EXHIBIT 10.3
CREDIT AGREEMENT
by and among
GP STRATEGIES CORPORATION,
GENERAL PHYSICS CANADA LTD.
THE LENDERS PARTY HERETO,
AND
FLEET BANK, NATIONAL ASSOCIATION,
AS AGENT, AS ISSUING BANK AND AS ARRANGER
Dated as of June 15, 1998
TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 1
1.1.Definitions 1
1.2.Principles of Construction 22
2. AMOUNT AND TERMS OF LOANS AND
LETTERS OF CREDIT 23
2.1. Revolving Credit Loans; Parent
Revolving Credit Notes 23
2.2. Term Loans; Term Notes 23
2.3. Procedure for Borrowing 24
2.4. Termination or Reduction of Parent Commitments
and GP Canada Credit Exposure 26
2.5. Prepayments of Loans 26
2.6. Use of Proceeds 27
2.7. Letter of Credit Sub-Facility 28
2.8. Letter of Credit Participation and Funding Commitments 29
2.9. Absolute Obligation With Respect to Letter of Credit
Payments 30
2.10. Payments 31
2.11. Cash Collateral Accounts 31
2.12. Defaulting Lender 32
3. INTEREST, FEES, YIELD PROTECTIONS, ETC. 33
3.1. Interest Rate and Payment Dates 33
3.2. Fees 34
3.3. Conversions 35
3.4. Concerning Interest Periods 36
3.5. Indemnification for Loss 36
3.6. Capital Adequacy 37
3.7. Reimbursement for Increased Costs 37
3.8. Illegality of Funding 38
3.9. Substituted Interest Rate 38
3.10. Taxes 39
3.11. Option to Fund 41
3.12. Replacement of Lenders 41
4. REPRESENTATIONS AND WARRANTIES 42
4.1. Subsidiaries; Capitalization 42
4.2. Existence and Power 42
4.3. Authority and Execution 42
4.4. Binding Agreement 42
4.5 Litigation 43
4.6. Required Consents 43
4.7 Absence of Defaults; No Conflicting Agreements 43
4.8. Compliance with Applicable Laws 44
4.9. Taxes 44
4.10 Governmental Regulations 44
4.11. Federal Reserve Regulations; Use of Loan Proceeds 44
4.12. Plans 44
4.13. Financial Statements 45
4.14. Property 45
4.15. Authorizations 46
4.16. Environmental Matters 46
4.17 Solvency 47
4.18. Absence of Certain Restrictions 47
4.19. No Misrepresentation 47
4.20. Software Systems 47
4.21 Material Subsidiaries 48
4.22 Learning Technologies Acquisition Documents 48
5. CONDITIONS TO FIRST LOANS OR THE ISSUANCE OF FIRST LETTERS
OF CREDIT 48
5.1. Evidence of Action 48
5.2. This Agreement 49
5.3 Notes; Letter of Credit Documents 49
5.4. Absence of Litigation 49
5.5 Approvals and Consents 49
5.6. Absence of Material Adverse Change 49
5.7. Financial Officer's Certificate 49
5.8 Existing Bank Debt 50
5.9 Opinion of Counsel to the Borrowers and their
Subsidiaries 50
5.10. Previous Information 50
5.11. Borrower Security Agreement; Subordination Agreement;
Parent Guaranty; Subsidiary Guaranty and Security
Agreement 50
5.12. Search Reports and Related Documents 52
5.13. Learning Technologies Acquisition; Certificate 52
5.14. Pro-Forma Compliance Certificate 52
5.15. Property, Public Liability and Other Insurance 53
5.16. Fees 53
5.17. Fees and Expenses of Special Counsel 53
6. CONDITIONS OF LENDING - ALL REVOLVING CREDIT LOANS AND
LETTERS OF CREDIT 53
6.1. Compliance 53
6.2. Borrowing Request; Letter of Credit Request 54
6.3. Certain Documents 54
6.4. Other Documents 54
7. AFFIRMATIVE COVENANTS 54
7.1 Financial Statements and Information 54
7.2. Certificates; Other Information 55
7.3. Legal Existence 57
7.4. Taxes 57
7.5 Insurance 57
7.6. Performance of Obligations 58
7.7. Condition of Property 59
7.8. Observance of Legal Requirements 59
7.9. Inspection of Property; Books and Records; Discussions 59
7.10. Authorizations 59
7.11. Financial Covenants 59
7.12. Additional Subsidiaries 60
8. NEGATIVE COVENANTS 61
8.1. Indebtedness 61
8.2. Liens 62
8.3. Merger, Consolidations and Acquisitions 64
8.4. Dispositions 65
8.5. Investments, Loans, Etc. 65
8.6. Restricted Payments 67
8.7. Capital Expenditures 67
8.8. Business and Name Changes 68
8.9. ERISA 68
8.10. Prepayments of Indebtedness 68
8.11. Amendments, Etc. of Certain Agreements 68
8.12. Transactions with Affiliates 68
8.13. Issuance of Additional Capital Stock 69
8.14. Limitation on Upstream Dividends by Subsidiaries 69
8.15. Limitation on Negative Pledges 69
9. DEFAULT 69
9.1. Events of Default 69
9.2. Contract Remedies 71
10. THE AGENT 72
10.1. Appointment 72
10.2. Delegation of Duties 73
10.3. Exculpatory Provisions 73
10.4 Reliance by Agent 73
10.5 Notice of Default 74
10.6 Non-Relianceon Agent and Other Lenders 74
10.7 Indemnification 75
10.8 Agent in Its Individual Capacity 75
10.9 Successor Agent 75
11. OTHER PROVISIONS 76
11.1 Amendments and Waivers 76
11.2 Notices 77
11.3 No Waiver; Cumulative Remedies 78
11.4. Survival of Representations and Warranties and Certain
Obligations 79
11.5 Expenses 79
11.6 Lending Offices 80
11.7 Successors and Assigns 80
11.8 Indemnity 81
11.9 Limitation of Liability 82
11.10 Counterparts 82
11.11 Adjustments; Set-off 82
11.12 Construction 84
11.13 Governing Law 84
11.14 Headings Descriptive 84
11.15 Severability 84
11.16 Integration 84
11.17 Consent to Jurisdiction 85
11.18 Service of Process 85
11.19 No Limitation on Service or Suit 85
11.20 Waiver of Trial by Jury 85
11.21 Treatment of Certain Information 85
11.22 Judgment Currency 86
EXHIBITS
Exhibit A Commitment Amounts
Exhibit B-1 Form of Revolving Credit Note
Exhibit B-2 Form of Term Note
Exhibit C-1 Form of Borrowing Request
Exhibit C-2 Form of Letter of Credit Request
Exhibit D Form of Notice of Conversion
Exhibit E Form of Compliance Certificate
Exhibit F-1 Form of Opinion of Outside Counsel to Borrowers and Subsidiaries
Exhibit F-2 Form of Opinion of In-House Counsel to Borrowers and Subsidiaries
Exhibit F-3 Form of Opinion of United Kingdom Counsel to GP (UK)
Exhibit F-4 Form of Opinion of Canadian Counsel to GP Canada
Exhibit G Form of Assignment and Acceptance
Exhibit H-1 Form of Parent Borrower Security Agreement
Exhibit H-2 Form of GP Canada Borrower Security Agreement
Exhibit I Form of Subsidiary Guaranty and Security Agreement
Exhibit J Form of Parent Guaranty
Exhibit K Form of Intercompany Demand Note
Exhibit L-1 Form of Subordination Agreement
Exhibit L-2 Form of Parent/Physics Subordination Agreement
Exhibit L-3 Form of SGLG/Physics Subordination Agreement
SCHEDULES
Schedule 4.1 Subsidiaries and Authorized, Issued and Outstanding Stock
Schedule 4.5 Litigation
Schedule 4.16 Environmental Matters
Schedule 4.20 Year 2000 Questionnaire
Schedule 8.1 Indebtedness and Joint Ventures
Schedule 8.2 Liens
Schedule 8.5 Investments and Owned Shares of Stock
CREDIT AGREEMENT, dated as of June 15, 1998, by and among GP
STRATEGIES CORPORATION ("Parent"), a Delaware corporation and GENERAL PHYSICS
CANADA LTD. ("GP Canada"), a corporation organized under the laws of Ontario,
Canada (Parent and GP Canada shall individually be referred to herein as a
"Borrower" and shall collectively be referred to herein as the "Borrowers"), the
lenders party hereto (together with their respective assigns, the "Lenders",
each a "Lender") and FLEET BANK, NATIONAL ASSOCIATION, as agent for the Lenders
(in such capacity, the "Agent") and as Issuing Bank (in such capacity, the
"Issuing Bank").
1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
1.1. Definitions
As used in this Agreement, terms defined in the preamble have the
meanings therein indicated, and the following terms have the following meanings:
"ABR Advances": collectively, the Revolving Credit Loans (or any
portions thereof), and/or the Term Loans (or any portion thereof) at such time
as they (or such portions) are made and/or being maintained at a rate of
interest based upon the Alternate Base Rate.
"Account(s)": with respect to any Person: (a) all "accounts"
as defined in the Uniform Commercial Code of the State of New York and, in
addition, all of the accounts, contract rights (including its rights as an
unpaid vendor, or lienor, including stoppage in transit, replevin and
reclamation), instruments, documents, chattel paper, notes and drafts of
such Person, whether secured or unsecured, and whether or not specifically
assigned to the Agent or any Lender hereunder, and including any right to
payment which has been earned under a contract right and all inventory
returned or reclaimed from Account Debtors and all rights to payment for
goods sold or leased or services rendered; and (b) all products and
proceeds (whether cash proceeds or otherwise) of the foregoing, whether now
owned, held, or hereafter acquired by such Person.
"Accountants": KPMG Peat Marwick LLP (or any successor
thereto), or such other firm of certified public accountants of recognized
national standing selected by Parent and reasonably satisfactory to the
Agent.
"Account Debtor": at any time, in addition to the definition of
"account debtor" as contained in the Uniform Commercial Code of the State
of New York, any Person who is obligated under or on account of an Account,
or any Person who is represented by a Borrower to be so obligated.
"Accumulated Funding Deficiency": as defined in Section 302 of
ERISA.
"Acquisition": with respect to any Person, the purchase or other
acquisition by such Person, by any means whatsoever (including through a merger,
amalgamation, dividend or otherwise and whether in a single transaction or in a
series of related transactions), of (i) any Capital Stock of any other Person
if, immediately thereafter, such other Person would be either a Subsidiary of
such Person or otherwise under the control of such Person, (ii) any business,
going concern or division or segment of any other Person, or (iii) any Property
of any other Person other than in the ordinary course of business, provided,
however, that no acquisition of all or substantially all of the assets of such
other Person shall be deemed to be in the ordinary course of business.
"Acquisition Cost": with respect to any Acquisition by any Person,
the sum of (i) all cash consideration paid or agreed to be paid by such Person
to make such Acquisition (inclusive of payments by such Person of the seller's
professional fees and expenses and other out-of- pocket expenses in connection
therewith), plus (ii) the fair market value of all non-cash consideration paid
by such Person in connection therewith, plus (iii) an amount equal to the
principal or stated amount of all liabilities assumed or incurred by such Person
in connection therewith. The principal or stated amount of any liability assumed
or incurred by a Person in connection with an Acquisition which is a contingent
liability shall be an amount equal to the stated amount of such liability or, if
the same is not stated, the maximum reasonably anticipated amount payable by
such Person in respect thereof as determined by such Person in good faith.
"Advance": an ABR Advance or a Eurodollar Advance, as the case
may be.
"Affected Advance": as defined in Section 3.9.
"Affected Principal Amount": in the event that (i) either Borrower
shall fail for any reason to borrow a Loan in respect of which it shall have
requested a Eurodollar Advance or convert an Advance to a Eurodollar Advance
after it shall have notified the Agent of its intent to do so, an amount equal
to the principal amount of such Eurodollar Advance; (ii) a Eurodollar Advance
shall terminate for any reason prior to the last day of the Interest Period
applicable thereto, an amount equal to the principal amount of such Eurodollar
Advance; and (iii) either Borrower shall prepay or repay all or any part of the
principal amount of a Eurodollar Advance prior to the last day of the Interest
Period applicable thereto, an amount equal to the principal amount of such
Advance so prepaid or repaid.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, control of a Person shall mean the
power, direct or indirect, (i) to vote 5% or more of the securities or other
interests having ordinary voting power for the election of directors or other
Managing Persons thereof, other than as a limited partner of such other Person
or (ii) to direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.
"Agreement": this Credit Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Aggregate Commitment Amount": at any time, the sum at such
time of the Commitment Amounts of all Lenders.
"Aggregate Commitment Percentage": as to any Lender in respect of
such Lender's Commitment and its obligation with respect to Letters of Credit,
the percentage equal to the sum of such Lender's Parent Commitment Amount plus
such Lender's GP Canada Credit Exposure divided by the sum of the Aggregate
Parent Commitment Amount plus the Aggregate GP Canada Credit Exposure (or if the
Parent Commitment does not then exist, the percentage determined as aforesaid on
the last day that the Parent Commitment did exist).
"Aggregate Credit Exposure": at any time, the sum at such time
of (i) the outstanding principal balance of the Revolving Credit Loans of
all Lenders, plus, (ii) the outstanding principal balance of the Term Loans
of all the Lenders, plus (iii) an amount equal to the Letter of Credit
Exposure of all Lenders.
"Aggregate GP Canada Commitment Amount": at any time, the sum
at such time of the GP Canada Commitment Amount of all Lenders.
"Aggregate GP Canada Credit Exposure": at any time, the sum at
such time of the outstanding principal balance of the Term Loans of all
Lenders.
"Aggregate Parent Commitment Amount": at any time, the sum at
such time of the Parent Commitment Amount of all Lenders.
"Aggregate Parent Credit Exposure": at any time, the sum at
such time of (i) the outstanding principal balance of the Revolving Credit
Loans of all Lenders, plus (ii) an amount equal to the Letter of Credit
Exposure of all Lenders.
"Alternate Base Rate": on any date, a rate of interest per
annum equal to the higher of (i) the Federal Funds Rate in effect on such
date plus 1/2 of 1% or (ii) the Fleet Rate in effect on such date.
"Applicable Fee Percentage": with respect to the Parent Commitment
Fee and Letter of Credit Commissions, at all times during which the applicable
Pricing Level set forth below is in effect, the percentage set forth below next
to such Pricing Level and under the applicable column:
Applicable Fee Percentage
Parent
Commitment Letter of Credit Commissions
Pricing Level Fee Standby Trade
Pricing Level I .500% 2.00% .25%
Pricing Level II .375% 1.75% .25%
Pricing Level III .250% 1.50% .25%
Changes in the Applicable Fee Percentage resulting from a change in
a Pricing Level shall be based upon the Compliance Certificate most recently
delivered pursuant to Section 7.1(c) and shall become effective on the date such
Compliance Certificate is delivered to the Agent. Notwithstanding anything to
the contrary contained in this definition, (i) if, at any time and from time to
time, the Parent shall be in Default of its obligations under Section 5.14 or
7.1(c), Pricing Level I shall apply until such Default is cured, and (ii) during
the period commencing on the Effective Date and ending on the date of delivery
thereafter of the first Compliance Certificate pursuant to Section 7.1(c),
Pricing Level I shall apply.
"Applicable Margin": with respect to the unpaid principal balance of
Parent ABR Advances and Parent Eurodollar Advances, in each case at all times
during which the applicable Pricing Level set forth below is in effect, the
percentage set forth below next to such Pricing Level and under the applicable
column:
Applicable Margin (Type of Advance)
Pricing Level ABR Eurodollar
Pricing Level I 0.50% 2.00%
Pricing Level II 0.25% 1.75%
Pricing Level III 0.00% 1.50%
Changes in the Applicable Margin resulting from a change in a
Pricing Level shall be based upon the Compliance Certificate most recently
delivered pursuant to Section 7.1(c) and shall become effective on the date such
Compliance Certificate is delivered to the Agent and the Lenders.
Notwithstanding anything to the contrary contained in this definition, (i) if,
at any time and from time to time, the Parent shall be in Default of its
obligations under Section 5.14 or 7.1(c), Pricing Level I shall apply until such
Default is cured, and (ii) during the period commencing on the Effective Date
and ending on the date of delivery thereafter of the first Compliance
Certificate pursuant to Section 7.1(c), Pricing Level I shall apply.
"Approved Bank": any bank whose (or whose parent company's)
unsecured non-credit supported short-term commercial paper rating from (i)
Standard & Poor's is at least A-1 or the equivalent thereof or (ii) Moody's
is at least P-1 or the equivalent thereof.
"Assignment": as defined in Section 11.7(c).
"Assignment and Acceptance Agreement": an assignment and
acceptance agreement executed by an assignor and an assignee, substantially
in the form of Exhibit G.
"Authorized Signatory": as to (i) any Person which is a corporation,
the chairman of the board, the president, any vice president, the chief
financial officer or any other officer thereof acceptable to the Agent and (ii)
any Person which is not a corporation, the general partner or other Managing
Person thereof acceptable to the Agent.
"Available Parent Commitment Amount": at any time, an amount
equal to the Aggregate Parent Commitment Amount at such time minus the
Aggregate Parent Credit Exposure at such time.
"Benefitted GP Canada Lender": as defined in Section 11.11(b).
"Benefitted Parent Lender": as defined in Section 11.11(a).
"Borrower Security Agreement": collectively (i) one Borrower
Security Agreement, by and between the Parent and the Agent substantially in the
form of Exhibit H-1, (ii) one Borrower Security Agreement by and between GP
Canada and the Agent substantially in the form of Exhibit H-2, and (iii) one
movable hypothec (the "Hypothec") by and between GP Canada and the Agent
mutually reasonably satisfactory to GP Canada and the Agent, as each of the same
may be amended, supplemented or otherwise modified from time to time.
"Borrowing Date": (i) as to the Parent Facility, any Business
Day on which (a) the Lenders make Revolving Credit Loans to the Parent or
(b) the Issuing Bank issues a Letter of Credit for the account of the
Parent and (ii) as to the GP Canada Facility, the GP Canada Borrowing Date.
"Borrowing Request": a request for Revolving Credit Loans
and/or Term Loans in the form of Exhibit C-1.
"Business Day": for all purposes other than as set forth in clause
(ii) below, (i) any day other than a Saturday, a Sunday or a day on which
commercial banks located in New York City or Toronto, Canada are authorized or
required by law or other governmental action to close, and (ii) with respect to
all notices and determinations in connection with, and payments of principal and
interest on, Eurodollar Advances, any day which is a Business Day described in
clause (i) above and which is also a day on which eurodollar funding between
banks may be carried on in London, England.
"Capital Expenditures": with respect to any Person for any period,
the aggregate of all expenditures incurred by such Person during such period
which, in accordance with GAAP, are required to be included in "Additions to
Property, Plant or Equipment" or similar items reflected on the balance sheet of
such Person, provided, however, that "Capital Expenditures" shall not include
(i) operating leases, or (ii) expenditures of proceeds of insurance settlements
in respect of lost, destroyed or damaged assets, equipment or other property to
the extent such expenditures are made to replace or repair such lost, destroyed
or damaged assets, equipment or other property within six months of the receipt
of such proceeds or (iii) Acquisition Costs incurred in connection with
Permitted Acquisitions including the cost of fixed assets acquired in any
Permitted Acquisition or (iv) the $2,000,000 cost of acquiring the Property
described in Section 8.1(n).
"Capital Lease Obligations": with respect to any Person,
obligations of such Person with respect to leases which are required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capital Stock": as to any Person, all shares, interests,
partnership interests, limited liability company interests, participations,
rights in or other equivalents (however designated) of such Person's equity
(however designated) and any rights, warrants or options exchangeable for or
convertible into such shares, interests, participations, rights or other equity.
"Cash Collateral": as defined in Section 2.11.
"Cash Collateral Account": as defined in Section 2.11.
"Cash Equivalents": (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in full support thereof) having maturities of not
more than twelve months from the date of acquisition, (ii) Dollar denominated
time deposits, certificates of deposit and bankers acceptances of (x) any Lender
or (y) any Approved Bank, in any such case with maturities of not more than
twelve months from the date of acquisition, (iii) commercial paper issued by any
Approved Bank or by the parent company of any Approved Bank and commercial paper
issued by, or guaranteed by, any industrial or financial company with an
unsecured non-credit supported short-term commercial paper rating of at least
A-1 or the equivalent by Standard & Poor's or at least P-1 or the equivalent by
Moody's, or guaranteed by any industrial or financial company with a long term
unsecured non-credit supported senior debt rating of at least A or A- 2, or the
equivalent, by Standard & Poor's or Moody's, as the case may be, and in each
case maturing within twelve months after the date of acquisition, (iv)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within twelve months from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's or Moody's and (v)
investments in money market funds substantially all the assets of which are
comprised of securities of the types described in clauses (i) through (iv)
above.
"Change in Management": Should any two of Scott N. Greenberg,
Jerome I. Feldman, John C. McAuliffe, or Martin M. Pollak cease (whether
due to retirement, disability, death or otherwise) to hold the office,
serve in the capacity or exercise the managerial policy-making
responsibilities which on the date hereof he/she now holds, serves in or
exercises with or on behalf of the applicable Borrower and/or Subsidiary
Guarantor in which he/she now holds, serves or exercises and a replacement
therefor reasonably satisfactory to the Agent has not been elected and
assumed such responsibilities within 120 days of such cessation.
"Code": the Internal Revenue Code of 1986, as the same may be
amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.
"Collateral": the Property in which a security interest is
granted under the Borrower Security Agreement and/or under the Subsidiary
Guaranty and Security Agreement.
"Collateral Documents": (i) upon the execution and delivery thereof,
the Borrower Security Agreement and the Subsidiary Guaranty and Security
Agreement, as each may be amended, supplemented or otherwise modified from time
to time, (ii) the Intercompany Demand Loan Documents and (iii) all documents
executed or delivered in connection with any of the foregoing.
"Commitment": the Parent Commitment in the case of the Parent
Facility and the GP Canada Commitment in the case of the GP Canada Facility.
"Commitment Amounts": the Parent Commitment Amounts in the
case of the Parent Facility and the GP Canada Commitment Amounts in the
case of the GP Canada Facility.
"Commitment Percentage": as to the Parent Facility, the Parent
Commitment Percentage and as to the GP Canada Facility, the GP Canada
Commitment Percentage.
"Compensatory Interest Payment": as defined in Section 3.1(c).
"Compliance Certificate": a certificate substantially in the
form of Exhibit E.
"Confidential Information": as described in Section 11.21.
"Consolidated": the Parent and its Subsidiaries (excluding Five
Star unless Five Star hereafter becomes a Material Subsidiary within the
terms of such definition) on a consolidated basis in accordance with GAAP.
"Consolidated Debt Service": for any period, the sum of (i)
Consolidated Interest Expense for such period and (ii) all scheduled
payments of principal on Consolidated Funded Debt during such period.
