Merger") of Newco with and
10
<PAGE>
into the Issuer, whereupon the separate existence of Newco would cease and the
Issuer would continue as the surviving corporation.
The Merger and the transactions contemplated thereby were consummated on
February 13, 1997, at which time (A) Newco merged with and into the Issuer and
(B) KLC Associates and KKR Partners II acquired 7,727,105 and 101,842 shares
(collectively, the "KCLC Shares"), respectively, of Issuer Common Stock.
After giving effect to the Merger and the appointment following the Merger
of David J. Johnson as Chief Executive Officer of the Issuer, the members of the
board of directors of the Issuer included Mr. Johnson, Henry R. Kravis, George
R. Roberts, Clifton S. Robbins, Nils P. Brous, Sandra W. Scarr and Stephen A.
Kaplan. The composition of the Board of Directors of the Issuer is subject to
change from time to time, but affiliates or employees of the Reporting Persons
are expected to constitute at all times a majority of such board.
As previously reported, in connection with the Merger Agreement, Newco and
certain previously reported stockholders of the Issuer were parties to a Voting
Agreement dated as of October 3, 1996 and amended as of December 27, 1996 (the
"Voting Agreement"). The provisions of the Voting Agreement relating to the
Issuer Common Stock expired according to their terms upon the consummation of
the Merger on February 13, 1997.
Concurrent with the Merger, (i) the certificate of incorporation of the
Issuer, as in effect immediately prior to the Merger, was amended so as to read
in its entirety in the form set forth as Exhibit A to the Merger Agreement
(previously filed as an exhibit to the Schedule 13D) so that, among other
things, the authorized capital stock
11
<PAGE>
of the Issuer was reduced from 40 million shares of Issuer Common Stock to 20
million shares of Issuer Common Stock and (ii) the bylaws of Newco as in effect
at the Effective Time became the bylaws of the Issuer.
Following the Merger, the Issuer Common Stock was delisted from the NASDAQ
National Market System.
The preceding summary of certain provisions of and Exhibits to the Merger
Agreement and the Voting Agreement is not intended to be complete and is
qualified in its entirety by reference to the full text of such agreements,
copies of which have previously been filed as exhibits to the Schedule 13D, and
incorporated therein by reference.
The Reporting Persons intend to review on a continuing basis their
investment in the Issuer, and the Reporting Persons may decide to increase or
decrease their investment in the Issuer depending upon the price and
availability of the Issuer's securities, subsequent developments affecting the
Issuer, the Issuer's business and prospects, other investment and business
opportunities available to the Reporting Persons, general stock market and
economic conditions, tax considerations and other factors.
Other than as described above, none of the Reporting Persons has any plans
or proposals that relate to or would result in any of the actions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
(a) and (b) Pursuant to the Merger, KLC Associates and KKR Partners II
acquired 7,727,105 and 101,842 shares, respectively, of Issuer Common Stock.
Under the definition of "beneficial ownership" as set forth in Rule 13d-3
under the Securities Act of 1933, as amended (the "Act"), the Partnerships, KKR
Associates (KLC), KKR Associates and KKR-KLC LLC may be deemed to beneficially
own, as a group, the KCLC Shares, constituting in the aggregate approximately
85% of the outstanding shares of Issuer Common Stock. The Reporting Persons do
not affirm the existence of any such group. Individually, KLC Associates and KKR
12
<PAGE>
Partners II may be deemed under Rule 13d-3 of the Act to own 7,727,105 and
101,842 shares, respectively, of Issuer Common Stock. The 7,828,947 shares of
Issuer Common Stock presently owned by the Partnerships constitute 85% of the
Issuer Common Stock outstanding following the Merger.
(b) KLC Associates, acting through its sole general partner, KKR
Associates KLC, has the sole power to vote or direct the voting of, and to
dispose or direct the disposition of, the shares of Issuer Common Stock which it
owns directly. As a result, KKR Associates KLC may be deemed to beneficially own
any shares of Issuer Common Stock that KLC Associates may beneficially own or be
deemed to beneficially own. KKR-KLC LLC, as sole general partner of KKR
Associates KLC, may be deemed to beneficially own any shares of Issuer Common
Stock that KKR Associates KLC may be deemed to beneficially own. KKR Partners
II, acting through its sole general partner, KKR Associates, has the sole power
to vote or direct the voting of, and to dispose or direct the disposition of,
the shares of Issuer Common Stock which it owns directly. As a result, KKR
Associates may be deemed to beneficially own any shares of Issuer Common Stock
that KKR Partners II may beneficially own or be deemed to beneficially own. Each
of Messrs. Kravis and Roberts, as managing members of KKR-KLC LLC and general
partners of KKR Associates, and each of Messrs. Robert I. MacDonnell, Paul E.
Raether, Michael W. Michelson, James H. Greene, Jr., Michael T. Tokarz, Perry
Golkin, Clifton S. Robbins, Scott M. Stuart and Edward A. Gilhuly, as the other
members of KKR-KLC LLC and general partners of KKR Associates, may be deemed to
beneficially own any shares of Issuer Common Stock that KKR-KLC LLC and KKR
Associates, respectively, may be
13
<PAGE>
deemed to beneficially own. Neither the filing of this Amendment No. 2 to the
Reporting Persons' Schedule 13D nor any of its contents shall be deemed to
constitute an admission that any Reporting Person is the beneficial owner of
Issuer Common Stock referred to in this paragraph for purposes of Section 13(d)
of the Exchange Act or for any other purpose, and such beneficial ownership is
expressly disclaimed.
(c) Except as set forth in this Item 5, to the best knowledge of each of
the Reporting Persons, none of the Reporting Persons and no other person
described in Item 2 hereof has beneficial ownership of, or has engaged in any
transaction during the past 60 days in, any shares of Issuer Common Stock.
(d) No person other than the Partnerships has the right to receive
dividends from, or the proceeds from the sale of, the KCLC Shares referred to in
this Item 5.
(e) Pursuant to the Merger, Newco was merged out of existence, ceased to
be the beneficial owner of more than five percent of Issuer Common Stock, and
thus ceased to be a Reporting Person.
Item 6. Contracts, Arrangements or Understandings with Respect to Securities of
the Issuer.
Except as set forth in this Statement, to the best knowledge of the
Reporting Persons, there are no other contracts, arrangements, understandings or
relationships (legal or otherwise) among the persons named in Item 2 and between
such persons and any person with respect to any securities of the Issuer,
including but not limited to, transfer or voting of any of the securities of the
Issuer, joint ventures, loan or option arrangements, puts or calls, guarantees
or profits, division of profits or loss, or the giving or withholding of
proxies, or a
14
<PAGE>
pledge or contingency the occurrence of which would give another person voting
power over the securities of the Issuer. The Issuer has granted certain rights
to the Reporting Persons with respect to the registration under the Act of
Issuer Common Stock held by the Reporting Persons or their transferees. The
Registration Rights Agreement relating to such rights is attached hereto as
Exhibit 5.
Item 7. Material to be Filed as Exhibits Please see attached Exhibit Index.
15
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
KKR-KLC L.L.C.
By:/s/ Clifton S. Robbins
---------------------------------
Name: Clifton S. Robbins
Title: Member
KKR ASSOCIATES (KLC) L.P.
By KKR-KLC L.L.C.,
as General Partner
By:/s/ Clifton S. Robbins
---------------------------------
Name: Clifton S. Robbins
Title: Member
KLC ASSOCIATES, L.P.
By KKR ASSOCIATES (KLC) L.P.,
as General Partner
By KKR-KLC L.L.C.,
as General Partner
By:/s/ Clifton S. Robbins
---------------------------------
Name: Clifton S. Robbins
Title: Member
KCLC ACQUISITION CORP.
By:/s/ Clifton S. Robbins
---------------------------------
Name: Clifton S. Robbins
Title: President
KKR ASSOCIATES L.P.
By:/s/ Clifton S. Robbins
---------------------------------
Name: Clifton S. Robbins
Title: General Partner
16
<PAGE>
KKR PARTNERS II, L.P.
By KKR ASSOCIATES L.P.,
as General Partner
By:/s/ Clifton S. Robbins
---------------------------------
Name: Clifton S. Robbins
Title: General Partner
DATED: February 18, 1997
17
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
1. Joint Filing Agreement, dated as of February 13, 1997, among
KCLC Acquisition Corp., KLC Associates, L.P., KKR Associates
(KLC) L.P., KKR-KLC L.L.C., KKR Partners II, L.P. and KKR
Associates L.P. relating to the filing of a joint statement
on Schedule 13D
2. Purchase Agreement, dated as of February 13, 1997, among the
Issuer and Chase Securities Inc., BT Securities Corporation,
Salomon Brothers Inc and Smith Barney Inc.
3. Indenture, dated as of February 13, 1997, between the Issuer
and Marine Midland Bank, as Trustee
4. Credit Agreement, dated as of February 13, 1997, among the
Issuer, the several lenders from time to time parties
thereto and The Chase Manhattan Bank, as Administrative
Agent
5. Registration Rights Agreement, dated as of February 13,
1997, among KCLC Acquisition Corp., KLC Associates, L.P. and
KKR Partners II, L.P.
EXHIBIT 1
JOINT FILING AGREEMENT
We, the signatories of the statement on Schedule 13D to which this
Agreement is attached, hereby agree that such statement is, and any amendments
thereto filed by any of us will be, filed on behalf of each of us.
KKR-KLC L.L.C.
By:/s/ Clifton S. Robbins
---------------------------------
Name: Clifton S. Robbins
Title: Member
KKR ASSOCIATES (KLC) L.P.
By KKR-KLC L.L.C.,
as General Partner
By:/s/ Clifton S. Robbins
---------------------------------
Name: Clifton S. Robbins
Title: Member
KLC ASSOCIATES, L.P.
By KKR ASSOCIATES (KLC) L.P.,
as General Partner
By KKR-KLC L.L.C.,
as General Partner
By:/s/ Clifton S. Robbins
---------------------------------
Name: Clifton S. Robbins
Title: Member
KCLC ACQUISITION CORP.
By:/s/ Clifton S. Robbins
---------------------------------
Name: Clifton S. Robbins
Title: President
<PAGE>
KKR ASSOCIATES L.P.
By:/s/ Clifton S. Robbins
---------------------------------
Name: Clifton S. Robbins
Title: General Partner
KKR PARTNERS II, L.P.
By KKR ASSOCIATES L.P.,
as General Partner
By:/s/ Clifton S. Robbins
---------------------------------
Name: Clifton S. Robbins
Title: General Partner
DATED: February 18, 1997
EXECUTION COPY
KINDERCARE LEARNING CENTERS, INC.
$300,000,000
9-1/2% Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
February 10, 1997
CHASE SECURITIES INC.
270 Park Avenue
New York, NY 10017
BT SECURITIES CORPORATION
300 South Grand Avenue
41st Floor
Los Angeles, CA 90071
SALOMON BROTHERS INC
Seven World Trade Center
New York, NY 10048
SMITH BARNEY INC.
388 Greenwich Street
New York, NY 10013
Ladies and Gentlemen:
KinderCare Learning Centers, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell $300,000,000 principal amount of its
9-1/2% Senior Subordinated Notes due 2009 (the "Securities"). The Securities are
to be issued pursuant to an Indenture to be dated the Closing Date (as defined
in Section 3 hereof) (the "Indenture"), between the Company and Marine Midland
Bank, as trustee (the "Trustee"). The Company hereby confirms its agreement with
Chase Securities Inc. ("CSI") and BT Securities Corporation, Salomon Brothers
Inc and Smith Barney Inc. (together, with CSI, the "Initial Purchasers") with
respect to the sale by the Company of the Securities to the Initial Purchasers.
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance on an exemption therefrom. The Company has
<PAGE>
2
prepared a preliminary offering memorandum dated January 23, 1997 (such
preliminary offering memorandum being hereinafter referred to as the
"preliminary offering memorandum"), and an offering memorandum dated February
10, 1997 (such offering memorandum, in the form first furnished to the Initial
Purchasers being hereinafter referred to as the "Offering Memorandum"), setting
forth information regarding the Company and the Securities for use in connection
with the offering of the Securities. Copies of the preliminary offering
memorandum have been, and copies of the Offering Memorandum will be, delivered
by the Company to the Initial Purchasers pursuant to the terms of this
Agreement. Any references herein to the preliminary offering memorandum and the
Offering Memorandum shall be deemed to include all amendments and supplements
thereto, unless otherwise noted. The Company hereby confirms that it has
authorized the use of the preliminary offering memorandum and the Offering
Memorandum in connection with the offering and sale of the Securities.
Holders (including subsequent transferees) of the Securities will
have the registration rights set forth in the Registration Rights Agreement (the
"Registration Rights Agreement"), to be dated the Closing Date, in substantially
the form of Exhibit A hereto, for so long as any such Securities constitute
"Registrable Notes" (as defined in the Registration Rights Agreement). Pursuant
to the Registration Rights Agreement, the Company will agree to file with the
Securities and Exchange Commission (the "Commission") (i) a registration
statement under the Securities Act (the "Exchange Offer Registration Statement")
registering an issue of a series of senior subordinated notes (the "Exchange
Securities") identical in all material respects to the Securities (except that
the Exchange Securities will not contain terms with respect to transfer
restrictions) to be offered in exchange for the Securities (the "Exchange
Offer") and (ii) under certain circumstances, a shelf registration statement
pursuant to Rule 415 under the Securities Act (the "Shelf Registration
Statement").
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Offering Memorandum.
<PAGE>
3
1. Representations, Warranties and Agreements of the Company. The
Company represents and warrants to and agrees with the Initial Purchasers as of
the date hereof and as of the Closing Date that:
(a) Each of the preliminary offering memorandum and the Offering
Memorandum, as of its respective date, contains all the information that,
if requested by a prospective purchaser, would be required to be provided
pursuant to Rule 144A(d)(4) under the Securities Act. Each of the
preliminary offering memorandum and the Offering Memorandum, as of its
respective date, did not, and at the Closing Date, the Offering Memorandum
and any amendment or supplement thereto will not, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
preceding sentence does not apply to information contained in or omitted
from the preliminary offering memorandum or the Offering Memorandum (or
any supplement or amendment thereto) in reliance upon and in conformity
with written information relating to the Initial Purchasers furnished to
the Company by or on behalf of the Initial Purchasers specifically for use
therein (the "Initial Purchasers' Information"). The parties acknowledge
and agree that the Initial Purchasers' Information consists solely of the
last paragraph of text on the cover page of the Offering Memorandum, the
stabilization legend on page four of the Offering Memorandum and the
third, sixth and eighth paragraphs under the caption "Plan of
Distribution" in the Offering Memorandum.
(b) Each of the Company and the Subsidiaries (as defined below) has
been duly incorporated (or the equivalent thereof, in the case of
Subsidiaries other than Domestic Subsidiaries) and each Domestic
Subsidiary is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation. Each of the Company and the
Subsidiaries is duly qualified to do business and is in good standing (or
the equivalent thereof, in the case of Subsidiaries other than Domestic
Subsidiaries) as a foreign corporation in each jurisdiction in which its
ownership or lease of property or the conduct of its businesses requires
such qualification, and has all power and authority necessary to own or
hold its
<PAGE>
4
respective properties and to conduct the businesses in which it is engaged
as described in the Offering Memorandum, except where the failure to so
qualify or have such power or authority would not have, singly or in the
aggregate, a material adverse effect on the financial condition, results
of operations or business of the Company and the Subsidiaries considered
as a whole (a "Material Adverse Effect"). The term "Subsidiary" means each
person with at least nominal assets of which a majority of the voting
equity securities or other interests is owned, directly or indirectly, by
the Company as of the Closing Date, such persons being referred to
collectively as the "Subsidiaries". The only Subsidiaries of the Company
organized under the laws of the United States of America or any State
thereof or the District of Columbia are KinderCare Real Estate Corp. and
KC Development Corp (collectively, the "Domestic Subsidiaries").
(c) The Company has the capitalization as set forth in the Offering
Memorandum under the heading "Capitalization", and all the issued shares
of capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable. The outstanding shares of
capital stock of each Subsidiary are validly authorized and issued and
fully paid and nonassessable (or the equivalent thereof, in the case of
Subsidiaries other than Domestic Subsidiaries) and are owned, directly or
indirectly, by the Company free and clear of any lien (other than any lien
on such capital stock pursuant to the Credit Facilities), charge,
encumbrance, security interest, restriction upon voting or transfer or any
other claim of any third party.
(d) This Agreement and the Agreement and Plan of Merger (the "Merger
Agreement") dated as of October 3, 1996, and as amended as of December 27,
1996, between KCLC Acquisition Corp., a Delaware corporation, and the
Company have been duly authorized and validly executed and delivered by
the Company. At the Closing Date the Indenture will conform in all
material respects to the requirements of the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act"), and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder.
The Indenture and the Registration Rights Agreement have been duly
<PAGE>
5
authorized by the Company. This Agreement and the Merger Agreement
constitute, and each of the Indenture and Registration Rights Agreement,
when duly executed and delivered in accordance with their terms by each
party thereto, will constitute, a valid and legally binding agreement of
the Company, enforceable against the Company in accordance with their
terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally, and to general equitable
principles (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(e) On the Closing Date, the Securities will have been duly
authorized by the Company, and the Securities, the Indenture and the
Registration Rights Agreement will have been duly executed by the Company
and will conform in all material respects to the descriptions thereof
contained in the Offering Memorandum. When the Securities are issued,
authenticated and delivered in accordance with the Indenture and paid for
in accordance with the terms of this Agreement (assuming due
authorization, execution and delivery of the Indenture by the Trustee and
due authentication of the Securities by the Trustee), the Securities will
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms and
entitled to the benefits of the Indenture, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights
generally, and to general equitable principles (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(f) The execution, delivery and performance of the Indenture, the
Securities, the Registration Rights Agreement, the Merger Agreement and
this Agreement by the Company, the consummation of the transactions
contemplated hereby and thereby, and the fulfillment of the terms hereof
or thereof, will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets (other than any lien pursuant to the Credit
Facilities) of the Company
<PAGE>
6
or any Subsidiary pursuant to, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or
any Subsidiary is a party or by which the Company or any Subsidiary is
bound or to which any of their respective properties or assets is subject,
nor will such actions result in any violation of the provisions of the
charter or by-laws of the Company or any Subsidiary or any statute or any
judgment, order, decree, rule or regulation of any court or arbitrator or
governmental agency or body having jurisdiction over the Company or any
Subsidiary or any of their respective properties or assets, except for any
such conflict, breach, violation, default, lien, charge or encumbrance
that would not have a Material Adverse Effect; and no consent, approval,
authorization or order of, or filing or registration with, any such court
or arbitrator or governmental agency or body under any such statute,
judgment, order, decree, rule or regulation is required for the execution,
delivery and performance of the Indenture, the Securities, the
Registration Rights Agreement, the Merger Agreement or this Agreement by
the Company or any Subsidiary or the consummation of the transactions
contemplated hereby and thereby which shall not have been obtained or made
on or prior to the Closing Date (other than (i) such consents, approvals,
authorizations or orders of, or filings or registrations with, the
Commission or any state securities regulatory authorities as may be
required to be obtained or made pursuant to this Agreement, the Merger
Agreement or the Registration Rights Agreement and (ii) consents,
approvals, authorizations or orders of, or filings or registrations with,
state and local licensing authorities which shall be obtained as soon as
practicable following receipt of notice of the necessity therefor in
connection with state and local child care licensing requirements and the
absence of which, singly or in the aggregate, would not have a Material
Adverse Effect). Attached hereto as Annex A is a complete and accurate
list of all of the material contracts of the Company.
(g) KPMG Peat Marwick LLP ("Peat Marwick") are independent certified
public accountants with respect to the Company and its Subsidiaries (i)
within the meaning of Rule 101 of the Code of Professional Conduct of the
American Institute of Certified Public Accountants ("AICPA") and its
interpretations and
<PAGE>
7
rulings thereunder and (ii) as required by the Securities Act and the
rules and regulations thereunder for financial statements included in a
definitive prospectus forming part of a registration statement on Form S-1
under the Securities Act. The historical financial statements (including
the related notes) included in the preliminary offering memorandum and the
Offering Memorandum comply in all material respects (except for the
inclusion of financial statement schedules) with the requirements
applicable to a Registration Statement on Form S-1 and have been prepared,
and fairly present in all material respects, the financial position of the
Company and the Subsidiaries on a consolidated basis at the respective
dates indicated and the results of their operations and cash flows for the
respective periods indicated, subject in the case of unaudited
consolidated financial statements to year-end audit adjustments, in
accordance with generally accepted accounting principles consistently
applied throughout such periods, except as otherwise disclosed therein;
and the financial information and financial data set forth in the Offering
Memorandum under the captions "Offering Memorandum Summary--Summary
Consolidated Financial and Other Data", "Capitalization", "Pro Forma
Consolidated Financial Statements", "Selected Historical Consolidated
Financial and Other Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" are derived from the
accounting records of the Company, and fairly present in all material
respects the data purported to be shown. The pro forma financial
statements contained in the preliminary offering memorandum and the
Offering Memorandum have been prepared on a basis consistent with such
historical statements, except for the pro forma adjustments specified
therein, include all material adjustments to the historical financial data
required by Rule 11-02 of Regulation S-X to reflect the Merger, the
Financings and other related transactions, give effect to assumptions made
on a reasonable basis and present fairly in all material respects the
historical and proposed transactions contemplated by the preliminary
offering memorandum, the Offering Memorandum and this Agreement. The other
historical financial and statistical information and data included in the
preliminary offering memorandum and the Offering Memorandum are, in all
material respects, accurately presented.
<PAGE>
8
(h) There are no pending actions or suits or judicial, arbitral or
other administrative or other proceedings to which the Company or any
Subsidiary is a party or of which any property or assets of the Company or
any Subsidiary is the subject which, singly or in the aggregate, if
determined adversely to the Company or any Subsidiary, are reasonably
likely to have a Material Adverse Effect; and to the Company's knowledge,
no such proceedings are threatened or contemplated by governmental
authorities or others.
(i) Neither the Company nor any Subsidiary is (A) in violation of
its charter or by-laws, (B) in default in any respect, nor has any event
occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the Company
or any Subsidiary is a party or by which it is bound or to which any of
their respective property or assets is subject or (C) in violation in any
respect of any law, ordinance, governmental rule, regulation or court
decree to which the Company or any Subsidiary or their respective property
or assets may be subject, except any violation or default under clauses
(B) or (C) that would not reasonably be expected to have a Material
Adverse Effect.
(j) The Company and the Subsidiaries possess all material licenses,
certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate state, federal or foreign
regulatory agencies or bodies which are necessary for the ownership of
their respective properties or the conduct of their businesses as
described in the Offering Memorandum, except where the failure to possess
or make the same would not have, singly or in the aggregate, a Material
Adverse Effect, and neither the Company nor any Subsidiary has received
notification of any revocation or modification of any such license,
authorization or permit (other than with respect to state child care
licensing requirements in connection with the transactions contemplated by
the Merger Agreement) and none of them has any reasonable basis to believe
that any such license, certificate, authorization or permit will not be
renewed.
<PAGE>
9
(k) Neither the Company nor any Subsidiary is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules and regulations of
the Commission thereunder.
(l) The Company and the Subsidiaries maintain insurance covering
their respective properties, operations, personnel and businesses
(including, without limitation, insurance against claims of alleged child
abuse), which insurance is in amounts and insures against such losses and
risks, in each case as is in accordance with customary industry practice
to protect their respective businesses. Neither the Company nor any
Subsidiary has received notice from any insurer or agent of such insurer
that capital improvements or other expenditures will have to be made in
order to continue such insurance.
(m) Except as disclosed in the Offering Memorandum, there are no
securities of the Company or any Subsidiary registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
listed on a national securities exchange or quoted in a U.S. automated
inter-dealer quotation system.
(n) Except as disclosed in the Offering Memorandum (including with
respect to this Agreement), neither the Company nor any Subsidiary is a
party to any contract, agreement or understanding with any person that
would give rise to a valid claim against the Company or any Subsidiary or
the Initial Purchasers for a brokerage commission, finder's fee or like
payment in connection with the offering of the Securities.
(o) The Company and the Subsidiaries own or possess adequate rights
to use all patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service mark registrations, copyrights,
licenses and know-how (including trade secrets and other unpatented or
unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their businesses, except where
the failure to own or possess such rights would not have a Material
Adverse Effect, and the Company has no reasonable basis to believe that
the conduct of their businesses will conflict with any such rights of
others which would reasonably be
<PAGE>
10
expected to have a Material Adverse Effect, and neither the Company nor
any Subsidiary has received any notice of any claim of conflict with any
such rights of others which, if such assertion of conflict were sustained,
would have a Material Adverse Effect.
(p) The Company and the Subsidiaries have good and marketable title
in fee simple to, or have valid rights to lease or otherwise use, all
items of real or personal property material to the business of the Company
and the Subsidiaries taken as a whole, in each case free and clear of all
liens, encumbrances, claims, defects and imperfections of title (other
than pursuant to the Credit Facilities) that would reasonably be expected
to have a Material Adverse Effect, it being understood that liens,
encumbrances, claims, defects and imperfections of title that do not
materially interfere with the use made or proposed to be made of such
property would not reasonably be expected to have a Material Adverse
Effect.
(q) Except as described in the Offering Memorandum or which would
not reasonably be expected to have a Material Adverse Effect, none of the
Company or its Subsidiaries has any liability for any prohibited
transaction or funding deficiency or any complete or partial withdrawal
liability with respect to any pension, profit sharing or other plan which
is subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), to which the Company or any Subsidiary makes or ever
has made a contribution and in which any employee of the Company or any
Subsidiary is or has ever been a participant. With respect to such plans,
the Company and each of its Subsidiaries is in compliance with all
applicable provisions of ERISA, except where any non-compliance would not
reasonably be expected to have a Material Adverse Effect.
(r) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission, or other release of any kind of
toxic or other wastes or other hazardous substances by, due to, or caused
by the Company or any Subsidiary (or, to the best of the Company's
knowledge, any other entity for whose acts or omissions the Company or any
Subsidiary is or may reasonably be expected to be liable) upon any of the
property now or previously owned or leased by the Company or any
Subsidiary, or
<PAGE>
11
upon any other property, (i) in violation of any statute or any ordinance,
rule, regulation, order, judgment, decree or permit or (ii) which would,
under any statute or any ordinance, rule (including rule of common law),
regulation, order, judgment, decree or permit, give rise to any liability,
except in the case of both clauses (i) and (ii) for any violation or
liability which would not have, singly or in the aggregate with all such
violations and liabilities, a Material Adverse Effect; there has been no
disposal, discharge, emission or other release of any kind onto such
property or into the environment surrounding such property of any toxic or
other wastes or other hazardous substances with respect to which the
Company or any Subsidiary has knowledge, except for any such disposal,
discharge, emission or other release of any kind which would not have,
singly or in the aggregate with all such discharges and other releases, a
Material Adverse Effect.
(s) Neither the Company nor any affiliate (as such term is defined
in Rule 501(b) under the Securities Act) of the Company has, directly or
through any agent, sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any "security" (as defined in the
Securities Act), which is or will be integrated with the sale of the
Securities in a manner that would require the registration of the
Securities under the Securities Act.
(t) None of the Company or any affiliate (as such term is defined in
Rule 501(b) under the Securities Act) of the Company or any other person
acting on its or their behalf has engaged, in connection with the offering
of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act.
(u) Assuming the accuracy of the Initial Purchasers' representations
in Section 2 hereof and their compliance with the agreements set forth
therein, it is not necessary, in connection with the issuance and sale of
the Securities and the offer, resale and delivery of the Securities in the
manner contemplated by this Agreement and the Offering Memorandum, to
register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act.
<PAGE>
12
(v) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(w) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Rule 10b-6 under the Exchange Act in
connection with the offering of the Securities.
(x) Except as described or summarized in the Offering Memorandum,
there are no outstanding rights, warrants or options to acquire, or
instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of
capital stock of or other equity interest in the Company.
(y) Since the date as of which information is given in the Offering
Memorandum, (A) there has been no material adverse change or any
development involving a prospective material adverse change in the
financial condition or in the earnings or business of the Company and the
Subsidiaries taken as a whole, whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into by
the Company or any Subsidiary, other than those in the ordinary course of
business, which are material with respect to the Company and the
Subsidiaries taken as a whole, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock, except as contemplated by the Merger
Agreement.
2. Purchase by the Initial Purchasers. On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
the Initial Purchasers, severally and not jointly, and the Initial Purchasers,
severally and not jointly, agree to purchase from the Company such respective
principal amounts of Securities as are set forth opposite the name of such
Initial Purchaser in Schedule I hereto at a purchase price equal to 97.25% of
the principal amount thereof, plus accrued interest, if any, from February 13,
1997, to the Closing Date.
<PAGE>
13
The Company shall not be obligated to deliver any of the Securities
except upon payment for all of the Securities to be purchased as provided
herein.
The Initial Purchasers have advised the Company that it is their
intention, as promptly as they deem appropriate after the Company shall have
furnished the Initial Purchasers with copies of the Offering Memorandum, to
resell the Securities pursuant to the procedures and upon the terms set forth in
the Offering Memorandum, including not to solicit any offer to buy or offer to
sell the Securities by means of any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) or in
any manner involving a public offering within the meaning of Section 4(2) of the
Securities Act. Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees with the Company that they have solicited and will solicit
offers for Securities only from, and will offer Securities only to, persons that
they reasonably believe to be (i) "Qualified Institutional Buyers" ("QIBs"), as
defined in Rule 144A under the Securities Act, or (ii) other Institutional
Accredited Investors, within the meaning of Rule 501(a) under the Securities
Act. The Initial Purchasers represent and warrant, severally and not jointly,
that they are either QIBs or Institutional Accredited Investors, in either case
with such knowledge and experience in financial and business matters as are
necessary to evaluate the merits and risks of an investment in the Securities,
and are acquiring their interest in the Securities not with a view to the
distribution or resale thereof, except resales in compliance with the
registration requirements or exemption provisions of the Securities Act and
neither they, nor anyone acting on their behalf, will offer the Securities so as
to bring the issuance and sale of the Securities within the provisions of
Section 5 of the Securities Act. The Company acknowledges and agrees that the
Initial Purchasers may sell Securities to any affiliate of an Initial Purchaser
and that any such affiliate may sell Securities purchased by it to the Initial
Purchasers. The Initial Purchasers agree that, prior to or simultaneously with
the confirmation of sale by the Initial Purchasers to any purchaser of any of
the Securities purchased by the Initial Purchasers from the Company pursuant
hereto, the Initial Purchasers shall furnish to that purchaser a copy of the
Offering Memorandum (and any amendment thereof or supplement thereto that the
Company shall have furnished to the Initial Purchasers prior to the date of such
confirmation of sale). In addition to the
<PAGE>
14
foregoing, the Initial Purchasers agree and understand that the Company and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Sections 5(c), (d), (e) and (f) hereof, counsel to the Company and to the
Initial Purchasers, respectively, may rely upon the accuracy and truth of the
foregoing representations, warranties and covenants in this Section 2 and the
Initial Purchasers hereby consent to such reliance.
3. Delivery of and Payment for the Securities. Delivery of and
payment for the Securities shall be made at the offices of Simpson Thacher &
Bartlett, New York, New York, or at such other place as shall be agreed upon by
the Initial Purchasers and the Company, at 10:00 a.m., New York City time, on
February 13, 1997, or at such other time or date, not later than seven full
business days thereafter, as shall be agreed upon by the Initial Purchasers and
the Company (such time and date of payment and delivery being referred to herein
as the "Closing Date").
On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior to
the Closing Date or by such other means as the parties hereto shall agree prior
to the Closing Date against delivery to the Initial Purchasers of the
certificates evidencing the Securities. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of the Initial Purchasers hereunder. Upon delivery,
the Securities shall be in global form, registered in such names and in such
denominations as CSI on behalf of the Initial Purchasers shall have requested in
writing not less than two full business days prior to the Closing Date. The
Company agrees to make one or more global certificates evidencing the Securities
available for inspection by CSI on behalf of the Initial Purchasers in New York,
New York at least 24 hours prior to the Closing Date.
4. Further Agreements of the Company. The Company agrees with the
Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Offering Memorandum untrue
<PAGE>
15
or which requires the making of any additions to or changes in the
Offering Memorandum (as amended or supplemented from time to time) in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading and not to effect such amendment or
supplementation without the consent of the Initial Purchasers (such
consent not to be unreasonably withheld); to advise the Initial Purchasers
promptly of any order preventing or suspending the use of the preliminary
offering memorandum or the Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any jurisdiction
and of the initiation or threatening of any proceeding for any such
purpose; and to use reasonable best efforts to prevent the issuance of any
such order preventing or suspending the use of the preliminary offering
memorandum or the Offering Memorandum or suspending any such qualification
and, if any such suspension is issued, to obtain the lifting thereof at
the earliest possible time;
(b) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of the
preliminary offering memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested; and the
Company hereby consents to the use of the preliminary offering memorandum
and the Offering Memorandum, and any amendments and supplements thereto,
in connection with resales of the Securities;
(c) if the delivery of the Offering Memorandum is required at any
time prior to the expiration of nine months after the time of the issue of
the Offering Memorandum in connection with the sale of the Securities and
if at such time any events shall have occurred as a result of which the
Offering Memorandum as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made when the Offering Memorandum is
delivered, not misleading, or if for any other reason it shall be
necessary at such time to amend or supplement the Offering Memorandum in
order to comply with any law, to notify the Initial Purchasers immediately
thereof, and
<PAGE>
16
to prepare promptly and furnish to the Initial Purchasers an amended
Offering Memorandum or a supplement to the Offering Memorandum which will
correct such statement or omission or effect such compliance. The Initial
Purchasers' delivery of any such amendment or supplement shall not
constitute a waiver of any of the conditions set forth in Section 5
hereof;
(d) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers
and counsel for the Initial Purchasers and not to effect any such
amendment or supplement to which the Initial Purchasers shall reasonably
object by notice to the Company after a reasonable period to review,
provided, however, that notwithstanding the Initial Purchasers' objection
such amendment or supplement may be effected if counsel to the Company
reasonably determines that the Company would be adversely affected if such
amendment or supplement is not effected;
(e) for a period of three years following the Closing Date, to
furnish to the Initial Purchasers all public reports and all reports,
documents, information and financial statements furnished by the Company
to the Commission pursuant to the Indenture or the Exchange Act or any
rule or regulation of the Commission thereunder;
(f) for so long as it is required to do so under the Indenture and
at any time that it is not subject to Section 13 or 15(d) of the Exchange
Act, upon request of any holder of the Securities, to furnish to such
holder, and to any prospective purchaser or purchasers of the Securities
designated by such holder, information satisfying the requirements of
subsection (d)(4) of Rule 144A under the Securities Act. This covenant is
intended to be for the benefit of the holders from time to time of the
Securities, and prospective purchasers of the Securities designated by
such holders;
(g) to use the proceeds from the sale of the Securities in the
manner described in the Offering Memorandum under the caption "Use of
Proceeds";
<PAGE>
17
(h) to assist the Initial Purchasers in arranging for the Securities
to be designated PORTAL Market securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the PORTAL Market
and for the Securities to be eligible for clearance and settlement through
The Depository Trust Company ("DTC");
(i) in connection with the offering of the Securities, to make its
officers, employees, independent accountants and legal counsel reasonably
available upon request by the Initial Purchasers;
(j) to do and perform all things required to be done and performed
by it under this Agreement that are within its control prior to or after
the Closing Date and to use its best efforts to satisfy all conditions
precedent on its part to the delivery of the Securities;
(k) except following the effectiveness of the Exchange Offer
Registration Statement or Shelf Registration Statement, as the case may
be, neither the Company nor any of its affiliates (as such term is defined
in Rule 501(b) under the Securities Act) will, and the Company will not
authorize or knowingly permit any person acting on its or their behalf to,
solicit any offer to buy or offer to sell the Securities by means of any
form of general solicitation or general advertising (as such terms are
used in Regulation D under the Securities Act) or in any manner involving
a public offering within the meaning of Section 4(2) of the Securities
Act;
(l) to not, and to ensure that no affiliate (as such term is defined
in Rule 501(b) under the Securities Act) of the Company will, offer, sell
or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner that would require the
registration of the Securities under the Securities Act;
(m) to cause each Security to bear the legend set forth in the form
of Security attached as Exhibit A to the Indenture until such legend shall
no longer be necessary or advisable because the Securities are no
<PAGE>
18
longer subject to the restrictions on transfer described therein;
(n) promptly to take from time to time such action as the Initial
Purchasers may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchasers may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of the
Securities; provided, however, that in connection therewith neither the
Company nor any Subsidiary shall be required to qualify as a foreign
corporation or to file a general consent to service of process or to
subject itself to taxation in respect of doing business in any
jurisdiction where it is not so qualified or so subject. The Company will
promptly advise the Initial Purchasers of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(o) to comply with the Registration Rights Agreement and all
agreements set forth in the representation letter of the Company to DTC
relating to the approval of the Securities for "book-entry" transfer;
(p) for a period of 90 days from the date of the Offering
Memorandum, to not offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement for,
or announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by the Company or any of its
Subsidiaries (other than the Securities or the Exchange Securities)
without the prior written consent of the Initial Purchasers, which consent
shall not be unreasonably withheld. The Company will not offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or
disposition would cause the exemption afforded by Section 4(2) of the
Securities Act to cease to be applicable to the offer and sale of the
Securities as contemplated by this Agreement and the Offering Memorandum;
<PAGE>
19
(q) in connection with the offering, until the Initial Purchasers
shall have notified the Company of the completion of the resale of the
Securities, neither the Company nor any of its affiliated purchasers (as
defined in Rule 10b-6 under the Exchange Act), either alone or with one or
more other persons, will bid for or purchase, for any account in which it
or any of its affiliated purchasers has a beneficial interest, any
Securities, or attempt to induce any person to purchase any Securities;
and neither it nor any of its affiliated purchasers will make bids or
purchases for the purpose of creating actual, or apparent, active trading
in the Securities or of raising the price of the Securities;
(r) during the period from the Closing Date until three years after
the Closing Date, without the prior written consent of the Initial
Purchasers, to not, and not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Securities that
have been reacquired by them, except for Securities purchased by the
Company or any of its affiliates and resold in a transaction registered
under the Securities Act; and
(s) to not take any action prior to the execution and delivery of
the Indenture which, if taken after such execution and delivery, would
have violated any of the covenants contained in the Indenture.
5. Conditions of Initial Purchasers' Obligations. The respective
obligations of the Initial Purchasers hereunder are subject to the accuracy, on
and as of the date hereof and on the Closing Date, of the representations and
warranties of the Company contained herein, to the accuracy of the statements of
officers of the Company made in any certificates delivered pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers as promptly as practicable on or
following the date of this Agreement or at such other date and time as to
which the Initial Purchasers may agree; and no stop order suspending the
sale of the Securities in any jurisdiction shall have been issued and no
<PAGE>
20
proceeding for that purpose shall have been commenced or shall be pending
or threatened.
(b) All corporate proceedings and other legal matters incident to
the authorization, form and validity of the Securities, the Indenture, the
Registration Rights Agreement, the Merger Agreement, this Agreement and
the Offering Memorandum, and all other legal matters relating to the
Securities, the Indenture, the Registration Rights Agreement, the Merger
Agreement, this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory in all material respects to the Initial
Purchasers, and the Company shall have furnished to the Initial Purchasers
all documents and information that they or their counsel may reasonably
request to enable them to pass upon such matters; and none of the Initial
Purchasers shall have discovered and disclosed to the Company on or prior
to the Closing Date that the Offering Memorandum or any amendment or
supplement thereto contains an untrue statement of a fact which, in the
opinion of counsel for the Initial Purchasers, is material or omits to
state any fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) Simpson Thacher & Bartlett, shall have furnished to the Initial
Purchasers its written opinion, as special counsel to the Company,
addressed to the Initial Purchasers and dated the Closing Date, in form
and substance reasonably satisfactory to the Initial Purchasers, to the
effect that:
(i) no consent, approval, authorization, order, registration
or qualification of or with any federal or New York governmental
agency or body or any Delaware governmental agency or body acting
pursuant to the Delaware General Corporation law or, to the
knowledge of such counsel, any federal or New York court or any
Delaware court acting pursuant to the Delaware General Corporation
Law is required for the issue and sale of the Securities by the
Company to the Initial Purchasers and the resale by the Initial
Purchasers in accordance with the Purchase Agreement, and the
compliance by the Company with all of the provisions of this
Agreement, except
<PAGE>
21
for such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the
Securities by the Initial Purchasers;
(ii) neither the Company nor any Domestic Subsidiary is an
"investment company" within the meaning of the Investment Company
Act and the rules and regulations of the Commission thereunder;
(iii) each of this Agreement, the Merger Agreement and the
Registration Rights Agreement constitutes a valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms (assuming the due authorization, execution
and delivery thereof by the Company and the other parties thereto)
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (regardless of whether enforcement is
considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing and except to the extent
that indemnification or contribution provisions may be
unenforceable;
(iv) the Indenture constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in
accordance with its terms (assuming due authorization, execution and
delivery by the Company and the Trustee), subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws relating to or affecting creditors'
rights generally, general equitable principles (regardless of
whether enforcement is considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing; the
Securities (assuming due authorization, execution and delivery by
the Company), upon the due authentication and delivery thereof by
the Trustee pursuant to the Indenture and upon payment and delivery
in accordance with this Agreement, will be duly and validly issued
<PAGE>
22
and outstanding and will constitute valid and legally binding
obligations of the Company entitled to the benefits of the Indenture
and enforceable against the Company in accordance with their terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (regardless of whether enforcement is
considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing; and the Indenture, the
Securities, the Merger Agreement, the Registration Rights Agreement,
the Voting Agreement and the Stockholders' Agreement (assuming it is
signed in the form attached as an Exhibit to the Merger Agreement),
conform in all material respects to the descriptions thereof
contained in the Offering Memorandum; and
(v) assuming the accuracy of the representations, warranties
and agreements of the Company and each Subsidiary contained in
paragraphs (s) and (t) of Section 1 of this Agreement and of the
Initial Purchasers in Section 2 of this Agreement, no registration
of the Securities under the Securities Act of 1933, as amended, and
no qualification of the Indenture under the Trust Indenture Act of
1939, as amended, is required for the offer and sale of the
Securities by the Company to the Initial Purchasers or the initial
reoffer and resale of the Securities by the Initial Purchasers
solely in the manner contemplated by the Offering Memorandum, this
Agreement and the Indenture.
Such counsel shall state that they have participated in conferences
with representatives of the Company, representatives of the independent
auditors of the Company and representatives of the Initial Purchasers at
which conferences the contents of the Offering Memorandum, any amendment
thereof and supplement thereto and related matters were discussed, and,
although such counsel assume no responsibility for the accuracy or
completeness or fairness of the Offering Memorandum, any amendment thereof
or supplement thereto (except as expressly provided above), nothing has
come to the attention of such
<PAGE>
23
counsel to cause such counsel to believe that the Offering Memorandum or
any amendment thereof or supplement thereto (other than the financial
statements and other financial and statistical information contained
therein, as to which such counsel need express no belief) as of its date
or such Closing Date, contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
In rendering such opinion, such counsel may state that its opinion
is limited to matters governed by the federal laws of the United States of
America, the laws of the State of New York, and the General Corporation
Law of Delaware and may rely as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of the
Company and public officials which are furnished to the Initial
Purchasers.
(d) Alston & Bird shall have furnished to the Initial Purchasers its
written opinion, as counsel to the Company, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, to the effect that:
(i) each of the Domestic Subsidiaries has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation;
(ii) the outstanding shares of common stock of the Company and
each Domestic Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable under the General
Corporation Law of the State of Delaware and neither the Company nor
any Domestic Subsidiary has any outstanding preferred stock;
(iii) the Company has full corporate power and authority to
execute and deliver the Indenture, the Securities, the Registration
Rights Agreement, the Merger Agreement and this Agreement and to
perform its obligations hereunder and thereunder; and the execution
and delivery of the Indenture,
<PAGE>
24
the Securities, the Registration Rights Agreement, the Merger
Agreement and this Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and
validly authorized by the Company;
(iv) each of this Agreement, the Merger Agreement and the
Registration Rights Agreement has been duly authorized, executed and
delivered by the Company;
(v) each of the Indenture and the Securities have been duly
authorized, executed and delivered by the Company;
(vi) the execution, delivery and performance by the Company of
the Indenture, the Securities, the Registration Rights Agreement,
the Merger Agreement and this Agreement and the fulfillment of the
terms hereof and thereof, do not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets (other than any
lien pursuant to the Credit Facilities) of the Company or any
Domestic Subsidiary pursuant to any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument specified on
Annex B, except for any such conflicts, breaches, violations or
defaults which would not reasonably be expected to have a Material
Adverse Effect, nor will such actions result in any violation of the
provisions of the charter or by-laws of the Company or any Domestic
Subsidiary or any statute, or, to the knowledge of such counsel, any
judgment, order, decree, rule or regulation of any Federal or
Georgia or, to the extent acting pursuant to the Delaware General
Corporation Law, Delaware court or governmental agency or body or
arbitrator having jurisdiction over the Company or any Domestic
Subsidiary or any of their respective properties or assets; and no
consent, approval, authorization or order of, or filing or
registration with, any such court or arbitrator or governmental
agency or body is required under any such statute, judgment, order,
decree, rule or regulation known to such counsel for the
<PAGE>
25
execution, delivery and performance of the Indenture, the
Securities, the Merger Agreement or the Registration Rights
Agreement by the Company; provided, however, that the foregoing may
exclude (A) state securities laws or Blue Sky laws, (B) any such
consents, approvals, authorizations, or order of, or filings or
registrations with, the Commission and any state securities
regulatory authorities as may be required to be obtained or made
pursuant to the Registration Rights Agreement; (C) any law, rule or
regulation of the government of the United States or any state
applicable to the Company and its Subsidiaries because of the
specific type of business in which each engages; (D) filing of the
Registration Statement on Form S-4 in connection with the Merger;
(E) the filing of a Certificate of Merger with the Secretary of
State of the State of Delaware; and (F) the Hart-Scott-Rodino
Antitrust Improvement Act of 1976; provided, further, however, that
such counsel need not express any opinion as to whether the offering
of the Securities may be made without registration under the
Securities Act.
(vii) neither the Company nor any Domestic Subsidiary is in
violation of any terms or provisions of its respective charter or
by-laws; and
(viii) to the knowledge of such counsel, no default exists and
no event has occurred which, with notice, lapse of time or both,
would constitute a default in the due performance and observance of
any term, covenant or condition of any agreement specified on Annex
B and which would reasonably be expected to have a Material Adverse
Effect.
Such counsel shall state that they participated in conferences with
officers of the Company in connection with the preparation by the Company
of its Annual Report on Form 10-K for the year ended May 31, 1996 (as
amended by Form 10-K/A filed with the Commission on September 30, 1996)
and its Quarterly Reports on Form 10-Q for the sixteen weeks ended
September 20, 1996, both of which are incorporated by reference in the
Offering Memorandum. In addition, such counsel
<PAGE>
26
shall state that they participated in certain conferences with the current
officers of the Company, other special counsel to the Company,
representatives of the independent auditors of the Company and
representatives of the Initial Purchasers at which conferences the
contents of the Offering Memorandum, any amendment thereof and supplement
thereto and related matters were discussed. Such counsel shall further
state that although such counsel has not independently verified and
assumes no responsibility for the accuracy, completeness or fairness of
statements contained in the Offering Memorandum, any amendment thereof or
supplement thereto, that, on the basis of the foregoing, nothing has come
to the attention of such counsel that causes such counsel to believe that
the Offering Memorandum (as amended or supplemented), as of its date or
the Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that such counsel need
express no opinion as to financial statements and related notes, schedules
and other historical and pro forma financial and statistical data
contained or incorporated by reference in the Offering Memorandum or any
supplement or amendment thereto.
In rendering such opinion, such counsel may state that its opinion
is limited to matters governed by the federal laws of the United States of
America, the laws of the State of Georgia, and the General Corporation Law
of Delaware and may rely as to matters of fact, to the extent such counsel
deems proper, on certificates of responsible officers of the Company and
public officials which are furnished to the Initial Purchasers.
(e) Rebecca S. Bryan, Esq., General Counsel of the Company shall
have furnished to the Initial Purchasers her written opinion, addressed to
the Initial Purchasers and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of
<PAGE>
27
incorporation; each of the Company and the Domestic Subsidiaries is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its businesses requires such
qualification (other than those jurisdictions in which the failure
to so qualify would not have a Material Adverse Effect) and has all
corporate power and authority necessary to own or hold its
properties and to conduct the businesses in which it is engaged as
described in the Offering Memorandum (except where the failure to
have such power or authority would not have a Material Adverse
Effect);
(ii) there is no pending or, to the best knowledge of counsel,
threatened action or suit or judicial, arbitral or other
administrative or other proceeding to which the Company or any
Subsidiary is a party or of which any of their respective properties
or assets is the subject that, singly or in the aggregate, if
determined adversely to the Company or any Subsidiary is reasonably
likely to have a Material Adverse Effect or would materially and
adversely affect the ability of the Company to perform its
obligations under this Agreement, the Registration Rights Agreement,
the Merger Agreement or the Indenture; and
(iii) neither the Company nor any Domestic Subsidiary is in
violation of any terms or provisions of (A) any license, permit,
judgment, decree or order or (B) any statute, rule or regulation, in
each case pertaining to matters other than child care licensing
rules and regulations, which violation in any case referred to in
(A) or (B) above is reasonably likely to have a Material Adverse
Effect.
Such counsel shall also confirm that there are no material Federal
rules dealing with child care licensing matters, and that she has advised
the Company regarding state and local child care licensing rules and
regulations while serving as counsel to the Company. Such counsel shall
also state that, insofar as is known to her, based solely upon such
experience and subject to the qualifications and limitations set
<PAGE>
28
forth below, all consents, approvals, authorizations, and orders of state
and local child care licensing authorities have been obtained except for
such consents, approvals, authorizations or orders which the Company has
indicated that it will obtain as soon as practicable following
notification from any appropriate governmental authority of its failure to
have obtained any such required consents, approvals, authorizations or
orders and the absence of which would not have a Material Adverse Effect.
Such counsel shall state that she has participated in certain
conferences with representatives of the Company, representatives of the
independent auditors of the Company and representatives of the Initial
Purchasers at which conferences the contents of the Offering Memorandum,
any amendment thereof and supplement thereto and related matters were
discussed, and, although such counsel assumes no responsibility for the
accuracy or completeness or fairness of the Offering Memorandum, any
amendment thereof or supplement thereto, nothing has come to the attention
of such counsel to cause such counsel to believe that the Offering
Memorandum or any amendment thereof or supplement thereto (other than the
financial statements and other financial and statistical information
contained therein, as to which such counsel need express no belief) as of
its date or such Closing Date, contained or contains any untrue statement
of a material fact or omitted or omits to state a material fact necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
In rendering such opinion, such counsel may state that her opinion
is limited to matters governed by the federal laws of the United States of
America, the laws of the State of Alabama, and the General Corporation Law
of Delaware and may rely as to matters of fact, to the extent such counsel
deems proper, on certificates of responsible officers of the Company and
public officials which are furnished to the Initial Purchasers.
(f) The Initial Purchasers shall have received from Cravath, Swaine
& Moore ("CS&M"), counsel for the Initial Purchasers, such opinion or
opinions, dated the Closing Date, with respect to such matters as the
<PAGE>
29
Initial Purchasers may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the purpose
of enabling them to pass upon such matters.
(g) At the time of the execution of this Agreement, the Company
shall have furnished to the Initial Purchasers a letter of Peat Marwick,
dated the date hereof (the "Initial Letter"), in form and substance
reasonably satisfactory to the Initial Purchasers, containing statements
and information of the type ordinarily included in accountants' "comfort
letters" to initial purchasers with respect to the financial statements
and certain financial information contained in the Offering Memorandum.
(h) On the Closing Date, the Company shall have furnished to the
Initial Purchasers a letter (the "bring-down letter") of Peat Marwick,
addressed to the Initial Purchasers and dated the Closing Date confirming,
as of the date of the bring-down letter (or, with respect to matters
involving changes or developments since the respective dates as of which
specified financial information is given in the Offering Memorandum, as of
a date not more than three days prior to the date of the bring-down
letter), the conclusions and findings of such firm with respect to the
financial information and other matters covered by its Initial Letter.
(i) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its Chief Financial Officer and
its Treasurer stating that (A) such officers have carefully examined the
Offering Memorandum, (B) in their opinion, as of its date and the Closing
Date, the Offering Memorandum did not, and does not, include any untrue
statement of a material fact and did not, and does not, omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, and since the date of the Offering Memorandum, no
event has occurred which should have been set forth in a supplement or
amendment to the Offering Memorandum so that the Offering Memorandum (as
so amended or supplemented) as of the Closing Date would not include any
untrue statement of a material fact and would not omit to state a material
fact
<PAGE>
30
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
and (C) as of the Closing Date, the representations and warranties of the
Company in this Agreement are true and correct in all material respects,
the Company has complied with all agreements and satisfied in all material
respects all conditions on its part to be performed or satisfied hereunder
on or prior to the Closing Date, and subsequent to the date of the most
recent financial statements contained in the Offering Memorandum, there
has been no event or development that can reasonably be expected to result
in a Material Adverse Effect, except as set forth in the Offering
Memorandum.
(j) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any event or development that can reasonably be expected to
result in a Material Adverse Effect or any change specified in the letters
referred to in paragraphs (g) or (h) of this Section, the effect of which,
in any such case described above, is, in the judgment of the Initial
Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or delivery of the Securities on
the terms and in the manner contemplated in the Offering Memorandum
(exclusive of any amendment or supplement).
(k) No action shall have been taken and no statute, rule,
injunction, regulation or order shall have been enacted, adopted or issued
by any federal or state court of competent jurisdiction or any
governmental agency which would, as of the Closing Date, prevent the
issuance or sale of the Securities.
(l) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Securities
or any of the Company's other debt securities or preferred stock by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) of the rules and
regulations of the Commission under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance
or review
<PAGE>
31
(other than an announcement with positive implications of a possible
upgrading), its rating of the Securities or any of the Company's other
debt securities or preferred stock.
(m) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on any such exchange or such
market by the Commission, by such exchange or by any other regulatory body
or governmental authority having jurisdiction, or trading in securities of
the Company on any exchange or in the over-the-counter market shall have
been suspended or (ii) any moratorium on commercial banking activities
shall have been declared by Federal or New York State authorities or (iii)
an outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or (iv) a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) the effect of which, in the case of this clause (iv), is,
in the judgment of the Initial Purchasers, so material and adverse as to
make it impracticable or inadvisable to proceed with the sale or the
delivery of the Securities on the terms and in the manner contemplated by
this Agreement and in the Offering Memorandum (exclusive of any amendment
or supplement thereto).
(n) The Company and the Initial Purchasers shall have executed and
delivered the Registration Rights Agreement.
(o) The Securities shall have been approved by the NASD for trading
in the PORTAL Market; provided that CSI shall have performed all of the
obligations required to be performed by it in connection with such PORTAL
application.
(p) The Indenture shall have been duly executed and delivered by the
Company and the Trustee and the Securities shall have been duly executed
and delivered by the Company and duly authenticated by the Trustee.
<PAGE>
32
(q) There shall not have occurred any invalidation of Rule 144A under
the Securities Act by any court or any withdrawal or proposed withdrawal
of any rule or regulation under the Securities Act or the Exchange Act by
the Commission or any amendment or proposed amendment thereof by the
Commission which in the judgment of the Initial Purchasers would
materially impair the ability of the Initial Purchasers to purchase, hold
or effect resales of the Securities as contemplated hereby.
(r) The Company shall have furnished to the Initial Purchasers a
copy of the solvency letter of Valuation Research, Inc. addressed to The
Chase Manhattan Bank.
(s) The Merger Agreement shall have been executed and delivered by
the parties thereto and shall be in force and effect.
(t) The Initial Purchasers shall be satisfied that the Merger and
the Credit Facilities shall have been consummated or will be consummated
simultaneously with the offering of the Securities on the terms described
in the Offering Memorandum.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
in all material respects to CS&M.
6. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Securities if, prior to that time, any of the events described in Section
5(j), (k), (l) or (m) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for the
purchase of the Securities which such defaulting Initial Purchaser agreed but
failed to purchase by other persons satisfactory to the Company and the
non-defaulting Initial Purchasers, but if no such arrangements are made within
<PAGE>
33
36 hours after such default, then, (i) if the principal amount of defaulted
Securities does not exceed 10% of the principal amount of Securities to be
purchased on such date, each of the non-defaulting Initial Purchasers shall be
obligated, severally and not jointly, to purchase the full amount thereof in the
proportions that their respective obligations hereunder bear to the obligations
of all non-defaulting Initial Purchasers, or (ii) if the principal amount of
defaulted Securities exceeds 10% of the principal amount of Securities to be
purchased on such date, this Agreement shall terminate without liability on the
part of any non-defaulting Initial Purchaser or the Company, except that the
Company will continue to be liable for the payment of expenses to the extent set
forth in Sections 8 and 12 except that the provisions of Sections 9 and 10 shall
not terminate and shall remain in effect.
As used in this Agreement, the term "Initial Purchaser" includes,
for all purposes of this Agreement unless the context otherwise requires, any
party not listed in Schedule I hereto who, pursuant to this Section 7, purchases
Securities which a defaulting Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company or any non-defaulting
Initial Purchaser for damages caused by its default. If other persons are
obligated or agree to purchase the Securities of a defaulting Initial Purchaser,
either the non-defaulting Initial Purchasers or the Company may postpone the
Closing Date for up to seven full business days in order to effect any changes
that in the opinion of counsel for the Company or counsel for the Initial
Purchasers may be necessary in the Offering Memorandum or in any other document
or arrangement, and the Company agrees to make promptly any amendment or
supplement to the Offering Memorandum that effects any such changes.
8. Reimbursement of Initial Purchasers' Expenses. If this Agreement
is terminated pursuant to Section 6 or if for any reason the purchase of the
Securities by the Initial Purchasers is not consummated, the Company shall
remain responsible (except to a defaulting Initial Purchaser) for the expenses
to be paid or reimbursed by it pursuant to Section 12 and the respective
obligations of the Company and the Initial Purchasers pursuant to Sections 9 and
10 shall remain in effect. In addition, if the purchase of the
<PAGE>
34
Securities by the Initial Purchasers is not consummated because any condition to
the obligations of the Initial Purchasers set forth in Section 5 hereof (other
than Section 5(m)) is not satisfied or because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or comply
with any provision hereof other than by reason of a default by the Initial
Purchasers, the Company will reimburse the Initial Purchasers upon demand
accompanied by reasonable supporting documentation for all reasonable
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with this Agreement and the
proposed purchase and sale of the Securities.
9. Indemnification. (a) The Company shall indemnify and hold
harmless the Initial Purchasers, their affiliates, and their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls any Initial Purchaser within the meaning of the Securities Act
or the Exchange Act (collectively referred to for the purposes of this Section 9
and Section 10 as the Initial Purchasers), to the fullest extent lawful, against
any loss, claim, damage, expense or liability, joint or several, or any action
in respect thereof, to which an Initial Purchaser may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of or is
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the preliminary offering memorandum or the Offering Memorandum
or in any amendment or supplement thereto or any information provided by the
Company pursuant to Section 4(e) or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and shall reimburse each Initial Purchaser promptly upon
demand for any legal or other expenses reasonably incurred by that Initial
Purchaser in connection with investigating or preparing to defend or defending
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability, expense or action promptly following receipt of
reasonably detailed statements itemizing such expenses; provided, however, that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based upon any such
<PAGE>
35
untrue statement or alleged untrue statement or omission or alleged omission
from any of such documents in reliance upon and in conformity with the Initial
Purchasers' Information; and provided further that with respect to any such
untrue statement or omission made in the preliminary offering memorandum, the
foregoing indemnity shall not inure to the benefit of any Initial Purchaser from
whom the person asserting such loss, claim, damage, liability or action
purchased the Securities, to the extent that such sale was an initial resale by
such Initial Purchaser and any such loss, claim, damage, liability or action of
such Initial Purchaser is a result of the fact that both (i) to the extent
required by applicable law, a copy of the Offering Memorandum was not sent or
given to such person at or prior to the written confirmation of the sale of such
Securities to such person, and (ii) the untrue statement or omission in the
preliminary offering memorandum was corrected in the Offering Memorandum unless,
in either case, such failure to deliver the Offering Memorandum was a result of
non-compliance by the Company with Section 4(c).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its affiliates, and their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act (collectively referred to for the purposes of this Section 9 and
Section 10 as the Compan, to the same extent as the foregoing indemnity from the
Company to each Initial Purchaser, against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Company may
become subject, whether commenced or threatened, under the Securities Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, expense, liability or
action arises out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the preliminary offering memorandum or
the Offering Memorandum or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, but in each case only to
the extent that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with the Initial
Purchasers' Information, and shall reimburse the Company for any legal or other
<PAGE>
36
expenses reasonably incurred by the Company in connection with investigating or
preparing to defend or defending against or appearing as a third party witness
in connection with any such loss, claim, damage, liability, expense or action
promptly following receipt of reasonably detailed statements itemizing such
expenses.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 9(a) or 9(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 9 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and, provided further that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 9. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified
<PAGE>
37
party) between the indemnified party and the indemnifying party (in which case
the indemnifying party will not have the right to direct the defense of such
action on behalf of the indemnified party) or (4) the indemnifying party has not
in fact employed counsel reasonably satisfactory to the indemnified party to
assume the defense of such action within a reasonable time after receiving
notice of the commencement of the action, in each of which cases the reasonable
fees, disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 9(a) and 9(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
The obligations of the Company and the Initial Purchasers in this
Section 9 and in Section 10 are in addition to any other liability that the
Company or the Initial Purchasers, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
10. Contribution. If the indemnification provided for in Section 9
is unavailable or insufficient to hold harmless an indemnified party under
Section 9(a) or (b),
<PAGE>
38
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Initial Purchasers on the other
from the offering of the Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the Initial
Purchasers on the other with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Initial Purchasers on the other
with respect to such offering shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Securities purchased under this
Agreement (before deducting expenses) received by or on behalf of the Company
bear to the total discounts received by the Initial Purchasers with respect to
the Securities purchased under this Agreement, in each case as set forth in the
table on the cover page of the Offering Memorandum. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or to the Initial Purchasers' Information on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Initial Purchasers agree that it would not be just and equitable if
contributions pursuant to this Section 10 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 10 shall be deemed
to include, for purposes of this Section 10, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 10, no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the
<PAGE>
39
total price at which the Securities purchased from the Company by it were
offered to investors less the amount of any damages which such Initial Purchaser
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The Initial Purchasers' obligations to contribute as provided in
this Section 10 are several in proportion to their respective purchase
obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Company
and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Initial Purchasers, the Company and their respective
affiliates and successors and the controlling persons and officers and directors
referred to in Sections 9 and 10 and their heirs and legal representatives and
other than holders and prospective purchasers of the Securities as provided in
Section 4(e), any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision contained herein.
12. Expenses. The Company agrees with the Initial Purchasers to pay
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities; (b) the costs incident to the preparation, printing
and distribution of any preliminary offering memorandum, the Offering Memorandum
and any amendments and supplements thereto; (c) the costs of reproducing and
distributing this Agreement, the Registration Rights Agreement and the
Indenture; (d) the costs incident to the preparation, issuance and delivery of
the certificates for the Securities to the Initial Purchasers; (e) the fees and
expenses of qualifying the Securities under the securities laws of the several
jurisdictions as provided in Section 4(n) and of preparing, printing and
distributing a Blue Sky Memorandum (including related reasonable fees and
expenses of CS&M); (f) any fees charged by securities rating services for rating
the Securities; (g) all fees and expenses of the Trustee; (h) all costs incident
to and fees and expenses of the inclusion of the Securities on the
<PAGE>
40
PORTAL Market system and the approval of the Securities for book-entry transfer
by DTC; and (i) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement (other than each parties'
respective share of the costs and expenses incurred in connection with the
roadshow); provided, however, that, except as otherwise provided in this Section
12 and in Section 8 the Initial Purchasers shall pay their own costs and
expenses, including the costs and expenses of their counsel, any transfer taxes
on the Securities that they may sell and the expenses of advertising any
offering of the Securities made by the Initial Purchasers.
