Exhibit 10.60
CREDIT AGREEMENT
between
ITT EDUCATIONAL SERVICES, INC.
and
JPMORGAN CHASE BANK, N.A.
Dated effective as of December 22,
2006
CREDIT
AGREEMENT
THIS CREDIT AGREEMENT, dated
effective as of December 22, 2006, is between ITT EDUCATIONAL
SERVICES, INC. , a Delaware corporation (the
“Borrower”), and JPMORGAN CHASE BANK, N.A. , a
national banking association (the “Bank”).
|
|
The parties hereto agree as
follows:
|
|
|
1.1.
|
Defined Terms
. As used herein:
|
“Advance” has the
meaning ascribed to such term in the Notes.
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with Borrower.
“Agreement” means this
Credit Agreement, as further modified, amended or replaced from
time to time.
“Authorized Officer”
means any of the Chief Executive Officer, the President and/or the
Chief Financial Officer of the Borrower or such other officer whose
authority to perform acts to be performed only by an Authorized
Officer under the terms of this Agreement is evidenced to the Bank
by a certified copy of an appropriate resolution of the Board of
Directors of the Borrower.
“Bank” means JPMorgan
Chase Bank, N.A., a national banking association, its successors
and assigns.
“Borrower” means ITT
Educational Services, Inc., a Delaware corporation, its successors
and assigns.
“Business Day” has the
meaning ascribed to such term in the Notes.
“Collateral Requirement”
will have the meaning ascribed to such term In Section 2.7
hereof.
“Control Agreement”
means a Control Agreement in the form appended to the Security
Agreement, duly executed and delivered by all parties
thereto.
“Custodial Account”
means the Custodial Account established by the Borrower with the
Bank (initially Account No. xxxxxxxxxx) in which the Bank has been
granted a security interest to cover Obligations under the Secured
Note, which will contain investment property subject to the
Security Agreement
“Current Financials”
means the Financial Statements of Borrower as of December 31, 2005,
and for the fiscal year then ended.
“Default” means any of
the events specified in Section 6 hereof.
“EBITDA” means, for any
period, net income for such period plus (a) without duplication and
to the extent deducted in determining net income for such period,
the sum of (i) interest expense for such period, (ii) income tax
expense for such period, (iii) all amounts attributable to
depreciation and amortization expense for such period, (iv) any
extraordinary charges for such period and (v) any other non-cash
charges for such period (but excluding any non-cash charge in
respect of an item that was included in net income in a prior
period) , minus (b) without duplication and to the extent included
in net income, any extraordinary gains and any non-cash items of
income for such period, all calculated for the Borrower on a
consolidated basis in accordance with GAAP.
“Environmental Laws”
means all provisions of laws, statutes, ordinances, rules,
regulations, permits, licenses, judgments, writs, injunctions,
decrees, orders, awards and standards promulgated by any
Governmental Authority concerning health, safety and protection of,
or regulation of the discharge of substances into, the
environment.
“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from
time-to-time.
“ERISA Affiliate” means
any trade or business, whether or not incorporated, which together
with Borrower would be treated as a single employer under
ERISA.
“Financial Statements”
means the balance sheets, income statements and statements of cash
flows of Borrower, and any accompanying notes or other disclosures
to such statements.
“GAAP” means generally
accepted accounting principles in the United States of America in
effect from time to time as promulgated by the Financial Standards
Accounting Board and recognized and interpreted by the American
Institute of Certified Public Accountants.
“Governmental Authority”
means 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 any government, including, without limiting the
generality of the foregoing, any agency, body, commission, court or
department thereof whether federal, state, local or
foreign.
“Hazardous Substances”
means asbestos, polychlorinated biphenyls and petroleum products
and any other regulated, hazardous or toxic materials, wastes and
substances which are defined, determined, regulated or identified
as such in any Environmental Laws (whether now existing or
hereafter enacted or promulgated).
“Indebtedness” means (a)
all indebtedness or other obligations of the Borrower for borrowed
money or for the deferred purchase price of property or services,
(b) all indebtedness or other obligations of any other Person for
borrowed money or for the deferred purchase price of property or
services, to the extent the payment or collection of which the
Borrower has guaranteed (except by reason of endorsement for
collection in the ordinary course of business) or in respect of
which the Borrower is liable, contingently or otherwise, including,
without limitation, liability by way of agreement to purchase, to
provide funds for payment, to supply funds to or otherwise to
invest in such other Person, or otherwise to assure a creditor
against loss, (c) all indebtedness or other obligations of the
Borrower for borrowed money or for the deferred purchase price of
property or services to the extent the same are secured by (or for
which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, deed of
trust, pledge, lien, security interest or other charge or
encumbrance upon or in property (including, without limitation,
accounts) owned by the Borrower, whether or not the Borrower has
assumed or become liable for the payment of such indebtedness or
obligations, and (d) capitalized lease obligations of the
Borrower.