"Consolidated EBITDA": for any period, net income (or net loss) of
the Parent and its Subsidiaries, determined on a Consolidated basis in
accordance with GAAP for such period plus (i) the sum of, without duplication,
(a) Consolidated Interest Expense, (b) provision for income taxes of the Parent
and its Subsidiaries, (c) depreciation, amortization and other non-cash charges
of the Parent and its Subsidiaries, (d) extraordinary losses from sales,
exchanges and other dispositions of Property not in the ordinary course of
business, each to the extent utilized in determining such net income for such
period, minus (ii) the sum of, without duplication, each of the following with
respect to the Parent and its Subsidiaries, to the extent utilized in
determining such net income (or net loss): (a) extraordinary gains from sales,
exchanges and other dispositions of Property not in the ordinary course of
business (other than gains on sales of publicly traded Capital Stock in an
amount not in excess of $2,000,000), (b) interest income, (c) investment income
and (d) other non-recurring items.
"Consolidated Interest Expense": for any period, interest
expense of the Parent and its Subsidiaries determined on a Consolidated
basis in accordance with GAAP.
"Consolidated Fixed Charges": for any period, the sum of,
without duplication, (i) Consolidated Debt Service for such period and (ii)
income taxes paid during such period by the Parent and its Subsidiaries.
"Consolidated Funded Debt": at any date of determination, the
aggregate funded indebtedness (as determined in accordance with GAAP) and
Capital Lease Obligations of the Parent and its Subsidiaries, determined on
a Consolidated basis in accordance with GAAP, on such date.
"Consolidated Net Worth": at any date of determination, the sum
of all amounts which would be included under "Shareholders' Equity" or any
analogous entry on a Consolidated balance sheet of the Parent determined in
accordance with GAAP as of such date.
"Consolidating": Parent and its Subsidiaries each taken
separately.
"Contingent Obligation": as to any Person ( a "secondary obligor"),
any obligation of such secondary obligor (i) guaranteeing or in effect
guaranteeing any return on any investment made by another Person, or (ii)
guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or
other obligation (a "primary obligation") of any other Person (a "primary
obligor") in any manner, whether directly or indirectly, including any
obligation of such secondary obligor, whether contingent, (a) to purchase any
primary obligation or any Property constituting direct or indirect security
therefor, (b) to advance or supply funds (A) for the purchase or payment of any
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 a primary
obligor, (c) to purchase Property, securities or services primarily for the
purpose of assuring the beneficiary of any primary obligation of the ability of
a primary obligor to make payment of a primary obligation, (d) otherwise to
assure or hold harmless the beneficiary of a primary obligation against loss in
respect thereof, and (e) in respect of the liabilities of any partnership in
which a secondary obligor is a general partner, except to the extent that such
liabilities of such partnership are nonrecourse to such secondary obligor and
its separate Property, provided, however, that the term "Contingent Obligation"
shall not include the indorsement of instruments for deposit or collection in
the ordinary course of business. The amount of any Contingent Obligation of a
Person shall be deemed to be an amount equal to the stated or determinable
amount of a primary obligation in respect of which such Contingent Obligation is
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith.
"Contract Assignment Consents": as defined in Section 4.15.
"Control Person": as defined in Section 3.6.
"Conversion Date": the date on which: (i) a Eurodollar Advance
is converted to an ABR Advance, (ii) an ABR Advance is converted to a
Eurodollar Advance or (iii) a Eurodollar Advance is converted to a new
Eurodollar Advance.
"Credit Exposure": with respect to any Lender as of any date, the
sum as of such date of (i) the outstanding principal balance of such Lender's
Revolving Credit Loans, plus, (ii) the outstanding principal balance of such
Lender's Term Loans, plus (iii) an amount equal to such Lender's Letter of
Credit Exposure.
"Credit Party": each Borrower, the Parent Guarantor, and each
Subsidiary Guarantor.
"Default": any event or condition which, with the giving of
notice, the lapse of time, or any other condition, would, unless cured or
waived, constitute an Event of Default.
"Defaulting Lender": as defined in Section 2.12.
"Disposition": with respect to any Person, any sale, assignment,
transfer or other disposition by such Person, by any means, of (i) the Capital
Stock of any other Person (other than a sale of the Capital Stock of Five Star
by the Parent), including without limitation with respect to either Borrower or
any Subsidiary Guarantor, the Capital Stock of any direct or indirect
Subsidiary, (ii) any business, going concern or division or segment thereof,
(iii) any other Property of such Person other than in the ordinary course of
business (other than inventory, except to the extent subject to a bulk sale),
provided, however, that no such sale, assignment, transfer or other disposition
of Property shall be deemed to be in the ordinary course of business if the fair
market value thereof is in excess of $2,000,000, or (iv) the sale, assignment,
transfer or disposition of all or substantially all of the Property of (a) such
Person, or (b) any Operating Entity (other than Five Star).
"Dollars" and "$": lawful currency of the United States.
"Domestic Subsidiary": a Subsidiary of the Parent organized
under the laws of the United States or a state thereof.
"Effective Date": the date on which all conditions in Section
5 and in Section 6 have been satisfied.
"Employee Benefit Plan": an employee benefit plan within the
meaning of Section 3(3) of ERISA maintained, sponsored or contributed to by
any Borrower, any of its Subsidiaries or any ERISA Affiliate.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the rules and regulations issued
thereunder, as from time to time in effect.
"ERISA Affiliate": when used with respect to an Employee Benefit
Plan, ERISA, the PBGC or a provision of the Code pertaining to employee benefit
plans, any Person which is a member of any group of organizations within the
meaning of Sections 414(b) or (c) of the Code (or, solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, Sections 414(m) or (o) of the Code) of which the Parent or any of
its Subsidiaries is a member.
"Eurodollar Advances": collectively, the Revolving Credit Loans
(or any portions thereof), and/or the Term Loans (or any portions thereof)
at such time as they (or such portions) are made and/or being maintained at
a rate of interest based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each Eurodollar Advance for each
Interest Period thereof, a rate of interest per annum, as determined by the
Agent, obtained by dividing the rate computed by paragraph (a) by the amount
computed under paragraph (b) (and then rounding to the nearest 1/100 of 1% or,
if there is no nearest 1/100 of 1%, then to the next higher 1/100 of 1%):
(a) the rate, as determined on the basis of the offered rates
for deposits in U.S. Dollars, for a period of time comparable to such Interest
Period for such Eurodollar Advance which appears on the Telerate page 3750 as of
11:00 a.m. London time on the day that is two Business Days preceding the first
day of such Eurodollar Advance; provided, however, if the rate described above
does not appear on the Telerate System on any applicable interest determination
date, the Eurodollar Rate shall be the rate (rounded upwards as described above,
if necessary) for deposits in Dollars for a period substantially equal to the
Interest Period on the Reuters Page "LIBO" (or such other page as may replace
the LIBO Page on that service for the purpose of displaying such rates), as of
11:00 a.m. (London Time), on the day that is two (2) Business Days prior to the
beginning of such Interest Period; and
If both the Telerate and Reuters system are unavailable, then the rate for
that date will be determined on the basis of the offered rates for deposits in
U.S. Dollars for a period of time comparable to such Interest Period for such
Eurodollar Advance which are offered by four major banks in the London interbank
market at approximately 11:00 a.m. London time, on the day that is two (2)
Business Days preceding the first day of such Eurodollar Advance as selected by
the Agent. The principal London office of each of the four major London banks
will be requested to provide a quotation of its U.S. Dollar deposit offered
rate. If at least two such quotations are provided, the rate for that date will
be the arithmetic mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that date will be determined on the basis of
the rates quoted for loans in U.S. Dollars to leading European banks for a
period of time comparable to such Eurodollar Advance offered by major banks in
New York City at approximately 11:00 a.m. New York City time, on the day that is
two Business Days preceding the first day of such Eurodollar Advance . In the
event that the Agent is unable to obtain any such quotation as provided above,
it will be deemed that the Eurodollar Rate pursuant to a Eurodollar Advance
cannot be determined.
(b) a number equal to 1.00 minus the aggregate of the then
stated maximum rates during such Interest Period of all reserve requirements
(including marginal, emergency, supplemental and special reserves), expressed as
a decimal, established by the Board of Governors of the Federal Reserve System
and any other banking authority to which Fleet and other major United States
money center banks are subject, in respect of eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board of
Governors of the Federal Reserve System), without benefit of credit for
proration, exceptions or offsets which may be available from time to time to
Fleet.
The Agent shall use its best efforts to advise the applicable Borrower of the
Eurodollar Rate as soon as practicable after each change in the Eurodollar Rate;
provided however, that the failure of the Agent to so advise the Borrowers on
any one or more occasions shall not result in any liability of the Agent or
affect the rights of the Lenders or the Agent or the obligations of the
Borrowers under this Agreement or any other Loan Document.
"Event of Default": as defined in Section 9.1.
"Existing Bank Debt": collectively, the Indebtedness of Parent and
certain Subsidiary Guarantors under that certain Credit Agreement dated March
26, 1997 by and among Parent, certain of the Subsidiary Guarantors and Fleet
Bank, National Association as Administrative and Collateral Agent and the
documents, instruments and agreements executed pursuant thereto or in connection
therewith, including all outstanding principal, unpaid and accrued interest,
unpaid and accrued fees and other unpaid sums thereunder.
"Federal Funds Rate": for any day, a rate per annum (expressed as a
decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to
the weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on such preceding Business Day as so published
on the next succeeding Business Day, and (ii) if such rate is not so published
for any day, the Federal Funds Rate for such day shall be the average of the
quotations for such day on such transactions received by Fleet as determined by
Fleet and reported to the Agent.
"Fees": as defined in Section 2.10.
"Financial Officer": as to any Person, the chief financial
officer of such Person or such other officer as shall be satisfactory to
the Agent.
"Financial Statements": as defined in Section 4.13.
"Five Star": Five Star Group, Inc.
"Fixed Charge Coverage Ratio": at any date of determination, the
ratio of (a) Consolidated EBITDA for the Trailing Period minus Capital
Expenditures for the Trailing Period to (b) Consolidated Fixed Charges for the
Trailing Period ending on such date or, if such date is not the last day of a
fiscal quarter, for the immediately preceding Trailing Period.
"Fleet": Fleet Bank, National Association.
"Fleet Rate": the variable per annum rate of interest so designated
from time to time by Fleet as its prime commercial lending rate, such rate to be
adjusted automatically (without notice) on the effective date of any change in
such designated rate. The Fleet Rate is a reference rate and does not
necessarily represent the lowest or best rate being charged to any customer.
"Foreign Subsidiaries": General Physics Corporation (UK)
Limited and any other Subsidiary, other than a Domestic Subsidiary or GP
Canada, which becomes a Material Subsidiary.
"Funded Current Liability Percentage": as defined in Section
401(a)(29) of the Code.
"GAAP": generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and in the statements and
pronouncements of the Financial Accounting Standards Board or in such other
statement by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination, consistently applied.
"Governmental Authority": any foreign, federal, state,
provincial, municipal or other government, or any department, commission,
board, bureau, agency, public authority or instrumentality thereof, or any
court or arbitrator.
"GP Canada Borrowing Date": means the date on which all
conditions in Sections 5 and 6 have been satisfied and funds are advanced
to GP Canada under the Term Notes.
"GP Canada Commitment": in respect of any Lender, such Lender's
undertaking on the GP Canada Borrowing Date to make Term Loans, subject to the
terms and conditions hereof, in an aggregate outstanding principal amount not
exceeding the GP Canada Commitment Amount of such Lender.
"GP Canada Commitment Amount": as of any date and with respect to
any Lender, the amount set forth adjacent to its name under the heading "GP
Canada Commitment Amount" in Exhibit A on such date or, in the event that such
Lender is not listed in Exhibit A, the "GP Canada Commitment Amount" which such
Lender shall have assumed from another Lender in accordance with Section 11.7 on
or prior to such date, in each case as the same may be adjusted from time to
time pursuant to Sections 2.4 and 11.7.
"GP Canada Commitment Percentage": as to any Lender in respect of
such Lender's GP Canada Commitment, the percentage equal to such Lender's GP
Canada Commitment Amount divided by the Aggregate GP Canada Commitment Amount
(or, if no GP Canada Commitments then exist, the percentage equal to such
Lender's GP Canada Commitment Amount on the last day upon which GP Canada
Commitments did exist divided by the Aggregate GP Canada Commitment Amount on
such day); provided, that, as to each Lender, such Lender's GP Canada Commitment
Percentage shall at all times equal such Lender's Parent Commitment Percentage.
"GP Canada Credit Exposure": with respect to any Lender as of
any date, the sum as of such date of the outstanding principal balance of
such Lender's Term Loans.
"GP Canada Facility": the credit facility described in Section
2.2.
"GP Canada Maturity Date": the later of July 15, 2003 and the date
which is five years and one day after the GP Canada Borrowing Date, or such
earlier date on which the Term Notes shall become due and payable, whether by
acceleration or otherwise.
"GP Canada Obligations": all of the Indebtedness, liabilities and
obligations of GP Canada to the Lenders, the Issuing Bank and the Agent, whether
now existing or hereafter arising, direct or indirect, absolute or contingent,
whether or not currently contemplated, arising under the Loan Documents.
"GP Canada Outstanding Percentage": as of any date and with respect
to each Lender, a fraction the numerator of which is the GP Canada Credit
Exposure of such Lender, on such date, and the denominator of which is the
aggregate GP Canada Credit Exposure of all Lenders on such date.
"GP (UK)": means General Physics Corporation (UK) Limited.
"GPC Group": collectively Physics, Services and Systems.
"HSR Act": the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Highest Lawful Rate": as to any Lender or the Issuing Bank, the
maximum rate of interest, if any, that at any time or from time to time may be
contracted for, taken, charged or received by such Lender on the Note held by it
or by the Issuing Bank on the Reimbursement Agreements, as the case may be, or
which may be owing to such Lender or the Issuing Bank pursuant to the Loan
Documents under the laws applicable to such Lender or the Issuing Bank and this
transaction.
"Hypothec": as defined under Borrower Security Agreement.
"Indebtedness": as to any Person, at a particular time, all items
which constitute, without duplication, (i) indebtedness for borrowed money, (ii)
indebtedness in respect of the deferred purchase price of Property or services
(other than trade payables incurred in the ordinary course of business), (iii)
indebtedness evidenced by notes, bonds, debentures or similar instruments, (iv)
obligations with respect to any conditional sale or title retention agreement,
(v) indebtedness arising under acceptance facilities and the amount available to
be drawn under all letters of credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder to the extent such Person shall
not have reimbursed the issuer in respect of the issuer's payment thereof, (vi)
all liabilities secured by any Lien on any Property owned by such Person even
though such Person has not assumed or otherwise become liable for the payment
thereof (other than carriers', warehousemen's, mechanics', repairmen's or other
like non-consensual statutory Liens arising in the ordinary course of business),
(vii) Capital Lease Obligations, (viii) all obligations of such Person in
respect of Capital Stock subject to mandatory redemption or redemption at the
option of the holder thereof, in whole or in part, (ix) indebtedness owing under
Interest Rate Protection Agreements (on a net basis with respect to all such
Interest Rate Protection Agreements) and (x) all Contingent Obligations of such
Person in respect of any of the foregoing.
"Indemnified Liabilities": as defined in Section 11.5.
"Indemnified Person": as defined in Section 11.8.
"Indemnified Tax": as defined in Section 3.10(a).
"Indemnified Tax Person": as defined in Section 3.10(a).
"Installment Payment Date": any date on which all or any
portion of the principal amount of the Term Loans are due and payable.
"Intercompany Demand Loan Collateral": all of the accounts
receivable and inventory of each Foreign Subsidiary, now or hereafter
acquired.
"Intercompany Demand Loan Documents": the Intercompany Demand Note,
the Intercompany Demand Loan Security Documents and each other document,
instrument and agreement executed pursuant to or in connection with any of the
foregoing, each as amended, supplemented or modified from time to time, as
pledged to the Agent pursuant to the Borrower Security Agreement and/or
Subsidiary Guarantee and Security Agreement.
"Intercompany Demand Loan Security Documents": the security
documents executed by each Foreign Subsidiary in favor of Parent or a
Subsidiary of Parent in order to grant such Person a first Lien in the
Intercompany Demand Loan Collateral.
"Intercompany Demand Note": one or more negotiable demand
promissory notes made by a Foreign Subsidiary to the order of Parent, or a
Domestic Subsidiary of Parent evidencing loans by the Parent or such
Domestic Subsidiary to such Foreign Subsidiary, substantially in the form
of Exhibit K.
"Intercompany Indebtedness": loans which are made by (i) any
Borrower to any Subsidiary Guarantor or to any Foreign Subsidiary, (ii) GP
Canada to Parent or (iii) any Subsidiary Guarantor to any other Subsidiary
Guarantor.
"Interest Payment Date": (i) as to any ABR Advance, the last day of
each month commencing on the first of such days to occur after such ABR Advance
is made or any Eurodollar Advance is converted to an ABR Advance, (ii) as to any
Eurodollar Advance as to which the applicable Borrower has selected an Interest
Period of one, two or three months, the last day of such Interest Period, (iii)
as to any Eurodollar Advance as to which the applicable Borrower has selected an
Interest Period of six or nine months, the last day of each three month interval
occurring during such Interest Period and the last day of such Interest Period;
and (iv) as to all Advances, the Maturity Date.
"Interest Period": with respect to any Eurodollar Advance requested
by a Borrower, the period commencing on, as the case may be, the Borrowing Date
or Conversion Date with respect to such Eurodollar Advance and ending one, two,
three, six or nine months thereafter, as selected by such Borrower in its
irrevocable Borrowing Request or its irrevocable Notice of Conversion, provided,
however, that (i) if any Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day, (ii) any Interest
Period which begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of the
appropriate subsequent calendar month. Interest Periods shall be subject to the
provisions of Section 3.4 and (iii) no portion of the Term Loans shall be
continued as or converted into a Eurodollar Advance with an Interest Period
which extends beyond an Installment Payment Date if, after giving effect to the
continuation or conversion of such Eurodollar Advance, the amount payable on any
Installment Payment Date would exceed the sum of (i) the aggregate principal
amount of the outstanding portion of the Term Loans constituting Eurodollar
Advances with Interest Periods ending prior to such Installment Payment Date and
(ii) the aggregate outstanding portion of the Term Loans constituting ABR
Advances.
"Interest Rate Protection Arrangement": any interest rate swap, cap
or collar arrangement or any other derivative product customarily offered by
banks or other financial institutions to their customers in order to reduce the
exposure of such customers to interest rate fluctuations, as the same may be
amended, supplemented or otherwise modified from time to time.
"Investments": as defined in Section 8.5.
"Learning Technologies Acquisition": the acquisition by Physics
and designated Affiliates of Physics of the Learning Technologies Assets in
a manner in all respects satisfactory to the Agent.
"Learning Technologies Acquisition Documents": collectively, (i) the
Asset Purchase Agreement, dated as of June 3, 1998, between Physics, as buyer
and the Sellers, as seller, pursuant to which Physics and designated Affiliates
of Physics acquires the Learning Technologies Assets, and (ii) all other
documents executed in connection therewith, as each may be amended, supplemented
or otherwise modified.
"Learning Technologies Assets": the assets and business of the
"Learning Technologies" division of the Sellers being acquired in the
Learning Technologies Acquisition.
"Learning Technologies Business": the Sellers' business of operating
their "Learning Technologies" division, which, together with the Learning
Technologies Assets and certain liabilities related thereto (other than
liabilities under the Loan Documents), is to be transferred to, and assumed by,
Physics, GP Canada and/or GP (UK) on the Effective Date.
"Lease Assignment Consents": as defined in Section 4.14.
"Letters of Credit": as defined in Section 2.7.
"Letter of Credit Commissions": as defined in Section 3.2(b).
"Letter of Credit Commitment": the commitment of the Issuing Bank to
issue Letters of Credit for the account of Parent having an aggregate
outstanding face amount up to the Letter of Credit Commitment Amount, and the
commitment of the Lenders to participate in the Letter of Credit Exposure as set
forth in Section 2.8.
"Letter of Credit Commitment Amount": Five Million and 00/100
Dollars ($5,000,000.00).
"Letter of Credit Exposure": at any time, (i) in respect of all the
Lenders, the sum at such time, without duplication, of (x) the aggregate undrawn
face amount of the outstanding Letters of Credit, (y) the aggregate amount of
unpaid drafts drawn on all Letters of Credit, and (z) the aggregate unpaid
Reimbursement Obligations (after giving effect to any Revolving Credit Loans
made on such date to pay any such Reimbursement Obligations), and (ii) in
respect of any Lender, an amount equal to such Lender's Parent Commitment
Percentage multiplied by the amount determined under clause (i) of this
definition.
"Letter of Credit Participation": with respect to each Lender,
its obligations to the Issuing Bank hereunder.
"Letter of Credit Request": a request in the form of Exhibit C-2.
"Leverage Ratio": at any date of determination, the ratio of (i)
Consolidated Funded Debt as of such date to (ii) Consolidated EBITDA for the
four fiscal quarter period ending on such date or, if such date is not the last
day of a fiscal quarter, for the immediately preceding four fiscal quarter
period; provided, that, for the period of determination in which the Learning
Technologies Acquisition is consummated and for the immediately following two
periods, for the purposes of calculating the Leverage Ratio, the EBITDA
attributable to the Learning Technologies Acquisition shall be deemed to be (i)
for the first period, the EBITDA attributable to Learning Technologies
Acquisition during such first period multiplied by 4, (ii) for the second
period, the EBITDA attributable to the Learning Technologies Acquisition for the
two periods multiplied by 2, and (iii) for the third period, the EBITDA
attributable to the Learning Technologies Acquisition for the three periods
multiplied by 1.3333.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit or
preferential arrangement, encumbrance, lien (statutory or other), or other
security agreement or security interest of any kind or nature whatsoever,
including any conditional sale or other title retention agreement and any
capital or financing lease having substantially the same economic effect as any
of the foregoing.
"Loan Documents": collectively, this Agreement, the Revolving
Credit Notes, the Term Notes, the Subordination Agreement, the
Reimbursement Agreements, the Parent Guaranty, the Collateral Documents and
all other agreements, instruments and documents executed or delivered in
connection herewith, in each case as amended, supplemented or otherwise
modified from time to time.
"Loans": the Revolving Credit Loans and the Term Loans.
"Managing Person": with respect to any Person that is (i) a
corporation, its board of directors, (ii) a limited liability company, its board
of control, managing member or members, (iii) a limited partnership, its general
partner, (iv) a general partnership or a limited liability partnership, its
managing partner or executive committee or (v) any other Person, the managing
body thereof or other Person analogous to the foregoing.
"Margin Stock": any "margin stock", as defined in Regulation U
of the Board of Governors of the Federal Reserve System, as amended,
supplemented or otherwise modified from time to time.