13. Survival. The respective indemnities, rights of contribution,
representations, warranties, agreements and statements made by or on behalf of
the Company and the Initial Purchasers and any of their respective affiliates,
representatives, officers, directors or controlling persons contained in this
Agreement or in any certificate delivered pursuant to this Agreement, shall
survive the delivery of and payment for the Securities and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation or statement as to the results thereof made by or
on behalf of any of them or any person controlling any of them.
14. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by
mail, telex or facsimile transmission to Chase Securities Inc., 270 Park
Avenue, New York, New York 10017, Attention: Legal Department; and
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Offering Memorandum, Attention: Chief Financial Officer; General Counsel;
provided, however, that any notice to the Initial Purchasers pursuant to Section
9(c) shall be delivered or sent by mail, telex or facsimile transmission to the
Initial Purchasers at their addresses set forth on the signature page hereof.
Any such statements, requests, notices or agreements shall take
effect at the time of receipt thereof.
<PAGE>
41
15. Business Day. For purposes of this Agreement, "business day"
means any day on which the New York Stock Exchange, Inc. is open for trading.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
17. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by facsimile) and, if
executed in one or more counterparts, the executed counter parts shall each be
an original, but all such counterparts shall together constitute one and the
same instrument.
18. Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
<PAGE>
19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
If the foregoing is in accordance with your understanding of this
Agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the several
Initial Purchasers in accordance with its terms. Initial Purchasers, kindly
indicate your acceptance in the space provided for that purpose below.
Very truly yours,
KINDERCARE LEARNING CENTERS, INC.,
by /s/ Philip L. Maslowe
----------------------------------
Name: Philip L. Maslowe
Title: Executive Vice President
and Chief Financial Officer
Accepted:
CHASE SECURITIES INC.,
By ________________________________
Name:
Title:
BT SECURITIES CORPORATION,
By ________________________________
Name:
Title:
SALOMON BROTHERS INC,
By ________________________________
Name:
Title:
<PAGE>
19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
If the foregoing is in accordance with your understanding of this
Agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the several
Initial Purchasers in accordance with its terms. Initial Purchasers, kindly
indicate your acceptance in the space provided for that purpose below.
Very truly yours,
KINDERCARE LEARNING CENTERS, INC.,
by_______________________________________
Name:
Title:
Accepted:
CHASE SECURITIES INC.,
By /s/ Gerard J. Murray
--------------------------------
Name: Gerard J. Murray
Title: Managing Director
BT SECURITIES CORPORATION,
By ________________________________
Name:
Title:
SALOMON BROTHERS INC,
By ________________________________
Name:
Title:
<PAGE>
19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
If the foregoing is in accordance with your understanding of this
Agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the several
Initial Purchasers in accordance with its terms. Initial Purchasers, kindly
indicate your acceptance in the space provided for that purpose below.
Very truly yours,
KINDERCARE LEARNING CENTERS, INC.,
by_______________________________________
Name:
Title:
Accepted:
CHASE SECURITIES INC.,
By ________________________________
Name:
Title:
BT SECURITIES CORPORATION,
By /s/ Michael R. Duckworth
--------------------------------
Name: Michael R. Duckworth
Title: Vice President
SALOMON BROTHERS INC,
By ________________________________
Name:
Title:
<PAGE>
19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
If the foregoing is in accordance with your understanding of this
Agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the several
Initial Purchasers in accordance with its terms. Initial Purchasers, kindly
indicate your acceptance in the space provided for that purpose below.
Very truly yours,
KINDERCARE LEARNING CENTERS, INC.,
by_______________________________________
Name:
Title:
Accepted:
CHASE SECURITIES INC.,
By ________________________________
Name:
Title:
BT SECURITIES CORPORATION,
By ________________________________
Name:
Title:
SALOMON BROTHERS INC,
By /s/ Edward P. Biggins
--------------------------------
Name: Edward P. Biggins
Title: Vice President
<PAGE>
SMITH BARNEY INC.,
By /s/ Michael S. Klein
--------------------------------
Name: Michael S. Klein
Title: Managing Director
Address for Notices:
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
Attention: Legal Department
BT SECURITIES CORPORATION
300 South Grand Avenue
41st Floor
Los Angeles, CA 90071
Attention: Legal Department
SALOMON BROTHERS INC
Seven World Trade Center
New York, NY 10048
Attention: Brad Gans
SMITH BARNEY INC.
388 Greenwich Street
New York, NY 10013
Attention: Legal Department
<PAGE>
Schedule I
Principal
Amount of Senior
Initial Purchaser Subordinated Notes
- ----------------- ------------------
Chase Securities Inc. $165,000,000
BT Securities Corporation 45,000,000
Salomon Brothers Inc 45,000,000
Smith Barney Inc. 45,000,000
------------
TOTAL $300,000,000
============
EXECUTION COPY
================================================================================
KINDERCARE LEARNING CENTERS, INC.,
as Issuer
and
MARINE MIDLAND BANK,
as Trustee
--------------------
Indenture
Dated as of February 13, 1997
---------------------
$300,000,000
9-1/2% Senior Subordinated Notes due 2009
9-1/2% Series B Senior Subordinated Notes due 2009
================================================================================
<PAGE>
KINDERCARE LEARNING CENTERS, INC.*
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of February 13, 1997
Trust Indenture
Act Section Indenture Section
ss. 310(a)(1) .......................................... 608
(a)(2) .......................................... 608
(b) .......................................... 609
ss. 312(a) .......................................... 701
(c) .......................................... 702
ss. 313(a) .......................................... 703
(c) .......................................... 703
ss. 314(a)(4) .......................................... 1010(a)
(c)(1) .......................................... 102
(c)(2) .......................................... 102
(e) .......................................... 102
ss.315(a) .......................................... 601(a)
(b) .......................................... 602
(c) .......................................... 601(b)
(d) .......................................... 601(c), 603
316(a)(last
sentence) .......................................... 101 ("Outstanding")
(a)(1)(A) .......................................... 502, 512
(a)(1)(B) .......................................... 513
(b) .......................................... 508
(c) .......................................... 104(d)
ss. 317(a)(1) .......................................... 503
(a)(2) .......................................... 504
(b) .......................................... 1003
ss. 318(a) .......................................... 111
- ----------
*Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE>
TABLE OF CONTENTS*
Page
PARTIES.................................................................... 1
RECITALS OF THE COMPANY.................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions............................................... 2
Acquired Indebtedness.............................................. 3
Act ............................................................... 3
Affiliate ......................................................... 3
Agent.............................................................. 3
Asset Sale......................................................... 3
Authenticating Agent............................................... 4
Bank Agent......................................................... 4
Bankruptcy Law..................................................... 4
Board of Directors................................................. 4
Board Resolution................................................... 5
Business Day....................................................... 5
Capital Stock...................................................... 5
Capitalized Lease Obligation....................................... 5
Cash Equivalents................................................... 5
Change of Control.................................................. 6
Commission......................................................... 6
Common Stock....................................................... 6
Company ........................................................... 6
Company Request or Company Order................................... 7
Consolidated Additional Paid-In Capital............................ 7
Consolidated Depreciation and Amortization Expense................. 7
Consolidated Interest Expense...................................... 7
Consolidated Net Income............................................ 7
Contingent Obligations............................................. 8
Corporate Trust Office............................................. 8
- ----------
*Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE>
Page
Custodian ......................................................... 8
Default............................................................ 9
Defaulted Interest................................................. 9
Depositary......................................................... 9
Designated Noncash Consideration................................... 9
Designated Preferred Stock......................................... 9
Designated Senior Indebtedness..................................... 9
Disqualified Stock................................................. 9
EBITDA............................................................. 9
Equity Interests................................................... 10
Equity Offering.................................................... 10
Event of Default................................................... 10
Exchange Act....................................................... 10
Exchange Notes..................................................... 10
Exchange Offer..................................................... 10
Exchange Offer Registration Statement.............................. 11
Existing Indebtedness.............................................. 11
Financings......................................................... 11
Fixed Charge Coverage Ratio........................................ 11
Fixed Charges...................................................... 12
Foreign Subsidiary................................................. 12
GAAP or Generally Accepted Accounting Principles................... 12
Government Securities.............................................. 12
guarantee.......................................................... 13
Guarantee.......................................................... 13
Guarantor.......................................................... 13
Hedging Obligations................................................ 13
Holder............................................................. 13
Indebtedness....................................................... 13
Indenture ......................................................... 14
Independent Financial Advisor...................................... 14
Initial Notes...................................................... 14
Initial Purchasers................................................. 14
Interest Payment Date.............................................. 14
Investment Grade Securities........................................ 14
Investments........................................................ 15
Issuance Date...................................................... 15
KKR................................................................ 15
Letter of Credit/Bankers' Acceptance Obligations................... 15
Lien............................................................... 15
Management Group................................................... 16
Maturity .......................................................... 16
Merger............................................................. 16
ii
<PAGE>
Page
Moody's............................................................ 16
Net Income......................................................... 16
Net Proceeds....................................................... 16
Note Register and Note Registrar................................... 17
Notes.............................................................. 17
Oaktree............................................................ 17
Obligations........................................................ 17
Offering Memorandum................................................ 17
Officer............................................................ 17
Officers' Certificate.............................................. 17
Opinion of Counsel................................................. 17
Outstanding........................................................ 17
Pari Passu Indebtedness............................................ 18
Paying Agent....................................................... 18
Permitted Holders.................................................. 19
Permitted Investments.............................................. 19
Person............................................................. 20
Predecessor Note................................................... 20
preferred stock.................................................... 21
QIB................................................................ 21
Real Estate Financing Transaction.................................. 21
Redemption Date.................................................... 21
Redemption Price................................................... 21
Registration Rights Agreement...................................... 21
Regular Record Date................................................ 21
Regulation S....................................................... 21
Related Parties.................................................... 21
Representative..................................................... 21
Responsible Officer................................................ 22
Restricted Investment.............................................. 22
Restricted Subsidiary.............................................. 22
Rule 144A ......................................................... 22
S&P................................................................ 22
Securities Act..................................................... 22
Senior Credit Facility............................................. 22
Senior Indebtedness................................................ 23
Shelf Registration Statement....................................... 23
Significant Subsidiary............................................. 23
Similar Business................................................... 23
Special Record Date................................................ 23
Stated Maturity.................................................... 23
Subordinated Indebtedness.......................................... 24
Subordinated Note Obligations...................................... 24
iii
<PAGE>
Page
Subsidiary......................................................... 24
Total Assets....................................................... 24
Trust Indenture Act or TIA......................................... 24
Trustee............................................................ 24
Unrestricted Subsidiary............................................ 25
Vice President..................................................... 25
Voting Stock....................................................... 25
Weighted Average Life to Maturity.................................. 25
Wholly Owned Restricted Subsidiary................................. 26
Wholly Owned Subsidiary............................................ 26
SECTION 102. Compliance Certificates and Opinions...................... 26
SECTION 103. Form of Documents Delivered to Trustee.................... 27
SECTION 104. Acts of Holders........................................... 27
SECTION 105. Notices, Etc., to Trustee, the Company and any Guarantor.. 29
SECTION 106. Notice to Holders; Waiver................................. 29
SECTION 107. Effect of Headings and Table of Contents.................. 30
SECTION 108. Successors and Assigns.................................... 30
SECTION 109. Separability Clause....................................... 30
SECTION 110. Benefits of Indenture..................................... 30
SECTION 111. Governing Law............................................. 31
SECTION 112. Legal Holidays............................................ 31
SECTION 113. No Personal Liability of Directors, Officers, Employees,
Stockholders or Incorporators........................... 31
SECTION 114. Counterparts.............................................. 31
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally........................................... 32
SECTION 202. Restrictive Legends....................................... 33
SECTION 203. Form of Certificate to Be Delivered upon Termination of
Restricted Period....................................... 36
SECTION 204. Form of Face of Note...................................... 37
SECTION 205. Form of Reverse of Note................................... 41
SECTION 206. Form of Trustee's Certificate of Authentication........... 49
ARTICLE THREE
THE NOTES
SECTION 301. Title and Terms........................................... 49
SECTION 302. Denominations............................................. 50
iv
<PAGE>
Page
SECTION 303. Execution, Authentication, Delivery and Dating............ 50
SECTION 304. Temporary Notes........................................... 52
SECTION 305. Registration, Registration of Transfer and Exchange....... 53
SECTION 306. Book-Entry Provisions for U.S. Global Note................ 54
SECTION 307. Special Transfer Provisions............................... 56
SECTION 308. Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Institutional Accredited Investors. 60
SECTION 309. Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S...................... 62
SECTION 310. Mutilated, Destroyed, Lost and Stolen Notes............... 64
SECTION 311. Payment of Interest; Interest Rights Preserved............ 64
SECTION 312. Persons Deemed Owners..................................... 66
SECTION 313. Cancellation.............................................. 66
SECTION 314. Computation of Interest................................... 66
SECTION 315. CUSIP Numbers............................................. 66
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture................... 67
SECTION 402. Application of Trust Money................................ 69
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default......................................... 69
SECTION 502. Acceleration of Maturity; Rescission and Annulment........ 71
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee ................................................ 73
SECTION 504. Trustee May File Proofs of Claim.......................... 73
SECTION 505. Trustee May Enforce Claims Without Possession of Notes.... 74
SECTION 506. Application of Money Collected............................ 74
SECTION 507. Limitation on Suits....................................... 75
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.................................... 76
SECTION 509. Restoration of Rights and Remedies........................ 76
SECTION 510. Rights and Remedies Cumulative............................ 76
SECTION 511. Delay or Omission Not Waiver.............................. 77
SECTION 512. Control by Holders........................................ 77
SECTION 513. Waiver of Past Defaults................................... 77
SECTION 514. Waiver of Stay or Extension Laws.......................... 78
SECTION 515. Undertaking for Costs..................................... 78
v
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Page
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities....................... 79
SECTION 602. Notice of Defaults........................................ 80
SECTION 603. Certain Rights of Trustee................................. 81
SECTION 604. Trustee Not Responsible for Recitals or Issuance of Notes. 82
SECTION 605. May Hold Notes............................................ 82
SECTION 606. Money Held in Trust....................................... 83
SECTION 607. Compensation and Reimbursement............................ 83
SECTION 608. Corporate Trustee Required; Eligibility................... 84
SECTION 609. Resignation and Removal; Appointment of Successor......... 84
SECTION 610. Acceptance of Appointment by Successor.................... 86
SECTION 611. Merger, Conversion, Consolidation or Succession to Business 86
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses............ 87
SECTION 702. Disclosure of Names and Addresses of Holders.............. 87
SECTION 703. Reports by Trustee........................................ 87
ARTICLE EIGHT
MERGER, CONSOLIDATION, OR SALE OF ASSETS
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms...... 88
SECTION 802. Successor Substituted..................................... 90
ARTICLE NINE
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
SECTION 901. Supplemental Indentures Without Consent of Holders........ 90
SECTION 902. Supplemental Indentures with Consent of Holders........... 91
SECTION 903. Execution of Supplemental Indentures...................... 92
SECTION 904. Effect of Supplemental Indentures......................... 93
SECTION 905. Conformity with Trust Indenture Act....................... 93
SECTION 906. Reference in Notes to Supplemental Indentures............. 93
SECTION 907. Notice of Supplemental Indentures......................... 93
SECTION 908. Effect on Senior Indebtedness............................. 93
vi
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Page
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if Any, and Interest...... 94
SECTION 1002. Maintenance of Office or Agency.......................... 94
SECTION 1003. Money for Note Payments to Be Held in Trust.............. 94
SECTION 1004. Corporate Existence...................................... 96
SECTION 1005. Payment of Taxes and Other Claims........................ 96
SECTION 1006. Maintenance of Properties................................ 96
SECTION 1007. Insurance................................................ 97
SECTION 1008. Compliance with Laws..................................... 97
SECTION 1009. Limitation on Restricted Payments........................ 97
SECTION 1010. Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock.....................................102
SECTION 1011. Limitation on Liens......................................106
SECTION 1012. Limitation on Transactions with Affiliates...............106
SECTION 1013. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries.................................107
SECTION 1014. Limitation on Guarantees of Indebtedness by Restricted
Subsidiaries...........................................109
SECTION 1015. Limitation on Other Senior Subordinated Indebtedness.....110
SECTION 1016. Purchase of Notes upon a Change of Control...............111
SECTION 1017. Limitation on Sales of Assets............................113
SECTION 1018. Statement by Officers as to Default......................115
SECTION 1019. Commission Reports and Reports to Holders................116
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Redemption...............................................116
SECTION 1102. Applicability of Article.................................117
SECTION 1103. Election to Redeem; Notice to Trustee....................117
SECTION 1104. Selection by Trustee of Notes to Be Redeemed.............117
SECTION 1105. Notice of Redemption.....................................118
SECTION 1106. Deposit of Redemption Price..............................119
SECTION 1107. Notes Payable on Redemption Date.........................119
SECTION 1108. Notes Redeemed in Part...................................119
vii
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Page
ARTICLE TWELVE
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. Company's Option to Effect Legal Defeasance or Covenant
Defeasance.........................................................120
SECTION 1202. Legal Defeasance and Discharge...........................120
SECTION 1203. Covenant Defeasance......................................120
SECTION 1204. Conditions to Legal Defeasance or Covenant Defeasance....121
SECTION 1205. Deposited Money and U.S. Government Securities to Be
Held in Trust; Other Miscellaneous Provisions..........123
SECTION 1206. Reinstatement............................................123
ARTICLE THIRTEEN
SUBORDINATION OF NOTES
SECTION 1301. Notes Subordinate to Senior Indebtedness.................124
SECTION 1302. Payment over of Proceeds upon Dissolution, Etc...........124
SECTION 1303. Suspension of Payment When Senior Indebtedness in
Default ...............................................125
SECTION 1304. Acceleration of Notes....................................126
SECTION 1305. When Distribution Must Be Paid Over......................126
SECTION 1306. Notice by Company........................................127
SECTION 1307. Payment Permitted If No Default..........................127
SECTION 1308. Subrogation to Rights of Holders of Senior Indebtedness..127
SECTION 1309. Provisions Solely to Define Relative Rights..............127
SECTION 1310. Trustee to Effectuate Subordination......................128
SECTION 1311. Subordination May Not Be Impaired by Company.............128
SECTION 1312. Distribution or Notice to Representative.................128
SECTION 1313. Notice to Trustee........................................129
SECTION 1314. Reliance on Judicial Order or Certificate of Liquidating
Agent .................................................129
SECTION 1315. Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustees' Rights.......................130
SECTION 1316. Article Applicable to Paying Agents......................130
SECTION 1317. No Suspension of Remedies................................130
SECTION 1318. Modification of Terms of Senior Indebtedness.............130
SECTION 1319. Certain Terms............................................131
SECTION 1320. Trust Moneys Not Subordinated............................131
SIGNATURES.................................................................132
viii
<PAGE>
INDENTURE, dated as of February 13, 1997, between KINDERCARE
LEARNING CENTERS, INC., a corporation duly organized and existing under the laws
of the State of Delaware (the "Company"), having its principal office at 2400
Presidents Drive, Montgomery, Alabama 36116, and MARINE MIDLAND BANK, a New York
banking corporation and trust company, as trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of and issuance of its
9-1/2% Senior Subordinated Notes due 2009 (the "Initial Notes"), and 9-1/2%
Series B Senior Subordinated Notes due 2009 (the "Exchange Notes", and together
with the Initial Notes, the "Notes"), of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture.
Upon the issuance of the Exchange Notes, if any, or the
effectiveness of the Shelf Registration Statement (as defined herein), this
Indenture will be subject to, and shall be governed by, the provisions of the
Trust Indenture Act of 1939, as amended, that are required or deemed to be part
of and to govern indentures qualified thereunder.
All things necessary have been done to make the Notes, when executed
and duly issued by the Company and authenticated and delivered hereunder by the
Trustee or the Authenticating Agent, the valid obligations of the Company and to
make this Indenture a valid agreement of the Company in accordance with their
and its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Notes by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Notes, as follows:
<PAGE>
2
ARTICLE ONE
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:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and words in the singular include the plural as well
as the singular, and words in the plural include the singular as well as
the plural;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, or defined by
Commission rule and not otherwise defined herein have the meanings
assigned to them therein, and the terms "cash transaction" and
"self-liquidating paper", as used in TIA Section 311, shall have the
meanings assigned to them in the rules of the Commission adopted under the
Trust Indenture Act;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with Generally Accepted Accounting
Principles;
(d) 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;
(e) the word "or" is not exclusive; and
(f) provisions of the Indenture apply to successive events and
transactions.
<PAGE>
3
Certain terms, used principally in Articles Two, Ten, Twelve and
Thirteen, are defined in those Articles.
"Acquired Indebtedness" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person
merged with or into or became a Restricted Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation of, such
other Person merging with or into or becoming a Restricted Subsidiary of such
specified Person and (ii) Indebtedness encumbering any asset acquired by such
specified Person.
"Act," when used with respect to any Holder, has the meaning set
forth in Section 104.
"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 purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise, provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Agent" means any Paying Agent, Authenticating Agent and Note
Registrar under this Indenture.
"Asset Sale" means:
(i) the sale, conveyance, transfer or other disposition (whether in
a single transaction or a series of related transactions) of property or
assets (including by way of a sale and leaseback) of the Company or any
Restricted Subsidiary (each referred to in this definition as a
"disposition") or
(ii) the issuance or sale of Equity Interests of any Restricted
Subsidiary (whether in a single transaction or a series of related
transactions), in each case, other than:
(a) a disposition of Cash Equivalents or Investment Grade Securities
or obsolete equipment in the ordinary course of business;
<PAGE>
4
(b) the disposition of all or substantially all of the assets of the
Company in a manner permitted pursuant to the provisions described in
Section 801 herein or any disposition that constitutes a Change of Control
pursuant to this Indenture;
(c) any Restricted Payment that is permitted to be made, and is
made, under the paragraph (a) of Section 1009;
(d) any disposition of assets with an aggregate fair market value of
less than $1 million;
(e) any disposition of property or assets by a Restricted Subsidiary
to the Company or by the Company or a Restricted Subsidiary to a Wholly
Owned Restricted Subsidiary;
(f) any exchange of like property pursuant to Section 1031 of the
Internal Revenue Code of 1986, as amended, for use in a Similar Business;
(g) any financing transaction with respect to property built or
acquired by the Company or any Restricted Subsidiary after the Issuance
Date including, without limitation, sale-leasebacks and asset
securitizations;
(h) foreclosures on assets; and
(i) any sale of Equity Interests in, or Indebtedness or other
securities of, an Unrestricted Subsidiary.
"Authenticating Agent" means the Person appointed, if any, by the
Trustee as an authenticating agent pursuant to the last paragraph of Section
303.
"Bank Agent" means The Chase Manhattan Bank, in its capacity as
administrative agent under the Senior Credit Facility, and any successor
administrative agent thereunder.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States federal or state or foreign law
relating to bankruptcy, insolvency, receivership, winding-up, liquidation,
reorganization or relief of debtors or any amendment to, succession to or change
in any such law.
"Board of Directors" means, with respect to any Person, either the
board of directors of such Person or any duly authorized committee thereof.
<PAGE>
5
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to close.
"Capital Stock" means with respect to any Person, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock of such Person, including, without limitation, if
such Person is a partnership, partnership interests (whether general or limited)
and 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,
such partnership.
"Capitalized Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized and reflected as a
liability on a balance sheet in accordance with GAAP.
"Cash Equivalents" means (a) United States dollars, (b) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, (c) certificates of
deposit, time deposits and eurodollar time deposits with maturities of one year
or less from the date of acquisition, bankers' acceptances with maturities not
exceeding one year and overnight bank deposits, in each case with any commercial
bank having capital and surplus in excess of $500 million, (d) repurchase
obligations for underlying securities of the types described in clauses (b) and
(c) entered into with any financial institution meeting the qualifications
specified in clause (c) above, (e) commercial paper rated A-1 or the equivalent
thereof by Moody's or S&P and in each case maturing within one year after the
date of acquisition, (f) investment funds investing 95% of their assets in
securities of the types described in clauses (a)-(e) above, (g) readily
marketable direct obligations issued by any state of the United States of
America or any political subdivision thereof having one of the two highest
rating categories obtainable from either Moody's or S&P and (h) Indebtedness or
preferred stock issued by Persons with a rating of "A" or higher from S&P or
"A2" or higher from Moody's.
<PAGE>
6
"Change of Control" means the occurrence of any of the following:
(a) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its Subsidiaries, taken as a whole (other than pursuant to a Real Estate
Financing Transaction); or
(b) the Company becomes aware of (by way of a report or any other
filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written
notice or otherwise) the acquisition by any Person or group (within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or
any successor provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the meaning of Rule
13d-5(b)(1) under the Exchange Act), other than the Permitted Holders and
their Related Parties, in a single transaction or in a related series of
transactions, by way of merger, consolidation or other business
combination or purchase of beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act, or any successor provision) of
beneficial ownership of more of the total voting power of the Voting Stock
of the Company than the Permitted Holders and their Related Parties
beneficially own at the time the Company so becomes aware of such
acquisition and the Permitted Holders and their Related Parties do not, at
such time, have the right or the ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors of the Company.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture 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" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issuance Date or issued after Issuance Date, and includes, without limitation,
all series and classes of such common stock.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture, until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
<PAGE>
7
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company (a) by its Chairman, a Vice-Chairman,
its President or any Vice President and (b) by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary and delivered to the Trustee;
provided, however, that such written request or order may be signed by any two
of the officers or directors listed in clause (a) above in lieu of being signed
by one of such officers or directors listed in such clause (a) and one of the
officers listed in clause (b) above.
"Consolidated Additional Paid-In Capital" means, with respect to any
Person for any period, the aggregate of the additional paid-in capital of such
Person and its Restricted Subsidiaries for such period, on a consolidated basis,
and otherwise determined in accordance with GAAP.
"Consolidated Depreciation and Amortization Expense" means with
respect to any Person for any period, the total amount of depreciation and
amortization expense and other noncash charges (excluding any noncash item that
represents an accrual, reserve or amortization of a cash expenditure for a
future period) of such Person and its Restricted Subsidiaries for such period on
a consolidated basis and otherwise determined in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any period,
the sum of: (a) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, to the extent such expense was deducted in
computing Consolidated Net Income (including amortization of original issue
discount, noncash interest payments, the interest component of Capitalized Lease
Obligations, and net payments (if any) pursuant to Hedging Obligations,
excluding amortization of deferred financing fees) and (b) consolidated
capitalized interest of such Person and its Restricted Subsidiaries for such
period, whether paid or accrued, to the extent such expense was deducted in
computing Consolidated Net Income.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, and otherwise determined
in accordance with GAAP; provided, however, that (i) any net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto)
shall be excluded, (ii) the Net Income for such period shall not include the
cumulative effect of a change in accounting principles during such period, (iii)
any net after-tax income (loss) from discontinued operations and any net
after-tax gains or losses on disposal of discontinued operations shall be
excluded, (iv) any net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to asset dispositions other than in the ordinary
course of business (as determined in good faith by the Board of Directors of the
Company) shall be excluded,
<PAGE>
8
(v) the Net Income for such period of any Person that is not a Subsidiary, or is
an Unrestricted Subsidiary, or that is accounted for by the equity method of
accounting, shall be included only to the extent of the amount of dividends or
distributions or other payments paid in cash (or to the extent converted into
cash) to the referent Person or a Wholly Owned Restricted Subsidiary thereof in
respect of such period, (vi) the Net Income of any Person acquired in a pooling
of interests transaction shall not be included for any period prior to the date
of such acquisition and (vii) the Net Income for such period of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of its Net
Income is not at the date of determination permitted without any prior
governmental approval (which has not been obtained) or, directly or indirectly,
by the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Restricted Subsidiary or its stockholders, unless such restriction with
respect to the payment of dividends or in similar distributions has been legally
waived.
"Contingent Obligations" means, with respect to any Person, any
obligation of such Person guaranteeing any leases, dividends or other
obligations that do not constitute Indebtedness ("primary obligations") of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligation or
(B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, or (iii)
to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation against loss in respect
thereof.
"Corporate Trust Office" means the principal corporate trust office
of the Trustee, at which at any particular time its corporate trust business
shall be administered, which office at the date of execution of this Indenture
is located at 140 Broadway, 12th Floor, New York, NY 10005, except that with
respect to presentation of Notes for payment or for registration of transfer or
exchange, such term shall mean any office or agency of the Trustee at which, at
any particular time, its corporate agency business shall be conducted.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
<PAGE>
9
"Default" means any event that is, or with the passage of time or
the giving of notice or both would be, an Event of Default.
"Defaulted Interest" has the meaning set forth in Section 311.
"Depositary" means The Depository Trust Company, its nominees and
successors.
"Designated Noncash Consideration" means the fair market value of
noncash consideration received by the Company or one of its Restricted
Subsidiaries in connection with an Asset Sale that is so designated as
Designated Noncash Consideration pursuant to an Officers' Certificate, setting
forth the basis of such valuation, executed by the principal executive officer
and the principal financial officer of the Company, less the amount of cash or
Cash Equivalents received in connection with a sale of such Designated Noncash
Consideration.
"Designated Preferred Stock" means preferred stock of the Company
(other than Disqualified Stock) that is issued for cash (other than to a
Restricted Subsidiary) and is so designated as Designated Preferred Stock,
pursuant to an Officers' Certificate executed by the principal executive officer
and the principal financial officer of the Company, on the issuance date
thereof, the cash proceeds of which are excluded from the calculation set forth
in clause (3) of paragraph (a) of Section 1009.
"Designated Senior Indebtedness" means (a) Senior Indebtedness under
the Senior Credit Facility and (b) any other Senior Indebtedness permitted under
this Indenture the principal amount of which is $50 million or more and that has
been designated by the Company as Designated Senior Indebtedness.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which, by its terms (or by the terms of any security into
which it is convertible or for which it is putable or exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, in each case prior to the date 91 days after the
maturity date of the Notes; provided, however, that if such Capital Stock is
issued to any plan for the benefit of employees of the Company or its
Subsidiaries or by any such plan to such employees, such Capital Stock shall not
constitute Disqualified Stock solely because it may be required to be
repurchased by the Company in order to satisfy applicable statutory or
regulatory obligations.
"EBITDA" means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period plus (a) provision for
taxes based
<PAGE>
10
on income or profits of such Person for such period deducted in computing
Consolidated Net Income, plus (b) Consolidated Interest Expense of such Person
for such period, plus (c) Consolidated Depreciation and Amortization Expense of
such Person for such period to the extent such depreciation and amortization
were deducted in computing Consolidated Net Income, plus (d) any expenses or
charges related to any Equity Offering or Indebtedness permitted to be incurred
by this Indenture (including such expenses or charges related to the Merger and
the Financings) and deducted in such period in computing Consolidated Net
Income, plus (e) the amount of any restructuring charge or reserve deducted in
such period in computing Consolidated Net Income, plus (f) without duplication,
any other noncash charges reducing Consolidated Net Income for such period
(excluding any such charge which requires an accrual of a cash reserve for
anticipated cash charges for any future period), less (g) without duplication,
noncash items increasing Consolidated Net Income of such Person for such period
(excluding any items which represent the reversal of any accrual of, or cash
reserve for, anticipated cash charges in any prior period).
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means any public or private sale of Common Stock
or preferred stock of the Company (excluding Disqualified Stock), other than
public offerings with respect to the Company's Common Stock registered on Form
S-8.
"Event of Default" has the meaning set forth in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Exchange Notes" has the meaning stated in the first recital of this
Indenture and refers to any Exchange Notes containing terms substantially
identical to the Initial Notes (except that (i) such Exchange Notes shall not
contain terms with respect to transfer restrictions and shall be registered
under the Securities Act, and (ii) certain provisions relating to an increase in
the stated rate of interest thereon shall be eliminated) that are issued and
exchanged for the Initial Notes in accordance with the Exchange Offer, as
provided for in the Registration Rights Agreement and this Indenture.
"Exchange Offer" means the offer by the Company to the Holders of
the Initial Notes to exchange all of the Initial Notes for Exchange Notes, as
provided for in the Registration Rights Agreement.
<PAGE>
11
"Exchange Offer Registration Statement" means the Exchange Offer
Registration Statement as defined in the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company or its
Restricted Subsidiaries in existence on the Issuance Date, plus interest
accruing thereon, after application of the net proceeds of the sale of the Notes
as described in the Offering Memorandum.
"Financings" means the financing transactions consummated on the
Issuance Date in conjunction with the Merger, and consists of (a) the
consummation of the Senior Credit Facility and (b) the issuance and sale of the
Notes to the Initial Purchasers.
"Fixed Charge Coverage Ratio" means, with respect to any Person for
any period, the ratio of EBITDA of such Person for such period to the Fixed
Charges of such Person for such period. In the event that the Company or any of
its Restricted Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than in the case of revolving credit borrowings, in which
case interest expense shall be computed based upon the average daily balance of
such Indebtedness during the applicable period) or issues or redeems preferred
stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter period. For purposes of making the
computation referred to above, Investments, acquisitions, dispositions, mergers,
consolidations and discontinued operations (as determined in accordance with
GAAP) that have been made by the Company or any of its Restricted Subsidiaries
during the four-quarter reference period or subsequent to such reference period
and on or prior to or simultaneously with the Calculation Date shall be
calculated on a pro forma basis assuming that all such Investments,
acquisitions, dispositions, discontinued operations, mergers and consolidations
(and the reduction of any associated fixed charge obligations and the change in
EBITDA resulting therefrom) had occurred on the first day of the four-quarter
reference period. If since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period) shall
have made any Investment, acquisition, disposition, discontinued operation,
merger or consolidation that would have required adjustment pursuant to this
definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro
forma effect thereto for such period as if such Investment, acquisition,
disposition, discontinued operation, merger or consolidation had occurred at the
beginning of the applicable four-quarter period. For purposes of this
definition,
<PAGE>
12
whenever pro forma effect is to be given to a transaction, the pro forma
calculations shall be made in good faith by a responsible financial or
accounting officer of the Company. If any Indebtedness bears a floating rate of
interest and is being given pro forma effect, the interest on such Indebtedness
shall be calculated as if the rate in effect on the Calculation Date had been
the applicable rate for the entire period (taking into account any Hedging
Obligations applicable to such Indebtedness). Interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by a responsible financial or accounting officer of the Company to be the rate
of interest implicit in such Capitalized Lease Obligation in accordance with
GAAP. For purposes of making the computation referred to above, interest on any
Indebtedness under a revolving credit facility computed on a pro forma basis
shall be computed based upon the average daily balance of such Indebtedness
during the applicable period. Interest on Indebtedness that may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rate, shall be deemed to have been
based upon the rate actually chosen, or, if none, then based upon such optional
rate chosen as the Company may designate.
"Fixed Charges" means, with respect to any Person for any period,
the sum of (a) Consolidated Interest Expense of such Person for such period and
(b) all cash dividend payments (excluding items eliminated in consolidation) on
any series of preferred stock of such Person.
"Foreign Subsidiary" means a Restricted Subsidiary not organized or
existing under the laws of the United States, any State thereof, the District of
Columbia or any territory thereof.
"GAAP" or "Generally Accepted Accounting Principles" means generally
accepted accounting principles set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, which are in
effect on the Issuance Date. For the purposes hereof, the term "consolidated"
with respect to any Person shall mean such Person consolidated with its
Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary.
"Government Securities" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of
<PAGE>
13
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act), as custodian with respect
to any such Government Securities or a specific payment of principal of or
interest on any such Government Securities held by such custodian for the
account of the holder of such depository receipt; 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 depository receipt from any amount received
by the custodian in respect of the Government Securities or the specific payment
of principal of or interest on the Government Securities evidenced by such
depository receipt.
"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness or other obligations.
"Guarantee" means any guarantee of the obligations of the Company
under the Indenture and the Notes by any Person in accordance with the
provisions of this Indenture. When used as a verb, "Guarantee" shall have a
corresponding meaning.
"Guarantor" means any Person that incurs a Guarantee; provided that
upon the release and discharge of such Person from its Guarantee in accordance
with this Indenture, such Person shall cease to be a Guarantor.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (a) currency exchange or interest rate swap
agreements, currency exchange or interest rate cap agreements and currency
exchange or interest rate collar agreements and (b) other agreements or
arrangements designed to protect such Person against fluctuations in currency
exchange or interest rates.
"Holder" means the Person in whose name a Note is registered in the
Note Register.
"Indebtedness" means, with respect to any Person, (a) any
indebtedness of such Person, whether or not contingent (i) in respect of
borrowed money, (ii) evidenced by bonds, notes, debentures or similar
instruments or letters of credit or bankers' acceptances (or, without double
counting, reimbursement agreements in respect thereof), (iii) representing the
balance deferred and unpaid of the purchase price of any property (including
Capitalized Lease Obligations), except any such balance that constitutes a trade
payable or similar obligation to a trade creditor, in each case accrued in the
ordinary course of business or (iv) representing any Hedging Obligations, if and
to the extent of
<PAGE>
14
any of the foregoing Indebtedness (other than letters of credit and Hedging
Obligations) that would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, (b) to the extent not otherwise
included, any obligation by such Person to be liable for, or to pay, as obligor,
guarantor or otherwise, on the Indebtedness of another Person (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business) and (c) to the extent not otherwise included, Indebtedness of another
Person secured by a Lien on any asset owned by such Person (whether or not such
Indebtedness is assumed by such Person); provided, however, that Contingent
Obligations incurred in the ordinary course of business shall be deemed not to
constitute Indebtedness.
"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.
"Independent Financial Advisor" means an accounting, appraisal,
investment banking firm or consultant to Persons engaged in Similar Businesses
of nationally recognized standing that is, in the judgment of the Company's
Board of Directors, qualified to perform the task for which it has been engaged.
"Initial Notes" has the meaning specified in the recitals to this
Indenture.
"Initial Purchasers" means Chase Securities Inc., BT Securities
Corporation, Salomon Brothers Inc and Smith Barney Inc., as purchasers of the
Initial Notes.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Notes.
"Investment Grade Securities" means (a) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof (other than Cash Equivalents), (b) debt
securities or debt instruments with a rating of BBB- or higher by S&P or Baa3 or
higher by Moody's or the equivalent of such rating by such rating organization,
or, if no rating of S&P or Moody's then exists, the equivalent of such rating by
any other nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Company and
its Subsidiaries, and (c) investments in any fund that invests exclusively in
investments of the type described in clauses (a) and (b) which fund may also
hold immaterial amounts of cash pending investment and/or distribution.
<PAGE>
15
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the form of loans
(including guarantees), advances or capital contributions (excluding advances to
customers, commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities issued by
any other Person and investments that are required by GAAP to be classified on
the balance sheet of the Company in the same manner as the other investments
included in this definition to the extent such transactions involve the transfer
of cash or other property. For purposes of the definition of "Unrestricted
Subsidiary" and Section 1009, (a) "Investments" shall include the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair
market value of the net assets of a Subsidiary of the Company at the time that
such Subsidiary is designated an Unrestricted Subsidiary; provided, however,
that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the
Company shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary equal to an amount (if positive) equal to (x) the
Company's "Investment" in such Subsidiary at the time of such redesignation less
(y) the portion (proportionate to the Company's equity interest in such
Subsidiary) of the fair market value of the net assets of such Subsidiary at the
time of such redesignation; and (b) any property transferred to or from an
Unrestricted Subsidiary shall be valued at its fair market value at the time of
such transfer, in each case as determined in good faith by the Board of
Directors.
"Issuance Date" means the closing date for the sale and original
issuance of the Notes hereunder.
"KKR" means Kohlberg Kravis Roberts & Co., L.P.
"Letter of Credit/Bankers' Acceptance Obligations" means
Indebtedness of the Company or any of its Restricted Subsidiaries with respect
to letters of credit or bankers' acceptances constituting Senior Indebtedness or
Pari Passu Indebtedness which shall be deemed to consist of (i) the aggregate
maximum amount then available to be drawn under all such letters of credit (the
determination of such maximum amount to assume compliance with all conditions
for drawing), (ii) the aggregate face amount of all unmatured bankers'
acceptances and (iii) the aggregate amount that has then been paid by, and not
reimbursed to, the issuers under such letters of credit or creation of such
bankers' acceptances.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any
<PAGE>
16
option or other agreement to sell or give a security interest in and any filing
of or agreement to give any financing statement under the Uniform Commercial
Code (or equivalent statutes) of any jurisdiction); provided that in no event
shall an operating lease be deemed to constitute a Lien.
"Management Group" means the group consisting of the Officers of the
Company.
"Maturity" means, with respect to any Note, the date on which any
principal of such Note becomes due and payable as therein or herein provided,
whether at the Stated Maturity by declaration of acceleration, call for
redemption or purchase or otherwise.
"Merger" means the merger between the Company and KCLC Acquisition
Corp., with the surviving corporation being the Company, pursuant to an
agreement and plan of merger dated as of October 3, 1996, as amended as of
December 27, 1996, between the Company and KCLC Acquisition Corp.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale, net
of the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and brokerage and sales
commissions), and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of principal, premium (if any) and interest on
Indebtedness required (other than required by clause (i) of the second paragraph
of Section 1017) to be paid as a result of such transaction and any deduction of
appropriate amounts to be provided by the Company as a reserve in accordance
with GAAP against any liabilities associated with the asset disposed of in such
transaction and retained by the Company after such sale or other disposition
thereof, including, without limitation, pension and other post-employment
benefit liabilities and liabilities related to environmental matters or against
any indemnification obligations associated with such transaction.
<PAGE>
17
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 305.
"Notes" has the meaning stated in the first recital of this
Indenture and more particularly means any Notes authenticated and delivered
under this Indenture.
"Oaktree" means Oaktree Capital Management, LLC, a California
limited liability company.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements (including, without limitation, reimbursement
obligations with respect to letters of credit and banker's acceptances), damages
and other liabilities payable under the documentation governing any
Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated February
10, 1997 with respect to the offering of the Notes.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, any Executive Vice President or Vice President, the Treasurer or the
Corporate Secretary of the Company.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company that meets the requirements set
forth in Section 102.
"Opinion of Counsel" means a written opinion of counsel, which and
who are reasonably acceptable to, and addressed to, the Trustee complying with
the requirements of Section 102. Unless otherwise required by the TIA, such
legal counsel may be an employee of or counsel to the Company or the Trustee.
"Outstanding," when used with respect to Notes, means, as of the
date of determination, all Notes theretofore authenticated and delivered under
this Indenture, except:
(a) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes, or portions thereof, 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
<PAGE>
18
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;
(c) Notes, except to the extent provided in Sections 1202 and 1203,
with respect to which the Company has effected defeasance and/or covenant
defeasance as provided in Article Eleven; and
(d) Notes in exchange for or in lieu of which other Notes (including
pursuant to Section 310) 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 the Notes are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or such other obligor shall be disregarded and deemed not to be Outstanding
(provided, that in connection with any offer by the Company or any obligor to
purchase the Notes, Notes tendered for purchase will be deemed to be Outstanding
and held by the tendering Holder until the date of purchase), except that, in
determining whether the Trustee shall be protected in making such calculation or
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes which the Trustee actually 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 such other obligor.
"Pari Passu Indebtedness" means (a) with respect to the Notes,
Indebtedness which ranks pari passu in right of payment to the Notes and (b)
with respect to any Guarantee, Indebtedness which ranks pari passu in right of
payment to such Guarantee.
"Paying Agent" means any Person (including the Company acting as
Paying Agent) authorized by the Company to pay the principal of (and premium, if
any) or interest on any Notes on behalf of the Company.
<PAGE>
19
"Permitted Holders" means Oaktree, KKR and any of their Affiliates
and the Management Group.
"Permitted Investments" means any of the following:
(a) any Investment in the Company or any Restricted Subsidiary;
(b) any Investment in cash and Cash Equivalents or Investment Grade
Securities;
(c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person that is a Similar Business if as a result of such
Investment (i) such Person becomes a Restricted Subsidiary or (ii) such
Person, in one transaction or a series of related transactions, is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or
a Restricted Subsidiary;
(d) any Investment in securities or other assets not constituting
cash or Cash Equivalents and received in connection with an Asset Sale
made pursuant to Section 1017 or any other disposition of assets not
constituting an Asset Sale;
(e) any Investment existing on the Issuance Date;
(f) advances to employees not in excess of $10 million outstanding
at any one time;
(g) any Investment acquired by the Company or any of its Restricted
Subsidiaries (i) in exchange for any other Investment or accounts
receivable held by the Company or any such Restricted Subsidiary in
connection with or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such other Investment or accounts
receivable or (ii) as a result of a foreclosure by the Company or any of
its Restricted Subsidiaries with respect to any secured Investment or
other transfer of title with respect to any secured Investment in default;
(h) Hedging Obligations permitted under clause (x) of paragraph (b)
of Section 1010;
(i) loans and advances to officers, directors and employees for
business-related travel expenses, moving expenses and other similar
expenses, in each case incurred in the ordinary course of business;
<PAGE>
20
(j) any Investment in a Similar Business (other than an Investment
in an Unrestricted Subsidiary) having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (j)
that are at that time outstanding, not to exceed the greater of (x) $80
million or (y) 15% of Total Assets at the time of such Investment (with
the fair market value of each Investment being measured at the time made
and without giving effect to subsequent changes in value);
(k) Investments the payment for which consists of Equity Interests
of the Company (exclusive of Disqualified Stock); provided, however, that
such Equity Interests will not increase the amount available for
Restricted Payments under clause (3) of paragraph (a) of Section 1009;
(l) additional Investments having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (l)
that are at that time outstanding, not to exceed the greater of (x) $25
million or (y) 5% of Total Assets at the time of such Investment (with the
fair market value of each Investment being measured at the time made and
without giving effect to subsequent changes in value);
(m) any transaction to the extent it constitutes an investment that
is permitted by and made in accordance with the provisions of paragraph
(b) of Section 1012 (except transactions described in clauses (ii) and
(vi) of such paragraph);
(n) any Investment by Restricted Subsidiaries in other Restricted
Subsidiaries and Investments by Subsidiaries that are not Restricted
Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries;
and
(o) Investments in any special purpose, Wholly Owned Subsidiary of
the Company organized after the Issuance Date in connection with a Real
Estate Financing Transaction that, in the good faith determination of the
Board of Directors of the Company, are necessary or advisable to effect
such Real Estate Financing Transaction.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"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;
<PAGE>
21
and, for the purposes of this definition, any Note authenticated and delivered
under Section 310 in exchange for a mutilated security or in lieu of a lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"preferred stock" means any Equity Interest with preferential right
of payment of dividends or upon liquidation, dissolution, or winding up.
"QIB" means a "Qualified Institutional Buyer" under Rule 144A.
"Real Estate Financing Transaction" means a financing or series of
financings consisting principally of one or more mortgage financings, real
estate sale or leaseback transactions or an asset-backed program based on real
estate owned by the Company or any of its Subsidiaries (funded by the issuance
of commercial paper, medium term notes or other forms of borrowing and including
credit enhancement facilities), and which may consist of or include such other
forms of financing consistent with the foregoing as the Board of Directors of
the Company shall approve in good faith.
"Redemption Date," when used with respect to any Note to be
redeemed, in whole or in part, 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.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of February 13, 1997, among the Company and the holders of
Initial Notes.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the February 1 or August 1 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Related Parties" means any Person controlled by the Permitted
Holder, including any partnership of which a Permitted Holder or its Affiliates
is the general partner.
"Representative" means (a) with respect to the Senior Credit
Facility, the Bank Agent and (b) with respect to any other Senior Indebtedness,
the indenture trustee or other trustee, agent or representative for the holders
of such Senior Indebtedness.
<PAGE>
22
"Responsible Officer," when used with respect to the Trustee, means
the chairman or any vice chairman of the board of directors, the chairman or any
vice chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
trust officer or assistant trust officer, the controller or any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above-designated officers, and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" means, at any time, any direct or indirect
Subsidiary of the Company that is not then an Unrestricted Subsidiary; provided,
however, that upon the occurrence of any Unrestricted Subsidiary ceasing to be
an Unrestricted Subsidiary, such Subsidiary shall be included in the definition
of "Restricted Subsidiary."
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard and Poor's Ratings Group, a division of McGraw-
Hill, Inc. and its successors.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Senior Credit Facility" means that certain credit facility pursuant
to the Credit Agreement dated as of February 13, 1997, among the Company, the
lenders from time to time party thereto, The Chase Manhattan Bank, as
administrative agent, Bankers Trust Company, as syndication agent, Wells Fargo
Bank, N.A., as documentation agent, and Chase Securities Inc., as arranger,
including any collateral documents, instruments and agreements executed in
connection therewith, and the term Senior Credit Facility shall also include any
amendments, supplements, modifications, extensions, renewals, restatements or
refundings thereof and any credit facilities that replace, refund or refinance
any part of the loans, other credit facilities or commitments thereunder,
including any such replacement, refunding or refinancing facility that increases
the amount borrowable thereunder or alters the maturity thereof.
<PAGE>
23
"Senior Indebtedness" means (a) the Obligations under the Senior
Credit Facility and (b) any other Indebtedness permitted to be incurred by the
Company hereunder, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or subordinated in right
of payment to the Notes, including, with respect to clauses (a) and (b),
interest accruing subsequent to the filing of, or which would have accrued but
for the filing of, a petition for bankruptcy, whether or not such interest is an
allowable claim in such bankruptcy proceeding. Notwithstanding anything to the
contrary in the foregoing, Senior Indebtedness will not include (i) any
liability for federal, state, local or other taxes owed or owing by the Company,
(ii) any obligation of the Company to any of its Subsidiaries, (iii) any
accounts payable or trade liabilities arising in the ordinary course of business
(including instruments evidencing such liabilities) other than obligations in
respect of bankers' acceptances and letters of credit under the Senior Credit
Facility, (iv) any Indebtedness that is incurred in violation hereof, (v)
Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without recourse to the
Company, (vi) any Indebtedness, guarantee or obligation of the Company which is
subordinate or junior to any other Indebtedness, guarantee or obligation of the
Company, (vii) Indebtedness evidenced by the Notes and (viii) Capital Stock of
the Company.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the Issuance Date.
"Similar Business" means a business, the majority of whose revenues
are derived from preschool and child care services, or from any educational
activities, or whose revenues are derived from the licensing of the KinderCare
name, or any business or activity that is reasonably similar thereto or a
reasonable extension, development or expansion thereof or ancillary thereto,
including, without limitation, educational materials, clothes, toys, and other
similar consumer products, as well as the operation of primary and private
schools.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 311.
"Stated Maturity" when used with respect to any Note or any
installment of interest thereon, means the date specified in such Note as the
fixed date on which the principal of such Note or such installment of interest
is due and payable, and, when used with respect to any other Indebtedness, means
the date specified in the instrument
<PAGE>
24
governing such Indebtedness as the fixed date on which the principal of such
Indebtedness, or any installment of interest thereon, is due and payable.
"Subordinated Indebtedness" means (a) with respect to the Notes, any
Indebtedness of the Company which is by its terms subordinated in right of
payment to the Notes and (b) with respect to any Guarantee, any Indebtedness of
the applicable Guarantor which is by its terms subordinated in right of payment
to such Guarantee.
"Subordinated Note Obligations" means any principal of, premium, if
any, and interest on the Notes payable pursuant to the terms of the Notes or
upon acceleration, together with and including any amounts received upon the
exercise of rights of rescission or other rights of action (including claims for
damages) or otherwise, to the extent relating to the purchase price of the Notes
or amounts corresponding to such principal, premium, if any, or interest on the
Notes.
"Subsidiary" means, with respect to any Person, (a) any corporation,
association, or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof and (b) any partnership,
joint venture, limited liability company or similar entity of which (x) more
than 50% of the capital accounts, distribution rights, total equity and voting
interests or general or limited partnership interests, as applicable, are owned
or controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof whether in the form
of membership, general, special or limited partnership or otherwise and (y) such
Person or any Wholly Owned Restricted Subsidiary of such Person is a controlling
general partner or otherwise controls such entity.
"Total Assets" means the total consolidated assets of the Company
and its Restricted Subsidiaries, as shown on the most recent balance sheet of
the Company.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force on the date as of which this Indenture was executed, except as
provided in Section 905.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
<PAGE>
25
"Unrestricted Subsidiary" means (a) any Subsidiary of the Company
which at the time of determination is an Unrestricted Subsidiary (as designated
by the Board of Directors of the Company, as provided below) and (b) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company
may designate any Subsidiary of the Company (including any existing Subsidiary
and any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity
Interests of, or owns, or holds any Lien on, any property of, the Company or any
Subsidiary of the Company (other than any Subsidiary of the Subsidiary to be so
designated), provided that (i) any Unrestricted Subsidiary must be an entity of
which shares of the capital stock or other equity interests (including
partnership interests) entitled to cast at least a majority of the votes that
may be cast by all shares or equity interests having ordinary voting power for
the election of directors or other governing body are owned, directly or
indirectly, by the Company, (ii) the Company certifies that such designation
complies with the requirements of Section 1009 and (iii) each of (A) the
Subsidiary to be so designated and (B) its Subsidiaries has not at the time of
designation, and does not thereafter, create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable with respect to any Indebtedness
pursuant to which the lender has recourse to any of the assets of the Company or
any of its Restricted Subsidiaries. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that,
immediately after giving effect to such designation, the Company could incur at
least $1.00 of additional Indebtedness under paragraph (a) of Section 1010 on a
pro forma basis taking into account such designation. Any such designation by
the Board of Directors shall be notified by the Company to the Trustee by
promptly filing with the Trustee a copy of the board resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"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".
"Voting Stock" means, with respect to any Person, any class or
series of capital stock of such Person that is ordinarily entitled to vote in
the election of directors thereof at a meeting of stockholders called for such
purpose, without the occurrence of any additional event or contingency.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Disqualified Stock, as the case may be, at any date, the
quotient obtained by dividing (a) the sum of the products of the number of years
from the date of determination to the date of each successive scheduled
principal payment of such
<PAGE>
26
Indebtedness or redemption or similar payment with respect to such Disqualified
Stock multiplied by the amount of such payment, by (b) the sum of all such
payments.
"Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary
that is a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person 100% of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person.
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 and any
Guarantor (if applicable) and any other obligor on the Notes (if applicable)
shall furnish to the Trustee an Officers' Certificate in form and substance
reasonably acceptable to the Trustee stating that all conditions precedent, if
any, provided for in this Indenture (including any covenant compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
provided pursuant to Section 1018(a)) 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 or such
firm, he or it has made such examination or investigation as is necessary
to enable him
<PAGE>
27
or it 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, any
Guarantor or other obligor on the Notes 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 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 a certificate or opinion of, or representations by, an officer or
officers of the Company, any Guarantor or other obligor on the Notes stating
that the information with respect to such factual matters is in the possession
of the Company, any Guarantor or other obligor on the Notes 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.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given 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 agents 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
<PAGE>
28
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 conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section 104.
(b) 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 the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of 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 that the Trustee deems sufficient.
(c) The principal amount and serial numbers of Notes held by any
Person, and the date of holding the same, shall be proved by the Note Register.
(d) If the Company shall solicit from the Holders of Notes any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to a Board Resolution, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not earlier than the date 30 days
prior to the first solicitation of Holders generally in connection therewith and
not later than the date such solicitation is completed. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Notes have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other Act,
and for that purpose the Outstanding Notes shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after the
record date.
<PAGE>
29
(e) 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 (including in
accordance with Section 310) in respect of anything done, omitted or suffered to
be done by the Trustee, any Paying Agent or the Company or any Guarantor in
reliance thereon, whether or not notation of such action is made upon such Note.
SECTION 105. Notices, Etc., to Trustee, the Company and any
Guarantor.
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 or any Guarantor or
any other obligor on the Notes shall be sufficient for every purpose
hereunder if made, given, furnished or delivered in writing and mailed,
first-class postage prepaid, or delivered by recognized overnight courier,
to or with the Trustee and received at its Corporate Trust Office,
Attention: Corporate Trust Services--KinderCare, or
(2) the Company or any Guarantor by the Trustee or by any Holder
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or delivered, in writing, or
mailed, first-class postage prepaid, or delivered by recognized overnight
courier, to the Company or such Guarantor addressed to it at the address
of its principal office specified in the first paragraph of this
Indenture, or at any other address previously furnished in writing to the
Trustee by the Company or such Guarantor.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to Holders by
the Company or the Trustee, 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 his address as it
appears in the Note Register, not later than the latest date, and not earlier
than the earliest date, 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. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been
<PAGE>
30
received by such Holder, whether or not such Holder actually receives such
notice. 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 or irregularities in regular
mail service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
SECTION 107. 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 108. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 109. 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 110. Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, (other than the parties hereto, any Agent and their
successors hereunder and each of the Holders and, with respect to any provisions
hereof relating to the subordination of the Notes or the rights of holders of
Senior Indebtedness, the holders of Senior Indebtedness) any benefit or any
legal or equitable right, remedy or claim under this Indenture.
<PAGE>
31
SECTION 111. Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY THE LAW OF THE
STATE OF NEW YORK EXCLUDING (TO THE GREATEST EXTENT PERMISSIBLE BY LAW) ANY RULE
OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF NEW YORK. UPON THE ISSUANCE OF THE EXCHANGE NOTES OR THE
EFFECTIVENESS OF THE SHELF REGISTRATION STATEMENT, THIS INDENTURE SHALL BE
SUBJECT TO THE PROVISIONS OF THE TRUST INDENTURE ACT THAT ARE REQUIRED TO BE
PART OF THIS INDENTURE AND SHALL, TO THE EXTENT APPLICABLE, BE GOVERNED BY SUCH
PROVISIONS.
SECTION 112. Legal Holidays.
In any case where any Interest Payment Date, any date established
for payment of Defaulted Interest pursuant to Section 311 or Redemption Date or
Stated Maturity or Maturity of any Note shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Notes) payment
of principal (or premium, if any) or interest need not be made on such date, but
may be made on the next succeeding Business Day with the same force and effect
as if made on the Interest Payment Date or date established for payment of
Defaulted Interest pursuant to Section 311, Redemption Date, or at the Stated
Maturity or Maturity; provided that no interest shall accrue for the period from
and after such Interest Payment Date, Redemption Date or date established for
payment of Defaulted Interest pursuant to Section 311, Stated Maturity or
Maturity, as the case may be, to the next succeeding Business Day.
SECTION 113. No Personal Liability of Directors, Officers,
Employees, Stockholders or Incorporators.
No director, officer, employee, incorporator or stockholders, as
such, of the Company or any Guarantor shall have any liability for any
obligations of the Company or such Guarantor under the Notes, this Indenture or
any Guarantee or for any claim based on, in respect of, or by reason of, such
obligations or their creations. Each Holder by accepting a Note waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
SECTION 114. Counterparts.
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32
This Indenture may be executed in any number of counterparts, each
of which shall be original; but such counterparts shall together constitute but
one and the same instrument.
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally.
The Initial Notes shall be known as the "9-1/2% Senior Subordinated
Notes due 2009" and the Exchange Notes shall be known as the "9-1/2% Series B
Senior Notes due 2009", in each case, of the Company. The Notes and the
Trustee's certificate of authentication shall be in substantially the forms set
forth in this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such 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 as may, consistently herewith, be
determined by the officers executing such Notes, as evidenced by their execution
of the Notes. Any portion of the text of any Note may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the Note.
Each Note shall be dated the date of its authentication.
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 of the Company executing such Notes, as evidenced by their
execution of such Notes.
Initial Notes offered and sold in reliance on Rule 144A to QIBs or
on another exemption under the Securities Act to institutional "Accredited
Investors" (as defined in Rule 501(a)(1), (2), (3) or (7) of the Securities Act)
("IAIs") will be issued on the Issuance Date in the form of two permanent global
Notes (with separate CUSIP numbers) substantially in the form set forth in
Sections 204 and 205 (each a "U.S. Global Note") deposited with the Trustee, as
custodian for the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. One U.S. Global Note (which may be
represented by more than one certificate, if so required by the Depositary's
rules regarding the maximum principal amount to be represented by a single
certificate) will represent Initial Notes sold to QIB's, and the other will
represent Initial Notes sold to IAIs. The aggregate principal amount of each
U.S. Global Note may from time to time be increased or decreased by adjustments
made on the records of the Trustee, as custodian
<PAGE>
33
for the Depositary or its nominee, as hereinafter provided. Transfers of Initial
Notes from QIBs to IAIs, and from IAIs to QIBs, will be represented by
appropriate increases and decreases to the respective amounts of the appropriate
U.S. Global Notes, as more fully provided in Section 307.
Initial Notes offered and sold in reliance on Regulation S, if any,
shall be issued initially in the form of temporary certificated Notes in
registered form substantially in the form set forth in Sections 204 and 205 (the
"Temporary Offshore Physical Notes"). The Temporary Offshore Physical Notes will
be registered in the name of, and held by, a temporary certificate holder
designated by Chase Securities Inc. until the later of the completion of the
distribution of the Initial Notes and the termination of the "restricted period"
(as defined in Regulation S) with respect to the offer and sale of the Initial
Notes (the "Offshore Notes Exchange Date"). The Company shall promptly notify
the Trustee in writing of the occurrence of the Offshore Notes Exchange Date
and, at any time following the Offshore Notes Exchange Date, upon receipt by the
Trustee and the Company of a certificate substantially in the form set forth in
Section 203, the Company shall execute, and the Trustee shall authenticate and
deliver, one or more permanent certificated Notes in registered form
substantially in the form set forth in Sections 204 and 205 (the "Permanent
Offshore Physical Notes") in exchange for the Temporary Offshore Physical Notes
of like tenor and amount.
Initial Notes offered and sold other than as described in the
preceding two paragraphs, if any, shall be issued in the form of permanent
certificated Notes in registered form in substantially the form set forth in
Sections 204 and 205 (the "U.S.
Physical Notes").
The Temporary Offshore Physical Notes, Permanent Offshore Physical
Notes and U.S. Physical Notes are sometimes collectively herein referred to as
the "Physical Notes".
SECTION 202. Restrictive Legends.
Unless and until (i) an Initial Note is sold under an effective
Registration Statement or (ii) an Initial Note is exchanged for an Exchange Note
in connection with an effective Registration Statement, in each case pursuant to
the Registration Rights Agreement, each such U.S. Global Note, Temporary
Offshore Physical Note, Permanent Offshore Physical Note and U.S. Physical Note
shall bear the following legend (the "Private Placement Legend") on the face
thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES
<PAGE>
34
ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, 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, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO
THE DATE WHICH IS THREE 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 SECURITY (OR ANY PREDECESSOR OF THIS
SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THIS SECURITY IS 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, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3)
OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR", FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR
FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT (AND IF ACQUIRING THE SECURITIES FROM SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR", IS ACQUIRING SECURITIES HAVING AN AGGREGATE
PRINCIPAL AMOUNT OF NOT LESS THAN $250,000), OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT; PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL HAVE THE RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
<PAGE>
35
CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION 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 THE OTHER SIDE OF THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
Each U.S. Global Note, whether or not an Initial Note, shall also
bear the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY ("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 SUCH OTHER REPRESENTATIVE OF
DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTIONS 306 AND 307 OF THE INDENTURE.
<PAGE>
36
SECTION 203. Form of Certificate to Be Delivered upon Termination
of Restricted Period.