“Leverage Ratio” means,
on any date, the ratio of (a) total Indebtedness on such date to
(b) EBITDA for the period of four consecutive fiscal quarters ended
on such date.
“Line of Credit” means
the reducing revolving line of credit made available by the Bank to
the Borrower in the maximum principal amount of One Hundred Fifty
Million and 00/100 Dollars ($150,000,000.00), governed by this
Agreement, including any renewal or extension thereof.
“Loan Documents” means
this Agreement, the Notes, the Security Agreement, and all other
documents executed and delivered by Borrower or any other third
party to govern, evidence, guarantee or secure the Line of
Credit.
“Loss” shall have the
meaning ascribed in Section 8.9 hereof.
“Maturity Date” means
October 1, 2009.
“Notes” means the
Secured Note and the Unsecured Note, any renewals, amendments,
replacements or renewals thereof, and any other promissory note
delivered by Borrower pursuant to this Agreement.
“Note” means either the Secured Note or the Unsecured
Note, any renewals, amendments, replacements or renewals
thereof.
“Obligations” means all
unpaid principal and accrued and unpaid interest on the Notes, all
accrued and unpaid fees hereunder, including, without limitation,
any advances pursuant to this Agreement or any amendment, and to
the extent recoverable, all reasonable costs of collection and
enforcement of any and all thereof, including reasonable attorney
fees.
“PBGC” means the Pension
Benefit Guaranty Corporation established pursuant to ERISA, or any
successor entity.
“Permitted Encumbrances”
means (a) liens for taxes or assessments which are not yet due,
liens for taxes or assessments or liens of judgments which are
being contested, appealed or reviewed in good faith by appropriate
proceedings which prevent foreclosure of any such lien or levy of
execution thereunder and against which liens, if any, adequate
insurance or reserves have been provided; (b) pledges or deposits
to secure payment of workers’ compensation obligations and
deposits or indemnities to secure public or statutory obligations
or for similar purposes; (c) liens and other security interests in
favor of Bank; and (d) those further encumbrances (if any) shown on
Schedule 1 attached hereto.
“Permissible
Investments” means the investments specified as Permissible
Investments in the Investment Guidelines attached to the Investment
Management Agreement of even date herewith between the Borrower and
J.P. Morgan Investment Management Inc. pertaining to the Custodial
Account which also meet the Maturity Guidelines and Quality
Guidelines specified therein, without amendment unless consented to
by the Bank.
“Person” means and
includes an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated association and a
Governmental Authority.
“Secured Note” means the
Secured Promissory Note, in substantially the form of Exhibit
A hereto, duly executed by Borrower to Bank to evidence secured
borrowings under the Line of Credit, including any amendment,
modification, renewal, extension or replacement thereof.
“Security Agreement”
means the Security Agreement with Respect to Custodial Account and
Investment Property of even date herewith or later in the form of
Exhibit C hereto, from the Borrower in favor of the Bank together
with its appended Control Agreement, duly executed by Borrower to
Bank to secure borrowings under the Secured Note, including any
amendment, modification, renewal, extension or replacement
thereof.
“Unsecured Note” means
the Unsecured Promissory Note, in substantially the form of
Exhibit B hereto, duly executed by Borrower to Bank to
evidence unsecured borrowings under the Line of Credit, including
any amendment, modification, renewal, extension or replacement
thereof.
“Unmatured Default”
means any event which with notice, or lapse of time, or both, would
constitute a Default.
|
|
1.2.
|
Rules of
Construction . The
foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. Use of the terms
“herein” “hereof”, and
“hereunder” shall
|
be deemed references to this
Agreement in its entirety and not to the Section clause in which
such term appears.
|
|
1.3.
|
Accounting Terms
. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP.
|
SECTION 2
|
|
2.1.
|
Line of Credit
. Subject to the terms and
conditions of this Agreement, Bank shall make the Line of Credit
available to Borrower for general working capital purposes,
including reacquisition of Borrower’s common stock, in an
initial maximum principal amount of up to One Hundred Fifty Million
Dollars ($150,000,000.00). The availability of the Line of Credit
will reduce by $21,428,571.43 each calendar quarter, beginning on
April 1, 2008, and will reduce by a like amount on the first day of
each calendar quarter thereafter, and shall in any event be payable
in full in any and all events on the Maturity Date. The Borrower ,
at any time and from time to time, may permanently reduce the Line
of Credit in whole or in part, in integral multiples of $1,000,000,
upon at least one Business Day written notice to the Bank, which
notice shall specify the amount of any such reduction, provided,
however, that the amount of the Line of Credit may not be reduced
below the outstanding principal balance of the Note.
|
Prior to the Maturity Date, the
Borrower may borrow, repay and reborrow under the Line of Credit so
long as the aggregate principal amount outstanding under the Line
of Credit does not exceed the foregoing limitations, or as
otherwise limited under this Agreement. Advances under the Line of
Credit will be in the minimum amount and increments set forth in
the applicable Note.