"Material Adverse Change": a material adverse change in (i) the
financial condition, operations, business, prospects or Property of the Parent
and its Subsidiaries taken as a whole, (ii) the ability of any Borrower to
perform its obligations under the Loan Documents or (iii) the ability of the
Agent and the Lenders to enforce the Loan Documents.
"Material Adverse Effect": a material adverse effect on (i) the
financial condition, operations, business, prospects or Property of the Parent
and its Subsidiaries taken as a whole, (ii) the ability of any Borrower to
perform its obligations under the Loan Documents or (iii) the ability of the
Agent and the Lenders to enforce the Loan Documents.
"Material Subsidiary": means each of the Subsidiary Guarantors and
any other Subsidiary of the Parent which (i) as at the end of the most recent
fiscal quarter of Parent, held 10% or more of the Consolidated assets of Parent
and its Subsidiaries, or (ii) for the four most recently completed fiscal
quarters of Parent accounted for more than 10% of the Consolidated EBITDA, as
shown on the financial statements of Parent and its Subsidiaries, provided that
for purposes of determining whether any Subsidiary acquired or organized after
the date hereof is a Material Subsidiary, the financial statements of the Parent
and its Subsidiaries shall be adjusted to include such Subsidiary acquired or
organized after the date hereof as if such Subsidiary had been a Subsidiary at
all times during such four fiscal quarters or, if shorter, during the period
after it was organized. Notwithstanding the foregoing, Five Star shall not be
deemed to be a Material Subsidiary; provided, that, if within 120 days from the
date hereof all of the Capital Stock of Five Star has not been sold by Parent or
a Subsidiary of Parent, a determination will at such time be made as to whether
Five Star is a Material Subsidiary and if Five Star is such a Material
Subsidiary it shall execute and become a party to all such Loan Documents and
take all such actions as any other Material Subsidiary is required to execute
and take pursuant to the terms of this Agreement.
"Maturity Date": means either the Parent Maturity Date or the GP
Canada Maturity Date.
"Moody's": Moody's Investors Service, Inc., or any successor thereto.
"Multi-employer Plan": a Pension Plan which is a Multi-employer plan
as defined in Section 4001(a)(3) of ERISA.
"MXL": MXL Industries, Inc.
"Net Cash Proceeds": with respect to any Disposition by any Borrower
or any of its Subsidiaries, the aggregate gross sales proceeds received by such
Borrower or such Subsidiary, as the case may be, in cash in connection with such
Disposition minus the sum of (i) sales and other commissions and legal and other
expenses incurred in connection with such Disposition and (ii) any taxes
reasonably estimated to be payable by the Borrower or such Subsidiary, as the
case may be, in connection therewith in respect of the fiscal year of such
Disposition.
"Notes": the Revolving Credit Notes and the Term Notes.
"Notice of Conversion": a notice substantially in the form of Exhibit
D.
"Obligations": the Parent Obligations and the GP Canada Obligations
collectively.
"Other Taxes": as defined in Section 3.10(c).
"Operating Entity": any Person or any business or operating unit of a
Person which is, or could be, operated separate and apart from (i) the other
businesses and operations of such Person, or (ii) any other line of business or
business segment.
"Organizational Documents": as to any Person which is (i) a
corporation, the certificate or articles of incorporation and by-laws of such
Person, (ii) a limited liability company, the limited liability company
agreement or similar agreement of such Person, (iii) a partnership, the
partnership agreement or similar agreement of such Person, or (iv) any other
form of entity or organization, the organizational documents analogous to the
foregoing.
"Outstandings": as of any date with respect to the Parent Facility and
the GP Canada Facility taken together, an amount equal to (a) with respect to
any Lender, the outstanding principal balance on such date of all the Loans of
such Lender plus the excess of (i) the aggregate sum of all payments by such
Lender after the Effective Date in participation of the Reimbursement
Obligations over (ii) all reimbursements of such Lender after the Effective Date
in respect thereof; and (b) with respect to the Issuing Bank, the excess of (i)
the aggregate sum of all drafts honored under all Letters of Credit after the
Effective Date, over (ii) all payments made after the Effective Date to the
Issuing Bank by the Borrowers and the Lenders in reimbursement thereof or
participation therein, as the case may be.
"Outstanding Percentage": as of any date and with respect to each
Lender and the Issuing Bank, as the case may be, a fraction the numerator of
which is the Outstandings of such Lender or the Issuing Bank, as applicable, on
such date, and the denominator of which is the aggregate Outstandings of all
Lenders and the Issuing Bank on such date.
"Parent Commitment": in respect of any Lender, such Lender's
undertaking during the applicable Commitment Period to make Revolving Credit
Loans, subject to the terms and conditions hereof, in an aggregate outstanding
principal amount not exceeding the Parent Commitment Amount of such Lender.
"Parent Commitment Amount": as of any date and with respect to any
Lender, the amount set forth adjacent to its name under the heading "Parent
Commitment Amount" in Exhibit A on such date or, in the event that such Lender
is not listed in Exhibit A, the "Parent Commitment Amount" which such Lender
shall have assumed from another Lender in accordance with Section 11.7 on or
prior to such date, in each case as the same may be adjusted from time to time
pursuant to Sections 2.4 and 11.7.
"Parent Commitment Fee": as defined in Section 3.2(a).
"Parent Commitment Percentage": as to any Lender in respect of such
Lender's Parent Commitment and its obligations with respect to Letters of
Credit, the percentage equal to such Lender's Parent Commitment Amount divided
by the Aggregate Parent Commitment Amount (or, if no Parent Commitments then
exist, the percentage equal to such Lender's Parent Commitment Amount on the
last day upon which Parent Commitments did exist divided by the Aggregate Parent
Commitment Amount on such day); provided, that, with respect to each Lender,
such Lender's Parent Commitment Percentage shall at all times equal such
Lender's GP Canada Commitment Percentage.
"Parent Commitment Period": means the period from the Effective Date
through the Parent Commitment Termination Date.
"Parent Commitment Termination Date": the earlier of the Business Day
immediately preceding the Parent Maturity Date or such other date upon which the
Commitments shall have been terminated in accordance herewith.
"Parent Credit Exposure": with respect to any Lender as of any date,
the sum as of such date of (i) the outstanding principal balance of such
Lender's Revolving Credit Loans, plus (ii) an amount equal to such Lender's
Letter of Credit Exposure.
"Parent Facility": the credit facility described in Section 2.1.
"Parent Guarantor": Parent, as to the GP Canada Facility.
"Parent Guaranty": the Parent Guaranty Agreement for the GP Canada
Facility by and between the Parent Guarantor and the Agent, substantially in the
form of Exhibit J, as amended, supplemented or otherwise modified from time to
time.
"Parent Maturity Date": June 15, 2001, or such earlier date on which
the Revolving Credit Notes shall become due and payable, whether by acceleration
or otherwise.
"Parent Obligations": all of the Indebtedness, liabilities and
obligations of Parent to the Lenders, the Issuing Bank and the Agent, whether
now existing or hereafter arising, direct or indirect, absolute or contingent,
whether or not currently contemplated, arising under the Loan Documents.
"Parent Outstandings": as of any date an amount equal to (a) with
respect to any Lender, the outstanding principal balance on such date of all the
Revolving Credit Loans of such Lender plus the excess of (i) the aggregate sum
of all payments by such Lender after the Effective Date in participation of the
Reimbursement Obligations over (ii) all reimbursements of such Lender after the
Effective Date in respect thereof; and (b) with respect to the Issuing Bank, the
excess of (i) the aggregate sum of all drafts honored under all Letters of
Credit after the Effective Date, over (ii) all payments made after the Effective
Date to the Issuing Bank by Parent and the Lenders in reimbursement thereof or
participation therein, as the case may be.
"Parent Outstanding Percentage": as of any date and with respect to
each Lender and the Issuing Bank, as the case may be, a fraction the numerator
of which is the Parent Outstandings of such Lender or the Issuing Bank, as
applicable, on such date, and the denominator of which is the aggregate Parent
Outstandings of all Lenders and the Issuing Bank on such date.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA, or any Governmental Authority succeeding to
the functions thereof.
"Pension Plan": at any date of determination, any Employee Benefit
Plan (including a Multi-employer Plan), the funding requirements of which (under
Section 302 of ERISA or Section 412 of the Code) are, or at any time within the
six years immediately preceding such date, were in whole or in part, the
responsibility of any Borrower, any of its Subsidiaries or any ERISA Affiliate.
"Permitted Acquisition": an Acquisition permitted by Section 8.3.
"Permitted Lien": a Lien permitted to exist under Section 8.2.
"Person": any individual, firm, partnership, limited liability
company, joint venture, corporation, association, business enterprise, joint
stock company, unincorporated association, trust, Governmental Authority or any
other entity, whether acting in an individual, fiduciary, or other capacity, and
for the purpose of the definition of "ERISA Affiliate", a trade or business.
"Physics": General Physics Corporation.
"PPSA": Personal Property Security Act of each province of Canada that
has adopted such act.
"Pricing Level": Pricing Level I, Pricing Level II or Pricing Level
III, as applicable.
"Pricing Level I": the applicable Pricing Level at any time when the
Leverage Ratio is greater than or equal to 3.00:1.00.
"Pricing Level II": the applicable Pricing Level at any time when the
Leverage Ratio is greater than or equal to 2.50:1.00 but less than 3.00:1.00.
"Pricing Level III": the applicable Pricing Level at any time when the
Leverage Ratio is less than 2.50:1.00.
"Prohibited Transaction": a transaction which is prohibited under
Section 4975 of the Code or Section 406 of ERISA and not exempt under Section
4975 of the Code or Section 408 of ERISA.
"Property": all types of real, personal, tangible, intangible or mixed
property.
"Proposed Lender": as defined in Section 3.12.
"Regulatory Change": (i) the introduction or phasing in of any law,
rule or regulation after the Relevant Date, (ii) the issuance or promulgation
after the Relevant Date of any directive, guideline or request from any
Governmental Authority (whether or not having the force of law), or (iii) any
change after the Relevant Date in the interpretation of any existing law, rule,
regulation, directive, guideline or request by any Governmental Authority
charged with the administration thereof. For purposes of this definition, the
term "Relevant Date" shall mean (i) in the case of each Lender listed on the
signature pages hereof, the Effective Date, or (ii) in the case of each other
Lender, the effective date of the Assignment and Acceptance Agreement or other
document pursuant to which it became a Lender.
"Reimbursement Agreement": as defined in Section 2.7(b).
"Reimbursement Obligation": the obligation of Parent to reimburse the
Issuing Bank for amounts drawn under a Letter of Credit.
"Remaining Interest Period": (i) in the event that any Borrower shall
fail for any reason to borrow a Revolving Credit Loan or Term Loan in respect of
which it shall have requested a Eurodollar Advance or convert an Advance to a
Eurodollar Advance after it shall have notified the Agent of its intent to do
so, a period equal to the Interest Period that such Borrower elected in respect
of such Eurodollar Advance; or (ii) in the event that a Eurodollar Advance shall
terminate for any reason prior to the last day of the Interest Period applicable
thereto, a period equal to the remaining portion of such Interest Period if such
Interest Period had not been so terminated; or (iii) in the event that any
Borrower shall prepay or repay all or any part of the principal amount of a
Eurodollar Advance prior to the last day of the Interest Period applicable
thereto, a period equal to the period from and including the date of such
prepayment or repayment to but excluding the last day of such Interest Period.
"Reportable Event": with respect to any Pension Plan, (i) any event
set forth in Sections 4043(c) (other than a Reportable Event as to which the 30
day notice requirement is waived by the PBGC under applicable regulations),
4062(c) or 4063(a) of ERISA or the regulations thereunder, (ii) an event
requiring any Borrower, any of its Subsidiaries or any ERISA Affiliate to
provide security to a Pension Plan under Section 401(a)(29) of the Code, or
(iii) any failure to make any payment required by Section 412(m) of the Code.
"Required Lenders": Lenders whose aggregate Credit Exposure constitute
at least 51% of the Aggregate Credit Exposure at such time; provided, however,
that if any Lender shall be a Defaulting Lender at such time then there shall be
excluded from the determination of Required Lenders at such time the aggregate
principal amount of Credit Exposure of such Lender at such time. For purposes of
the preceding sentence, the term "Credit Exposure" as applied to each Lender and
any Commitment shall mean (a) the sum of (i) the Parent Commitment Percentage of
such Lender multiplied times the Aggregate Parent Commitment Amount; plus (ii)
the principal balance of outstanding Term Loans at such time of such Lender;
provided, that, with respect to the Parent Commitment, if Required Lenders is
being determined at any time after the Parent Commitment Termination Date,
"Credit Exposure" shall be determined by replacing the calculation provided for
the Parent Facility above by the principal balance of outstanding Revolving
Credit Loans of such Lender at such time, plus such Lender's Letter of Credit
Exposure; provided, further that if there are no outstanding Revolving Credit
Loans and there is no Letter of Credit Exposure at such time, then Required
Lenders shall be determined in accordance with "(a)(i)" on the last day prior to
the Parent Commitment Termination Date.
"Restricted Payment": as to any Person (i) any dividend or other
distribution, direct or indirect, on account of any shares of Capital Stock in
such Person now or hereafter outstanding (other than a dividend payable solely
in shares of such Capital Stock to the holders of such shares) and (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition, direct or indirect, of any shares of any class of Capital Stock in
such Person now or hereafter outstanding.
"Revolving Credit Loan" and "Revolving Credit Loans": as defined in
Section 2.1(a).
"Revolving Credit Note" and "Revolving Credit Notes": as defined in
Section 2.1(b).
"SEC": the Securities and Exchange Commission or any Governmental
Authority succeeding to the functions thereof.
"Sellers": collectively, SHL Systemhouse Co., MCI Systemhouse Corp.,
SHL Computer Innovations, Inc. and SHL Technology Solutions Limited.
"Services": GP Environmental Services, Inc.
"Solvent": with respect to any Person on a particular date, the
condition that on such date, (i) the fair value of the Property of such Person
is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (ii) the present fair salable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (iii) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature, and (iv) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's Property would constitute an unreasonably small amount of
capital. For purposes of this definition, the amount of any contingent liability
at any time shall be computed as the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability after taking into account
probable payments by co-obligors.
"Special Counsel": Emmet, Marvin & Martin, LLP, special counsel to the
Agent.
"Standby Letters of Credit": as defined in Section 2.7(a).
"Standard & Poor's": Standard & Poor's Ratings Services, a division of
The McGraw Hill Companies, Inc., or any successor thereto.
"Subordinated Debt": all Indebtedness of a Credit Party which is
subordinated to the Obligations on terms and conditions at least as favorable to
the Banks as are contained in the Subordination Agreement or on other terms and
conditions acceptable to the Agent and the Required Lenders, provided that,
notwithstanding the terms of the Subordination Agreement, in order for such
Indebtedness to be considered "Subordinated Debt", the principal amount of such
Indebtedness shall not be payable until at least 180 days after the later of the
Parent Commitment Termination Date and the GP Canada Maturity Date, and no
principal of or interest on or other amounts in respect to such Indebtedness
shall be payable at any time after the occurrence and during the continuance of
any Event of Default.
"Subordination Agreement": as defined in Section 5.11(b).
"Subsidiary": as to any Person, any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which such Person or any Subsidiary of such Person, directly or indirectly,
either (i) in respect of a corporation, owns or controls more than 50% of the
outstanding Capital Stock having ordinary voting power to elect a majority of
the Managing Person, irrespective of whether a class or classes shall or might
have voting power by reason of the happening of any contingency, or (ii) in
respect of an association, partnership, limited liability company, joint venture
or other business entity, is entitled to share in more than 50% of the profits
and losses, however determined; provided, however, that with respect to the
financial covenants contained herein the term "Subsidiary" shall not include
Five Star.
"Subsidiary Guarantor": with respect to the Parent Facility: MXL,
Services, Systems, Physics and each present and future Material Subsidiary of
Parent that is a Domestic Subsidiary; and with respect to the GP Canada
Facility: MXL, Services, Systems, Physics and each present and future Material
Subsidiary.
"Subsidiary Guaranty and Security Agreement": collectively the
Subsidiary Guaranty and Security Agreements for the Parent Facility and the GP
Canada Facility, by and among each applicable Subsidiary Guarantor and the
Agent, substantially in the Form of Exhibit I, as amended, supplemented or
otherwise modified from time to time.
"Systems": General Physics Federal Systems, Inc.
"Taxes": as defined in Section 3.10(a).
"Tax on the Income": as defined in Section 3.10(a).
"Termination Event": with respect to any Pension Plan, (i) a
Reportable Event, (ii) the termination of a Pension Plan, or the filing of a
notice of intent to terminate a Pension Plan, or the treatment of a Pension Plan
amendment as a termination under Section 4041(c) of ERISA, (iii) the institution
of proceedings to terminate a Pension Plan under Section 4042 of ERISA, or (iv)
the appointment of a trustee to administer any Pension Plan under Section 4042
of ERISA.
"Term Loan" and "Term Loans": as defined in Section 2.2(a).
"Term Note" and "Term Notes": as defined in Section 2.2(b).
"Trade Letters of Credit": as defined in Section 2.7(a).
"Trailing Period": means
(1) with respect to the fiscal quarter ending June 30, 1998, such
fiscal quarter;
(2) with respect to the fiscal quarter ending September 30, 1998, such
fiscal quarter and the first immediately preceding fiscal quarter;
(3) with respect to the fiscal quarter ending December 31, 1998, such
fiscal quarter and the two immediately preceding fiscal quarters; and
(4) with respect to each fiscal quarter thereafter, such fiscal
quarter and the three immediately preceding fiscal quarters.
"Transaction Documents": collectively, the Loan Documents and the
Learning Technologies Acquisition Documents.
"Type": with respect to any Loan, the character of such Loan as an ABR
Advance or a Eurodollar Advance, each of which constitutes a type of loan.
"Unfunded Pension Liabilities": with respect to any Pension Plan, at
any date of determination, the amount determined by taking the accumulated
benefit obligation, as disclosed in accordance with Statement of Accounting
Standards No. 87, "Employers' Accounting for Pensions", over the fair market
value of Pension Plan assets.
"United States": the United States of America (including the States
thereof and the District of Columbia).
"Unqualified Amount": as defined in Section 3.1(c).
"Unrecognized Retiree Welfare Liability": with respect to any Employee
Benefit Plan that provides post retirement benefits other than pension benefits,
the amount of the transition obligation, as determined in accordance with
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Post retirement Benefits Other Than Pensions," as of the most recent valuation
date, that has not been recognized as an expense in an income statement of any
Borrower and its Subsidiaries, provided that prior to the date such Statement is
applicable to a Borrower, such amount shall be based on an estimate made in good
faith of such transition obligation.
"Upstream Dividends": as defined in Section 8.14.
"U.S. Person": a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under any
laws of the United States, or any estate or trust that is subject to United
States federal income taxation regardless of the source of its income.
1.2. Principles of Construction
(a) All terms defined in a Loan Document shall have the meanings given
such terms therein when used in the other Loan Documents or any certificate,
opinion or other document made or delivered pursuant thereto, unless otherwise
defined therein.
(b) As used in the Loan Documents and in any certificate, opinion or
other document made or delivered pursuant thereto, accounting terms not defined
in Section 1.1, and accounting terms partly defined in Section 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP.
If at any time any change in GAAP would affect the computation of any financial
ratio or requirement set forth in this Agreement, the Agent, the Lenders and the
Borrowers shall negotiate in good faith to amend such ratio or requirement to
reflect such change in GAAP (subject to the approval of the Required Lenders),
provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii) the
Borrowers shall provide to the Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.
(c) The words "hereof", "herein", "hereto" and "hereunder" and similar
words when used in a Loan Document shall refer to such Loan Document as a whole
and not to any particular provision thereof, and Section, schedule and exhibit
references contained therein shall refer to Sections thereof or schedules or
exhibits thereto unless otherwise expressly provided therein.
(d) The phrase "may not" is prohibitive and not permissive.
(e) Unless the context otherwise requires, words in the singular
number include the plural, and words in the plural include the singular.
(f) Unless specifically provided in a Loan Document to the contrary,
any reference to a time shall refer to such time in New York.
(g) Unless specifically provided in a Loan Document to the contrary,
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each means "to but excluding".
(h) References in any Loan Document to a fiscal period shall refer to
that fiscal period of Parent.
(i) The words "include" and "including", when used in each Loan
Document, shall mean that the same shall be included "without limitation",
unless otherwise expressly provided therein.
2. AMOUNT AND TERMS OF REVOLVING CREDIT LOANS AND LETTERS OF CREDIT
2.1. Revolving Credit Loans; Revolving Credit Notes
(a) Subject to the terms and conditions hereof, each Lender severally
(and not jointly) agrees to make revolving credit loans (each a "Revolving
Credit Loan" and, as the context may require, collectively with all other
Revolving Credit Loans of such Lender and with the Revolving Credit Loans of all
other Lenders, the "Revolving Credit Loans") to Parent from time to time during
the Parent Commitment Period, provided that immediately after giving effect
thereto (i) such Lender's Parent Credit Exposure would not exceed such Lender's
Parent Commitment Amount, and (ii) the Aggregate Parent Credit Exposure would
not exceed the Aggregate Parent Commitment Amount. During the Parent Commitment
Period, Parent may borrow, prepay in whole or in part and reborrow under the
Parent Commitment, all in accordance with the terms and conditions of this
Agreement. Subject to the provisions of Sections 2.3 and 3.3, at the option of
Parent, Revolving Credit Loans may be made as one or more (i) ABR Advances, (ii)
Eurodollar Advances or (iii) any combination thereof.
(b) The Revolving Credit Loans made by each Lender shall be evidenced
by a promissory note of Parent, substantially in the form of Exhibit B-1, with
appropriate insertions therein as to date and principal amount (each, as
indorsed or modified from time to time, a "Revolving Credit Note" and,
collectively with the Revolving Credit Notes of all other Lenders, the
"Revolving Credit Notes"), payable to the order of such Lender, dated the first
Borrowing Date, and in the stated principal amount equal to such Lender's Parent
Commitment Amount. The outstanding principal balance of the Revolving Credit
Loans shall be due and payable on the Parent Maturity Date.
2.2. Term Loans; Term Notes
(a) Subject to the terms and conditions hereof, each Lender severally
(and not jointly) agrees to make a term loan (each a "Term Loan" and, as the
context may require, collectively with all other Term Loans of all other
Lenders, the "Term Loans") to GP Canada on the GP Canada Borrowing Date,
provided that immediately after giving effect thereto (i) such Lender's GP
Canada Credit Exposure would not exceed such Lender's GP Canada Commitment
Amount, and (ii) the Aggregate GP Canada Credit Exposure would not exceed the
Aggregate GP Canada Commitment Amount. Subject to the provisions of Sections 2.3
and 3.3, at the option of GP Canada, Term Loans may be made as one or more (i)
ABR Advances, (ii) Eurodollar Advances or (iii) any combination thereof.