On or after March 25, 1997
MARINE MIDLAND BANK
140 Broadway, 12th Floor
New York, NY 10005
Attention: Corporate Trust Services - KinderCare
Re: KINDERCARE LEARNING CENTERS, INC.
(the "Company")
9-1/2% Senior Subordinated Notes due 2009 (the "Notes")
Ladies and Gentlemen:
This letter relates to Notes represented by a temporary global note
certificate (the "Temporary Certificate"). Pursuant to Section 201 of the
Indenture dated as of February 13, 1997 relating to the Notes (the "Indenture"),
we hereby certify that (1) we are the beneficial owner of $[ ] principal
amount of Notes represented by the Temporary Certificate and (2) we are a person
outside the United States to whom the Notes could be transferred in accordance
with Rule 904 of Regulation S promulgated under the Securities Act of 1933, as
amended. Accordingly, you are hereby requested to issue a Certificated Note
representing the undersigned's interest in the principal amount of Notes
represented by the Temporary Certificate, all in the manner provided by the
Indenture.
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
<PAGE>
37
covered hereby. Terms used in this certificate have the meanings set forth in
Regulation S.
Very truly yours,
[Name of Holder]
By:______________________________________
Authorized Signature
SECTION 204. Form of Face of Note.
KINDERCARE LEARNING CENTERS, INC.
9-1/2% [Series B]* Senior Subordinated Note due 2009
CUSIP No. _____
No. __________ $________
KINDERCARE LEARNING CENTERS, INC., a Delaware corporation (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 February 15, 2009, at the office or agency of
the Company referred to below, and to pay interest thereon on August 15, 1997
and semi-annually thereafter, on February 15 and August 15 in each year, from
February 13, 1997, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, at the rate of 9-1/2% per annum,
until the principal hereof is paid or duly provided for, and (to the extent
lawful) to pay on demand interest on any overdue interest at the rate borne by
the Notes from the date on which such overdue interest becomes payable to the
date payment of such interest has been made or duly provided for. 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
February 1 or August 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 shall
- ----------
* Include only for Exchange Notes.
<PAGE>
38
forthwith cease to be payable to the Holder on such Regular Record Date, and
such defaulted interest, and (to the extent lawful) interest on such defaulted
interest at the rate borne by the Notes, may 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 may 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.
[The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated as of February 13, 1997 (the "Registration
Rights Agreement"), between the Company and the Initial Purchasers named
therein. In the event that either (a) an Exchange Offer Registration Statement
(as such term is defined in the Registration Rights Agreement) is not filed with
the Commission on or prior to the 45th day following the date of original issue
of the Notes, (b) such Exchange Offer Registration Statement has not been
declared effective on or prior to the 150th day following the date of original
issue of the Notes or (c) the Exchange Offer (as such term is defined in the
Registration Rights Agreement) is not consummated on or prior to the 180th day
following the date of original issue of the Notes or a Shelf Registration
Statement (as such term is defined in the Registration Rights Agreement) with
respect to the Notes is not declared effective on or prior to the 180th day
following the date of original issue of the Notes, the interest rate borne by
this Note shall be increased by one-quarter of one percent per annum following
such 45-day period in the case of clause (a) above, such 150-day period in the
case of clause (b) above or such 180-day period in the case of clause (c) above,
which rate will be increased by an additional one-quarter of one percent per
annum for each 90-day period that any such additional interest continues to
accrue; provided that the aggregate increase in such annual interest rate will
in no event exceed one percent. Upon (x) the filing of the Exchange Offer
Registration Statement after the 45-day period described in clause (a) above,
(y) the effectiveness of the Exchange Offer Registration Statement after the
150-day period described in clause (b) above or (z) the consummation of the
Exchange Offer or the effectiveness of a Shelf Registration Statement, as the
case may be, after the 180-day period described in clause (c) above, the
interest rate borne by the Note from the date of such filing, effectiveness or
consummation, as the case may be, will be reduced to the original interest rate
set forth above if the Company is otherwise in compliance with this paragraph;
provided, however, that, if after such reduction in interest rate, a different
event specified in clause (a), (b) or (c) above occurs, the interest rate may
again be increased and thereafter reduced pursuant to the foregoing provisions.
If the Company issues a notice that the Shelf Registration Statement is unusable
pending the announcement of a material corporate transaction or otherwise
pursuant to Section 3(k) of the Registration Rights Agreement, or such a notice
is required
<PAGE>
39
under applicable securities laws to be issued by the Company, and the aggregate
number of days in any consecutive twelve-month period for which all such notices
are issued or required to be issued exceeds 30 days in the aggregate, then the
interest rate borne by the Notes will be increased by one-quarter of one percent
per annum following the date that such Shelf Registration Statement ceases to be
usable beyond the period permitted above, which rate shall be increased by an
additional one-quarter of one percent per annum for each 90-day period that such
additional interest continues to accrue; provided that the aggregate increase in
such annual interest rate may in no event exceed one percent. Upon the Company
declaring that the Shelf Registration Statement is usable after the interest
rate has been increased pursuant to the preceding sentence, the interest rate
borne by the Notes will be reduced to the original interest rate if the Company
is otherwise in compliance with this paragraph; provided, however, that if after
any such reduction in interest rate the Shelf Registration Statement again
ceases to be usable beyond the period permitted above, the interest rate will
again be increased and thereafter reduced pursuant to the foregoing
provisions.]*
Payment of the principal of (and premium, if any, on) and interest
on this Note will be made at the office or agency of the Company maintained for
that purpose in The City of New York, or at such other office or agency of the
Company as may be maintained for such purpose, 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 payment of interest may be
made at the option of the Company (i) by check mailed to the address of the
Person entitled thereto as such address shall appear on the Note Register or
(ii) by wire transfer to an account maintained by the payee located in the
United States.
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 duly
executed by the Trustee or the Authenticating Agent referred to on the reverse
hereof by manual
- ----------
* Include only for Initial Notes.
<PAGE>
40
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
duly executed under its corporate seal.
KINDERCARE LEARNING CENTERS,
INC.
By_______________________________________
Name:
Title:
Attest: [SEAL]
____________________________
Authorized Officer
<PAGE>
41
SECTION 205. Form of Reverse of Note.
This Note is one of a duly authorized issue of securities of the
Company designated as its 9-1/2% [Series B]* Senior Subordinated Notes due 2009
(the "Notes"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $300,000,000, which may be issued
under an indenture (the "Indenture") dated as of February 13, 1997 between the
Company and Marine Midland Bank, as trustee (the "Trustee", which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, 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 indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness as defined in the
Indenture, and this Note is issued subject to such provisions. Each Holder of
this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints the Trustee his attorney-in-fact for
such purpose.
On or before each payment date, the Company shall deliver or cause
to be delivered to the Trustee or the Paying Agent an amount in dollars
sufficient to pay the amount due on such payment date.
The Notes are subject to redemption upon not less than 30 nor more
than 60 days', written notice, at any time on and after February 15, 2002, as a
whole or in part, at the election of the Company, at a Redemption Price equal to
the percentage of the principal amount set forth below, plus, in each case,
accrued and unpaid interest, if
- ----------
* Include only for the Exchange Notes
<PAGE>
42
any, to the applicable Redemption Date, if redeemed during the twelve month
period beginning February 15, of the years indicated below:
Redemption
Year Price
---- -----
2002 ............................................ 104.750%
2003 ............................................ 103.167%
2004 ............................................ 101.583%
2005 and thereafter ............................. 100.000%
In addition, at any time or from time to time, on or prior to
February 15, 2000, the Company may, at its option, redeem up to 40% of the
aggregate principal amount of Notes originally issued under the Indenture on the
Issuance Date at a Redemption Price equal to 109.5% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
Redemption Date, with the net proceeds of one or more Equity Offerings; provided
that at least 60% of the aggregate principal amount of Notes originally issued
under the Indenture on the Issuance Date remains outstanding immediately after
the occurrence of such redemption; and provided further that such redemption
shall occur within 60 days of the date of the closing of any such Equity
Offering.
If less than all the Notes are to be redeemed pursuant to the
preceding two paragraphs, the Trustee shall select the Notes or portions thereof
to be redeemed in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes being redeemed are listed, or if
the Notes are not so listed, on a pro rata basis, by lot or by such other method
the Trustee shall deem fair and appropriate; provided that no such partial
redemption shall reduce the portion of the principal amount of a Note not
redeemed to less than $1,000.
In the case of any redemption of Notes, interest installments 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, of record at the close
of business on the relevant Regular Record Date or Special Record Date, as the
case may be, referred to on the face hereof. Notes (or portions thereof) for
whose redemption and payment provision is made in accordance with the Indenture
shall cease to bear interest from and after the Redemption Date.
In the event of redemption or repurchase of this Note in part only,
a new Note or Notes for the unredeemed portion hereof shall be issued in the
name of the Holder hereof upon the cancellation hereof.
<PAGE>
43
Upon the occurrence of a Change of Control, the Company will be
required to make an offer to purchase on the Change of Control Payment Date all
outstanding Notes at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the date of purchase, in accordance with the Indenture. Holders of Notes that
are subject to an offer to purchase will receive a Change of Control Offer from
the Company prior to any related Change of Control Payment Date.
Under certain circumstances, in the event the Net Proceeds received
by the Company from an Asset Sale, which proceeds are not used (i) to
permanently reduce Obligations under the Senior Credit Facility (and to
correspondingly reduce commitments with respect thereto) or other Senior
Indebtedness or Pari Passu Indebtedness (provided that if the Company shall so
reduce Obligations under Pari Passu Indebtedness, it will equally and ratably
reduce Obligations under the Notes if the Notes are then prepayable or, if the
Notes may not be then prepaid, the Company shall make an offer (in accordance
with the procedures set forth below for an Asset Sale Offer) to all Holders to
purchase 100% of the principal amount thereof the amount of Notes that would
otherwise be prepaid), (ii) to make an investment in any one or more businesses,
capital expenditures or acquisitions of other assets in each case, used or
useful in a Similar Business and/or (iii) to make an investment in properties or
assets that replace the properties and assets that are the subject of such Asset
Sale, equal or exceeds a specified amount, the Company will be required to make
an offer to all Holders to purchase the maximum principal amount of Notes, in an
integral multiple of $1,000, that may be purchased out of such amount at a
purchase price in cash equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of purchase, in accordance with
the Indenture. Holders of Notes that are subject to any offer to purchase will
receive an Asset Sale Offer from the Company prior to any related Asset Sale
Purchase Date.
In the case of any redemption or repurchase of Notes, interest
installments 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, of
record at the close of business on the relevant Regular Record Date or Special
Record Date, as the case may be, referred to on the face hereof. Notes (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
Redemption Date.
If an Event of Default shall occur and be continuing, the principal
of all the Notes may be declared due and payable in the manner and with the
effect provided in the Indenture.
<PAGE>
44
The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of the Company on this Note and (b) certain restrictive
covenants and the related Defaults and Events of Default, upon compliance by the
Company with certain conditions set forth therein, which provisions apply to
this Note.
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 under the Indenture and the Notes and the
Guarantees, if any, at any time by the Company and the Trustee with the consent
of the Holders of a specified percentage in aggregate principal amount of the
Notes at the time Outstanding. Additionally, the Indenture permits that, without
notice to or consent of any Holder, the Company, any Guarantor and the Trustee
together may amend or supplement the Indenture, any Guarantee or this Note (i)
to cure any ambiguity, defect or inconsistency, (ii) to provide for
uncertificated Notes in addition to or in place of certificated Notes, (iii) to
comply with the covenant relating to mergers, consolidations and sales of
assets, (iv) to provide for the assumption of the Company's obligations to
Holders of such Notes, (v) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights under the Indenture of any such Holder, (vi) to add covenants
for the benefit of the Holders or to surrender any right or power conferred upon
the Company, (vii) to comply with the requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the Trust Indenture
Act, (viii) to evidence and provide for the acceptance of appointment under the
Indenture by a successor Trustee pursuant to the requirements of Section 610
thereof, (ix) to make any change that does not adversely affect the legal rights
of any Holder or (x) to add a Guarantor under the Indenture. The Indenture also
contains provisions permitting the Holders of specified percentages in aggregate
principal amount of the Notes at the time Outstanding, on behalf of the Holders
of all the Notes, to waive compliance by the Company with certain provisions of
the Indenture the Notes and the Guarantees, if any, and certain past Defaults
under the Indenture and the Notes and the Guarantees, if any, and their
consequences. Any such consent or waiver by or on behalf of 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 herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note.
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, any
Guarantor or any other obligor on the Notes (in the event such Guarantor or
other obligor is obligated to make payments in respect of the Notes), which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place, and rate,
<PAGE>
45
and in the coin or currency, herein prescribed, subject to the subordination
provisions of the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registerable on the Note
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Note Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes, 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
denominations of $1,000 and any integral multiple 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 a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to pay all documentary, stamp or similar issue or transfer taxes or
other governmental charge payable in connection therewith.
Prior to the time of 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 agent shall be affected by notice to the contrary.
<PAGE>
46
THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY THE LAW OF THE
STATE OF NEW YORK EXCLUDING (TO THE GREATEST EXTENT PERMISSIBLE BY LAW) ANY RULE
OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF NEW YORK.
Interest on this Note shall be computed on the basis of a 360-day
year of twelve 30-day months.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
________________________________________________________________________________
________________________________________________________________________________
please print or typewrite name and address including zip code of assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
________________________________________________________________________________
attorney to transfer said Note on the books of the Company with full power of
substitution in the premises.
<PAGE>
47
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE PHYSICAL
NOTES]
In connection with any transfer of this Note occurring prior to the
date that is the earlier of the date of an effective Registration Statement, as
defined in the Registration Rights Agreement dated as of February 13, 1997, or
February 15, 1999, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
|_|(a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
|_|(b) this Note is being transferred other than in accordance with (a) above
and documents are being furnished that comply with the conditions of
transfer set forth in this Note and the Indenture.
If neither of the foregoing boxes is checked, the Trustee or other 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 307 of the Indenture shall have
been satisfied.
Date: ____________________ _______________________________________________
NOTICE: The signature must correspond with
the name as written upon the face of
the within-mentioned instrument in
every particular, without alteration
or any change whatsoever.
Signature Guarantee:
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
<PAGE>
48
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 of
1933, as amended, 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.
Dated:_______________________________ NOTICE: To be executed by
an executive officer.
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 1016 of the Indenture, check the Box: |_|.
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 1016 of the Indenture, state the amount (in original
principal amount) below:
$_____________________.
Date:_____________________________________
Your Signature:______________________________
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee:_________________________
<PAGE>
49
SECTION 206. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in
substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned
Indenture.
MARINE MIDLAND BANK,
as Trustee
By__________________________________
Authorized Signatory
Dated: ____________________
ARTICLE THREE
THE NOTES
SECTION 301. Title and Terms.
The aggregate principal amount of Notes which may be authenticated
and delivered under this Indenture is limited to $300,000,000, 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, 307, 310,
906, 1015, 1017 or 1108 or pursuant to an Exchange Offer.
The Initial Notes shall be known and designated as the "9-1/2%
Senior Subordinated Notes due 2009" and the Exchange Notes shall be known and
designated as the "9-1/2% Series B Senior Subordinated Notes due 2009", in each
case, of the Company. The Stated Maturity of the Notes shall be February 15,
2009, and they shall bear interest at the rate of 9-1/2% per annum from February
13, 1997, or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, payable on August 15, 1997 and semi-annually
thereafter on February 15 and August 15 in each
<PAGE>
50
year, until the principal thereof is paid in full and to the Person in whose
name the Note (or any predecessor Note) is registered at the close of business
on the February 1 or August 1 next preceding such interest payment date.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months, until the principal thereof is paid or duly provided for.
Interest on any overdue principal, interest (to the extent lawful) or premium,
if any, shall be payable on demand.
The principal of (and premium, if any) and interest on the Notes
shall be payable at the office or agency of the Company maintained for such
purpose in The City of New York, or at such other office or agency of the
Company as may be maintained for such purpose; provided, however, that, at the
option of the Company, interest may be paid (a) by check mailed to addresses of
the Persons entitled thereto as such addresses shall appear on the Note Register
or (ii) by transfer to an account maintained by the payee located in the United
States.
Holders shall have the right to require the Company to purchase
their Notes, in whole or in part, in the event of a Change of Control pursuant
to Section 1016.
The Notes shall be subject to repurchase by the Company pursuant to
an Asset Sale Offer as provided in Section 1017.
The Notes shall be redeemable as provided in Article Twelve and in
the Notes.
The Indebtedness evidenced by the Notes shall be subordinated in
right of payment to Senior Indebtedness as provided in Article Thirteen.
SECTION 302. Denominations.
The Notes shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Notes shall be executed on behalf of the Company by its Chief
Executive Officer or a Vice President, under its corporate seal reproduced
thereon and attested by its Corporate Secretary or an Assistant Secretary. The
signature of any of these officers on the Notes may be manual or facsimile
signatures of the present or any future such authorized officer and may be
imprinted or otherwise reproduced on the Notes.
<PAGE>
51
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 Initial 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
such Company Order shall authenticate and deliver such Initial Notes directing
the Trustee to authenticate the Notes and certifying that all conditions
precedent to the issuance of Notes contained herein have been fully complied
with, and the Trustee in accordance with such Company Order shall authenticate
and deliver such Initial Notes. On Company Order, the Trustee shall authenticate
for original issue Exchange Notes in an aggregate principal amount not to exceed
$300,000,000; provided that such Exchange Notes shall be issuable only upon the
valid surrender for cancellation of Initial Notes of a like aggregate principal
amount in accordance with an Exchange Offer pursuant to the Registration Rights
Agreement. In each case, the Trustee shall be entitled to receive an Officers'
Certificate and an Opinion of Counsel of the Company that it may reasonably
request in connection with such authentication of Notes. Such order shall
specify the amount of Notes to be authenticated and the date on which the
original issue of Initial Notes or Exchange Notes is to be authenticated.
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 duly
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture.
In case the Company or any Guarantor, pursuant to Article Eight,
shall be consolidated or merged with or into any other Person or shall convey,
transfer, lease or otherwise dispose of its properties and assets substantially
as an entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company or such
Guarantor shall have been merged, or the Person which shall have received a
conveyance, transfer, lease or other disposition as aforesaid, shall have
executed an indenture supplemental hereto with the Trustee pursuant to Article
Eight, any of the Notes authenticated or delivered prior to such consolidation,
merger,
<PAGE>
52
conveyance, transfer, lease or other disposition may, from time to time, at the
request of the successor Person, be exchanged for other Notes executed in the
name of the successor Person with such changes in phraseology and form as may be
appropriate, but otherwise in substance of like tenor as the Notes surrendered
for such exchange and of like principal amount; and the Trustee, upon Company
Request of the successor Person, shall authenticate and deliver Notes as
specified in such request for the purpose of such exchange. If Notes shall at
any time be authenticated and delivered in any new name of a successor Person
pursuant to this Section 303 in exchange or substitution for or upon
registration of transfer of any Notes, such successor Person, at the option of
the Holders but without expense to them, shall provide for the exchange of all
Notes at the time Outstanding for Notes authenticated and delivered in such new
name.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes on behalf of the Trustee. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Note Registrar or Paying Agent
to deal with the Company and its Affiliates.
SECTION 304. Temporary Notes.
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 conclusively 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
upon surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 1002, 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 a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
<PAGE>
53
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
referred to as the "Note Register") 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 Note Register shall be in written form
or any other form capable of being converted into written form within a
reasonable time. At all reasonable times, the Note Register shall be open to
inspection by the Trustee. The Trustee is hereby initially appointed as security
registrar (the Trustee in such capacity, together with any successor of the
Trustee in such capacity, the "Note Registrar") for the purpose of registering
Notes and transfers of Notes as herein provided.
Upon surrender for registration of transfer of any Note at the
office or agency of the Company designated pursuant to Section 1002, 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 denomination or denominations of a like aggregate principal amount.
Furthermore, any Holder of a U.S. Global Note shall, by acceptance
of such Global Note, agree that transfers of beneficial interest in such Global
Note 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.
At the option of the Holder, Notes may be exchanged for other Notes
of any authorized denomination and of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange (including an exchange of Initial Notes
for Exchange Notes), the Company shall execute, and the Trustee shall
authenticate and deliver, the Notes which the Holder making the exchange is
entitled to receive; provided that no exchange of Initial Notes for Exchange
Notes shall occur until an Exchange Offer Registration Statement shall have been
declared effective by the Commission, the Trustee shall have received an
Officers' Certificate confirming that the Exchange Offer Registration Statement
has been declared effective by the Commission and the Initial Notes to be
exchanged for the Exchange Notes shall be cancelled by the Trustee.
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
<PAGE>
54
the same benefits under this Indenture, as the Notes surrendered upon such
registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Note Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Note Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange or redemption 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, 1016, 1017 or 1108, not involving any
transfer.
SECTION 306. Book-Entry Provisions for U.S. Global Note.
(a) Each U.S. Global Note initially shall (i) be registered in the
name of the Depositary for such global Note or the nominee of such Depositary,
(ii) be delivered to the Trustee as custodian for such Depositary and (iii) bear
legends as set forth in Section 202.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any U.S. Global Note
held on their behalf by the Depositary, or the Trustee as its custodian, or
under the U.S. Global Note, 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
such U.S. Global Note 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 shall 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.
(b) Transfers of a U.S. Global Note shall be limited to transfers of
such U.S. Global Note in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners in a
U.S. Global Note may be transferred in accordance with the rules and procedures
of the Depositary and the provisions of Section 307. If required to do so
pursuant to any applicable law or regulation, beneficial owners may obtain U.S.
Physical Notes in exchange for their beneficial interests in a U.S. Global Note
upon written request in accordance with the Depositary's and the Registrar's
procedures. In addition, U.S. Physical Notes shall be
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55
transferred to all beneficial owners in exchange for their beneficial interests
in a U.S. Global Note if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such U.S. Global Note or the
Depositary ceases to be a clearing agency registered under the Exchange Act, at
a time when the Depositary is required to be so registered in order to act as
Depositary, and in each case a successor depositary is not appointed by the
Company within 90 days of such notice or, (ii) the Company executes and delivers
to the Trustee and Note Registrar an Officers' Certificate stating that such
U.S. Global Note shall be so exchangeable or (iii) an Event of Default has
occurred and is continuing and the Note Registrar has received a request from
the Depositary.
(c) In connection with any transfer of a portion of the beneficial
interest in a U.S. Global Note pursuant to subsection (b) of this Section to
beneficial owners who are required to hold U.S. Physical Notes, the Note
Registrar shall reflect on its books and records the date and a decrease in the
principal amount of such U.S. Global Note in an amount equal to the principal
amount of the beneficial interest in the U.S. Global Note to be transferred, and
the Company shall execute, and the Trustee shall authenticate and deliver, one
or more U.S. Physical Notes of like tenor and amount.
(d) In connection with the transfer of an entire U.S. Global Note to
beneficial owners pursuant to subsection (b) of this Section, such U.S. 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 such U.S. Global Note, an equal aggregate principal amount of U.S.
Physical Notes of authorized denominations.
(e) Any U.S. Physical Note delivered in exchange for an interest in
a U.S. Global Note pursuant to subsection (c) or subsection (d) of this Section
shall, except as otherwise provided by paragraph (a)(i)(x) and paragraph (f) of
Section 307, bear the applicable legend regarding transfer restrictions
applicable to the U.S. Physical Note set forth in Section 202.
(f) The registered holder of a U.S. 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.
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56
SECTION 307. Special Transfer Provisions.
Unless and until (i) an Initial Note is sold under an effective
Registration Statement, or (ii) an Initial Note is exchanged for an Exchange
Note in connection with an effective Registration Statement, in each case
pursuant to the Registration Rights Agreement, the following provisions shall
apply:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of an Initial Note to any IAI which is not a QIB (excluding
Non-U.S. Persons):
(i) The Note Registrar shall register the transfer of any Initial
Note, whether or not such Initial Note bears the Private Placement Legend,
if (x) the requested transfer is at least three years after the original
issue date of the Initial Note or (y) the proposed transferee has
delivered to the Note Registrar a certificate substantially in the form
set forth in Section 308.
(ii) Unless the proposed transferee is entitled to receive a U.S.
Physical Note as provided in Section 306, the proposed transferee shall
obtain a beneficial interest in the U.S. Global Note representing Initial
Notes held by IAIs, in which case, upon receipt by the Note Registrar of
the documents, if any, required by paragraph (i), such transfer will be
made in accordance with the rules and procedures of the Depositary;
provided, however, that the Note Registrar shall incur no liability
hereunder as a result of the failure of any IAI to deliver to the Note
Registrar a certificate substantially in the form set forth in Section
308.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Note to a QIB
(excluding Non-U.S. Persons):
(i) If the Note to be transferred consists of U.S. Physical Notes,
Temporary Offshore Physical Notes or Permanent Offshore Physical Notes,
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 Initial Note stating, or has otherwise advised the Company and the Note
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 Initial Note stating, or has otherwise advised
the Company and the Note Registrar in writing, that it is purchasing the
Initial Note for its own account or an account with respect to which it
exercises sole investment discretion and that it, or the person on whose
behalf it is acting with respect to any such account, is a QIB
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57
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.
(ii) If the proposed transferee is an Agent Member, and the Initial
Note to be transferred consists of U.S. Physical Notes, Temporary Offshore
Physical Notes or Permanent Offshore Physical Notes, or an interest in the
U.S. Global Note representing Initial Notes held by IAIs, upon receipt by
the Note Registrar of instructions given in accordance with the
Depositary's and the Note Registrar's procedures therefor, the Note
Registrar shall reflect on its books and records the date and an increase
in the principal amount of the U.S. Global Note representing Initial Notes
held by QIBs in an amount equal to (x) the principal amount of the U.S.
Physical Notes, Temporary Offshore Physical Notes or Permanent Offshore
Physical Notes, as the case may be, to be transferred, and the Trustee
shall cancel the Physical Note so transferred or (y) the amount of
interest in the U.S. Global Note representing Initial Notes held by IAIs
to be so transferred (in which case the Note Registrar shall reflect on
its books and records the date and an appropriate decrease in the
principal amount of such U.S. Global Note).
(c) Transfers by Non-U.S. Persons Prior to March 25, 1997. The
following provisions shall apply with respect to registration of any proposed
transfer of an Initial Note by a Non-U.S. Person prior to March 25, 1997:
(i) The Note Registrar shall register the transfer of any Initial
Note (x) if the proposed transferee is a Non-U.S. Person and the proposed
transferor has delivered to the Note Registrar a certificate substantially
in the form set forth in Section 309 or (y) if the proposed transferee is
a QIB and the proposed transferor has checked the box provided for on the
form of Initial Note stating, or has otherwise advised the Company and the
Note 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 Initial Note stating, or has
otherwise advised the Company and the Note Registrar in writing, that it
is purchasing the Initial Note for its own account or an account with
respect to which it exercises sole investment discretion and that it, or
the person on whose behalf it is acting with respect to any such account,
is a QIB 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
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58
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. Unless clause (ii) below is
applicable, the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Temporary Offshore Physical Notes of like tenor
and amount.
(ii) If the proposed transferee is an Agent Member, upon receipt by
the Note Registrar of instructions given in accordance with the
Depositary's and the Note Registrar's procedures therefor, the Note
Registrar shall reflect on its books and records the date and an increase
in the principal amount of the appropriate U.S. Global Note in an amount
equal to the principal amount of the Temporary Offshore Physical Note to
be transferred, and the Note Registrar shall cancel the Temporary Offshore
Physical Notes so transferred.
(d) Transfers by Non-U.S. Persons on or After March 25, 1997. The
following provisions shall apply with respect to any transfer of an Initial Note
by a Non-U.S. Person on or after March 25, 1997:
(i) (x) If the Initial Note to be transferred is a Permanent
Offshore Physical Note, the Note Registrar shall register such transfer,
(y) if the Initial Note to be transferred is a Temporary Offshore Physical
Note, upon receipt of a certificate substantially in the form set forth in
Section 309 from the proposed transferor, the Note Registrar shall
register such transfer and (z) in the case of either clause (x) or (y),
unless clause (ii) below is applicable, the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Permanent Offshore
Physical Notes of like tenor and amount.
(ii) If the proposed transferee is an Agent Member, upon receipt by
the Note Registrar of instructions given in accordance with the
Depositary's and the Note Registrar's procedures therefor, the Note
Registrar shall reflect on its books and records the date and an increase
in the principal amount of the appropriate U.S. Global Note in an amount
equal to the principal amount of the Temporary Offshore Physical Note or
of the Permanent Offshore Physical Note to be transferred, and the Trustee
shall cancel the Physical Note so transferred.
(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of an Initial Note to a
Non-U.S. Person:
(i) Prior to March 25, 1997, the Note Registrar shall register any
proposed transfer of an Initial Note to a Non-U.S. Person upon receipt of
a
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59
certificate substantially in the form set forth in Section 309 from the
proposed transferor and the Company shall execute, and the Trustee shall
authenticate and make available for delivery, one or more Temporary
Offshore Physical Notes.
(ii) On and after March 25, 1997, the Note Registrar shall register
any proposed transfer to any Non-U.S. Person (w) if the Initial Note to be
transferred is a Permanent Offshore Physical Note, (x) if the Initial Note
to be transferred is a Temporary Offshore Physical Note, upon receipt of a
certificate substantially in the form set forth in Section 309 from the
proposed transferor, (y) if the Initial Note to be transferred is a U.S.
Physical Note or an interest in a U.S. Global Note, upon receipt of a
certificate substantially in the form set forth in Section 309 from the
proposed transferor and (z) in the case of either clause (w), (x) or (y),
the Company shall execute, and the Trustee shall authenticate and deliver,
one or more Permanent Offshore Physical Notes of like tenor and amount.
(iii) If the proposed transferor is an Agent Member holding a
beneficial interest in a U.S. Global Note, upon receipt by the Note
Registrar of (x) the document, if any, required by paragraph (i), and (y)
instructions in accordance with the Depositary's and the Note Registrar's
procedures therefor, the Note Registrar shall reflect on its books and
records the date and a decrease in the principal amount of such U.S.
Global Note in an amount equal to the principal amount of the beneficial
interest in the U.S. Global Note to be transferred and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
Permanent Offshore Physical Notes of like tenor and amount.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Note
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Note Registrar shall deliver only Notes that bear the
Private Placement Legend unless either (i) the circumstances contemplated by the
fourth paragraph of Section 201 (with respect to Permanent Offshore Physical
Notes) or paragraph (a)(i)(x), (d)(i) or (e)(ii) of this Section 307 exist or
(ii) there is delivered to the Note 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 Securities Act.
(g) 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 Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
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60
The Note Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 306 or this Section
307. 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 Note Registrar.
SECTION 308. Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Institutional Accredited Investors.
[date]
KINDERCARE LEARNING CENTERS, INC.
c/o Marine Midland Bank, as Trustee
140 Broadway, 12th Floor
New York, NY 10005
Attention: Corporate Trust Services - KinderCare
Dear Sirs:
In connection with our proposed purchase of $_______ of the 9-1/2%
Senior Subordinated Notes due 2009 (the "Notes") of KinderCare Learning Centers,
Inc., a Delaware corporation (the "Company"), we confirm that:
(1) We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act
of 1933, as amended (the "Securities Act")) purchasing for our own account
or for the account of such an institutional "accredited investor," and we
are acquiring the Notes for investment purposes and not with a view to, or
for offer or sale in connection with, any distribution in violation of the
Securities Act or other applicable securities law and we 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 its investment.
(2) We understand and acknowledge that the Notes have not been
registered under the Securities Act, or any other applicable securities
law and may not be offered, sold or otherwise transferred except in
compliance with the registration requirements of the Securities Act or any
other applicable securities law, or pursuant to an exemption therefrom,
and in each case in compliance with the conditions for transfer set forth
below. We agree on our own behalf and on
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61
behalf of any investor account for which we are purchasing Notes to offer,
sell or otherwise transfer such Notes prior to the date which is three
years after the later of the date of original issue and the last date on
which the Company or any affiliate of the Company was the owner of such
Notes (or any predecessor thereto) (the "Resale Restriction Termination
Date") only (a) to the Company, (b) pursuant to a registration statement
which has been declared effective under the Securities Act, (c) for so
long as the Notes are eligible for resale pursuant to Rule 144A under the
Securities Act, to a person we reasonably believe is a "Qualified
Institutional Buyer" within the meaning of Rule l44A (a "QIB") that
purchases for its own account or for the account of a QIB and 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, (e) to an institutional "accredited investor" within the meaning of
subparagraphs (a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501 under the
Securities Act that is acquiring the Notes for its own account or for the
account of such an institutional "accredited investor" for investment
purposes and not with a view to, or for offer or sale in connection with,
any distribution in violation of the Securities Act or (f) pursuant to any
other available exemption from the registration requirements of the
Securities Act, subject in each of the foregoing cases to any requirement
of law that the disposition of our property or the property of such
investor account or accounts be at all times within our or their control
and to compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Notes is proposed
to be made pursuant to clause (e) above prior to the Resale Restriction
Termination Date, the transferor shall deliver to the trustee under the
Indenture pursuant to which the Notes are issued a letter from the
transferee substantially in the form of this letter, which shall provide,
among other things, that the transferee is a person or entity as defined
in paragraph 1 of this letter and that it is acquiring such Notes for
investment purposes and not for distribution in violation of the
Securities Act. We acknowledge that the Company and the Trustee reserve
the right prior to any offer, sale or other transfer of the Notes pursuant
to clauses (d), (e) and (f) above prior to the Resale Restriction
Termination Date to require the delivery of an opinion of counsel,
certifications and/or other information satisfactory to the Company and
the Trustee.
(3) We are acquiring the Notes purchased by us for our own account
or for one or more accounts as to each of which we exercise sole
investment discretion.
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62
(4) You are entitled to rely upon this letter and you are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Very truly yours,
By: (Name of Purchaser)
Date:
Upon transfer the Notes would be registered in the name of the new beneficial
owner as follows:
Taxpayer ID
Name Address Number:
- ---- ------- -------
SECTION 309. Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S.
[date]
Marine Midland Bank, as Trustee
140 Broadway, 12th Floor
New York, NY 10005
Attention: Corporate Trust Services - KinderCare
Re: KINDERCARE LEARNING CENTERS, INC.
(the "Company") 9-1/2% Senior Subordinated
Notes due 2009 (the "Notes")
Ladies and Gentlemen:
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63
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 United States
Securities Act 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 order 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; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
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
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64
SECTION 310. Mutilated, Destroyed, Lost and Stolen Notes.
If (i) any mutilated Note is surrendered to the Trustee, or (ii) the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, and there is delivered to the Company,
any Guarantor and the Trustee such security or indemnity, in each case, as may
be required by them to save each of them harmless, then, in the absence of
notice to the Company any Guarantor or the Trustee that such Note has been
acquired by a bona fide purchaser, the Company shall execute and upon Company
Order the Trustee shall authenticate and deliver, in exchange for any such
mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new Note
of like tenor and principal amount, 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) in connection
therewith.
Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, any Guarantor and any other
obligor upon the Notes, whether or not the mutilated, destroyed, lost or stolen
Note shall be at any time enforceable by anyone, and shall be entitled to all
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 311. Payment of Interest; 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 such Note (or one or more Predecessor Notes) is registered at the
close of business on the Regular Record Date for such interest at the office or
agency of the Company maintained for such purpose pursuant to Section 1002;
provided, however, that each installment of interest may at the Company's option
be paid by (i) mailing a check for such interest, payable to or upon the written
order of the Person entitled thereto pursuant
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65
to Section 312, to the address of such Person as it appears in the Note Register
or (ii) wire transfer to an account located in the United States maintained by
the payee.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date shall forthwith cease to
be payable to the Holder on the Regular Record Date by virtue of having been
such Holder, and such defaulted interest and (to the extent lawful) interest on
such defaulted interest at the rate borne by the Notes (such defaulted interest
and interest thereon herein collectively called "Defaulted Interest") shall 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
(not less than 30 days after such notice) of the proposed payment (the
"Special Record Date"), 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 Special Record
Date 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 in the manner
provided for 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 given, 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 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, if, after notice given by the Company
to the Trustee
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66
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 312. Persons Deemed Owners.
Prior to the due presentment of a Note for registration of transfer,
the Company, the Trustee and any agent of the Company, any Guarantor 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 premium,
if any) and (subject to Sections 305 and 311) interest on such Note and for all
other purposes whatsoever, whether or not such Note be overdue, and none of the
Company, any Guarantor, the Trustee nor any agent of the Company, any Guarantor
or the Trustee shall be affected by notice to the contrary.
SECTION 313. 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. If the
Company shall acquire any of the Notes other than as set forth in the preceding
sentence, the acquisition shall not operate as a redemption or satisfaction of
the Indebtedness represented by such Notes unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 313. 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 by the Trustee in
accordance with its customary procedures unless by Company Order the Company
shall direct that cancelled Notes be returned to it.
SECTION 314. Computation of Interest.
Interest on the Notes shall be computed on the basis of a 360-day
year of twelve 30-day months.
SECTION 315. CUSIP Numbers.
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67
The Company in issuing Notes may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers; if so, the Trustee shall use
such "CUSIP" numbers in addition to serial numbers in notices of redemption and
repurchase as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such CUSIP numbers
either as printed on the Notes or as contained in any notice of a redemption or
repurchase and that reliance may be placed only on the serial or other
identification numbers printed on the Notes, and any such redemption or
repurchase shall not be affected by any defect in or omission of such CUSIP
numbers.
ARTICLE FOUR
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 surviving rights of registration of transfer or exchange of
Notes expressly provided for herein or pursuant hereto) 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 such Notes theretofore authenticated and delivered
(other than (i) Notes which have been lost, stolen or destroyed and
which have been replaced or paid as provided in Section 310 and (ii)
Notes for whose payment money has theretofore been deposited in
trust with the Trustee or any Paying Agent 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 by reason of the making
of a notice of redemption or otherwise; or
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(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 or any Guarantor, in the case of (i), (ii) or (iii)
above, has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for such purpose an amount
sufficient to pay and discharge the entire indebtedness on such
Notes not theretofore delivered to the Trustee for cancellation, for
principal of (and premium, 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) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such
deposit or shall occur as a result of such deposit and such deposit will
not result in a breach or violation of, or constitute a default under, any
other instrument or agreement to which the Company or any Guarantor is a
party or by which it is bound;
(3) the Company or any Guarantor has paid or caused to be paid all
sums payable hereunder by the Company or any Guarantor;
(4) the Company has delivered irrevocable instructions to the
Trustee to apply the deposited money toward the payment of such Notes at
maturity or the Redemption Date, as the case may be; and
(5) 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 satisfied.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 606 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.
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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 premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 401 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and any Guarantor's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 401; provided that if the Company has made any payment of principal of,
premium, if any, or interest on any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or Government Securities held
by the Trustee or Paying Agent.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Thirteen or 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):
(i) default in payment when due and payable, upon redemption,
acceleration or otherwise, of principal or premium, if any, on the Notes
whether or not such payment shall be prohibited by Article Thirteen;
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(ii) default for 30 days or more in the payment when due of interest
with respect to the Notes whether or not such payment shall be prohibited
by Article Thirteen;
(iii) default in the performance, or breach, of any covenant,
warranty or other agreement of the Company or any Guarantor contained in
this Indenture or any Guarantee under this Indenture (other than a default
in the performance, or breach, of a covenant, warranty or agreement which
is specifically dealt with in clauses (i) or (ii) of this Section 501) and
continuance of such default or breach for a period of 30 days after
written notice shall have been given to the Company or such Guarantor by
the Trustee or to the Company or such Guarantor and the Trustee by the
Holders of at least 30% in aggregate principal amount of the Notes then
Outstanding;
(iv) default under any mortgage, indenture or instrument under which
there is issued or by which there is secured or evidenced any Indebtedness
for money borrowed by the Company or any of its Restricted Subsidiaries or
the payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries (other than Indebtedness owed to the Company or a Restricted
Subsidiary), whether such Indebtedness or guarantee now exists or is
created after the Issuance Date, if both (A) such default either (1)
results from the failure to pay any such Indebtedness at its stated final
maturity (after giving effect to any applicable grace periods) or (2)
relates to an obligation other than the obligation to pay principal of any
such Indebtedness at its stated final maturity and results in the holder
or holders of such Indebtedness causing such Indebtedness to become due
prior to its stated maturity and (B) the principal amount of such
Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal at stated final
maturity (after giving effect to any applicable grace periods), or the
maturity of which has been so accelerated, aggregate $20 million or more
at any one time outstanding;
(v) failure by the Company or any of its Significant Subsidiaries to
pay final judgments aggregating in excess of $20 million, which final
judgments remain unpaid, undischarged and unstayed for a period of more
than 60 days after such judgment becomes final, and in the event such
judgment is covered by insurance, an enforcement proceeding has been
commenced by any creditor upon such judgment or decree which is not
promptly stayed;
(vi) the Company or any of its Significant Subsidiaries pursuant to
or within the meaning of Federal Bankruptcy Code: (A) commences a
voluntary case; (B) consents to the entry of an order for relief against
it in an involuntary
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case; (C) consents to the appointment of a Custodian of it or for all or
substantially all of its property; (D) makes a general assignment for the
benefit of its creditors, or (E) admits in writing that it is generally
not paying its debts (other than debts which are the subject of a bona
fide dispute) as they become due;
(vii) a court of competent jurisdiction enters an order or decree
under any Federal Bankruptcy Code that remains unstayed and in effect for
60 days and: (A) is for relief against the Company or any of its
Significant Subsidiaries in an involuntary case; (B) appoints a Custodian
of the Company or any of its Significant Subsidiaries or for all or
substantially all of the property of the Company or any of its Significant
Subsidiaries; or (C) orders the liquidation of the Company or any of its
Significant Subsidiaries; provided that clauses (A), (B) and (C) shall not
apply to an Unrestricted Subsidiary, unless such action or proceeding has
a material adverse effect on the interests of the Company or any
Restricted Subsidiary; or
(viii) any Guarantee shall for any reason cease to be in full force
and effect or is declared null and void or any Responsible Officer of the
Company or any Guarantor denies that it has any further liability under
any Guarantee or gives notice to such effect (other than by reason of the
termination of this Indenture or the release of any such Guarantee in
accordance with this Indenture).
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than by reason of an Event of Default
specified in Section 501(vi) or 501(vii)) occurs and is continuing, the Trustee
or the Holders of at least 30% in principal amount of the Notes Outstanding may
declare the principal (and premium, if any), interest and any other monetary
obligations on all the then outstanding Notes to be due and payable immediately,
by a notice in writing to the Company (and to the Trustee if given by Holders);
provided, however, that, so long as any Indebtedness permitted to be incurred
pursuant to the Senior Credit Facility shall be outstanding, such acceleration
shall not be effective until the earlier of (i) acceleration of any such
Indebtedness under the Senior Credit Facility or (ii) five Business Days after
the giving of written notice to the Company and the Bank Agent of such
acceleration. Upon the effectiveness of such declaration, such principal and
interest will be due and payable immediately. Notwithstanding the foregoing, in
the case of an Event of Default specified in Section 501(vi) or 501(vii) occurs
and is continuing, then the principal amount of all the Notes shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder.
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At any time after a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article, the Holders of a majority
in aggregate principal amount of the Notes Outstanding, 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 all Outstanding Notes,
(B) all unpaid principal of (and premium, if any, on) any
Outstanding Notes which has become due otherwise than by such
declaration of acceleration, and interest on such unpaid principal
and premium at the rate borne by the Notes (for purposes of this
clause (B) without duplication to amounts to be paid or deposited
under clause (A) above),
(C) to the extent that payment of such interest is lawful,
interest on overdue interest at the rate borne by 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, other than the non-payment of amounts of
principal of (or premium, if any, on) or interest on Notes which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 513;
(3) if the rescission would not conflict with any judgment or
decree; and
(4) in the event of the cure or waiver of an Event of Default
specified in clause (iv) of Section 501, the Trustee shall have received
an Officers' Certificate and, if appropriate, an Opinion of Counsel that
such Event of Default has been cured or waived.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
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Upon a determination by the Company that the Senior Credit Facility
is no longer in effect, the Company shall promptly give to the Trustee written
notice thereof, which notice shall be countersigned by the Bank Agent. Unless
and until the Trustee shall have received such written notice with respect to
the Senior Credit Facility, the Trustee, subject to the TIA Sections 315(a)
through 315(d), shall be entitled in all respects to assume that the Senior
Credit Facility is in effect (unless a Responsible Officer of the Trustee shall
have knowledge to the contrary).
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
If an Event of Default specified in Section 501(i) or 501(ii) occurs
and is continuing, the Trustee, in its own name as trustee of an express trust,
may institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any Guarantor (in accordance with the
applicable Guarantee) or any other obligor upon the Notes and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company, any Guarantor or any other obligor upon the Notes,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders under this Indenture or any Guarantee by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, including, seeking recourse against any Guarantor pursuant to the
terms of any Guarantee, 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 including, without limitation,
seeking recourse against any Guarantor pursuant to the terms of a Guarantee, or
to enforce any other proper remedy, subject however to Section 513. No recovery
of any such judgment upon any property of the Company or any Guarantor shall
affect or impair any rights, powers or remedies of the Trustee or the Holders.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor,
including any Guarantor, upon the Notes or the property of the Company or of
such other obligor or their creditors, the Trustee (irrespective of whether the
principal of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal,
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premium, if any, or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Notes, to
take such other actions (including participating as a member, voting or
otherwise, of any official committee of creditors appointed in such
matter) and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian 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 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 606.
Nothing herein contained 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 such Holders, vote for the election of a trustee in
bankruptcy or other similar official.
SECTION 505. Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture, the Notes or
the Guarantees 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 and 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.
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Subject to Article Thirteen, 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 premium, if any) 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;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Notes 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 (and premium, if any) and
interest, respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto, including the Company or any other obligor on the Notes, as their
interests may appear or as a court of competent jurisdiction may direct,
provided that all sums due and owing to the Holders and the Trustee have
been paid in full as required by this Indenture.
SECTION 507. Limitation on Suits.
No Holder of any Notes 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;
(2) the Holders of not less than 30% 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 offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
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(5) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Holders of a
majority or more in principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, any Note or any Guarantee to affect, disturb or prejudice the
rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
any Note or any Guarantee, except in the manner herein provided and for the
equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article Eleven) and in
such Note of the principal of (and premium, if any) and (subject to Section 311)
interest on such Note on the respective Stated Maturities expressed in such Note
(or, in the case of redemption or repurchase, on the Redemption Date or
repurchase) 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 or any Guarantee 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, any
Guarantor, any other obligor on the Notes, 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 310, 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
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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 Note 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 not less than 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, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture or any Guarantee,
(2) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders not
consenting; and
(3) subject to the provisions of Section 315 of the Trust Indenture
Act, 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.
Subject to Sections 508 and 902, the Holders of a majority in
aggregate principal amount of the Outstanding Notes (including consents obtained
in connection with a tender offer or exchange offer for the Notes) may on behalf
of the Holders of all the Notes waive any existing Default or Event of Default
and its consequences under the Indenture or any Guarantee except a continuing
Default or Event of Default in the payment of interest on, premium, if any, or
the principal of, any such Note held by a nonconsenting Holder, or in respect of
a covenant or a provision which cannot be amended or modified without the
consent of all Holders.
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In the event that any Event of Default specified in Section 501(iv)
shall have occurred and be continuing, such Event of Default and all
consequences thereof (including without limitation any acceleration or resulting
payment default) shall be annulled, waived and rescinded, automatically and
without any action by the Trustee or the Holders of the Notes, if within 20 days
after such Event of Default arose (x) the Indebtedness or guarantee that is the
basis for such Event of Default has been discharged, or (y) the holders thereof
have rescinded or waived the acceleration, notice or action (as the case may be)
giving rise to such Event of Default, or (z) if the default that is the basis
for such Event of Default has been cured.
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 Event of Default or impair any right consequent thereon.
SECTION 514. Waiver of Stay or Extension Laws.
The Company, the Guarantors and any other obligors upon the Notes,
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 stay or extension law wherever enacted, now or at
any time hereafter in force, which would prohibit or forgive the Company, any
Guarantor or any such obligor from paying all or any portion of the principal
of, premium, if any, or interest on the Notes contemplated herein or in the
Notes or which may affect the covenants or the performance of this Indenture;
and each of the Company, any Guarantor and any such obligor (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.
SECTION 515. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, 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, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
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the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Notes, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of (or premium, if any) or interest on any Note on or after the
respective Stated Maturities expressed in such Note (or, in the case of
redemption, on or after the Redemption Date).
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) Except during the continuance of a Default or an Event of
Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith or willful misconduct on its part,
the Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture, but not to verify
the contents thereof.
(b) In case a Default or an Event of Default has occurred and is
continuing of which a Responsible Officer of the Trustee has actual knowledge or
of which written notice of such Default or Event of Default shall have been
given to the Trustee by the Company, any other obligor of the Notes or by any
Holder, the Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
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(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in aggregate principal amount of
the Outstanding Notes relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture; and
(4) 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.
(d) 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.
Within 60 days after the occurrence of any Default hereunder, the
Trustee shall transmit in the manner and to the extent provided in TIA Section
313(c), notice of such Default hereunder known to the Trustee, unless such
Default shall have been cured or waived; provided, however, that, except in the
case of a Default in the payment of the principal of (or premium, if any) or
interest on any Note, the Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders;
and provided further that in the case of any Default of the character specified
in Section 501(iii) no such notice to Holders shall be given until at least 30
days after the occurrence thereof.
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SECTION 603. Certain Rights of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Subject to the provisions of TIA Sections 315(a) through 315(d):
(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 may 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, request and rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and any
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 offered 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
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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;
(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; and
(8) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
(c) The Trustee shall not be required 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.
SECTION 604. Trustee Not Responsible for Recitals or Issuance of
Notes.
The recitals contained herein and in the Notes, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Notes, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Notes and
perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility on Form T-1 supplied to the Company are true and
accurate, subject to the qualifications set forth therein. The Trustee shall not
be accountable for the use or application by the Company of Notes or the
proceeds thereof.
SECTION 605. May Hold Notes.
The Trustee, any Paying Agent, any Note Registrar, any
Authenticating Agent or any other agent of the Company or of the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Notes and,
subject to TIA Sections 310(b) and 311, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Paying Agent, Note
Registrar, Authenticating Agent or such other agent.
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SECTION 606. Money Held in Trust.
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust hereunder for the purposes for which they were
received, but 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 in writing with the
Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time such compensation as
shall be agreed to in writing between the Company and the Trustee 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 and costs and expenses of
collection), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify each of the Trustee or any predecessor Trustee (and
their respective directors, officers, employees and agents) for, and to
hold it harmless against, any and all loss, damage, claim, liability or
expense, including taxes (other than taxes based on the income of the
Trustee) incurred without negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration of this trust,
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 obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such obligations
of the Company, the Trustee shall have a claim prior to the Holders of the Notes
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of (and premium, if any) or
interest on particular Notes.
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When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(vi) or (vii), the expenses
(including the reasonable charges and expenses of its counsel) of and the
compensation for such services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 608. Corporate Trustee Required; Eligibility.
There shall be at all times a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1), and which shall have an
office in The City of New York and shall have a combined capital and surplus of
at least $50,000,000. If the Trustee does not have an office in The City of New
York, the Trustee may appoint an agent in The City of New York reasonably
acceptable to the Company to conduct any activities which the Trustee may be
required under this Indenture to conduct in The City of New York. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of federal, state, territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section 608,
the combined capital and surplus of such corporation 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 shall cease to be eligible in
accordance with the provisions of this Section 608, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
SECTION 609. Resignation and Removal; Appointment of Successor.
(a) 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 this Section.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee by written instrument executed by
authority of the Board of Directors, a copy of which shall be delivered to the
resigning Trustee and a copy to the successor trustee. If an instrument of
acceptance required by this Section 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.
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(c) The Trustee may be removed at any time by Act of the Holders of
not less than a majority in principal amount of the Outstanding Notes, delivered
to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) 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 608 and
shall fail to resign 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
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a Custodian 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, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), 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 and the appointment of a successor Trustee.
(e) 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, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Notes delivered to
the Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, 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.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to the
Holders of Notes in
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the manner provided for in Section 106. Each notice shall include the name of
the successor Trustee and the address of its Corporate Trust Office.
SECTION 610. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder 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 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.
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 611. 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 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. In case at
that time any of the Notes shall not have been authenticated, any successor
Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor Trustee. In all such cases such
certificates shall have the full force and effect which this Indenture provides
for the certificate of authentication of the Trustee shall have; provided,
however, that the right to adopt the certificate of authentication of any
predecessor Trustee or to authenticate
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Notes in the name of any predecessor Trustee shall apply only to its successor
or successors by merger, conversion or consolidation.
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses.
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not more than 10 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders as of such Regular Record Date; and
(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after receipt by the Company of any such request, a list
of similar form and content to that in Subsection (a) hereof as of a date not
more than 15 days prior to the time such list is furnished;
provided, however that if and so long as the Trustee shall be the Note
Registrar, no such list need be furnished.
SECTION 702. Disclosure of Names and Addresses of Holders.
Every Holder of Notes, by receiving and holding the same, agrees
with the Company and the Trustee that none of the Company or the Trustee or any
agent of either of them shall be held accountable by reason of the disclosure of
any such information as to the names and addresses of the Holders in accordance
with TIA Section 312, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under TIA Section 312(b).
SECTION 703. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the first
May 15 after the first issuance of Notes, the Trustee shall transmit to the
Holders, in the manner and to the extent provided in TIA Section 313(c), a brief
report dated as of such May 15 if required by TIA Section 313(a).
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ARTICLE EIGHT
MERGER, CONSOLIDATION, OR SALE OF ASSETS
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
(a) The Company will not consolidate with or merge with or into or
wind up into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions (other than
pursuant to a Real Estate Financing Transaction), to any Person unless:
(i) the Company is the surviving corporation or the Person formed by
or surviving any such consolidation or merger (if other than the Company)
or to which such sale, assignment, transfer, lease, conveyance or other
disposition will have been made is a corporation organized or existing
under the laws of the United States, any state thereof, the District of
Columbia, or any territory thereof (the Company or such Person, as the
case may be, being herein called the "Successor Company");
(ii) the Successor Company (if other than the Company) expressly
assumes all the obligations of the Company under this Indenture and the
Notes pursuant to a supplemental indenture or other documents or
instruments in form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of
Default exists;
(iv) immediately after giving pro forma effect to such transaction,
as if such transaction had occurred at the beginning of the applicable
four-quarter period, (A) the Successor Company would be permitted to incur
at least $1.00 of additional Indebtedness under paragraph (a) of Section
1010, or (B) the Fixed Charge Coverage Ratio for the Successor Company and
its Restricted Subsidiaries would be greater than such Ratio for the
Company and its Restricted Subsidiaries immediately prior to such
transaction;
(v) each Guarantor, if any, unless it is the other party to the
transactions described above, shall have by supplemental indenture
confirmed that its Guarantee will apply to such Person's obligations under
this Indenture and the Notes; and
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(vi) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, or transfer and if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with the requirements of this Indenture.
Notwithstanding the foregoing clause (iv), (a) any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company and (b) the Company may merge with an
Affiliate incorporated solely for the purpose of reincorporating the Company in
another State of the United States so long as the amount of Indebtedness of the
Company and its Restricted Subsidiaries is not thereby increased.
(b) Each Guarantor, if any, shall not, and the Company will not
permit a Guarantor to consolidate with or merge with or into or wind up into
(whether or not such Guarantor is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties and assets to any Person, unless at the time and after giving effect
thereto:
(i) either (1) such Guarantor is the surviving corporation or (2)
the Person formed by or surviving any such consolidation or merger (if
other than the Guarantor) or to which such sale, assignment, transfer,
lease, conveyance or other disposition will have been made is a
corporation organized or existing under the laws of the United States, any
State thereof, the District of Columbia, or any territory thereof (such
Guarantor or such Person, as the case may be, being herein called the
"Successor Guarantor");
(ii) the Successor Guarantor (if other than such Guarantor)
expressly assumes all the obligations of such Guarantor hereunder and
under such Guarantor's Guarantee pursuant to a supplemental indenture or
other documents or instruments in form reasonably satisfactory to the
Trustee;
(iii) immediately after giving effect to such transaction, on a pro
forma basis (and treating any Indebtedness not previously an obligation of
the Guarantor, the Company or any of its Subsidiaries which becomes an
obligation of the Guarantor, the Company or any of its Subsidiaries in
connection with or as a result of such transaction as having been incurred
at the time of such transaction) no Default or Event of Default shall have
occurred and be continuing; and
(iv) the Guarantor shall have delivered, or caused to be delivered,
to the Trustee, an Officers' Certificate and an Opinion of Counsel, each
to the effect
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that such consolidation, merger or transfer and such supplemental
indenture (if any) in respect thereof comply with this Indenture.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with or merger of the Company
with or into or wind up into any other corporation or any sale, assignment,
conveyance, transfer, lease or other disposition of the properties and assets of
the Company substantially as an entirety to any Person in accordance with
Section 801, the successor Person formed by such consolidation or into which the
Company is merged or wound up or to which such sale, assignment, conveyance,
transfer, lease or other disposition is made will succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the Company
therein, and thereafter (except in the case of a sale, assignment, transfer,
lease, conveyance or other disposition) the predecessor corporation will be
relieved of all further obligations and covenants under this Indenture and the
Notes; provided that, solely with respect to calculating amounts described in
clauses (A), (B) and (C) of paragraph (a) of Section 1009, any such surviving
entity to the Company shall only be deemed have succeeded to and be substituted
for the Company with respect to periods subsequent to the effective time of such
merger, consolidation, combination or transfer of assets.
ARTICLE NINE
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, the Guarantors, if
any (with respect to a Guarantee to which it is a party), 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 cure any ambiguity, defect or inconsistency; or
(2) to provide for uncertificated Notes in addition to or in place
of certificated Notes; or
(3) to comply with Article Eight hereof; or
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(4) to provide for the assumption of the Company's or any
Guarantor's obligations to Holders of such Notes; or
(5) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any such Holder; or
(6) to add covenants for the benefit of the Holders or to surrender
any right or power conferred upon the Company; or
(7) to comply with requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture
Act; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee pursuant to the requirements of Section
610; or
(9) to make any other change that does not adversely affect the
legal rights of any Holder; or
(10) to add a Guarantor hereunder.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of at least a majority in principal
amount of the Outstanding Notes (including consents obtained in connection with
a tender offer or exchange offer for the Notes), 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 under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby (with respect to
any Notes held by a nonconsenting Holder of the Notes):
(1) reduce the principal amount of the Notes whose Holders must
consent to an amendment, supplement or waiver; or
(2) reduce the principal of or change or have the effect of changing
the Stated Maturity of any Note or alter or waive the provisions with
respect to the redemption of the Notes (other than Sections 1016 and 1017
and the defined terms used therein); or
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(3) reduce the rate of or change or have the effect of changing the
time for payment of interest on any Note; or
(4) waive a Default or Event of Default in the payment of principal
of, premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes Outstanding and a waiver of the
payment default that resulted from the acceleration), or in respect of a
covenant or provision contained in the Indenture or any Guarantee which
cannot be amended or modified without the consent of all Holders; or
(5) make any Note payable in money other than that stated in the
Notes; or
(6) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of the Holders of the Notes to
receive payments of principal of or premium, if any, or interest on the
Notes; or
(7) make any change in the foregoing amendment and waiver
provisions; or
(8) impair the right of any Holder of the Notes to receive payment
of principal of, or interest on such Holder's Notes on or after the due
dates therefor or to institute suit for the enforcement of any payment on
or with respect to such Holder's Notes; or
(9) make any change in the subordination provisions of this
Indenture that would adversely affect the Holders of the Notes.
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 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 Trustees own rights, duties or
immunities under this Indenture or otherwise.
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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 (except as provided in Section 902).
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to the Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
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.
SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Company
shall give notice thereof to the Holders of each Outstanding Note affected, in
the manner provided for in Section 106, setting forth in general terms the
substance of such supplemental indenture.
SECTION 908. Effect on Senior Indebtedness.
No supplemental indenture shall adversely affect the rights of any
holders of Senior Indebtedness under Article Thirteen unless the requisite
holders of each issue of Senior Indebtedness affected thereby shall have
consented to such supplemental indenture.
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ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if Any, and Interest.
The Company covenants and agrees for the benefit of the Holders that
it will duly and punctually pay the principal of (and premium, if any) and
interest on the Notes in accordance with the terms of the Notes and this
Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in The City of New York, an office or
agency where Notes may be presented or surrendered for payment, where Notes may
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Corporate Trust Office of the Trustee shall be such office or agency
of the Company, unless the Company shall designate and maintain some other
office or agency for one or more of such purposes. The Company will give prompt
written notice to the Trustee of any change in the location of any 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 (in or outside of The City of New York) where the Notes may
be presented or surrendered for any or all such purposes and may from time to
time rescind any such designation; 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 City of New York for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and 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, it
will, on or before each due date of the principal of (or premium, if any) or
interest on any of the Notes, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal of (or premium,
if any) or interest 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 to so act.
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Whenever the Company shall have one or more Paying Agents for the
Notes, it will, on or before each due date of the principal of (or premium, if
any) or interest on any Notes, deposit with a Paying Agent a sum in same day
funds (or New York Clearing House funds if such deposit is made prior to the
date on which such deposit is required to be made) sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure to so act.
The Company will cause each Paying Agent (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) hold all sums held by it for the payment of the principal of
(and premium, if any) or interest on Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Notes) in the making of any payment of principal
(and premium, if any) or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
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 sums.
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 premium,
if any) or interest on any Note and remaining unclaimed for two years after such
principal, premium or interest 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
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Paying Agent, before being required to make any such repayment to the Company,
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 the Borough of Manhattan, The City of New York,
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. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect the corporate
existence and that of each Restricted Subsidiary and the corporate rights
(charter and statutory) licenses and franchises of the Company and each
Restricted Subsidiary; provided, however, that the Company shall not be required
to preserve any such existence (except the Company) right, license or franchise
if the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
each of its Restricted Subsidiaries, taken as a whole, and that the loss thereof
is not, and will not be, disadvantageous in any material respect to the Holders.
SECTION 1005. 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, (a) all material 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 (b)
all lawful claims for labor, materials and supplies, which, if unpaid, might by
law become a material liability or lien upon the property of the Company or any
Subsidiary; 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 and for which appropriate reserves, if necessary (in
the good faith judgment of management of the Company) are being maintained in
accordance with GAAP.
SECTION 1006. Maintenance of Properties.
The Company will cause all material properties owned by the Company
or any Restricted Subsidiary or used or held for use in the conduct of its
business or the business of any Restricted Subsidiary to be maintained and kept
in normal condition, repair and working order 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 conducted at all times;
provided, however, that nothing in this Section shall prevent the Company or any
of its Restricted
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Subsidiaries from discontinuing the 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 Restricted Subsidiary and not adverse in
any material respect to the Holders.
SECTION 1007. Insurance.
To the extent available at commercially reasonable rates, the
Company will maintain, and will cause its Subsidiaries to maintain, insurance
with responsible carriers against such risks and in such amounts, and with such
deductibles, retentions, self-insured amounts and co-insurance provisions, as
are customarily carried by similar businesses, of similar size, including
professional and general liability, property and casualty loss, workers'
compensation and interruption of business insurance.
SECTION 1008. Compliance with Laws.
The Company shall comply, and shall cause each of its Subsidiaries
to comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental regulatory authority, in respect of the conduct
of their respective businesses and the ownership of their respective properties,
except for such noncompliances as would not in the aggregate have a material
adverse effect on the financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole.
SECTION 1009. Limitation on Restricted Payments.