The entire outstanding balance of
the Line of Credit and the Borrower’s obligation to pay
interest thereon, at all times shall be evidenced by either the
Secured Note or the Unsecured Note. The Borrower must elect to
borrow under the Line of Credit either on a secured basis in which
case all Advances shall be evidenced by and outstanding under the
Secured Note, or on an unsecured basis, in which case all Advances
shall be evidenced by and outstanding under the Unsecured Note. As
of the Closing Date, Borrower has elected to borrow under the Line
of Credit on an unsecured basis. At any time Borrower has elected
to borrow on a secured basis, Borrower, upon not fewer than ten
(10) days prior written notice to the Bank, may elect to borrow on
an unsecured basis, and on the effective date of such election
(subject to the condition that no Default has occurred and is
continuing) the entire outstanding principal balance of the
outstanding principal balance of the Secured Note shall be deemed
to have been paid and satisfied by an Advance made under the Line
of Credit and evidenced by the Unsecured Note, which Advance shall
be unsecured, and the Bank shall deliver to the Custodian a notice
of termination of the Control Agreement. At any time Borrower has
elected to borrow on a unsecured basis, Borrower, upon not fewer
than ten (10) Business Days prior written notice to the Bank, may
elect to borrow on a secured basis, and on the effective date of
such election (subject to satisfaction of all conditions in this
Agreement to the making of secured Advances) the entire outstanding
principal balance of the Unsecured Note shall be deemed to have
been paid and satisfied by an Advance made under the Line of Credit
and evidenced by the Secured Note. The effective date of each such
election will be the tenth (10 th ) Business Day
following delivery of such election by the Borrower to the
Bank.
|
|
2.2.
|
Interest
. Prior to maturity or Default, the
outstanding principal balance of the Line of Credit from time to
time shall bear interest at a per annum rate or rates as
contemplated and otherwise set forth in the Note which evidences
the outstanding Advances.
|
|
|
2.3.
|
Payments of Principal and
Interest .
|
|
|
2.3.1.
|
Line of Credit
. Interest on the outstanding
balance of the Line of Credit from time to time shall be due and
payable as provided for in the Notes. Prior to the Maturity Date,
the Borrower shall make sufficient principal payments on April 1,
2008 and on the first day of each calendar quarter thereafter to
reduce the outstanding principal balance of the Line of Credit to
an amount then available under the Line of Credit. The entire
principal balance of the Line of Credit, together with all accrued
and unpaid interest thereon, and all fees and charges payable in
connection therewith shall be due and payable on the Maturity
Date.
|
|
|
2.3.2.
|
Method of Payment
. All payments of principal and
interest hereunder shall be made in immediately available funds to
Bank at Bank’s address set forth on the signature page hereof
or at any other place specified in writing by Bank to Borrower, by
Noon (Indianapolis time) on the date when due.
|
|
|
2.3.3.
|
Business Day
. If any required payment of
principal or interest provided herein becomes due and payable on a
date other than a Business Day, the maturity of the installment of
principal or interest shall be extended to the next succeeding
Business Day, and interest shall be payable during such extension
of maturity.
|
|
|
2.4.
|
Prepayment
. Subject to the limitations set
forth in this Agreement, Borrower may borrow, pay, reborrow and
repay the available principal amount of the Line of Credit at any
time, and from time to time, subject to the provisions set forth in
the Notes.
|
|
|
2.5.1.
|
Commitment Fee
. In connection with the
availability of the Line of Credit, the Borrower will pay to the
Bank a commitment fee equal to 0.15% per annum on the average daily
unused balance of the Line of Credit, taking into consideration the
periodic reductions of availability of the Line of Credit set forth
in Section 2.1. Such fee will be payable quarterly in arrears
following receipt of an invoice therefore to the Borrower,
calculated on the last day of each calendar quarter and at the
maturity of the Line of Credit.
|
|
|
2.5.2.
|
Late Charges
. The Borrower shall pay to the Bank
for each required payment due under a Note which is paid more than
ten (10) days following its due date, a late charge equal to the
greater of (i) $25.00, or (ii) five percent (5.0%) of the required
payment amount, provided however that the late charge assessed with
respect to any late payment will not exceed Fifteen Hundred and
00/100 Dollars ($1,500.00).
|
|
|
2.5.3.
|
General
. The compensation provided in this
Section 2.5 shall be in consideration of the services of Bank in
connection with the Line of Credit and shall be in addition to any
other fee, charge, payment or expense required to be borne by the
Borrower under the Loan Documents.
|
|
|
2.6.