(b) The Term Loans made by each Lender shall be evidenced by a
promissory note of GP Canada, substantially in the form of Exhibit B-2, with
appropriate insertions therein as to date and principal amount (each, as
indorsed or modified from time to time, a "Term Note" and, collectively with the
Term Notes of all other Lenders, the "Term Notes"), payable to the order of such
Lender, dated the GP Canada Borrowing Date, and in the stated principal amount
equal to such Lender's GP Canada Commitment Amount. Subject to Section 2.2(c),
the aggregate outstanding principal balance of the Term Loans shall be payable
in twenty (20) quarterly principal payments, the first 19 of which shall be in
the amount of $187,500 each, payable on the first day of each April, July,
October and January, commencing October 1, 1998 and a 20th and final installment
on the GP Canada Maturity Date in an amount equal to the then outstanding
principal balance and all accrued and unpaid interest.
(c) Notwithstanding anything contained in this Agreement, except for
sums due and owing upon an Event of Default, GP Canada shall not be required to
repay or otherwise reduce more than 25% of the original aggregate principal
amount of any Term Loan pursuant to this Agreement prior to the GP Canada
Maturity Date (including amounts required to be repaid under Section 2.2(b)),
and the maximum amount to be applied to the repayment of any Term Loan shall be
25% of the original aggregate principal amount of such Term Loan, less the
aggregate principal amount of such Term Loan otherwise repaid pursuant to this
Agreement; provided, however, that (i) the foregoing shall not limit or in any
manner restrict the rights of the Agent and the Lenders to demand payment in
full of the Term Loans prior to the GP Canada Maturity Date upon an Event of
Default under this Agreement, (ii) in addition to the maximum amount required to
be paid by GP Canada pursuant to the foregoing provisions, GP Canada may, at its
option, make voluntary prepayments in accordance with Section 2.5 of this
Agreement, and (iii) GP Canada shall be required, on the GP Canada Maturity
Date, to pay all amounts that were not applied to repay the Term Loans pursuant
to the provisions of this subsection 2.2(c) together with the aggregate then
unpaid principal balance and all accrued and unpaid interest and other sums then
due and owing to the Lenders.
2.3. Procedure for Borrowing
(a) Parent may borrow under the applicable Parent Commitment on any
Business Day during the applicable Commitment Period, and the Term Loans shall
be made on the GP Canada Borrowing Date, in each case provided that the
applicable Borrower shall notify the Agent by the delivery of a Borrowing
Request signed by Parent in the case of the Parent Facility and signed by GP
Canada in the case of the GP Canada Facility. The Borrowing Request shall be
sent by telecopy and shall be irrevocable (confirmed promptly, and in any event
within five Business Days, by the delivery to the Agent of a Borrowing Request
manually signed by such Borrower) no later than: 11:00 a.m., three Business Days
prior to the requested Borrowing Date, in the case of Eurodollar Advances, or
either 11:00 a.m., one Business Day prior to the requested Borrowing Date, or
10:00 a.m. on the requested Borrowing Date in the case of ABR Advances,
specifying (A) the aggregate principal amount to be borrowed under the
applicable Commitment, (B) the requested Borrowing Date, (C) whether such
borrowing is to consist of one or more Eurodollar Advances, ABR Advances, or a
combination thereof, (D) if the borrowing is to consist of one or more
Eurodollar Advances, the length of the Interest Period for each such Eurodollar
Advance and (E) if all or any part of the applicable Revolving Credit Loan will
directly or indirectly be used by, or be for the benefit of, any Subsidiary
Guarantor, the name of such Subsidiary Guarantor. With respect to any one
Borrower, each (i) Eurodollar Advance to be made on a Borrowing Date, when
aggregated with all amounts to be converted to a Eurodollar Advance on such date
and having the same Interest Period as such first Eurodollar Advance, shall
equal no less than $500,000 or such amount plus a whole multiple of $100,000 in
excess thereof, and (ii) each ABR Advance made on each Borrowing Date shall
equal no less than $500,000 or such amount plus a whole multiple of $100,000 in
excess thereof or, if less, the Available Parent Commitment Amount in the case
of the Parent Facility.
(b) Upon receipt of each Borrowing Request, the Agent shall promptly
notify each Lender thereof. Subject to its receipt of the notice referred to in
the preceding sentence, each Lender will make available to the Agent for the
account of the applicable Borrower at the office of the Agent set forth in
Section 11.2 not later than 12:00 noon on the relevant Borrowing Date requested
by such Borrower, in funds immediately available to the Agent at such office,
the amount of its (i) Parent Commitment Percentage of the requested Revolving
Credit Loans and/or (ii) GP Canada Commitment Percentage of the requested Term
Loans. The amounts so made available to the Agent on such Borrowing Date will
then, subject to the satisfaction of the terms and conditions of this Agreement,
as determined by the Agent, be made available on such date to the applicable
Borrower by the Agent at the office of the Agent specified in Section 11.2 by
crediting an account of such Borrower on the books of such office with the
aggregate of said amounts received by the Agent.
(c) Unless the Agent shall have received prior notice from a Lender
(by telephone or otherwise, such notice to be promptly confirmed by telecopy or
other writing) that such Lender will not make available to the Agent such
Lender's applicable Commitment Percentage of the applicable Loans requested by
the applicable Borrower, the Agent may assume that such Lender has made such
share available to the Agent on the Borrowing Date in accordance with this
Section, provided that such Lender received notice of the requested Loans from
the Agent, and the Agent may, in reliance upon such assumption, make available
to the applicable Borrower on the Borrowing Date a corresponding amount. If and
to the extent such Lender shall not have so made its applicable Commitment
Percentage of such Loans available to the Agent, such Lender and the applicable
Borrower severally agree to pay to the Agent forthwith on demand such
corresponding amount (to the extent not previously paid by the other), together
with interest thereon for each day from the date such amount is made available
to the applicable Borrower to the date such amount is paid to the Agent, at a
rate per annum equal to, in the case of such Borrower, the applicable interest
rate set forth in Section 3.1 for ABR Advances, and, in the case of such Lender,
at a rate of interest per annum equal to the Federal Funds Rate for the first
three days after the due date of such payment until the date such payment is
received by the Agent and the Federal Funds Rate plus 2% thereafter. Such
payment by such Borrower, however, shall be without prejudice to its rights
against such Lender. If such Lender shall pay to the Agent such corresponding
amount, such amount so paid shall constitute such Lender's Revolving Credit Loan
and/or Term Loan, as the case may be as part of the Revolving Credit Loans
and/or Term Loans, as the case may be, for purposes of this Agreement, which
such Loan shall be deemed to have been made by such Lender on the Borrowing Date
applicable to such Loans.
(d) If a Lender makes a new Revolving Credit Loan to Parent on a
Borrowing Date on which Parent is to repay a Revolving Credit Loan from such
Lender, such Lender shall apply the proceeds of such new Revolving Credit Loan
to make such repayment, and only the excess of the proceeds of such new
Revolving Credit Loan over the Revolving Credit Loan being repaid need be made
available to the Agent.
2.4. Termination or Reduction of Parent Commitments and GP Canada
Credit Exposure
(a) Voluntary Reductions. The Parent shall have the right, upon at
least three Business Days' prior written notice to the Agent, (i) at any time
when the Aggregate Parent Credit Exposure shall be zero or at any time the
Parent elects to pay or to prepay the Revolving Credit Loans in their entirety,
to terminate the Parent Commitments of all of the Lenders, and (ii) at any time
and from time to time when the Aggregate Parent Commitment Amount shall exceed
the Aggregate Parent Credit Exposure, to permanently reduce the Aggregate Parent
Commitment Amount by a sum not greater than the amount of such excess, provided,
however, that each such partial reduction shall be in the amount of $5,000,000
or such amount plus a whole multiple of $1,000,000 in excess thereof.
(b) Mandatory Reductions Relating to Insurance. Subject to Section
2.2(c), the Aggregate Parent Commitment Amount and the Aggregate GP Canada
Credit Exposure, as the case may be, shall be permanently reduced by the
amounts, at the times and to the extent required by Section 7.5(b).
(c) Mandatory Reductions Relating to Dispositions. Subject to Section
2.2(c), the Aggregate Parent Commitment Amount and the Aggregate GP Canada
Credit Exposure, as the case may be, shall be permanently reduced by the
amounts, at the times and to the extent required by Section 8.4.
(d) Mandatory Reductions Relating to Capital Stock. Subject to Section
2.2(c), the Aggregate Parent Commitment Amount and the Aggregate GP Canada
Credit Exposure, as the case may be, shall be permanently reduced by the
amounts, at the times and to the extent the applicable Borrower issues any
additional Capital Stock other than in connection with, and as part of, the
Acquisition Cost of a Permitted Acquisition.
(e) In General. Each reduction of the Aggregate Parent Commitment
Amount and/or Aggregate GP Canada Credit Exposure, as the case may be, shall be
made by (i) in the case of the Parent Facility reducing each Lender's applicable
Commitment Amount by an amount equal to such Lender's applicable Commitment
Percentage of such reduction and (ii) in the case of the GP Canada Facility,
subject to Section 2.2(c), reducing each Lender's outstanding Term Loan by an
amount equal to such Lender's Commitment Percentage of such reduction.
Simultaneously with each reduction of the Aggregate Parent Commitment Amount
under this Section, Parent shall pay the Parent Commitment Fee accrued on the
amount by which the Aggregate Parent Commitment Amount has been reduced.
2.5. Prepayments of Loans
(a) Voluntary Prepayments. A Borrower may, at its option, prepay its
Loans without premium or penalty (but subject to Section 3.5), in full at any
time or in part from time to time by notifying the Agent in writing at least one
Business Day prior to the proposed prepayment date, in the case of Loans
consisting of ABR Advances and at least three Business Days prior to the
proposed prepayment date, in the case of Loans consisting of Eurodollar
Advances, specifying whether the Loans to be prepaid consist of ABR Advances,
Eurodollar Advances, or a combination thereof, the Loan to be prepaid, the
amount to be prepaid and the date of prepayment. Each such notice shall be
irrevocable and the amount specified in each such notice shall be due and
payable on the date specified, together with accrued interest to the date of
such payment on the amount prepaid. Upon receipt of such notice, the Agent shall
promptly notify each Lender thereof. Each partial prepayment of Loans pursuant
to this subsection shall be in an aggregate principal amount of $1,000,000 or
such amount plus a whole multiple of $500,000 in excess thereof, or, if less,
the outstanding principal balance of the Revolving Credit Loans or Term Loans,
as the case may be. After giving effect to any partial prepayment with respect
to Eurodollar Advances which were made (whether as the result of a borrowing or
a conversion) to such Borrower on the same date and which had the same Interest
Period, the outstanding principal balance of such Eurodollar Advances shall
exceed (subject to Section 3.3) $1,000,000 or such amount plus a whole multiple
of $100,000 in excess thereof.
(b) Mandatory Prepayments of Revolving Credit Loans Relating to
Termination of the Commitments and Reductions of the Aggregate Commitment
Amount. Upon the termination of the Parent Commitments of all of the Lenders,
Parent shall prepay the outstanding principal balance of all Revolving Credit
Loans and deposit into the Cash Collateral Account an amount which would cause
the balance on deposit in the Cash Collateral Account to equal or exceed an
amount equal to the Letter of Credit Exposure of all Lenders. Upon each
reduction of the Aggregate Parent Commitment Amount, if the Aggregate Parent
Credit Exposure would exceed the Aggregate Parent Commitment Amount as so
reduced, Parent shall (unless the Aggregate Parent Credit Exposure would not
exceed the Aggregate Parent Commitment Amount as so reduced) either (A) prepay
the applicable Revolving Credit Loans, or (B) make a deposit into the Cash
Collateral Account, or both, so that the Aggregate Parent Commitment Amount as
so reduced plus the balance on deposit in the Cash Collateral Account would
exceed the Aggregate Parent Credit Exposure. To the extent any mandatory
reduction of the Aggregate GP Canada Credit Exposure is required pursuant to
Section 2.4, subject to Section 2.2(c), such reduction shall be effected
pursuant to a mandatory prepayment of the Term Loans in an amount equal to the
amount of such reduction.
(c) In General. Simultaneously with each prepayment of a Loan, the
applicable Borrower shall prepay all accrued interest on the amount prepaid
through the date of prepayment and any amount required pursuant to Section 3.10
hereto. Provided no Default or Event of Default shall have occurred, the Parent
may specify the Loan to which any voluntary prepayment shall be applied. Unless
otherwise specified by the applicable Borrower, each prepayment of Loans shall
first be applied to ABR Advances. If any prepayment or any other payment is made
in respect of any Eurodollar Advance, in whole or in part, prior to the last day
of the applicable Interest Period, each Borrower, as applicable, agrees to
indemnify the Lenders in accordance with Section 3.5. Prepayments of the Term
Loans may not be reborrowed, shall permanently reduce the amount thereof and
shall be applied to the last maturing installments of such Term Loans in inverse
order of their respective maturities.
2.6. Use of Proceeds
(a) Parent agrees that the proceeds of the Revolving Credit Loans or
Letters of Credit shall be used solely, directly or indirectly, to (i) make
intercompany advances to Subsidiaries to repay the Existing Bank Debt, (ii)
finance in part the Learning Technologies Acquisition and to pay certain of the
fees and expenses in connection with such Learning Technologies Acquisition,
(iii) to finance in part additional Acquisitions by Parent or one or more of its
Subsidiaries, (iv) pay all of the Fees of Parent due hereunder, (v) pay the
reasonable out-of-pocket fees and expenses incurred by Parent in connection with
the Loan Documents and (vi) for Parent and the Subsidiary Guarantors' working
capital and general corporate purposes not inconsistent with the provisions
hereof. Notwithstanding anything to the contrary contained in any Loan Document,
Parent agrees that no part of the proceeds of any Revolving Credit Loan or
Letter of Credit will be used, directly or indirectly, for a purpose which
violates any law, including the provisions of Regulations T, U or X of the Board
of Governors of the Federal Reserve System, as amended.
(b) GP Canada agrees that the proceeds of the Term Loans shall be used
solely, directly or indirectly, to (i) finance in part the Learning Technologies
Acquisition as it relates to assets located in Canada and to pay certain of the
fees and expenses in connection with such Learning Technologies Acquisition,
(ii) pay all of the Fees of GP Canada due hereunder, and (iii) pay the
reasonable out-of-pocket fees and expenses incurred by GP Canada in connection
with the Loan Documents. Notwithstanding anything to the contrary contained in
any Loan Document, GP Canada agrees that no part of the proceeds of any Term
Loan will be used, directly or indirectly, for a purpose which violates any law,
including the provisions of Regulations T, U or X of the Board of Governors of
the Federal Reserve System, as amended.
2.7. Letter of Credit Sub-Facility
(a) Subject to the terms and conditions of this Agreement, the Issuing
Bank agrees, in reliance on the agreement of the other Lenders set forth in
Section 2.8, to issue standby letters of credit (the "Standby Letters of
Credit") or commercial (trade) letters of credit (the "Trade Letters of Credit"
and, together with the Standby Letters of Credit, and the letters of credit
currently outstanding (the "Existing L/C's")and issued by the Issuing Bank for
the account of Parent or Physics described on Schedule 2.7 hereto, the "Letters
of Credit") denominated in Dollars during the Parent Commitment Period for the
account of Parent, provided that, immediately after the issuance of each Letter
of Credit, (i) the Letter of Credit Exposure of all Lenders (whether or not the
conditions for drawing under any Letter of Credit have or may be satisfied)
would not exceed the Letter of Credit Commitment Amount, and (ii) the Aggregate
Parent Credit Exposure would not exceed the Aggregate Parent Commitment Amount.
Each Standby Letter of Credit shall have an expiration date which shall be not
later than the earlier of (i) 365 days after the date of issuance thereof or
(ii) sixty days before the Parent Maturity Date. Each Trade Letter of Credit
shall have an expiration date which shall be not later than the earlier of (i)
180 days after the date of issuance thereof (although any such Letter of Credit
shall be renewable for an additional 365 day period but in no event later than
the Parent Maturity Date) or (ii) sixty days before the Parent Maturity Date. No
Letter of Credit shall be issued if the Agent, or any Lender by notice to the
Agent no later than 1:00 p.m. one Business Day prior to the requested date of
issuance of such Letter of Credit, shall have determined that any condition set
forth in Sections 5 or 6 has not been satisfied.
(b) Each Letter of Credit shall be issued for the account of Parent in
support of an obligation of Parent or a Subsidiary (other than GP Canada) in
favor of a beneficiary who has requested the issuance of such Letter of Credit
as a condition to a transaction entered into in connection with the Parent, or
Subsidiary's ordinary course of business. Parent shall give the Agent a Letter
of Credit Request for the issuance of each Letter of Credit by 11:00 a.m., three
Business Days prior to the requested date of issuance. Each Letter of Credit
Request shall be accompanied by the Issuing Bank's standard Application and
Agreement for such Letter of Credit (each, a "Reimbursement Agreement") executed
by an Authorized Signatory of Parent, and shall specify (i) the beneficiary of
such Letter of Credit and the obligations of Parent or of a Subsidiary Guarantor
in respect of which such Letter of Credit is to be issued, (ii) Parent' proposal
as to the conditions under which a drawing may be made under such Letter of
Credit and the documentation to be required in respect thereof, (iii) the
maximum amount to be available under such Letter of Credit, and (iv) the
requested dates of issuance and expiration. Upon receipt of such Letter of
Credit Request from Parent, the Agent shall promptly notify the Issuing Bank and
each other Lender thereof. Each Letter of Credit shall be in form and substance
reasonably satisfactory to the Issuing Bank, with such provisions with respect
to the conditions under which a drawing may be made thereunder and the
documentation required in respect of such drawing as the Issuing Bank shall
reasonably require. Each Letter of Credit shall be used solely for the purposes
described therein. The Issuing Bank shall, on the proposed date of issuance and
subject to the terms and conditions of the Reimbursement Agreement and to the
other terms and conditions of this Agreement, issue the requested Letter of
Credit.
(c) Each payment by the Issuing Bank of a draft drawn under a Letter
of Credit shall give rise to an obligation on the part of Parent to reimburse
the Issuing Bank immediately for the amount thereof.
(d) Notwithstanding anything to the contrary contained herein or in
any Reimbursement Agreement, to the extent that the terms of this Agreement
shall be inconsistent with the terms of such Reimbursement Agreement, the terms
of this Agreement shall govern.
(e) It is expressly agreed that as to the Existing L/C's,
notwithstanding the fact that some of such L/C's may have been issued for the
account of Physics and were executed in connection with the Existing Bank Debt,
and notwithstanding the fact that such Existing L/C's were issued in connection
with the Existing Bank Debt, for purposes of this Agreement, Parent shall be
obligated for all reimbursement and other obligations in connection therewith as
if such Existing L/C's were issued pursuant to this Agreement (provided, that,
where Physics was the account party with respect to such Exisiting L/C's,
Physics shall nonethelsess remain obligated with Parent, on a joint and several
basis, in connection therefor). To the extent the Agent or the Issuing Bank
determines that the provisions of any documents executed in connection with the
Existing Bank Debt would be required to effect the intent of this subparagraph
2.7(e), such documents and provisions (but only such documents and provisions)
shall remain in full force and effect as long as the Agent or the Issuing Bank
deems necessary to effect the provisions of htis subparagraph 2.7(e).;
2.8. Letter of Credit Participation and Funding Commitments
(a) Each Lender hereby unconditionally, irrevocably and severally (and
not jointly) for itself only and without any notice to or the taking of any
action by such Lender, takes an undivided participating interest in the
obligations of the Issuing Bank under and in connection with each Letter of
Credit in an amount equal to such Lender's Parent Commitment Percentage of the
amount of such Letter of Credit. Each Lender shall be liable to the Issuing Bank
for its Parent Commitment Percentage of the unreimbursed amount of any draft
drawn and honored under each Letter of Credit. Each Lender shall also be liable
for an amount equal to the product of its Parent Commitment Percentage and any
amounts paid by Parent pursuant to Section 2.7(c) and 2.9 that are subsequently
rescinded or avoided, or must otherwise be restored or returned. Such
liabilities shall be unconditional and without regard to the occurrence of any
Default or Event of Default or the compliance by Parent or GP Canada with any of
its obligations under the Loan Documents.
(b) The Issuing Bank will promptly notify the Agent, and the Agent
will promptly notify each Lender (which notice shall be promptly confirmed in
writing) of the date and the amount of any draft presented under any Letter of
Credit with respect to which full reimbursement of payment is not made by Parent
as provided in Section 2.7(c), and forthwith upon receipt of such notice, such
Lender (other than the Issuing Bank in its capacity as a Lender) shall make
available to the Agent for the account of the Issuing Bank its Parent Commitment
Percentage of the amount of such unreimbursed draft at the office of the Agent
specified in Section 11.2, in lawful money of the United States and in
immediately available funds, before 4:00 p.m., on the day such notice was given
by the Agent, if the relevant notice was given by the Agent at or prior to 1:00
p.m., on such day, and before 12:00 noon, on the next Business Day, if the
relevant notice was given by the Agent after 1:00 p.m., on such day. The Agent
shall distribute the payments made by each such Lender (other than the Issuing
Bank in its capacity as a Lender) pursuant to the immediately preceding sentence
to the Issuing Bank promptly upon receipt thereof in like funds as received.
Each such Lender shall indemnify and hold harmless the Agent and the Issuing
Bank from and against any and all losses, liabilities (including liabilities for
penalties), actions, suits, judgments, demands, costs and expenses (including
reasonable attorneys' fees and expenses and an administration fee of not less
than $100 payable to the Issuing Bank as the issuer of the relevant Letter of
Credit) resulting from any failure on the part of such Lender to provide, or
from any delay in providing, the Agent with such Lender's Commitment Percentage
of the amount of any payment made by the Issuing Bank under a Letter of Credit
in accordance with this subsection (b) (except in respect of losses, liabilities
or other obligations suffered by the Issuing Bank resulting from the gross
negligence or willful misconduct of the Issuing Bank). If a Lender does not make
available to the Agent when due such Lender's Parent Commitment Percentage of
any unreimbursed payment made by the Issuing Bank under a Letter of Credit
(other than payments made by the Issuing Bank by reason of its gross negligence
or willful misconduct), such Lender shall be required to pay interest to the
Agent for the account of the Issuing Bank on such Lender's Parent Commitment
Percentage of such payment at a rate of interest per annum equal to the Federal
Funds Rate for the first three days after the due date of such payment until the
date such payment is received by the Agent and the Federal Funds Rate plus 2%
thereafter. The Agent shall distribute such interest payments to the Issuing
Bank upon receipt thereof in like funds as received.
(c) Whenever the Agent is reimbursed by Parent, for the account of the
Issuing Bank, for any payment under a Letter of Credit and such payment relates
to an amount previously paid by a Lender in respect of its Parent Commitment
Percentage of the amount of such payment under such Letter of Credit, the Agent
(or the Issuing Bank, to the extent that the Agent has paid the same to the
Issuing Bank) will pay over such payment to such Lender (i) before 4:00 p.m. on
the day such payment from Parent is received, if such payment is received at or
prior to 1:00 P.M. on such day, or (ii) before 12:00 noon on the next succeeding
Business Day, if such payment from Parent is received after 12:00 p.m. on such
day.