(a) The Company will not, and will not permit any Restricted
Subsidiaries, directly or indirectly, to take any of the following actions:
(i) declare or pay any dividend or make any distribution on account
of the Company's or any of its Restricted Subsidiaries' Equity Interests,
including any dividend or distribution payable in connection with any
merger or consolidation (other than (A) dividends or distributions by the
Company payable in Equity Interests (other than Disqualified Stock) of the
Company or (B) dividends or distributions by a Restricted Subsidiary so
long as, in the case of any dividend or distribution payable on or in
respect of any class or series of securities issued by a Subsidiary other
than a Wholly Owned Subsidiary, the Company or a Restricted Subsidiary
receives at least its pro rata share of such dividend or distribution in
accordance with its Equity Interests in such class or series of
securities);
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(ii) purchase, redeem, defease or otherwise acquire or retire for
value any Equity Interests of the Company;
(iii) make any principal payment on, or redeem, repurchase, defease
or otherwise acquire or retire for value in each case, prior to any
scheduled repayment, or maturity, any Subordinated Indebtedness; or
(iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless, at the time of
such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(2) immediately before and immediately after giving effect to such
transaction on a pro forma basis, the Company could incur $1.00 of
additional Indebtedness under paragraph (a) of Section 1010; and
(3) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issuance Date (including Restricted Payments
permitted by clauses (i), (ii) (with respect to the payment of dividends
on Refunding Capital Stock pursuant to clause (b) thereof), (iv) (only to
the extent that amounts paid pursuant to such clause are greater than
amounts that would have been paid pursuant to such clause if $5 million
and $10 million were substituted in such clause for $10 million and $20
million, respectively), (v), (viii) and (ix) of the next succeeding
paragraph, but excluding all other Restricted Payments permitted by the
next succeeding paragraph), is less than the sum of:
(A) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the fiscal quarter that first
begins after the Issuance Date to the end of the Company's most recently
ended fiscal quarter for which internal financial statements are available
at the time of such Restricted Payment (or, in the case such Consolidated
Net Income for such period is a deficit, minus 100% of such deficit);
provided, however, that for the purposes of this clause (A), Consolidated
Net Income shall be deemed to include any increases during such period to
Consolidated Additional Paid-In Capital of the Company, which increases
are attributable to tax benefits from net operating losses incurred prior
to the Issuance Date and are not otherwise included in Consolidated Net
Income of the Company for such period, plus
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(B) 100% of the aggregate net cash proceeds and the fair market
value, as determined in good faith by the Board of Directors, of
marketable securities received by the Company since immediately after the
closing of the Merger and the Financings from the issue or sale of Equity
Interests (including Retired Capital Stock (as defined below), but
excluding cash proceeds and marketable securities received from the sale
of Equity Interests to members of management, directors or consultants of
the Company and its Subsidiaries after the Issuance Date to the extent
such amounts have been applied to Restricted Payments in accordance with
clause (iv) of the next succeeding paragraph) or debt securities of the
Company that have been converted into such Equity Interests of the Company
(other than Refunding Capital Stock (as defined below) or Equity Interests
or convertible debt securities of the Company sold to a Restricted
Subsidiary and other than Disqualified Stock or debt securities that have
been converted into Disqualified Stock), plus
(C) 100% of the aggregate amount of cash and marketable securities
contributed to the capital of the Company following the Issuance Date,
plus
(D) 100% of the aggregate amount received in cash and the fair
market value of marketable securities (other than Restricted Investments)
received from (A) the sale or other disposition (other than to the Company
or a Restricted Subsidiary) of Restricted Investments made by the Company
and its Restricted Subsidiaries or (B) a dividend from, or the sale (other
than to the Company or a Restricted Subsidiary) of the stock of, an
Unrestricted Subsidiary (other than an Unrestricted Subsidiary the
Investment in which was made by the Company or a Restricted Subsidiary
pursuant to clauses (vi) or (x) below).
(b) The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would have
complied with the provisions of the Indenture;
(ii) (A) the redemption, repurchase, retirement or other acquisition
of any Equity Interests (the "Retired Capital Stock") or Subordinated
Indebtedness of the Company in exchange for, or out of the proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary) of,
Equity Interests of the Company (other than any Disqualified Stock) (the
"Refunding Capital Stock"), and (B) if immediately prior to the retirement
of Retired Capital Stock, the declaration and payment of dividends thereon
was permitted under clause (v) of this paragraph, the declaration and
payment of dividends on the Refunding Capital Stock in an aggregate amount
per year no greater than the aggregate amount of dividends per annum that
was declarable and payable on such Retired
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Capital Stock immediately prior to such retirement; provided, however,
that at the time of the declaration of any such dividends, no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof;
(iii) the redemption, repurchase or other acquisition or retirement
of Subordinated Indebtedness of the Company made by exchange for, or out
of the proceeds of the substantially concurrent sale of, new Indebtedness
of the Company so long as (A) the principal amount of such new
Indebtedness does not exceed the principal amount of the Subordinated
Indebtedness being so redeemed, repurchased, acquired or retired for value
(plus the amount of any premium required to be paid under the terms of the
instrument governing the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired), (B) such Indebtedness is subordinated
to the Senior Indebtedness and the Notes at least to the same extent as
such Subordinated Indebtedness so purchased, exchanged, redeemed,
repurchased, acquired or retired for value, (C) such Indebtedness has a
final scheduled maturity date equal to or later than the final scheduled
maturity date of the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired and (D) such Indebtedness has a Weighted
Average Life to Maturity equal to or greater than the remaining Weighted
Average Life to Maturity of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired;
(iv) a Restricted Payment to pay for the repurchase, retirement or
other acquisition or retirement for value of common Equity Interests of
the Company held by any future, present or former employee, director or
consultant of the Company or any Subsidiary pursuant to any management
equity plan or stock option plan or any other management or employee
benefit plan or agreement; provided, however, that the aggregate
Restricted Payments made under this clause (iv) does not exceed in any
calendar year $10 million (with unused amounts in any calendar year being
carried over to succeeding calendar years subject to a maximum (without
giving effect to the following proviso) of $20 million in any calendar
year); provided further that such amount in any calendar year may be
increased by an amount not to exceed (A) the cash proceeds from the sale
of Equity Interests of the Company to members of management, directors or
consultants of the Company and its Subsidiaries that occurs after the
Issuance Date (to the extent the cash proceeds from the sale of such
Equity Interest have not otherwise been applied to the payment of
Restricted Payments by virtue of the preceding subclause (a)(3)) plus (B)
the cash proceeds of key man life insurance policies received by the
Company and its Restricted Subsidiaries after the Issuance Date less (C)
the amount of any Restricted Payments previously made pursuant to clauses
(A) and (B) of this subparagraph (iv); and provided further that
cancellation of Indebtedness owing to the Company from members of
management of the Company or any of its Restricted Subsidiaries in
connection with a repurchase of Equity Interests of the Company will not
be deemed to
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constitute a Restricted Payment for purposes of this Section 1009 or any
other provision hereof;
(v) the declaration and payment of dividends to holders of any class
or series of Designated Preferred Stock (other than Disqualified Stock)
issued after the Issuance Date (including, without limitation, the
declaration and payment of dividends on Refunding Capital Stock in excess
of the dividends declarable and payable thereon pursuant to clause (ii));
provided, however, that for the most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date of issuance of such Designated Preferred Stock, after
giving effect to such issuance on a pro forma basis, the Company and its
Restricted Subsidiaries would have had a Fixed Charge Coverage Ratio of at
least 1.75 to 1.00;
(vi) Investments in Unrestricted Subsidiaries having an aggregate
fair market value, taken together with all other Investments made pursuant
to this clause (vi) that are at that time outstanding, not to exceed $20
million at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value);
(vii) repurchases of Equity Interests deemed to occur upon exercise
of stock options if such Equity Interests represent a portion of the
exercise price of such options;
(viii) the payment of dividends on the Company's Common Stock,
following the first public offering of the Company's Common Stock after
the Issuance Date, of up to 6% per annum of the net proceeds received by
the Company in such public offering, other than public offerings with
respect to the Company's Common Stock registered on Form S-8;
(ix) a Restricted Payment to pay for the repurchase, retirement or
other acquisition or retirement for value of Equity Interests of the
Company in existence on the Issuance Date and which are not held by KKR or
any of their Affiliates or the Management Group on the Issuance Date
(including any Equity Interests issued in respect of such Equity Interests
as a result of a stock split, recapitalization, merger, combination,
consolidation or otherwise, but excluding any management equity plan or
stock option plan or similar agreement), provided that the aggregate
Restricted Payments made under this clause (ix) shall not exceed $30
million, provided further that notwithstanding the foregoing proviso, the
Company shall be permitted to make Restricted Payments under this clause
(ix) only if after giving effect thereto, the Company would be permitted
to incur at least $1.00 of additional Indebtedness under paragraph (a) of
Section 1010; and
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(x) other Restricted Payments in an aggregate amount not to exceed
$20 million;
provided, however, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (iii), (iv), (v), (vi), (vii),
(viii), (ix) and (x), no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and provided further that
for purposes of determining the aggregate amount expended for Restricted
Payments in accordance with subclause (a)(3) of the immediately preceding
paragraph, only the amounts expended under clauses (i), (ii) (with respect to
the payment of dividends on Refunding Capital Stock pursuant to clause (b)
thereof), (iv) (only to the extent that amounts paid pursuant to such clause are
greater than amounts that would have been paid pursuant to such clause if $5
million and $10 million were substituted in such clause for $10 million and $20
million, respectively), (v), (viii) and (ix) shall be included.
(c) Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 1009 were computed, which calculations may
be based upon the Company's latest available financial statements. The Trustee
shall have no duty to recompute or recalculate or verify the accuracy of the
information set forth in such Officers' Certificate.
(d) As of the Issuance Date, all of the Company's Subsidiaries will
be Restricted Subsidiaries. The Company will not permit any Unrestricted
Subsidiary to become a Restricted Subsidiary except pursuant to the second to
last sentence of the definition of "Unrestricted Subsidiary." For purposes of
designating any Restricted Subsidiary as an Unrestricted Subsidiary, all
outstanding Investments by the Company and its Restricted Subsidiaries (except
to the extent repaid) in the Subsidiary so designated will be deemed to be
Restricted Payments in an amount determined as set forth in the last sentence of
the definition of "Investments." Such designation will only be permitted if a
Restricted Payment in such amount would be permitted at such time and if such
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
Unrestricted Subsidiaries will not be subject to any of the restrictive
covenants set forth in this Indenture.
SECTION 1010. Limitation on Incurrence of Indebtedness and Issuance
of Disqualified Stock.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable with respect to (collectively,
"incur" and collectively, an "incurrence" of) any Indebtedness (including
Acquired Indebtedness) or any shares of Disqualified Stock; provided,
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however, that the Company may incur Indebtedness or issue shares of Disqualified
Stock if the Fixed Charge Coverage Ratio for the Company and its Restricted
Subsidiaries for the most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date of
such incurrence would have been at least 1.75 to 1.00 determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred or the Disqualified Stock had been
issued, as the case may be, and the application of proceeds had occurred at the
beginning of such four-quarter period.
(b) The foregoing limitations will not apply to:
(i) the incurrence by the Company of Indebtedness under the Senior
Credit Facility and the issuance and creation of letters of credit and
bankers' acceptances thereunder (with letters of credit and bankers'
acceptances being deemed to have a principal amount equal to the face
amount thereof) up to an aggregate principal amount of $550 million
outstanding at any one time;
(ii) any Real Estate Financing Transaction; provided, however, that
the amount of Indebtedness outstanding under clause (i) above and this
clause (ii) shall not in the aggregate exceed $550 million at any time
outstanding;
(iii) the incurrence by the Company of Indebtedness represented by
the Notes issued on the Issuance Date;
(iv) Existing Indebtedness (other than Indebtedness described in
clauses (i) and (iii));
(v) Indebtedness (including Capitalized Lease Obligations) incurred
by the Company or any of its Restricted Subsidiaries to finance the
purchase, lease or improvement of property (real or personal) or equipment
(whether through the direct purchase of assets or the Capital Stock of any
Person owning such assets) in an aggregate principal amount which, when
aggregated with the principal amount of all other Indebtedness then
outstanding and incurred pursuant to this clause (v) (together with any
Refinancing Indebtedness with respect thereto), does not exceed the
greater of (x) $50 million or (y) 10% of Total Assets;
(vi) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business, including
without limitation letters of credit in respect of workers' compensation
claims or self-insurance, or other Indebtedness with respect to
reimbursement type obligations regarding workers' compensation claims;
provided,
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however, that upon the drawing of such letters of credit or the incurrence
of such Indebtedness, such obligations are reimbursed within 30 days
following such drawing or incurrence;
(vii) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of
purchase price or similar obligations, in each case, incurred or assumed
in connection with the disposition of any business, assets or a
Subsidiary, other than guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or a Subsidiary for
the purpose of financing such acquisition; provided, however, that (A)
such Indebtedness is not reflected on the balance sheet of the Company or
any Restricted Subsidiary (contingent obligations referred to in a
footnote to financial statements and not otherwise reflected on the
balance sheet will not be deemed to be reflected on such balance sheet for
purposes of this clause (A)) and (B) the maximum assumable liability in
respect of all such Indebtedness shall at no time exceed the gross
proceeds including noncash proceeds (the fair market value of such noncash
proceeds being measured at the time received and without giving effect to
any subsequent changes in value) actually received by the Company and its
Restricted Subsidiaries in connection with such disposition;
(viii) Indebtedness of the Company to a Restricted Subsidiary;
provided that any such Indebtedness is made pursuant to an intercompany
note and is subordinated in right of payment to the Notes; provided
further that any subsequent issuance or transfer of any Capital Stock or
any other event which results in any such Restricted Subsidiary ceasing to
be a Restricted Subsidiary or any other subsequent transfer of any such
Indebtedness (except to the Company or another Restricted Subsidiary)
shall be deemed, in each case to be an incurrence of such Indebtedness;
(ix) Indebtedness of a Restricted Subsidiary to the Company or
another Restricted Subsidiary; provided that (A) any such Indebtedness is
made pursuant to an intercompany note and (B) if a Guarantor incurs such
Indebtedness from a Restricted Subsidiary that is not a Guarantor such
Indebtedness is subordinated in right of payment to the Guarantee of such
Guarantor; provided further that any subsequent transfer of any such
Indebtedness (except to the Company or another Restricted Subsidiary)
shall be deemed, in each case to be an incurrence of such Indebtedness;
(x) Hedging Obligations that are incurred in the ordinary course of
business (A) for the purpose of fixing or hedging interest rate risk with
respect to any Indebtedness that is permitted by the terms of the
Indenture to be outstanding or (B) for the purpose of fixing or hedging
currency exchange rate risk with respect to any currency exchanges;
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(xi) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
in the ordinary course of business;
(xii) Indebtedness of any Guarantor in respect of such Guarantor's
Guarantee;
(xiii) Indebtedness of the Company and any of its Foreign
Subsidiaries not otherwise permitted hereunder in an aggregate principal
amount, which when aggregated with the principal amount of all other
Indebtedness then outstanding and incurred pursuant to this clause (xiii),
does not exceed $150 million at any one time outstanding; provided,
however, that Indebtedness of Foreign Subsidiaries, which when aggregated
with the principal amount of all other Indebtedness of Foreign
Subsidiaries then outstanding and incurred pursuant to this clause (xiii),
does not exceed $75 million (or the equivalent thereof in any other
currency) at any one time outstanding;
(xiv) (A) any guarantee by the Company of Indebtedness or other
obligations of any of its Restricted Subsidiaries so long as the
incurrence of such Indebtedness incurred by such Restricted Subsidiary is
permitted under the terms of this Indenture and (B) any Excluded Guarantee
(as defined in paragraph (a) of Section 1014) of a Restricted Subsidiary;
(xv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness which serves to refund, refinance or
restructure any Indebtedness incurred as permitted under paragraph (a) and
clauses (iii) and (iv) above, or any Indebtedness issued to so refund,
refinance or restructure such Indebtedness including additional
Indebtedness incurred to pay premiums and fees in connection therewith
(the "Refinancing Indebtedness") prior to its respective maturity;
provided, however, that such Refinancing Indebtedness (A) has a Weighted
Average Life to Maturity at the time such Refinancing Indebtedness is
incurred which is not less than the remaining Weighted Average Life to
Maturity of Indebtedness being refunded or refinanced, (B) to the extent
such Refinancing Indebtedness refinances Indebtedness subordinated or pari
passu to the Notes, such Refinancing Indebtedness is subordinated or pari
passu to the Notes at least to the same extent as the Indebtedness being
refinanced or refunded and (C) shall not include (x) Indebtedness of a
Subsidiary that refinances Indebtedness of the Company or (y) Indebtedness
of the Company or a Restricted Subsidiary that refinances Indebtedness of
an Unrestricted Subsidiary; and provided further that subclauses (A) and
(B) of this clause (xv) will not apply to any refunding or refinancing of
any Senior Indebtedness; and
(xvi) Indebtedness or Disqualified Stock of Persons that are
acquired by the Company or any of its Restricted Subsidiaries or merged
into a Restricted Subsidiary in accordance with the terms of this
Indenture; provided that such Indebtedness or
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Disqualified Stock is not incurred in contemplation of such acquisition or
merger; and provided further that after giving effect to such acquisition,
either (A) the Company would be permitted to incur at least $1.00 of
additional Indebtedness under paragraph (a) or (B) the Fixed Charge
Coverage Ratio is greater than immediately prior to such acquisition.
SECTION 1011. Limitation on Liens.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist
any Lien that secures obligations under any Pari Passu Indebtedness or
Subordinated Indebtedness on any asset or property of the Company or such
Restricted Subsidiary, or any income or profits therefrom, or assign or convey
any right to receive income therefrom, unless the Notes are equally and ratably
secured with the obligations so secured or until such time as such obligations
are no longer secured by a Lien.
No Guarantor will directly or indirectly create, incur, assume or
suffer to exist any Lien that secures obligations under any Pari Passu
Indebtedness or Subordinated Indebtedness of such Guarantor on any asset or
property of such Guarantor or any income or profits therefrom, or assign or
convey any right to receive income therefrom, unless the Guarantee of such
Guarantor is equally and ratably secured with the obligations so secured or
until such time as such obligations are no longer secured by a Lien.
Notwithstanding the foregoing, no such equal and ratable security
need be provided if the Indebtedness secured is incurred pursuant to a Real
Estate Financing Transaction.
SECTION 1012. Limitation on Transactions with Affiliates.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
any contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction") involving aggregate consideration in excess of $5 million, unless:
(i) such Affiliate Transaction is on terms that are not materially
less favorable to the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person; and
(ii) the Company delivers to the Trustee with respect to any
Affiliate Transaction involving aggregate payments in excess of $10
million, a resolution adopted by a majority of the Board of Directors of
the Company approving such Affiliate
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Transaction and set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above.
(b) The foregoing provisions will not apply to the following: (i)
transactions between or among the Company and/or any of its Restricted
Subsidiaries; (ii) Restricted Payments permitted by Section 1009; (iii) the
payment of customary annual management, consulting and advisory fees and related
expenses to KKR and its Affiliates; (iv) the payment of reasonable and customary
fees paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Restricted Subsidiary; (v)
payments by the Company or any of its Restricted Subsidiaries to KKR and its
Affiliates made for any financial advisory, financing, underwriting or placement
services or in respect of other investment banking activities, including,
without limitation, in connection with acquisitions or divestitures which
payments are approved by a majority of the Board of Directors of the Company in
good faith; (vi) transactions in which the Company or any of its Restricted
Subsidiaries, as the case may be, delivers to the Trustee a letter from an
Independent Financial Advisor stating that such transaction is fair to the
Company or such Restricted Subsidiary from a financial point of view or meets
the requirements of clause (i) of paragraph (a); (vii) payments or loans to
employees or consultants which are approved by a majority of the Board of
Directors of the Company in good faith; (viii) any agreement as in effect as of
the Issuance Date or any amendment thereto (so long as any such amendment is not
disadvantageous to the Holders in any material respect) or any transaction
contemplated thereby; (ix) the existence of, or the performance by the Company
or any of its Restricted Subsidiaries of its obligations under the terms of, any
stockholders agreement (including any registration rights agreement or purchase
agreement related thereto) to which it is a party as of the Issuance Date and
any similar agreements which it may enter into thereafter; provided, however,
that the existence of, or the performance by the Company or any of its
Restricted Subsidiaries of obligations under any future amendment to any such
existing agreement or under any similar agreement entered into after the
Issuance Date shall only be permitted by this clause (ix) to the extent that the
terms of any such amendment or new agreement are not otherwise disadvantageous
to the holders of the Notes in any material respect; (x) the payment of all fees
and expenses related to the Merger and the Financings; and (xi) transactions
with customers, clients, suppliers, or purchasers or sellers of goods or
services, in each case in the ordinary course of business and otherwise in
compliance with the terms of the Indenture which are fair to the Company or its
Restricted Subsidiaries, in the reasonable determination of the Board of
Directors of the Company or the senior management thereof, or are on terms at
least as favorable as might reasonably have been obtained at such time from an
unaffiliated party.
SECTION 1013. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries.
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The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause to become
effective any consensual encumbrance or consensual restriction on the ability of
any such Restricted Subsidiary to:
(a) (i) pay dividends or make any other distributions to the Company
or any of its Restricted Subsidiaries on its Capital Stock or any other
interest or participation in, or measured by, its profits or (ii) pay any
Indebtedness owed to the Company or any of its Restricted Subsidiaries;
(b) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(c) sell, lease, or transfer any of its properties or assets to the
Company, or any of its Restricted Subsidiaries;
except (in each case) for such encumbrances or restrictions existing under or by
reason of:
(1) contractual encumbrances or restrictions in effect on the
Issuance Date, including pursuant to the Senior Credit Facility and its
related documentation;
(2) this Indenture and the Notes;
(3) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature discussed in
clause (c) above on the property so acquired;
(4) applicable law or any applicable rule, regulation or order;
(5) any agreement or other instrument of a Person acquired by the
Company or any Restricted Subsidiary in existence at the time of such
acquisition (but not created in contemplation thereof), which encumbrance
or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of
the Person, so acquired;
(6) contracts for the sale of assets, including, without limitation
customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary;
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(7) secured Indebtedness otherwise permitted to be incurred pursuant
to Sections 1010 and 1011 that limit the right of the debtor to dispose of
the assets securing such Indebtedness;
(8) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business;
(9) other Indebtedness of Foreign Subsidiaries permitted to be
incurred subsequent to the Issuance Date pursuant to Section 1010;
(10) customary provisions in joint venture agreements and other
similar agreements entered into in the ordinary course of business;
(11) customary provisions contained in leases and other agreements
entered into in the ordinary course of business;
(12) restrictions created in connection with any Real Estate
Financing Transaction that, in the good faith determination of the Board
of Directors of the Company, are necessary or advisable to effect such
Real Estate Financing Transaction; and
(13) any encumbrances or restrictions of the type referred to in
clauses (a), (b) and (c) above imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements
or refinancings of the contracts, instruments or obligations referred to
in clauses (c)(1) through (c)(12) above, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the
Company's Board of Directors, no more restrictive with respect to such
dividend and other payment restrictions than those contained in the
dividend or other payment restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.
SECTION 1014. Limitation on Guarantees of Indebtedness by Restricted
Subsidiaries.
(a) The Company will not permit any Restricted Subsidiary to
guarantee the payment of any Indebtedness of the Company or any Indebtedness of
any other Restricted Subsidiary unless (i) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to the Indenture
providing for a Guarantee of payment of the Notes by such Restricted Subsidiary
except that (A) if the Notes are subordinated in right of payment to such
Indebtedness, the Guarantee under the supplemental indenture shall be
subordinated to such
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Restricted Subsidiary's guarantee with respect to such Indebtedness
substantially to the same extent as the Notes are subordinated to such
Indebtedness under the Indenture and (B) if such Indebtedness is by its express
terms subordinated in right of payment to the Notes, any such guarantee of such
Restricted Subsidiary with respect to such Indebtedness shall be subordinated in
right of payment to such Restricted Subsidiary's Guarantee with respect to the
Notes substantially to the same extent as such Indebtedness is subordinated to
the Notes; (ii) such Restricted Subsidiary waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such Restricted
Subsidiary under its Guarantee; and (iii) such Restricted Subsidiary shall
deliver to the Trustee an Opinion of Counsel to the effect that (A) such
Guarantee of the Notes has been duly executed and authorized and (B) such
Guarantee of the Notes constitutes a valid, binding and enforceable obligation
of such Restricted Subsidiary, except insofar as enforcement thereof may be
limited by bankruptcy, insolvency or similar laws (including, without
limitation, all laws relating to fraudulent transfers) and except insofar as
enforcement thereof is subject to general principles of equity; provided that
this paragraph (a) shall not be applicable to any guarantee of any Restricted
Subsidiary (x) that (A) existed at the time such Person became a Restricted
Subsidiary of the Company and (B) was not incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary of the Company or
(y) that guarantees the payment of Obligations of the Company or any Restricted
Subsidiary under the Senior Credit Facility or any other bank facility which is
designated as Senior Indebtedness and any refunding, refinancing or replacement
thereof, in whole or in part, provided that such refunding, refinancing or
replacement thereof constitutes Senior Indebtedness and is not incurred pursuant
to a registered offering of securities under the Securities Act or a private
placement of securities (including under Rule 144A) pursuant to an exemption
from the registration requirements of the Securities Act, which private
placement provides for registration rights under the Securities Act (any
guarantee excluded by operations of this clause (y) being an "Excluded
Guarantee").
(b) Notwithstanding the foregoing and the other provisions of this
Indenture, any Guarantee by a Restricted Subsidiary of the Notes shall provide
by its terms that it shall be automatically and unconditionally released and
discharged upon (i) any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Capital Stock in, or all or
substantially all the assets of, such Restricted Subsidiary (which sale,
exchange or transfer is not prohibited hereunder) or (ii) the release or
discharge of the guarantee which resulted in the creation of such Guarantee,
except a discharge or release by or as a result of payment under such guarantee.
SECTION 1015. Limitation on Other Senior Subordinated Indebtedness.
The Company will not, and will not permit any Guarantor to, directly
or indirectly, incur any Indebtedness (including Acquired Indebtedness) that is
subordinate in right of payment
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to any Indebtedness of the Company or any Indebtedness of any Guarantor, as the
case may be, unless such Indebtedness is either (a) pari passu in right of
payment with the Notes or such Guarantor's Guarantee, as the case may be or (b)
subordinate in right of payment to the Notes, or such Guarantor's Guarantee, as
the case may be, in the same manner and at least to the same extent as the Notes
are subordinate to Senior Indebtedness or such Guarantor's Guarantee is
subordinate to such Guarantor's Senior Indebtedness, as the case may be.
SECTION 1016. Purchase of Notes upon a Change of Control.
(a) Upon the occurrence of a Change of Control, the Company will
make an offer to purchase all or any part (equal to $1,000 or an integral
multiple thereof) of the Notes pursuant to the offer described below (the
"Change of Control Offer") at a price in cash (the "Change of Control Payment")
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of purchase.
(b) Within 30 days following any Change of Control, the Company
shall give to each Holder of the Notes, with a copy to the Trustee, in the
manner provided in Section 106 a notice stating:
(1) a Change of Control Offer is being made pursuant to the covenant
entitled "Purchase of Notes upon Change of Control," and that all Notes
properly tendered pursuant to such Change of Control Offer will be
accepted for payment;
(2) the purchase price and the purchase date, which will be no
earlier than 30 days nor later than 60 days from the date such notice is
mailed, except as may be otherwise required by applicable law (the "Change
of Control Payment Date");
(3) any Note not properly tendered will remain outstanding and
continue to accrue interest;
(4) unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change of
Control Offer will cease to accrue interest on the Change of Control
Payment Date;
(5) Holders electing to have any Notes purchased pursuant to a
Change of Control Offer will be required to surrender the Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes completed, to the Paying Agent and at the address specified in the
notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date;
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(6) Holders will be entitled to withdraw their tendered Notes and
their election to require the Company to purchase such Notes, provided
that the Paying Agent receives, not later than the close of business on
the last day of the offer period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes tendered for purchase, and a statement that such Holder is
withdrawing such Holder's tendered Notes and his election to have such
Notes purchased;
(7) that Holders whose Notes are being purchased only in part will
be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof; and
(8) any additional instructions a Holder must follow in order to
have its Notes repurchased in accordance with this Section 1016.
(c) Prior to complying with the provisions of this Section 1016, but
in any event within 30 days following a Change of Control, the Company will
either repay all outstanding amounts under the Senior Credit Facility or offer
to repay in full all outstanding amounts under the Senior Credit Facility and
repay the Obligations held by each lender who has accepted such offer or obtain
the requisite consents, if any, under the Senior Credit Facility to permit the
repurchase of the Notes required by this Section 1016. The Company will comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws or
regulations are applicable in connection with the repurchase of the Notes
pursuant to a Change of Control Offer. To the extent that the provisions of any
securities laws or regulations conflict with the provisions hereunder, the
Company will comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations described hereunder by
virtue thereof.
(d) On the Change of Control Payment Date, the Company shall, to the
extent permitted by law,
(i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer,
(ii) deposit with the Paying Agent an amount equal to the aggregate
Change of Control Payment in respect of all Notes or portions thereof so
tendered and
(iii) deliver, or cause to be delivered, to the Trustee for
cancellation the Notes so accepted together with an Officers' Certificate
stating that such Notes or portions thereof have been tendered to and
purchased by the Company.
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(e) The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
(f) The Paying Agent shall promptly mail to each Holder of Notes the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any, provided that each such
new Note will be in a principal amount of $1,000 or an integral multiple
thereof.
SECTION 1017. Limitation on Sales of Assets.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, cause, make or suffer to exist an Asset Sale, unless (x) the
Company, or its Restricted Subsidiaries, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by the Company) of the assets sold or
otherwise disposed of and (y) at least 75% of the proceeds from such Asset Sale
when received consists of cash or Cash Equivalents; provided that the amount of
(a) any liabilities (as shown on the Company's or such Restricted Subsidiary's
most recent balance sheet) of the Company or any Restricted Subsidiary (other
than liabilities that are by their terms subordinated to the Notes) that are
assumed by the transferee of any such assets, (b) any notes or other obligations
received by the Company or any such Restricted Subsidiary from such transferee
that are converted by the Company or such Restricted Subsidiary into cash within
180 days after such Asset Sale (to the extent of the cash received) and (c) any
Designated Noncash Consideration received by the Company or any of its
Restricted Subsidiaries in such Asset Sale having an aggregate fair market
value, taken together with all other Designated Noncash Consideration received
pursuant to this clause (c) that is at that time outstanding, not to exceed the
greater of (x) $100.0 million or (y) 20% of Total Assets at the time of the
receipt of such Designated Noncash Consideration (with the fair market value of
each item of Designated Noncash Consideration being measured at the time
received and without giving effect to subsequent changes in value), shall be
deemed to be cash for the purposes of this provision.
Within 30 months after the Company's or any Restricted Subsidiary's
receipt of the Net Proceeds of any Asset Sale, the Company or such Restricted
Subsidiary may apply the Net Proceeds from such Asset Sale, at its option, (i)
to permanently reduce Obligations under the Senior Credit Facility (and to
correspondingly reduce commitments with respect thereto) or other Senior
Indebtedness or Pari Passu Indebtedness (provided that if the Company shall so
reduce Obligations under Pari Passu Indebtedness, it will equally and ratably
reduce Obligations under the Notes if the Notes are then prepayable or, if the
Notes may not be then prepaid, the Company shall make an offer (in accordance
with the procedures set forth below for an Asset Sale Offer) to all Holders to
purchase at 100% of the principal amount thereof the amount of Notes that would
otherwise be prepaid), (ii) to an investment in any one or more businesses,
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capital expenditures or acquisitions of other assets in each case, used or
useful in a Similar Business and/or (iii) to an investment in properties or
assets that replace the properties and assets that are the subject of such Asset
Sale. Pending the final application of any such Net Proceeds, the Company or
such Restricted Subsidiary may temporarily reduce Indebtedness under a revolving
credit facility, if any, or otherwise invest such Net Proceeds in Cash
Equivalents or Investment Grade Securities. The Indenture will provide that any
Net Proceeds from the Asset Sale that are not invested as provided and within
the time period set forth in the first sentence of this paragraph will be deemed
to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $15 million,
the Company shall make an offer to all Holders of Notes (an "Asset Sale Offer")
to purchase the maximum principal amount of Notes, that is an integral multiple
of $1,000, that may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the date fixed for the closing of such offer
(the "Offered Price"). Within 10 Business Days after the date on which the
aggregate amount of Excess Proceeds exceeds $15 million, the Company shall give
to each Holder of the Notes, with a copy to the Trustee, in the manner provided
in Section 106 a notice stating:
(i) that the Holder has the right to require the Company to
repurchase such Holder's Notes at the Offered Price, subject to proration
in the event the Excess Proceeds are less than the aggregate Offered Price
of all Notes tendered;
(ii) the date of purchase of Notes pursuant to the Asset Sale Offer
(the "Asset Sale Purchase Date"), which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed;
(iii) that the Offered Price will be paid to Holders electing to
have Notes purchased on the Asset Sale Purchase Date, provided that a
Holder must surrender its Note to the Paying Agent at the address
specified in the notice prior to the close of business at least five
Business Days prior to the Asset Sale Purchase Date;
(iv) any Note not tendered will continue to accrue interest pursuant
to its terms;
(v) that unless the Company defaults in the payment of the Offered
Price, any Note accepted for payment pursuant to the Asset Sale Offer
shall cease to accrue interest on and after the Asset Sale Purchase Date;
(vi) that Holders will be entitled to withdraw their tendered Notes
and their election to require the Company to purchase such Notes, provided
that the Company receives, not later than the close of business on the
third Business Day preceding the Asset Sale Purchase Date, a telegram,
telex, facsimile transmission or letter setting forth the
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name of the Holder, the principal amount of the Notes tendered for
purchase, and a statement that such Holder is withdrawing its election to
have such Notes purchased;
(vii) that the Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered; which unpurchased portion must be equal
to $1,000 in principal amount or an integral multiple thereof; and
(viii) the instructions a Holder must follow in order to have his
Notes purchased in accordance with this Section 1017.
To the extent that the aggregate amount of Notes tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased in the
manner described in Section 1104. Upon completion of any such Asset Sale Offer,
the amount of Excess Proceeds shall be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section 1017, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
this Indenture.
SECTION 1018. Statement by Officers as to Default.
(a) The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing officers with a view to
determining whether it has kept, observed, performed and fulfilled, and has
caused each of its Subsidiaries to keep, observe, perform and fulfill its
obligations under this Indenture and further stating, as to each such officer
signing such certificate, that, to the best of his or her knowledge, the Company
during such preceding fiscal year has kept, observed, performed and fulfilled,
and has caused each of its Subsidiaries to keep, observe, perform and fulfill
each and every such covenant contained in this Indenture and no Default or Event
of Default occurred during such year and at the date of such certificate there
is no Default or Event of Default which has occurred and is continuing or, if
such signers do know of such Default or Event of Default, the certificate shall
describe its status, with particularity and that, to the best of his or her
knowledge, no event has occurred and remains by reason of which payments on the
account of the principal of or interest, if any, on the Notes
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is prohibited or if such event has occurred, a description of the event and what
action each is taking or proposes to take with respect thereto. The Officers'
Certificate shall also notify the Trustee should the Company elect to change the
manner in which it fixes its fiscal year end. For purposes of this Section
1018(a), such compliance shall be determined without regard to any period of
grace or requirement of notice under this Indenture.
(b) When any Default has occurred and is continuing under this
Indenture, or if the trustee for or the holder of any other evidence of
Indebtedness of the Company or any Subsidiary gives any notice or takes any
other action with respect to a claimed default (other than with respect to
Indebtedness in the principal amount of less than $10 million), the Company
shall deliver to the Trustee by registered or certified mail or facsimile
transmission an Officers' Certificate specifying such event, notice or other
action within five Business Days of its occurrence.
SECTION 1019. Commission Reports and Reports to Holders.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on
an annual and quarterly basis on forms provided for such annual and quarterly
reporting pursuant to rules and regulations promulgated by the Commission, the
Company will file with the Commission (and provide the Trustee and Holders with
copies thereof, without cost to each Holder, within 15 days after it files them
with the Commission), (a) within 90 days after the end of each fiscal year,
annual reports on Form 10-K (or any successor or comparable form) containing the
information required to be contained therein (or required in such successor or
comparable form); (b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, reports on Form 10-Q (or any successor or
comparable form); (c) promptly from time to time after the occurrence of an
event required to be therein reported, such other reports on Form 8-K (or any
successor or comparable form); and (d) any other information, documents and
other reports which the Company would be required to file with the Commission if
it were subject to Section 13 or 15(d) of the Exchange Act; provided, however,
the Company shall not be so obligated to file such reports with the Commission
if the Commission does not permit such filing, in which event the Company will
make available such information to prospective purchasers of Notes, in addition
to providing such information to the Trustee and the Holders, in each case
within 15 days after the time the Company would be required to file such
information with the Commission, if it were subject to Sections 13 or 15(d) of
the Exchange Act.
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Redemption.
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The Notes may or shall, as the case may be, be redeemed, as a whole
or from time to time in part, subject to the conditions and at the Redemption
Prices specified in the form of Note, together with accrued interest to the
Redemption Date.
SECTION 1102. Applicability of Article.
Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
SECTION 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Notes pursuant to Section
1101 shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, 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 and of
the principal amount of Notes to be redeemed and shall deliver to the Trustee
such documentation and records as shall enable the Trustee to select the Notes
to be redeemed pursuant to Section 1104.
SECTION 1104. 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, in compliance with the requirements of the principal national
securities exchange, if any, on which such Notes are listed, or, if such Notes
are not so listed, on a pro rata basis, by lot or by such other method as the
Trustee shall deem fair and appropriate (and in such manner as complies with
applicable legal requirements) and which may provide for the selection for
redemption of portions of the principal of Notes; provided, however, that no
such partial redemption shall reduce the portion of the principal amount of a
Note not redeemed to less than $1,000.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Notes shall relate, in the
case of any Note redeemed or to be redeemed only in part, to the portion of the
principal amount of such Note which has been or is to be redeemed.
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SECTION 1105. Notice of Redemption.
Notice of redemption shall be given in the manner provided for in
Section 106 not less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder of Notes to be redeemed. The Trustee shall give notice of
redemption in the Company's name and at the Company's expense; provided,
however, that the Company shall deliver to the Trustee, at least 45 days prior
to the Redemption Date, an Officers' Certificate requesting that the Trustee
give such notice and setting forth the information to be stated in such notice
as provided in the following items.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section 1107, if any,
(3) if less than all Outstanding Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption,
(4) in case any Note is to be redeemed in part only, the notice
which relates to such Note shall state that on and after the Redemption
Date, upon surrender of such Note, the holder will receive, without
charge, a new Note or Notes of authorized denominations for the principal
amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price (and accrued
interest, if any, to the Redemption Date payable as provided in Section
1107) will become due and payable upon each such Note, or the portion
thereof, to be redeemed, and, unless the Company defaults in making the
redemption payment, that interest on Notes called for redemption (or the
portion thereof) will cease to accrue on and after said date,
(6) the place or places where such Notes are to be surrendered for
payment of the Redemption Price and accrued interest, if any,
(7) the name and address of the Paying Agent,
(8) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price,
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(9) the CUSIP number, and that no representation is made as to the
accuracy or correctness of the CUSIP number, if any, listed in such notice
or printed on the Notes, and
(10) the paragraph of the Notes pursuant to which the Notes are to
be redeemed.
SECTION 1106. 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 accrued interest on, all
the Notes which are to be redeemed on that date.
SECTION 1107. 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 (together with accrued interest, if any, to
the Redemption Date), and from and after such 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, if any, to the Redemption
Date; provided, however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall 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 Regular Record Date or Special Record Date, as the case
may be, according to their terms and the provisions of Section 311.
If any Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Notes.
SECTION 1108. Notes Redeemed in Part.
Any Note which is to be redeemed only in part (pursuant to the
provisions of this Article) shall be surrendered at the office or agency of the
Company maintained for such purpose pursuant to Section 1002 (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 such Holders 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, of any
authorized denomination as requested by such Holder, in an aggregate principal
amount equal to and in exchange for the unredeemed
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portion of the principal of the Note so surrendered, provided, that each such
new Note will be in a principal amount of $1,000 or integral multiple thereof.
ARTICLE TWELVE
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. Company's Option to Effect Legal Defeasance or
Covenant Defeasance.
The Company and the Guarantors may, at their option by Board
Resolution, at any time, with respect to the Notes, elect to have either Section
1202 or Section 1203 be applied to all Outstanding Notes upon compliance with
the conditions set forth below in this Article Twelve.
SECTION 1202. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 1201 of the option
applicable to this Section 1202, the Company and any Guarantor shall be deemed
to have been discharged from its obligations with respect to all Outstanding
Notes on the date the conditions set forth in Section 1204 are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means
that the Company and any such Guarantor shall be deemed to have paid and
discharged the entire Indebtedness represented by the Outstanding Notes, which
shall thereafter be deemed to be "Outstanding" only for the purposes of Section
1205 and the other Sections of this Indenture referred to in (A) and (B) below,
and to have satisfied all its other obligations under such Notes and this
Indenture insofar as such Notes are concerned (and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of Outstanding Notes to receive, solely
from the trust fund described in Section 1204 and as more fully set forth in
such Section, payments in respect of the principal of (and premium, if any, on)
and interest on such Notes when such payments are due, (B) the Company's
obligations with respect to such Notes under Sections 304, 305, 310, 1002 and
1003, (C) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, and the Company's obligations in connection therewith and (D) this
Article Twelve.
Subject to compliance with this Article Twelve, the Company may
exercise its option under this Section 1202 notwithstanding the prior exercise
of its option under Section 1203 with respect to the Notes.
SECTION 1203. Covenant Defeasance.
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Upon the Company's exercise under Section 1201 of the option
applicable to this Section 1203, the Company shall be released from its
obligations under any covenant contained in Section 801 and in Sections 1009
through 1019 with respect to the Outstanding Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"),
and the Notes shall thereafter be deemed not to be "Outstanding" for the
purposes of any direction, waiver, consent or declaration or Act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "Outstanding" for all other purposes hereunder (it being
understood that such Notes will not be outstanding for accounting purposes). For
this purpose, such Covenant Defeasance means that, with respect to the
Outstanding 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
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
501(iii), but, except as specified above, the remainder of this Indenture and
such Notes shall be unaffected thereby.
SECTION 1204. Conditions to Legal Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 1202 or Section 1203 to the Outstanding Notes:
(i) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of the Indenture who shall agree to comply with the provisions of this
Article Twelve 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 benefit of the Holders of such Notes, cash in
U.S. dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants selected by
the Company, to pay the principal of, premium, if any, and interest due on
the Outstanding Notes on the Stated Maturity or on the applicable
Redemption Date as the case may be, of such principal, premium, if any, or
interest on the Outstanding Notes;
(ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee (which opinion may be subject to
customary assumptions and exclusions) confirming that (A) the Company has
received from, or there has been published by, the United States Internal
Revenue Service a ruling or (B) since the Issuance Date, there has been a
change in the applicable U.S. federal income tax law, in either case to
the effect that, and based thereon such Opinion of Counsel in the United
States (which opinion may be subject to customary assumptions and
exclusions) shall confirm that the Holders of the Outstanding
<PAGE>
122
Notes will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of such Legal Defeasance and will be subject to U.S.
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not
occurred;
(iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders of the Outstanding Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a
result of such Covenant Defeasance and will be subject to such tax on the
same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default
from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company
or any Guarantor is a party or by which the Company or any Guarantor is
bound;
(vi) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that, as of the date of such opinion and subject to
customary assumptions and exclusions following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally under any applicable U.S. federal or state law, and that the
Trustee has a perfected security interest in such trust funds for the
ratable benefit of the Holders;
(vii) 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 defeating, hindering, delaying or defrauding any creditors of
the Company or any Guarantor or others; and
(viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States (which Opinion
of Counsel may be subject to customary assumptions and exclusions) each
stating that all conditions precedent provided for or relating to the
Legal Defeasance or the Covenant Defeasance, as the case may be, have been
complied with.
<PAGE>
123
SECTION 1205. Deposited Money and U.S. Government Securities to Be
Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all
money and Government Securities (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee, collectively for purposes of this
Section 1205, the "Trustee") pursuant to Section 1204 in respect of the
Outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such 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 Holders of such Notes of
all sums due and to become due thereon in respect of principal (and premium, if
any) and interest, but such money need not be segregated from other funds except
to the extent required by law. Money and Government Securities so held in trust
are not subject to Article Thirteen.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the Government Securities
deposited pursuant to Section 1204 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 the Outstanding Notes.
Anything in this Article Twelve 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 Securities held by it as provided in
Section 1204 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 an equivalent legal defeasance or covenant
defeasance, as applicable, in accordance with this Article.
SECTION 1206. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money or
Government Securities in accordance with Section 1205 by reason of any legal
proceeding or by any reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 1202 or 1203, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
1205; provided, however, that if the Company makes any payment of principal of
(or premium, if any) or interest on any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money and Government Securities held
by the Trustee or Paying Agent.
<PAGE>
124
ARTICLE THIRTEEN
SUBORDINATION OF NOTES
SECTION 1301. Notes Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Note, by his
acceptance thereof, likewise covenants and agrees, for the benefit of the
holders, from time to time, of Senior Indebtedness that, to the extent and in
the manner hereinafter set forth in this Article, the Indebtedness represented
by the Notes and the payment of the principal of (and premium, if any) and
interest on each and all of the Notes and all other Subordinated Note
Obligations are hereby expressly made subordinate and subject in right of
payment as provided in this Article to the prior payment in full in cash or cash
equivalents of all Senior Indebtedness, whether outstanding on the Issuance Date
or thereafter incurred, created, assumed or, except as set forth in Section
1014, guaranteed.
SECTION 1302. Payment over of Proceeds upon Dissolution, Etc.
Upon any distribution to creditors of the Company in a liquidation
or dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or cash equivalents of all Obligations due in
respect of such Senior Indebtedness before the Holders are entitled to
receive any payment with respect to the Subordinated Note Obligations
(except that Holders may receive (i) shares of stock and any debt
securities that are subordinated at least to the same extent as the Notes
to (a) Senior Indebtedness and (b) any securities issued in exchange for
Senior Indebtedness and (ii) payments and other distributions made from
the trusts described in Article Twelve); and
(2) until all Obligations with respect to Senior Indebtedness (as
provided in subsection (1) above) are paid in full in cash or cash
equivalents, any distribution to which Holders would be entitled but for
this Article shall be made to holders of Senior Indebtedness (except that
Holders may receive (i) shares of stock and any debt securities that are
subordinated to at least the same extent as the Notes to (a) Senior
Indebtedness and (b) any securities issued in exchange for Senior
Indebtedness and (ii) payments and other distributions made from the
trusts described in Article Twelve) as their interests may appear.
<PAGE>
125
SECTION 1303. Suspension of Payment When Senior Indebtedness in
Default.
The Company may not make any payment or distribution to the Trustee
or any Holder in respect of Subordinated Note Obligations and may not acquire
from the Trustee or any Holder any Notes for cash or property (other than (i)
securities that are subordinated to at least the same extent as the Notes to (a)
Senior Indebtedness and (b) any securities issued in exchange for Senior
Indebtedness and (ii) payments and other distributions made from the trusts
described in Article Twelve) until all Senior Indebtedness has been paid in full
in cash or cash equivalents if:
(i) a default in the payment of any principal of, premium, if any,
or interest on, or of unreimbursed amounts under drawn letters of credit
or in respect of banker's acceptances or fees relating to letters of
credit or banker's acceptances constituting, Designated Senior
Indebtedness occurs and is continuing beyond any applicable grace period
in the agreement, indenture or other document governing such Designated
Senior Indebtedness (a "payment default"); or
(ii) a default, other than a payment default, on Designated Senior
Indebtedness occurs and is continuing that then permits holders of the
Designated Senior Indebtedness to accelerate its maturity (a "non-payment
default") and the Trustee receives a notice of the default (a "Payment
Blockage Notice") from a Person who may give it pursuant to Section 1313
hereof. No new period of payment blockage may be commenced unless and
until 365 days have elapsed since the effectiveness of the immediately
prior Payment Blockage Notice. However, if any Payment Blockage Notice
within such 365-day period is given by or on behalf of any holders of
Designated Senior Indebtedness (other than the Bank Agent under the Senior
Credit Facility), the Bank Agent may give another Payment Blockage Notice
within such period. In no event, however, may the total number of days
during which any Payment Blockage Period or Periods is in effect exceed
179 days in the aggregate during any 365 consecutive day period. No
nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default shall
have been cured or waived for a period of not less than 90 days.
The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(1) in the case of a payment default, upon the date on which such
default is cured or waived or shall have ceased to exist or such
Designated Senior Indebtedness shall have been discharged or paid in full
in cash or cash equivalents, or
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126
(2) in case of a nonpayment default, the earlier of (x) the date on
which such nonpayment default is cured or waived, (y) 179 days after the
date on which the applicable Payment Blockage Notice is received (the
"Payment Blockage Period") or (z) the date such Payment Blockage Period
shall be terminated by written notice to the Trustee from the requisite
holders of such Designated Senior Indebtedness necessary to terminate such
period or from their Representative, after which the Company shall resume
making any and all required payments in respect of the Notes, including
any missed payments,
if this Article otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 1304. Acceleration of Notes.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Indebtedness of the
acceleration.
SECTION 1305. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment of
any Subordinated Note Obligations at a time when such payment is prohibited by
Sections 1302 or 1303, such payment shall be held by the Trustee or such Holder,
for the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Indebtedness as their interests may appear or
to their Representative under the indenture or other agreement (if any) pursuant
to which such Senior Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay such Senior Indebtedness in full
in cash or cash equivalents in accordance with their terms, after giving effect
to any concurrent payment or distribution to or for the benefit of holders of
Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article Thirteen, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into the Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
Thirteen, except if such payment is made as a result of the willful misconduct
or gross negligence of the Trustee.
<PAGE>
127
SECTION 1306. Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent
of any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes that violate this Article, but failure to give such
notice shall not affect the subordination of the Notes to the Senior
Indebtedness as provided in this Article Thirteen.
SECTION 1307. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or
in any of the Notes shall prevent the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1302 or under the conditions
described in Section 1303, from making payments at any time of principal of (and
premium, if any, on) or interest on the Notes.
SECTION 1308. Subrogation to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full of all Senior Indebtedness in cash or
cash equivalents, the Holders shall be subrogated (equally and ratably with the
holders of all Pari Passu Indebtedness of the Company) to the rights of the
holders of such Senior Indebtedness to receive payments and distributions of
cash, property and securities applicable to the Senior Indebtedness until the
Subordinated Note Obligations shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of Senior Indebtedness
of any cash, property or securities to which the Holders of the Notes or the
Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Indebtedness by Holders of the Notes or on their behalf or by the
Trustee, shall, as among the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Notes, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness; it
being understood that the provisions of this Article are intended solely for the
purpose of determining the relative rights of the Holders of the Notes, on the
one hand, and the holders of Senior Indebtedness, on the other hand.
SECTION 1309. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Notes is intended to or shall
(a) impair, as between the Company and the Holders, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders the
principal of (and premium, if any) and interest on the Notes as and when the
same shall become due and payable
<PAGE>
128
in accordance with their terms; or (b) affect the relative rights against the
Company of the Holders and creditors of the Company other than their rights in
relation to holders of Senior Indebtedness; or (c) prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
of the holders of Senior Indebtedness. If the Company fails because of this
Article to pay principal (or premium, if any) or interest on a Note on the due
date, the failure is still a Default or Event of Default.
SECTION 1310. Trustee to Effectuate Subordination.
Each Holder of a Note by his acceptance thereof authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and appoints the Trustee his attorney-in-fact for any and all such
purposes. If the Trustee does not file a proper proof of claim or proof of debt
in the form required in any proceeding referred to in Section 504 hereof at
least 30 days before the expiration of the time to file such claim, the Bank
Agent (if the Senior Credit Facility is still outstanding) is hereby authorized
to file an appropriate claim for and on behalf of the Holders of the Notes.
SECTION 1311. Subordination May Not Be Impaired by Company.
No right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
SECTION 1312. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders
of Senior Indebtedness, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of the Company referred
to in this Article Thirteen, the Trustee and the Holders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other acts pertinent thereto or to this Article
Thirteen.
<PAGE>
129
SECTION 1313. Notice to Trustee.
(a) The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Notes. Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Notes, unless and
until the Trustee shall have received written notice thereof from the Company,
the Bank Agent or a holder of Senior Indebtedness or from any trustee, fiduciary
or agent therefor; and, prior to the receipt of any such written notice, the
Trustee, subject to TIA Sections 315(a) through 315(d), shall be entitled in all
respects to assume that no such facts exist; provided, however, that, if the
Trustee shall not have received the notice provided for in this Section at least
three Business Days prior to the date upon which by the terms hereof any money
may become payable for any purpose (including, without limitation, the payment
of the principal of (and premium, if any) or interest on any Note), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within three Business Days
prior to such date.
(b) Subject to TIA Sections 315(a) through 315(d), the Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor) to establish that such notice has been given by a
holder of Senior Indebtedness (or a trustee, fiduciary or agent therefor). In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 1314. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of the Company referred
to in this Article, the Trustee, subject to TIA Sections 315(a) through 315(d),
and the Holders of the Notes shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person
<PAGE>
130
making such payment or distribution, delivered to the Trustee or to the Holders
of Notes, for the purpose of ascertaining the Persons entitled to participate in
such payment or distribution, the holders of Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article; provided that such court, trustee, receiver, custodian,
assignee, agent or other Person has been apprised of, or the order, decree or
certificate makes reference to, the provisions of this Article.
SECTION 1315. Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustees' Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder. Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 607.
SECTION 1316. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee; provided,
however, that Section 1315 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 1317. No Suspension of Remedies.
Nothing contained in this Article shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Article Five or to pursue any rights or remedies hereunder
or under applicable law, except as provided in Article Five.
SECTION 1318. Modification of Terms of Senior Indebtedness.
Any renewal or extension of the time of payment of any Senior
Indebtedness or the exercise by the holders of Senior Indebtedness of any of
their rights under any instrument creating or evidencing Senior Indebtedness,
including, without limitation, the waiver of default thereunder, may be made or
done all without notice to or assent from the Holders or the Trustee.
<PAGE>
131
No compromise, alteration, amendment, modification, extension,
renewal or other change of, or waiver, consent or other action in respect of,
any liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of any indenture or other instrument under which any
Senior Indebtedness is outstanding or of such Senior Indebtedness, whether or
not such release is in accordance with the provisions of any applicable
document, shall in any way alter or affect any of the provisions of this Article
Thirteen or of the Notes relating to the subordination thereof.
SECTION 1319. Certain Terms.
For purposes of this Article Thirteen, (i) "cash equivalents" means
Government Securities with maturities of nine months or less and (ii) unless the
context clearly indicates otherwise, any payment or distribution to the Trustee
or any Holder in respect of any Subordinated Note Obligation shall include any
payment or distribution of any kind or character from any source, whether in
cash, property or securities, by set-off or otherwise, including any repurchase,
redemption or acquisition of the Notes and any direct or indirect payment
payable by reason of any other Indebtedness or Obligation being subordinated to
the Notes.
SECTION 1320. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments
from cash or the proceeds of Government Securities held in trust under Article
Twelve hereof by the Trustee (or other qualifying trustee) and which were
deposited in accordance with the terms of Article Twelve hereof and not in
violation of Section 1303 hereof for the payment of principal of (and premium,
if any) and interest on the Notes shall not be subordinated to the prior payment
of any Senior Indebtedness or subject to the restrictions set forth in this
Article Thirteen, and none of the Holders shall be obligated to pay over any
such amount to the Company or any holder of Senior Indebtedness or any other
creditor of the Company.
This Indenture may be signed 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 Indenture.
<PAGE>
132
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
KINDERCARE LEARNING CENTERS,
INC.,
a Delaware corporation
By /s/ Philip L. Maslowe
--------------------------------------
Name: Philip L. Maslowe
Title: Executive Vice President
and Chief Financial Officer
MARINE MIDLAND BANK,
as Trustee
By /s/ Eileen M. Hughes
--------------------------------------
Name: Eileen M. Hughes
Title: Assistant Vice President
- --------------------------------------------------------------------------------
EXECUTION COPY
KINDERCARE LEARNING
CENTERS, INC.
$390,000,000
Credit Agreement
February 13, 1997
The Several Lenders
from Time to Time Parties thereto
Wells Fargo Bank, N.A.
as Documentation
Bankers Trust Company
as Syndication Agent
Chase Securities Inc.
as Arranger
The chase Manhattan Bank
as Administrative Agent
[Logo] CHASE
================================================================================
<PAGE>
EXECUTION COPY
================================================================================
CREDIT AGREEMENT
among
KINDERCARE LEARNING CENTERS, INC.
The Several Lenders
from Time to Time Parties Hereto
THE CHASE MANHATTAN BANK,
as Administrative Agent
BANKERS TRUST COMPANY,
as Syndication Agent
and
WELLS FARGO BANK, N.A.,
as Documentation Agent
Dated as of February 13, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Definitions................................................ 2
SECTION 2. Amount and Terms of Credit................................. 32
2.1 Commitments................................................... 32
2.2 Minimum Amount of Each Borrowing; Maximum Number of
Borrowings.................................................... 33
2.3 Notice of Borrowing........................................... 33
2.4 Disbursement of Funds......................................... 35
2.5 Repayment of Loans; Evidence of Debt.......................... 35
2.6 Conversions and Continuations................................. 36
2.7 Pro Rata Borrowings........................................... 37
2.8 Interest...................................................... 37
2.9 Interest Periods.............................................. 38
2.10 Increased Costs, Illegality, etc.............................. 39
2.11 Compensation.................................................. 41
2.12 Change of Lending Office...................................... 41
2.13 Notice of Certain Costs....................................... 42
SECTION 3. Letters of Credit.......................................... 42
3.1 Letters of Credit............................................. 42
3.2 Letter of Credit Requests..................................... 42
3.3 Letter of Credit Participations............................... 43
3.4 Agreement to Repay Letter of Credit Drawings.................. 45
3.5 Increased Costs............................................... 46
3.6 Successor Letter of Credit Issuer............................. 46
SECTION 4. Fees; Commitments.......................................... 47
4.1 Fees.......................................................... 47
4.2 Voluntary Reduction of Revolving Credit Commitments........... 48
4.3 Mandatory Termination of Commitments.......................... 48
SECTION 5. Payments................................................... 49
5.1 Voluntary Prepayments......................................... 49
5.2 Mandatory Prepayments......................................... 49
5.3 Method and Place of Payment................................... 52
5.4 Net Payments.................................................. 52
5.5 Computations of Interest and Fees............................. 54
SECTION 6. Conditions Precedent to Initial Borrowing.................. 55
6.1 Credit Documents.............................................. 55
6.2 Closing Certificate........................................... 55
6.3 Corporate Proceedings of Each Credit Party.................... 55
6.4 Corporate Documents........................................... 55
6.5 No Material Adverse Change.................................... 55
6.6 Fees.......................................................... 55
6.7 Equity Contribution........................................... 55
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Page
6.8 Merger........................................................ 55
6.9 Other Indebtedness............................................ 56
6.10 Closing Date Balance Sheet.................................... 56
6.11 Solvency Letter............................................... 56
6.12 Required Approvals............................................ 56
6.13 Existing Credit Agreement..................................... 56
6.14 Legal Opinion................................................. 56
6.15 Subordinated Notes............................................ 56
SECTION 7. Conditions Precedent to All Credit Events.................. 57
7.1 No Default; Representations and Warranties.................... 57
7.2 Notice of Borrowing; Letter of Credit Request................. 57
SECTION 8. Representations, Warranties and Agreements................. 57
8.1 Corporate Status.............................................. 57
8.2 Corporate Power and Authority................................. 57
8.3 No Violation.................................................. 58
8.4 Litigation.................................................... 58
8.5 Margin Regulations............................................ 58
8.6 Governmental Approvals........................................ 58
8.7 Investment Company Act........................................ 58
8.8 True and Complete Disclosure.................................. 58
8.9 Financial Condition; Financial Statements..................... 59
8.10 Tax Returns and Payments...................................... 59
8.11 Compliance with ERISA......................................... 59
8.12 Subsidiaries.................................................. 60
8.13 Patents, etc.................................................. 60
8.14 Environmental Laws............................................ 60
8.15 Properties.................................................... 60
SECTION 9. Affirmative Covenants...................................... 61
9.1 Information Covenants......................................... 61
9.2 Books, Records and Inspections................................ 63
9.3 Maintenance of Insurance...................................... 63
9.4 Payment of Taxes.............................................. 63
9.5 Consolidated Corporate Franchises............................. 64
9.6 Compliance with Statutes, Obligations, etc.................... 64
9.7 ERISA......................................................... 64
9.8 Good Repair................................................... 64
9.9 Transactions with Affiliates.................................. 65
9.10 End of Fiscal Years; Fiscal Quarters.......................... 65
9.11 Additional Guarantors......................................... 65
9.12 Pledges of Additional Stock and Evidence of Indebtedness...... 65
9.13 Use of Proceeds............................................... 66
9.14 Changes in Business........................................... 66
SECTION 10. Negative Covenants......................................... 66
10.1 Limitation on Indebtedness.................................... 66
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10.2 Limitation on Liens........................................... 69
10.3 Limitation on Fundamental Changes............................. 69
10.4 Limitation on Sale of Assets.................................. 70
10.5 Limitation on Investments..................................... 71
10.6 Limitation on Dividends....................................... 73
10.7 Limitation on Debt Payments and Amendments.................... 73
10.8 Limitation on Sale Leasebacks................................. 73
10.9 Consolidated Lease Expense.................................... 74
10.10 Consolidated Senior Debt to Consolidated EBITDA Ratio......... 74
10.11 Consolidated EBITDA to Consolidated Interest Expense Ratio.... 74
10.12 Capital Expenditures.......................................... 75
SECTION 11. Events of Default.......................................... 76
11.1 Payments...................................................... 76
11.2 Representations, etc.......................................... 76
11.3 Covenants..................................................... 76
11.4 Default Under Other Agreements................................ 76
11.5 Bankruptcy, etc............................................... 76
11.6 ERISA......................................................... 77
11.7 Guarantee..................................................... 77
11.8 Pledge Agreement.............................................. 77
11.9 Judgments..................................................... 77
11.10 Change of Control............................................. 78
SECTION 12. The Administrative Agent................................... 78
12.1 Appointment................................................... 78
12.2 Delegation of Duties.......................................... 78
12.3 Exculpatory Provisions........................................ 79
12.4 Reliance by Administrative Agent.............................. 79
12.5 Notice of Default............................................. 79
12.6 Non-Reliance on Administrative Agent and Other Lenders........ 80
12.7 Indemnification............................................... 80
12.8 Administrative Agent in Its Individual Capacity............... 80
12.9 Successor Agent............................................... 81
SECTION 13. Miscellaneous.............................................. 81
13.1 Amendments and Waivers........................................ 81
13.2 Notices....................................................... 82
13.3 No Waiver; Cumulative Remedies................................ 83
13.4 Survival of Representations and Warranties.................... 83
13.5 Payment of Expenses and Taxes................................. 83
13.6 Successors and Assigns; Participations and Assignments........ 84
13.7 Replacements of Lenders under Certain Circumstances........... 86
13.8 Adjustments; Set-off.......................................... 87
13.9 Counterparts.................................................. 87
13.10 Severability.................................................. 87
13.11 Integration................................................... 87
13.12 GOVERNING LAW................................................. 87
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Page
13.13 Submission to Jurisdiction; Waivers........................... 88
13.14 Acknowledgements.............................................. 88
13.15 WAIVERS OF JURY TRIAL......................................... 89
13.16 Confidentiality............................................... 89
<PAGE>
SCHEDULES
Schedule 1.1 Commitments and Addresses of Lenders
Schedule 8.12 Subsidiaries
Schedule 10.1 Other Indebtedness
EXHIBITS
Exhibit A Form of Guarantee
Exhibit B Form of Pledge Agreement
Exhibit C-1 Form of Promissory Note (Term Loans)
Exhibit C-2 Form of Promissory Note (Revolving Credit and Swingline Loans)
Exhibit D Form of Letter of Credit Request
Exhibit E-1 Form of Legal Opinion of Simpson Thacher & Bartlett
Exhibit E-2 Form of Legal Opinion of Alston & Bird
Exhibit E-3 Form of Legal Opinion of Rebecca S. Bryan
Exhibit F Form of Assignment and Acceptance
Exhibit G Form of Closing Certificate
Exhibit H Form of Confidentiality Agreement
<PAGE>
CREDIT AGREEMENT dated as of February 13, 1997, among KINDERCARE
LEARNING CENTERS, INC., a Delaware corporation (the "Borrower"), the lending
institutions from time to time parties hereto (each a "Lender" and,
collectively, the "Lenders"), THE CHASE MANHATTAN BANK, as Administrative Agent
(such term and each other capitalized term used but not defined in this
introductory statement having the meaning provided in Section 1), BANKERS TRUST
COMPANY, as Syndication Agent, and WELLS FARGO BANK, N.A., as Documentation
Agent.