|
Method of Advance
. Whenever the Borrower desires the
Bank to make an Advance, the Borrower, by an Authorized Officer
shall give the Bank notice by not later than 1:30 p.m.,
Indianapolis time on the day of the proposed Advance which shall be
a Business Day, which notice shall specify the amount and the
proposed date of the Advance. Such notice shall be given in writing
(which may be a facsimile transmission or e-mail) and the Bank, in
making an Advance, shall be authorized to rely on any such notice
which shall have been received by it in good faith from a Person
reasonably believed to be an Authorized Officer. All advances will
be made to the Borrower by a credit to the Borrower's account
maintained at the Bank. All advances by Bank and payments by
Borrower shall be recorded by Bank on its books and records, and
the principal amount outstanding from time to time, plus interest
payable thereon, shall be determined from the books and records of
Bank. The books and records of Bank shall be presumed prima
facie correct as to such matters, absent manifest
error.
|
|
|
2.7.
|
Security for Secured
Note . At any time the
outstanding principal balance of the Advances is evidenced by the
Secured Note (a) the Obligations will be secured under the terms of
the Security Agreement, and (b) Borrower will at all times maintain
investment property in the Custodial Account subject to the
Security Agreement which constitute Permissible Investments with a
market value of not less than 105.3% of the outstanding principal
balance of the Secured Note (the “Collateral
Requirement”). If the Collateral Requirement is not satisfied
for any period of ten (10) consecutive Business Days (the
“Cure Period”), the Borrower shall be deemed to have
elected to borrow on an unsecured basis, and such deemed election
shall be immediately effective as of the close of the Bank’s
business on the last day of the Cure Period.
|
|
3.
|
Representations and
Warranties . Borrower
represents, covenants and warrants to Bank as follows:
|
|
|
3.1.
|
Due Organization
. Borrower represents that it is a
corporation duly organized and validly existing in the State of
Delaware and is qualified to do business as a foreign entity in
every State in which failure to be qualified reasonably could be
expected to have a material adverse effect on its
business.
|
|
|
3.2.
|
Power . Borrower possesses the requisite power to
enter into the Loan Documents, to borrow thereunder, to execute and
deliver the Loan Documents and to perform its obligations
thereunder.
|
|
|
3.3.
|
Authority
. Borrower has taken the necessary
corporate action to authorize the execution and delivery of the
Loan Documents and the borrowings thereunder and the granting of
the security interests therein, and none of the provisions of the
Loan Documents violates, breaches, contravenes, conflicts with, or
causes a default under any provision of certificate of
incorporation or by-laws of Borrower or any provision of any
existing note, bond, mortgage, debenture, indenture, trust,
license, lease, instrument, decree, order, judgment, or agreement
to which either Borrower is a party or by which it or its assets
may be bound or affected.
|
|
|
3.4.
|
Financial
Statements . The Current
Financials were prepared in accordance with GAAP and fairly present
the financial condition of the Borrower as of the date thereof and
the results of its operations for the period then ended and, to the
knowledge of the Borrower, since such dates, there has been no
material adverse change in Borrower’s financial
condition.
|
|
|
3.5.
|
Binding Obligations
. Each of the Loan Documents to be
executed by Borrower, when issued for value, will constitute a
legal, valid and binding obligation of the Borrower enforceable
against the Borrower in accordance with its terms, except as the
same may be limited by reorganization, bankruptcy, insolvency,
moratorium or other laws affecting generally the enforcement of
creditors’ rights.
|
|
|
3.6.
|
Default
. No event has occurred and or no
circumstances exists that constitute, or which with notice, lapse
of time, or both, would constitute a material default under the
terms and conditions of any trust, debenture, indenture, note,
bond, instrument, mortgage, material lease, order, decree, or
judgment to which the Borrower is a party or by which it or its
assets are bound.
|
|
|
3.7.
|
Tax Returns
. To Borrower’s knowledge,
except as otherwise disclosed in writing to Bank, all tax returns
or reports of the Borrower required by law to have been filed have
been filed, and all taxes, assessments, contributions, fees and
other governmental charges (other than those presently payable
without penalty or interest and those currently being contested in
good faith and against which adequate reserves have been
established) upon Borrower or its assets, properties or income,
which are payable, have been paid, except for any that if not filed
or paid, could not reasonably be expected to have a material
adverse effect on the Borrower
|
|
|
3.8.
|
Litigation
. Except as set forth on Schedule
3.8 , no litigation or proceeding of any Governmental Authority
or other Person is presently pending or, to the Borrower’s
knowledge threatened, nor has any claim been asserted, against
Borrower which seeks to enjoin the transactions
contemplated
|
by this Agreement or which, if
adversely determined, would materially affect the business,
operations, financial condition or properties of the
Borrower.
|
|
3.9.
|
ERISA . To the best of Borrower’s knowledge,
Borrower and each ERISA Affiliate is in compliance in all material
respects with all applicable provisions of ERISA, and neither
Borrower nor any ERISA Affiliate has incurred any liability to the
PBGC. Neither a “reportable event”, nor a
“prohibited transaction”, has occurred under, nor has
there occurred any complete or partial withdrawal from, nor has
there occurred any other event which would constitute grounds for
termination of or the appointment of a trustee to administer any
“employee benefit plan” (including any
“multi-employer plan”) maintained for employees of
Borrower or any ERISA Affiliate, all within the meanings ascribed
by ERISA.