2.9. Absolute Obligation With Respect to Letter of Credit Payments
(a) The payment of drafts under any Letter of Credit shall be made in
accordance with the terms of such Letter of Credit and the Uniform Customs and
Practice for Documentary Credits of the International Chamber of Commerce No.
500, as adopted or amended from time to time. The Issuing Bank shall be entitled
to honor any drafts and accept any documents presented to it by the beneficiary
of such Letter of Credit in accordance with the terms of such Letter of Credit
and believed by the Issuing Bank in good faith to be genuine. The Issuing Bank
shall not have any duty to inquire as to the accuracy or authenticity of any
draft or other drawing documents which may be presented to it, but shall be
responsible only to determine in accordance with customary commercial practices
that the documents which are required to be presented before payment or
acceptance of a draft under any Letter of Credit have been delivered and that
they comply on their face with the requirements of that Letter of Credit.
(b) Parent's obligation to reimburse the Agent for the account of the
Issuing Bank in respect of a Letter of Credit for each payment under or in
respect of such Letter of Credit shall be absolute and unconditional under any
and all circumstances and irrespective of any set-off, counterclaim or defense
to payment which Parent may have or have had against the beneficiary of such
Letter of Credit, the Agent, the Issuing Bank, as issuer of such Letter of
Credit, any Lender or any other Person, including any defense based on the
failure of any drawing to conform to the terms of such Letter of Credit, its
lack of knowledge of the issuance of such Letter of Credit, any drawing document
proving to be forged, fraudulent or invalid, or the legality, validity,
regularity or enforceability of such Letter of Credit; provided, that, with
respect to any Letter of Credit, the foregoing shall not relieve the Issuing
Bank of any liability it may have to Parent for any actual damages sustained by
Parent arising from a wrongful payment under such Letter of Credit made as a
result of the Issuing Bank's gross negligence or willful misconduct.
2.10. Payments
(a) Each payment, including each prepayment, of principal and interest
on the Loans, of the Parent Commitment Fee, the Letter of Credit Commissions and
of all of the other fees to be paid to the Agent and the Lenders in connection
with this Agreement (the Parent Commitment Fee, the Letter of Credit Commissions
and the additional Letter of Credit fees and the Letter of Credit fronting fees
referred to in Section 3.2(b), together with all of such other fees, being
sometimes hereinafter collectively referred to as the "Fees") shall be made by
the applicable Borrower prior to 12:00 noon on the date such payment is due to
the Agent for the account of the applicable Lenders at the Agent's office
specified in Section 11.2, in each case in lawful money of the United States, in
immediately available funds and without set-off or counterclaim. As between a
Borrower and the Lenders, any payment by a Borrower to the Agent for the account
of the Lenders shall be deemed to be payment by such Borrower to the Lenders.
The failure of a Borrower to make any such payment by such time shall not
constitute a Default, provided that such payment is made on such due date, but
any such payment made after 12:00 noon on such due date shall be deemed to have
been made on the next Business Day for the purpose of calculating interest on
amounts outstanding on the Loans. Subject to Section 9.2(b), promptly upon
receipt by the Agent of each payment, including each prepayment, pursuant to
this Section, the Agent shall remit such payment in like funds as received as
follows: (a) in the case of the Parent Facility, (i) in the case of the Parent
Commitment Fees and the Letter of Credit Commissions, to each Lender according
to its Parent Commitment Percentage, and (ii) in the case of principal and
interest on the Revolving Credit Loans, to each Lender pro rata according to its
Parent Outstanding Percentage of the amount of principal or interest, as the
case may be, which is then due and payable to the Lenders on account of
Revolving Credit Loans, (b) in the case of the GP Canada Facility, to each
Lender according to its GP Canada Outstanding Percentage of the amount of
principal or interest, as the case may be, which is due and payable to the
Lenders on account of Term Loans.
(b) If any payment hereunder, under the Notes or under any
Reimbursement Agreement shall be due and payable on a day which is not a
Business Day, the due date thereof (except as otherwise provided in the
definition of Interest Period) shall be extended to the next Business Day and
(except with respect to payments in respect of the Fees) interest shall be
payable at the applicable rate specified herein during such extension, provided,
however that if such next Business Day is after (i) the Parent Maturity Date in
the case of payments in connection with the Parent Facility, or (ii) the GP
Canada Maturity Date in the case of payments in connection with the GP Canada
Facility, any such payment shall be due on the immediately preceding Business
Day. However, in the case of the GP Canada Facility, if the immediately
preceding Business Day is not at least five years and one day after the GP
Canada Borrowing Date, the payment(s) shall be due and payable on the next
Business Day which is at least five years and one day after the GP Canada
Borrowing Date.
2.11. Cash Collateral Account
At, or at any time before, the time Parent shall be required to make a
deposit into the Cash Collateral Account, the Agent shall establish and maintain
at its offices at 1185 Avenue of the Americas, New York, New York in the name of
the Parent but under the sole dominion and control of the Agent, a separate cash
collateral account designated as "GP Strategies Corporation Cash Collateral
Account" (collectively the "Cash Collateral Account"). Parent may from time to
time make one or more deposits into the Cash Collateral Account. Parent hereby
pledges to the Agent for its benefit, the benefit of the Issuing Bank and the
pro rata benefit of the Lenders, a Lien on and security interest in the Cash
Collateral Account and all sums at any time and from time to time on deposit
therein (the Cash Collateral Account, together with all sums on deposit therein,
being sometimes hereinafter collectively referred to as the "Cash Collateral"),
as collateral security for the prompt payment in full when due, whether at
stated maturity, by acceleration or otherwise of all the Parent Obligations.
Parent agrees that at any time and from time to time at its expense, it will
promptly execute and deliver to the Agent any further instruments and documents,
and take any further actions, that may be necessary or that the Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Agent to exercise and
enforce its rights and remedies hereunder with respect to any Cash Collateral.
Parent agrees that it will not (i) sell or otherwise dispose of any of the Cash
Collateral, or (ii) create or permit to exist any Lien upon any of the Cash
Collateral, except for Permitted Liens. Parent hereby authorizes the Agent,
promptly after each drawing under any Letter of Credit shall become due and
payable, to apply any and all cash on deposit in the Cash Collateral Account
towards the reimbursement of the Issuing Bank for all sums paid in respect of
such drawing, and all other Parent Obligations which shall then be due and
owing.
2.12. Defaulting Lender
(a) Notwithstanding anything to the contrary herein, in the event any
Lender (x) has refused (which refusal constitutes a breach by such Lender of its
obligations under this Agreement) to make available its portion of any Loan or
(y) notifies either the Agent or any Borrower that it does not intend to make
available its portion of any Loan (if the actual refusal would constitute a
breach by such Lender of its obligations under this Agreement) (each a "Lender
Default"), all rights and obligations hereunder of such Lender (a "Defaulting
Lender") as to which a Lender Default is in effect and of the other parties
hereto shall be modified to the extent of the express provisions of this Section
2.12 while such Lender Default remains in effect.
(b) Loans shall be incurred pro rata from Lenders (the "Non-Defaulting
Lenders") which are not Defaulting Lenders based on their respective Commitment
Percentages with respect to such Loans, and no Commitment Percentage of any
Lender or any pro rata share of any Loans required to be advanced by any Lender
shall be increased as a result of such Lender Default. Amounts received in
respect of principal of any type of Loans shall be applied to reduce the
applicable Loans of each Lender pro rata based on (i) with respect to the Parent
Facility, the Parent Outstanding Percentage at the time of such application and
(ii) with respect to the GP Canada Facility, subject to Section 2.2(c), the GP
Canada Outstanding Percentage at the time of such application; provided, that
such amount shall not be applied to any Loans of a Defaulting Lender at any time
when, and to the extent that, the aggregate amount of Loans of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Loans then outstanding.
(c) A Defaulting Lender shall not be entitled to give instructions to
the Agent or to approve, disapprove, consent to or vote on any matters relating
to this Agreement and the other Loan Documents. All amendments, waivers and
other modifications of this Agreement and the other Loan Documents may be made
without regard to a Defaulting Lender and, for purposes of the definition of
"Required Lenders", a Defaulting Lender shall be deemed not to be a Lender and
not to have Loans outstanding.
(d) Other than as expressly set forth in this Section 2.12, the rights
and obligations of a Defaulting Lender (including, without limitation, the
obligation to indemnify the Agent) and the other parties hereto shall remain
unchanged. To the extent the Borrower incurs any costs directly related to a
repayment under Section 2.3(c), such Defaulting Lender shall reimburse such
Borrower for all such costs. Nothing in this Section 2.12 shall be deemed to
release any Defaulting Lender from its obligations under this Agreement and the
other Loan Documents, shall alter such obligations, shall operate as a waiver of
any default by such Defaulting Lender hereunder, or shall prejudice any rights
which any Borrower, the Agent or any Lender may have against any Defaulting
Lender as a result of any default of such Defaulting Lender hereunder.
(e) In the event a Defaulting Lender cures to the satisfaction of the
Agent the breach which caused a Lender to become a Defaulting Lender, such
Defaulting Lender shall no longer be a Defaulting Lender and shall be treated as
a Lender under this Agreement.
3. INTEREST, FEES, YIELD PROTECTIONS, ETC.
3.1. Interest Rate and Payment Dates
(a) Prior to Maturity. Except as otherwise provided in Section 3.1(b)
and 3.1(c), prior to maturity, the Revolving Credit Loans and Term Loans shall
bear interest on the outstanding principal balance thereof at the applicable
interest rate or rates per annum set forth below:
ADVANCES RATE
Each Parent ABR Advance Alternate Base Rate plus
the Applicable Margin.
Each GP Canada ABR Advance Alternate Base Rate.
Each Parent Eurodollar Eurodollar Rate for the
Advance applicable Interest Period plus
the Applicable Margin.
Each GP Canada Eurodollar Eurodollar Rate for the
Advance applicable Interest Period plus 2%.
(b) Late Charges. Upon the occurrence and during the continuance of
an Event of Default, the unpaid principal balance of the Revolving Credit Loans
and Term Loans shall bear interest, payable on demand, at a rate per annum
(whether before or after the entry of a judgment thereon) equal to 2% plus the
rate which would otherwise be applicable under Section 3.1(a), and any overdue
Reimbursement Obligation, interest or other amount payable under the Loan
Documents shall bear interest, payable on demand, at a rate per annum (whether
before or after the entry of a judgment thereon) equal to the Alternate Base
Rate plus the Applicable Margin applicable to ABR Advances plus 2%.
(c) Highest Lawful Rate. At no time shall the interest rate payable
on the Loans of any Lender, together with the Fees and all other amounts payable
under the Loan Documents to such Lender, to the extent the same are construed to
constitute interest, exceed the Highest Lawful Rate applicable to such Lender.
If with respect to any Lender for any period during the term of this Agreement,
any amount paid to such Lender under the Loan Documents, to the extent the same
shall (but for the provisions of this Section) constitute or be deemed to
constitute interest, would exceed the maximum amount of interest permitted by
the Highest Lawful Rate applicable to such Lender during such period (such
amount being hereinafter referred to as an "Unqualified Amount"), then (i)
subject to Section 2.2(c), such Unqualified Amount shall be applied or shall be
deemed to have been applied as a prepayment of the Loans of such Lender, and
(ii) if in any subsequent period during the term of this Agreement, all amounts
payable under the Loan Documents to such Lender in respect of such period which
constitute or shall be deemed to constitute interest shall be less than the
maximum amount of interest permitted by the Highest Lawful Rate applicable to
such Lender during such period, then the applicable Borrower shall pay to such
Lender, as interest and not in repayment of principal, in respect of such period
an amount (each a "Compensatory Interest Payment") equal to the lesser of (x) a
sum which, when added to all such amounts, would equal the maximum amount of
interest permitted by the Highest Lawful Rate applicable to such Lender during
such period, and (y) an amount equal to the Unqualified Amount less all other
Compensatory Interest Payments made in respect thereof.
(d) Interest Act Compliance. For purpose of the Interest Act (Canada),
(i) whenever any interest or fee under this Agreement is calculated using a rate
based on a year of 360 days or 365 days, as the case may be, the rate determined
pursuant to such calculation, when expressed as an annual rate, is equivalent to
(x) the applicable rate based on a year of 360 days or 365 days, as the case may
be, (y) multiplied by the actual number of days in the calendar year in which
the period for which such interest or fee is payable (or compounded) ends, and
(z) divided by 360 or 365, as the case may be, (ii) the principle of deemed
reinvestment of interest does not apply to any interest calculation under this
Agreement, and (iii) the rates of interest stipulated in this Agreement are
intended to be nominal rates and not effective rates or yields.
(e) In General. Interest on ABR Advances and on Eurodollar Advances
shall be calculated on the basis of a 360-day year, in each case, for the actual
number of days elapsed. Except as otherwise provided in Section 3.1(b), interest
shall be payable in arrears on each Interest Payment Date and upon each payment
(including prepayment) of the Loans. Any change in the interest rate on the
Loans resulting from a change in the Alternate Base Rate or reserve requirements
shall become effective as of the opening of business on the day on which such
change shall become effective. The Agent shall, as soon as practicable, notify
each Borrower and the Lenders of the effective date and the amount of each such
change in the Fleet Rate, but any failure to so notify shall not in any manner
affect the obligation of Parent and GP Canada to pay interest on the Loans in
the amounts and on the dates required. Each determination of the Alternate Base
Rate or a Eurodollar Rate by the Agent pursuant to this Agreement shall be
conclusive and binding on all parties hereto absent manifest error. Each
Borrower acknowledges that to the extent interest payable on ABR Advances is
based on the Fleet Rate, such rate is only one of the bases for computing
interest on loans made by the Lenders, and by basing interest payable on ABR
Advances on the Fleet Rate, the Lenders have not committed to charge, and the
Borrowers have not in any way bargained for, interest based on a lower or the
lowest rate at which the Lenders may now or in the future make loans to other
borrowers.
3.2. Fees
(a) Parent Commitment Fee. Parent agrees to pay to the Agent, for the
account of the Lenders in accordance with each Lender's Parent Commitment
Percentage, a fee (the "Parent Commitment Fee"), during the Parent Commitment
Period, at a rate per annum equal to the Applicable Fee Percentage on the
average daily Available Parent Commitment Amount. The Parent Commitment Fee
shall be payable quarterly in arrears on the last day of each March, June,
September and December of each year, commencing on the first such day following
the Effective Date, and ending on the date that the Parent Commitments shall
expire or otherwise terminate. The Parent Commitment Fee shall be calculated on
the basis of a 360 day year for the actual number of days elapsed.
(b) Letter of Credit Commissions; Fronting Fees and Additional Fees.
Parent agrees to pay to (i) the Agent, for the account of the Lenders in
accordance with each Lender's Parent Commitment Percentage, commissions (the
"Letter of Credit Commissions") with respect to the Letters of Credit for the
period from and including the date of issuance of each thereof to and including
the expiration date thereof, at a rate per annum equal to (x) with respect to
Standby Letters of Credit, the Applicable Fee Percentage applicable thereto in
effect on the date of issuance thereof, and (y) with respect to Trade Letters of
Credit the Applicable Fee Percentage applicable thereto (but in no event less
than $75) in effect on the date of issuance thereof, in each case on the average
daily maximum amount available under any contingency to be drawn under such
Letter of Credit, and (ii) to the Issuing Bank for its own account, (x) a Letter
of Credit fronting fee in an amount equal to the original face amount of each
Letter of Credit multiplied by one eighth of one percent (1/8%) per annum,
payable upon issuance of each such Letter of Credit, and (y) its standard fees
and charges customarily charged to customers similar to Parent with respect to
any Letter of Credit. The Letter of Credit Commissions shall be (A) calculated
on the basis of a 360-day year for the actual number of days elapsed and (B)
payable quarterly in arrears on the last day of each March, June, September and
December of each year and on the Parent Maturity Date.
(c) Agent's Fees. The Borrowers, on a joint and several basis, agree
to pay to the Agent, for its own account, such other fees as have been agreed to
in writing by one or more Borrower and the Agent.
3.3. Conversions
(a) A Borrower may elect from time to time to convert one or more of
its Eurodollar Advances to ABR Advances by giving the Agent at least one
Business Day's prior irrevocable notice of such election, specifying the Advance
to be converted, provided, that any such conversion of Eurodollar Advances shall
only be made on the last day of the Interest Period applicable thereto. In
addition, a Borrower may elect from time to time to convert its (i) ABR Advances
to Eurodollar Advances and (ii) Eurodollar Advances to new Eurodollar Advances
by selecting a new Interest Period therefor, in each case by giving the Agent at
least three Business Days' prior irrevocable notice of such election, in the
case of a conversion to Eurodollar Advances, specifying the amount to be so
converted and the initial Interest Period relating thereto, provided that any
such conversion of ABR Advances to Eurodollar Advances shall only be made on a
Business Day and any such conversion of Eurodollar Advances to new Eurodollar
Advances shall only be made on the last day of the Interest Period applicable to
the Eurodollar Advances which are to be converted to such new Eurodollar
Advances. Each such notice shall be irrevocable and shall be given by the
delivery by telecopy of a Notice of Conversion (confirmed promptly, and in any
event within five Business Days), by the delivery to the Agent of a Notice of
Conversion manually signed by the applicable Borrower. The Agent shall promptly
provide the applicable Lenders with notice of each such election. Advances may
be converted pursuant to this Section in whole or in part, provided that the
amount to be converted by a Borrower to each Eurodollar Advance, when aggregated
with any Eurodollar Advance to be made to such Borrower on such date in
accordance with Section 2.3 and having the same Interest Period as such first
Eurodollar Advance, shall equal no less than $1,000,000 or such amount plus a
whole multiple of $100,000 in excess thereof.
(b) Notwithstanding anything in this Agreement to the contrary, upon
the occurrence and during the continuance of a Default or an Event of Default,
no Borrower shall have any right to elect to convert any existing ABR Advance to
a new Eurodollar Advance or to convert any existing Eurodollar Advance to a new
Eurodollar Advance. In such event, all ABR Advances shall be automatically
continued as ABR Advances and all Eurodollar Advances shall be automatically
converted to ABR Advances on the last day of the Interest Period applicable to
such Eurodollar Advance.
(c) Each conversion shall be effected by each Lender by reflecting the
Type of Loan from the Advance being converted to the new ABR Advance or
Eurodollar Advance, as the case may be, (it being understood that any such
conversion shall not constitute a borrowing. Each conversion of an Advance does
not reflect a repayment of the converted Advance or an additional borrowing, but
a continuation of the original obligation in full force and effect.
3.4. Concerning Interest Periods
Notwithstanding any other provision of any Loan Document:
(a) If the applicable Borrower shall have failed to elect a Eurodollar
Advance under Section 2.3 or 3.3, as the case may be, in connection with any
borrowing of new Loans or expiration of an Interest Period with respect to any
existing Eurodollar Advance, the amount of the Loans subject to such borrowing
or such existing Eurodollar Advance shall thereafter be a Eurodollar Advance for
one or more Interest Periods of one month until such time, if any, as a new
Eurodollar Advance shall have been elected pursuant to Section 3.3.
(b) No Interest Period selected in respect of the borrowing or
conversion of any Eurodollar Advance shall end after the Parent Maturity Date in
the case of the Parent Facility or the GP Canada Maturity Date in the case of
the GP Canada Facility.
(c) The Borrowers shall not be permitted to have more than twenty
Eurodollar Advances outstanding at any one time, it being agreed that each
borrowing of a Eurodollar Advance pursuant to a single Borrowing Request shall
constitute the making of one Eurodollar Advance for the purpose of calculating
such limitation.
3.5. Indemnification for Loss
Notwithstanding anything contained herein to the contrary, if a
Borrower shall fail to borrow or convert on a Borrowing Date or Conversion Date
after it shall have given notice to do so in which it shall have requested a
Eurodollar Advance, or if a Eurodollar Advance shall be terminated for any
reason prior to the last day of the Interest Period applicable thereto, or if,
while a Eurodollar Advance is outstanding, any repayment or prepayment of such
Eurodollar Advance is made for any reason (including as a result of acceleration
or illegality) on a date which is prior to the last day of the Interest Period
applicable thereto, such Borrower agrees to indemnify each Lender against, and
to pay on demand directly to such Lender, any loss or expense suffered by such
Lender as a result of such failure to borrow or convert, termination, repayment
or prepayment, including an amount, if greater than zero, equal to:
A x (B-C) x D
360
where:
"A" equals such Lender's pro rata share of the Affected Principal Amount;
"B" equals the Eurodollar Rate (expressed as a decimal), applicable to such
Eurodollar Advances;
"C" equals the Eurodollar Rate (expressed as a decimal), in effect on or about
the first day of the applicable Remaining Interest Period, based on the
applicable rates offered or bid, as the case may be, on or about such date, for
deposits in an amount equal approximately to such Lender's pro rata share of the
Affected Principal Amount with an Interest Period equal approximately to the
applicable Remaining Interest Period, as determined by such Lender;
"D" equals the number of days from and including the first day of the applicable
Remaining Interest Period to but excluding the last day of such Remaining
Interest Period;
and any other out-of-pocket loss or expense (including any internal processing
charge customarily charged by such Lender) suffered by such Lender in connection
with such Eurodollar Advance, including in liquidating or employing deposits
acquired to fund or maintain the funding of its pro rata share of the Affected
Principal Amount, or redeploying funds prepaid or repaid, in amounts which
correspond to its pro rata share of the Affected Principal Amount. Each
determination by the Agent or a Lender pursuant to this Section shall be
conclusive and binding on each Borrower absent manifest error.
3.6. Capital Adequacy
If the amount of capital required or expected to be maintained by any
Lender or the Issuing Bank or any Person directly or indirectly owning or
controlling such Lender or the Issuing Bank (each a "Control Person"), shall be
affected by the occurrence of a Regulatory Change and such Lender or the Issuing
Bank shall have determined that such Regulatory Change shall have had or will
thereafter have the effect of reducing (i) the rate of return on such Lender's,
the Issuing Bank's or such Control Person's capital, or (ii) the asset value to
such Lender, the Issuing Bank or such Control Person of the Revolving Credit
Loans made or maintained by such Lender, or of the Reimbursement Obligations or
any participation therein, in any case to a level below that which such Lender,
the Issuing Bank or such Control Person could have achieved or would thereafter
be able to achieve but for such Regulatory Change (after taking into account
such Lender's, the Issuing Bank's or such Control Person's policies regarding
capital adequacy) by an amount deemed by such Lender or the Issuing Bank to be
material to such Lender, the Issuing Bank or Control Person, then, within ten
days after demand by such Lender or the Issuing Bank, each Borrower shall pay to
such Lender, the Issuing Bank or such Control Person such additional amount or
amounts as shall be sufficient to compensate such Lender, the Issuing Bank or
such Control Person, as the case may be, for such reduction.