The Borrower has entered into an Agreement and Plan of Merger dated
as of October 3, 1996, and amended as of December 27, 1996 (such Agreement and
Plan of Merger, as the same may be further amended, supplemented or otherwise
modified from time to time, being referred to herein as the "Merger Agreement"),
with KCLC Acquisition Corp., a Delaware corporation ("KCLC") and a wholly owned
subsidiary of the Partnership and other Affiliates of KKR, pursuant to which
KCLC will merge with and into the Borrower in a transaction (the "Merger") in
which (a) each pre-Merger shareholder of the Borrower will be entitled to elect
either to receive $19.00 per share in cash (the "Cash Merger Price") or to
retain such shares, provided that the aggregate amount of any such retained
shares will not exceed approximately 15% of the Borrower Common Stock; (b) the
Partnership will receive all the Borrower Common Stock, other than any Borrower
Common Stock so retained by pre-Merger shareholders, in exchange for the Equity
Contribution; and (c) the Borrower will be the surviving corporation in the
Merger.
The Borrower has requested the Lenders to extend credit in the form
of (a) Term Loans during the Term Loan Availability Period, in an aggregate
principal amount not in excess of $90,000,000, and (b) Revolving Credit Loans at
any time and from time to time prior to the Revolving Credit Maturity Date, in
an aggregate principal amount at any time outstanding not in excess of
$300,000,000 less the sum of (i) the aggregate Letter of Credit Outstandings at
such time and (ii) the aggregate principal amount of all Swingline Loans then
outstanding. The Borrower has requested the Letter of Credit Issuer to issue
Letters of Credit at any time and from time to time prior to the L/C Maturity
Date, in an aggregate face amount at any time outstanding not in excess of
$75,000,000. The Borrower has requested Chase to extend credit in the form of
Swingline Loans at any time and from time to time prior to the Swingline
Maturity Date, in an aggregate principal amount at any time outstanding not in
excess of $25,000,000.
The proceeds of the Term Loans borrowed on the Closing Date will be
used by the Borrower, together with (a) the net proceeds from the issuance of
the Subordinated Notes and (b) the proceeds of the Equity Contribution, solely
(i) to pay the cash consideration payable in connection with the Merger, (ii) to
repay all principal, interest, fees and other amounts outstanding under the
Existing Credit Agreement, including the amounts borrowed thereunder to finance
the repurchase of Senior Notes pursuant to the Debt Tender Offer, (iii) to
refinance certain other indebtedness of the Borrower, (iv) to pay fees and
expenses incurred in connection with the Merger, the financing therefor and the
other transactions contemplated hereby and thereby and (v) for general corporate
purposes. Proceeds of Term Loans borrowed after the Closing Date, letters of
credit and the proceeds of Revolving Credit Loans and Swingline Loans will be
used by the Borrower for general corporate purposes (including Permitted
Acquisitions).
<PAGE>
2
The parties hereto hereby agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall
have the meanings specified in this Section 1 unless the context otherwise
requires (it being understood that defined terms in this Agreement shall include
in the singular number the plural and in the plural the singular):
"ABR" shall mean, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. Any change in the ABR due to a change in the Prime Rate,
the Three-Month Secondary CD Rate or the Federal Funds Effective Rate
shall be effective as of the opening of business on the effective day of
such change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
"ABR Loan" shall mean each Loan bearing interest at the rate
provided in Section 2.8(a) and, in any event, shall include all Swingline
Loans.
"ABR Revolving Credit Loan" shall mean any Revolving Credit Loan
bearing interest at a rate determined by reference to the ABR.
"Acquired EBITDA" shall mean, with respect to any Acquired Entity or
Business, any Converted Restricted Subsidiary, any Sold Entity or Business
or any Converted Unrestricted Subsidiary (any of the foregoing, a "Pro
Forma Entity") for any period, the sum of the amounts for such period of
(a) income from continuing operations before income taxes and
extraordinary items, (b) interest expense, (c) depreciation expense, (d)
amortization expense, including amortization of deferred financing fees,
(e) non-recurring charges, (f) non-cash charges, (g) losses on asset sales
and (h) restructuring charges or reserves less the sum of the amounts for
such period of (i) non-recurring gains, (j) non-cash gains and (k) gains
on asset sales, all as determined on a consolidated basis for such Pro
Forma Entity in accordance with GAAP.
"Acquired Entity or Business" shall have the meaning provided in the
definition of the term "Consolidated EBITDA".
"Acquisition Subsidiary" shall mean (a) any Subsidiary of the
Borrower that is formed or acquired after the Closing Date in connection
with Permitted Acquisitions, provided that at such time (or promptly
thereafter) the Borrower designates such Subsidiary an Acquisition
Subsidiary in a written notice to the Administrative Agent, (b) any
Restricted Subsidiary on the Closing Date subsequently re-designated as an
Acquisition Subsidiary by the Borrower in a written notice to the
Administrative Agent, provided that such re-designation shall be deemed to
be an investment on the date of such re-designation in an Acquisition
Subsidiary in an amount equal to the sum of (i) the net worth of such
re-designated Restricted Subsidiary immediately prior to such
re-designation (such net worth to be calculated without regard to any
Guarantee provided by such re-designated Restricted Subsidiary) and (ii)
the aggregate principal amount of any Indebtedness owed by such
re-designated Restricted Subsidiary to the
<PAGE>
3
Borrower or any other Restricted Subsidiary immediately prior to such
re-designation, all calculated, except as set forth in the parenthetical
to clause (i), on a consolidated basis in accordance with GAAP, and (c)
each Subsidiary of an Acquisition Subsidiary; provided, however, that (i)
at the time of any written re-designation by the Borrower to the
Administrative Agent of any Acquisition Subsidiary as a Restricted
Subsidiary, the Acquisition Subsidiary so re-designated shall no longer
constitute an Acquisition Subsidiary, (ii) no Acquisition Subsidiary may
be re-designated as a Restricted Subsidiary if a Default or Event of
Default would result from such re-designation and (iii) no Restricted
Subsidiary may be re-designated as an Acquisition Subsidiary if a Default
or Event of Default would result from such re-designation. On or promptly
after the date of its formation, acquisition or re-designation, as
applicable, each Acquisition Subsidiary (other than an Acquisition
Subsidiary that is a Foreign Subsidiary) shall have entered into a tax
sharing agreement containing terms that, in the reasonable judgment of the
Administrative Agent, provide for an appropriate allocation of tax
liabilities and benefits.
"Adjusted Total Revolving Credit Commitment" shall mean at any time
the Total Revolving Credit Commitment less the aggregate Revolving Credit
Commitments of all Defaulting Lenders.
"Adjusted Total Term Loan Commitment" shall mean at any time the
Total Term Loan Commitment less the Term Loan Commitments of all
Defaulting Lenders.
"Administrative Agent" shall mean Chase, together with its
affiliates, as the arranger of the Commitments and as the administrative
agent for the Lenders under this Agreement and the other Credit Documents.
"Administrative Agent's Office" shall mean the office of the
Administrative Agent located at 270 Park Avenue, New York, New York 10017,
or such other office in New York City as the Administrative Agent may
hereafter designate in writing as such to the other parties hereto.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to
control a corporation if such Person possesses, directly or indirectly,
the power (a) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such corporation or (b) to direct
or cause the direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract or
otherwise.
"Aggregate Revolving Credit Outstandings" shall have the meaning
provided in Section 5.2(b).
"Agreement" shall mean this Credit Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
<PAGE>
4
"Applicable ABR Margin" shall mean, with respect to each ABR Loan at
any date, the applicable percentage per annum set forth below based upon
(a) whether such loan is a Revolving Credit Loan, a Swingline Loan or a
Term Loan and (b) the Status in effect on such date:
Applicable ABR
Loan Status Margin
---- ------ --------------
Revolving Credit Loans and Level I Status 1.250%
Swingline Loans Level II Status 1.000%
Level III Status 0.500%
Level IV Status 0.250%
Level V Status 0.000%
Term Loans Level I Status 1.750%
Level II Status 1.500%
Level III Status 1.250%
"Applicable Eurodollar Margin" shall mean, with respect to each
Eurodollar Term Loan and Eurodollar Revolving Credit Loan at any date, the
applicable percentage per annum set forth below based upon (a) whether
such loan is a Revolving Credit Loan or a Term Loan and (b) the Status in
effect on such date:
Applicable Eurodollar
Loan Status Margin
---- ------ ---------------------
Revolving Credit Loans Level I Status 2.500%
Level II Status 2.250%
Level III Status 1.750%
Level IV Status 1.500%
Level V Status 1.250%
Term Loans Level I Status 3.000%
Level II Status 2.750%
Level III Status 2.500%
"Asset Sale Prepayment Event" shall mean any sale, transfer or other
disposition of any business units, assets or other properties of the
Borrower or any of the Restricted Subsidiaries not in the ordinary course
of business. Notwithstanding the foregoing, the term "Asset Sale
Prepayment Event" shall not include any transaction permitted by Section
10.4 (other than Section 10.4(b)).
<PAGE>
5
"Authorized Officer" shall mean the Chairman of the Board, the
President, the Chief Financial Officer, the Treasurer or any other senior
officer of the Borrower designated as such in writing to the
Administrative Agent by the Borrower.
"Available Amount" shall mean, on any date (the "Reference Date"),
an amount equal to (a) the sum of (i) for the purposes of Sections 10.5(l)
and 10.5(n), $100,000,000, (ii) the aggregate amount of Net Cash Proceeds
from Prepayment Events refused by Term Loan Lenders and retained by the
Borrower in accordance with Section 5.2(c)(iv) on or prior to the
Reference Date, (iii) an amount equal to (x) the cumulative amount of
Excess Cash Flow for all fiscal years completed prior to the Reference
Date minus (y) the portion of such Excess Cash Flow that has been on or
prior to the Reference Date (or will be) applied to the prepayment of
Loans in accordance with Section 5.2(a)(ii), (iv) the amount of any
capital contributions (other than the Equity Contribution and any equity
contribution made in accordance with Section 10.5(c)(i)) made in cash to
the Borrower from and including the Business Day immediately following the
Closing Date through and including the Reference Date, (v) an amount equal
to the Net Cash Proceeds received by the Borrower on or prior to the
Reference Date from any issuance of equity securities by the Borrower,
(vi) the aggregate amount of all cash dividends and other cash
distributions received by the Borrower or any Guarantor from any
Acquisition Subsidiaries, Minority Investments or Unrestricted
Subsidiaries on or prior to the Reference Date (other than the portion of
any such dividends and other distributions that is used by the Borrower or
any Guarantor to pay taxes), (vii) the aggregate amount of all cash
repayments of principal received by the Borrower or any Guarantor from any
Acquisition Subsidiaries, Minority Investments or Unrestricted
Subsidiaries on or prior to the Reference Date in respect of loans made by
the Borrower or any Guarantor to such Acquisition Subsidiaries, Minority
Investments or Unrestricted Subsidiaries and (viii) the aggregate amount
of all net cash proceeds received by the Borrower or any Guarantor in
connection with the sale, transfer or other disposition of its ownership
interest in any Acquisition Subsidiary, Minority Investment or
Unrestricted Subsidiary on or prior to the Reference Date minus (b) the
sum of (i) the aggregate amount of any investments (including loans) made
by the Borrower or any Restricted Subsidiary (other than any Acquisition
Subsidiary) in or to Acquisition Subsidiaries pursuant to Section 10.5(j)
on or prior to the Reference Date, (ii) the aggregate amount of any
investments (including loans) made by the Borrower or any Restricted
Subsidiary (other than any Acquisition Subsidiary) pursuant to Section
10.5(n) on or prior to the Reference Date, (iii) the aggregate amount of
any investments made by the Borrower or any Restricted Subsidiary to
acquire the Remaining Public Equity pursuant to Section 10.5(l) on or
prior to the Reference Date and (iv) the aggregate price paid by the
Borrower in connection with any prepayment, repurchase or redemption of
Subordinated Notes pursuant to Section 10.7(a) on or prior to the
Reference Date.
"Available Commitment" shall mean an amount equal to the excess, if
any, of (a) the sum of (i) the amount of the Total Revolving Credit
Commitment and (ii) the amount of the Total Term Loan Commitment over (b)
the sum of (i) the aggregate principal amount of all Revolving Credit
Loans (but not Swingline Loans) then outstanding and (ii) the aggregate
Letter of Credit Outstandings at such time.
<PAGE>
6
"Available Foreign Investment Amount" shall mean, on any date (the
"Investment Date"), an amount equal to (a) the sum of (i) $150,000,000,
(ii) the aggregate amount of all cash dividends and other cash
distributions received by the Borrower or any Guarantor from any
Restricted Foreign Subsidiaries on or prior to the Investment Date (other
than the portion of any such dividends and other distributions that is
used by the Borrower or any Guarantor to pay taxes), (iii) the aggregate
amount of all cash repayments of principal received by the Borrower or any
Guarantor from any Restricted Foreign Subsidiaries on or prior to the
Investment Date in respect of loans made by the Borrower or any Guarantor
to such Restricted Foreign Subsidiaries and (iv) the aggregate amount of
all net cash proceeds received by the Borrower or any Guarantor in
connection with the sale, transfer or other disposition of its ownership
interest in any Restricted Foreign Subsidiary on or prior to the
Investment Date minus (b) the aggregate amount of any investments
(including loans) made by the Borrower or any Restricted Subsidiary (other
than any Restricted Foreign Subsidiary) in or to Restricted Foreign
Subsidiaries pursuant to Section 10.5(j) or 10.5(k) on or prior to the
Investment Date.
"Bankruptcy Code" shall have the meaning provided in Section 11.5.
"Base CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which
is one and the denominator of which is one minus the C/D Reserve
Percentage and (b) the C/D Assessment Rate.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrower Common Stock" shall mean any class of outstanding common
stock of the Borrower after the Merger.
"Borrowing" shall mean and include (a) the incurrence of Swingline
Loans from Chase on a given date, (b) the incurrence of one Type of Term
Loan on the Closing Date (or resulting from conversions on a given date
after the Closing Date) having, in the case of Eurodollar Term Loans, the
same Interest Period (provided that ABR Loans incurred pursuant to Section
2.10(b) shall be considered part of any related Borrowing of Eurodollar
Term Loans) and (c) the incurrence of one Type of Revolving Credit Loan on
a given date (or resulting from conversions on a given date) having, in
the case of Eurodollar Revolving Credit Loans, the same Interest Period
(provided that ABR Loans incurred pursuant to Section 2.10(b) shall be
considered part of any related Borrowing of Eurodollar Revolving Credit
Loans).
"Business Day" shall mean (a) for all purposes other than as covered
by clause (b) below, any day excluding Saturday, Sunday and any day that
shall be in The City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close
and (b) with respect to all notices and determinations in
<PAGE>
7
connection with, and payments of principal and interest on, Eurodollar
Loans, any day that is a Business Day described in clause (a) and which is
also a day for trading by and between banks in Dollar deposits in the
relevant interbank Eurodollar market.
"Capital Expenditures" shall mean, for any period, the aggregate of
all expenditures (whether paid in cash or accrued as liabilities and
including in all events all amounts expended or capitalized under Capital
Leases, but excluding any amount representing capitalized interest) by the
Borrower and the Restricted Subsidiaries during such period that, in
conformity with GAAP, are or are required to be included as additions
during such period to property, plant or equipment reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries, provided
that the term "Capital Expenditures" shall not include (a) expenditures
made in connection with the replacement, substitution or restoration of
assets (i) to the extent financed from insurance proceeds paid on account
of the loss of or damage to the assets being replaced or restored or (ii)
with awards of compensation arising from the taking by eminent domain or
condemnation of the assets being replaced, (b) the purchase price of
equipment that is purchased simultaneously with the trade-in of existing
equipment to the extent that the gross amount of such purchase price is
reduced by the credit granted by the seller of such equipment for the
equipment being traded in at such time, (c) the purchase of plant,
property or equipment made within one year of the sale of any asset to the
extent purchased with the proceeds of such sale or (d) expenditures that
constitute any part of Consolidated Lease Expense.
"Capitalized Lease Obligations" shall mean, as applied to any
Person, all obligations under Capital Leases of such Person or any of its
Subsidiaries, in each case taken at the amount thereof accounted for as
liabilities in accordance with GAAP.
"Capital Lease", as applied to any Person, shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee
that, in conformity with GAAP, is, or is required to be, accounted for as
a capital lease on the balance sheet of that Person.
"Cash Merger Price" shall have the meaning provided in the first
paragraph of this Agreement.
"C/D Assessment Rate" shall mean for any day as applied to any ABR
Loan, the annual assessment rate in effect on such day that is payable by
a member of the Bank Insurance Fund maintained by the Federal Deposit
Insurance Corporation or any successor thereto (the "FDIC") classified as
well-capitalized and within supervisory subgroup "B" (or a comparable
successor assessment risk classification) within the meaning of 12 C.F.R.
ss. 327.3(d) (or any successor provision) to the FDIC for the FDIC's
insuring time deposits at offices of such institution in the United
States.
"C/D Reserve Percentage" shall mean for any day as applied to any
ABR Loan, the percentage (expressed as a decimal) that is in effect on
such day, as prescribed by the Board, for determining the reserve
requirement for a Depositary Institution (as defined in Regulation D of
the Board) in respect of new non-personal time deposits in Dollars having
a maturity that is 30 days or more.
<PAGE>
8
"Center" shall mean any facility primarily providing for the care,
education or development of infants or other children, or part of such
facility (including, without limitation, related office buildings, parking
lots or other related real property), now or hereafter owned, leased or
operated by the Borrower or any of its Subsidiaries, in each case
including, without limitation, the land on which such facility is located,
all buildings and other improvements thereon, including leasehold
improvements, all fixtures, furniture, equipment, inventory and other
tangible personal property located in or used in connection with such
facility and all accounts receivable and other intangible personal
property (other than motor vehicles) related to the ownership, lease or
operation of such facility, all whether now existing or hereafter
acquired.
"Change of Control" shall mean and be deemed to have occurred if (a)
(i) KKR, its Affiliates and the Management Group shall at any time not
own, in the aggregate, directly or indirectly, beneficially and of record,
at least 35% of the outstanding Voting Stock of the Borrower (other than
as the result of one or more widely distributed offerings of Borrower
Common Stock, in each case whether by the Borrower or by KKR, its
Affiliates or the Management Group) and/or (ii) any person, entity or
"group" (within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended) shall at any time have acquired direct
or indirect beneficial ownership of a percentage of the outstanding Voting
Stock of the Borrower that exceeds the percentage of such Voting Stock
then beneficially owned, in the aggregate, by KKR, its Affiliates and the
Management Group, unless, in the case of either clause (i) or (ii) above,
KKR, its Affiliates and the Management Group have, at such time, the right
or the ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the
Borrower; and/or (b) at any time Continuing Directors shall not constitute
a majority of the Board of Directors of the Borrower.
"Chase" shall mean The Chase Manhattan Bank, a New York banking
corporation, and any successor thereto by merger, consolidation or
otherwise.
"Closing Date" shall mean the date of the initial Borrowing
hereunder.
"Closing Date Center" shall mean any Center owned, leased or
operated by the Borrower or any of the Restricted Subsidiaries on the
Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued
thereunder. Section references to the Code are to the Code, as in effect
at the date of this Agreement, and any subsequent provisions of the Code,
amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall have the meaning provided in the Pledge
Agreement.
<PAGE>
9
"Commitment Fee Rate" shall mean, with respect to the Available
Commitment on any day, the rate per annum set forth below opposite the
Status in effect on such day:
Commitment
Status Fee Rate
------ --------
Level I Status 0.500%
Level II Status 0.375%
Level III Status 0.350%
Level IV Status 0.300%
Level V Status 0.250%
"Commitments" shall mean, with respect to each Lender, such Lender's
Term Loan Commitment and Revolving Credit Commitment.
"Confidential Information" shall have the meaning provided in
Section 13.16.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated December 1996 delivered to
the Lenders in connection with this Agreement.
"Consolidated Earnings" shall mean, for any period, "income from
continuing operations before income taxes and extraordinary items" of the
Borrower and the Restricted Subsidiaries for such period, determined in a
manner consistent with the manner in which such amount was determined in
accordance with the audited financial statements referred to in Section
9.1(a).
"Consolidated EBITDA" shall mean, for any period, the sum, without
duplication, of the amounts for such period of (a) Consolidated Earnings,
(b) Consolidated Interest Expense, (c) depreciation expense, (d)
amortization expense, including amortization of deferred financing fees,
(e) non-recurring charges, (f) non-cash charges, (g) losses on asset
sales, (h) restructuring charges or reserves and (i) in the case of any
period ending during the fiscal year ending May 30, 1997, Transaction
Expenses less the sum of the amounts for such period of (j) non-recurring
gains, (k) non-cash gains and (l) gains on asset sales, all as determined
on a consolidated basis for the Borrower and the Restricted Subsidiaries
in accordance with GAAP, provided that (i) except as provided in clause
(ii) below, there shall be excluded from Consolidated Earnings for any
period the income from continuing operations before income taxes and
extraordinary items of all Unrestricted Subsidiaries for such period to
the extent otherwise included in Consolidated Earnings and (ii) for
purposes of the definition of the term "Permitted Acquisition" and
Sections 10.3, 10.10 and 10.11, (x) there shall be included in determining
Consolidated EBITDA for any period (A) the Acquired EBITDA of any Person,
property, business or asset (other than an Unrestricted Subsidiary)
acquired and not subsequently sold, transferred or otherwise disposed of
(but not including the Acquired EBITDA of any related Person, property,
business or assets to the extent not so acquired) by the Borrower or any
Restricted Subsidiary during such period (each such Person, property,
business or asset acquired and not subsequently so disposed of, an
"Acquired Entity or
<PAGE>
10
Business"), and the Acquired EBITDA of any Unrestricted Subsidiary that is
converted into a Restricted Subsidiary during such period (each, a
"Converted Restricted Subsidiary"), in each case based on the actual
Acquired EBITDA of such Acquired Entity or Business or Converted
Restricted Subsidiary for such period (including the portion thereof
occurring prior to such acquisition or conversion) and (B) an adjustment
in respect of each Acquired Entity or Business acquired during such period
equal to the amount of the Pro Forma Adjustment with respect to such
Acquired Entity or Business for such period (including the portion thereof
occurring prior to such acquisition or conversion) as specified in the Pro
Forma Adjustment Certificate delivered to the Lenders and the
Administrative Agent and (y) there shall be excluded in determining
Consolidated EBITDA for any period the Acquired EBITDA of any Person,
property, business or asset (other than an Unrestricted Subsidiary) sold,
transferred or otherwise disposed of by the Borrower or any Restricted
Subsidiary during such period (each such Person, property, business or
asset so sold or disposed of, a "Sold Entity or Business"), and the
Acquired EBITDA of any Restricted Subsidiary that is converted into an
Unrestricted Subsidiary during such period (each, a "Converted
Unrestricted Subsidiary"), in each case based on the actual Acquired
EBITDA of such Sold Entity or Business or Converted Unrestricted
Subsidiary for such period (including the portion thereof occurring prior
to such sale, transfer, disposition or conversion).
"Consolidated EBITDA to Consolidated Interest Expense Ratio" shall
mean, as of any date of determination, the ratio of (a) Consolidated
EBITDA for the relevant Test Period to (b) Consolidated Interest Expense
for such Test Period.
"Consolidated Interest Expense" shall mean, for any period, cash
interest expense (including that attributable to Capital Leases in
accordance with GAAP), net of cash interest income, of the Borrower and
the Restricted Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of the Borrower and the Restricted Subsidiaries,
including, without limitation, all commissions, discounts and other fees
and charges owed with respect to letters of credit and bankers' acceptance
financing and net costs under Hedge Agreements (other than currency swap
agreements, currency future or option contracts and other similar
agreements), but excluding, however, amortization of deferred financing
costs and any other amounts of non-cash interest, all as calculated on a
consolidated basis in accordance with GAAP, provided that (a) except as
provided in clause (b) below, there shall be excluded from Consolidated
Interest Expense for any period the cash interest expense (or income) of
all Unrestricted Subsidiaries for such period to the extent otherwise
included in Consolidated Interest Expense and (b) for purposes of the
definition of the term "Permitted Acquisition" and Sections 10.3, 10.10
and 10.11, (i) there shall be included in determining Consolidated
Interest Expense for any period the cash interest expense (or income) of
any Acquired Entity or Business acquired during such period and of any
Converted Restricted Subsidiary converted during such period, in each case
based on the cash interest expense (or income) of such Acquired Entity or
Business or Converted Restricted Subsidiary for such period (including the
portion thereof occurring prior to such acquisition or conversion)
assuming any Indebtedness incurred or repaid in connection with any such
acquisition or conversion had been incurred or prepaid on the first day of
such period and (ii) there shall be excluded in determining Consolidated
Interest Expense for any period the cash interest expense (or income) of
any Sold Entity or Business sold, transferred or otherwise disposed of
during such period and of
<PAGE>
11
any Converted Unrestricted Subsidiary converted during such period, in
each case based on the actual cash interest expense (or income) of such
Sold Entity or Business or Converted Unrestricted Subsidiary for such
period (including the portion thereof occurring prior to such sale,
transfer, disposition or conversion); provided further, however, that
Consolidated Interest Expense for the Test Periods ending on May 30, 1997,
September 19, 1997, and December 12, 1997, shall be determined by (a) in
the case of the Test Period ending on May 30, 1997, multiplying
Consolidated Interest Expense for the period commencing on March 8, 1997,
and ending on May 30, 1997, by 13/3, (b) in the case of the Test Period
ending on September 19, 1997, multiplying Consolidated Interest Expense
for the period commencing on March 8, 1997, and ending on September 19,
1997, by 13/7, and (c) in the case of the Test Period ending on December
12, 1997, multiplying Consolidated Interest Expense for the period
commencing on March 8, 1997, and ending on December 12, 1997, by 13/10.
"Consolidated Lease Expense" shall mean, for any period, all rental
expenses of the Borrower and the Restricted Subsidiaries during such
period under operating leases for real or personal property (including in
connection with Real Estate Financings), excluding real estate taxes,
insurance costs and common area maintenance charges and net of sublease
income, other than (a) obligations under vehicle leases entered into in
the ordinary course of business and (b) Capitalized Lease Obligations, all
as determined on a consolidated basis in accordance with GAAP, provided
that (i) except as provided in clause (ii) below, there shall be excluded
from Consolidated Lease Expense for any period the rental expenses of all
Unrestricted Subsidiaries for such period to the extent otherwise included
in Consolidated Lease Expense and (ii) for purposes of the definition of
the term "Permitted Acquisition" and Sections 10.3 and 10.9, (x) there
shall be included in determining Consolidated Lease Expense for any period
the rental expenses of any Acquired Entity or Business acquired during
such period and of any Converted Restricted Subsidiary converted during
such period, in each case based on the rental expenses of such Acquired
Entity or Business or Converted Restricted Subsidiary for such period
(including the portion thereof occurring prior to such acquisition or
conversion) and (y) there shall be excluded in determining Consolidated
Lease Expense for any period the rental expenses of any Sold Entity or
Business sold, transferred or otherwise disposed of during such period and
of any Converted Unrestricted Subsidiary converted during such period, in
each case based on the actual rental expenses of such Sold Entity or
Business or Converted Unrestricted Subsidiary for such period (including
the portion thereof occurring prior to such sale, transfer, disposition or
conversion).
"Consolidated Net Income" shall mean, for any period, the
consolidated net income (or loss) of the Borrower and the Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided, however, that the term "Consolidated Net Income" shall be deemed
to include any increases during such period to consolidated additional
paid-in capital of the Borrower and the Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP, to the extent
such increases are attributable to tax benefits from net operating losses
incurred prior to the Closing Date that are not otherwise included in
Consolidated Net Income for such period.
<PAGE>
12
"Consolidated Senior Debt" shall mean, as of any date of
determination, Consolidated Total Debt as of such date minus Consolidated
Subordinated Debt as of such date.
"Consolidated Senior Debt to Consolidated EBITDA Ratio" shall mean,
as of any date of determination, the ratio of (a) Consolidated Senior Debt
as of the last day of the relevant Test Period to (b) Consolidated EBITDA
for such Test Period.
"Consolidated Subordinated Debt" shall mean, as of any date of
determination, all Indebtedness of the Borrower and the Restricted
Subsidiaries for borrowed money that is (a) outstanding on such date and
(b) subordinated in right of payment to the Obligations, all calculated on
a consolidated basis in accordance with GAAP.
"Consolidated Total Debt" shall mean, as of any date of
determination, the sum of (a) all Indebtedness of the Borrower and the
Restricted Subsidiaries for borrowed money outstanding on such date (other
than, for purposes of Section 10.10, any such Indebtedness of the Borrower
in an aggregate amount at any time outstanding not to exceed $30,000,000
incurred to fund any payment of the non-current liabilities of the
Borrower reflected on the Borrower's consolidated financial statements for
its fiscal year ended May 31, 1996) and (b) all Capitalized Lease
Obligations of the Borrower and the Restricted Subsidiaries outstanding on
such date, all calculated on a consolidated basis in accordance with GAAP.
"Consolidated Working Capital" shall mean, at any date, the excess
of (a) the sum of all amounts (other than cash, cash equivalents and bank
overdrafts) that would, in conformity with GAAP, be set forth opposite the
caption "total current assets" (or any like caption) on a consolidated
balance sheet of the Borrower and the Restricted Subsidiaries at such date
over (b) the sum of all amounts that would, in conformity with GAAP, be
set forth opposite the caption "total current liabilities" (or any like
caption) on a consolidated balance sheet of the Borrower and the
Restricted Subsidiaries on such date, but excluding (i) the current
portion of any Funded Debt, (ii) without duplication of clause (i) above,
all Indebtedness consisting of Loans and Letter of Credit Exposure to the
extent otherwise included therein and (iii) the current portion of
deferred income taxes.
"Continuing Director" shall mean, at any date, an individual (a) who
is a member of the Board of Directors of the Borrower on the date hereof,
(b) who, as at such date, has been a member of such Board of Directors for
at least the 12 preceding months, (c) who has been nominated to be a
member of such Board of Directors, directly or indirectly, by KKR or
Persons nominated by KKR or (d) who has been nominated to be a member of
such Board of Directors by a majority of the other Continuing Directors
then in office.
"Converted Restricted Subsidiary" shall have the meaning provided in
the definition of the term "Consolidated EBITDA".
"Converted Unrestricted Subsidiary" shall have the meaning provided
in the definition of the term "Consolidated EBITDA".
<PAGE>
13
"Credit Documents" shall mean this Agreement, the Guarantee, the
Pledge Agreement and any promissory notes issued by the Borrower
hereunder.
"Credit Event" shall mean and include the making (but not the
conversion or continuation) of a Loan and the issuance of a Letter of
Credit.
"Credit Party" shall mean each of the Borrower and the Guarantors.
"Cumulative Consolidated Net Income Available to Common
Stockholders" means, as of any date of determination, Consolidated Net
Income less cash dividends paid with respect to preferred stock for the
period (taken as one accounting period) commencing on the Closing Date and
ending on the last day of the most recent fiscal quarter for which Section
9.1 Financials have been delivered to the Lenders under Section 9.1.
"Debt Incurrence Prepayment Event" shall mean any issuance or
incurrence by the Borrower or any of the Restricted Subsidiaries of any
Indebtedness (excluding any Indebtedness permitted to be issued or
incurred under Section 10.1).
"Debt Tender Offer" shall mean the tender offer and consent
solicitation for outstanding Senior Notes consummated by the Borrower on
November 14, 1996, pursuant to the Offer to Purchase and Consent
Solicitation Statement dated October 16, 1996.
"Default" shall mean any event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" shall mean any Lender with respect to which a
Lender Default is in effect.
"Dividends" shall have the meaning provided in Section 10.6.
"Documentation Agent" shall mean Wells Fargo Bank, N.A., together
with its affiliates, as the documentation agent for the Lenders under this
Agreement and the other Credit Documents.
"Dollars" and "$" shall mean dollars in lawful currency of the
United States of America.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower
that is organized under the laws of the United States, any state thereof,
the District of Columbia or any territory thereof.
"Drawing" shall have the meaning provided in Section 3.4(b).
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigations (other than
internal reports prepared by the Borrower or any of its Subsidiaries
<PAGE>
14
(a) in the ordinary course of such Person's business or (b) as required in
connection with a financing transaction or an acquisition or disposition
of real estate) or proceedings relating in any way to any Environmental
Law or any permit issued, or any approval given, under any such
Environmental Law (hereafter, "Claims"), including, without limitation,
(i) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or
damages pursuant to any applicable Environmental Law and (ii) any and all
Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Materials or arising from alleged injury or threat of injury to health,
safety or the environment.
"Environmental Law" shall mean any applicable Federal, state,
foreign or local statute, law, rule, regulation, ordinance, code and rule
of common law now or hereafter in effect and in each case as amended, and
any binding judicial or administrative interpretation thereof, including
any binding judicial or administrative order, consent decree or judgment,
relating to the environment, human health or safety or Hazardous
Materials.
"Equity Contribution" shall mean the equity contribution to the
Borrower by the Partnership of an aggregate cash amount of not less than
$148,750,000.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time. Section references to ERISA are to
ERISA as in effect at the date of this Agreement and any subsequent
provisions of ERISA amendatory thereof, supplemental thereto or
substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) that together with the Borrower or a Subsidiary would be deemed
to be a "single employer" within the meaning of Section 414(b) or (c) of
the Code or, solely for purposes of Section 302 of ERISA and Section 412
of the Code, is treated as a single employer under Section 414 of the
Code.
"Eurodollar Loan" shall mean any Eurodollar Term Loan or Eurodollar
Revolving Credit Loan.
"Eurodollar Rate" shall mean, in the case of any Eurodollar Term
Loan or Eurodollar Revolving Credit Loan, with respect to each day during
each Interest Period pertaining to such Eurodollar Loan, the rate of
interest determined on the basis of the rate for deposits in Dollars for a
period equal to such Interest Period commencing on the first day of such
Interest Period appearing on Page 3750 of the Telerate screen as of 11:00
A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750
of the Telerate Service (or otherwise on such service), the "Eurodollar
Rate" for the purposes of this paragraph shall be determined by reference
to such other publicly available service for displaying eurodollar rates
as may be agreed upon by the Administrative Agent and the Borrower or, in
the absence of such agreement, the "Eurodollar Rate" for the purposes of
this paragraph shall instead be the rate per annum notified to the
Administrative Agent by the Reference Lender as the rate at which the
Reference Lender is offered Dollar deposits at or about 10:00 A.M., New
York time, two Business Days prior to
<PAGE>
15
the beginning of such Interest Period, in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery on
the first day of such Interest Period for the number of days comprised
therein and in an amount comparable to the amount of its Eurodollar Term
Loan or Eurodollar Revolving Credit Loan, as the case may be, to be
outstanding during such Interest Period.
"Eurodollar Revolving Credit Loan" shall mean any Revolving Credit
Loan bearing interest at a rate determined by reference to the Eurodollar
Rate.
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at
a rate determined by reference to the Eurodollar Rate.
"Event of Default" shall have the meaning provided in Section 11.
"Excess Cash Flow" shall mean, for any period, an amount equal to
the excess of (a) the sum, without duplication, of (i) Consolidated Net
Income for such period, (ii) an amount equal to the amount of all non-cash
charges to the extent deducted in arriving at such Consolidated Net
Income, (iii) decreases in Consolidated Working Capital for such period
and (iv) an amount equal to the aggregate net non-cash loss on the sale,
lease, transfer or other disposition of assets by the Borrower and the
Restricted Subsidiaries during such period (other than sales in the
ordinary course of business) to the extent deducted in arriving at such
Consolidated Net Income over (b) the sum, without duplication, of (i) an
amount equal to the amount of all non-cash credits included in arriving at
such Consolidated Net Income, (ii) the aggregate amount actually paid by
the Borrower and the Restricted Subsidiaries in cash during such period on
account of Capital Expenditures (excluding the principal amount of
Indebtedness incurred in connection with such Capital Expenditures,
whether incurred in such period or in a subsequent period), (iii) the
aggregate amount of all prepayments of Revolving Credit Loans and
Swingline Loans made during such period to the extent accompanying
reductions of the Total Revolving Credit Commitments, (iv) the aggregate
amount of all principal payments of Indebtedness of the Borrower or the
Restricted Subsidiaries (including, without limitation, any Term Loans and
the principal component of payments in respect of Capitalized Lease
Obligations but excluding Revolving Credit Loans and Swingline Loans) made
during such period (other than in respect of any revolving credit facility
to the extent there is not an equivalent permanent reduction in
commitments thereunder), (v) an amount equal to the aggregate net non-cash
gain on the sale, lease, transfer or other disposition of assets by the
Borrower and the Restricted Subsidiaries during such period (other than
sales in the ordinary course of business) to the extent included in
arriving at such Consolidated Net Income, (vi) increases in Consolidated
Working Capital for such period, (vii) payments by the Borrower and the
Restricted Subsidiaries during such period in respect of long-term
liabilities of the Borrower and the Restricted Subsidiaries other than
Indebtedness, (viii) the amount of Investments made during such period
pursuant to Section 10.5 to the extent that such Investments were financed
with internally generated cash flow of the Borrower and the Restricted
Subsidiaries, (ix) the amount of dividends paid during such period
pursuant to clause (c) of the proviso to Section 10.5 and (x) the
aggregate amount of expenditures actually made by the Borrower and the
Restricted Subsidiaries in cash during such period (including,
<PAGE>
16
without limitation, expenditures for the payment of financing fees) to the
extent that such expenditures are not expensed during such period.
"Existing Credit Agreement" shall mean the Credit Agreement dated
June 2, 1994, by and among the Borrower, the lenders listed therein, The
Toronto-Dominion Bank, as Facing Bank, and Toronto Dominion (Texas), Inc.,
as Agent, as the same may be amended, supplemented or otherwise modified
from time to time.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the per annum rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
that is a Business Day, the average 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.
"Fees" shall mean all amounts payable pursuant to, or referred to
in, Section 4.1.
"Final Date" shall mean the date on which the Revolving Credit
Commitments shall have terminated, no Revolving Credit Loans shall be
outstanding and the Letter of Credit Outstandings shall have been reduced
to zero.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower that
is not a Domestic Subsidiary.
"Fronting Fee" shall have the meaning provided in Section 4.1(c).
"Funded Debt" shall mean all Indebtedness of the Borrower and the
Restricted Subsidiaries for borrowed money that matures more than one year
from the date of its creation or matures within one year from such date
that is renewable or extendable, at the option of the Borrower or one of
the Restricted Subsidiaries, to a date more than one year from such date
or arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
from such date, including, without limitation, all amounts of Funded Debt
required to be paid or prepaid within one year from the date of its
creation and, in the case of the Borrower, Indebtedness in respect of the
Loans.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; provided,
however, that if there occurs after the date hereof any change in GAAP
that affects in any respect the calculation of any covenant contained in
Section 10, the Lenders and the Borrower shall negotiate in good faith
amendments to the provisions of this Agreement that relate to the
calculation of such covenant with the intent of having the respective
positions of the Lenders and the Borrower after such change in GAAP
conform as nearly as possible to their respective positions as of the date
of this Agreement and, until any such amendments have been agreed upon,
the covenants in Section 10 shall be calculated as if no such change in
GAAP has occurred.
<PAGE>
17
"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.
"Guarantee" shall mean and include the Guarantee, made by each
Guarantor in favor of the Administrative Agent for the benefit of the
Lenders, substantially in the form of Exhibit A, as the same may be
amended, supplemented or otherwise modified from time to time.
"Guarantee Obligations" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness of
any other Person (the "primary obligor") in any manner, whether directly
or indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, (a) to purchase any such Indebtedness
or any property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such
Indebtedness or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such Indebtedness
of the ability of the primary obligor to make payment of such Indebtedness
or (d) otherwise to assure or hold harmless the owner of such Indebtedness
against loss in respect thereof; provided, however, that the term
"Guarantee Obligations" shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of
any Guarantee Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the Indebtedness in respect of which such
Guarantee Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in
good faith.
"Guarantor" shall mean each Domestic Subsidiary of the Borrower that
is a Restricted Subsidiary and is or becomes a party to the Guarantee.
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, friable asbestos, urea formaldehyde foam
insulation, transformers or other equipment that contain dielectric fluid
containing regulated levels of polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances", "hazardous waste", "hazardous
materials", "extremely hazardous waste", "restricted hazardous waste",
"toxic substances", "toxic pollutants", "contaminants", or "pollutants",
or words of similar import, under any applicable Environmental Law; and
(c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any Governmental Authority.
"Hedge Agreements" shall mean interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements entered into by the Borrower in order to protect the Borrower
or any of the Restricted Subsidiaries against fluctuations in interest
rates or currency exchange rates.
<PAGE>
18
"Indebtedness" of any Person shall mean (a) all indebtedness of such
Person for borrowed money, (b) the deferred purchase price of assets or
services that in accordance with GAAP would be shown on the liability side
of the balance sheet of such Person, (c) the face amount of all letters of
credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder, (d) all Indebtedness of a second Person secured
by any Lien on any property owned by such first Person, whether or not
such Indebtedness has been assumed, (e) all Capitalized Lease Obligations
of such Person, (f) all obligations of such Person under interest rate
swap, cap or collar agreements, interest rate future or option contracts,
currency swap agreements, currency future or option contracts and other
similar agreements and (g) without duplication, all Guarantee Obligations
of such Person, provided that Indebtedness shall not include trade
payables and accrued expenses, in each case arising in the ordinary course
of business.
"Interest Period" shall mean, with respect to any Term Loan or
Revolving Credit Loan, the interest period applicable thereto, as
determined pursuant to Section 2.9.
"KCLC" shall have the meaning provided in the first paragraph of
this Agreement.
"KKR" shall mean each of Kohlberg Kravis Roberts & Co., L.P. and KKR
Associates, L.P.
"L/C Maturity Date" shall mean the date that is five Business Days
prior to the Revolving Credit Maturity Date.
"L/C Participant" shall have the meaning provided in Section 3.3(a).
"L/C Participation" shall have the meaning provided in Section
3.3(a).
"Lender" shall have the meaning provided in the preamble to this
Agreement.
"Lender Default" shall mean (a) the failure (which has not been
cured) of a Lender to make available its portion of any Borrowing or to
fund its portion of any unreimbursed payment under Section 3.3 or (b) a
Lender having notified the Administrative Agent and/or the Borrower that
it does not intend to comply with the obligations under Section 2.1(b),
2.1(d) or 3.3, in the case of either clause (a) or clause (b) above, as a
result of the appointment of a receiver or conservator with respect to
such Lender at the direction or request of any regulatory agency or
authority.
"Letter of Credit" shall mean each standby letter of credit issued
pursuant to Section 3.1.
"Letter of Credit Commitment" shall mean $75,000,000, as the same
may be reduced from time to time pursuant to Section 3.1.
"Letter of Credit Exposure" shall mean, with respect to any Lender,
such Lender's Revolving Credit Commitment Percentage of the Letter of
Credit Outstandings.
<PAGE>
19
"Letter of Credit Fee" shall have the meaning provided in Section
4.1(b).
"Letter of Credit Issuer" shall mean Chase or any successor to Chase
pursuant to Section 3.6.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (a) the aggregate Stated Amount of all outstanding
Letters of Credit and (b) the aggregate amount of all Unpaid Drawings in
respect of all Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in
Section 3.2.
"Level I Status" shall mean, on any date, (a) in the case of
Revolving Credit Loans and Swingline Loans, the Consolidated Senior Debt
to Consolidated EBITDA Ratio is greater than or equal to 3.50:1.00 as of
such date and (b) in the case of Term Loans, the Consolidated Senior Debt
to Consolidated EBITDA Ratio is greater than or equal to 3.00:1.00 as of
such date.
"Level II Status" shall mean, on any date, the circumstance that
Level I Status does not exist and (a) in the case of Revolving Credit
Loans and Swingline Loans, the Consolidated Senior Debt to Consolidated
EBITDA Ratio is greater than or equal to 3.00:1.00 as of such date and (b)
in the case of Term Loans, the Consolidated Senior Debt to Consolidated
EBITDA Ratio is greater than or equal to 2.50:1.00 as of such date.
"Level III Status" shall mean, on any date, the circumstance that
neither Level I Status nor Level II Status exists and (a) in the case of
Revolving Credit Loans and Swingline Loans, the Consolidated Senior Debt
to Consolidated EBITDA Ratio is greater than or equal to 2.25:1.00 as of
such date and (b) in the case of Term Loans, the Consolidated Senior Debt
to Consolidated EBITDA Ratio is less than 2.50:1.00 as of such date.
"Level IV Status" shall mean, on any date, in the case of Revolving
Credit Loans and Swingline Loans, the circumstance that none of Level I
Status, Level II Status or Level III Status exists and the Consolidated
Senior Debt to Consolidated EBITDA Ratio is greater than or equal to
1.75:1.00 as of such date.
"Level V Status" shall mean, on any date, in the case of Revolving
Credit Loans and Swingline Loans, the circumstance that none of Level I
Status, Level II Status, Level III Status or Level IV Status exists and
the Consolidated EBITDA to Consolidated Interest Expense Ratio is greater
than or equal to 2.50:1.00 as of such date.
"Lien" shall mean any mortgage, pledge, security interest,
hypothecation, assignment, lien (statutory or other) or similar
encumbrance (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement or any lease in the
nature thereof).
"Loan" shall mean any Revolving Credit Loan, Swingline Loan or Term
Loan made by any Lender hereunder.
<PAGE>
20
"Management Group" shall mean, at any time, the Chairman of the
Board, the President, any Executive Vice President or Vice President, the
Treasurer and the Secretary of the Borrower at such time.
"Mandatory Borrowing" shall have the meaning provided in Section
2.1(d).
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Change" shall mean any change in the business,
assets, operations, properties or financial condition of the Borrower and
its Subsidiaries taken as a whole that would materially adversely affect
the ability of the Borrower and the other Credit Parties taken as a whole
to perform their obligations under this Agreement and the other Credit
Documents taken as a whole.
"Material Adverse Effect" shall mean a circumstance or condition
affecting the business, assets, operations, properties or financial
condition of the Borrower and its Subsidiaries taken as a whole that would
materially adversely affect (a) the ability of the Borrower and the other
Credit Parties taken as a whole to perform their obligations under this
Agreement and the other Credit Documents taken as a whole or (b) the
rights and remedies of the Administrative Agent and the Lenders under this
Agreement and the other Credit Documents taken as a whole.
"Material Subsidiary" shall mean, at any date of determination, any
Restricted Subsidiary of the Borrower (a) whose total assets at the last
day of the Test Period ending on the last day of the most recent fiscal
period for which Section 9.1 Financials have been delivered were equal to
or greater than 5% of the consolidated total assets of the Borrower and
the Restricted Subsidiaries at such date or (b) whose gross revenues for
such Test Period were equal to or greater than 5% of the consolidated
gross revenues of the Borrower and the Restricted Subsidiaries for such
period, in each case determined in accordance with GAAP.
"Maturity Date" shall mean the Term Loan Maturity Date or the
Revolving Credit Maturity Date.
"Merger" shall have the meaning provided in the first paragraph of
this Agreement.
"Merger Agreement" shall have the meaning provided in the first
paragraph of this Agreement.
"Minimum Borrowing Amount" shall mean (a) with respect to a
Borrowing of Term Loans or Revolving Credit Loans, $1,000,000 and (b) with
respect to a Borrowing of Swingline Loans, $100,000.
"Minority Investment" shall mean any Person (other than a
Subsidiary) in which the Borrower or any Restricted Subsidiary owns
capital stock or other equity interests.
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21
"Moody's" shall mean Moody's Investors Service, Inc. or any
successor by merger or consolidation to its business.
"Net Cash Proceeds" shall mean, with respect to any Prepayment Event
or any issuance by the Borrower of equity securities, (a) the gross cash
proceeds (including payments from time to time in respect of installment
obligations, if applicable) received by or on behalf of the Borrower or
any of the Restricted Subsidiaries in respect of such Prepayment Event or
issuance, as the case may be, less (b) the sum of:
(i) in the case of any Prepayment Event, the amount, if any,
of all taxes paid or estimated to be payable by the Borrower or any
of the Restricted Subsidiaries in connection with such Prepayment
Event,
(ii) in the case of any Prepayment Event, the amount of any
reasonable reserve established in accordance with GAAP against any
liabilities (other than any taxes deducted pursuant to clause (i)
above) (A) associated with the assets that are the subject of such
Prepayment Event and (B) retained by the Borrower or any of the
Restricted Subsidiaries, provided that the amount of any subsequent
reduction of such reserve (other than in connection with a payment
in respect of any such liability) shall be deemed to be Net Cash
Proceeds of such a Prepayment Event occurring on the date of such
reduction,
(iii) in the case of any Prepayment Event, the amount of any
Indebtedness secured by a Lien on the assets that are the subject of
such Prepayment Event to the extent that the instrument creating or
evidencing such Indebtedness requires that such Indebtedness be
repaid upon consummation of such Prepayment Event,
(iv) in the case of any Asset Sale Prepayment Event, the amount
of any proceeds of such Asset Sale Prepayment Event that the
Borrower has reinvested (or intends to reinvest within one year of
the date of such Asset Sale Prepayment Event) in the business of the
Borrower or any of the Restricted Subsidiaries (subject to Section
9.14), provided that any portion of such proceeds that has not been
so reinvested within such one-year period shall (x) be deemed to be
Net Cash Proceeds of an Asset Sale Prepayment Event occurring on the
last day of such one-year period and (y) be applied to the repayment
of Term Loans in accordance with Section 5.2(a)(i), provided further
that, for purposes of the preceding proviso, such one-year period
shall be extended by up to eighteen months from the last day of such
one-year period so long as (A) such proceeds are to be reinvested
within such additional eighteen-month period under the Borrower's
business plan as most recently adopted in good faith by its Board of
Directors and (B) the Borrower believes in good faith that such
proceeds will be so reinvested within such additional eighteen-month
period, and
(v) in the case of any Prepayment Event or any issuance by the
Borrower of equity securities, reasonable and customary fees,
commissions, expenses, issuance costs, discounts and other costs
paid by the Borrower or any of the Restricted Subsidiaries in
connection with such Prepayment Event or issuance, as the case may
<PAGE>
22
be (other than those payable to the Borrower or any Subsidiary of
the Borrower), in each case only to the extent not already deducted
in arriving at the amount referred to in clause (a) above.
"Non-Defaulting Lender" shall mean and include each Lender other
than a Defaulting Lender.
"Non-Excluded Taxes" shall have the meaning provided in Section
5.4(a).
"Notice of Borrowing" shall have the meaning provided in Section
2.3.
"Notice of Conversion or Continuation" shall have the meaning
provided in Section 2.6.
"Obligations" shall mean all monetary amounts of every type or
description at any time owing to the Administrative Agent, any Lender or,
in the case of Hedge Agreements, any affiliate of a Lender pursuant to the
terms of this Agreement, any other Credit Document or any Hedge Agreement.
"Participant" shall have the meaning provided in Section
13.6(a)(ii).
"Partnership" shall mean KLC Associates, L.P., a Delaware limited
partnership, all the general and limited partners of which are Affiliates
of KKR.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall mean the acquisition, by merger or
otherwise, by the Borrower or any of the Restricted Subsidiaries of assets
or capital stock or other equity interests, so long as (a) such
acquisition and all transactions related thereto shall be consummated in
accordance with applicable law; (b) such acquisition shall, in the case of
the acquisition of capital stock or other equity interests by the Borrower
or any Restricted Domestic Subsidiary, result in the issuer of such
capital stock or other equity interests becoming a Restricted Domestic
Subsidiary and a direct Restricted Domestic Subsidiary in the case of such
an acquisition by the Borrower; (c) after giving effect to such
acquisition, no Default or Event of Default shall have occurred and be
continuing; and (d) the Borrower shall be in compliance, on a pro forma
basis after giving effect to such acquisition (including any Indebtedness
assumed or permitted to exist or incurred pursuant to Sections 10.1(j) and
10.1(k), respectively, and any related Pro Forma Adjustment), with the
covenants set forth in Sections 10.9, 10.10 and 10.11, as such covenants
are recomputed as at the last day of the most recently ended Test Period
under such Sections as if such acquisition had occurred on the first day
of such Test Period.
"Permitted Investments" shall mean (a) securities issued or
unconditionally guaranteed by the United States government or any agency
or instrumentality thereof, in each case having maturities of not more
than 24 months from the date of acquisition thereof; (b) securities
<PAGE>
23
issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof or any
political subdivision of any such state or any public instrumentality
thereof having maturities of not more than 24 months from the date of
acquisition thereof and, at the time of acquisition, having an investment
grade rating generally obtainable from either S&P or Moody's (or, if at
any time neither S&P nor Moody's shall be rating such obligations, then
from another nationally recognized rating service); (c) commercial paper
issued by any Lender or any bank holding company owning any Lender; (d)
commercial paper maturing no more than 12 months after the date of
creation thereof and, at the time of acquisition, having a rating of at
least A-2 or P-2 from either S&P or Moody's (or, if at any time neither
S&P nor Moody's shall be rating such obligations, an equivalent rating
from another nationally recognized rating service); (e) domestic and
eurodollar certificates of deposit or bankers' acceptances maturing no
more than two years after the date of acquisition thereof issued by any
Lender or any other bank having combined capital and surplus of not less
than $250,000,000 in the case of domestic banks and $100,000,000 (or the
dollar equivalent thereof) in the case of foreign banks; (f) repurchase
agreements with a term of not more than 30 days for underlying securities
of the type described in clauses (a), (b) and (e) above entered into with
any bank meeting the qualifications specified in clause (e) above or
securities dealers of recognized national standing; (g) shares of
investment companies that are registered under the Investment Company Act
of 1940 and invest solely in one or more of the types of securities
described in clauses (a) through (f) above; and (h) in the case of
investments by any Restricted Foreign Subsidiary, other customarily
utilized high-quality investments in the country where such Restricted
Foreign Subsidiary is located.
"Permitted Liens" shall mean (a) Liens for taxes, assessments or
governmental charges or claims not yet due or which are being contested in
good faith and by appropriate proceedings for which appropriate reserves
have been established in accordance with GAAP; (b) Liens in respect of
property or assets of the Borrower or any of its Subsidiaries imposed by
law, such as carriers', warehousemen's and mechanics' Liens and other
similar Liens arising in the ordinary course of business, in each case so
long as such Liens arise in the ordinary course of business and do not
individually or in the aggregate have a Material Adverse Effect; (c) Liens
arising from judgments or decrees in circumstances not constituting an
Event of Default under Section 11.9; (d) Liens incurred or deposits made
in connection with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business; (e) ground leases
in respect of real property on which facilities owned or leased by the
Borrower or any of its Subsidiaries are located; (f) easements,
rights-of-way, restrictions, minor defects or irregularities in title and
other similar charges or encumbrances not interfering in any material
respect with the business of the Borrower and its Subsidiaries taken as a
whole; (g) any interest or title of a lessor or secured by a lessor's
interest under any lease permitted by this Agreement; (h) Liens in favor
of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods; (i)
Liens on goods the purchase price of which is financed by a documentary
letter of credit issued for the account of the Borrower or any of its
Subsidiaries, provided that such Lien secures only the obligations of the
Borrower or such Subsidiaries in respect of such letter of credit to the
extent permitted
<PAGE>
24
under Section 10.1; and (j) leases or subleases granted to others not
interfering in any material respect with the business of the Borrower and
its Subsidiaries, taken as a whole.
"Permitted Mortgage Financing" shall mean any financing (or series
of related financings) by the Borrower or any of the Restricted
Subsidiaries after the Closing Date that is secured by a mortgage on one
or more Centers, provided that (a) the recourse of the lenders with
respect to such financing is limited solely to such mortgaged Centers, (b)
such financing is consummated for fair value as determined at the time of
consummation in good faith by the Board of Directors of the Borrower
(which such determination may take into account any investment of the
Borrower or such Restricted Subsidiary in connection with, and any other
material economic terms of, such financing) and (c) to the extent such
Centers are Closing Date Centers, the proceeds of such financing are
applied to the prepayment of Term Loans as provided in Section 5.2(a)(i).
"Permitted Sale Leaseback" shall mean any Sale Leaseback consummated
by the Borrower or any of the Restricted Subsidiaries after the Closing
Date with respect to one or more Centers, provided that (a) such Sale
Leaseback is consummated for fair value as determined at the time of
consummation in good faith by the Board of Directors of the Borrower
(which such determination may take into account any retained interest or
other investment of the Borrower or such Restricted Subsidiary in
connection with, and any other material economic terms of, such Sale
Leaseback) and (b) to the extent such Centers are Closing Date Centers,
the proceeds of such Sale Leaseback are applied to the prepayment of Term
Loans as provided in Section 5.2(a)(i).
"Permitted Securitization" shall mean any structured financing (or
series of related structured financings) by the Borrower or any of the
Restricted Subsidiaries after the Closing Date that involves the sale,
transfer or other disposition of one or more Centers to a Real Estate
Financing Subsidiary and the issuance by such Real Estate Financing
Subsidiary of commercial paper, medium-term notes or any other forms of
financing, provided that (a) such structured financing is consummated for
fair value as determined at the time of consummation in good faith by the
Board of Directors of the Borrower (which such determination may take into
account any retained interest or other investment of the Borrower or such
Restricted Subsidiary in connection with, and any other material economic
terms of, such structured financing) and (b) to the extent such Centers
are Closing Date Centers, the proceeds of such structured financing are
applied to the prepayment of Term Loans as provided in Section 5.2(a)(i).
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or other
enterprise or any Governmental Authority.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA and subject to Title IV of ERISA, that is
or was within any of the preceding five plan years maintained or
contributed to by (or to which there is or was an obligation to contribute
or to make payments of) the Borrower, a Subsidiary or an ERISA Affiliate.
<PAGE>
25
"Pledge Agreement" shall mean and include the Pledge Agreement
entered into by the Borrower, the other pledgors party thereto and the
Administrative Agent for the benefit of the Lenders, substantially in the
form of Exhibit B, as the same may be amended, supplemented or otherwise
modified from time to time.
"Prepayment Event" shall mean any Asset Sale Prepayment Event, Debt
Incurrence Prepayment Event or Real Estate Financing Prepayment Event.
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Administrative Agent as its reference
rate in effect at its principal office in New York City (the Prime Rate
not being intended to be the lowest rate of interest charged by Chase in
connection with extensions of credit to debtors).
"Pro Forma Adjustment" shall mean, for any period, with respect to
the Acquired EBITDA of any Acquired Entity or Business, the pro forma
increase or decrease in such Acquired EBITDA projected by the Borrower in
good faith as a result of reasonably identifiable and supportable net cost
savings or additional net costs, as the case may be, realizable during
such period by combining the operations of such Acquired Entity or
Business with the operations of the Borrower and its Subsidiaries,
provided that so long as such net cost savings or additional net costs
will be realizable at any time during such period, it may be assumed, for
purposes of projecting such pro forma increase or decrease to such
Acquired EBITDA, that such net cost savings or additional net costs will
be realizable during the entire such period, provided further that any
such pro forma increase or decrease to such Acquired EBITDA shall be
without duplication for net cost savings or additional net costs actually
realized during such period and already included in such Acquired EBITDA.
"Pro Forma Adjustment Certificate" shall mean any certificate of an
Authorized Officer of the Borrower delivered pursuant to Section 9.1(h) or
setting forth the information described in clause (iv) to Section 9.1(d).
"Real Estate Financing" shall mean any Permitted Mortgage Financing,
Permitted Sale Leaseback or Permitted Securitization.
"Real Estate Financing Prepayment Event" shall mean any Real Estate
Financing, in either case with respect to Closing Date Centers.
"Real Estate Financing Subsidiary" shall mean any special purpose
entity of the Borrower or any Restricted Subsidiary formed in connection
with Real Estate Financings.
"Reference Lender" shall mean Chase.
"Register" shall have the meaning provided in Section 13.6(c).
"Regulation D" shall mean Regulation D of the Board as from time to
time in effect and any successor to all or a portion thereof establishing
reserve requirements.
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26
"Regulation G" shall mean Regulation G of the Board as from time to
time in effect and any successor to all or a portion thereof establishing
margin requirements.
"Regulation T" shall mean Regulation T of the Board as from time to
time in effect and any successor to all or a portion thereof establishing
margin requirements.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and any successor to all or a portion thereof establishing
margin requirements.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and any successor to all or a portion thereof establishing
margin requirements.
"Remaining Public Equity" shall mean all the Borrower Common Stock
in existence on the Closing Date and which is not beneficially owned,
directly or indirectly, by KKR, its Affiliates or the Management Group on
the Closing Date, including any additional Borrower Common Stock or other
capital stock or equity interests in the Borrower issued in respect of
such Borrower Common Stock in existence on the Closing Date as a result of
a stock split, recapitalization, merger, combination, consolidation or
otherwise, but excluding any management equity plan or stock option plan
or similar agreement.
"Repayment Amount" shall have the meaning provided in Section
2.5(b).
"Repayment Date" shall have the meaning provided in Section 2.5(b).
"Reportable Event" shall mean an event described in Section 4043 of
ERISA and the regulations thereunder.
"Required Lenders" shall mean, at any date, (a) Non-Defaulting
Lenders having or holding a majority of the sum of (i) the Adjusted Total
Revolving Credit Commitment at such date, (ii) the Adjusted Total Term
Loan Commitment at such date and (iii) the outstanding principal amount of
the Term Loans (excluding the Term Loans held by Defaulting Lenders) at
such date or (b) if the Total Revolving Credit Commitment and the Total
Term Loan Commitment have been terminated or for the purposes of
acceleration pursuant to Section 11, the holders (excluding Defaulting
Lenders) of a majority of the outstanding principal amount of the Loans
and Letter of Credit Exposures (excluding the Loans and Letter of Credit
Exposures of Defaulting Lenders) in the aggregate at such date.
"Required Revolving Credit Lenders" shall mean, at any date, (a)
Non-Defaulting Lenders having or holding a majority of the Adjusted Total
Revolving Credit Commitment at such date or (b) if the Total Revolving
Credit Commitment has been terminated, the holders (excluding Defaulting
Lenders) of a majority of the outstanding principal amount of the
Revolving Credit Loans and Letter of Credit Exposures (excluding the Loans
and Letter of Credit Exposures of Defaulting Lenders) in the aggregate at
such date.