|
|
|
3.10.
|
Full Disclosure
. To Borrower’s knowledge, no
written information, exhibit, memorandum, or report (excluding
estimated future operating results) furnished by Borrower to Bank
in connection with the negotiation of the Line of Credit contains
any material misstatement of fact, or omits to state any fact
necessary to make the statements contained therein not materially
misleading, and all estimated future operating results, if
furnished, were prepared on the basis of assumptions, data,
information, tests or other conditions believed to be valid or
accurate or to exist at the time such estimates were prepared and
furnished. There currently exists no fact or circumstance relative
to Borrower, whether or not disclosed, which is presently
anticipated to have a material adverse effect upon the business,
operations, financial condition or properties of Borrower or the
ability of Borrower to fully perform its obligations under the Loan
Documents.
|
|
|
3.11.
|
Licenses
. Borrower possesses such
franchises, licenses, permits, patents, copyrights, trademarks, and
consents of appropriate Governmental Authorities to own its
property and as are necessary to carry on its business.
|
|
|
3.12.
|
Compliance with Law
. Borrower is in substantial
compliance with all applicable requirements of law and of all
Governmental Authorities, noncompliance with which reasonably could
be expected to have a materially adverse effect upon the business,
operations, financial condition or properties of
Borrower.
|
|
|
3.13.
|
Margin Stock
. Borrower is not engaged in the
business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of
the proceeds of the Line of Credit will be used, either directly or
indirectly, for the purpose, whether immediate, incidental or
remote, of purchasing or carrying any margin stock or of extending
credit to others for the purpose of purchasing or carrying any
margin stock, and Borrower shall furnish to Bank, upon its request,
a statement in conformity with the requirements of Federal Reserve
Board Form U-1 referred to in Regulation U. Further, no part of the
proceeds of the Line of Credit will be used for any purpose that
violates, or which is inconsistent with, the provisions of
Regulations G, T, U or X of the Board of Governors.
|
|
|
3.14.
|
Approvals
. No authorization, consent,
approval or any form of exemption of any Governmental Authority is
required in connection with the execution and delivery by Borrower
of the Loan Documents, the borrowings and performance by Borrower
thereunder or the issuance of the Note.
|
|
|
3.15.
|
Insolvency
. Borrower is not
“insolvent” within the meaning of that term as defined
in §101(32) of the Federal Bankruptcy Code and is able to pay
its debts as they mature.
|
|
|
3.16.
|
Regulation
. Borrower is not an
“investment company” within the meaning of the
Investment Company Act of 1940, as amended, or a “holding
company” or an “affiliate of a holding company”
or a “subsidiary of a holding company” within the
meanings of the Public Utility Holding Company Act of 1935, as
amended.
|
|
|
3.17.
|
Environmental
Compliance . To the
knowledge of Borrower, except as disclosed in any written report
delivered to Bank, Borrower is in material compliance with all
material Environmental Laws, including, without limitation, all
Environmental Laws in jurisdictions in which Borrower owns or
operates, or has owned or operated, a facility or site, arranges or
has arranged for disposal or treatment of hazardous substances,
solid waste or other waste, accepts or has accepted for transport
any hazardous substances, solid waste or other wastes or holds or
has held any interest in real property or otherwise. No litigation
or proceeding arising under, relating to or in connection with any
Environmental Law is pending or, to Borrower’s knowledge,
threatened against Borrower, any real property which a Borrower
holds or has held an interest or any past or present operation of
Borrower. No release, threatened release or disposal or hazardous
waste, solid waste or other wastes is occurring, or, to the
knowledge of the Borrower, has occurred, on, under or to any real
property in which Borrower holds any interest or performs any of
its operations, in material violation of any material Environmental
Law. As used in this Section, “litigation or
proceeding” means any demand, claim, notice, suit, suit in
equity, action, administrative action, investigation or inquiry
whether brought by a Governmental Authority.
|
|
|
4.1.
|
Negative Covenants
. Until the Obligations shall have
been fully and finally paid and performed, without the prior
written consent of Bank, which consent shall not be unreasonably
withheld, Borrower will not:
|
|
|
4.1.1.
|
Dispose of Property
. Except in the ordinary course of
business (which will include the disposition of equipment or real
property no longer used or useful to the Borrower), sell, transfer,
lease or otherwise dispose of any material part of Borrower’s
assets or properties, or discount, with or without recourse, any
accounts of Borrower without prior notification to the
Bank.
|
|
|
4.1.2.
|
Further Encumber
. Except for Permitted Encumbrances,
and liens granted under the Security Agreement, voluntarily create
or suffer to exist any mortgage, pledge, lien or other encumbrance
upon any of its properties or assets, real or personal, tangible or
intangible, whether now owned or hereafter acquired.
|
|
|
4.1.3.