3.7. Reimbursement for Increased Costs
If any Lender, the Agent or the Issuing Bank shall determine that a
Regulatory Change:
(a) does or shall subject it to any Taxes of any kind whatsoever with
respect to any Eurodollar Advances or its obligations under this Agreement to
make Eurodollar Advances, or change the basis of taxation of payments to it of
principal, interest or any other amount payable hereunder in respect of its
Eurodollar Advances, or impose on the Agent, the Issuing Bank or such Lender any
other condition regarding the Letters of Credit including any Taxes required to
be withheld from any amounts payable under the Loan Documents (except for, in
each case, imposition of, or change in the rate of, Tax on the Income of such
Lender); or
(b) does or shall impose, modify or make applicable any
reserve, special deposit, compulsory loan, assessment, increased cost or similar
requirement against assets held by, or deposits of, or advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
such Lender in respect of its Eurodollar Advances which is not otherwise
included in the determination of a Eurodollar Rate, or against any Letters of
Credit issued by the Issuing Bank or participated in by any Lender;
and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing, converting or maintaining its Eurodollar Advances or its
commitment to make such Eurodollar Advances, or to reduce any amount receivable
hereunder in respect of its Eurodollar Advances, or to increase the cost to the
Issuing Bank of issuing or maintaining the Letters of Credit or the cost to any
Lender of participating therein or the cost to the Agent or the Issuing Bank of
performing its respective functions hereunder with respect to the Letters of
Credit, then, in any such case, each Borrower shall pay such Lender, the Agent,
or the Issuing Bank, as the case may be, within ten days after demand therefor,
such additional amounts as is sufficient to compensate such Lender, the Issuing
Bank or the Agent, as the case may be, for such additional cost or reduction in
such amount receivable which such Lender, the Issuing Bank or the Agent, as the
case may be, deems to be material as determined by such Lender, the Issuing Bank
or the Agent, as the case may be; provided, however, that nothing in this
Section shall require the Borrowers to indemnify the Lenders, the Agent, or the
Issuing Bank, as the case may be, with respect to withholding Taxes for which
the Borrowers have no obligation under Section 3.10. No failure by any Lender or
the Agent, or the Issuing Bank to demand, and no delay in demanding,
compensation for any increased cost shall constitute a waiver of its right to
demand such compensation at any time. A statement setting forth the calculations
of any additional amounts payable pursuant to this Section submitted by a
Lender, the Agent or the Issuing Bank, as the case may be, to a Borrower shall
be conclusive absent manifest error.
3.8. Illegality of Funding
Notwithstanding any other provision hereof, if any Lender shall
reasonably determine that any law, regulation, treaty or directive, or any
change therein or in the interpretation or application thereof, shall make it
unlawful for such Lender to make or maintain any Eurodollar Advance as
contemplated by this Agreement, such Lender shall promptly notify each Borrower
and the Agent thereof, and (i) the commitment of such Lender to make such
Eurodollar Advances or convert ABR Advances to Eurodollar Advances shall
forthwith be suspended, (ii) such Lender shall fund its portion of each
requested Eurodollar Advance as an ABR Advance and (iii) such Lender's Loans
then outstanding as such Eurodollar Advances, if any, shall be converted
automatically to ABR Advances on the last day of the then current Interest
Period applicable thereto or at such earlier time as may be required by law. If
the commitment of any Lender with respect to Eurodollar Advances is suspended
pursuant to this Section and such Lender shall have obtained actual knowledge
that it is once again legal for such Lender to make or maintain Eurodollar
Advances, such Lender shall promptly notify the Agent and each Borrower thereof
and, upon receipt of such notice by each of the Agent and each Borrower, such
Lender's commitment to make or maintain Eurodollar Advances shall be reinstated.
3.9. Substituted Interest Rate
In the event that (i) the Agent shall have determined (which
determination shall be conclusive and binding upon each Borrower) that by reason
of circumstances affecting the interbank eurodollar market either adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate applicable
pursuant to Section 3.1 or (ii) the Required Lenders shall have notified the
Agent that they have determined (which determination shall be conclusive and
binding on each Borrower) that the applicable Eurodollar Rate will not
adequately and fairly reflect the cost to such Lenders of maintaining or funding
loans bearing interest based on such Eurodollar Rate, with respect to any
portion of the Loans that a Borrower has requested be made as Eurodollar
Advances or Eurodollar Advances that will result from the requested conversion
of any portion of the Advances into or of Eurodollar Advances (each, an
"Affected Advance"), the Agent shall promptly notify each Borrower and the
Lenders (by telephone or otherwise, to be promptly confirmed in writing) of such
determination, on or, to the extent practicable, prior to the requested
Borrowing Date or Conversion Date for such Affected Advances. If the Agent shall
give such notice, (a) any Affected Advances shall be made as ABR Advances, (b)
the Advances (or any portion thereof) that were to have been converted to
Affected Advances shall be converted to ABR Advances and (c) any outstanding
Affected Advances shall be converted, on the last day of the then current
Interest Period with respect thereto, to ABR Advances. Until any notice under
clauses (i) or (ii), as the case may be, of this Section has been withdrawn by
the Agent (by notice to each Borrower promptly upon either (x) the Agent having
determined that such circumstances affecting the interbank eurodollar market no
longer exist and that adequate and reasonable means do exist for determining the
Eurodollar Rate pursuant to Section 3.1 or (y) the Agent having been notified by
such Required Lenders that circumstances no longer render the Advances (or any
portion thereof) Affected Advances, no further Eurodollar Advances shall be
required to be made by the Lenders, nor shall any Borrower have the right to
convert all or any portion of the Loans to or as Eurodollar Advances.
3.10. Taxes
(a) Payments to be Free and Clear. Except as otherwise expressly
required by applicable law, all payments by each Credit Party under the Loan
Documents to or for the account of the Agent, the Issuing Bank or any Lender
(each, an "Indemnified Tax Person") shall be made free and clear of, and without
any deduction or withholding for or on account of, any and all present or future
income, stamp or other taxes, levies, imposts, duties, fees, assessments,
deductions, withholdings, or other charges of whatever nature, now or hereafter
imposed, levied, collected, withheld, or assessed by any jurisdiction, or by any
department, agency, state, province or other political subdivision thereof or
therein (collectively, "Taxes"), excluding as to any Indemnified Tax Person, (i)
a Tax on the Income imposed on such Indemnified Tax Person and (ii) any
interest, fees, additions to tax or penalties for late payment thereof (each
such nonexcluded Tax, an "Indemnified Tax"). For purposes hereof, "Tax on the
Income" shall mean, as to any Person, a Tax imposed by one of the following
jurisdictions or by any political subdivision or taxing authority thereof: (i)
the United States, (ii) Canada, (iii) the jurisdiction in which such Person is
organized, (iv) the jurisdiction in which such Person's principal office or
lending offices are located; which Tax is an income tax or franchise tax imposed
on all or part of the net income or net profits of such Person or which Tax
represents interest, fees, or penalties for late payment of such an income tax
or franchise tax.
(b) Grossing Up of Payments. If any Credit Party or any other Person
is required by any law, rule, regulation, order, directive, treaty or guideline
to make any deduction or withholding (which deduction or withholding would
constitute an Indemnified Tax) from any amount required to be paid by any Credit
Party to or on behalf of an Indemnified Tax Person under any Loan Document, then
(i) such Credit Party shall pay such Indemnified Tax before the date on which
penalties attach thereto, such payment to be made for its own account (if the
liability to pay is imposed on such Credit Party) or on behalf of and in the
name of such Indemnified Tax Person (if the liability is imposed on such
Indemnified Tax Person), and (ii) the sum payable to such Indemnified Tax Person
shall be increased as may be necessary so that after making all required
deductions and withholdings (including deductions and withholdings applicable to
additional sums payable under this Section) such Indemnified Tax Person receives
an amount equal to the sum it would have received had no such deductions or
withholdings been made; provided, however, that no such additional amount shall
be payable if any such Taxes are required to be paid by reason only of the
payees having some connection with a Canadian taxing jurisdiction, other than
the receipt of the payments to be made under this Agreement and the holding and
disposition of the Term Notes issued pursuant to this Agreement. Notwithstanding
the foregoing, as to the Parent Facility only, no additional amount shall be
required to be paid to any Indemnified Tax Person under clause (ii) of the
preceding sentence except to the extent that the requirement to deduct or
withhold or the amount thereof is attributable to (i) the introduction after the
Effective Date of any law, rule or regulation requiring any Person to withhold
or deduct any amount from any payment under the Loan Documents in respect of an
Indemnified Tax or (ii) any increase after the Effective Date in the rate of any
such withholding or deduction.
(c) Other Taxes. Each Credit Party agrees, to pay any current or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Loan
Documents or otherwise with respect to, the Loan Documents (collectively, the
"Other Taxes").
(d) Evidence of Payment. Within 30 days after the reasonable request
therefor by the Agent in connection with any payment of Indemnified Taxes or
Other Taxes, each Credit Party will furnish to the Agent the original or a
certified copy of an official receipt from the jurisdiction to which payment is
made evidencing payment thereof or, if unavailable, a certificate from a
Financial Officer that states that such payment has been made and that sets
forth the date and amount of such payment.
(e) U.S. Tax Certificates. Each Indemnified Tax Person that is
organized under the laws of any jurisdiction other than the United States or any
political subdivision thereof that is exempt from United States federal
withholding tax, or that is subject to such tax at a reduced rate under an
applicable treaty, with respect to payments under the Loan Documents shall
deliver to the Agent for transmission to each Borrower, on or prior to the
Effective Date (in the case of each Indemnified Tax Person listed on the
signature pages hereof) or on the effective date of the Assignment and
Acceptance Agreement or other document pursuant to which it becomes an
Indemnified Tax Person (in the case of each other Indemnified Tax Person), and
at such other times as may be required by applicable law, Internal Revenue Form
4224 or Form 1001 or any other certificates or documents required under United
States law to establish entitlement to such exemption or reduced rate. In
addition, each Indemnified Tax Person shall deliver the forms described above
promptly upon the obsolescence or invalidity of any form previously delivered by
such Indemnified Tax Person. No Credit Party shall be required to pay any
additional amount to any such Indemnified Tax Person under subsection (b) above
if such Indemnified Tax Person shall have failed to satisfy the requirements of
the two immediately preceding sentences; provided that if such Indemnified Tax
Person shall have satisfied such requirements on the Effective Date (in the case
of each Indemnified Tax Person listed on the signature pages hereof) or on the
effective date of the Assignment and Acceptance Agreement or other document
pursuant to which it became an Indemnified Tax Person (in the case of each other
Indemnified Tax Person), nothing in this subsection shall relieve any Credit
Party of its obligation to pay any additional amounts pursuant to subsection (b)
to the extent that, as a result of any change in applicable law or treaty, such
Indemnified Tax Person is no longer properly entitled to deliver certificates,
documents or other evidence at a subsequent date establishing the fact that such
Indemnified Tax Person is entitled to such exemption or reduced rate.
(f) In the event that an Indemnified Tax Person is entitled to receive
a refund of or credit for or remission or repayment of taxes withheld or paid
pursuant to this Section 3.10 ("Tax Credit"), which credit or refund is
identifiable by such Indemnified Tax Person as being a result of taxes withheld
in connection with sums payable hereunder or under any other Loan Document, such
Indemnified Tax Person shall use reasonable efforts to obtain the Tax Credit,
and upon receipt of such Tax Credit shall promptly notify the Agent and the
Borrowers and shall remit to the Borrowers the amount of such Tax Credit
(without interest) allocable to payments made hereunder or under the other Loan
Documents.
3.11. Option to Fund
Each Lender has indicated that, if a Borrower requests a Eurodollar
Advance, such Lender may wish to purchase one or more deposits in order to fund
or maintain its funding of its Commitment Percentage of such Eurodollar Advance
during the Interest Period with respect thereto; it being understood that the
provisions of this Agreement relating to such funding are included only for the
purpose of determining the rate of interest to be paid in respect of such
Eurodollar Advance and any amounts owing under Sections 3.5 and 3.7. Each Lender
shall be entitled to fund and maintain its funding of all or any part of each
Eurodollar Advance in any manner it sees fit, but all such determinations
hereunder shall be made as if each Lender had actually funded and maintained its
Commitment Percentage of each Eurodollar Advance during the applicable Interest
Period through the purchase of deposits in the London interbank market in an
amount equal to its Commitment Percentage of such Eurodollar Advance having a
maturity corresponding to such Interest Period. Any Lender may fund its
Commitment Percentage of each Eurodollar Advance from or for the account of any
branch or office of such Lender as such Lender may choose from time to time.
3.12. Replacement of Lenders
Notwithstanding the foregoing, if (i) any Lender shall request
compensation pursuant to Section 3.6 or a Borrower shall be required to pay any
additional amounts pursuant to Section 3.10 in respect of any Lender in an
aggregate amount in excess of $50,000, (ii) any Lender shall give any notice to
a Borrower or the Agent pursuant to Section 3.7, (iii) any Lender shall on two
or more occasions give a notice to the Borrowers or the Agent pursuant to
Section 3.8, or (iv) any Lender shall be an uncured Defaulting Lender on two or
more occasions; then, in each such case, provided that no Default or Event of
Default shall then exist and be continuing, during the 90 day period after the
receipt of such request or notice, such Borrower may require that such Lender
transfer all of its right, title and interest under this Agreement and each of
such Lender's Notes to any lender identified by such Borrower (a "Proposed
Lender") if such Proposed Lender agrees to assume all of the obligations of such
Lender for consideration equal to the outstanding principal amount of such
Lender's Loans and all unreimbursed sums paid by such Lender under Section
2.8(b), together with interest thereon to the date of such transfer and all
other amounts payable under the Loan Documents to such Lender on or prior to the
date of such transfer (including any fees accrued hereunder and any amounts
which would be payable under Section 3.5 as if all of such Lender's Loans were
being prepaid in full on such date). Subject to the execution and delivery of
new Notes, an instrument of assignment and assumption, and such other documents
as such Lender may reasonably require, such Proposed Lender shall be a "Lender"
for all purposes hereunder. Without prejudice to the survival of any other
agreement of the Borrowers hereunder, the agreements of the Borrowers contained
in Sections 3.5, 3.6, 11.5, 11.8 and 11.10 (without duplication of any payments
made to such Lender by one or both of the Borrowers or the Proposed Lender)
shall survive for the benefit of any Lender replaced under this Section with
respect to the time prior to such replacement.
4. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this
Agreement and to make the Loans and the Issuing Bank to issue the Letters of
Credit and the Lenders to participate therein, each Borrower makes the following
representations and warranties to the Agent, the Issuing Bank and each Lender:
4.1. Subsidiaries; Capitalization
As of the Effective Date, GP Canada has no Subsidiaries and the Parent
has only the Subsidiaries set forth on, and the authorized, issued and
outstanding Capital Stock of the Parent and each such Subsidiary is as set forth
on, Schedule 4.1. As of the Effective Date, GP Canada is a wholly-owned
Subsidiary of Parent and except as set forth on Schedule 4.1, the shares of, or
partnership or other interests in, each Subsidiary of the Borrowers are owned
beneficially and of record by a Borrower or another Subsidiary of a Borrower,
are free and clear of all Liens and are duly authorized, validly issued, fully
paid and nonassessable. As of the Effective Date, except as set forth on
Schedule 4.1, (i) no Credit Party nor any of the Foreign Subsidiaries has issued
any securities convertible into, or options or warrants for, any common or
preferred equity securities thereof, (ii) there are no agreements, voting trusts
or understandings binding upon any Borrower or any of its Subsidiaries with
respect to the voting securities of any Borrower or any of its Subsidiaries or
affecting in any manner the sale, pledge, assignment or other disposition
thereof, including any right of first refusal, option, redemption, call or other
right with respect thereto, whether similar or dissimilar to any of the
foregoing, and (iii) all of the outstanding Capital Stock of each Credit Party
or Foreign Subsidiary is owned by a Borrower or another Credit Party.
4.2. Existence and Power
Each Borrower, each Credit Party and each of the Foreign Subsidiaries
is duly incorporated, organized or formed and validly existing in good standing
under the laws of the jurisdiction of its incorporation or formation, has all
requisite power and authority to own its Property and to carry on its business
as now conducted, and is in good standing and authorized to do business in each
jurisdiction in which the nature of the business conducted therein or the
Property owned by it therein makes such qualification necessary, except where
such failure to qualify could not reasonably be expected to have a Material
Adverse Effect.
4.3. Authority and Execution
Each Borrower, each Credit Party and each of the Foreign Subsidiaries
has full legal power and authority to enter into, execute, deliver and perform
the terms of the Loan Documents to which it is a party all of which have been
duly authorized by all proper and necessary corporate, partnership or other
applicable action and is in full compliance with its Organizational Documents.
4.4. Binding Agreement
The Loan Documents (other than the Notes) constitute, and the Notes,
when issued and delivered pursuant hereto for value received, will constitute,
the valid and legally binding obligations of each Credit Party and each Foreign
Subsidiary, in each case, to the extent it is a party thereto, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws now or hereafter affecting the enforcement of creditors' rights generally
and except that the remedy of specific performance and other equitable remedies
are subject to judicial discretion.
4.5. Litigation
Except as set forth on Schedule 4.5, there are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority
(whether purportedly on behalf of any Borrower, any other Credit Party or any of
the Foreign Subsidiaries) pending or, to the knowledge of any Borrower,
threatened against any Borrower, any other Credit Party or any of the Foreign
Subsidiaries or maintained by any Borrower, any other Credit Party or any of the
Foreign Subsidiaries or which may affect the Property of any Borrower, or any
other Credit Party or any of the Foreign Subsidiaries or any of their respective
Properties or rights, which (i) could reasonably be expected to have a Material
Adverse Effect, (ii) call into question the validity or enforceability of, or
otherwise seek to invalidate, any Loan Document, (iii) might, individually or in
the aggregate, materially and adversely affect any of the transactions
contemplated by any Loan Document or (iv) seek to prevent or delay the
consummation of the Learning Technologies Acquisition.
4.6. Required Consents
(a) Except for information filings required to be made in the ordinary
course of business which are not a condition to the performance by any Borrower
or any of its Subsidiaries under the Loan Documents to which it is a party, no
consent, authorization or approval of, filing with, notice to, or exemption by,
stockholders or holders of any other equity interest, any Governmental Authority
or any other Person is required to authorize, or is required in connection with
the execution, delivery or performance of the Loan Documents to which such
Borrower or any of its Subsidiaries is a party or is required as a condition to
the validity or enforceability of the Loan Documents to which any of the same is
a party. Each Borrower, prior to each borrowing by it hereunder, has obtained
all necessary approvals and consents of, and has filed or caused to be filed all
reports, applications, documents, instruments and information required to be
filed pursuant to all applicable laws, rules, regulations and requests of, all
Governmental Authorities in connection with such borrowing.
(b) Except as provided in the Learning Technologies Acquisition
Documents, no consent, authorization or approval of, filing with, notice to, or
exemption by, stockholders or holders of any other equity interest, any
Governmental Authority or any other Person is required to authorize, or is
required in connection with the execution, delivery and performance of the
Learning Technologies Acquisition Documents or is required as a condition to the
validity or enforceability thereof.
4.7. Absence of Defaults; No Conflicting Agreements
(a) No Borrower, no other Credit Party nor any of the Foreign
Subsidiaries is in default under any mortgage, indenture, contract or agreement
to which it is a party or by which it or any of its Property is bound, the
effect of which default could reasonably be expected to have a Material Adverse
Effect. The execution, delivery or carrying out of the terms of the Loan
Documents will not constitute a default under, or result in the creation or
imposition of, or obligation to create, any Lien upon any Property of any
Borrower, any other Credit Party or any of the Foreign Subsidiaries or result in
a breach of or require the mandatory repayment of or other acceleration of
payment under or pursuant to the terms of any such mortgage, indenture, contract
or agreement.
(b) No Borrower nor any of its Subsidiaries is in default with
respect to any judgment, order, writ, injunction, decree or decision of any
Governmental Authority which default could reasonably be expected to have a
Material Adverse Effect.
4.8. Compliance with Applicable Laws
Each Borrower, each other Credit Party and each of the Foreign
Subsidiaries is complying in all material respects with all statutes,
regulations, rules and orders of all Governmental Authorities which are
applicable to such Borrower such other Credit Party or such Foreign Subsidiary,
a violation of which could reasonably be expected to have a Material Adverse
Effect.
4.9. Taxes
Each Borrower, each other Credit Party, and each of the Foreign
Subsidiaries has filed or caused to be filed all tax returns required to be
filed and has paid, or has made adequate provision for the payment of, all taxes
shown to be due and payable on said returns or in any assessments made against
it (other than those being contested as required under Section 7.4) which would
be material to such Borrower, such other Credit Party or such Foreign
Subsidiaries, and no tax Liens have been filed with respect thereto. The
charges, accruals and reserves on the books of each Borrower, each other Credit
Party and each of the Subsidiaries with respect to all taxes are, to the best
knowledge of each Borrower, adequate for the payment of such taxes, and no
Borrower knows of any unpaid assessment which is due and payable against any
Borrower, any other Credit Party or any of the Foreign Subsidiaries or any
claims being asserted which could reasonably be expected to have a Material
Adverse Effect, except such thereof as are being contested as required under
Section 7.4, and for which adequate reserves have been set aside in accordance
with GAAP.
4.10. Governmental Regulations
No Borrower, no other Credit Party, no Foreign Subsidiary nor any
Person controlled by, controlling, or under common control with, any Borrower or
any of its Subsidiaries, is subject to regulation under the Public Utility
Holding Company Act of 1935, as amended, the Federal Power Act, as amended, or
the Investment Company Act of 1940, as amended, or is subject to any statute or
regulation which prohibits or restricts the incurrence of Indebtedness,
including statutes or regulations relative to common or contract carriers or to
the sale of electricity, gas, steam, water, telephone, telegraph or other public
utility services.
4.11. Federal Reserve Regulations; Use of Loan Proceeds
No Borrower, no other Credit Party and nor any of the Foreign
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
Margin Stock. After giving effect to the making of each Revolving Credit Loan
and the issuance of each Letter of Credit, Margin Stock will constitute less
than 25% of the assets (as determined by any reasonable method) of each Borrower
and its Subsidiaries.