"Required Term Loan Lenders" shall mean, at any date, (a)
Non-Defaulting Lenders having or holding a majority of the sum of (i) the
Adjusted Total Term Loan Commitment at
<PAGE>
27
such date and (ii) the outstanding principal amount of the Term Loans
(excluding the Term Loans held by Defaulting Lenders) in the aggregate at
such date or (b) if the Total Term Loan Commitment has been terminated or
for the purposes of acceleration pursuant to Section 11 , the holders
(excluding Defaulting Lenders) of a majority of the outstanding principal
amount of the Term Loans (excluding the Term Loans of Defaulting Lenders)
in the aggregate at such date.
"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 any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority,
in each case applicable to or binding upon such Person or any of its
property or assets or to which such Person or any of its property or
assets is subject.
"Restricted Domestic Subsidiary" shall mean each Restricted
Subsidiary that is also a Domestic Subsidiary.
"Restricted Foreign Subsidiary" shall mean any Foreign Subsidiary
that is also a Restricted Subsidiary.
"Restricted Subsidiary" shall mean any Subsidiary of the Borrower
other than an Unrestricted Subsidiary.
"Revolving Credit Commitment" shall mean, (a) with respect to each
Lender that is a Lender on the date hereof, the amount set forth opposite
such Lender's name on Schedule 1.1 as such Lender's "Revolving Credit
Commitment" and (b) in the case of any Lender that becomes a Lender after
the date hereof, the amount specified as such Lender's "Revolving Credit
Commitment" in the Assignment and Acceptance pursuant to which such Lender
assumed a portion of the Total Revolving Credit Commitment, in each case
as the same may be changed from time to time pursuant to the terms hereof.
"Revolving Credit Commitment Percentage" shall mean at any time, for
each Lender, the percentage obtained by dividing such Lender's Revolving
Credit Commitment by the Total Revolving Credit Commitment, provided that
at any time when the Total Revolving Credit Commitment shall have been
terminated, each Lender's Revolving Credit Commitment Percentage shall be
its Revolving Credit Commitment Percentage as in effect immediately prior
to such termination.
"Revolving Credit Loan" shall have the meaning provided in Section
2.1.
"Revolving Credit Maturity Date" shall mean the date that is seven
years after the Closing Date, or, if such date is not a Business Day, the
next preceding Business Day.
"Sale Leaseback" shall mean any transaction or series of related
transactions pursuant to which the Borrower or any of the Restricted
Subsidiaries sells, transfers or otherwise disposes of any property, real
or personal, whether now owned or hereafter acquired, and
<PAGE>
28
thereafter rents or leases such property or other property which it
intends to use for substantially the same purpose or purposes as the
property being sold, transferred or disposed.
"S&P" shall mean Standard & Poor's Ratings Service or any successor
by merger or consolidation to its business.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Section 9.1 Financials" shall mean the financial statements
delivered, or required to be delivered, pursuant to Section 9.1(a) or (b)
together with the accompanying officer's certificate delivered, or
required to be delivered, pursuant to Section 9.1(e).
"Senior Note Indenture" shall mean the Indenture dated as of June 2,
1994, and supplemented, in connection with the Debt Tender Offer, as of
November 7, 1996, as the same may be further amended, supplemented or
otherwise modified from time to time, between the Borrower and AmSouth
Bank N.A., as trustee, pursuant to which the Senior Notes were issued.
"Senior Notes" shall mean the 10-3/8% Senior Notes of the Borrower
due June 1, 2001 in an initial aggregate principal amount of $100,000,000.
"Sold Entity or Business" shall have the meaning provided in the
definition of the term "Consolidated EBITDA".
"Specified Subsidiary" shall mean, at any date of determination, (a)
any Material Subsidiary or (b) any Unrestricted Subsidiary (i) whose total
assets at the last day of the Test Period ending on the last day of the
most recent fiscal period for which Section 9.1 Financials have been
delivered were equal to or greater than 15% of the consolidated total
assets of the Borrower and its Subsidiaries at such date or (ii) whose
gross revenues for such Test Period were equal to or greater than 15% of
the consolidated gross revenues of the Borrower and its Subsidiaries for
such period, in each case determined in accordance with GAAP.
"Stated Amount" of any Letter of Credit shall mean the maximum
amount from time to time available to be drawn thereunder, determined
without regard to whether any conditions to drawing could then be met.
"Status" shall mean, as to the Borrower as of any date, the
existence of Level I Status, Level II Status, Level III Status, Level IV
Status or Level V Status, as the case may be, on such date. Changes in
Status resulting from changes in the Consolidated Senior Debt to
Consolidated EBITDA Ratio (and, in the case of Level V, in the
Consolidated EBITDA to Consolidated Interest Expense Ratio) shall become
effective (the date of such effectiveness, the "Effective Date") as of the
first day following the most recent fiscal year or period for which (a)
Section 9.1 Financials are delivered to the Lenders under Section 9.1 and
(b) an officer's certificate is delivered by the Borrower to the Lenders
setting forth, with respect to such Section 9.1 Financials, the
then-applicable Status, and shall remain in effect until the next change
to be effected pursuant to this definition, provided that (i) if the
Borrower shall
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29
have made any payments in respect of interest or commitment fees during
the period (the "Interim Period") from and including the Effective Date to
but excluding the day any change in Status is determined as provided
above, then the amount of the next such payment due on or after such day
shall be increased or decreased by an amount equal to any underpayment or
overpayment so made by the Borrower during such Interim Period, (ii)
notwithstanding the foregoing, for the period from and including the
Closing Date to but excluding the day that is 180 days following the
Closing Date, the Status of the Borrower for the purposes of this
Agreement shall be deemed to be Level I and (iii) each determination of
the Consolidated Senior Debt to Consolidated EBITDA Ratio (and, in the
case of Level V, in the Consolidated EBITDA to Consolidated Interest
Expense Ratio) pursuant to this definition shall be made with respect to
the Test Period ending at the end of the fiscal period covered by the
relevant financial statements.
"Subordinated Note Indenture" shall mean the Indenture dated as of
the date hereof, as the same may be amended, supplemented or otherwise
modified from time to time, between the Borrower and Marine Midland Bank,
as trustee, pursuant to which the Subordinated Notes were issued.
"Subordinated Notes" shall mean the $300,000,000 aggregate principal
amount of Senior Subordinated Notes of the Borrower due 2009 issued on or
about the Closing Date pursuant to the Subordinated Note Indenture.
"Subsidiary" of any Person shall mean and include (a) any
corporation more than 50% of whose stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the time
stock of any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time
owned by such Person directly or indirectly through Subsidiaries and (b)
any partnership, association, joint venture or other entity in which such
Person directly or indirectly through Subsidiaries has more than a 50%
equity interest at the time. Unless otherwise expressly provided, all
references herein to a "Subsidiary" shall mean a Subsidiary of the
Borrower.
"Swingline Commitment" shall mean $25,000,000.
"Swingline Loans" shall have the meaning provided in Section 2.1(c).
"Swingline Maturity Date" shall mean, with respect to any Swingline
Loan, the date that is five Business Days prior to the Revolving Credit
Maturity Date.
"Syndication Agent" shall mean Bankers Trust Company, together with
its affiliates, as the syndication agent for the Lenders under this
Agreement and the other Credit Documents.
"Term Loan" shall have the meaning provided in Section 2.1.
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"Term Loan Availability Period" shall mean the period from and
including the Closing Date to but excluding the day that is 180 days
following the Closing Date.
"Term Loan Commitment" shall mean, (a) in the case of each Lender
that is a Lender on the date hereof, the amount set forth opposite such
Lender's name on Schedule 1.1 as such Lender's "Term Loan Commitment" and
(b) in the case of any Lender that becomes a Lender after the date hereof,
the amount specified as such Lender's "Term Loan Commitment" in the
Assignment and Acceptance pursuant to which such Lender assumed a portion
of the Total Term Loan Commitment, in each case as the same may be changed
from time to time pursuant to the terms hereof.
"Term Loan Maturity Date" shall mean the date that is nine years
after the Closing Date, or, if such Date is not a Business Day, the next
preceding Business Day.
"Test Period" shall mean, for any determination under this
Agreement, the four consecutive fiscal quarters of the Borrower then last
ended.
"Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate, expressed as a per annum rate, for three-month
certificates of deposit reported as being in effect on such day (or, if
such day shall not be a Business Day, the next preceding Business Day) by
the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day, the average of
the secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately 10:00
A.M., New York time, on such day (or, if such day shall not be a Business
Day, on the next preceding Business Day) by the Administrative Agent from
three New York City negotiable certificate of deposit dealers of
recognized standing selected by it.
"Total Commitment" shall mean the sum of the Total Term Loan
Commitment and the Total Revolving Credit Commitment.
"Total Credit Exposure" shall mean, at any date, the sum of (a) the
Total Revolving Credit Commitment at such date, (b) the Total Term Loan
Commitment at such date and (c) the outstanding principal amount of all
Term Loans at such date.
"Total Revolving Credit Commitment" shall mean the sum of the
Revolving Credit Commitments of all the Lenders.
"Total Term Loan Commitment" shall mean the sum of the Term Loan
Commitments of all the Lenders.
"Transaction Expenses" shall mean any fees or expenses incurred or
paid by the Borrower or any of its Subsidiaries in connection with the
Merger, the financing therefor and
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31
the other transactions contemplated hereby and thereby (including any
premium over par or similar amount paid to holders of Senior Notes in
connection with the Debt Tender Offer).
"Transferee" shall have the meaning provided in Section 13.6(e).
"Type" shall mean (a) as to any Term Loan, its nature as an ABR Loan
or a Eurodollar Term Loan and (b) as to any Revolving Credit Loan, its
nature as an ABR Loan or a Eurodollar Revolving Credit Loan.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the present value of the accrued benefits under the Plan as
of the close of its most recent plan year, determined in accordance with
Statement of Financial Accounting Standards No. 87 as in effect on the
date hereof, based upon the actuarial assumptions that would be used by
the Plan's actuary in a termination of the Plan, exceeds the fair market
value of the assets allocable thereto.
"Unpaid Drawing" shall have the meaning provided in Section 3.4(a).
"Unrestricted Subsidiary" shall mean (a) any Subsidiary of the
Borrower that is formed or acquired after the Closing Date, provided that
at such time (or promptly thereafter) the Borrower designates such
Subsidiary an Unrestricted Subsidiary in a written notice to the
Administrative Agent, (b) any Restricted Subsidiary on the Closing Date
subsequently re-designated as an Unrestricted Subsidiary by the Borrower
in a written notice to the Administrative Agent, provided that such
re-designation shall be deemed to be an investment on the date of such
re-designation in an Unrestricted Subsidiary in an amount equal to the sum
of (i) the net worth of such re-designated Restricted Subsidiary
immediately prior to such re-designation (such net worth to be calculated
without regard to any Guarantee provided by such re-designated Restricted
Subsidiary) and (ii) the aggregate principal amount of any Indebtedness
owed by such re-designated Restricted Subsidiary to the Borrower or any
other Restricted Subsidiary immediately prior to such re-designation, all
calculated, except as set forth in the parenthetical to clause (i), on a
consolidated basis in accordance with GAAP, and (c) each Subsidiary of an
Unrestricted Subsidiary; provided, however, that (i) at the time of any
written re-designation by the Borrower to the Administrative Agent of any
Unrestricted Subsidiary as a Restricted Subsidiary, the Unrestricted
Subsidiary so re-designated shall no longer constitute an Unrestricted
Subsidiary, (ii) no Unrestricted Subsidiary may be re-designated as a
Restricted Subsidiary if a Default or Event of Default would result from
such re-designation and (iii) no Restricted Subsidiary may be
re-designated as an Unrestricted Subsidiary if a Default or Event of
Default would result from such re-designation. On or promptly after the
date of its formation, acquisition or re-designation, as applicable, each
Unrestricted Subsidiary (other than an Unrestricted Subsidiary that is a
Foreign Subsidiary) shall have entered into a tax sharing agreement
containing terms that, in the reasonable judgment of the Administrative
Agent, provide for an appropriate allocation of tax liabilities and
benefits.
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"Voting Stock" shall mean, with respect to any Person, shares of
such Person's capital stock having the right to vote for the election of
directors of such Person under ordinary circumstances.
SECTION 2. Amount and Terms of Credit.
2.1 Commitments. (a) Subject to and upon the terms and conditions
herein set forth, each Lender having a Term Loan Commitment severally agrees to
make a loan or loans (each a "Term Loan" and, collectively, the "Term Loans") to
the Borrower, which Term Loans (i) shall be made on the Closing Date and on any
other single date during the Term Loan Availability Period, (ii) may, at the
option of the Borrower, be incurred and maintained as, and/or converted into,
ABR Loans or Eurodollar Term Loans, provided that all Term Loans made by each of
the Lenders pursuant to the same Borrowing shall, unless otherwise specifically
provided herein, consist entirely of Term Loans of the same Type, (iii) may be
repaid in accordance with the provisions hereof, but once repaid, may not be
reborrowed, (iv) shall not exceed for any such Lender the Term Loan Commitment
of such Lender and (v) shall not exceed in the aggregate the Total Term Loan
Commitment. On the Term Loan Maturity Date, all Term Loans shall be repaid in
full.
(b) Subject to and upon the terms and conditions herein set forth,
each Lender having a Revolving Credit Commitment severally agrees to make a loan
or loans (each a "Revolving Credit Loan" and, collectively, the "Revolving
Credit Loans") to the Borrower, which Revolving Credit Loans (i) shall be made
at any time and from time to time on and after the Closing Date and prior to the
Revolving Credit Maturity Date, (ii) may, at the option of the Borrower, be
incurred and maintained as, and/or converted into, ABR Loans or Eurodollar
Revolving Credit Loans, provided that all Revolving Credit Loans made by each of
the Lenders pursuant to the same Borrowing shall, unless otherwise specifically
provided herein, consist entirely of Revolving Credit Loans of the same Type,
(iii) may be repaid and reborrowed in accordance with the provisions hereof,
(iv) shall not exceed for any such Lender at any time outstanding that aggregate
principal amount which, when added to the product of (x) such Lender's Revolving
Credit Commitment Percentage and (y) the sum of (I) the aggregate Letter of
Credit Outstandings at such time and (II) the aggregate principal amount of all
Swingline Loans then outstanding, equals the Revolving Credit Commitment of such
Lender at such time and (v) shall not, after giving effect thereto and to the
application of the proceeds thereof, exceed for all Lenders at any time
outstanding the aggregate principal amount that, when added to the sum of (x)
the Letter of Credit Outstandings at such time and (y) the aggregate principal
amount of all Swingline Loans then outstanding, equals the Total Revolving
Credit Commitment then in effect. On the Revolving Credit Maturity Date, all
Revolving Credit Loans shall be repaid in full.
(c) Subject to and upon the terms and conditions herein set forth,
Chase in its individual capacity agrees, at any time and from time to time on
and after the Closing Date and prior to the Swingline Maturity Date, to make a
loan or loans (each a "Swingline Loan" and, collectively, the "Swingline Loans")
to the Borrower, which Swingline Loans (i) shall be ABR Loans, (ii) shall have
the benefit of the provisions of Section 2.1(d), (iii) shall not exceed at any
time outstanding the Swingline Commitment, (iv) shall not, after giving effect
thereto and to the application of the proceeds thereof, exceed in the aggregate
at any time outstanding the principal amount that, when added to the aggregate
principal amount of all Revolving Credit Loans then outstanding and all Letter
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33
of Credit Outstandings at such time, equals the Total Revolving Credit
Commitment then in effect and (v) may be repaid and reborrowed in accordance
with the provisions hereof. On the Swingline Maturity Date, each outstanding
Swingline Loan shall be repaid in full. Chase shall not make any Swingline Loan
after receiving a written notice from the Borrower or any Lender stating that a
Default or Event of Default exists and is continuing until such time as Chase
shall have received written notice of (i) rescission of all such notices from
the party or parties originally delivering such notice or (ii) the waiver of
such Default or Event of Default in accordance with the provisions of Section
13.1.
(d) On any Business Day, Chase may, in its sole discretion, give
notice to the Lenders that all then-outstanding Swingline Loans shall be funded
with a Borrowing of Revolving Credit Loans, in which case a Borrowing of
Revolving Credit Loans constituting ABR Loans (each such Borrowing, a "Mandatory
Borrowing") shall be made on the immediately succeeding Business Day by all
Lenders pro rata based on each Lender's Revolving Credit Commitment Percentage,
and the proceeds thereof shall be applied directly to Chase to repay Chase for
such outstanding Swingline Loans. Each Lender hereby irrevocably agrees to make
such Revolving Credit Loans upon one Business Day's notice pursuant to each
Mandatory Borrowing in the amount and in the manner specified in the preceding
sentence and on the date specified to it in writing by Chase notwithstanding (i)
that the amount of the Mandatory Borrowing may not comply with the minimum
amount for each Borrowing specified in Section 2.2, (ii) whether any conditions
specified in Section 7 are then satisfied, (iii) whether a Default or an Event
of Default has occurred and is continuing, (iv) the date of such Mandatory
Borrowing or (v) any reduction in the Total Commitment after any such Swingline
Loans were made. In the event that, in the sole judgment of Chase, any Mandatory
Borrowing cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code in respect of the Borrower), each Lender hereby agrees
that it shall forthwith purchase from Chase (without recourse or warranty) such
participation of the outstanding Swingline Loans as shall be necessary to cause
the Lenders to share in such Swingline Loans ratably based upon their respective
Revolving Credit Commitment Percentages, provided that all principal and
interest payable on such Swingline Loans shall be for the account of Chase until
the date the respective participation is purchased and, to the extent
attributable to the purchased participation, shall be payable to the Lender
purchasing same from and after such date of purchase.
2.2 Minimum Amount of Each Borrowing; Maximum Number of Borrowings.
The aggregate principal amount of each Borrowing of Term Loans, Revolving Credit
Loans or Swingline Loans shall be in a multiple of $100,000 and shall not be
less than the Minimum Borrowing Amount with respect thereto (except that
Mandatory Borrowings shall be made in the amounts required by Section 2.1(d)).
More than one Borrowing may be incurred on any date, provided that at no time
shall there be outstanding more than 20 Borrowings of Eurodollar Loans under
this Agreement.
2.3 Notice of Borrowing. (a) The Borrower shall give the
Administrative Agent at the Administrative Agent's Office (i) prior to 12:00
Noon (New York time) at least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of the Borrowing of the Term
Loans if all or any of the Term Loans are to be initially Eurodollar Loans and
(ii) prior written notice (or telephonic notice promptly confirmed in writing)
prior to 10:00 A.M. (New York time) on the date of the Borrowing of the Term
Loans if all the Term Loans are to be ABR Loans.
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34
Such notice (together with each notice of a Borrowing of Revolving Credit Loans
pursuant to Section 2.3(b) and each notice of a Borrowing of Swingline Loans
pursuant to Section 2.3(c), a "Notice of Borrowing") shall be irrevocable and
shall specify (i) the aggregate principal amount of the Term Loans to be made,
(ii) the date of the borrowing (which shall be a Business Day and, in the case
of the initial borrowing, shall be the Closing Date) and (iii) whether the Term
Loans shall consist of ABR Loans and/or Eurodollar Term Loans and, if the Term
Loans are to include Eurodollar Term Loans, the Interest Period to be initially
applicable thereto. The Administrative Agent shall promptly give each Lender
written notice (or telephonic notice promptly confirmed in writing) of the
proposed Borrowing of Term Loans, of such Lender's proportionate share thereof
and of the other matters covered by the related Notice of Borrowing.
(b) Whenever the Borrower desires to incur Revolving Credit Loans
hereunder (other than Mandatory Borrowings or borrowings to repay Unpaid
Drawings), it shall give the Administrative Agent at the Administrative Agent's
Office (i) prior to 12:00 Noon (New York time) at least three Business Days'
prior written notice (or telephonic notice promptly confirmed in writing) of
each Borrowing of Eurodollar Revolving Credit Loans and (ii) prior to 12:00 Noon
(New York time) at least one Business Day's prior written notice (or telephonic
notice promptly confirmed in writing) of each Borrowing of ABR Loans. Each such
Notice of Borrowing, except as otherwise expressly provided in Section 2.10,
shall be irrevocable and shall specify (i) the aggregate principal amount of the
Revolving Credit Loans to be made pursuant to such Borrowing, (ii) the date of
Borrowing (which shall be a Business Day) and (iii) whether the respective
Borrowing shall consist of ABR Loans or Eurodollar Revolving Credit Loans and,
if Eurodollar Revolving Credit Loans, the Interest Period to be initially
applicable thereto. The Administrative Agent shall promptly give each Lender
written notice (or telephonic notice promptly confirmed in writing) of each
proposed Borrowing of Revolving Credit Loans, of such Lender's proportionate
share thereof and of the other matters covered by the related Notice of
Borrowing.
(c) Whenever the Borrower desires to incur Swingline Loans
hereunder, it shall give the Administrative Agent written notice (or telephonic
notice promptly confirmed in writing) of each Borrowing of Swingline Loans prior
to 1:00 P.M. (New York time) on the date of such Borrowing. Each such notice
shall be irrevocable and shall specify (i) the aggregate principal amount of the
Swingline Loans to be made pursuant to such Borrowing and (ii) the date of
Borrowing (which shall be a Business Day). The Administrative Agent shall
promptly give Chase written notice (or telephonic notice promptly confirmed in
writing) of each proposed Borrowing of Swingline Loans and of the other matters
covered by the related Notice of Borrowing.
(d) Mandatory Borrowings shall be made upon the notice specified in
Section 2.1(d), with the Borrower irrevocably agreeing, by its incurrence of any
Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section.
(e) Borrowings to reimburse Unpaid Drawings shall be made upon the
notice specified in Section 3.4(c).
(f) Without in any way limiting the obligation of the Borrower to
confirm in writing any notice it may give hereunder by telephone, the
Administrative Agent may act prior to receipt of written confirmation without
liability upon the basis of such telephonic notice believed by the
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35
Administrative Agent in good faith to be from an Authorized Officer of the
Borrower. In each such case the Borrower hereby waives the right to dispute the
Administrative Agent's record of the terms of any such telephonic notice.
2.4 Disbursement of Funds. (a) No later than 12:00 Noon (New York
time) on the date specified in each Notice of Borrowing (including Mandatory
Borrowings), each Lender will make available its pro rata portion, if any, of
each Borrowing requested to be made on such date in the manner provided below,
provided that all Swingline Loans shall be made available in the full amount
thereof by Chase no later than 2:00 P.M. (New York time) on the date requested.
(b) Each Lender shall make available all amounts it is to fund under
any Borrowing in Dollars and immediately available funds to the Administrative
Agent at the Administrative Agent's Office and the Administrative Agent will
(except in the case of Mandatory Borrowings and Borrowings to repay Unpaid
Drawings) make available to the Borrower by depositing to the Borrower's account
at the Administrative Agent's Office the aggregate of the amounts so made
available in Dollars and the type of funds received. Unless the Administrative
Agent shall have been notified by any Lender prior to the date of any such
Borrowing that such Lender does not intend to make available to the
Administrative Agent its portion of the Borrowing or Borrowings to be made on
such date, the Administrative Agent may assume that such Lender has made such
amount available to the Administrative Agent on such date of Borrowing, and the
Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Administrative Agent by such Lender and the Administrative Agent has made
available same to the Borrower, the Administrative Agent shall be entitled 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 shall promptly notify the Borrower, and the
Borrower shall immediately pay such corresponding amount to the Administrative
Agent. The Administrative Agent shall also be entitled to recover from such
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 rate per
annum equal to (i) if paid by such Lender, the Federal Funds Effective Rate or
(ii) if paid by the Borrower, the then-applicable rate of interest, calculated
in accordance with Section 2.8, for the respective Loans.
(c) Nothing in this Section 2.4 shall be deemed to relieve any
Lender from its obligation to fulfill its commitments hereunder or to prejudice
any rights that the Borrower may have against any Lender as a result of any
default by such Lender hereunder (it being understood, however, that no Lender
shall be responsible for the failure of any other Lender to fulfill its
commitments hereunder).
2.5 Repayment of Loans; Evidence of Debt. (a) The Borrower shall
repay to the Administrative Agent, for the benefit of the Lenders, (i) on the
Term Loan Maturity Date, the then-unpaid Term Loans, and (ii) on the Revolving
Credit Maturity Date, the then-unpaid Revolving Credit Loans. The Borrower shall
repay to the Administrative Agent, for the account of Chase, on the Swingline
Maturity Date, the then-unpaid Swingline Loans.
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(b) The Borrower shall repay to the Administrative Agent, for the
benefit of the Lenders of Term Loans, on each date set forth below (each a
"Repayment Date"), the principal amount of the Term Loans set forth below
opposite such Repayment Date (each a "Repayment Amount"):
Number of Months From Closing Date Repayment Amount
- ---------------------------------- ----------------
12 $ 500,000
24 500,000
36 500,000
48 500,000
60 500,000
72 500,000
84 500,000
96 500,000
108 86,000,000
To the extent that the aggregate principal amount of Term Loans outstanding on
the last day of the Term Loan Availability Period is less than $90,000,000, the
Repayment Amounts shall automatically be decreased, in the inverse order of
maturity, by the amount of such difference.
(c) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to the
appropriate lending office of such Lender resulting from each Loan made by such
lending office of such Lender from time to time, including the amounts of
principal and interest payable and paid to such lending office of such Lender
from time to time under this Agreement.
(d) The Administrative Agent shall maintain the Register pursuant to
Section 13.6, and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount of each Loan made
hereunder, whether such Loan is a Term Loan, a Revolving Credit Loan or a
Swingline Loan, the Type of each Loan made and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Lender or Chase hereunder and
(iii) the amount of any sum received by the Agent hereunder from the Borrower
and each Lender's share thereof.
(e) The entries made in the Register and accounts and subaccounts
maintained pursuant to paragraphs (c) and (d) of this Section 2.5 shall, to the
extent permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided, however,
that the failure of any Lender or the Administrative Agent to maintain such
account, such Register or such subaccount, as applicable, or any error therein,
shall not in any manner affect the obligation of the Borrower to repay (with
applicable interest) the Loans made to the Borrower by such Lender in accordance
with the terms of this Agreement.
2.6 Conversions and Continuations. (a) The Borrower shall have the
option on any Business Day to convert all or a portion equal to at least the
Minimum Borrowing Amount of the outstanding principal amount of Term Loans or
Revolving Credit Loans of one Type into a Borrowing or
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37
Borrowings of another Type or to continue the outstanding principal amount of
any Eurodollar Term Loans or Eurodollar Revolving Credit Loans as Eurodollar
Term Loans or Eurodollar Revolving Credit Loans, as the case may be, for an
additional Interest Period, provided that (i) no partial conversion of
Eurodollar Term Loans or Eurodollar Revolving Credit Loans shall reduce the
outstanding principal amount of Eurodollar Term Loans or Eurodollar Revolving
Credit Loans made pursuant to a single Borrowing to less than the Minimum
Borrowing Amount, (ii) ABR Loans may not be converted into Eurodollar Term Loans
or Eurodollar Revolving Credit Loans if a Default or Event of Default is in
existence on the date of the conversion and the Administrative Agent has or the
Required Lenders have determined in its or their sole discretion not to permit
such conversion, (iii) Eurodollar Loans may not be continued as Eurodollar Term
Loans or Eurodollar Revolving Credit Loans for an additional Interest Period if
a Default or Event of Default is in existence on the date of the proposed
continuation and the Administrative Agent has or the Required Lenders have
determined in its or their sole discretion not to permit such continuation and
(iv) Borrowings resulting from conversions pursuant to this Section 2.6 shall be
limited in number as provided in Section 2.2. Each such conversion or
continuation shall be effected by the Borrower by giving the Administrative
Agent at the Administrative Agent's Office prior to 12:00 Noon (New York time)
at least three Business Days' (or one Business Day's notice in the case of a
conversion into ABR Loans) prior written notice (or telephonic notice promptly
confirmed in writing) (each a "Notice of Conversion or Continuation") specifying
the Term Loans or Revolving Credit Loans to be so converted or continued, the
Type of Term Loans or Revolving Credit Loans to be converted or continued into
and, if such Term Loans or Revolving Credit Loans are to be converted into or
continued as Eurodollar Term Loans or Eurodollar Revolving Credit Loans, the
Interest Period to be initially applicable thereto. The Administrative Agent
shall give each Lender notice as promptly as practicable of any such proposed
conversion or continuation affecting any of its Term Loans or Revolving Credit
Loans.
(b) If any Default or Event of Default is in existence at the time of any
proposed continuation of any Eurodollar Term Loans or Eurodollar Revolving
Credit Loans and the Administrative Agent has or the Required Lenders have
determined in its or their sole discretion not to permit such continuation, such
Eurodollar Term Loans or Eurodollar Revolving Credit Loans shall be
automatically converted on the last day of the current Interest Period into ABR
Loans. If upon the expiration of any Interest Period in respect of Eurodollar
Term Loans or Eurodollar Revolving Credit Loans, the Borrower has failed to
elect a new Interest Period to be applicable thereto as provided in paragraph
(a) above, the Borrower shall be deemed to have elected to convert such
Borrowing of Eurodollar Term Loans or Eurodollar Revolving Credit Loans, as the
case may be, into a Borrowing of ABR Loans effective as of the expiration date
of such current Interest Period.
2.7 Pro Rata Borrowings. Each Borrowing of Term Loans or Revolving
Credit Loans under this Agreement shall be granted by the Lenders pro rata on
the basis of their then-applicable Commitments. It is understood that no Lender
shall be responsible for any default by any other Lender in its obligation to
make Loans hereunder and that each Lender shall be obligated to make the Loans
provided to be made by it hereunder, regardless of the failure of any other
Lender to fulfill its commitments hereunder.
2.8 Interest. (a) The unpaid principal amount of each ABR Loan shall
bear interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate
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per annum that shall at all times be the Applicable ABR Margin plus the ABR in
effect from time to time.
(b) The unpaid principal amount of each Eurodollar Term Loan or Eurodollar
Revolving Credit Loan shall bear interest from the date of the Borrowing thereof
until maturity thereof (whether by acceleration or otherwise) at a rate per
annum that shall at all times be the Applicable Eurodollar Margin in effect from
time to time plus the relevant Eurodollar Rate.
(c) If all or a portion of (i) the principal amount of any Loan or (ii)
any interest payable thereon shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum that is (x) in the case of overdue principal, the rate that
would otherwise be applicable thereto plus 2% or (y) in the case of any overdue
interest, to the extent permitted by applicable law, the rate described in
Section 2.8(a) plus 2% from and including the date of such non-payment to but
excluding the date on which such amount is paid in full (after as well as before
judgment).
(d) Interest on each Loan shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each ABR Loan, quarterly in arrears on the last day of
each March, June, September and December, (ii) in respect of each Eurodollar
Term Loan or Eurodollar Revolving Credit Loan, on the last day of each Interest
Period applicable thereto and, in the case of an Interest Period in excess of
three months, on each date occurring at three-month intervals after the first
day of such Interest Period, (iii) in respect of each Loan (except, in the case
of prepayments, any ABR Loan), on any prepayment (on the amount prepaid), at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(e) All computations of interest hereunder shall be made in accordance
with Section 5.5.
(f) The Administrative Agent, upon determining the interest rate for any
Borrowing of Eurodollar Loans, shall promptly notify the Borrower and the
relevant Lenders thereof. Each such determination shall, absent clearly
demonstrable error, be final and conclusive and binding on all parties hereto.
2.9 Interest Periods. At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion or Continuation in respect of the making of,
or conversion into or continuation as, a Borrowing of Eurodollar Term Loans or
Eurodollar Revolving Credit Loans (in the case of the initial Interest Period
applicable thereto) or prior to 10:00 A.M. (New York time) on the third Business
Day prior to the expiration of an Interest Period applicable to a Borrowing of
Eurodollar Term Loans or Eurodollar Revolving Credit Loans, the Borrower shall
have the right to elect by giving the Administrative Agent written notice (or
telephonic notice promptly confirmed in writing) the Interest Period applicable
to such Borrowing, which Interest Period shall, at the option of the Borrower,
be a one, two, three, six or (in the case of Revolving Credit Loans, if
available to all the
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39
Lenders making such loans as determined by such Lenders in good faith based on
prevailing market conditions) a nine or twelve month period. Notwithstanding
anything to the contrary contained above:
(a) the initial Interest Period for any Borrowing of Eurodollar Term
Loans or Eurodollar Revolving Credit Loans shall commence on the date of
such Borrowing (including the date of any conversion from a Borrowing of
ABR Loans) and each Interest Period occurring thereafter in respect of
such Borrowing shall commence on the day on which the next preceding
Interest Period expires;
(b) if any Interest Period relating to a Borrowing of Eurodollar
Term Loans or Eurodollar Revolving Credit Loans begins on the last
Business Day of a calendar month or begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day
of the calendar month at the end of such Interest Period;
(c) if any Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period in respect
of a Eurodollar Term Loan or Eurodollar Revolving Credit Loan would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day; and
(d) the Borrower shall not be entitled to elect any Interest Period
in respect of any Eurodollar Term Loan or Eurodollar Revolving Credit Loan
if such Interest Period would extend beyond the applicable Maturity Date
of such Loan.
2.10 Increased Costs, Illegality, etc. (a) In the event that (x) in the
case of clause (i) below, the Administrative Agent or (y) in the case of clauses
(ii) and (iii) below, any Lender shall have reasonably determined (which
determination shall, absent clearly demonstrable error, be final and conclusive
and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising on or after the Closing Date
affecting the interbank Eurodollar market, adequate and fair means do not
exist for ascertaining the applicable interest rate on the basis provided
for in the definition of Eurodollar Rate; or
(ii) at any time, that such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans (other than any such increase or reduction
attributable to taxes) because of (x) any change since the date hereof in
any applicable law, governmental rule, regulation, guideline or order (or
in the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation, guideline or
order), such as, for example, but not limited to, a change in official
reserve requirements, and/or (y) other circumstances affecting the
interbank Eurodollar market or the position of such Lender in such market;
or
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40
(iii) at any time, that the making or continuance of any Eurodollar
Loan has become unlawful by compliance by such Lender in good faith with
any law, governmental rule, regulation, guideline or order (or would
conflict with any such governmental rule, regulation, guideline or order
not having the force of law even though the failure to comply therewith
would not be unlawful), or has become impracticable as a result of a
contingency occurring after the date hereof that materially and adversely
affects the interbank Eurodollar market;
then, and in any such event, such Lender (or the Administrative Agent, in the
case of clause (i) above) shall within a reasonable time thereafter give notice
(if by telephone confirmed in writing) to the Borrower and to the Administrative
Agent of such determination (which notice the Administrative Agent shall
promptly transmit to each of the other Lenders). Thereafter (x) in the case of
clause (i) above, Eurodollar Term Loans and Eurodollar Revolving Credit Loans
shall no longer be available until such time as the Administrative Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such
notice by the Administrative Agent no longer exist (which notice the
Administrative Agent agrees to give at such time when such circumstances no
longer exist), and any Notice of Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Term Loans or Eurodollar Revolving Credit
Loans that have not yet been incurred shall be deemed rescinded by the Borrower,
(y) in the case of clause (ii) above, the Borrower shall pay to such Lender,
promptly after receipt of written demand therefor, such additional amounts (in
the form of an increased rate of, or a different method of calculating, interest
or otherwise as such Lender in its reasonable discretion shall determine) as
shall be required to compensate such Lender for such increased costs or
reductions in amounts receivable hereunder (it being agreed that a written
notice as to the additional amounts owed to such Lender, showing in reasonable
detail the basis for the calculation thereof, submitted to the Borrower by such
Lender shall, absent clearly demonstrable error, be final and conclusive and
binding upon all parties hereto) and (z) in the case of clause (iii) above, the
Borrower shall take one of the actions specified in Section 2.10(b) as promptly
as possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the circumstances
described in Section 2.10(a)(ii) or (iii), the Borrower may (and in the case of
a Eurodollar Loan affected pursuant to Section 2.10(a)(iii) shall) either (i) if
the affected Eurodollar Loan is then being made pursuant to a Borrowing, cancel
said Borrowing by giving the Administrative Agent telephonic notice (confirmed
promptly in writing) thereof on the same date that the Borrower was notified by
a Lender pursuant to Section 2.10(a)(ii) or (iii) or (ii) if the affected
Eurodollar Loan is then outstanding, upon at least three Business Days' notice
to the Administrative Agent, require the affected Lender to convert each such
Eurodollar Revolving Credit Loan and Eurodollar Term Loan into an ABR Loan,
provided that if more than one Lender is affected at any time, then all affected
Lenders must be treated in the same manner pursuant to this Section 2.10(b).
(c) If, after the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority, the
National Association of Insurance Commissioners, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by a Lender or its parent with any request or directive made or adopted after
the date hereof regarding capital adequacy (whether or not having the force of
law) of any such authority, association, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such
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41
Lender's or its parent's capital or assets as a consequence of such Lender's
commitments or obligations hereunder to a level below that which such Lender or
its parent could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Lender's or its parent's policies
with respect to capital adequacy), then from time to time, promptly after demand
by such Lender (with a copy to the Administrative Agent), the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or its parent for such reduction, it being understood and agreed, however, that
a Lender shall not be entitled to such compensation as a result of such Lender's
compliance with, or pursuant to any request or directive to comply with, any
such law, rule or regulation as in effect on the date hereof. Each Lender, upon
determining in good faith that any additional amounts will be payable pursuant
to this Section 2.10(c), will give prompt written notice thereof to the
Borrower, which notice shall set forth in reasonable detail the basis of the
calculation of such additional amounts, although the failure to give any such
notice shall not, subject to Section 2.13, release or diminish any of the
Borrower's obligations to pay additional amounts pursuant to this Section
2.10(c) upon receipt of such notice.
2.11 Compensation. If (a) any payment of principal of any Eurodollar
Term Loan or Eurodollar Revolving Credit Loan is made by the Borrower to or for
the account of a Lender other than on the last day of the Interest Period for
such Eurodollar Loan as a result of a payment or conversion pursuant to Section
2.5, 2.6, 2.10, 5.1, 5.2 or 13.7, as a result of acceleration of the maturity of
the Loans pursuant to Section 11 or for any other reason, (b) if any Borrowing
of Eurodollar Term Loans or Eurodollar Revolving Credit Loans is not made as a
result of a withdrawn Notice of Borrowing, (c) if any ABR Loan is not converted
into a Eurodollar Term Loan or Eurodollar Revolving Credit Loan as a result of a
withdrawn Notice of Conversion or Continuation, (d) if any Eurodollar Loan is
not continued as a Eurodollar Term Loan or Eurodollar Revolving Credit Loan as a
result of a withdrawn Notice of Conversion or Continuation or (e) if any
prepayment of principal of any Eurodollar Term Loan or Eurodollar Revolving
Credit Loan is not made as a result of a withdrawn notice of prepayment pursuant
to Section 5.1 or 5.2, the Borrower shall, after receipt of a written request by
such Lender (which request shall set forth in reasonable detail the basis for
requesting such amount), pay to the Administrative Agent for the account of such
Lender any amounts required to compensate such Lender for any additional losses,
costs or expenses that such Lender may reasonably incur as a result of such
payment, failure to convert, failure to continue or failure to prepay,
including, without limitation, any loss, cost or expense (excluding loss of
anticipated profits) actually incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such Eurodollar Loan.
2.12 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.10(a)(ii),
2.10(a)(iii), 2.10(b), 3.5 or 5.4 with respect to such Lender, it will, if
requested by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any Loans
affected by such event, provided that such designation is made on such terms
that such Lender and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Nothing in this Section 2.12 shall
affect or postpone any of the obligations of the Borrower or the right of any
Lender provided in Section 2.10, 3.5 or 5.4.
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42
2.13 Notice of Certain Costs. Notwithstanding anything in this
Agreement to the contrary, to the extent any notice required by Section 2.10,
2.11, 3.5 or 5.4 is given by any Lender more than 180 days after such Lender has
knowledge (or should have had knowledge) of the occurrence of the event giving
rise to the additional cost, reduction in amounts, loss, tax or other additional
amounts described in such Sections, such Lender shall not be entitled to
compensation under Section 2.10, 2.11, 3.5 or 5.4, as the case may be, for any
such amounts incurred or accruing prior to the giving of such notice to the
Borrower.
SECTION 3. Letters of Credit.
3.1 Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower, at any time and from time to time on
or after the Closing Date and prior to the L/C Maturity Date, may request that
the Letter of Credit Issuer issue, for the account of the Borrower, a standby
letter of credit or letters of credit in such form as may be approved by the
Letter of Credit Issuer in its reasonable discretion.
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be issued
the Stated Amount of which, when added to the Letter of Credit Outstandings at
such time, would exceed the Letter of Credit Commitment then in effect; (ii) no
Letter of Credit shall be issued the Stated Amount of which, when added to the
sum of (x) the Letter of Credit Outstandings at such time and (y) the aggregate
principal of all Revolving Credit Loans and Swingline Loans then outstanding,
would exceed the Total Revolving Credit Commitment then in effect; (iii) each
Letter of Credit shall have an expiry date occurring no later than one year
after the date of issuance thereof, unless otherwise agreed upon by the
Administrative Agent and the Letter of Credit Issuer, provided that in no event
shall such expiry date occur later than the L/C Maturity Date; (iv) each Letter
of Credit shall be denominated in Dollars; and (v) no Letter of Credit shall be
issued by the Letter of Credit Issuer after it has received a written notice
from the Borrower or any Lender stating that a Default or Event of Default has
occurred and is continuing until such time as the Letter of Credit Issuer shall
have received a written notice of (x) rescission of such notice from the party
or parties originally delivering such notice or (y) the waiver of such Default
or Event of Default in accordance with the provisions of Section 13.1.
(c) Upon at least one Business Day's prior written notice (or telephonic
notice promptly confirmed in writing) to the Administrative Agent and the Letter
of Credit Issuer (which notice the Administrative Agent shall promptly transmit
to each of the Lenders), the Borrower shall have the right, on any day,
permanently to terminate or reduce the Letter of Credit Commitment in whole or
in part, provided that, after giving effect to such termination or reduction,
the Letter of Credit Outstandings shall not exceed the Letter of Credit
Commitment.
3.2 Letter of Credit Requests. (a) Whenever the Borrower desires
that a Letter of Credit be issued for its account, it shall give the
Administrative Agent and the Letter of Credit Issuer at least five (or such
lesser number as may be agreed upon by the Administrative Agent and the Letter
of Credit Issuer) Business Days' written notice thereof. Each notice shall be
executed by the Borrower and shall be in the form of Exhibit D (each a "Letter
of Credit Request"). The Administrative Agent shall promptly transmit copies of
each Letter of Credit Request to each Lender.
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(b) The making of each Letter of Credit Request shall be deemed to be a
representation and warranty by the Borrower that the Letter of Credit may be
issued in accordance with, and will not violate the requirements of, Section
3.1(b).
3.3 Letter of Credit Participations. (a) Immediately upon the
issuance by the Letter of Credit Issuer of any Letter of Credit, the Letter of
Credit Issuer shall be deemed to have sold and transferred to each other Lender
(each such other Lender, in its capacity under this Section 3.3, an "L/C
Participant"), and each such L/C Participant shall be deemed irrevocably and
unconditionally to have purchased and received from the Letter of Credit Issuer,
without recourse or warranty, an undivided interest and participation (each an
"L/C Participation"), to the extent of such L/C Participant's Revolving Credit
Commitment Percentage, in such Letter of Credit, each substitute letter of
credit, each drawing made thereunder and the obligations of the Borrower under
this Agreement with respect thereto, and any security therefor or guaranty
pertaining thereto (although Letter of Credit Fees will be paid directly to the
Administrative Agent for the ratable account of the L/C Participants as provided
in Section 4.1(b) and the L/C Participants shall have no right to receive any
portion of any Fronting Fees).
(b) In determining whether to pay under any Letter of Credit, the Letter
of Credit Issuer shall have no obligation relative to the L/C Participants other
than to confirm that any documents required to be delivered under such Letter of
Credit have been delivered and that they appear to comply on their face with the
requirements of such Letter of Credit. Any action taken or omitted to be taken
by the Letter of Credit Issuer under or in connection with any Letter of Credit
issued by it, if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create for the Letter of Credit Issuer any resulting
liability.
(c) In the event that the Letter of Credit Issuer makes any payment under
any Letter of Credit issued by it and the Borrower shall not have repaid such
amount in full to the Letter of Credit Issuer pursuant to Section 3.4(a), the
Letter of Credit Issuer shall promptly notify the Administrative Agent and each
L/C Participant of such failure, and each L/C Participant shall promptly and
unconditionally pay to the Administrative Agent, for the account of the Letter
of Credit Issuer, the amount of such L/C Participant's Revolving Credit
Commitment Percentage of such unreimbursed payment in Dollars and in same day
funds; provided, however, that no L/C Participant shall be obligated to pay to
the Administrative Agent for the account of the Letter of Credit Issuer its
Revolving Credit Commitment Percentage of such unreimbursed amount arising from
any wrongful payment made by the Letter of Credit Issuer under a Letter of
Credit as a result of acts or omissions constituting willful misconduct or gross
negligence on the part of the Letter of Credit Issuer. If the Letter of Credit
Issuer so notifies, prior to 11:00 A.M. (New York time) on any Business Day, any
L/C Participant required to fund a payment under a Letter of Credit, such L/C
Participant shall make available to the Administrative Agent for the account of
the Letter of Credit Issuer such L/C Participant's Revolving Credit Commitment
Percentage of the amount of such payment on such Business Day in same day funds.
If and to the extent such L/C Participant shall not have so made its Revolving
Credit Commitment Percentage of the amount of such payment available to the
Administrative Agent for the account of the Letter of Credit Issuer, such L/C
Participant agrees to pay to the Administrative Agent for the account of the
Letter of Credit Issuer, forthwith on demand, such amount, together with
interest thereon for each day from such date until the date such amount is paid
to the Administrative Agent for the account of the Letter of Credit Issuer at
the Federal Funds
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Effective Rate. The failure of any L/C Participant to make available to the
Administrative Agent for the account of the Letter of Credit Issuer its
Revolving Credit Commitment Percentage of any payment under any Letter of Credit
shall not relieve any other L/C Participant of its obligation hereunder to make
available to the Administrative Agent for the account of the Letter of Credit
Issuer its Revolving Credit Commitment Percentage of any payment under such
Letter of Credit on the date required, as specified above, but no L/C
Participant shall be responsible for the failure of any other L/C Participant to
make available to the Administrative Agent such other L/C Participant's
Revolving Credit Commitment Percentage of any such payment.
(d) Whenever the Letter of Credit Issuer receives a payment in respect of
an unpaid reimbursement obligation as to which the Administrative Agent has
received for the account of the Letter of Credit Issuer any payments from the
L/C Participants pursuant to the preceding clause (c) above, the Letter of
Credit Issuer shall pay to the Administrative Agent and the Administrative Agent
shall promptly pay to each L/C Participant that has paid its Revolving Credit
Commitment Percentage of such reimbursement obligation, in Dollars and in same
day funds, an amount equal to such L/C Participant's share (based upon the
proportionate aggregate amount originally funded by such L/C Participant to the
aggregate amount funded by all L/C Participants) of the principal amount of such
reimbursement obligation and interest thereon accruing after the purchase of the
respective L/C Participations.
(e) The obligations of the L/C Participants to make payments to the
Administrative Agent for the account of the Letter of Credit Issuer with respect
to Letters of Credit shall be irrevocable and not subject to counterclaim,
set-off or other defense or any other qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
that the Borrower may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person
for whom any such transferee may be acting), the Administrative Agent, the
Letter of Credit Issuer, any Lender or other Person, whether in connection
with this Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying transaction
between the Borrower and the beneficiary named in any such Letter of
Credit);
(iii) any draft, certificate or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default;
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45
provided, however, that no L/C Participant shall be obligated to pay to the
Administrative Agent for the account of the Letter of Credit Issuer its
Revolving Credit Commitment Percentage of any unreimbursed amount arising from
any wrongful payment made by the Letter of Credit Issuer under a Letter of
Credit as a result of acts or omissions constituting willful misconduct or gross
negligence on the part of the Letter of Credit Issuer.
3.4 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
hereby agrees to reimburse the Letter of Credit Issuer, by making payment to the
Administrative Agent in Dollars in immediately available funds at the
Administrative Agent's Office, for any payment or disbursement made by the
Letter of Credit Issuer under any Letter of Credit (each such amount so paid
until reimbursed, an "Unpaid Drawing") immediately after, and in any event on
the date of, such payment, with interest on the amount so paid or disbursed by
the Letter of Credit Issuer, to the extent not reimbursed prior to 5:00 P.M.
(New York time) on the date of such payment or disbursement, from and including
the date paid or disbursed to but excluding the date the Letter of Credit Issuer
is reimbursed therefor, at a rate per annum that shall at all times be the
Applicable ABR Margin plus the ABR as in effect from time to time, provided
that, notwithstanding anything contained in this Agreement to the contrary, (i)
unless the Borrower shall have notified the Administrative Agent and the Letter
of Credit Issuer prior to 10:00 A.M. on the date of such drawing that the
Borrower intends to reimburse the Letter of Credit Issuer for the amount of such
drawing with funds other than the proceeds of Loans, the Borrower shall be
deemed to have given a Notice of Borrowing to the Administrative Agent
requesting that the Lenders make Revolving Credit Loans (which shall initially
be ABR Loans) on the date on which such drawing is honored in an amount equal to
the amount of such drawing and (ii) each Lender shall, on such date, make
Revolving Credit Loans in an amount equal to such Lender's pro rata portion of
such Borrowing in accordance with the provisions of Section 2.4.
(b) The Borrower's obligations under this Section 3.4 to reimburse the
Letter of Credit Issuer with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
that the Borrower or any other Person may have or have had against the Letter of
Credit Issuer, the Administrative Agent or any Lender (including in its capacity
as an L/C Participant), including, without limitation, any defense based upon
the failure of any drawing under a Letter of Credit (each a "Drawing") to
conform to the terms of the Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of such Drawing, provided that
the Borrower shall not be obligated to reimburse the Letter of Credit Issuer for
any wrongful payment made by the Letter of Credit Issuer under the Letter of
Credit issued by it as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of the Letter of Credit Issuer.
(c) Each payment by the Letter of Credit Issuer under any Letter of Credit
shall constitute a request by the Borrower for an ABR Revolving Credit Loan in
the amount of the Unpaid Drawing in respect of such Letter of Credit. The Letter
of Credit Issuer shall notify the Borrower and the Administrative Agent, by
10:00 A.M. (New York time) on any Business Day on which the Letter of Credit
Issuer intends to honor a drawing under a Letter of Credit, of (i) the Letter of
Credit Issuer's intention to honor such drawing and (ii) the amount of such
drawing. Unless otherwise instructed by the Borrower by 10:30 A.M. (New York
time) on such Business Day, the Administrative Agent shall notify each Lender of
such drawing and the amount of its Revolving Credit Loan to be made in
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46
respect thereof, and each Lender shall be irrevocably obligated to make an ABR
Revolving Credit Loan to the Borrower in the amount of its Revolving Credit
Commitment Percentage of the applicable Unpaid Drawing by 12:00 noon (New York
time) on such Business Day by making the amount of such Revolving Credit Loan
available to the Administrative Agent at the Administrative Agent's Office. Such
Revolving Credit Loans shall be made without regard to the Minimum Borrowing
Amount. The Administrative Agent shall use the proceeds of such Revolving Credit
Loans solely for purpose of reimbursing the Letter of Credit Issuer for the
related Unpaid Drawing.
3.5 Increased Costs. If after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or actual compliance by the Letter of Credit Issuer or any L/C
Participant with any request or directive made or adopted after the date hereof
(whether or not having the force of law), by any such authority, central bank or
comparable agency shall either (a) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against letters of
credit issued by the Letter of Credit Issuer, or any L/C Participant's L/C
Participation therein, or (b) impose on the Letter of Credit Issuer or any L/C
Participant any other conditions affecting its obligations under this Agreement
in respect of Letters of Credit or L/C Participations therein or any Letter of
Credit or such L/C Participant's L/C Participation therein; and the result of
any of the foregoing is to increase the cost to the Letter of Credit Issuer or
such L/C Participant of issuing, maintaining or participating in any Letter of
Credit, or to reduce the amount of any sum received or receivable by the Letter
of Credit Issuer or such L/C Participant hereunder (other than any such increase
or reduction attributable to taxes) in respect of Letters of Credit or L/C
Participations therein, then, promptly after receipt of written demand to the
Borrower by the Letter of Credit Issuer or such L/C Participant, as the case may
be (a copy of which notice shall be sent by the Letter of Credit Issuer or such
L/C Participant to the Administrative Agent), the Borrower shall pay to the
Letter of Credit Issuer or such L/C Participant such additional amount or
amounts as will compensate the Letter of Credit Issuer or such L/C Participant
for such increased cost or reduction, it being understood and agreed, however,
that the Letter of Credit Issuer or a L/C Participant shall not be entitled to
such compensation as a result of such Person's compliance with, or pursuant to
any request or directive to comply with, any such law, rule or regulation as in
effect on the date hereof. A certificate submitted to the Borrower by the Letter
of Credit Issuer or a L/C Participant, as the case may be (a copy of which
certificate shall be sent by the Letter of Credit Issuer or such L/C Participant
to the Administrative Agent), setting forth in reasonable detail the basis for
the determination of such additional amount or amounts necessary to compensate
the Letter of Credit Issuer or such L/C Participant as aforesaid shall be
conclusive and binding on the Borrower absent clearly demonstrable error.
3.6 Successor Letter of Credit Issuer. The Letter of Credit Issuer
may resign as Letter of Credit Issuer upon 60 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower. If the Letter of Credit
Issuer shall resign as Letter of Credit Issuer under this Agreement, then the
Borrower shall appoint from among the Lenders with Revolving Credit Commitments
a successor issuer of Letters of Credit, whereupon such successor issuer shall
succeed to the rights, powers and duties of the Letter of Credit Issuer, and the
term "Letter of Credit Issuer" shall mean such successor issuer effective upon
such appointment. At the time such resignation shall become effective, the
Borrower shall pay to the resigning Letter of Credit Issuer all accrued and
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47
unpaid fees pursuant to Sections 4.1(c) and (d). The acceptance of any
appointment as the Letter of Credit Issuer hereunder by a successor Lender shall
be evidenced by an agreement entered into by such successor, in a form
satisfactory to the Borrower and the Administrative Agent and, from and after
the effective date of such agreement, such successor Lender shall have all the
rights and obligations of the previous Letter of Credit Issuer under this
Agreement and the other Credit Documents. After the resignation of the Letter of
Credit Issuer hereunder, the resigning Letter of Credit Issuer shall remain a
party hereto and shall continue to have all the rights and obligations of a
Letter of Credit Issuer under this Agreement and the other Loan Documents with
respect to Letters of Credit issued by it prior to such resignation, but shall
not be required to issue additional Letters of Credit. After any retiring Letter
of Credit Issuer's resignation as Letter of Credit Issuer, the provisions of
this Agreement relating to the Letter of Credit Issuer shall inure to its
benefit as to any actions taken or omitted to be taken by it (a) while it was
Letter of Credit Issuer under this Agreement or (b) at any time with respect to
Letters of Credit issued by such Letter of Credit Issuer.
SECTION 4. Fees; Commitments.
4.1 Fees. (a) The Borrower agrees to pay to the Administrative
Agent, for the account of each Lender having a Term Loan Commitment or a
Revolving Credit Commitment (in each case pro rata according to the respective
Commitments of all such Lenders), a commitment fee for each day (i) in the case
of the Term Loan Commitments, from and including the Closing Date to but
excluding the last day of the Term Loan Availability Period and (ii) in the case
of the Revolving Credit Commitments, from and including the Closing Date to but
excluding the Final Date. Such commitment fee shall be payable (i) in the case
of the Term Loan Commitments, in arrears (x) on the last day of March 1997 (for
the period ended on such day) and (y) on the last day of the Term Loan
Availability Period (for the period ended on such day for which no payment has
been received pursuant to clause (i)(x) above) and (ii) in the case of the
Revolving Credit Commitments, in arrears (x) on the last day of each March,
June, September and December (for the three-month period (or portion thereof)
ended on the such day) and (y) on the Final Date (for the period ended on such
date for which no payment has been received pursuant to clause (ii)(x) above),
and shall be computed for each day during such period at a rate per annum equal
to the Commitment Fee Rate in effect on such day on the Available Commitments in
effect on such day. Notwithstanding the foregoing, the Borrower shall not be
obligated to pay any amounts to any Defaulting Lender pursuant to this Section
4.1.
(b) The Borrower agrees to pay to the Administrative Agent for the account
of the Lenders pro rata on the basis of their respective Letter of Credit
Exposure, a fee in respect of each Letter of Credit (the "Letter of Credit
Fee"), for the period from and including the date of issuance of such Letter of
Credit to but not including the termination date of such Letter of Credit
computed at the per annum rate for each day equal to the Applicable Eurodollar
Margin for Revolving Credit Loans minus 0.125% per annum on the average daily
Stated Amount of such Letter of Credit. Such Letter of Credit Fees shall be due
and payable quarterly in arrears on the last day of each March, June, September
and December and on the date upon which the Total Revolving Credit Commitment
terminates and the Letter of Credit Outstandings shall have been reduced to
zero.
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48
(c) The Borrower agrees to pay to the Administrative Agent for the account
of the Letter of Credit Issuer a fee in respect of each Letter of Credit issued
by it (the "Fronting Fee"), for the period from and including the date of
issuance of such Letter of Credit to but not including the termination date of
such Letter of Credit, computed at the rate for each day equal to 0.125% per
annum on the average daily Stated Amount of such Letter of Credit. Such Fronting
Fees shall be due and payable quarterly in arrears on the last day of each
March, June, September and December and on the date upon which the Total
Revolving Credit Commitment terminates and the Letter of Credit Outstandings
shall have been reduced to zero.
(d) The Borrower agrees to pay directly to the Letter of Credit Issuer
upon each issuance of, drawing under, and/or amendment of, a Letter of Credit
issued by it such amount as the Letter of Credit Issuer and the Borrower shall
have agreed upon for issuances of, drawings under or amendments of, letters of
credit issued by it.
(e) The Borrower agrees to pay to the Administrative Agent, on the Closing
Date, the fees in the amounts and on the dates previously agreed to in writing
by the Borrower and the Administrative Agent. The Administrative Agent agrees to
pay to each Lender, for its own account on the Closing Date, the fees in the
amounts and on the dates previously agreed to in writing by the Administrative
Agent and such Lender.
4.2 Voluntary Reduction of Revolving Credit Commitments. Upon at
least one Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) to the Administrative Agent at the Administrative Agent's
Office (which notice the Administrative Agent shall promptly transmit to each of
the Lenders), the Borrower shall have the right, without premium or penalty, on
any day, permanently to terminate or reduce the Revolving Credit Commitments in
whole or in part, provided that (a) any such reduction shall apply
proportionately and permanently to reduce the Revolving Credit Commitment of
each of the Lenders, (b) any partial reduction pursuant to this Section 4.2
shall be in the amount of at least $1,000,000 and (c) after giving effect to
such termination or reduction and to any prepayments of the Loans made on the
date thereof in accordance with this Agreement, the sum of (i) the aggregate
outstanding principal amount of the Revolving Credit Loans and the Swingline
Loans and (ii) the Letter of Credit Outstandings shall not exceed the Total
Revolving Credit Commitment.
4.3 Mandatory Termination of Commitments. (a) The Total Term Loan
Commitment shall be reduced at 5:00 P.M. (New York time) on the Closing Date by
an amount equal to the aggregate principal amount of Term Loans borrowed on the
Closing Date. The Total Term Loan Commitment shall terminate upon the earlier of
(i) any borrowing of Term Loans following the Closing Date and (ii) at 5:00 P.M.
(New York time) on the last day of the Term Loan Availability Period.
(b) The Total Revolving Credit Commitment shall terminate at 5:00 P.M.
(New York time) on the Revolving Credit Maturity Date.
(c) The Swingline Commitment shall terminate at 5:00 P.M. (New York time)
on the Swingline Maturity Date.
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49
SECTION 5. Payments.
5.1 Voluntary Prepayments. The Borrower shall have the right to
prepay Term Loans, Revolving Credit Loans and Swingline Loans, without premium
or penalty, in whole or in part from time to time on the following terms and
conditions: (a) the Borrower shall give the Administrative Agent at the
Administrative Agent's Office written notice (or telephonic notice promptly
confirmed in writing) of its intent to make such prepayment, the amount of such
prepayment and (in the case of Eurodollar Term Loans and Eurodollar Revolving
Credit Loans) the specific Borrowing(s) pursuant to which made, which notice
shall be given by the Borrower no later than (i) in the case of Term Loans or
Revolving Credit Loans, 10:00 A.M. (New York time) one Business Day prior to, or
(ii) in the case of Swingline Loans, 10:00 A.M. (New York time) on, the date of
such prepayment and shall promptly be transmitted by the Administrative Agent to
each of the Lenders or Chase, as the case may be; (b) each partial prepayment of
any Borrowing of Term Loans or Revolving Credit Loans shall be in a multiple of
$100,000 and in an aggregate principal amount of at least $1,000,000 and each
partial prepayment of Swingline Loans shall be in a multiple of $100,000 and in
an aggregate principal amount of at least $100,000, provided that no partial
prepayment of Eurodollar Term Loans or Eurodollar Revolving Credit Loans made
pursuant to a single Borrowing shall reduce the outstanding Eurodollar Term
Loans or Eurodollar Revolving Credit Loans made pursuant to such Borrowing to an
amount less than the Minimum Borrowing Amount for Eurodollar Term Loans or
Eurodollar Revolving Credit Loans; and (c) any prepayment of Eurodollar Term
Loans or Eurodollar Revolving Credit Loans pursuant to this Section 5.1 on any
day other than the last day of an Interest Period applicable thereto shall be
subject to compliance by the Borrower with the applicable provisions of Section
2.11. Each prepayment of Term Loans pursuant to this Section 5.1 shall be
applied to reduce the Repayment Amounts in such order as the Borrower may
determine. At the Borrower's election in connection with any prepayment pursuant
to this Section 5.1, such prepayment shall not be applied to any Term Loan or
Revolving Credit Loan of a Defaulting Lender.
5.2 Mandatory Prepayments. (a) Term Loan Prepayments. (i) On each
occasion that a Prepayment Event occurs, the Borrower shall, within five
Business Days after the occurrence of such Prepayment Event, offer to prepay, in
accordance with paragraph (c) below, the principal amount of Term Loans in an
amount equal to 100% of the Net Cash Proceeds from such Prepayment Event;
provided, however, that the Borrower may elect to not so apply to the prepayment
of Term Loans up to $50,000,000 of Net Cash Proceeds from Real Estate Financing
Prepayment Events in the aggregate during the term of this Agreement.
(ii) Not later than the date that is six months after the last day of any
fiscal year (commencing with the fiscal year ending May 30, 1997), the Borrower
shall offer to prepay, in accordance with paragraph (c) below, the principal of
Term Loans in an amount equal to (x) 50% of Excess Cash Flow for such fiscal
year (or, in the case of the fiscal year ending May 30, 1997, for the period
from and including the Closing Date to and including May 30, 1997) minus (y) the
amount of any such Excess Cash Flow that the Borrower has, prior to such date,
reinvested in the business of the Borrower or any of its Subsidiaries (subject
to Section 9.14).
(b) Aggregate Revolving Credit Outstandings. If on any date the sum of the
outstanding principal amount of the Revolving Credit Loans and Swingline Loans
and the aggregate amount of
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50
Letter of Credit Outstandings (all the foregoing, collectively, the "Aggregate
Revolving Credit Outstandings") exceeds the Total Revolving Credit Commitment as
then in effect, the Borrower shall forthwith repay on such date the principal
amount of Swingline Loans and, after all Swingline Loans have been paid in full,
Revolving Credit Loans, in an amount equal to such excess. If, after giving
effect to the prepayment of all outstanding Swingline Loans and Revolving Credit
Loans, the Aggregate Revolving Credit Outstandings exceed the Total Revolving
Credit Commitment then in effect, the Borrower shall pay to the Administrative
Agent an amount in cash equal to such excess and the Administrative Agent shall
hold such payment for the benefit of the Lenders as security for the obligations
of the Borrower hereunder (including, without limitation, obligations in respect
of Letter of Credit Outstandings) pursuant to a cash collateral agreement to be
entered into in form and substance satisfactory to the Administrative Agent
(which shall permit certain investments in Permitted Investments satisfactory to
the Administrative Agent, until the proceeds are applied to the secured
obligations).