|
Merge, Etc
. Enter into any consolidation or
merger with any Person unless the Borrower will be the surviving
corporation in such merger or consolidation.
|
|
|
4.1.4.
|
Change Name or Place of
Business . Change its
name or jurisdiction of organization, except after thirty (30) days
prior written notice to the Bank.
|
|
|
4.1.5.
|
Accounting Policies
. Change its fiscal year or any of
its significant accounting policies, except to the extent necessary
to comply with or permitted by GAAP.
|
|
|
4.1.6.
|
Change of Business
. Make any material change in the
nature of its business as carried on at the date of closing of the
Line of Credit, which change could reasonably be expected to have a
material adverse effect on the business or financial condition of
the Borrower.
|
|
|
4.1.7.
|
Benefit Plans
. Permit any condition to exist in
connection with any employee benefit plan which would constitute
grounds for the PBGC to institute proceedings to have the employee
benefit plan terminated or a trustee appointed to administer the
employee benefit plan; or engage in, or permit to exist or occur
any other condition, event or transaction with respect to any
employee benefit plan which could result in Borrower incurring any
material liability, fine or penalty.
|
|
|
4.1.8.
|
Permissible
Investments . Amend the
definition of Permissible Investments contained in the Investment
Guidelines attached to the Investment Management Agreement of
even
|
date herewith between the Borrower
and J.P. Morgan Investment Management Inc., or the Maturity
Guidelines and Quality Guidelines specified therein.
|
|
4.2.
|
Affirmative
Covenants . Until the
Obligations shall have been fully and finally paid and performed,
unless expressly waived in writing by Bank, which waiver shall not
be unreasonably withheld, Borrower shall:
|
|
|
4.2.1.
|
Financial Reporting
. Furnish to Bank:
|
|
|
4.2.1.1.
|
As soon as practicable, but in
any event within 120 days after the end of each fiscal year, its
audited balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on by independent public
accountants of recognized national standing (without a “going
concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of
operations of the Borrower and its consolidated subsidiaries on a
consolidated basis in conformity with GAAP;
|
|
|
4.2.1.2.
|
As soon as practicable, but in
any event within 45 days after the end of each of fiscal quarter of
the Borrower, its internally prepared balance sheet and related
statements of operations, stockholders' equity and cash flows as of
the end of and for such fiscal quarter and the then elapsed portion
of the fiscal year, all certified by one of its officers as
presenting fairly in all material respects the financial condition
and results of operations of the Borrower on a consolidated basis
in accordance with GAAP, subject to normal year-end adjustments and
the absence of footnotes;
|
|
|
4.2.1.3.
|
Within 45 days after the end of
each fiscal quarter of the Borrower, a certificate setting forth
the status of Borrower’s compliance as at the end of such
fiscal quarter with the financial covenants set forth in Section
4.3 hereof signed one of its authorized officers and further
indicating whether the exists any Default under this Agreement, and
if so the event or condition which gives rise to such
Default;
|
|
|
4.2.1.4.
|
As soon as possible, but in any
event within thirty (30) days after the commencement thereof, a
written statement describing any litigation instituted by or
against Borrower which, if adversely determined, could reasonably
be expected to have a material effect upon the business,
operations, financial condition or properties of
Borrower;
|
|
|
4.2.1.5.
|
As soon as possible, but in any
event within ten (10) days after Borrower becomes aware thereof, a
written statement describing any reportable event or prohibited
transaction which has occurred with respect to any employee benefit
plan and the action which Borrower proposes to take with respect
thereto;
|
|
|
4.2.1.6.
|
Such other information as Bank
may from time to time reasonably request in writing.
|
|
|
4.2.2.
|
Existence
. Maintain its existence and right
to do business.
|
|
|
4.2.3.
|
Taxes, Etc
. Pay and discharge all taxes,
assessments, judgments, orders, and governmental charges or levies
imposed upon Borrower or on its income or profits or upon its
property prior to the date on which penalties attach thereto and
all lawful claims which, if unpaid, may become a lien or charge
upon the property of Borrower, provided
|
that a Borrower shall not be
required to pay any tax, assessment, charge, judgment, order, levy
or claim, if such payment is being contested diligently, in good
faith, and by appropriate proceedings which will prevent
foreclosure or levy upon its property and adequate reserves against
such liability have been established.
|
|
4.2.4.
|
Maintain Properties
. Maintain all properties and assets
used by, or useful to, Borrower in the ordinary course of its
business in good working order and condition and suitable for the
purpose for which it is intended, ordinary wear and tear excepted,
and from time to time, make any necessary repairs and
replacements.
|
|
|
4.2.5.
|
Insurance
. Maintain in full force and effect
public liability insurance and casualty insurance policies with
coverages and with such companies as are reasonably acceptable to
Bank.
|
|
|
4.2.6.