4.12. Plans
(a) Each Employee Benefit Plan is in compliance with ERISA and the
Code, where applicable, in all material respects, except where non-compliance
could not reasonably be expected to have a Material Adverse Effect. As of the
Effective Date, (i) the amount of all Unfunded Pension Liabilities under the
Pension Plans, excluding any plan which is a Multi-employer Plan, does not
exceed $250,000, and (ii) the amount of the aggregate Unrecognized Retiree
Welfare Liability under all applicable Employee Benefit Plans does not exceed
$250,000. Each Borrower and each of its Subsidiaries and ERISA Affiliates has
complied with the requirements of Section 515 of ERISA with respect to each
Pension Plan which is a Multi-employer Plan, except where non-compliance could
not reasonably be expected to have a Material Adverse Effect. As of the
Effective Date, no Borrower nor its Subsidiaries or ERISA Affiliates have any
liability under Section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of purchaser default) and the aggregate
potential annual withdrawal liability payments, as determined in accordance with
Title IV of ERISA, of the Borrowers and their Subsidiaries and ERISA Affiliates
with respect to all Pension Plans which are Multi-employer Plans is
approximately $250,000. Each Borrower and its Subsidiaries and ERISA Affiliates
have, as of the Effective Date, made all contributions or payments to or under
each such Pension Plan required by law or the terms of such Pension Plan or any
contract or agreement with respect thereto, except where non-compliance could
not reasonably be expected to have a Material Adverse Effect. No material
liability to the PBGC has been, or is expected by any Borrower, any of its
Subsidiaries or any ERISA Affiliate to be, incurred by any Borrower, any such
Subsidiary or any ERISA Affiliate, except where non-compliance could not
reasonably be expected to have a Material Adverse Effect. Liability, as referred
to in this Section includes any joint and several liability. Each Employee
Benefit Plan which is a group health plan within the meaning of Section
5000(b)(1) of the Code is in material compliance with the continuation of health
care coverage requirements of Section 4980B of the Code, except where
non-compliance could not reasonably be expected to have a Material Adverse
Effect.
(b) All contributions required under applicable law have been made in
respect of all pension plans of GP Canada and each such pension plan is fully
funded on an ongoing and termination basis.
4.13. Financial Statements
The Parent heretofore delivered to the Agent and the Lenders copies of
the (i) audited Consolidated and unaudited Consolidating Balance Sheets of
Parent as of December 31, 1997 and the related Consolidated and Consolidating
Statements of Operations, Stockholder's Equity and Cash Flows for the fiscal
years then ended and (ii) the unaudited Consolidated and Consolidating Balance
Sheets of Parent as of March 31, 1998, and the related Consolidated and
Consolidating Statements of Operations, Stockholder's Equity and Cash Flows for
the fiscal quarters then ended (with the related notes and schedules, the
"Financial Statements"). The Financial Statements fairly present the
Consolidated and Consolidating financial condition and results of the operations
of Parent and its Subsidiaries as of the dates and for the periods indicated
therein (subject, in the case of such unaudited statements, to normal year-end
adjustments) and have been prepared in conformity with GAAP. Except as reflected
in the Financial Statements or in the notes thereto, neither Parent nor any of
its Subsidiaries has any obligation or liability of any kind (whether fixed,
accrued, Contingent, unmatured or otherwise) which, in accordance with GAAP,
should have been shown on the Financial Statements and was not. Since the date
of the Financial Statements, Parent and each of its Subsidiaries has conducted
its business only in the ordinary course and there has been no Material Adverse
Change.
4.14. Property
Each Borrower and each of the other Credit Parties and each Foreign
Subsidiary has good and marketable title to, or a valid leasehold interest in,
all of its real Property, and is the owner of, or has a valid lease of, all
personal property, in each case which is material to the Borrowers and their
Subsidiaries, taken as a whole, subject to no Liens, except Permitted Liens.
Except for consents of landlords to the assignment of the leases set forth in
Schedule 2.1(A)(3) to the Learning Technologies Acquisition Documents (the
"Lease Assignments Consents"), all leases of Property to any Borrower, any
Credit Party or any of the Foreign Subsidiaries are in full force and effect,
such Borrower, such Credit Party or such Foreign Subsidiary, as the case may be,
enjoys quiet and undisturbed possession under all leases of real property and no
Borrower, any other Credit Party nor any of the Foreign Subsidiaries is in
default beyond any applicable grace period of any provision thereof, the effect
of which could reasonably be expected to have a Material Adverse Effect. As to
the Lease Assignments Consents that have not been obtained on or before the
Effective Date, the failure to obtain such then remaining Lease Assignments
Consents could not reasonably be expected to have a Material Adverse Effect.
4.15. Authorizations
Except for consents to certain assignments set forth in Schedule
2.1(A)(4) to the Learning Technologies Acquisition Documents (the "Contract
Assignment Consents"), each Borrower, each Credit Party and each Foreign
Subsidiary possesses or has the right to use all franchises, licenses and other
rights as are material and necessary for the conduct of its business, and with
respect to which it is in compliance, with no known conflict with the valid
rights of others which could reasonably be expected to have a Material Adverse
Effect. No event has occurred which permits or, to the best knowledge of each
Borrower, after notice or the lapse of time or both, or any other condition,
could reasonably be expected to permit, the revocation or termination of any
such franchise, license or other right which revocation or termination could
reasonably be expected to have a Material Adverse Effect. As to the Contract
Assignment Consents that have not been obtained on or before the Effective Date,
the failure to obtain such then remaining Contract Assignment Consents could not
reasonably be expected to have a Material Adverse Effect.
4.16. Environmental Matters
Except as set forth in Schedule 4.16, no Borrower, no other Credit
Party nor any of the Foreign Subsidiaries (i) has received written notice or
otherwise learned of any claim, demand, action, event, condition, report or
investigation indicating or concerning any potential or actual liability which
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect, arising in connection with (A) any non-compliance with or
violation of the requirements of any applicable federal, state, provincial or
local environmental health or safety statute or regulation, or (B) the release
or threatened release of any toxic or hazardous waste, substance or constituent,
or other substance into the environment, (ii) to the best knowledge of each
Borrower, has any threatened or actual liability in connection with the release
or threatened release of any toxic or hazardous waste, substance or constituent,
or other substance into the environment which individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect, (iii) has
received notice of any federal, state or provincial investigation evaluating
whether any remedial action is needed to respond to a release or threatened
release of any toxic or hazardous waste, substance or constituent or other
substance into the environment for which any Borrower any other Credit Party or
any of the Foreign Subsidiaries is or would be liable, which liability could
reasonably be expected to have a Material Adverse Effect, or (iv) has received
notice that any Borrower, any other Credit Party or any of the Foreign
Subsidiaries is or may be liable to any Person under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601 et seq., or any analogous state or foreign law, which liability
could reasonably be expected to have a Material Adverse Effect. Each Borrower,
each other Credit Party, each of the Foreign Subsidiaries is in compliance with
the financial responsibility requirements of federal and state environmental
laws to the extent applicable, including those contained in 40 C.F.R., parts 264
and 265, subpart H, and any analogous state or foreign law, except in those
cases in which the failure so to comply would not reasonably be expected to have
a Material Adverse Effect.
4.17. Solvency
Immediately after giving effect to the transactions contemplated by
the Transaction Documents, each Borrower, each of the other Credit Parties and
each of the Foreign Subsidiaries is and will be Solvent.
4.18. Absence of Certain Restrictions
No indenture, certificate of designation for preferred stock,
agreement or instrument to which any Borrower, any other Credit Party or any of
the Foreign Subsidiaries is a party (other than this Agreement), prohibits or
limits in any way, directly or indirectly the ability of any Credit Party or
Foreign Subsidiary to make Restricted Payments or repay any Indebtedness to such
Borrower or to another Subsidiary of such Borrower.
4.19. No Misrepresentation
No representation or warranty contained in any Loan Document and no
certificate or report from time to time furnished by any Borrower or any of its
Subsidiaries in connection with the transactions contemplated thereby, contains
or will contain a misstatement of material fact or omits or will omit to state a
material fact required to be stated in order to make the statements therein
contained not misleading in the light of the circumstances under which made,
provided that any projections or pro-forma financial information contained
therein are based upon good faith estimates and assumptions believed by the
Parent to be reasonable at the time made, it being recognized by the Agent, the
Issuing Bank and 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 thereby may differ from the projected results.
4.20. Software Systems
(a) The software of each Credit Party is designed to be used and the
software of each Foreign Subsidiary will, by January 1, 1999, be designed to be
used, prior to, during, and after calendar year 2000 A.D., and such software
will operate during each such time period without error relating to date data,
specifically including any error relating to, or the conduct of, date data which
represents or references different centuries or more than one century. Without
limiting the generality of the foregoing, (i) no software of any Credit Party
will, and, by January 1, 1999, no software of any Foreign Subsidiary will,
abnormally end or provide invalid or incorrect results as a result of date data,
and (ii) the software of each Credit Party has been designed to ensure, and the
software of each Foreign Subsidiary will, by January 1, 1999 be designed to
ensure, year 2000 A.D. compatibility, including date data, century recognition,
calculations which accommodate same century and multicentury formulas and date
values, and date data interface values that reflect the century.
(b) The software of each Credit Party includes and the software of
each Foreign Subsidiary will, by January 1, 1999, include "Year 2000
capabilities." For purposes of this Agreement, Year 2000 capabilities means the
software: (i) will manage and manipulate data involving dates, including single
century formulas and multicentury formulas, and will not cause an abnormally
ending scenario within the application or generate incorrect values or invalid
results involving such dates, (ii) provides that all date-related users
interface functionalities and data fields include the indication of century, and
(iii) provides that all date-related data interface functionalities include the
indication of century.
(c) The information on Schedule 4.20 is true and correct.
4.21 Material Subsidiaries.
Each Material Subsidiary is either a Credit Party or a Foreign
Subsidiary.
4.22 Learning Technology Acquisition Documents.
(i) Each Borrower, Credit Party and Foreign Subsidiary that is party
to any of the Learning Technology Acquisition Documents has full legal power and
authority to enter into and to execute, deliver and perform the terms of the
Learning Technology Acquisition Documents, all of which have been duly
authorized by all proper and necessary corporate action.
(ii) The Learning Technology Acquisition Documents are the valid and
legally binding obligations of each Borrower, Credit Party and Foreign
Subsidiary that is a party thereto, and, to the best of Parent's knowledge, the
Sellers, enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws now or hereafter affecting the enforcement of
creditors' rights generally and except that the remedy of specific performance
and other equitable remedies are subject to judicial discretion.
(iii) The execution, delivery or carrying out of the terms of the
Learning Technology Acquisition Documents will not constitute a default under,
or result in the creation or imposition of, or obligation to create, any lien
upon any Property of any Borrower, Credit Party or Foreign Subsidiary party
thereto or result in a breach of or require the mandatory repayment of or other
acceleration of payment pursuant to the terms of any such mortgage, indenture
contract or agreement.
5. CONDITIONS TO FIRST LOANS OR THE ISSUANCE OF FIRST LETTERS OF CREDIT
In addition to the conditions precedent set forth in Section 6, the
obligation of each Lender to make Loans or the Issuing Bank to issue Letters of
Credit on the first Borrowing Date and the Lenders to participate therein shall
be subject to the fulfillment of the following conditions precedent:
5.1. Evidence of Action
The Agent shall have received a certificate, dated the first Borrowing
Date, of the Secretary or Assistant Secretary or other analogous counterpart of
each Credit Party (i) attaching a true and complete copy of the resolutions of
its Managing Person and of all documents evidencing all necessary corporate,
partnership or similar action (in form and substance satisfactory to the Agent)
taken by it to authorize the Loan Documents to which it is a party and the
transactions contemplated thereby, (ii) attaching a true and complete copy of
its Organizational Documents, (iii) setting forth the incumbency of its officer
or officers or other analogous counterpart who may sign the Loan Documents,
including therein a signature specimen of such officer or officers and (iv)
attaching a certificate of good standing of the appropriate Governmental
Authority of the jurisdiction of its formation and of each other jurisdiction in
which it is qualified to do business, except, in the case of such other
jurisdiction, when the failure to be in good standing in such jurisdiction would
not have a Material Adverse Effect.
5.2. This Agreement
The Agent shall have received counterparts of this Agreement signed by
each of the parties hereto (or receipt by the Agent from a party hereto of a
telecopy signature page signed by such party which shall have agreed to promptly
provide the Agent with originally executed counterparts hereof).
5.3. Notes; Letter of Credit Documents
The Agent shall have received the Revolving Credit Notes and the Term
Notes, duly executed by an Authorized Signatory of the applicable Borrower and
the Agent and the Issuing Bank shall have received a Continuing Application and
Agreement for each of the Standby Letters of Credit and Trade Letters of Credit,
each duly executed by an Authorized Signatory of Parent.
5.4. Absence of Litigation
There shall be no injunction, writ, preliminary restraining order or
other order of any nature issued by any Governmental Authority in any respect
affecting the transactions provided for in the Transaction Documents and no
action or proceeding by or before any Governmental Authority has been commenced
and is pending or, to the knowledge of any Borrower, threatened, seeking to
prevent or delay the transactions contemplated by the Transaction Documents or
challenging any other terms and provisions hereof or thereof or seeking any
damages in connection therewith, and the Agent shall have received a
certificate, in all respects satisfactory to the Agent, of an executive officer
of Parent to the foregoing effects.
5.5. Approvals and Consents
Except for the Lease Assignment Consents and the Contract Assignment
Consents, which consents the Parent is and will continue using its best efforts
to cause to be obtained, all approvals and consents of all Persons required to
be obtained in connection with the consummation of the transactions contemplated
by the Transaction Documents shall have been obtained and shall be in full force
and effect, and all required notices have been given and all required waiting
periods shall have expired, including under the HSR Act, and the Agent shall
have received a certificate, in all respects satisfactory to the Agent, of an
executive officer of each Borrower to the foregoing effects.
5.6. Absence of Material Adverse Change
No material adverse change in the business, assets, liabilities,
financial condition or results of operations of the Learning Technologies
Business has occurred and the Agent shall have received a certificate, in all
respects satisfactory to the Agent, of an executive officer of the Parent to the
foregoing effect.
5.7. Financial Officer's Certificate
The Agent shall have received a certificate of a Financial Officer of
each Borrower, dated the first Borrowing Date, in all respects satisfactory to
the Agent certifying that after giving effect to the (i) consummation of the
Learning Technologies Acquisition and the release or termination of all Liens,
if any, on the Learning Technologies Assets, and (ii) Loans to be made on the
first Borrowing Date, to the best knowledge of each such Financial Officer, each
Borrower and each Credit Party and each Foreign Subsidiary is Solvent.
5.8. Existing Bank Debt
Prior to or simultaneously with the making of the Loans or the
issuance of the Letters of Credit on the first Borrowing Date, other than the
Existing L/C's, Parent and its applicable Subsidiaries shall have fully repaid
all Existing Bank Debt and all agreements with respect thereto shall have been
cancelled or terminated.
5.9. Opinion of Counsel to the Borrowers and their Subsidiaries;
Provincial Reporting Letters
The Agent shall have received (A) opinions of (i) Morgan, Lewis &
Bockius LLP, special New York counsel to the Parent and the domestic Credit
Parties, (ii) Andrea Kantor, Esq., in-house counsel to Parent and its
Subsidiaries (other than Physics and its Subsidiaries), (iii) Kenneth Crawford,
Esq., in-house counsel to Physics and its Subsidiaries, (iv) Morgan, Lewis &
Bockius LLP (United Kingdom), counsel to GP (UK), and (v) Goodman Phillips &
Vineberg, counsel to GP Canada. Each opinion shall be addressed to the Agent and
the Lenders, (shall permit Special Counsel to rely thereon), and shall be dated
the first Borrowing Date, and shall be substantially in the forms of Exhibits
F-1, F-2, F-3, F-4 and F-5 respectively and (B) provincial reporting letters on
the registration of Collateral in Canada. It is understood that such opinions
are being delivered to the Agent and the Lenders upon the direction of the
Borrowers and their Subsidiaries and that the Agent and the Lenders may and will
rely on such opinions.
5.10. Previous Information
All of the information provided by or on behalf of any and/or all of
the Borrowers or any of their Subsidiaries the Agent and/or the Lenders prior to
their commitment to extend credit to the Borrowers (the "Pre-Commitment
Information") shall be true and correct in all material aspects; and no
development or change shall have occurred, and no additional information shall
have come to the attention of the Agent or any Lender, that (i) has resulted in
or could reasonably be expected to result in a material change in, or material
deviation from, the Pre-Commitment Information or (ii) has had or could
reasonably be expected to have a Material Adverse Effect.
5.11. Borrower Security Agreement; Subordination Agreement; Parent
Guaranty; Subsidiary Guaranty and Security Agreement and Related Matters
(a) The Agent shall have received the Borrower Security Agreement,
duly executed, by an Authorized Signatory of each Borrower and dated the first
Borrowing Date, together with the following:
(i) one or more share certificates, representing (x) all of the issued
and outstanding Capital Stock of each Subsidiary Guarantor and (y) 65% of all
the issued and outstanding Capital Stock of GP Canada, GP (UK) and each Foreign
Subsidiary that is a Material Subsidiary, together with an undated stock power,
executed in blank by an Authorized Signatory of the owner of such Capital Stock
and bearing a signature guarantee in all respects satisfactory to the Agent, in
respect of each such certificate;
(ii) each Intercompany Demand Note payable to Parent, duly executed by
the applicable Foreign Subsidiary and duly endorsed in blank by Parent to the
Agent, the originals of each of the Intercompany Demand Documents and
assignments of financing statements (or other similar mechanism required to
perfect security interests under applicable law) from Parent to the Agent;
(iii) such UCC Financing Statements (or other comparable documents
with respect to Collateral located outside of the United States), executed by
each Borrower where required, as shall be reasonably requested by the Agent in
order to perfect the security interest in any collateral security granted under
the Borrower Security Agreement;
(iv) executed notices required by the Borrower Security Agreement to
comply with the Federal Assignment of Claims Act and the Financial
Administration Act (Canada) and relevant provincial legislation, each with
respect to any agreements in excess of $500,000; and
(v) such other documents as the Agent may require in connection with
the perfection of its security interests therein.
(b) (i) Each Credit Party shall have executed a subordination
agreement in favor of the Agent in substantially the form of Exhibit L-1 hereto
providing for the subordination of all obligations to the other Credit Parties
to the Obligations (the "Subordination Agreement"), (ii) Parent and Physics
shall have executed a subordination agreement in favor of the Agent in
substantially the form of Exhibit L-2 hereto relating to the 6% Subordinated
Debentures Due 2004 dated as of August 31, 1994 issued by Physics, Parent and
Five Star (including non-payment of such obligations at all times) to the Parent
Obligations and (iii) SGLG, Inc. and GPC shall have executed a Subordination
Agreement in favor of the Agent in substantially the form of Exhibit L-3 hereto
providing for the subordination of Physics obligations to SGLG, Inc. (including
non-payment of such obligations at all times, except payments of $50,000 in each
three-month period may be made in certain circumstances set forth therein) to
the Obligations.
(c) The Agent shall have received a Subsidiary Guaranty and Security
Agreement, duly executed by an Authorized Signatory of each Subsidiary Guarantor
together with the following:
(i) one or more share certificates, representing (x) all of the issued
and outstanding Capital Stock of each Subsidiary Guarantor owned by each such
Subsidiary and (y) 65% of all the issued and outstanding Capital Stock of GP
Canada, GP (UK) and each Foreign Subsidiary that is a Material Subsidiary and
that is owned by each such Subsidiary, each together with an undated stock
power, executed in blank by an Authorized Signatory of the owner of such Capital
Stock and bearing a signature guarantee in all respects satisfactory to the
Agent, in respect of each such certificate;
(ii) each Intercompany Demand Note payable to a Subsidiary, duly
executed by the applicable Foreign Subsidiary and duly endorsed in blank by such
Subsidiary to the Agent, the originals of each of the Intercompany Demand
Documents and assignments of financing statements (or other similar mechanism
required to perfect security interests under applicable law) from the applicable
Subsidiary to the Agent;
(iii) such UCC Financing Statements (or other comparable documents
with respect to Collateral located outside of the United States), executed by an
Authorized Signatory of each Subsidiary Guarantor, as shall be reasonably
requested by the Agent in order to perfect the security interest in any
collateral security granted under the Subsidiary Guaranty and Security
Agreement; and
(iv) executed notices required by the Subsidiary Guaranty and Security
Agreement to comply with the Federal Assignment of Claims Act and the Financial
Administration Act (Canada) and relevant provincial legislation, each with
respect to any agreements in excess of $500,000; and
(v) such other documents as the Agent may require in connection with
the perfection of its security interests therein.
(d) The Agent shall have received a Parent Guaranty, duly executed by
an Authorized Signatory of the Parent Guarantor.
(e) Intentionally Omitted.
(f) The Agent shall have received (A) copies of, or certificates of
the brokers with respect to, each policy of insurance owned by a Borrower or a
Subsidiary Guarantor covering or in any manner relating to the Collateral and
are otherwise in form and substance satisfactory to the Required Lenders, naming
the Agent, in its capacity as such, as additional insured and loss payee as its
interests may appear; and (B) evidence of each Borrower's and Subsidiary
Guarantor's liability insurance policies.
5.12. Search Reports and Related Documents
The Agent shall have received (i) UCC, PPSA, tax and judgment lien,
patent and trademark search reports and other search reports in all respects
satisfactory to the Agent with respect to each applicable public office where
Liens are or may be filed disclosing that there are no Liens of record in such
official's office covering any Property of any Borrower or any of the Material
Subsidiaries or showing any Borrower or Material Subsidiary as debtor thereunder
(other than Permitted Liens) and (ii) a certificate of each Borrower signed by
an Authorized Signatory thereof, dated the first Borrowing Date, certifying
that, upon the making of Loans and the issuance of Letters of Credit on the
first Borrowing Date, there will exist no Liens on any Property of any Borrower
or any Material Subsidiary other than Permitted Liens.
5.13. Learning Technologies Acquisition; Certificate
(a) The Learning Technologies Acquisition shall have been consummated.
(b) The Agent shall have received a certificate of the Secretary or
Assistant Secretary of Physics, in all respects satisfactory to the Agent and
dated the first Borrowing Date, (i) attaching a true and complete copy of (A)
each of the fully executed Learning Technologies Acquisition Documents,
including, without limitation, all of the "conveyance documents" delivered
pursuant to Section 2.1(C) of the Learning Technologies Asset Purchase
Agreement, (B) evidence indicating the designation by Physics of its rights to
acquire the Learning Technologies Assets located in Canada to GP Canada and the
Learning Technologies Assets located in the United Kingdom to GP (UK) and (ii)
certifying that (A) each thereof is in full force and effect, and (B) the
Learning Technologies Acquisition has been consummated in accordance with the
Learning Technologies Acquisition Documents and without any waiver by Physics or
any other buyer of any conditions.
(c) The Agent shall have received evidence (which shall take the form
of a representation contained in the Learning Technologies Acquisition
Documents) indicating that there are no Liens encumbering the Learning
Technology Assets.
5.14. Pro-Forma Compliance Certificate
The Agent shall have received a certificate of a Financial Officer of
the Parent, in all respects reasonably satisfactory to the Agent and dated the
first Borrowing Date, attaching a pro-forma Compliance Certificate (after giving
effect to the consummation of the transactions contemplated by the Transaction
Documents and based upon the Financial Statements).