(c) Application to Repayment Amounts. Each prepayment of Term Loans
required by Section 5.2(a) shall be applied to reduce the Repayment Amounts in
such order as the Borrower may determine. With respect to each such prepayment,
(i) the Borrower will, not later than the date specified in Section 5.2(a) for
offering to make such prepayment, give the Administrative Agent telephonic
notice (promptly confirmed in writing) requesting that the Administrative Agent
provide notice of such prepayment to each Term Loan Lender, (ii) each Term Loan
Lender will have the right to refuse any such prepayment by giving written
notice of such refusal to the Borrower within fifteen Business Days after such
Lender's receipt of notice from the Administrative Agent of such prepayment (and
the Borrower shall not prepay any such Term Loans until the date that is
specified in the immediately following clause), (iii) the Borrower will make all
such prepayments not so refused upon the earlier of (x) such fifteenth Business
Day and (y) such time as the Borrower has received notice from each Lender that
it consents to or refuses such prepayment and (iv) any prepayment so refused may
be retained by the Borrower.
(d) Application to Term Loans. With respect to each prepayment of Term
Loans required by Section 5.2(a), the Borrower may designate the Types of Loans
that are to be prepaid and the specific Borrowing(s) pursuant to which made,
provided that (i) Eurodollar Term Loans may be designated for prepayment
pursuant to this Section 5.2 only on the last day of an Interest Period
applicable thereto unless all Eurodollar Term Loans with Interest Periods ending
on such date of required prepayment and all ABR Term Loans have been paid in
full; and (ii) if any prepayment of Eurodollar Term Loans made pursuant to a
single Borrowing shall reduce the outstanding Term Loans made pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount for Eurodollar
Term Loans, such Borrowing shall immediately be converted into ABR Loans. In the
absence of a designation by the Borrower as described in the preceding sentence,
the Administrative Agent shall, subject to the above, make such designation in
its reasonable discretion with a view, but no obligation, to minimize breakage
costs owing under Section 2.11.
(e) Application to Revolving Credit Loans. With respect to each prepayment
of Revolving Credit Loans required by Section 5.2(b), the Borrower may designate
the Types of Loans that are to be prepaid and the specific Borrowing(s) pursuant
to which made, provided that (i) Eurodollar Revolving Credit Loans may be
designated for prepayment pursuant to this Section 5.2 only on the last day of
an Interest Period applicable thereto unless all Eurodollar Revolving Credit
Loans with
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Interest Periods ending on such date of required prepayment and all ABR Loans
have been paid in full; (ii) if any prepayment of Eurodollar Revolving Credit
Loans made pursuant to a single Borrowing shall reduce the outstanding Revolving
Credit Loans made pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount for Eurodollar Revolving Credit Loans, such Borrowing shall
immediately be converted into ABR Loans; (iii) each prepayment of any Loans made
pursuant to a Borrowing shall be applied pro rata among such Loans; and (iv)
notwithstanding the provisions of the preceding clause (iii), no prepayment made
pursuant to Section 5.2(b) of Revolving Credit Loans shall be applied to the
Revolving Credit Loans of any Defaulting Lender. In the absence of a designation
by the Borrower as described in the preceding sentence, the Administrative Agent
shall, subject to the above, make such designation in its reasonable discretion
with a view, but no obligation, to minimize breakage costs owing under Section
2.11.
(f) Eurodollar Interest Periods. In lieu of making any payment pursuant to
this Section 5.2 in respect of any Eurodollar Loan other than on the last day of
the Interest Period therefor, so long as no Default or Event of Default shall
have occurred and be continuing, the Borrower at its option may deposit with the
Administrative Agent an amount equal to the amount of the Eurodollar Loan to be
prepaid and such Eurodollar Loan shall be repaid on the last day of the Interest
Period therefor in the required amount. Such deposit shall be held by the
Administrative Agent in a corporate time deposit account established on terms
reasonably satisfactory to the Administrative Agent, earning interest at the
then-customary rate for accounts of such type. Such deposit shall constitute
cash collateral for the Obligations, provided that the Borrower may at any time
direct that such deposit be applied to make the applicable payment required
pursuant to this Section 5.2.
(g) Minimum Amount. No prepayment shall be required pursuant to Section
5.2(a)(i) unless and until the amount at any time of Net Cash Proceeds from
Prepayment Events required to be applied at or prior to such time pursuant to
such Section and not yet applied at or prior to such time to prepay Term Loans
pursuant to such Section exceeds $15,000,000 in the aggregate.
(h) Foreign Asset Sales. Notwithstanding any other provisions of this
Section 5.2, (i) to the extent that any of or all the Net Cash Proceeds of any
asset sale by a Restricted Foreign Subsidiary giving rise to an Asset Sale
Prepayment Event (a "Foreign Asset Sale") are prohibited or delayed by
applicable local law from being repatriated to the United States, the portion of
such Net Cash Proceeds so affected will not be required to be applied to repay
Term Loans at the times provided in this Section 5.2 but may be retained by the
applicable Restricted Foreign Subsidiary so long, but only so long, as the
applicable local law will not permit repatriation to the United States (the
Borrower hereby agreeing to cause the applicable Restricted Foreign Subsidiary
to promptly take all actions required by the applicable local law to permit such
repatriation), and once such repatriation of any of such affected Net Cash
Proceeds is permitted under the applicable local law, such repatriation will be
immediately effected and such repatriated Net Cash Proceeds will be promptly
(and in any event not later than two Business Days after such repatriation)
applied to the repayment of the Term Loans pursuant to this Section 5.2 and (ii)
to the extent that the Borrower has determined in good faith that repatriation
of any of or all the Net Cash Proceeds of any Foreign Asset Sale would have a
material adverse tax cost consequence with respect to such Net Cash Proceeds,
the Net Cash Proceeds so affected may be retained by the applicable Restricted
Foreign Subsidiary, provided that, in the case of this clause (ii), on or before
the date on which any Net Cash Proceeds so retained would otherwise have been
required to be applied to reinvestments or prepayments pursuant to Section
5.2(a), (x) the
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Borrower applies an amount equal to such Net Cash Proceeds to such reinvestments
or prepayments as if such Net Cash Proceeds had been received by the Borrower
rather than such Restricted Foreign Subsidiary or (y) such Net Cash Proceeds are
applied to the repayment of Indebtedness of a Restricted Foreign Subsidiary.
5.3 Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments under this Agreement shall be made,
without set-off, counterclaim or deduction of any kind, to the Administrative
Agent for the ratable account of the Lenders entitled thereto, the Letter of
Credit Issuer or Chase, as the case may be, not later than 12:00 Noon (New York
time) on the date when due and shall be made in immediately available funds and
in lawful money of the United States of America at the Administrative Agent's
Office, it being understood that written or facsimile notice by the Borrower to
the Administrative Agent to make a payment from the funds in the Borrower's
account at the Administrative Agent's Office shall constitute the making of such
payment to the extent of such funds held in such account. The Administrative
Agent will thereafter cause to be distributed on the same day (if payment was
actually received by the Administrative Agent prior to 2:00 P.M. (New York time)
on such day) like funds relating to the payment of principal or interest or Fees
ratably to the Lenders entitled thereto.
(b) Any payments under this Agreement that are made later than 2:00 P.M.
(New York time) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day that is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.
5.4 Net Payments. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any current or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding (i) net income taxes and franchise taxes (imposed in lieu
of net income taxes) imposed on the Administrative Agent or any Lender and (ii)
any taxes imposed on the Administrative Agent or any Lender as a result of a
current or former connection between the Administrative Agent or such Lender and
the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") are required to be withheld from any amounts payable to the
Administrative Agent or any Lender hereunder, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent necessary
to yield to the Administrative Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement; provided, however, that the
Borrower shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the United States of America or a
state thereof if such Lender fails to comply with the requirements of paragraph
(b) of this Section 5.4. Whenever any Non-Excluded Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account
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53
of such Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower fails
to pay any Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Administrative
Agent and the Lenders for any incremental taxes, interest, costs or penalties
that may become payable by the Administrative Agent or any Lender as a result of
any such failure. The agreements in this Section 5.4(a) shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
(b) Each Lender that is not incorporated or organized under the laws of
the United States of America or a state thereof shall:
(i) deliver to the Borrower and the Administrative Agent two copies
of either United States Internal Revenue Service Form 1001 or Form 4224
or, in the case of Non-U.S. Lender claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8, or any subsequent versions
thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, a certificate representing that such Non-U.S. Lender is not a
bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of
the Borrower and is not a controlled foreign corporation related to the
Borrower (within the meaning of Section 864(d)(4) of the Code)), properly
completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or reduced rate of, U.S. Federal withholding tax on
payments by the Borrower under this Agreement;
(ii) deliver to the Borrower and the Administrative Agent two
further copies of any such form or certification on or before the date
that any such form or certification expires or becomes obsolete and after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower or
the Administrative Agent;
unless in any such case any change in treaty, law or regulation has occurred
prior to the date on which any such delivery would otherwise be required that
renders any such form inapplicable or would prevent such Lender from duly
completing and delivering any such form with respect to it and such Lender so
advises the Borrower and the Administrative Agent. Each Person that shall become
a Participant pursuant to Section 13.6 or a Lender pursuant to Section 13.6
shall, upon the effectiveness of the related transfer, be required to provide
all the forms and statements required pursuant to this Section 5.4(b), provided
that in the case of a Participant such Participant shall furnish all such
required forms and statements to the Lender from which the related participation
shall have been purchased.
(c) The Borrower shall not be required to indemnify any Non-U.S. Lender,
or to pay any additional amounts to any Non-U.S. Lender, in respect of U.S.
Federal withholding tax pursuant to paragraph (a) above to the extent that (i)
the obligation to withhold amounts with respect to U.S. Federal withholding tax
existed on the date such Non-U.S. Lender became a party to this Agreement
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54
(or, in the case of a Non-U.S. Participant, on the date such Participant became
a Participant hereunder); provided, however, that this clause (i) shall not
apply to the extent that (x) the indemnity payments or additional amounts any
Lender (or Participant) would be entitled to receive (without regard to this
clause (i)) do not exceed the indemnity payment or additional amounts that the
person making the assignment, participation or transfer to such Lender (or
Participant) would have been entitled to receive in the absence of such
assignment, participation or transfer, or (y) such assignment, participation or
transfer had been requested by the Borrower, (ii) the obligation to pay such
additional amounts would not have arisen but for a failure by such Non-U.S.
Lender or Non-U.S. Participant to comply with the provisions of paragraph (b)
above or (iii) any of the representations or certifications made by a Non-U.S.
Lender or Non-U.S. Participant pursuant to paragraph (b) above are incorrect at
the time a payment hereunder is made, other than by reason of any change in
treaty, law or regulation having effect after the date such representations or
certifications were made.
(d) If the Borrower determines in good faith that a reasonable basis
exists for contesting any taxes for which indemnification has been demanded
hereunder, the relevant Lender or the Administrative Agent, as applicable, shall
cooperate with the Borrower in challenging such taxes at the Borrower's expense
if so requested by the Borrower. If any Lender or the Administrative Agent, as
applicable, receives a refund of a tax for which a payment has been made by the
Borrower pursuant to this Agreement, which refund in the good faith judgment of
such Lender or Administrative Agent, as the case may be, is attributable to such
payment made by the Borrower, then the Lender or the Administrative Agent, as
the case may be, shall reimburse the Borrower for such amount as the Lender or
Administrative Agent, as the case may be, determines to be the proportion of the
refund as will leave it, after such reimbursement, in no better or worse
position than it would have been in if the payment had not been required. A
Lender or Administrative Agent shall claim any refund that it determines is
available to it, unless it concludes in its reasonable discretion that it would
be adversely affected by making such a claim. Neither the Lender nor the
Administrative Agent shall be obliged to disclose any information regarding its
tax affairs or computations to the Borrower in connection with this paragraph
(d) or any other provision of this Section 5.4.
(e) Each Lender represents and agrees that, on the date hereof and at all
times during the term of this Agreement, it is not and will not be a conduit
entity participating in a conduit financing arrangement (as defined in Section
7701(1) of the Code and the regulations thereunder) with respect to the
Borrowings hereunder unless the Borrower has consented to such arrangement prior
thereto.
5.5 Computations of Interest and Fees. (a) Interest on Eurodollar
Loans and, except as provided in the next succeeding sentence, ABR Loans shall
be calculated on the basis of a 360-day year for the actual days elapsed.
Interest on ABR Loans in respect of which the rate of interest is calculated on
the basis of the Prime Rate and interest on overdue interest shall be calculated
on the basis of a 365- (or 366-, as the case may be) day year for the actual
days elapsed.
(b) Fees and Letter of Credit Outstandings shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed.
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55
SECTION 6. Conditions Precedent to Initial Borrowing.
The initial Borrowing under this Agreement is subject to the satisfaction
of the following conditions precedent:
6.1 Credit Documents. The Administrative Agent shall have received
(a) this Agreement, executed and delivered by a duly authorized officer of the
Borrower and each Lender, (b) the Guarantee, executed and delivered by a duly
authorized officer of each Guarantor, (c) the Pledge Agreement, executed and
delivered by each pledgor party thereto and (d) all certificates representing
securities pledged under the Pledge Agreement, accompanied by instruments of
transfer and undated stock powers endorsed in blank.
6.2 Closing Certificate. The Administrative Agent shall have
received a certificate of each Credit Party, dated the Closing Date,
substantially in the form of Exhibit G, with appropriate insertions, executed by
the President or any Vice President and the Secretary or any Assistant Secretary
of such Credit Party, and attaching the documents referred to in Sections 6.3
and 6.4.
6.3 Corporate Proceedings of Each Credit Party. The Administrative
Agent shall have received a copy of the resolutions, in form and substance
satisfactory to the Administrative Agent, of the Board of Directors of each
Credit Party (or a duly authorized committee thereof) authorizing (a) the
execution, delivery and performance of the Credit Documents and the Merger
Agreement (and any agreements relating thereto) to which it is a party and (b)
in the case of the Borrower, the extensions of credit contemplated hereunder.
6.4 Corporate Documents. The Administrative Agent shall have
received true and complete copies of the certificate of incorporation and
by-laws of each Credit Party.
6.5 No Material Adverse Change. There shall have been no material
adverse change in the business, assets, operations, properties, financial
condition or prospects of the Borrower and its Subsidiaries taken as a whole
since May 31, 1996.
6.6 Fees. The Administrative Agent shall have received the fees
referred to in Section 4.1(e) to be received on the Closing Date.
6.7 Equity Contribution. The Equity Contribution shall have been
made or shall be made simultaneously with the making of the initial Loans.
6.8 Merger. (a) The Merger shall have been consummated, or shall be
consummated simultaneously with the making of the initial Loans, in accordance
with applicable law and the Merger Agreement, (b) the Partnership and other
Affiliates of KKR shall have received shares representing approximately 85% of
the shares of Borrower Common Stock expected to be outstanding immediately after
the Merger, (c) all the warrants and options of the Borrower outstanding
immediately prior to the Merger shall have been converted into the right to
receive not more than approximately $26,500,000 in cash in the aggregate and (d)
the Administrative Agent shall be reasonably satisfied with the capitalization,
structure and equity ownership of the Borrower and its Subsidiaries (it being
agreed that such capitalization, structure and ownership on the date hereof are
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56
satisfactory). The Merger Agreement shall not have been amended since December
27, 1996, in any material respect that is, in the reasonable judgment of the
Administrative Agent, adverse to the interests of the Lenders.
6.9 Other Indebtedness. After giving effect to the Merger and the
other transactions contemplated hereby, the Borrower and its Subsidiaries shall
have outstanding no Indebtedness or preferred stock other than (a) the
extensions of credit under this Agreement, (b) the Subordinated Notes, (c) the
$211,000 in aggregate principal amount of Senior Notes that remained outstanding
following consummation of the Debt Tender Offer and (d) Indebtedness permitted
under Section 10.1, other than under clauses (j), (k) and (n) thereof.
6.10 Closing Date Balance Sheet. The Lenders shall have received a
pro forma consolidated closing balance sheet of the Borrower giving effect to
the Merger, the financing therefor and the other transactions contemplated
hereby and thereby, dated the Closing Date and reasonably satisfactory to the
Lenders.
6.11 Solvency Letter. The Lenders shall have received a solvency
letter from Valuation Research, Inc., in form and substance reasonably
satisfactory to the Administrative Agent, as to the solvency of the Borrower and
its Subsidiaries on a consolidated basis after giving effect to the Merger, the
making of the initial Loans and the consummation of the other transactions
contemplated hereby, together with such other evidence of solvency reasonably
requested by the Administrative Agent.
6.12 Required Approvals. All requisite material Governmental
Authorities and third parties shall have approved or consented to the Merger and
the other transactions contemplated hereby to the extent required, all
applicable appeal periods shall have expired and there shall be no governmental
or judicial action, actual or threatened, that has or could have a reasonable
likelihood of restraining, preventing or imposing burdensome conditions on the
Merger, the financing therefor or the other transactions contemplated hereby or
thereby.
6.13 Existing Credit Agreement. All loans outstanding under, and all
other amounts due in respect of, the Existing Credit Agreement shall have been
repaid in full; the commitments under the Existing Credit Agreement shall have
been permanently terminated; all obligations under the Existing Credit Agreement
and security interests relating thereto shall have been discharged; and the
Administrative Agent shall have received reasonably satisfactory evidence of
such repayment, termination and discharge.
6.14 Legal Opinions. The Administrative Agent shall have received,
with a counterpart for each Lender, the executed legal opinions of (a) Simpson
Thacher & Bartlett, special New York counsel to the Borrower, substantially in
the form of Exhibit E-1, (b) Alston & Bird, counsel to the Borrower,
substantially in the form of Exhibit E-2, and (c) Rebecca S. Bryan, General
Counsel of the Borrower, substantially in the form of Exhibit E-3, and the
Borrower hereby instructs such counsel to deliver such legal opinions.
6.15 Subordinated Notes. The Borrower shall have received gross
proceeds of not less than $300,000,000 from the sale at par of the Subordinated
Notes.
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57
SECTION 7. Conditions Precedent to All Credit Events. The agreement of
each Lender to make any Loan requested to be made by it on any date (including,
without limitation, its initial Loan, but excluding Mandatory Borrowings) and
the obligation of the Letter of Credit Issuer to issue Letters of Credit on any
date is subject to the satisfaction of the following conditions precedent:
7.1 No Default; Representations and Warranties. At the time of each
Credit Event and also after giving effect thereto (a) there shall exist no
Default or Event of Default and (b) all representations and warranties made by
any Credit Party contained herein or in the other Credit Documents shall be true
and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event (except where such representations and warranties expressly relate
to an earlier date, in which case such representations and warranties shall have
been true and correct in all material respects as of such earlier date).
7.2 Notice of Borrowing; Letter of Credit Request. (a) Prior to the
making of each Term Loan, each Revolving Credit Loan (other than any Revolving
Credit Loan made pursuant to Section 3.4(a)) and each Swingline Loan, the
Administrative Agent shall have received a Notice of Borrowing (whether in
writing or by telephone) meeting the requirements of Section 2.3.
(b) Prior to the issuance of each Letter of Credit, the Administrative Agent
and the Letter of Credit Issuer shall have received a Letter of Credit Request
meeting the requirements of Section 3.2(a).
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by each Credit Party to each of the Lenders that all
the applicable conditions specified above exist as of that time.
SECTION 8. Representations, Warranties and Agreements. In order to induce
the Lenders to enter into this Agreement, to make the Loans and issue or
participate in Letters of Credit as provided for herein, the Borrower makes the
following representations and warranties to, and agreements with, the Lenders,
all of which shall survive the execution and delivery of this Agreement and the
making of the Loans and the issuance of the Letters of Credit:
8.1 Corporate Status. The Borrower and each Material Subsidiary (a)
is a duly organized and validly existing corporation or other entity in good
standing under the laws of the jurisdiction of its organization and has the
corporate or other organizational power and authority to own its property and
assets and to transact the business in which it is engaged and (b) has duly
qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified, except where the failure
to be so qualified could not reasonably be expected to result in a Material
Adverse Effect.
8.2 Corporate Power and Authority. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Credit Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and
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58
performance of the Credit Documents to which it is a party. Each Credit Party
has duly executed and delivered each Credit Document to which it is a party and
each such Credit Document constitutes the legal, valid and binding obligation of
such Credit Party enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and subject to general principles of
equity.
8.3 No Violation. Neither the execution, delivery and performance by
any Credit Party of the Credit Documents to which it is a party nor compliance
with the terms and provisions thereof nor the consummation of the Merger and the
other transactions contemplated therein will (a) contravene any applicable
provision of any material law, statute, rule, regulation, order, writ,
injunction or decree of any court or governmental instrumentality, (b) result in
any breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
the Borrower or any of the Restricted Subsidiaries pursuant to, the terms of any
material indenture (including the Senior Note Indenture), loan agreement, lease
agreement, mortgage, deed of trust, agreement or other material instrument to
which the Borrower or any of the Restricted Subsidiaries is a party or by which
it or any of its property or assets is bound or (c) violate any provision of the
certificate of incorporation or By-Laws of the Borrower or any of the Restricted
Subsidiaries.
8.4 Litigation. Except as set forth in the Borrower's Form 10-K for
the fiscal year ended May 31, 1996, or in the Borrower's Form 10-Q for the
fiscal quarter ended September 20, 1996, or for the fiscal quarter ended
December 13, 1996, in each case as filed with the SEC, there are no actions,
suits or proceedings (including, without limitation, Environmental Claims)
pending or, to the knowledge of the Borrower, threatened with respect to the
Borrower or any of its Subsidiaries that could reasonably be expected to result
in a Material Adverse Effect.
8.5 Margin Regulations. Neither the making of any Loan hereunder nor
the use of the proceeds thereof will violate the provisions of Regulation G, T,
U or X of the Board.
8.6 Governmental Approvals. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any Governmental Authority is required to authorize or is required
in connection with (a) the execution, delivery and performance of any Credit
Document or (b) the legality, validity, binding effect or enforceability of any
Credit Document, except any of the foregoing the failure to obtain or make could
not reasonably be expected to have a Material Adverse Effect.
8.7 Investment Company Act. The Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
8.8 True and Complete Disclosure. (a) All factual information and
data (taken as a whole) heretofore or contemporaneously furnished by the
Borrower, any of its Subsidiaries or any of their respective authorized
representatives in writing to the Administrative Agent and/or any Lender on or
before the Closing Date (including, without limitation, (i) the Confidential
Information Memorandum and (ii) all information contained in the Credit
Documents) for purposes of or in connection with this Agreement or any
transaction contemplated herein was true and complete in all
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59
material respects on the date as of which such information or data is dated or
certified and was not incomplete by omitting to state any material fact
necessary to make such information and data (taken as a whole) not misleading at
such time in light of the circumstances under which such information or data was
furnished, it being understood and agreed that for purposes of this Section
8.8(a), such factual information and data shall not include projections and pro
forma financial information.
(b) The projections and pro forma financial information contained in the
information and data referred to in paragraph (a) above were based on good faith
estimates and assumptions believed by such Persons to be reasonable at the time
made, it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected
results.
8.9 Financial Condition; Financial Statements. (a) The consolidated
balance sheet of the Borrower and its Subsidiaries at May 31, 1996, and the
related consolidated statements of income and cash flows for the fiscal year
ended as of such date, which statements have been audited by KPMG Peat Marwick
LLP, independent certified public accountants, who delivered an unqualified
opinion with respect thereto, and (b) the unaudited consolidated balance sheet
of the Borrower and its Subsidiaries at September 20, 1996, and at December 13,
1996, and the related consolidated statements of income and cash flows for the
respective fiscal quarters and portions of the fiscal year ended as of such
dates, in each case present fairly in all material respects the consolidated
financial position of the Borrower and its Subsidiaries at the respective dates
of said statements and the results of operations for the respective periods
covered thereby. All such financial statements have been prepared in accordance
with GAAP consistently applied except to the extent provided in the notes to
said financial statements and, in the case of said financial statements referred
to in clause (b), subject to normal year-end audit adjustments. There has been
no Material Adverse Change since May 31, 1996, other than solely as a result of
changes in general economic conditions.
8.10 Tax Returns and Payments. Each of the Borrower and its
Subsidiaries has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it that have become due, other than
those not yet delinquent or contested in good faith. The Borrower and each of
its Subsidiaries have paid, or have provided adequate reserves (in the good
faith judgment of the management of the Borrower) in accordance with GAAP for
the payment of, all material federal, state and foreign income taxes applicable
for all prior fiscal years and for the current fiscal year to the Closing Date.
8.11 Compliance with ERISA. Each Plan is in compliance with ERISA,
the Code and any applicable Requirement of Law; no Reportable Event has occurred
(or is reasonably likely to occur) with respect to any Plan; no Plan is
insolvent or in reorganization (or is reasonably likely to be insolvent or in
reorganization), and no written notice of any such insolvency or reorganization
has been given to the Borrower, any Subsidiary or any ERISA Affiliate; no Plan
(other than a multiemployer plan) has an accumulated or waived funding
deficiency (or is reasonably likely to have such a deficiency); neither the
Borrower nor any Subsidiary nor any ERISA Affiliate has incurred (or is
reasonably likely expected to incur) any liability to or on account of a Plan
pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or
4204 of ERISA or Section 4971 or 4975 of the Code or has been notified in
writing that it will incur any liability under any of the foregoing Sections
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60
with respect to any Plan; no proceedings have been instituted (or are reasonably
likely to be instituted) to terminate or to reorganize any Plan or to appoint a
trustee to administer any Plan, and no written notice of any such proceedings
has been given to the Borrower, any Subsidiary or any ERISA Affiliate; and no
lien imposed under the Code or ERISA on the assets of the Borrower or any
Subsidiary or any ERISA Affiliate exists (or is reasonably likely to exist) nor
has the Borrower, any Subsidiary or any ERISA Affiliate been notified in writing
that such a lien will be imposed on the assets of the Borrower, any Subsidiary
or any ERISA Affiliate on account of any Plan, except to the extent that a
breach of any of the foregoing representations, warranties or agreements in this
Section 8.11 would not result, individually or in the aggregate, in an amount of
liability that would be reasonably likely to have a Material Adverse Effect. No
Plan (other than a multiemployer plan) has an Unfunded Current Liability that
would, individually or when taken together with any other liabilities referenced
in this Section 8.11, be reasonably likely to have a Material Adverse Effect.
With respect to Plans that are multiemployer plans (as defined in Section 3(37)
of ERISA), the representations and warranties in this Section 8.11, other than
any made with respect to (a) liability under Section 4201 or 4204 of ERISA or
(b) liability for termination or reorganization of such Plans under ERISA, are
made to the best knowledge of the Borrower.
8.12 Subsidiaries. Schedule 8.12 lists each Subsidiary of the
Borrower (and the direct and indirect ownership interest of the Borrower
therein), in each case existing on the Closing Date. To the knowledge of the
Borrower, each Material Subsidiary as of the Closing Date has been so designated
on Schedule 8.12.
8.13 Patents, etc.. The Borrower and each of the Restricted
Subsidiaries have obtained all patents, trademarks, servicemarks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their respective businesses as currently
conducted and as proposed to be conducted, except where the failure to obtain
any such rights could not reasonably be expected to have a Material Adverse
Effect.
8.14 Environmental Laws. (a) Other than instances of noncompliance
that could not reasonably be expected to have a Material Adverse Effect: (i) the
Borrower and each of its Subsidiaries are in compliance with all Environmental
Laws in all jurisdictions in which the Borrower and each of its Subsidiaries are
currently doing business (including, without limitation, having obtained all
material permits required under Environmental Laws); and (ii) the Borrower will
comply and cause each of its Subsidiaries to comply with all such Environmental
Laws (including, without limitation, all permits required under Environmental
Laws).
(b) Neither the Borrower nor any of its Subsidiaries has treated, stored,
transported or disposed of Hazardous Materials at or from any currently or
formerly owned Real Estate (as defined in Section 9.1(f)) or facility relating
to its business in a manner that could reasonably be expected to have a Material
Adverse Effect.
8.15 Properties. The Borrower and each of the Restricted
Subsidiaries have good title to or leasehold interest in all properties that are
necessary for the operation of their respective businesses as currently
conducted and as proposed to be conducted, free and clear of all Liens (other
than any Liens permitted by this Agreement) and except where the failure to have
such good title could not reasonably be expected to have a Material Adverse
Effect.
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61
SECTION 9. Affirmative Covenants. The Borrower hereby covenants and agrees
that on the Closing Date and thereafter, for so long as this Agreement is in
effect and until the Commitments, the Swingline Commitment and each Letter of
Credit have terminated and the Loans and Unpaid Drawings, together with
interest, Fees and all other Obligations incurred hereunder, are paid in full:
9.1 Information Covenants. The Borrower will furnish to each Lender
and the Administrative Agent:
(a) Annual Financial Statements. On or before the date on which such
financial statements are required to be filed with the SEC, the
consolidated balance sheet of (i) the Borrower and the Restricted
Subsidiaries and (ii) the Borrower and its Subsidiaries, in each case as
at the end of such fiscal year and the related consolidated statement of
income and retained earnings and of cash flows for such fiscal year,
setting forth comparative consolidated figures for the preceding fiscal
year, and certified by independent certified public accountants of
recognized national standing whose opinion shall not be qualified as to
the scope of audit or as to the status of the Borrower or any of the
Material Subsidiaries as a going concern, together in any event with a
certificate of such accounting firm stating that in the course of its
regular audit of the business of the Borrower and the Material
Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, such accounting firm has obtained no
knowledge of any Default or Event of Default relating to Section 10.9,
10.10 and 10.11 that has occurred and is continuing or, if in the opinion
of such accounting firm such a Default or Event of Default has occurred
and is continuing, a statement as to the nature thereof.
(b) Quarterly Financial Statements. As soon as available and in any
event on or before the date on which such financial statements are
required to be filed with the SEC with respect to each of the first three
quarterly accounting periods in each fiscal year of the Borrower, the
consolidated balance sheet of (i) the Borrower and the Restricted
Subsidiaries and (ii) the Borrower and its Subsidiaries, in each case as
at the end of such quarterly period and the related consolidated statement
of income for such quarterly accounting period and for the elapsed portion
of the fiscal year ended with the last day of such quarterly period, and
the related consolidated statement of cash flows for the elapsed portion
of the fiscal year ended with the last day of such quarterly period, and
setting forth comparative consolidated figures for the related periods in
the prior fiscal year or, in the case of such consolidated balance sheet,
for the last day of the prior fiscal year, all of which shall be certified
by an Authorized Officer of the Borrower, subject to changes resulting
from audit and normal year-end audit adjustments.
(c) Budgets. Within 60 days after the commencement of each fiscal
year of the Borrower, budgets of the Borrower in reasonable detail for the
fiscal year as customarily prepared by management of the Borrower for its
internal use, setting forth the principal assumptions upon which such
budgets are based.
(d) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 9.1(a) and (b), a
certificate of an Authorized Officer of the Borrower to the effect that no
Default or Event of Default exists or, if any Default or Event of Default
does exist, specifying the nature and extent thereof, which certificate
shall set forth (i) the calculations required to
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62
establish whether the Borrower and its Subsidiaries were in compliance
with the provisions of Sections 10.9, 10.10 and 10.11 as at the end of
such fiscal year or period, as the case may be, (ii) a specification of
any change in the identity of the Restricted Subsidiaries, Unrestricted
Subsidiaries, Acquisition Subsidiaries, Real Estate Financing Subsidiaries
and Foreign Subsidiaries as at the end of such fiscal year or period, as
the case may be, from the Restricted Subsidiaries, Unrestricted
Subsidiaries, Acquisition Subsidiaries, Real Estate Financing Subsidiaries
and Foreign Subsidiaries, respectively, provided to the Lenders on the
Closing Date or the most recent fiscal year or period, as the case may be,
(iii) the then applicable Status and (iv) the amount of any Pro Forma
Adjustment not previously set forth in a Pro Forma Adjustment Certificate
or any change in the amount of a Pro Forma Adjustment set forth in any Pro
Forma Adjustment Certificate previously provided and, in either case, in
reasonable detail, the calculations and basis therefor; and at the time of
the delivery of the financial statements provided for in Section 9.1(a), a
certificate of an Authorized Officer of the Borrower setting forth in
reasonable detail the Available Amount as at the end of the fiscal year to
which such financial statements relate.
(e) Notice of Default or Litigation. Promptly after an Authorized
Officer of the Borrower or any of its Subsidiaries obtains knowledge
thereof, notice of (i) the occurrence of any event that constitutes a
Default or Event of Default, which notice shall specify the nature
thereof, the period of existence thereof and what action the Borrower
proposes to take with respect thereto, and (ii) any litigation or
governmental proceeding pending against the Borrower or any of its
Subsidiaries that could reasonably be expected to result in a Material
Adverse Effect.
(f) Environmental Matters. The Borrower will promptly advise the
Lenders in writing after obtaining knowledge of any one or more of the
following environmental matters, unless such environmental matters would
not, individually or when aggregated with all other such matters, be
reasonably expected to result in a Material Adverse Effect:
(i) Any pending or threatened Environmental Claim against the
Borrower or any of its Subsidiaries or any Real Estate (as defined
below);
(ii) Any condition or occurrence on any Real Estate that (x)
results in noncompliance by the Borrower or any of its Subsidiaries
with any applicable Environmental Law or (y) could reasonably be
anticipated to form the basis of an Environmental Claim against the
Borrower or any of its Subsidiaries or any Real Estate;
(iii) Any condition or occurrence on any Real Estate that
could reasonably be anticipated to cause such Real Estate to be
subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Estate under any Environmental Law; and
(iv) The taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any
Real Estate.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and the Borrower's response thereto. The term "Real Estate" shall mean
land, buildings and improvements owned or leased by the Borrower or any of
its
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63
Subsidiaries, but excluding all operating fixtures and equipment, whether
or not incorporated into improvements.
(g) Other Information. Promptly upon filing thereof, copies of any
filings on Form 10-K, 10-Q or 8-K or registration statements with, and
reports to, the SEC by the Borrower or any of its Subsidiaries (other than
amendments to any registration statement (to the extent such registration
statement, in the form it becomes effective, is delivered to the Lenders),
exhibits to any registration statement and any registration statements on
Form S-8) and copies of all financial statements, proxy statements,
notices and reports that the Borrower or any of its Subsidiaries shall
send to the holders of any publicly issued debt of the Borrower and/or any
of its Subsidiaries (including the Subordinated Notes) in their capacity
as such holders (in each case to the extent not theretofore delivered to
the Lenders pursuant to this Agreement) and, with reasonable promptness,
such other information (financial or otherwise) as the Administrative
Agent on its own behalf or on behalf of any Lender may reasonably request
in writing from time to time.
(h) Pro Forma Adjustment Certificate. Not later than the
consummation of the acquisition of any Acquired Entity or Business by the
Borrower or any Restricted Subsidiary for which there shall be a Pro Forma
Adjustment, a certificate of an Authorized Officer of the Borrower setting
forth the amount of such Pro Forma Adjustment and, in reasonable detail,
the calculations and basis therefor.
9.2 Books, Records and Inspections. The Borrower will, and will
cause each of the Specified Subsidiaries to, permit officers and designated
representatives of the Administrative Agent or the Required Lenders to visit and
inspect any of the properties or assets of the Borrower and any such Specified
Subsidiary in whomsoever's possession to the extent that it is within the
Borrower's or such Specified Subsidiary's control to permit such inspection, and
to examine the books of account of the Borrower and any such Specified
Subsidiary and discuss the affairs, finances and accounts of the Borrower and of
any such Specified Subsidiary with, and be advised as to the same by, its and
their officers and independent accountants, all at such reasonable times and
intervals and to such reasonable extent as the Administrative Agent or the
Required Lenders may desire.
9.3 Maintenance of Insurance. The Borrower will, and will cause each
of the Material Subsidiaries to, at all times maintain in full force and effect,
with insurance companies which the Borrower believes (in the good faith judgment
of the management of the Borrower) are financially sound and responsible at the
time the relevant coverage is placed or renewed, insurance in at least such
amounts and against at least such risks (and with such risk retentions) as are
usually insured against in the same general area by companies engaged in the
same or a similar business; and will furnish to the Lenders, upon written
request from the Administrative Agent, information presented in reasonable
detail as to the insurance so carried.
9.4 Payment of Taxes. The Borrower will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which material penalties attach thereto, and all lawful material claims that, if
unpaid, could reasonably be expected to become a material Lien upon any
properties of the Borrower or any of the Restricted Subsidiaries, provided that
neither the Borrower nor any of its Subsidiaries shall be required to pay any
such tax, assessment, charge, levy or claim that is being contested in good
faith
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64
and by proper proceedings if it has maintained adequate reserves (in the good
faith judgment of the management of the Borrower) with respect thereto in
accordance with GAAP.
9.5 Consolidated Corporate Franchises. The Borrower will do, and
will cause each Material Subsidiary to do, or cause to be done, all things
necessary to preserve and keep in full force and effect its existence, corporate
rights and authority, except to the extent that the failure to do so could not
reasonably be expected to have a Material Adverse Effect; provided, however,
that the Borrower and its Subsidiaries may consummate any transaction permitted
under Section 10.3 or 10.4.
9.6 Compliance with Statutes, Obligations, etc. The Borrower will,
and will cause each Subsidiary to, comply with all applicable laws, rules,
regulations and orders, except to the extent the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
9.7 ERISA. Promptly after the Borrower or any Subsidiary or any
ERISA Affiliate knows or has reason to know of the occurrence of any of the
following events that, individually or in the aggregate (including in the
aggregate such events previously disclosed or exempt from disclosure hereunder,
to the extent the liability therefor remains outstanding), would be reasonably
likely to have a Material Adverse Effect, the Borrower will deliver to each of
the Lenders a certificate of an Authorized Officer or any other senior officer
of the Borrower setting forth details as to such occurrence and the action, if
any, that the Borrower, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices (required, proposed or otherwise)
given to or filed with or by the Borrower, such Subsidiary, such ERISA
Affiliate, the PBGC, a Plan participant (other than notices relating to an
individual participant's benefits) or the Plan administrator with respect
thereto: that a Reportable Event has occurred; that an accumulated funding
deficiency has been incurred or an application is to be made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan; that a
Plan having an Unfunded Current Liability has been or is to be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA
(including the giving of written notice thereof); that a Plan has an Unfunded
Current Liability that has or will result in a lien under ERISA or the Code;
that proceedings will be or have been instituted to terminate a Plan having an
Unfunded Current Liability (including the giving of written notice thereof);
that a proceeding has been instituted against the Borrower, a Subsidiary or an
ERISA Affiliate pursuant to Section 515 of ERISA to collect a delinquent
contribution to a Plan; that the PBGC has notified the Borrower, any Subsidiary
or any ERISA Affiliate of its intention to appoint a trustee to administer any
Plan; that the Borrower, any Subsidiary or any ERISA Affiliate has failed to
make a required installment or other payment pursuant to Section 412 of the Code
with respect to a Plan; or that the Borrower, any Subsidiary or any ERISA
Affiliate has incurred or will incur (or has been notified in writing that it
will incur) any liability (including any contingent or secondary liability) to
or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code.
9.8 Good Repair. The Borrower will, and will cause each of the
Restricted Subsidiaries to, ensure that its properties and equipment used or
useful in its business in whomsoever's possession they may be to the extent that
it is within the Borrower's or such Restricted Subsidiary's control to cause
same, are kept in good repair, working order and condition, normal
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65
wear and tear excepted, and that from time to time there are made in such
properties and equipment all needful and proper repairs, renewals, replacements,
extensions, additions, betterments and improvements thereto, to the extent and
in the manner customary for companies in similar businesses and consistent with
third party leases, except in each case to the extent the failure to do so could
be reasonably expected to have a Material Adverse Effect.
9.9 Transactions with Affiliates. The Borrower will conduct, and
cause each of the Restricted Subsidiaries to conduct, all transactions with any
of its Affiliates on terms that are substantially as favorable to the Borrower
or such Restricted Subsidiary as it would obtain in a comparable arm's-length
transaction with a Person that is not an Affiliate, provided that the foregoing
restrictions shall not apply to (a) the payment of customary annual fees to KKR
and its Affiliates for management, consulting and financial services rendered to
the Borrower and its Subsidiaries, and investment banking fees paid to KKR and
its Affiliates for services rendered to the Borrower and its Subsidiaries in
connection with divestitures, acquisitions, financings and other transactions,
(b) customary fees paid to members of the Board of Directors of the Borrower and
its Subsidiaries and (c) transactions permitted by Section 10.6.
9.10 End of Fiscal Years; Fiscal Quarters. The Borrower will, for
financial reporting purposes, cause (a) each of its, and each of its
Subsidiaries', fiscal years to end on the Friday nearest May 31 of each year and
(b) each of its, and each of its Subsidiaries', fiscal quarters to end on (i)
the Friday 16 weeks after, (ii) the Friday 28 weeks after and (iii) the Friday
40 weeks after, the Friday nearest May 31 of each year; provided, however, that
the Borrower may, upon written notice to the Administrative Agent, change the
financial reporting convention specified above to any other financial reporting
convention reasonably acceptable to the Administrative Agent, in which case the
Borrower and the Administrative Agent will, and are hereby authorized by the
Lenders to, make any adjustments to this Agreement that are necessary in order
to reflect such change in financial reporting.
9.11 Additional Guarantors. The Borrower will cause (a) any direct
or indirect Domestic Subsidiary (other than any Unrestricted Subsidiary,
Acquisition Subsidiary or Real Estate Financing Subsidiary) formed or otherwise
purchased or acquired after the date hereof and (b) any Subsidiary (other than
any Unrestricted Subsidiary or Acquisition Subsidiary) that is not a Domestic
Subsidiary on the date hereof but subsequently becomes a Domestic Subsidiary
(other than any Unrestricted Subsidiary or Acquisition Subsidiary), in each case
to execute a supplement to the Guarantee, in form and substance reasonably
satisfactory to the Administrative Agent, in order to become a Guarantor.
9.12 Pledges of Additional Stock and Evidence of Indebtedness. The
Borrower will pledge, and, in the case of clause (c), will cause each direct
Domestic Subsidiary to pledge, to the Administrative Agent, for the benefit of
the Lenders, (a) all the capital stock of each direct Domestic Subsidiary (other
than any Unrestricted Subsidiary, Acquisition Subsidiary or Real Estate
Financing Subsidiary) and 65% of all the capital stock of each direct Foreign
Subsidiary (other than any Unrestricted Subsidiary, Acquisition Subsidiary or
Real Estate Financing Subsidiary), in each case, formed or otherwise purchased
or acquired after the date hereof, in each case pursuant to a supplement to the
Pledge Agreement in form and substance reasonably satisfactory to the
Administrative Agent, (b) all the capital stock of any direct Domestic
Subsidiary (other than any
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66
Unrestricted Subsidiary or Acquisition Subsidiary) and 65% of all the capital
stock of each direct Foreign Subsidiary (other than any Unrestricted Subsidiary
or Acquisition Subsidiary), in each case that is not a direct Subsidiary on the
date hereof but subsequently becomes a direct Subsidiary (other than an
Unrestricted Subsidiary or Acquisition Subsidiary), in each case pursuant to a
supplement to the Pledge Agreement in form and substance reasonably satisfactory
to the Administrative Agent, and (c) all evidences of Indebtedness in excess of
$5,000,000 received by the Borrower or any of the direct Domestic Subsidiaries
(other than any Unrestricted Subsidiary, Acquisition Subsidiary or Real Estate
Financing Subsidiary) in connection with any disposition of assets pursuant to
Section 10.4(b), in each case pursuant to a supplement to the Pledge Agreement
in form and substance reasonably satisfactory to the Administrative Agent.
9.13 Use of Proceeds. The Borrower will use the Letters of Credit
and the proceeds of all Loans for the purposes set forth in the introductory
statement to this Agreement.
9.14 Changes in Business. The Borrower and its Subsidiaries taken as
a whole will not fundamentally and substantively alter the character of their
business taken as a whole from the business conducted by the Borrower and its
Subsidiaries taken as a whole on the date hereof, educational activities and
other business activities incidental or related to any of the foregoing.
SECTION 10. Negative Covenants. The Borrower hereby covenants and agrees
that on the Closing Date and thereafter, for so long as this Agreement is in
effect and until the Commitments, the Swingline Commitment and each Letter of
Credit have terminated and the Loans and Unpaid Drawings, together with
interest, Fees and all other Obligations incurred hereunder, are paid in full:
10.1 Limitation on Indebtedness. The Borrower will not, and will not
permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness arising under the Credit Documents;
(b) Indebtedness of (i) the Borrower to any Subsidiary of the
Borrower and (ii) Indebtedness of any Restricted Subsidiary to the
Borrower or any other Subsidiary of the Borrower;
(c) Indebtedness in respect of any bankers' acceptance, letter of
credit, warehouse receipt or similar facilities entered into in the
ordinary course of business;
(d) except as provided in clauses (j) and (k) below, Guarantee
Obligations incurred by (i) Restricted Subsidiaries in respect of
Indebtedness of the Borrower or other Restricted Subsidiaries that is
permitted to be incurred under this Agreement and (ii) the Borrower in
respect of Indebtedness of the Restricted Subsidiaries that is permitted
to be incurred under this Agreement;
(e) Guarantee Obligations incurred in the ordinary course of
business in respect of obligations of suppliers, customers, franchisees,
lessors and licensees;
(f) (i) Indebtedness (including Indebtedness arising under Capital
Leases) incurred within 270 days of the acquisition, construction or
improvement of fixed or capital assets to finance the
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67
acquisition, construction or improvement of such fixed or capital assets
or otherwise incurred in respect of Capital Expenditures permitted by
Section 10.12 , (ii) Indebtedness arising under Capital Leases entered
into in connection with Real Estate Financings and (iii) Indebtedness
arising under Capital Leases, other than Capital Leases entered into
pursuant to subclauses (i) and (ii) above, provided that the aggregate
amount of Indebtedness incurred pursuant to this subclause (iii) shall not
exceed $100,000,000 at any time outstanding, and (iv) any refinancing,
refunding, renewal or extension of any Indebtedness specified in subclause
(i), (ii) or (iii) above, provided that the principal amount thereof is
not increased above the principal amount thereof outstanding immediately
prior to such refinancing, refunding, renewal or extension;
(g) Indebtedness outstanding on the date hereof and listed on
Schedule 10.1 and any refinancing, refunding, renewal or extension
thereof, provided that (i) the principal amount thereof is not increased
above the principal amount thereof outstanding immediately prior to such
refinancing, refunding, renewal or extension and (ii) the direct and
contingent obligors with respect to such Indebtedness are not changed;
(h) Indebtedness in respect of Hedge Agreements;
(i) Indebtedness in respect of the Subordinated Notes;
(j) (i) Indebtedness of a Person or Indebtedness attaching to assets
of a Person that, in either case, becomes a Restricted Subsidiary
(including a Restricted Subsidiary that is also an Acquisition Subsidiary)
or Indebtedness attaching to assets that are acquired by the Borrower or
any Restricted Subsidiary (including any Acquisition Subsidiary), in each
case after the Closing Date as the result of a Permitted Acquisition,
provided that (w) such Indebtedness existed at the time such Person became
a Restricted Subsidiary or at the time such assets were acquired and, in
each case, was not created in anticipation thereof, (x) such Indebtedness
is not guaranteed in any respect by the Borrower or any Restricted
Subsidiary (other than any such person that so becomes a Restricted
Subsidiary), (y)(A) the Borrower pledges the capital stock of such Person
to the Administrative Agent to the extent required under Section 9.12, (B)
such Person executes a supplement to the Guarantee to the extent required
under Section 9.11 and (C) if any such Indebtedness is secured, (1) the
Guarantee referred to in the preceding subclause (B) is equally and
ratably secured or (2) in the case of assets acquired by the Borrower or
any Restricted Subsidiary (other than any Acquisition Subsidiary), the
Borrower's obligations hereunder or such Restricted Subsidiary's
Guarantee, as the case may be, are equally and ratably secured, provided
that the requirements of this subclause (y) shall not apply to an
aggregate amount at any time outstanding of up to (and including)
$75,000,000 of the aggregate of (1) such Indebtedness and (2) all
Indebtedness as to which the proviso to clause (k)(i)(y) below then
applies, and (z) the aggregate amount of such Indebtedness and all
Indebtedness incurred under clause (k) below, when taken together, does
not exceed $300,000,000 in the aggregate at any time outstanding, provided
that, when calculating the outstanding amount of Indebtedness for purposes
of this subclause (z), Indebtedness of any Acquisition Subsidiary,
Indebtedness attaching to assets of any Acquisition Subsidiary and
Indebtedness attaching to assets acquired by any Acquisition Subsidiary
shall be excluded, and (ii) any refinancing, refunding, renewal or
extension of any Indebtedness specified in subclause (i) above, provided
that (x) the principal amount of any such Indebtedness is not increased
above the principal amount thereof
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68
outstanding immediately prior to such refinancing, refunding, renewal or
extension and (y) the direct and contingent obligors with respect to such
Indebtedness are not changed;
(k) (i) Indebtedness of the Borrower or any Restricted Subsidiary
(including any Acquisition Subsidiary) incurred to finance a Permitted
Acquisition, provided that (x) such Indebtedness is not guaranteed in any
respect by any Restricted Subsidiary (other than any Person acquired (the
"acquired Person") as a result of such Permitted Acquisition or the
Restricted Subsidiary so incurring such Indebtedness) or, in the case of
Indebtedness of any Restricted Subsidiary, by the Borrower, (y)(A) the
Borrower pledges the capital stock of such acquired Person to the
Administrative Agent to the extent required under Section 9.12, (B) such
acquired Person executes a supplement to the Guarantee to the extent
required under Section 9.11 and (C) if a guarantee by such acquired Person
of any such Indebtedness is secured by assets of such acquired Person, the
Guarantee referred to in the preceding subclause (B) is equally and
ratably secured, provided that the requirements of this subclause (y)
shall not apply to an aggregate amount at any time outstanding of up to
(and including) $75,000,000 of the aggregate of (1) such Indebtedness and
(2) all Indebtedness as to which the proviso to clause (j)(i)(y) above
then applies, and (z) the aggregate amount of such Indebtedness and all
Indebtedness assumed or permitted to exist under clause (j) above, when
taken together, does not exceed $300,000,000 in the aggregate at any time
outstanding, provided that, when calculating the outstanding amount of
Indebtedness for purposes of this subclause (z), Indebtedness of any
Acquisition Subsidiary shall be excluded, and (ii) any refinancing,
refunding, renewal or extension of any Indebtedness specified in subclause
(i) above, provided that (x) the principal amount of any such Indebtedness
is not increased above the principal amount thereof outstanding
immediately prior to such refinancing, refunding, renewal or extension and
(y) the direct and contingent obligors with respect to such Indebtedness
are not changed;
(l) Indebtedness of Restricted Foreign Subsidiaries in an aggregate
amount at any time outstanding not to exceed (i) $75,000,000 minus (ii)
the amount equal to (x) the aggregate amount of Indebtedness incurred and
outstanding at such time pursuant to clause (n) below minus (y)
$100,000,000;
(m) (i) Indebtedness incurred in connection with any Real Estate
Financing and (ii) any refinancing, refunding, renewal or extension of any
Indebtedness specified in subclause (i) above, provided that (x) the
principal amount of any such Indebtedness is not increased above the
principal amount thereof outstanding immediately prior to such
refinancing, refunding, renewal or extension and (y) the direct and
contingent obligors with respect to such Indebtedness are not changed; and
(n) (i) additional Indebtedness, provided that the aggregate amount
of Indebtedness incurred and remaining outstanding pursuant to this clause
(n) shall not at any time exceed the sum of (x) $100,000,000 and (y) the
amount equal to (A) $75,000,000 minus (B) the aggregate amount of
Indebtedness then outstanding under clause (l) above, and (ii) any
refinancing, refunding, renewal or extension of any Indebtedness specified
in subclause (i) above.
<PAGE>
69
10.2 Limitation on Liens. The Borrower will not, and will not permit
any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist
any Lien upon any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any Restricted Subsidiary, whether now owned or
hereafter acquired, except:
(a) Liens arising under the Credit Documents;
(b) Permitted Liens;
(c) Liens securing Indebtedness permitted pursuant to Section
10.1(f), provided that such Liens attach at all times only to the assets
so financed;
(d) Liens existing on the date hereof;
(e) (i) Liens incurred by any Real Estate Financing Subsidiary in
connection with a Real Estate Financing and (ii) Liens incurred by the
Borrower or any Restricted Subsidiary on Centers in connection with a
Permitted Mortgage Financing of such Centers;
(f) Liens existing on the assets of any Person that becomes a
Restricted Subsidiary, or existing on assets acquired, pursuant to a
Permitted Acquisition to the extent the Liens on such assets secure
Indebtedness permitted by Section 10.1(j), provided that such Liens attach
at all times only to the same assets that such Liens attached to, and
secure only the same Indebtedness that such Liens secured, immediately
prior to such Permitted Acquisition;
(g) (i) Liens placed upon the capital stock of any Restricted
Subsidiary acquired pursuant to a Permitted Acquisition to secure
Indebtedness of the Borrower or any other Restricted Subsidiary incurred
pursuant to Section 10.1(k) in connection with such Permitted Acquisition,
(ii) Liens placed upon the assets of such Restricted Subsidiary to secure
a guarantee by such Restricted Subsidiary of any such Indebtedness of the
Borrower or any other Restricted Subsidiary and (iii) Liens placed upon
the capital stock or assets of any Acquisition Subsidiary to secure
Indebtedness of such Acquisition Subsidiary incurred pursuant to Section
10.1(k) in connection with any Permitted Acquisition;
(h) the replacement, extension or renewal of any Lien permitted by
clauses (a) through (g) above upon or in the same assets theretofore
subject to such Lien or the replacement, extension or renewal (without
increase in the amount or change in any direct or contingent obligor) of
the Indebtedness secured thereby; and
(i) additional Liens so long as the aggregate principal amount of
the obligations so secured does not exceed $25,000,000 at any time
outstanding.
10.3 Limitation on Fundamental Changes. The Borrower will not, and
will not permit any of the Restricted Subsidiaries to, enter into any merger,
consolidation or amalgamation, or
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70
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of,
all or substantially all its business units, assets or other properties, except
that:
(a) the Borrower may effect the Merger;
(b) any Subsidiary of the Borrower or any other Person may be merged
or consolidated with or into the Borrower, provided that (i) the Borrower
shall be the continuing or surviving corporation or the Person formed by
or surviving any such merger or consolidation (if other than the Borrower)
shall be a corporation organized or existing under the laws of the United
States, any state thereof, the District of Columbia or any territory
thereof (the Borrower or such Person, as the case may be, being herein
referred to as the "Successor Borrower"), (ii) the Successor Borrower (if
other than the Borrower) shall expressly assume all the obligations of the
Borrower under this Agreement and the other Credit Documents pursuant to a
supplement hereto or thereto in form reasonably satisfactory to the
Administrative Agent, (iii) no Default or Event of Default would result
from the consummation of such merger or consolidation, (iv) the Successor
Borrower shall be in compliance, on a pro forma basis after giving effect
to such merger or consolidation, with the covenants set forth in Sections
10.9, 10.10 and 10.11, as such covenants are recomputed as at the last day
of the most recently ended Test Period under such Section as if such
merger or consolidation had occurred on the first day of such Test Period,
(v) each Guarantor, unless it is the other party to such merger or
consolidation, shall have by a supplement to the Guarantee confirmed that
its Guarantee shall apply to the Successor Borrower's obligations under
this Agreement and (vi) the Borrower shall have delivered to the
Administrative Agent an officer's certificate and an opinion of counsel,
each stating that such merger or consolidation and such supplement to this
Agreement or any Guarantee comply with this Agreement, provided further
that if the foregoing are satisfied, the Successor Borrower (if other than
the Borrower) will succeed to, and be substituted for, the Borrower under
this Agreement;
(c) any Subsidiary of the Borrower or any other Person may be merged
or consolidated with any one or more other Subsidiaries of the Borrower,
provided that (i) no Default or Event of Default would result from such
merger or consolidation, (ii) in the case of any merger or consolidation
involving one or more Restricted Subsidiaries, a Restricted Subsidiary
shall be the continuing or surviving corporation and (iii) in the case of
any merger or consolidation involving one or more Guarantors, a Guarantor
shall be the continuing or surviving corporation;
(d) any Restricted Subsidiary that is not a Guarantor may sell,
lease, transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower, a Guarantor or any
other Restricted Subsidiary of the Borrower; and
(e) any Guarantor may sell, lease, transfer or otherwise dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to the
Borrower or any other Guarantor.
10.4 Limitation on Sale of Assets. The Borrower will not, and will
not permit any of the Restricted Subsidiaries to, (i) convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired (other than any such sale, transfer, assignment
or other
<PAGE>
71
disposition resulting from any casualty or condemnation, of any assets of the
Borrower or the Restricted Subsidiaries) or (ii) sell any shares owned by it of
any Restricted Subsidiary's capital stock to any Person other than the Borrower,
a Guarantor or a Restricted Foreign Subsidiary, except that:
(a) the Borrower and the Restricted Subsidiaries may sell, transfer
or otherwise dispose of used or surplus equipment, vehicles, inventory and
other assets in the ordinary course of business;
(b) the Borrower and the Restricted Subsidiaries may sell, transfer
or otherwise dispose of other assets for fair value, provided that (i) the
aggregate amount of such sales, transfers and disposals by the Borrower
and the Restricted Subsidiaries taken as a whole pursuant to this clause
(b) shall not exceed in the aggregate $250,000,000 during the term of this
Agreement, (ii) any consideration in excess of $5,000,000 received by the
Borrower or any Guarantor in connection with such sales, transfers and
other dispositions of assets pursuant to this clause (b) that is in the
form of Indebtedness shall be pledged to the Administrative Agent pursuant
to Section 9.12, (iii) with respect to any such sale, transfer or
disposition (or series of related sales, transfers or dispositions) in an
aggregate amount in excess of $10,000,000, the Borrower shall be in
compliance, on a pro forma basis after giving effect to such sale,
transfer or disposition, with the covenants set forth in Sections 10.9,
10.10 and 10.11, as such covenants are recomputed as at the last day of
the most recently ended Test Period under such Sections as if such sale,
transfer or disposition had occurred on the first day of such Test Period,
and (iv) after giving effect to any such sale, transfer or disposition, no
Default or Event of Default shall have occurred and be continuing;
(c) the Borrower and the Restricted Subsidiaries may make sales of
assets for fair value to the Borrower or to any Restricted Subsidiary;
(d) any Restricted Subsidiary may effect any transaction permitted
by Section 10.3;
(e) the Borrower and the Restricted Subsidiaries may sell or
discount without recourse accounts receivable arising in the ordinary
course of business in connection with the compromise or collection
thereof; and
(f) the Borrower and the Restricted Subsidiaries may sell, transfer
or otherwise dispose of Centers in connection with Real Estate Financings.
10.5 Limitation on Investments. The Borrower will not, and will not
permit any of the Restricted Subsidiaries to, make any advance, loan, extensions
of credit or capital contribution to, or purchase any stock, bonds, notes,
debentures or other securities of or any assets of, or make any other investment
in, any Person, except:
(a) extensions of trade credit and asset purchases in the ordinary
course of business;
(b) Permitted Investments;
(c) loans and advances to officers, directors and employees of the
Borrower or any of its Subsidiaries (i) to finance the purchase of capital
stock of the Borrower and (ii) for additional
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72
purposes not contemplated by subclause (i) above in an aggregate principal
amount at any time outstanding with respect to this clause (ii) not
exceeding $10,000,000;
(d) investments existing on the date hereof and any extensions,
renewals or reinvestments thereof, so long as the aggregate amount of all
investments pursuant to this clause (d) is not increased at any time above
the amount of such investments existing on the date hereof;
(e) investments in Hedge Agreements permitted by Section 10.1(h);
(f) investments received in connection with the bankruptcy or
reorganization of suppliers or customers and in settlement of delinquent
obligations of, and other disputes with, customers arising in the ordinary
course of business;
(g) investments payment for which is made solely with capital stock
of the Borrower;
(h) investments constituting non-cash proceeds of sales, transfers
and other dispositions of assets to the extent permitted by Section 10.4;
(i) investments in any Guarantor;
(j) investments constituting Permitted Acquisitions, provided that
the aggregate amount of any such investment made by the Borrower or any
Restricted Subsidiary (other than any Acquisition Subsidiary) in any
Acquisition Subsidiary shall not exceed the Available Amount at the time
of such investment, provided further that the aggregate amount of any such
investment made by the Borrower or any Restricted Subsidiary (other than
any Restricted Foreign Subsidiary) in any Restricted Foreign Subsidiary
shall not exceed (i) the Available Foreign Investment Amount at the time
of such investment minus (ii) the portion of the Available Foreign
Investment Amount being used at such time for investments made pursuant to
clause (n) below;
(k) investments in any Restricted Foreign Subsidiary, provided that
the aggregate amount of any such investment made by the Borrower or any
Restricted Subsidiary (other than any Restricted Foreign Subsidiary) shall
not exceed (i) the Available Foreign Investment Amount at the time of such
investment minus (ii) the portion of the Available Foreign Investment
Amount being used at such time for investments made pursuant to clause (n)
below;
(l) investments made to pay for the repurchase, retirement or other
acquisition of the Remaining Public Equity in an aggregate amount at the
time of such investment not in excess of the lesser of (i) the Available
Amount at such time and (ii) the aggregate amount of such investments then
permitted to be made under the Subordinated Note Indenture;
(m) investments made in any Real Estate Financing Subsidiary in
connection with Real Estate Financings; and
(n) additional investments (including investments in Minority
Investments, Unrestricted Subsidiaries and Acquisition Subsidiaries) in an
aggregate amount at the time of such investment not in excess of the sum
of (i) the Available Amount at such time and (ii) the amount equal to (x)
one-
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73
half of the Available Foreign Investment Amount at such time minus (y) the
amount at such time by which the sum of the amounts referrred to in clause
(b) of the definition of the term "Available Amount" exceeds the sum of
the amounts referred to in clause (a) of such definition.
10.6 Limitation on Dividends. The Borrower will not declare or pay
any dividends (other than dividends payable solely in its capital stock or
rights, warrants or options to purchase its capital stock) or return any capital
to its stockholders or make any other distribution, payment or delivery of
property or cash to its stockholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for consideration, any shares of any
class of its capital stock now or hereafter outstanding (or any warrants for or
options or stock appreciation rights in respect of any of such shares), or set
aside any funds for any of the foregoing purposes, or permit any of the
Restricted Subsidiaries to purchase or otherwise acquire for consideration
(other than in connection with an investment permitted by Section 10.5) any
shares of any class of the capital stock of the Borrower, now or hereafter
outstanding (or any options or warrants or stock appreciation rights issued by
such Person with respect to its capital stock) (all of the foregoing
"Dividends"), provided that, so long as no Default or Event of Default exists or
would exist after giving effect thereto, (a) the Borrower may redeem in whole or
in part any capital stock of the Borrower for another class of capital stock or
rights to acquire capital stock of the Borrower, provided that such other class
of capital stock contains terms and provisions at least as advantageous to the
Lenders as those contained in the capital stock redeemed thereby, (b) the
Borrower may repurchase shares of its capital stock (and/or options or warrants
in respect thereof) held by its officers, directors and employees so long as
such repurchase is pursuant to, and in accordance with the terms of, management
and/or employee stock plans, stock subscription agreements or shareholder
agreements and (c) the Borrower may declare and pay dividends on its capital
stock, provided that (i) the aggregate amount of dividends paid pursuant to this
clause (c) shall not at any time exceed 50% of Cumulative Consolidated Net
Income Available to Common Stockholders at such time and (ii) at the time of the
payment of any such dividends and after giving effect thereto, the Consolidated
Senior Debt to Consolidated EBITDA Ratio on the date of such payment of such
dividends shall be less than 2.50:1.00.