|
Books and Records
. Keep proper books of account in
which full, true and correct entries will be made of all dealings
and transactions of and in relation to the business and affairs of
Borrower, and, upon reasonable advance notice and during normal
business hours, and as often as Bank may reasonably request, permit
authorized representatives of Bank to (a) have access to the
premises and properties of Borrower and to the records relating to
the operations of Borrower; (b) make copies of or excerpts from
such records; (c) discuss the affairs, finances and accounts of
Borrower with and be advised as to the same by the chief executive
and financial officers of Borrower; and (d) audit and inspect such
books, records, accounts, memoranda and correspondence at all
reasonable times, to make such abstracts and copies thereof as Bank
may deem necessary.
|
|
|
4.2.7.
|
Reports
. File, as appropriate, on a timely
basis, annual reports, operating records and any other reports or
filings required to be made with any Governmental Authority, which
if not filed, could reasonably be expected to have a material
adverse effect on the business of financial condition of the
Borrower.
|
|
|
4.2.8.
|
Licenses
. Maintain in full force and effect
all material operating permits, licenses, franchises, and rights
required by Borrower in the ordinary course of business.
|
|
|
4.2.9.
|
Compliance with Law
. Comply with, conform to, and obey
in all material respects all material laws, ordinances, rules,
regulations and other legal requirements applicable to Borrower,
including, without limitation, all material Environmental Laws and
ERISA.
|
|
|
4.2.10.
|
Trade Accounts
. Pay all trade accounts in
accordance with Borrower’s customary practice.
|
|
|
4.2.11.
|
Use of Proceeds
. Use the proceeds of the Line of
Credit solely for the purposes herein described.
|
|
|
4.2.12.
|
Loan Payments
. Duly and punctually pay or cause
to be paid principal and interest on the Line of Credit in lawful
money of the United States at the time and places and in the manner
specified herein and in the Notes.
|
|
|
4.2.13.
|
Banking
Relationship . Maintain a
banking deposit account with Bank through which transactions
related to the Line of Credit may be accomplished.
|
|
|
4.3.
|
Financial Covenants
. Until the Obligations shall have
been fully and finally paid and performed, unless expressly waived
in writing by Bank, Borrower shall have:
|
|
|
4.3.1.
|
Leverage Ratio
. A Leverage Ratio, determined as of
the end of each fiscal quarter, of not greater than 1.0 to
1.0.
|
|
|
4.3.2.
|
Unrestricted Cash and
Investments to Indebtedness . A ratio of (i) the combination of its
unrestricted cash and unrestricted investments (including any
investments in the Custodial Account), to (ii) its Indebtedness, of
not less than 1.5 to 1.0, as of the end of any fiscal quarter or
fiscal year of the Borrower.
|
|
|
5.1.
|
Conditions to Initial
Advance . The closing of
the Line of Credit shall be subject, among other things, to
satisfaction of each of the following conditions
precedent:
|
|
|
5.1.1.
|
Authorization
. Borrower shall have furnished to
Bank, (a) certified copies of each of Borrower’s certificate
of incorporation and by-laws, both as amended, accompanied by
recent certificate of good standing issued by the Delaware
Secretary of State, and (b) a certified copy of resolutions adopted
by its Board of Directors authorizing the Line of Credit and the
execution and delivery of the Loan Documents, and (c) a certificate
of incumbency specifying the names and capacities of those Persons
authorized to execute the Loan Documents.
|
|
|
5.1.2.
|
Loan Documents
. Each of the Loan Documents shall
have been executed and delivered by Borrower to Bank.
|
|
|
5.1.3.
|
Expenses
. Borrower shall have reimbursed
Bank for all reasonable legal fees and other reasonable expenses
(if any) of Bank in connection with the Line of Credit.
|
|
|
5.1.4.
|
Other Documents
. Borrower shall have furnished such
other documents, instruments, financing statements and certificates
as Bank may reasonably request.
|
|
|
5.1.5.
|
Consents
. All consents necessary for the
consummation of the transaction contemplated by this Agreement and
the Loan Documents shall have been obtained.
|
|
|
5.1.6.
|
No Default
. As of the date hereof, and after
giving effect to the initial funding of the Line of Credit, there
shall not exist a Default.
|
|
|
5.2.
|
Conditions to
Advances . Prior to each
subsequent extension of any credit to the Borrower under this
Agreement:
|
|
|
5.2.1.
|
No Default
. No Default or Unmatured Default
shall have occurred and be continuing.
|
|
|
5.2.2.
|
Representations and
Warranties . Each
representation and warranty contained in Section 3 shall be true
and correct as of the date of such advance, except to the extent
any such representation or warranty relates solely to an earlier
date and except changes reflecting transactions permitted by this
Agreement or otherwise consented to by the Bank.
|
|
|
5.2.3.
|
Secured Advances
. If Borrower is borrowing on a
secured basis, the Borrower has executed and delivered the Security
Agreement, there is a Control Agreement in effect and there is a
sufficient market value of Permissible Investments in the Custodial
Account to support such borrowing as required under Section 2.7
hereof, and a Control Agreement shall be in effect among the
Borrower, the Bank, and the Custodian.
|
|
|
5.2.4.
|
Expenses
. Borrower shall have reimbursed
Bank for all reasonable legal fees and other reasonable expenses
incurred by Bank and payable by Borrower in connection with the
Line of Credit.
|
|
|
5.3.
|
General
. Each request for an Advance under
the Line of Credit shall constitute a representation and warranty
by Borrower that the applicable conditions contained in this
Section 5 have been satisfied.
|
|
6.
|
Default
The occurrence of any of the
following events shall be deemed a Default hereunder:
|
|
|
6.1.
|
any representation or warranty
made by Borrower to Bank under or in connection with any Loan
Document shall be false in any material respect as of the date on
which made;
|
|
|
6.2.
|
Borrower fails to pay the
principal of or interest on a Note, or any fee or other payment
Obligation when due;
|
|
|
6.3.
|
the breach by Borrower of the
covenants contained in Section 4.1;
|
|
|
6.4.
|
the breach by the Borrower of any
of the terms of the Security Agreement which remain uncured after
any applicable grace and cure period set forth therein;
|
|
|
6.5.
|
the breach by Borrower of any
other terms or provisions of the Loan Documents, other than a
breach which constitutes a Default under Section 6.1, 6.2 or 6.3,
not cured within thirty (30) days after written notice from Bank to
Borrower specifying such breach;
|
|
|
6.6.
|
the failure of Borrower to pay
any other Indebtedness exceeding $10,000,000 when due or within any
applicable grace or cure period, or the default by Borrower in the
performance of any other term, provision or condition contained in
any agreement under which any such Indebtedness was created or is
governed, the effect of which is to permit the holder or holders of
such Indebtedness to cause such Indebtedness to become due prior to
its stated maturity, unless such default is waived in writing by
the holder or holders of such Indebtedness; or any such
Indebtedness shall be validly declared to be due and payable or
required to be prepaid prior to the stated maturity
thereof;
|
|
|
6.7.
|
Borrower shall (i) have an order
for relief entered with respect to it under the Federal Bankruptcy
Code, (ii) not pay, or admit in writing its inability to pay, its
debts generally as they become due, (iii) make an assignment for
the benefit of creditors, (iv) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial
part of its property, (v) institute any proceeding seeking an order
for relief under the Federal Bankruptcy Code or seeking to
adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or
composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or
fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, or (vi)
suspend operations as presently conducted or discontinue doing
business as an ongoing concern;
|
|
|
6.8.
|
without the application, approval
or consent of Borrower, a receiver, trustee, examiner, liquidator
or similar official shall be appointed for Borrower, or any
substantial part of its property, or a proceeding described in
Section 6.7 above shall be instituted against Borrower and such
appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of thirty (30) consecutive
days;
|
|
|
6.9.
|
any Governmental Authority shall
condemn, seize or otherwise appropriate, or take custody or control
of all or any substantial portion of the property of Borrower;
or
|
|
|
6.10.
|
any uninsured judgment exceeding
$10,000,000 is entered against Borrower, and the Borrower shall
fail to pay, bond or otherwise discharge the same once it is no
longer stayed on appeal or otherwise being contested in good faith
by appropriate proceedings which prevent foreclosure or execution
and against which adequate reserves have been
established.
|
|
|
7.1.
|
Acceleration
. If any Default described in
Sections 6.7 or 6.8 occurs, the Line of Credit shall automatically
terminate and the Obligations shall immediately become due and
payable without any election or action on the part of Bank. If any
other Default occurs, Bank, by written notice to Borrower, may
terminate its commitments hereunder and declare the Obligations to
be due and payable, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest
or notice of any kind, all of which Borrower hereby expressly
waives.
|
|
|
7.2.
|
Remedy . Upon the occurrence and continuance of a
Default, Bank may immediately proceed to exercise all remedies
available to it under the Loan Documents or otherwise under
applicable law. No right or remedy conferred upon or reserved to
Bank under the Loan Documents is intended to be exclusive of any
other available remedy or right, but each and every remedy shall be
cumulative and concurrent and shall be in addition to every other
remedy now or hereafter existing at law or in equity. No single or
partial exercise of any power or right shall preclude any further
or other exercise of any power or right.
|
|
|
7.3.
|
Preservation of
Rights . No delay or
omission of Bank to exercise any power or right under the Loan
Documents shall impair such power or right or be construed to be a
waiver of any Default or an acquiescence therein, and any single or
partial exercise of any power or right shall not preclude other or
further exercise thereof or the exercise of any other power or
right. No advance hereunder shall constitute a waiver of any of the
conditions of Bank’s obligation to make further advances,
nor, in the event Borrower is unable to satisfy any such condition,
shall a waiver of such condition in any one instance have the
effect of precluding Bank from thereafter declaring such inability
to be a Default hereunder.
|
|