10.7 Limitation on Debt Payments and Amendments. (a) The Borrower
will not optionally prepay, repurchase or redeem or otherwise defease any
Subordinated Notes; provided, however, that so long as no Default or Event of
Default has occurred and is continuing, the Borrower may optionally prepay,
repurchase or redeem Subordinated Notes for an aggregate price not in excess of
the Available Amount at the time of such prepayment, repurchase or redemption.
(b) The Borrower will not waive, amend, modify, terminate or release
the Subordinated Note Indenture, to the extent that any such waiver, amendment,
supplement, modification, termination or release would be adverse to the Lenders
in any material respect.
10.8 Limitation on Sale Leasebacks. The Borrower will not, and will
not permit any of the Restricted Subsidiaries to, enter into or effect any Sale
Leasebacks of Centers, other than Permitted Sale Leasebacks.
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74
10.9 Consolidated Lease Expense. The Borrower will not permit
Consolidated Lease Expense for any fiscal year of the Borrower set forth below
to exceed the amount set forth below opposite such fiscal year:
Fiscal Year Amount
----------- ------
1997 $ 75,000,000
1998 80,000,000
1999 85,000,000
2000 90,000,000
2001 95,000,000
2002 100,000,000
2003 105,000,000
2004 110,000,000
2005 115,000,000
2006 120,000,000
10.10 Consolidated Senior Debt to Consolidated EBITDA Ratio. The
Borrower will not permit the Consolidated Senior Debt to Consolidated EBITDA
Ratio for any Test Period ending during any period set forth below to be greater
than the ratio set forth below opposite such period:
Period Ratio
------ -----
Closing Date through fourth quarter of 3.80:1.00
fiscal year 1997
First two quarters of fiscal year 1998 4.10:1.00
Last two quarters of fiscal year 1998 4.00:1.00
First two quarters of fiscal year 1999 4.50:1.00
Last two quarters of fiscal year 1999 4.30:1.00
First quarter of fiscal year 2000 4.75:1.00
Second quarter of fiscal year 2000 4.50:1.00
Last two quarters of fiscal year 2000 4.30:1.00
First two quarters of fiscal year 2001 4.50:1.00
Last two quarters of fiscal year 2001 4.25:1.00
First two quarters of fiscal year 2002 3.75:1.00
Last two quarters of fiscal year 2002 3.50:1.00
First two quarters of fiscal year 2003 3.25:1.00
Last two quarters of fiscal year 2003 3.00:1.00
First two quarters of fiscal year 2004 2.75:1.00
Third quarter of fiscal year 2004 through Term 2.50:1.00
Loan Maturity Date
10.11 Consolidated EBITDA to Consolidated Interest Expense Ratio.
The Borrower will not permit the Consolidated EBITDA to Consolidated Interest
Expense Ratio for any Test Period
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75
ending during any period set forth below to be less than the ratio set forth
below opposite such period:
Period Ratio
------ -----
Closing Date through second quarter of fiscal year 1998 1.50:1.00
Last two quarters of fiscal year 1998 1.40:1.00
Fiscal year 1999 1.45:1.00
Fiscal year 2000 1.60:1.00
Fiscal year 2001 1.70:1.00
Fiscal year 2002 1.90:1.00
Fiscal year 2003 2.10:1.00
Fiscal year 2004 2.25:1.00
Fiscal year 2005 through Term Loan Maturity Date 2.50:1.00
10.12 Capital Expenditures. The Borrower will not, and will not
permit any of the Restricted Subsidiaries, to make any Capital Expenditures
(other than Permitted Acquisitions that constitute Capital Expenditures) that
would cause the aggregate amount of all Capital Expenditures made by the
Borrower and the Restricted Subsidiaries in any fiscal year of the Borrower set
forth below to exceed the amount set forth below opposite such fiscal year:
Fiscal Year Amount
----------- ------
1997 $ 95,000,000
1998 100,000,000
1999 155,000,000
2000 185,000,000
2001 190,000,000
2002 190,000,000
2003 190,000,000
2004 190,000,000
2005 190,000,000
2006 190,000,000
To the extent that Capital Expenditures made by the Borrower and the Restricted
Subsidiaries during any fiscal year are less than the maximum amount permitted
to be made for such fiscal year, 75% of such unused amount (each such amount, a
"carry-forward amount") may be carried forward to the immediately succeeding
fiscal year and utilized to make Capital Expenditures in such succeeding fiscal
year in the event the amount set forth above for such succeeding fiscal year has
been used (it being understood and agreed that (a) no carry-forward amount may
be carried forward beyond the first three fiscal years immediately succeeding
the fiscal year in which it arose, (b) no portion of the carry-forward amount
available for any fiscal year may be used until the entire amount of Capital
Expenditures permitted to be made in such fiscal year (without giving effect to
such carry-forward amount) shall be made and (c) if the carry-forward amount
available for any fiscal year is the sum of amounts carried forward from each of
the two or three immediately preceding fiscal years, no portion
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76
of such carry-forward amount from the earlier of the two or three immediately
preceding fiscal years may be used until the entire portion of such
carry-forward amount from the more recent immediately preceding fiscal year
shall have been used for Capital Expenditures made in such fiscal year).
SECTION 11. Events of Default. Upon the occurrence of any of the following
specified events (each an "Event of Default"):
11.1 Payments. The Borrower shall (a) default in the payment when
due of any principal of the Loans or (b) default, and such default shall
continue for five or more days, in the payment when due of any interest on the
Loans or any Fees or any Unpaid Drawings or of any other amounts owing hereunder
or under any other Credit Document; or
11.2 Representations, etc.. Any representation, warranty or
statement made or deemed made by any Credit Party herein or in the Guarantee,
the Pledge Agreement or any certificate delivered or required to be delivered
pursuant hereto or thereto shall prove to be untrue in any material respect on
the date as of which made or deemed made; or
11.3 Covenants. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 9.1(f) or Section 10 or (b) default in the due performance or observance
by it of any term, covenant or agreement (other than those referred to in
Section 11.1 or 11.2 or clause (a) of this Section 11.3) contained in this
Agreement, the Guarantee or the Pledge Agreement and such default shall continue
unremedied for a period of at least 30 days after receipt of written notice by
the Borrower from the Administrative Agent or the Required Lenders; or
11.4 Default Under Other Agreements. (a) The Borrower or any of the
Restricted Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) in excess of $20,000,000 in the
aggregate, for the Borrower and such Subsidiaries, beyond the period of grace,
if any, provided in the instrument or agreement under which such Indebtedness
was created or (ii) default in the observance or performance of any agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or (except in the case of
Indebtedness consisting of any Hedge Agreement) any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, any such Indebtedness to
become due prior to its stated maturity; or (b) without limiting the provisions
of clause (a) above, any such Indebtedness (other than Indebtedness consisting
of any Hedge Agreement) shall be declared to be due and payable, or required to
be prepaid other than by a regularly scheduled required prepayment or as a
mandatory prepayment, prior to the stated maturity thereof; or
11.5 Bankruptcy, etc.. The Borrower or any Specified Subsidiary
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against the Borrower or any Specified Subsidiary and the petition is not
controverted within 10 days after commencement of the case; or an involuntary
case is commenced against the
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Borrower or any Specified Subsidiary and the petition is not dismissed within 60
days after commencement of the case; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially all
of the property of the Borrower or any Specified Subsidiary; or the Borrower or
any Specified Subsidiary commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Borrower or any Specified Subsidiary; or
there is commenced against the Borrower or any Specified Subsidiary any such
proceeding that remains undismissed for a period of 60 days; or the Borrower or
any Specified Subsidiary is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or the
Borrower or any Specified Subsidiary suffers any appointment of any custodian or
the like for it or any substantial part of its property to continue undischarged
or unstayed for a period of 60 days; or the Borrower or any Specified Subsidiary
makes a general assignment for the benefit of creditors; or any corporate action
is taken by the Borrower or any Specified Subsidiary for the purpose of
effecting any of the foregoing; or
11.6 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof or a waiver of such standard
or extension of any amortization period is sought or granted under Section 412
of the Code; any Plan is or shall have been terminated or is the subject of
termination proceedings under ERISA (including the giving of written notice
thereof); an event shall have occurred or a condition shall exist in either case
entitling the PBGC to terminate any Plan or to appoint a trustee to administer
any Plan (including the giving of written notice thereof); any Plan shall have
an accumulated funding deficiency (whether or not waived); the Borrower or any
Subsidiary or any ERISA Affiliate has incurred or is likely to incur a liability
to or on account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063,
4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code (including
the giving of written notice thereof); (b) there could result from any event or
events set forth in clause (a) of this Section 11.6 the imposition of a lien,
the granting of a security interest, or a liability, or the reasonable
likelihood of incurring a lien, security interest or liability; and (c) such
lien, security interest or liability will or would be reasonably likely to have
a Material Adverse Effect; or
11.7 Guarantee. The Guarantee or any material provision thereof
shall cease to be in full force or effect or any Guarantor thereunder or any
Credit Party shall deny or disaffirm in writing such Guarantor's obligations
under the Guarantee; or
11.8 Pledge Agreement. The Pledge Agreement or any material
provision thereof shall cease to be in full force or effect (other than pursuant
to the terms hereof or thereof or as a result of acts or omissions of the
Administrative Agent or any Lender) or any Pledgor thereunder or any Credit
Party shall deny or disaffirm in writing such Pledgor's obligations under the
Pledge Agreement; or
11.9 Judgments. One or more judgments or decrees shall be entered
against the Borrower or any of the Restricted Subsidiaries involving a liability
of $20,000,000 or more in the aggregate for all such judgments and decrees for
the Borrower and the Restricted Subsidiaries (to the extent not paid or fully
covered by insurance provided by a carrier not disputing coverage) and any such
judgments or decrees shall not have been vacated, discharged or stayed or bonded
pending appeal within 60 days from the entry thereof; or
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11.10 Change of Control. A Change of Control shall occur;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Lenders, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against the Borrower,
except as otherwise specifically provided for in this Agreement (provided that,
if an Event of Default specified in Section 11.5 shall occur with respect to the
Borrower or any Specified Subsidiary, the result that would occur upon the
giving of written notice by the Administrative Agent as specified in clauses
(i), (ii) and (iv) below shall occur automatically without the giving of any
such notice): (i) declare the Total Term Loan Commitment and the Total Revolving
Commitment terminated, whereupon the Commitments and Swingline Commitment, if
any, of each Lender or Chase, as the case may be, shall forthwith terminate
immediately and any Fees theretofore accrued shall forthwith become due and
payable without any other notice of any kind; (ii) declare the principal of and
any accrued interest in respect of all Loans and all Obligations owing hereunder
and thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; (iii) terminate any Letter of Credit that may
be terminated in accordance with its terms; and/or (iv) direct the Borrower to
pay (and the Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default specified in Section 11.5 with respect to the
Borrower or any Specified Subsidiary, it will pay) to the Administrative Agent
at the Administrative Agent's Office such additional amounts of cash, to be held
as security for the Borrower's reimbursement obligations for Drawings that may
subsequently occur thereunder, equal to the aggregate Stated Amount of all
Letters of Credit issued and then outstanding.
SECTION 12. The Administrative Agent.
12.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Credit Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Credit Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this 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 Agreement or any other Credit Document or
otherwise exist against the Administrative Agent.
12.2 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement and the other Credit Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
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12.3 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 Agreement or any
other Credit Document (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 the Borrower or
any Guarantor or any officer thereof contained in this Agreement or any other
Credit Document 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 Agreement or any other Credit Document or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Credit Document or for any failure of the Borrower
or any Guarantor 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 of any of the
agreements contained in, or conditions of, this Agreement or any other Credit
Document, or to inspect the properties, books or records of the Borrower.
12.4 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the Lender specified in the Register
with respect to any amount owing hereunder as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Credit Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that 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 this Agreement and the other Credit
Documents in accordance with a request of the Required Lenders, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Loans.
12.5 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
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give 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 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.
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12.6 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 representations or warranties to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
the Borrower or any Guarantor, 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 Borrower and any Guarantor and made its
own decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
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 Agreement and the other Credit Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrower and any
Guarantor. 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, assets,
operations, properties, financial condition, prospects or creditworthiness of
the Borrower or any Guarantor that may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
12.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective portions of the Total Credit Exposure in
effect on the date on which indemnification is sought (or, if indemnification is
sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with their respective
portions of the Total Credit Exposure in effect immediately prior to such date),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever that may at any time (including, without limitation, at any time
following the payment of the Loans) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing, provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct. The agreements in this Section 12.7 shall
survive the payment of the Loans and all other amounts payable hereunder.
12.8 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 Borrower and any Guarantor
as though the Administrative Agent were not the Administrative Agent hereunder
and under the other Credit Documents. With respect to the Loans made by it, the
Administrative Agent shall have the same rights and powers under this Agreement
and
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the other Credit Documents 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.
12.9 Successor Agent. The Administrative Agent may resign as
Administrative Agent upon 20 days' prior written notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Credit Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be approved by the Borrower (which approval shall not be
unreasonably withheld), 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 Administrative 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 Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 12 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Credit Documents.
SECTION 13. Miscellaneous.
13.1 Amendments and Waivers. Neither this Agreement nor any other
Credit Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 13.1. 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 relevant
Credit Party or Credit Parties written amendments, supplements or modifications
hereto and to the other Credit Documents for the purpose of adding any
provisions to this Agreement or the other Credit Documents or changing in any
manner the rights of the Lenders or of the Borrower hereunder or thereunder or
(b) waive, on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this 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, supplement or modification shall directly (i) forgive any
portion of any Loan or extend the final scheduled maturity date of any Loan or
reduce the stated rate, or forgive any portion, or extend the date for the
payment, of any interest or fee payable hereunder (other than as a result of
waiving the applicability of any post-default increase in interest rates) or
extend the final expiration date of any Lender's Commitment or extend the final
expiration date of any Letter of Credit beyond the L/C Maturity Date or increase
the aggregate amount of the Commitments of any Lender, in each case without the
written consent of each Lender directly and adversely affected thereby, or (ii)
amend, modify or waive any provision of this Section 13.1 or reduce the
percentages specified in the definitions of the terms "Required Lenders",
"Required Revolving Credit Lenders" and "Required Term Loan Lenders", or consent
to the assignment or transfer by the Borrower of its rights and obligations
under any Credit Document to which it is a party (except as permitted pursuant
to Section 10.3), in each case without the written consent of each Lender
directly and adversely affected thereby, or (iii) amend, modify or waive any
provision of Section 12 without the written consent of the then-current
Administrative Agent, or (iv) amend, modify or waive any provision of Section 3
without the written consent of the Letter of Credit
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Issuer, or (v) amend, modify or waive any provisions hereof relating to
Swingline Loans without the written consent of Chase, or (vi) change any
Revolving Credit Commitment to a Term Loan Commitment, or change any Term Loan
Commitment to a Revolving Credit Commitment, in each case without the prior
written consent of each Lender directly and adversely affected thereby, or (vii)
decrease any Repayment Amount or extend any scheduled Repayment Date, in each
case without the written consent of the Required Term Loan Lenders, or (viii)
except to the extent permitted under the applicable Credit Document, release all
or substantially all the Collateral under the Pledge Agreement or release all or
substantially all the Guarantors under the Guarantee, in each case without the
written consent of (x) the Required Revolving Credit Lenders and (y) the
Required Term Loan Lenders. Any such waiver and any such amendment, supplement
or modification shall apply equally to each of the affected Lenders and shall be
binding upon the Borrower, such Lenders, the Administrative Agent and all future
holders of the affected Loans. In the case of any waiver, the Borrower, the
Lenders and the Administrative Agent shall be restored to their former positions
and rights hereunder and under the other Credit Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing, it being
understood that no such waiver shall extend to any subsequent or other Default
or Event of Default or impair any right consequent thereon.
13.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered, or three days after
being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth on Schedule 1.1 in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto:
The Borrower: KinderCare Learning Centers, Inc.
2400 Presidents Drive
Montgomery, AL 36116
Attention: Chief Financial Officer
Fax: 334-260-2925
with a copy to:
KinderCare Learning Centers, Inc.
In care of Kohlberg Kravis Roberts & Co., L.P.
9 West 57th Street
New York, NY 10019
Attention: Nils P. Brous
Fax: 212-750-0003
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The Administrative Agent: The Chase Manhattan Bank
c/o Loan and Agency Services Group
One Chase Manhattan Plaza,
Eighth Floor
New York, NY 10081
Attention: Janet Belden
Fax: 212-552-5658
with a copy to:
The Chase Manhattan Bank
270 Park Avenue
New York, NY 10017
Attention: William J. Caggiano
Fax: 212-972-0009
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Sections 2.3, 2.6, 2.9, 4.2 and 5.1 shall not be
effective until received.
13.3 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 or under the other Credit Documents
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
13.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Credit Documents and in any
document, certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement and the
making of the Loans hereunder.
13.5 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 and
execution of, and any amendment, supplement or modification to, this 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, including, without limitation, the
reasonable fees, disbursements and other charges of counsel to the
Administrative Agent, (b) to pay or reimburse each Lender and the Administrative
Agent for all its reasonable and documented costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Credit Documents and any such other documents, including,
without limitation, the reasonable fees, disbursements and other charges of
counsel to each Lender and of counsel to the Administrative Agent, (c) to pay,
indemnify, and hold harmless each Lender and the Administrative Agent from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay
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in paying, stamp, excise and other similar taxes, if any, that may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Credit Documents and any such other
documents, and (d) to pay, indemnify, and hold harmless each Lender and the
Administrative Agent and their respective directors, officers, employees,
trustees and agents 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, including, without limitation,
reasonable and documented fees, disbursements and other charges of counsel, with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the other Credit Documents and any such other documents,
including, without limitation, any of the foregoing relating to the violation
of, noncompliance with or liability under, any Environmental Law applicable to
the operations of the Borrower, any of its Subsidiaries or any of the Properties
(all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided that the Borrower shall have no obligation hereunder to
the Administrative Agent or any Lender nor any of their respective directors,
officers, employees and agents with respect to indemnified liabilities arising
from (i) the gross negligence or willful misconduct of the party to be
indemnified or (ii) disputes among the Administrative Agent, the Lenders and/or
their transferees. The agreements in this Section 13.5 shall survive repayment
of the Loans and all other amounts payable hereunder.
13.6 Successors and Assigns; Participations and Assignments. (a) (i)
This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Lenders, the Administrative Agent and their respective successors and
assigns, except that the Borrower may not assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of each
Lender.
(ii) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing to such
Lender, any Commitment of such Lender or any other interest of such Lender
hereunder and under the other Credit Documents. In the event of any such sale by
a Lender of a participating interest to a Participant, such Lender's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such Loan for all purposes
under this Agreement and the other Credit Documents, and the Borrower 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 Agreement and
the other Credit Documents. In no event shall any Participant under any such
participation have any right to approve any amendment or waiver of any provision
of any Credit Document, or any consent to any departure by any Credit Party
therefrom, except to the extent that such amendment, waiver or consent would
directly forgive any principal of any Loan or reduce the stated rate, or forgive
any portion, or postpone the date for the payment, of any interest or fee
payable hereunder (other than as a result of waiving the applicability of any
post-default increase in interest rates), or increase the aggregate amount of
the Commitments of any Lender or postpone the date of the final scheduled
maturity of any Loan, in each case to the extent subject to such participation.
The Borrower agrees that if amounts outstanding under this Agreement are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by
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applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement, provided that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in Section 13.7 as fully as if it were
a Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of Sections 2.10 and 2.11 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it were a Lender, provided that no Participant shall be entitled to receive
any greater amount pursuant to any such Section 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.
(iii) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time and from time to time assign to any
Lender or any Affiliate (with the consent of the Borrower if any increased costs
would result therefrom) thereof or, with the consent of the Borrower and the
Administrative Agent (which in each case shall not be unreasonably withheld, it
being understood that, without limitation, the Borrower shall have the right to
withhold its consent to any assignment if, in order for such assignment to
comply with applicable law, the Borrower would be required to obtain the consent
of, or make any filing or registration with, any Governmental Authority), to an
additional bank, fund which is regularly engaged in making, purchasing or
investing in loans or securities or financial institution (an "Assignee") all or
any part of its rights and obligations under this Agreement and the other Credit
Documents pursuant to an Assignment and Acceptance, substantially in the form of
Exhibit F, executed by such Assignee, such assigning Lender (and, in the case of
an Assignee that is not then a Lender or an Affiliate thereof, by the Borrower
and the Administrative Agent) and delivered to the Administrative Agent for its
acceptance and recording in the Register, provided that, except in the case of
an assignment of all of a Lender's interests under this Agreement, unless
otherwise agreed to by the Borrower and the Administrative Agent, no such
assignment to an Assignee (other than any Lender or any Affiliate thereof) shall
be in an aggregate principal amount of less than $5,000,000. Upon such
execution, delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment as set forth therein and (y) the assigning Lender thereunder
shall, to the extent provided in such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such assigning Lender shall cease to be a
party hereto). Notwithstanding any provision of this Agreement to the contrary,
the consent of the Borrower shall not be required for any assignment that occurs
at any time when any of the events described in Section 11.5 shall have occurred
and be continuing with respect to the Borrower.
(b) Nothing herein shall prohibit any Lender from pledging or assigning
all or any portion of its Loans to any Federal Reserve Bank in accordance with
applicable law. In order to facilitate such pledge or assignment, the Borrower
hereby agrees that, upon request of any Lender at any time and from time to time
after the Borrower has made its initial borrowing hereunder, the Borrower shall
provide to such Lender, at the Borrower's own expense, a promissory note,
substantially in the form
<PAGE>
86
of Exhibit C-1 or C-2, as the case may be, evidencing the Term Loans and
Revolving Credit Loans, respectively, owing to such Lender.
(c) The Administrative Agent, on behalf of the Borrower, shall maintain at
the address of the Administrative Agent referred to in Section 13.2 a copy of
each Assignment and Acceptance delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Lenders and the Commitment
of, and principal amount of the Loans owing to, each Lender from time to time.
The entries in the Register shall be conclusive, in the absence of manifest
error, and the Borrower, the Administrative Agent and the Lenders shall treat
each Person whose name is recorded in the Register as the owner of a Loan or
other obligation hereunder as the owner thereof for all purposes of this
Agreement and the other Credit Documents, notwithstanding any notice to the
contrary. Any assignment of any Loan or other obligation hereunder shall be
effective only upon appropriate entries with respect thereto being made in the
Register. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d) (i) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an Affiliate thereof, by the Borrower and the Administrative
Agent) together with payment to the Administrative Agent of a registration and
processing fee of $3,500, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders and the Borrower.
(e) Subject to Section 13.16, the Borrower authorizes each Lender to
disclose to any Participant or Assignee (each, a "Transferee") and any
prospective Transferee any and all financial information in such Lender's
possession concerning the Borrower and its Affiliates that has been delivered to
such Lender by or on behalf of the Borrower pursuant to this Agreement or which
has been delivered to such Lender by or on behalf of the Borrower in connection
with such Lender's credit evaluation of the Borrower and its Affiliates prior to
becoming a party to this Agreement, provided that neither the Administrative
Agent nor any Lender shall provide to any Transferee or prospective Transferee
any of the Confidential Information unless such person shall have previously
executed a Confidentiality Agreement in the form of Exhibit H.
13.7 Replacements of Lenders under Certain Circumstances. The
Borrower shall be permitted to replace any Lender that (a) requests
reimbursement for amounts owing pursuant to Section 2.10, 2.12, 3.5 or 5.4, (b)
is affected in the manner described in Section 2.10(a)(iii) and as a result
thereof any of the actions described in such Section is required to be taken or
(c) becomes a Defaulting Lender, with a replacement bank or other financial
institution, provided that (i) such replacement does not conflict with any
Requirement of Law, (ii) no Event of Default shall have occurred and be
continuing at the time of such replacement, (iii) the Borrower shall repay (or
the replacement bank or institution shall purchase, at par) all Loans and other
amounts (other than any disputed amounts), pursuant to Section 2.10, 2.11, 2.12,
3.5 or 5.4, as the case may be) owing to such replaced Lender prior to the date
of replacement, (iv) the replacement bank or institution, if not already a
Lender, and the terms and conditions of such replacement, shall be reasonably
satisfactory to the Administrative Agent, (v) the replaced Lender shall be
obligated to make such replacement in accordance with the provisions of Section
13.6 (provided that the Borrower shall be obligated to pay
<PAGE>
87
the registration and processing fee referred to therein) and (vi) any such
replacement shall not be deemed to be a waiver of any rights that the Borrower,
the Administrative Agent or any other Lender shall have against the replaced
Lender.
13.8 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender")
shall at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 11.5, or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Loans, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) After the occurrence and during the continuance of an Event of
Default, in addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and application
made by such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
13.9 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
13.10 Severability. Any provision of this Agreement that 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.
13.11 Integration. This Agreement and the other Credit Documents
represent the agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the
<PAGE>
88
Administrative Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Credit Documents.
13.12 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
13.13 Submission to Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Credit Documents to
which it is a party, or for recognition and enforcement of any judgement
in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of
America for the Southern District of New York and appellate courts from
any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 13.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section 13.13 any special, exemplary, punitive or consequential
damages.
13.14 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Credit Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Credit Documents, and
the relationship between Administrative Agent and Lenders, on one hand,
and the Borrower, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and
<PAGE>
89
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Borrower and the Lenders.
13.15 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
13.16 Confidentiality. The Administrative Agent and each Lender
shall hold all non-public information furnished by or on behalf of the Borrower
in connection with such Lender's evaluation of whether to become a Lender
hereunder or obtained by such Lender or the Administrative Agent pursuant to the
requirements of this Agreement ("Confidential Information"), in accordance with
its customary procedure for handling confidential information of this nature and
(in the case of a Lender that is a bank) in accordance with safe and sound
banking practices and in any event may make disclosure as required or requested
by any governmental agency or representative thereof or pursuant to legal
process or to such Lender's or the Administrative Agent's attorneys,
professional advisors or independent auditors, provided that unless specifically
prohibited by applicable law or court order, each Lender and the Administrative
Agent shall notify the Borrower of any request by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information, and provided further that in no event shall any Lender or the
Administrative Agent be obligated or required to return any materials furnished
by the Borrower or any Subsidiary of the Borrower. Each Lender and the
Administrative Agent agrees that it will not provide to prospective Transferees
or to prospective direct or indirect contractual counterparties in swap
agreements to be entered into in connection with Loans made hereunder any of the
Confidential Information unless such Person shall have previously executed a
Confidentiality Agreement in the form of Exhibit H.
<PAGE>
90
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.
KINDERCARE LEARNING CENTERS, INC.,
by /s/ Philip L. Maslowe
----------------------------------
Name: Philip L. Maslowe
Title: Executive Vice President/
Chief Financial Officer
THE CHASE MANHATTAN BANK, as Administrative
Agent and as a Lender,
by /s/ L. Palambo
----------------------------------
Name: L. Palambo
Title: Vice President
Attorney-in-fact
BANKERS TRUST COMPANY,
as Syndication Agent and as a Lender,
by___________________________________
Name:
Title:
WELLS FARGO BANK, N.A.,
as Documentation Agent and as a Lender,
by___________________________________
Name:
Title:
<PAGE>
90
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.
KINDERCARE LEARNING CENTERS, INC.,
by___________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Administrative
Agent and as a Lender,
by___________________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Syndication Agent and as a Lender,
by /s/ Mary Jo Jolly
----------------------------------
Name: MARY JO JOLLY
Title: ASSISTANT VICE PRESIDENT
WELLS FARGO BANK, N.A.,
as Documentation Agent and as a Lender,
by___________________________________
Name:
Title:
<PAGE>
90
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.
KINDERCARE LEARNING CENTERS, INC.,
by___________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Administrative
Agent and as a Lender,
by___________________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Syndication Agent and as a Lender,
by___________________________________
Name:
Title:
WELLS FARGO BANK, N.A.,
as Documentation Agent and as a Lender,
by /s/ David A. Neumann
----------------------------------
Name: David A. Neumann
Title: Vice President
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY,
by
------------------------------
Name:
Title:
ALLSTATE INSURANCE COMPANY,
by
------------------------------
Name:
Title:
AMSOUTH BANK OF ALABAMA,
by /s/ Donald M. Sinclair
------------------------------
Name: Donald M. Sinclair
Title: Vice President
BANK OF AMERICA ILLINOIS,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK
by
------------------------------
Name:
Title:
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
AMSOUTH BANK OF ALABAMA,
by /s/
------------------------------
Name:
Title:
BANK OF AMERICA ILLINOIS,
by /s/ Eugene F. Martin
------------------------------
Name: Eugene F. Martin
Title: Vice President
THE BANK OF NEW YORK
by
------------------------------
Name:
Title:
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY,
by
------------------------------
Name:
Title:
ALLSTATE INSURANCE COMPANY,
by
------------------------------
Name:
Title:
AMSOUTH BANK OF ALABAMA,
by
------------------------------
Name:
Title:
BANK OF AMERICA ILLINOIS,
by
------------------------------
Name:
Title:
THE BANK OF NEW YORK
by /s/ Ann Marie Beeble
------------------------------
Name: Ann Marie Beeble
Title: Assistant Vice President
<PAGE>
THE BANK OF NOVA SCOTIA,
by /s/ R.M. Brown
------------------------------
Name: R.M. Brown
Title: Relationship Manager
CIBC INC.,
by
------------------------------
Name:
Title:
CREDITANSTALT-BANKVEREIN,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
<PAGE>
THE BANK OF NOVA SCOTIA,
by
------------------------------
Name:
Title:
CIBC INC.,
by /s/ Roger Colden
------------------------------
Name: Roger Colden
Title: Director, CIBC Wood Gundy
Securities Corp. AS AGENT
CREDITANSTALT-BANKVEREIN,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
<PAGE>
THE BANK OF NOVA SCOTIA,
by
------------------------------
Name:
Title:
CIBC INC.,
by
------------------------------
Name:
Title:
CREDITANSTALT-BANKVEREIN,
by /s/ Joseph P. Longosz
------------------------------
Name: Joseph P. Longosz
Title: Vice President
by /s/ Scott Kray
------------------------------
Name: Scott Kray
Title: Senior Associate
<PAGE>
FLEET NATIONAL BANK,
by /s/ Eric C. Vander Mel
------------------------------
Name: Eric C. Vander Mel
Title: Vice President
LEHMAN COMMERCIAL PAPER, INC.
by
------------------------------
Name:
Title:
LLOYDS BANK PLC,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
THE LONG TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
by
------------------------------
Name:
Title:
<PAGE>
FLEET NATIONAL BANK,
by
------------------------------
Name:
Title:
LEHMAN COMMERCIAL PAPER, INC.
by /s/ Dennis J. Dee
------------------------------
Name: Dennis J. Dee
Title: Authorized Secretary
LLOYDS BANK PLC,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
THE LONG TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
by
------------------------------
Name:
Title:
<PAGE>
FLEET NATIONAL BANK,
by
------------------------------
Name:
Title:
LEHMAN COMMERCIAL PAPER, INC.
by
------------------------------
Name:
Title:
LLOYDS BANK PLC,
by /s/ Paul D. Brianmonte
------------------------------
Name: Paul D. Brianmonte
Title: Vice President
B374
by /s/ Stephen J. Attree
------------------------------
Name: Stephen J. Attree
Title: Assistant Vice President
A088
THE LONG TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
by
------------------------------
Name:
Title:
<PAGE>
FLEET NATIONAL BANK,
by
------------------------------
Name:
Title:
LEHMAN COMMERCIAL PAPER, INC.
by
------------------------------
Name:
Title:
LLOYDS BANK PLC,
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
THE LONG TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
by /s/ Shuichi Tajima
------------------------------
Name: Shuichi Tajima
Title: Deputy General Manager
<PAGE>
KZH HOLDING CORPORATION,
by
------------------------------
Name:
Title:
MARINE MIDLAND BANK,
by /s/ JB Lyons
------------------------------
Name: JB Lyons
Title: SVP
MERRILL LYNCH CAPITAL CORPORATION,
by
------------------------------
Name:
Title:
METROPOLITAN LIFE INSURANCE COMPANY,
by
------------------------------
Name:
Title:
<PAGE>
KZH HOLDING CORPORATION,
by
------------------------------
Name:
Title:
MARINE MIDLAND BANK,
by
------------------------------
Name:
Title:
MERRILL LYNCH CAPITAL CORPORATION,
by /s/ Christopher K. Stout
------------------------------
Name: Christopher K. Stout
Title: VP
METROPOLITAN LIFE INSURANCE COMPANY,
by
------------------------------
Name:
Title:
<PAGE>
NATIONSBANK, N.A. (SOUTH),
by
------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC
by /s/ W. Wakefield Smith
------------------------------
Name: W. Wakefield Smith
Title: Vice President
THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY,
by
------------------------------
Name:
Title:
OAK HILL SECURITIES FUND, L.P.
by
------------------------------
Name:
Title:
<PAGE>
NATIONSBANK, N.A. (SOUTH),
by
------------------------------
Name:
Title:
NATIONAL WESTMINSTER BANK PLC
by /s/ Derrick C. Bell
------------------------------
Name: Derrick C. Bell
Title: Vice President
THE SAKURA BANK, LIMITED
by
------------------------------
Name:
Title:
SOCIETE GENERALE,
by
------------------------------
Name:
Title:
<PAGE>
ORIX USA CORPORATION,
by
------------------------------
Name:
Title:
PRIME INCOME TRUST,
by /s/
------------------------------
Name:
Title:
PROTECTIVE LIFE INSURANCE COMPANY,
by
------------------------------
Name:
Title:
THE SAKURA BANK, LIMITED,
by /s/ Yasuhiro Terada
------------------------------
Name: Yasuhiro Terada
Title: Senior Vice President
<PAGE>
SOCIETE GENERALE,
by /s/ John M. Stack
------------------------------
Name: John M. Stack
Title: Vice President
SOUTHTRUST BANK OF ALABAMA, NATIONAL
ASSOCIATION.
by /s/
------------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED,
by
------------------------------
Name:
Title:
THE TRAVELERS INSURANCE COMPANY,
by
------------------------------
Name:
Title:
<PAGE>
SOCIETE GENERALE,
by
------------------------------
Name:
Title:
SOUTHTRUST BANK OF ALABAMA, NATIONAL
ASSOCIATION.
by /s/ Allan P. Causey
------------------------------
Name: Allan P. Causey
Title: Vice President
THE SUMITOMO BANK, LIMITED,
by
------------------------------
Name:
Title:
THE TRAVELERS INSURANCE COMPANY,
by
------------------------------
Name:
Title:
<PAGE>
SOCIETE GENERALE,
by
------------------------------
Name:
Title:
SOUTHTRUST BANK OF ALABAMA, NATIONAL
ASSOCIATION.
by
------------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED,
by /s/ John C. Kissinger
------------------------------
Name: John C. Kissinger
Title: Joint General Manager
THE TRAVELERS INSURANCE COMPANY,
by
------------------------------
Name:
Title:
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST,
by
------------------------------
Name:
Title:
WACHOVIA BANK OF GEORGIA, N.A.,
by /s/ John C. Canty
------------------------------
Name: John C. Canty
Title: Banking Officer
by
------------------------------
Name:
Title:
by
------------------------------
Name:
Title:
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of February 13, 1997, among
KCLC Acquisition Corp., a Delaware corporation (the "Company"), KLC Associates,
L.P., a Delaware limited partnership ("KLC"), and KKR Partners II, L.P., a
Delaware limited partnership ("KKR Partners" and, together with KLC, the "Common
Stock Partnerships").
RECITALS
Pursuant to an Agreement and Plan of Merger, dated as of October 3,
1996 and as amended as of December 27, 1996 (the "Merger Agreement"), among
KinderCare Learning Centers, Inc. ("KinderCare") and the Company, the Company
will be merged with and into KinderCare on February 13, 1997 (the "Merger"). As
a result of the Merger, each outstanding share of common stock, par value $.01
per share (the "Common Stock") of the Company, all 100 of which shares are owned
collectively by the Common Stock Partnerships, will be converted into (i) a
number of shares of common stock, par value $.01 per share, of KinderCare equal
to the quotient of (A) 7,828,947 divided by (B) the number of shares of Common
Stock outstanding immediately prior to the Effective Time. At the Effective
Time, KinderCare shall succeed by merger to all of the rights and obligations of
the Company, including those set forth herein, as well as to all of the other
property and assets of the Company.
Pursuant to a Stock Sale and Equity Contribution Agreement, dated as
of February 13, 1997 (the "Equity Contribution Agreement"), among the Company
and the Common Stock Partnerships, the Common Stock Partnerships made equity
contributions of $148.75 million in the aggregate to the Company. Upon the
merger of the Company with and into KinderCare, such $148.75 million will be
received by KinderCare as an equity contribution by the Common Stock
Partnerships.
AGREEMENT
1. Definitions. As used in this Agreement, the following capitalized
terms shall have the following respective meanings:
"Common Stock": the common stock, par value $.01 per share, of the
Company and its successors, including, without limitation, the common
stock of KinderCare into which the Common Stock may be converted by
Merger.
"Common Equivalent Securities": securities that are convertible into
or exchangeable or exercisable for Common Stock.
"Demand Party": (a) KLC, (b) KKR Partners or (c) any other Holder or
Holders, including, without limitation, any present or future general or
limited partner
<PAGE>
of either Common Stock Partnership, or any general or limited partner or
member of any general or limited partner thereof, that may become an
assignee of such Common Stock Partnership's rights hereunder; provided
that to be a Demand Party under this clause (c), a Holder or Holders must
either individually or in aggregate with all other Holders with whom it is
acting together to demand registration own at least 1% of the total number
of Registrable Securities.
"Exchange Act": The Securities Exchange Act of 1934, as amended, or
any similar federal statute then in effect, and a reference to a
particular section thereof shall be deemed to include a reference to the
comparable section, if any, of any such similar federal statute.
"Holder": Each Common Stock Partnership and any other holder of
Registrable Securities (including any direct or indirect transferees of a
Common Stock Partnership) who agrees in writing to be bound by the
provisions of this Agreement.
"Person": Any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization or
government or any department or agency thereof.
"Registrable Securities": Any Common Stock or Common Equivalent
Securities acquired by a Common Stock Partnership from the Company or any
affiliate of the Company, whether as a result of the Merger or upon the
conversion of any convertible security or otherwise, and any Common Stock
or Common Equivalent Securities which may be issued or distributed in
respect thereof by way of stock dividend or stock split or other
distribution, recapitalization or reclassification. As to any particular
Registrable Securities, once issued, such Registrable Securities shall
cease to be Registrable Securities when (i) a registration statement with
respect to the sale by the Holder of such securities shall have become
effective under the Securities Act (as defined below) and such securities
shall have been disposed of in accordance with such registration
statement, (ii) such securities shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities
Act, (iii) such securities shall have been otherwise transferred, new
certificates for such securities not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent
disposition of such securities shall not require registration or
qualification of such securities under the Securities Act or any state
securities or blue sky law then in force, or (iv) such securities shall
have ceased to be outstanding.
"Registration Expenses": Any and all expenses incident to
performance of or compliance with this Agreement, including, without
limitation, (i) all SEC (as defined below) and stock exchange or National
Association of Securities Dealers, Inc. (the "NASD") registration and
filing fees (including, if applicable, the fees and expenses of any
"qualified independent underwriter," as such term is defined in Schedule E
to the By-laws of the NASD, and of its counsel), (ii) all fees and
expenses of complying with securities or blue sky laws (including fees and
disbursements of counsel for the
-2-
<PAGE>
underwriters in connection with blue sky qualifications of the Registrable
Securities), (iii) all printing, messenger and delivery expenses, (iv) all
fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange pursuant to clause
(viii) of Section 4 and all rating agency fees, (v) the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits and/or "cold
comfort" letters required by or incident to such performance and
compliance, (vi) the reasonable fees and disbursements of counsel selected
pursuant to Section 7 hereof by the Holders of the Registrable Securities
being registered to represent such Holders in connection with each such
registration, (vii) any fees and disbursements of underwriters customarily
paid by the issuers or sellers of securities, including liability
insurance if the Company so desires or if the underwriters so require, and
the reasonable fees and expenses of any special experts retained in
connection with the requested registration, but excluding underwriting
discounts and commissions and transfer taxes, if any, and (viii) other
reasonable out-of-pocket expenses of Holders (provided that such expenses
shall not include expenses of counsel other than those provided for in
clause (vi) above).
"Securities Act": The Securities Act of 1933, as amended, or any
similar federal statute then in effect, and a reference to a particular
section thereof shall be deemed to include a reference to the comparable
section, if any, of any such similar federal statute.
"SEC": The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.
2. Incidental Registrations. (a) Right to Include Registrable
Securities. If the Company at any time after the date hereof proposes to
register its Common Stock or any Common Equivalent Securities under the
Securities Act (other than a registration on Form S-4 or S-8, or any successor
or other forms promulgated for similar purposes), whether or not for sale for
its own account, in a manner which would permit registration of Registrable
Securities for sale to the public under the Securities Act, it will, at each
such time, give prompt written notice to all Holders of Registrable Securities
of its intention to do so and of such Holders' rights under this Section 2. Upon
the written request of any such Holder made within 15 days after the receipt of
any such notice (which request shall specify the Registrable Securities intended
to be disposed of by such Holder), the Company will use its best efforts to
effect the registration under the Securities Act of all Registrable Securities
which the Company has been so requested to register by the Holders thereof, to
the extent requisite to permit the disposition of the Registrable Securities so
to be registered; provided that (i) if, at any time after giving written notice
of its intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to proceed with the proposed
registration of the securities to be sold by it, the Company may, at its
election, give written notice of such determination to each Holder of
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), and (ii) if such registration involves an underwritten offering, all
Holders of
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Registrable Securities requesting to be included in the Company's registration
must sell their Registrable Securities to the underwriters selected by the
Company on the same terms and conditions as apply to the Company, with such
differences, including any with respect to indemnification and liability
insurance, as may be customary or appropriate in combined primary and secondary
offerings. If a registration requested pursuant to this Section 2(a) involves an
underwritten public offering, any Holder of Registrable Securities requesting to
be included in such registration may elect, in writing prior to the effective
date of the registration statement filed in connection with such registration,
not to register such securities in connection with such registration. Nothing in
this Section 2(a) shall operate to limit the right of any Holder to (i) request
the registration of Common Stock issuable upon conversion, exercise or exchange
of Common Equivalent Securities held by such Holder notwithstanding the fact
that at the time of request such Holder holds only Common Equivalent Securities
or (ii) request the registration at one time of both Common Stock and Common
Equivalent Securities.
(b) Expenses. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 2.
(c) Priority in Incidental Registrations. If a registration pursuant
to this Section 2 involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering, so as to be likely to have an adverse effect on the
price, timing or distribution of the securities offered in such offering as
contemplated by the Company (other than the Registrable Securities), then the
Company will include in such registration (i) first, 100% of the securities the
Company proposes to sell and (ii) second, to the extent of the number of
Registrable Securities requested to be included in such registration which, in
the opinion of such managing underwriter, can be sold without having the adverse
effect referred to above, the number of Registrable Securities which the Holders
have requested to be included in such registration, such amount to be allocated
pro rata among all requesting Holders on the basis of the relative number of
shares of Registrable Securities then held by each such Holder (provided that
any shares thereby allocated to any such Holder that exceed such Holder's
request will be reallocated among the remaining requesting Holders in like
manner).
3. Registration on Request. (a) Request by the Demand Party. At any
time, upon the written request of the Demand Party requesting that the Company
effect the registration under the Securities Act of all or part of such Demand
Party's Registrable Securities and specifying the amount and intended method of
disposition thereof, the Company will promptly give written notice of such
requested registration to all other Holders of such Registrable Securities, and
thereupon will, as expeditiously as possible, use its best efforts to effect the
registration under the Securities Act of:
(i) such Registrable Securities (including, if such request
relates to any Common Equivalent Securities, the shares of Common Stock
issuable upon such conversion, exercise or exchange) which the Company has
been so requested to register by the Demand Party; and
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(ii) all other Registrable Securities of the same class or series
as are to be registered at the request of a Demand Party and which the
Company has been requested to register by any other Holder thereof by
written request given to the Company within 15 days after the giving of
such written notice by the Company (which request shall specify the amount
of such Registrable Securities),
all to the extent necessary to permit the disposition (in accordance with the
intended method of distribution thereof as aforesaid) of the Registrable
Securities so to be registered; provided, that with respect to any Demand Party
other than a Common Stock Partnership, the Company shall not be obligated to
effect any registration of Registrable Securities under this Section 3(a) unless
such Demand Party requests that the Company register at least 1% of the total
number of Registrable Securities; and provided, further, that, unless Holders of
a majority of the shares of Registrable Securities held by Holders consent
thereto in writing, the Company shall not be obligated to file a registration
statement relating to any registration request under this Section 3(a) (x)
within a period of nine months after the effective date of any other
registration statement relating to any registration request under this Section
3(a) which was not effected on Form S-3 (or any successor or similar short-form
registration statement) or relating to any registration effected under Section
2, or (y) if with respect thereto the managing underwriter, the SEC, the
Securities Act or the rules and regulations thereunder, or the form on which the
registration statement is to be filed, would require the conduct of an audit
other than the regular audit conducted by the Company at the end of its fiscal
year, in which case the filing may be delayed until the completion of such
regular audit (unless the Holders of the Registrable Securities to be registered
agree to pay the expenses of the Company in connection with such an audit other
than the regular audit). Nothing in this Section 3 shall operate to limit the
right of any Holder to (i) request the registration of Common Stock issuable
upon conversion, exercise or exchange of Common Equivalent Securities held by
such Holder notwithstanding the fact that at the time of request such Holder
holds only Common Equivalent Securities or (ii) request the registration at one
time of both Common Stock Common Equivalent Securities.
(b) Registration Statement Form. If any registration
requested pursuant to this Section 3 which is proposed by the Company to be
effected by the filing of a registration statement on Form S-3 (or any successor
or similar short-form registration statement) shall be in connection with an
underwritten public offering, and if the managing underwriter shall advise the
Company in writing that, in its opinion, the use of another form of registration
statement is of material importance to the success of such proposed offering,
then such registration shall be effected on such other form.
(c) Expenses. The Company will pay all Registration Expenses in
connection with the first six (6) registrations of each class or series of
Registrable Securities pursuant to this Section 3 upon the written request of
any Demand Party, provided that, for purposes hereof, a request to register
Common Stock into which a Common Equivalent Security is convertible, exercisable
or exchangeable in conjunction with a registration of such Common Equivalent
Security shall be deemed to be one request for registration of a class or series
of Registrable Securities. All expenses for any subsequent registrations of
Registrable Securities pursuant to this Section 3 shall be paid pro rata by the
Company and all other Persons
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(including the Holders) participating in such registration on the basis of the
relative number of shares of Common Stock of each such person whose Registrable
Securities are included in such registration.
(d) Effective Registration Statement. A registration requested
pursuant to this Section 3 will not be deemed to have been effected unless it
has become effective and all of the Registrable Securities registered thereunder
have been sold; provided that if, within 180 days after it has become effective,
the offering of Registrable Securities pursuant to such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court, such registration will be deemed
not to have been effected.
(e) Selection of Underwriters. If a requested registration pursuant
to this Section 3 involves an underwritten offering, the Holders of a majority
of the shares of Registrable Securities which are held by Holders and which the
Company has been requested to register shall have the right to select the
investment banker or bankers and managers to administer the offering; provided,
however, that such investment banker or bankers and managers shall be reasonably
satisfactory to the Company.
(f) Priority in Requested Registrations. If a requested registration
pursuant to this Section 3 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
securities requested to be included in such registration (including securities
of the Company which are not Registrable Securities) exceeds the number which
can be sold in such offering, the Company will include in such registration only
the Registrable Securities requested to be included in such registration. In the
event that the number of Registrable Securities requested to be included in such
registration exceeds the number which, in the opinion of such managing
underwriter, can be sold, the number of such Registrable Securities to be
included in such registration shall be allocated pro rata among all requesting
Holders on the basis of the relative number of shares of Registrable Securities
then held by each such Holder (provided that any shares thereby allocated to any
such Holder that exceed such Holder's request shall be reallocated among the
remaining requesting Holders in like manner). In the event that the number of
Registrable Securities requested to be included in such registration is less
than the number which, in the opinion of the managing underwriter, can be sold,
the Company may include in such registration the securities the Company proposes
to sell up to the number of securities that, in the opinion of the underwriter,
can be sold.
(g) Additional Rights. If the Company at any time grants to any
other holders of Common Stock any rights to request the Company to effect the
registration under the Securities Act of any such shares of Common Stock on
terms more favorable to such holders than the terms set forth in this Section 3,
the terms of this Section 3 shall be deemed amended or supplemented to the
extent necessary to provide the Holders such more favorable rights and benefits.
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4. Registration Procedures. If and whenever the Company is required
to use its best efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, the Company
will, as expeditiously as possible:
(i) prepare and, in any event within 120 days after the end of
the period within which a request for registration may be given to the
Company, file with the SEC a registration statement with respect to such
Registrable Securities and use its best efforts to cause such registration
statement to become effective, provided, however, that the Company may
discontinue any registration of its securities which is being effected
pursuant to Section 2 at any time prior to the effective date of the
registration statement relating thereto;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period not in excess of 270 days and to comply
with the provisions of the Securities Act, the Exchange Act and the rules
and regulations of the SEC thereunder with respect to the disposition of
all securities covered by such registration statement during such period
in accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement; provided that
before filing a registration statement or prospectus, or any amendments or
supplements thereto, the Company will furnish to counsel selected pursuant
to Section 7 hereof by the Holders of the Registrable Securities covered
by such registration statement to represent such Holders, copies of all
documents proposed to be filed, which documents will be subject to the
review of such counsel;
(iii) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits filed therewith,
including any documents incorporated by reference), such number of copies
of the prospectus included in such registration statement (including each
preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as such
seller may reasonably request in order to facilitate the disposition of
the Registrable Securities by such seller;
(iv) use its best efforts to register or qualify such Registrable
Securities covered by such registration in such jurisdictions as each
seller shall reasonably request, and do any and all other acts and things
which may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such Seller, except that the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this
clause (iv), it would not be obligated to be so qualified, to subject
itself to taxation in any such jurisdiction or to consent to general
service of process in any such jurisdiction;
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<PAGE>
(v) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) notify each seller of any such Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in clause (ii) of this Section 4,
of the Company's becoming aware that the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and at the request of any such
seller, prepare and furnish to such seller a reasonable number of copies
of an amended or supplemental prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing;
(vii) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable (but not more than eighteen
months) after the effective date of the registration statement, an
earnings statement which shall satisfy the provisions of Section 11(a) of
the Securities Act and the rules and regulations promulgated thereunder;
(viii) (A) use its best efforts to list such Registrable Securities
on any securities exchange on which the Common Stock is then listed (or if
the Common Stock is not then listed, on any securities exchange requested)
if such Registrable Securities are not already so listed and if such
listing is then permitted under the rules of such exchange; (B) if such
Registrable Securities are Common Equivalent Securities, upon the
reasonable request of sellers of a majority of shares of such Registrable
Securities, use its best efforts to list the Common Equivalent Securities
and, if requested, the Common Stock underlying such Common Equivalent
Securities, notwithstanding that at the time of request such sellers hold
only Common Equivalent Securities, on any securities exchange so
requested, if such Registrable Securities are not already so listed, and
if such listing is then permitted under the rules of such exchange; (C)
and use its best efforts to provide a transfer agent and registrar for
such Registrable Securities covered by such registration statement not
later than the effective date of such registration statement;
(ix) enter into such customary agreements (including an
underwriting agreement in customary form), which may include
indemnification provisions in favor of underwriters and other persons in
addition to, or in substitution for the provisions of Section 5 hereof,
and take such other actions as sellers of a majority of shares of such
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<PAGE>
Registrable Securities or the underwriters, if any, reasonably requested
in order to expedite or facilitate the disposition of such Registrable
Securities;
(x) obtain a "cold comfort" letter or letters from the Company's
independent public accounts in customary form and covering matters of the
type customarily covered by "cold comfort" letters as the seller or
sellers of a majority of shares of such Registrable Securities shall
reasonably request (provided that Registrable Securities constitute at
least 25% of the securities covered by such registration statement);
(xi) make available for inspection by any seller of such
Registrable Securities covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties
of the Company, and cause all of the Company's officers, directors and
employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(xii) notify counsel (selected pursuant to Section 7 hereof) for
the Holders of Registrable Securities included in such registration
statement and the managing underwriter or agent, immediately, and confirm
the notice in writing (i) when the registration statement, or any
post-effective amendment to the registration statement, shall have become
effective, or any supplement to the prospectus or any amendment prospectus
shall have been filed, (ii) of the receipt of any comments from the SEC,
(iii) of any request of the SEC to amend the registration statement or
amend or supplement the prospectus or for additional information, and (iv)
of the issuance by the SEC of any stop order suspending the effectiveness
of the registration statement or of any order preventing or suspending the
use of any preliminary prospectus, or of the suspension of the
qualification of the registration statement for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for
any of such purposes;
(xiii) make every reasonable effort to prevent the issuance of any
stop order suspending the effectiveness of the registration statement or
of any order preventing or suspending the use of any preliminary
prospectus and, if any such order is issued, to obtain the withdrawal of
any such order at the earliest possible moment;
(xiv) if requested by the managing underwriter or agent or any
Holder of Registrable Securities covered by the registration statement,
promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or agent or such
Holder reasonably requests to be included therein, including, without
limitation, with respect to the number of Registrable Securities being
sold by such Holder to such underwriter or agent, the purchase price being
paid therefor by such underwriter or agent and with respect to any other
terms of the
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<PAGE>
underwritten offering of the Registrable Securities to be sold in such
offering; and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after being notified of
the matters incorporated in such prospectus supplement or post-effective
amendment;
(xv) cooperate with the Holders of Registrable Securities covered
by the registration statement and the managing underwriter or agent, if
any, to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legends) representing securities to be sold
under the registration statement, and enable such securities to be in such
denominations and registered in such names as the managing underwriter or
agent, if any, or such Holders may request;
(xvi) obtain for delivery to the Holders of Registrable Securities
being registered and to the underwriter or agent an opinion or opinions
from counsel for the Company in customary form and in form, substance and
scope reasonably satisfactory to such Holders, underwriters or agents and
their counsel; and
(xvii) cooperate with each seller of Registrable Securities and
each underwriter or agent participating in the disposition of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with the NASD.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company with such
information regarding such seller and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as the
Company may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in clause (vi) of this Section 4, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by clause (vi) of this
Section 4, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in clause (ii) of this
Section 4 shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to clause (vi) of this
Section 4 and including the date when each seller of Registrable Securities
covered by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by clause (vi) of this Section
4.
5. Indemnification. (a) Indemnification by the Company. In the event
of any registration of any securities of the Company under the Securities Act
pursuant to Section 2 or 3, the Company will, and it hereby does, indemnify and
hold harmless, to the extent
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permitted by law, the seller of any Registrable Securities covered by such
registration statement, each affiliate of such seller and their respective
directors and officers, general and limited partners or members (including any
director, officer, affiliate, employee, agent and controlling Person of any of
the foregoing), each other Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who controls
such seller or any such underwriter within the meaning of the Securities Act,
against any and all losses, claims, damages or liabilities, joint or several,
and expenses (including reasonable attorney's fees and reasonable expenses of
investigation) to which such indemnified party may become subject under the
Securities Act, common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof, whether or not
such indemnified party is a party thereto) arise out of or are based upon (a)
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such securities were registered under
the Securities Act, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement thereto, or (b) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in light
of the circumstances under which they were made) not misleading, and the Company
will reimburse such indemnified party for any legal or any other expenses
reasonably incurred by it in connection with investigating or defending against
any such loss, claim, liability, action or proceeding; provided that the Company
shall not be liable to any indemnified party in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement or amendment or supplement thereto or in any such
preliminary, final or summary prospectus in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by such seller specifically stating that it is for use in the preparation
thereof. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any indemnified party and
shall survive the transfer of such securities by such seller.
(b) Indemnification by the Seller. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed in accordance with Section 4 herein, that the Company shall have received
an undertaking reasonably satisfactory to it from the prospective seller of such
Registrable Securities or any underwriter to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subdivision (a) of this
Section 5) the Company and all other prospective sellers with respect to any
untrue statement or alleged untrue statement in or omission or alleged omission
from such registration statement, any preliminary, final or summary prospectus
contained therein, or any amendment or supplement, if such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company through
an instrument duly executed by such seller or underwriter specifically stating
that it is for use in the preparation of such registration statement,
preliminary, final or summary prospectus or amendment or supplement, or a
document incorporated by reference into any of the foregoing. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Company or any of the prospective sellers, or any of their
respective affiliates, directors, officers or
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controlling Persons and shall survive the transfer of such securities by such
seller. In no event shall the liability of any selling Holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 5, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided that the failure of the
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 5, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified party and indemnifying
parties may exist in respect of such claim, the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party will consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof, the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in this
Section 5 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party under this Section 5(d) as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method
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of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(e) Other Indemnification. Indemnification similar to that specified
in the preceding subdivisions of this Section 5 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation or governmental authority other than the
Securities Act.
(f) Non-Exclusivity. The obligations of the parties under this
Section 5 shall be in addition to any liability which any party may otherwise
have to any other party.
6. Rule 144. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available such information), and it will
take such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of any
Holder of Registrable Securities, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
Notwithstanding anything contained in this Section 6, the Company may deregister
under Section 12 of the Exchange Act if it then is permitted to do so pursuant
to the Exchange Act and the rules and regulations thereunder.
7. Selection of Counsel. In connection with any registration of
Registrable Securities pursuant to Sections 2 and 3 hereof, the Holders of a
majority of the Registrable Securities covered by any such registration may
select one counsel to represent all Holders of Registrable Securities covered by
such registration; provided, however, that in the event that the counsel
selected as provided above is also acting as counsel to the Company in
connection with such registration, the remaining Holders shall be entitled to
select one additional counsel to represent all such remaining Holders.
8. Miscellaneous. (a) Other Investors. The Company may enter into
agreements with other purchasers of Common Stock who are then employees of the
Company (or its successor) or any of its subsidiaries, making them parties
hereto (and thereby giving them all, or a portion, of the rights, preferences
and privileges of an original party hereto) with respect to additional shares of
Common Stock (the "Supplemental Agreements"); provided, however, that pursuant
to any such Supplemental Agreement, such purchaser expressly agrees to be bound
by all of the terms, conditions and obligations of this Agreement as if such
purchaser were an original party hereto. All shares of Common Stock issued or
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issuable pursuant to such Supplemental Agreements shall be deemed to be
Registrable Securities.
(b) Holdback Agreement. If any such registration shall be in
connection with an underwritten public offering, each Holder of Registrable
Securities agrees not to effect any public sale or distribution, including any
sale pursuant to Rule 144 under the Securities Act, of any equity securities of
the Company, or of any security convertible into or exchangeable or exercisable
for any equity security of the Company (in each case, other than as part of such
underwritten public offering), within 7 days before or such period not to exceed
180 days as the underwriting agreement may require (or such lesser period as the
managing underwriters may permit) after the effective date of such registration
(except as part of such registration), and the Company hereby also so agrees and
agrees to cause each other holder of any equity security, or of any security
convertible into or exchangeable or exercisable for any equity security, of the
Company purchased from the Company (at any time other than in a public offering)
to so agree.
(c) Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Holders of
a majority of the Registrable Securities then outstanding; provided, however,
that no amendment, waiver or consent to the departure from the terms and
provisions of this Agreement that is adverse to either Common Stock Partnership
or any of their respective successors and assigns shall be effective as against
any such Person for so long as such Person holds any Registrable Securities
unless consented to in writing by such Person. Each Holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any consent
authorized by this Section 8(c), whether or not such Registrable Securities
shall have been marked to indicate such consent.
(d) Successors, Assigns and Transferees. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent Holder of any Registrable
Securities, subject to the provisions contained herein. Without limitation to
the foregoing, in the event that either Common Stock Partnership distributes or
otherwise transfers any shares of the Registrable Securities to any of its
present or future general or limited partners, the Company hereby acknowledges
that the registration rights granted pursuant to this Agreement shall be
transferred to such partner or partners on a pro rata basis, and that at or
after the time of any such distribution or transfer, any such partner or group
of partners may designate a Person to act on its behalf in delivering any
notices or making any requests hereunder.
(e) Notices. All notices and other communications provided for
hereunder shall be in writing and shall be sent by first class mail, telex,
telecopier or hand delivery:
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(i) (A) if to the Company prior to the Merger, to:
KCLC Acquisition Corp.
9 West 57th Street
New York, New York 10019
Attention: Clifton S. Robbins
(B) if to the Company following the Merger, to:
KinderCare Learning Centers, Inc.
2400 Presidents Drive
Montgomery, Alabama 36116
Attention: General Counsel
(ii) if to either Common Stock Partnership, to:
c/o Kohlberg Kravis Roberts & Co., L.P.
9 West 57th Street
New York, New York 10019
Attention: Clifton S. Robbins
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: David J. Sorkin, Esq
(iii) if to any other holder of Registrable Securities, to the
address of such other holder as shown in the stock record book of the
Company, or to such other address as any of the above shall have
designated in writing to all of the other above.
All such notices and communications shall be deemed to have been
given or made (1) when delivered by hand, (2) five business days after being
deposited in the mail, postage prepaid, (3) when telexed answer-back received or
(4) when telecopied, receipt acknowledged.
(f) Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
(g) Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses,
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phrases or sentences hereof shall not be in any way impaired, it being intended
that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
(h) Counterparts. This Agreement may be executed in counterparts,
and by different parties on separate counterparts, each of which shall be deemed
an original, but all such counterparts shall together constitute one and the
same instrument.
(i) Governing Law; Submission to Jurisdiction. This Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of New York applicable to contracts made and to be performed therein. The
parties to this Agreement hereby agree to submit to the jurisdiction of the
courts of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof in any
action or proceeding arising out of or relating to this Agreement.
(j) Specific Performance. The parties hereto acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, it is agreed that they shall be entitled
to an injunction or injunctions to prevent breaches of the provision of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction in the United States or any state thereof, in
addition to any other remedy to which they may be entitled at law or in equity.
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IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be duly executed on its behalf as of the
date first written above.
KCLC ACQUISITION CORP.
By: /s/ Clifton S. Robbins
---------------------------------------
Name: Clifton S. Robbins
Title: President
KLC ASSOCIATES, L.P.
By KKR Associates (KLC) L.P.,
as General Partner
By KKR-KLC L.L.C., as
General Partner
By: /s/ Clifton S. Robbins
---------------------------------------
Name: Clifton S. Robbins
Title: Member
KKR PARTNERS II, L.P.
By KKR ASSOCIATES L.P., as
General Partner
By: /s/ Clifton S. Robbins
---------------------------------------
Name: Clifton S. Robbins
Title: General Partner
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ACKNOWLEDGEMENT
The undersigned authorized officer of KinderCare Learning Centers, Inc. is aware
of this Registration Rights Agreement and acknowledges that KinderCare Learning
Centers, Inc. will be bound by the terms hereof as successor to KCLC Acquisition
Corp. by merger.
KINDERCARE LEARNING CENTERS, INC.
By /s/ Philip L. Maslowe
-----------------------------------
Name: Philip L. Maslowe
Title: Senior Vice President
Chief Financial Officer
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