5.15. Property, Public Liability and Other Insurance
The Agent shall have received a certificate of all insurance
maintained by each Borrower and its Subsidiaries in form and substance
reasonably satisfactory to the Agent, together with the endorsements required by
Section 7.5.
5.16. Fees
All fees payable to the Agent, the Issuing Bank and the Lenders on the
first Borrowing Date shall have been paid.
5.17. Fees and Expenses of Special Counsel
The fees and expenses of Special Counsel in connection with the
preparation, negotiation and closing of the Loan Documents shall have been paid.
5.18. Certain Conditions Satisfied Post Closing
Notwithstanding anything to the contrary contained in this Section 5,
the condition set forth in Section 5.9(B) related to provincial reporting
letters (excluding the provincial reporting letter for Ontario, Canada) and the
condition set forth in Section 5.11(a) as it relates to the Hypothec, shall not
be required as conditions to the first extension of credit, but shall be
required to be provided (i) within seven days of the date hereof in the case of
the provincial reporting letters and (ii) within thirty days of the date hereof
in the case of the Hypothec.
6. CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF CREDIT
The obligation of each Lender to make any Loan or the Issuing Bank to
issue any Letter of Credit on a Borrowing Date and each Lender to participate
therein is subject to the satisfaction of the following conditions precedent as
of the date of such Loan or the issuance of such Letter of Credit, as the case
may be:
6.1. Compliance
On each Borrowing Date and after giving effect to the Loans to be made
and the Letters of Credit to be issued thereon (i) there shall exist no Default
or Event of Default, (ii) the representations and warranties contained in the
Loan Documents shall be true and correct with the same effect as though such
representations and warranties had been made on such Borrowing Date, except to
the extent such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall have been true and
correct on and as of such earlier date, and (iii) each Credit Party and each
Foreign Subsidiary shall be in compliance with all of the terms, covenants and
conditions of the Loan Documents to which it is a party. Each borrowing by a
Borrower and each request by the Parent for the issuance of a Letter of Credit
shall constitute a certification by each Borrower as of such Borrowing Date that
each of the foregoing matters is true and correct in all respects.
6.2. Borrowing Request; Letter of Credit Request
With respect to the Loans to be made, and the Letters of Credit to be
issued, on each Borrowing Date, the Agent shall have received, (i) in the case
of Loans, a Borrowing Request and (ii) in the case of Letters of Credit, a
Letter of Credit Request, in each case duly executed by an Authorized Signatory
of the applicable Borrower.
6.3. Certain Documents
All documents required by the provisions of the Loan Documents to be
executed or delivered to the Agent or any Lender on or before the applicable
Borrowing Date shall have been so executed and delivered on or before such
Borrowing Date.
6.4. Other Documents
Each of the Agent, the Issuing Bank and the Lenders shall have
received such other documents, each in form and substance reasonably
satisfactory to it, as it shall reasonably require in connection with the making
of the Loans and the issuance of the Letters of Credit on such Borrowing Date.
7. AFFIRMATIVE COVENANTS
Each Borrower agrees that, so long as this Agreement is in effect, any
Loan or Reimbursement Obligation (contingent or otherwise) in respect of any
Letter of Credit remains outstanding and unpaid, or any other amount is owing
under any Loan Document to any Lender, the Issuing Bank or the Agent, the Parent
shall:
7.1. Financial Statements and Information
Maintain, and cause each of its Subsidiaries to maintain, a standard
system of accounting in accordance with GAAP, and furnish or cause to be
furnished to the Agent and each Lender:
(a) As soon as available, but in any event within 105 days after the
end of each fiscal year, a copy of the Parent's Consolidated and Consolidating
Balance Sheets as at the end of such fiscal year, together with the related
Consolidated and Consolidating Statements of Operations and Stockholders' Equity
and Consolidated Cash Flows as of and through the end of such fiscal year,
setting forth in each case in comparative form the figures for the preceding
fiscal year. The Consolidated Balance Sheets and Consolidated Statements of
Operations, Stockholders' Equity and Cash Flows (as well as like separate
consolidated Balance Sheets and Consolidated Statements of Operations,
Stockholders' Equity and Cash Flows of Physics) shall be audited and certified
without qualification by the Accountants, which certification shall (i) state
that the examination by such Accountants in connection with such Consolidated
financial statements has been made in accordance with generally accepted
auditing standards and, accordingly, included such tests of the accounting
records and such other auditing procedures as were considered necessary in the
circumstances, and (ii) include the opinion of such Accountants that such
Consolidated financial statements have been prepared in accordance with GAAP in
a manner consistent with prior fiscal periods, except as otherwise specified in
such opinion. The Consolidating Balance Sheets and Consolidating Statements of
Operations, Stockholders' Equity and Cash Flows shall be certified by a
Financial Officer of Parent, as being complete and correct in all material
respects and as presenting fairly the Consolidating financial condition and the
Consolidating results of operations of the Parent and its Subsidiaries.
Notwithstanding any of the foregoing, Parent may satisfy its obligation to
furnish Consolidated Balance Sheets and Consolidated Statements of Operations,
Stockholders' Equity and Cash Flows by furnishing copies of the Parent's annual
report on Form 10-K in respect of such fiscal year, together with the financial
statements required to be attached thereto, provided Parent is required to file
such annual report on Form 10-K with the SEC and such filing is actually made.
(b) As soon as available, but in any event within 50 days after the
end of each of the first three fiscal quarters of each fiscal year, a copy of
the Consolidated and Consolidating Balance Sheets of the Parent and its
Consolidated Subsidiaries as at the end of each such quarterly period, together
with the related Consolidated and Consolidating Statements of Operations and
Consolidated Statement of Cash Flows for such period and for the elapsed portion
of the fiscal year through such date, setting forth in each case in comparative
form the figures for the corresponding periods of the preceding fiscal year,
certified by a Financial Officer of Parent, as being complete and correct in all
material respects and as presenting fairly the Consolidated and Consolidating
financial condition and the Consolidated and Consolidating results of operations
of the Parent and its Subsidiaries. Notwithstanding any of the foregoing, the
Parent may satisfy its obligation to furnish quarterly Consolidated Balance
Sheets and Consolidated Statement of Operations and Cash Flows by furnishing
copies of the Parent's quarterly report on Form 10-Q in respect of such fiscal
quarter, together with the financial statements required to be attached thereto,
provided Parent is required to file such quarterly report on Form 10-Q with the
SEC and such filing is actually made.
(c) Within 50 days after the end of each of the first three fiscal
quarters (105 days after the end of the last fiscal quarter), a Compliance
Certificate, certified by a Financial Officer of Parent.
(d) As soon as available, but not later than 30 days after the last
day of each fiscal year, budgets for each Borrower and its Subsidiaries for the
coming fiscal year, in form and substance reasonably satisfactory to the Agent.
(e) Monthly, and not later than the 25th day following the last day of
each month, (i) with respect to each Borrower and its Subsidiaries, separate
accounts receivable aging reports for Parent, Physics, GP Canada, GP (UK) and
MXL, in form and substance reasonably satisfactory to the Agent and (ii) a
certification as to the outstanding principal balance of each Intercompany
Demand Note as of the last day of the immediately preceding month.
(f) Such other information as the Agent or any Lender may reasonably
request from time to time.
7.2. Certificates; Other Information
Furnish to the Agent and each Lender:
(a) Prompt written notice if: (i) any Indebtedness of any Borrower or
any of its Subsidiaries in an aggregate amount in excess of $500,000 is declared
or shall become due and payable prior to its stated maturity, or is called and
not paid when due, (ii) a default shall have occurred under any note (other than
the Notes), certificate, security or other evidence of Indebtedness in an
aggregate amount in excess of $500,000, or the holder or obligee of any note
(other than the Notes), certificate, security or other evidence of Indebtedness,
with respect to any other Indebtedness of any Borrower or any of its
Subsidiaries has the right to declare Indebtedness in an aggregate amount in
excess of $500,000 due and payable prior to its stated maturity, (iii) there
shall occur and be continuing a Default or an Event of Default or (iv) a Change
in Management should occur;
(b) Prompt written notice of: (i) any citation, summons, subpoena,
order to show cause or other document naming any Borrower or any of its
Subsidiaries a party to any proceeding before any Governmental Authority which
could reasonably be expected to have a Material Adverse Effect or which calls
into question the validity or enforceability of any of the Loan Documents, and
include with such notice a copy of such citation, summons, subpoena, order to
show cause or other document, and (ii)(A) any lapse or other termination of any
material license, permit, franchise or other authorization issued to any
Borrower or any of its Subsidiaries by any Person or Governmental Authority, and
(B) any refusal by any Person or Governmental Authority to renew or extend any
such material license, permit, franchise or other authorization, which lapse,
termination, refusal or dispute could reasonably be expected to have a Material
Adverse Effect;
(c) Promptly upon becoming available, copies of all (i) registration
statements, regular, periodic or special reports, schedules and other material
which any Borrower or any of its Subsidiaries may now or hereafter be required
to file with or deliver to any securities exchange or the SEC, and (ii) material
news releases and annual reports relating to any Borrower or any of its
Subsidiaries;
(d) Prompt written notice in the event that any Borrower, any of its
Subsidiaries or any ERISA Affiliate knows, or has reason to know, that (i) any
Termination Event with respect to a Pension Plan has occurred or will occur,
(ii) any condition exists with respect to a Pension Plan which presents a
material risk of termination of the Pension Plan, imposition of an excise tax,
requirement to provide security to the Pension Plan or other liability on any
Borrower, any of its Subsidiaries or any ERISA Affiliate, (iii) any Borrower,
any of its Subsidiaries or any ERISA Affiliate has applied for a waiver of the
minimum funding standard under Section 412 of the Code with respect to a Pension
Plan, (iv) the aggregate amount of the Unfunded Pension Liabilities under all
Pension Plans is in excess of $1,000,000, (v) the aggregate amount of
Unrecognized Retiree Welfare Liability under all applicable Employee Benefit
Plans is in excess of $1,000,000, (vi) any Borrower, any of its Subsidiaries or
any ERISA Affiliate has engaged in a Prohibited Transaction with respect to an
Employee Benefit Plan, (vii) the imposition of any tax under Section 4980B(a) of
the Code or (viii) the assessment of a civil penalty under Section 502(c) of
ERISA, together with a certificate of a Financial Officer of the applicable
Borrower setting forth the details of such event and the action which such
Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect
thereto, together with a copy of all notices and filings with respect thereto,
in each case, which the happening of such event could reasonably be expected to
have a Material Adverse Effect.
(e) Prompt written notice in the event that any Borrower, any of its
Subsidiaries or any ERISA Affiliate shall receive a demand letter from the PBGC
notifying any Borrower, such Subsidiary or such ERISA Affiliate of any final
decision finding liability and the date by which such liability must be paid,
together with a copy of such letter and a certificate of a Financial Officer of
such Borrower setting forth the action which such Borrower, such Subsidiary or
such ERISA Affiliate proposes to take with respect thereto.
(f) Promptly upon the same becoming available, and in any event by the
date such amendment is adopted, a copy of any Pension Plan amendment that any
Borrower, any of its Subsidiaries or any ERISA Affiliate proposes to adopt which
would require the posting of security under Section 401(a)(29) of the Code,
together with a certificate of a Financial Officer of such Borrower setting
forth the reasons for the adoption of such amendment and the action which such
Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect
thereto.
(g) As soon as possible and in any event by the tenth day after any
required installment or other payment under Section 412 of the Code owed to a
Pension Plan shall have become due and owing and remain unpaid a copy of the
notice of failure to make required contributions provided to the PBGC by any
Borrower, any of its Subsidiaries or any ERISA Affiliate under Section 412(n) of
the Code, together with a certificate of a Financial Officer setting forth the
action which such Borrower, such Subsidiary or such ERISA Affiliate proposes to
take with respect thereto.
(h) Promptly upon the same becoming available, and in any event by
15th day of each month, (i) a listing of all Government Receivables created
since the last such report provided and (ii) a duly executed Confirmatory
Assignment of Contract and Notice of Assignment of Accounts Receivable as
Security, substantially in the form of Exhibit A and Exhibit B, respectively, to
the Subsidiary Guaranty and Security Agreement and the Borrower Security
Agreement.
(i) Such other information as the Agent or any Lender shall reasonably
request from time to time.
7.3. Legal Existence
Except as may otherwise be permitted by Sections 8.3 and 8.4,
maintain, and cause each Credit Party and each of its Foreign Subsidiaries to
maintain, its corporate, partnership or analogous existence, as the case may be,
in good standing in the jurisdiction of its incorporation or formation and in
each other jurisdiction in which the failure so to do could reasonably be
expected to have a Material Adverse Effect.
7.4. Taxes
Pay and discharge when due, and cause each Credit Party and each of
its Foreign Subsidiaries so to do, all Taxes upon or with respect to the Parent,
any Credit Party and any Foreign Subsidiary and all Taxes upon the income,
profits and Property of the Parent, any Credit Party and any Foreign Subsidiary,
which if unpaid, could reasonably be expected to have a Material Adverse Effect
or become a Lien on Property of the Parent, any Credit Party and any Foreign
Subsidiary (other than a Lien described in Section 8.2(i)), unless and to the
extent only that such Taxes shall be contested in good faith and by appropriate
proceedings diligently conducted by the Parent, the Credit Party or the Foreign
Subsidiary and provided that any such contested Tax shall not constitute, or
create, a Lien on any Property of the Parent, any Credit Party and any Foreign
Subsidiary senior to the Liens, if any, granted to the Agent and the Lenders by
the Collateral Documents on such Property, and, provided further, that the
Parent, the applicable Credit Party and the applicable Foreign Subsidiary shall
give the Agent prompt notice of such contest and that such reserve or other
appropriate provision as shall be required by the Accountants in accordance with
GAAP shall have been made therefor.
7.5. Insurance
(a) Insurance. Maintain, and cause each Credit Party and each of the
Foreign Subsidiaries to maintain, insurance with financially sound insurance
carriers on such of its Property, against at least such risks, and in at least
such amounts, as are usually insured against by similar businesses, including
public liability (bodily injury and property damage), fidelity, business
interruption, and workers' compensation with deductibles which are customary for
companies engaged in similar businesses, and which, in the case of property
insurance, shall be (i) in amounts sufficient to prevent any Borrower or such
Subsidiary from becoming a co-insurer, and (ii) against all risks; and file with
the Agent within ten days after request therefor a detailed list of such
insurance then in effect, stating the names of the carriers thereof, the policy
numbers, the insureds thereunder, the amounts of insurance, dates of expiration
thereof, and the Property and risks covered thereby, together with a certificate
of the Financial Officer (or such other officer as shall be acceptable to the
Agent) of such Borrower certifying that in the opinion of such officer such
insurance is adequate in nature and amount, complies with the obligations of the
Borrowers under this Section, and is in full force and effect.
(b) Insurance Covering Collateral. Promptly upon request therefor,
deliver or cause to be delivered to the Agent originals or duplicate originals
of all such policies of insurance covering the Collateral. All such insurance
policies in respect of property insurance and business interruption insurance
shall contain a standard loss payable clause and shall be endorsed to provide
that, in respect of the interests of the Agent, the Issuing Bank and the
Lenders: (i) the Agent shall be an additional insured, (ii) 30 days' prior
written notice of any cancellation, reduction of amounts payable, or any changes
and amendments shall be given to the Agent, and (iii) the Agent shall have the
right, but not the obligation, to pay any premiums due or to acquire other such
insurance upon the failure of a Borrower or such Subsidiary to pay the same or
to so insure. All property insurance policies shall name the Agent as sole loss
payee in respect of each claim relating to the Collateral and resulting in a
payment under any such insurance policy exceeding $1,000,000. Provided that no
Default or Event of Default shall exist, the Agent agrees, promptly upon its
receipt thereof, to pay over to the Parent, the applicable Credit Party or the
applicable Foreign Subsidiary that owns the applicable Property the proceeds of
such payment to enable the Parent, the applicable Credit Party or the applicable
Foreign Subsidiary to repair, restore or replace the Property subject to such
claim. To the extent that such the Parent, the Credit Party or the Foreign
Subsidiary fails to repair, restore or replace such Property subject to a claim,
subject to Section 2.2(c), an amount equal to such proceeds shall be immediately
applied as a permanent reduction of the Aggregate Parent Commitment Amount
and/or Aggregate GP Canada Credit Exposure, as the case may be, pursuant to
Section 2.4(b). If a Default or Event of Default shall then exist, the Agent
shall (i) hold the proceeds of such payment as Collateral until such Default or
Event of Default shall no longer exist and then pay over the same to such
Borrower or Credit Party to enable such Borrower or Credit Party to repair,
restore or replace or cause to be repaired, restored or replaced the Property
subject to the claim which resulted in such payment or (ii) hold such proceeds
as Collateral and apply the same to the obligations of the Parent or Credit
Party under the Loan Documents in such order, in such amounts and at such times
as the Agent, with the consent of Required Lenders, shall decide.
(c) Concurrent Insurance. No Borrower nor any of its Subsidiaries
shall take out separate insurance concurrent in form or contributing in the
event of loss with that required to be maintained pursuant to subsection (b)
above unless the Agent has approved the carrier and the form and content of the
insurance policy, including naming the Agent as an additional insured and sole
loss payee thereunder.
7.6. Performance of Obligations
Pay and discharge when due, and cause each Credit Party and each of
the Foreign Subsidiaries so to do, all lawful Indebtedness, obligations and
claims for labor, materials and supplies or otherwise which, if unpaid, could
reasonably be expected to (i) have a Material Adverse Effect, or (ii) become a
Lien upon Property of any Borrower, any Credit Party, or any of the Foreign
Subsidiaries other than a Permitted Lien, unless and to the extent only that the
validity of such Indebtedness, obligation or claim shall be contested in good
faith and by appropriate proceedings diligently conducted and that any such
contested Indebtedness, obligations or claims shall not constitute, or create, a
Lien on any Property of a Borrower, any Credit Party, or any of the Foreign
Subsidiaries senior to the Lien, if any, granted to the Agent under the
Collateral Documents on such Property, and provided that the Parent, Credit
Party or Foreign Subsidiary shall give the Agent prompt notice of any such
contest and that such reserve or other appropriate provision as shall be
required by the Accountants in accordance with GAAP shall have been made
therefor.
7.7. Condition of Property
At all times, maintain, protect and keep in good repair, working order
and condition (ordinary wear and tear excepted), and cause each of the Credit
Parties and Foreign Subsidiaries so to do, all Property necessary to the
operation of any Credit Party's or such Foreign Subsidiary's business.
7.8. Observance of Legal Requirements
Observe and comply in all respects, and cause each of its Subsidiaries
so to do, with all laws, ordinances, orders, judgments, rules, regulations,
certifications, franchises, permits, licenses, directions and requirements of
all Governmental Authorities, which now or at any time hereafter may be
applicable to it, a violation of which could reasonably be expected to have a
Material Adverse Effect, except such thereof as shall be contested in good faith
and by appropriate proceedings diligently conducted by it, provided that the
Borrowers shall give the Agent prompt notice of such contest and that such
reserve or other appropriate provision as shall be required by the Accountants
in accordance with GAAP shall have been made therefor.
7.9. Inspection of Property; Books and Records; Discussions
At all reasonable times, upon reasonable prior notice, at the Lenders'
expense (unless an Event of Default has occurred and is continuing in which case
it shall be at the Borrowers' expense) permit representatives of the Agent and
each Lender to visit the offices of each Borrower, each other Credit Party and
each Foreign Subsidiary, to examine the books and records thereof and
Accountants' reports relating thereto, and to make copies or extracts therefrom,
to discuss the affairs of each Borrower, each other Credit Party and each
Foreign Subsidiary with the respective officers thereof, and to examine and
inspect the Property of each Borrower, each other Credit Party and each Foreign
Subsidiary and to meet and discuss the affairs of each Borrower, each other
Credit Party and each Foreign Subsidiary with the Accountants.
7.10. Authorizations
Maintain, and cause each of its Subsidiaries to maintain, in full
force and effect, all material licenses, franchises, permits, licenses,
authorizations and other rights as are necessary for the conduct of its
business.
7.11. Financial Covenants
(a) Fixed Charge Coverage Ratio. Maintain Fixed Charged Coverage
Ratios of not less than the ratios set forth below as of the last day of each
fiscal quarter in the periods set forth below:
Ratio Period
1.50:1.00 Effective Date through
June 30, 1999
1.50:1.00 July 1, 1999 through
June 30, 2000
1.50:1.00 July 1, 2000 through
June 30, 2001
1.75:1.00 July 1, 2001 and
thereafter
(b) Leverage Ratio. Maintain as of the last day of each fiscal
quarter during the periods set forth below, a Leverage Ratio of not more than
the ratios set forth below:
Ratio Period
3.50:1.00 Effective Date through
June 30, 1999
3.25:1.00 July 1, 1999 through
June 30, 2000
3.00:1.00 July 1, 2000 and
thereafter
(c) Minimum Consolidated Net Worth. Maintain at all times as of the
last day of each fiscal quarter, Consolidated Net Worth in an amount not less
than the sum of (i) 90% of the Consolidated Net Worth on the Effective Date
(after giving effect to the Learning Technologies Acquisition), (ii) 80% of the
Borrower's Consolidated net income (if positive) for each fiscal quarter
commencing June 30, 1998 to such date of determination and (iii) any increase to
Consolidated Net Worth resulting from any equity issuance by the Borrower or any
of its Subsidiaries.
7.12. Additional Subsidiaries
(i) On or prior to each date hereafter upon which a Person shall have
become a Material Subsidiary of the Parent, (a) deliver such certificates, stock
powers and other documents as would be required by Section 5.11(a)(i) and/or
Section 5.11(c)(i) as if such Material Subsidiary were a Material Subsidiary as
of the first Borrowing Date or as otherwise may be required hereby and/or by the
Borrower Security Agreement and/or by the Subsidiary Guaranty and Security
Agreement and such other documents as the Agent shall request; provided, that,
to the extent such new Material Subsidiary is not a Subsidiary of a Credit
Party, the owner of the Capital Stock of such new Material Subsidiary shall
execute all documentation reasonably requested by the Agent in order to effect
the pledge to the Agent, for the ratable benefit of the Lenders, of (A) 100% of
the issued and outstanding Capital Stock of such new Material Subsidiary to the
extent it is a Domestic Subsidiary and (B) 65% of the issued and outstanding
Capital Stock of such new Material Subsidiary to the extent it is a Foreign
Subsidiary (b) cause each such Material Subsidiary that is a Domestic Subsidiary
to become a party to the Subsidiary Guaranty and Security Agreement and provide
and execute all documents requested by the Agent to perfect a Lien in Collateral
granted thereunder (to the extent such Material Subsidiary owns Property of the
type described as Collateral in such Subsidiary Guaranty and Security Agreement)
and (c) cause each such Material Subsidiary that is not a Domestic Subsidiary to
execute an Intercompany Demand Note to the order of Parent or a Subsidiary of
Parent and Parent, or its Subsidiary, as the case may be, shall endorse such
note in blank and deliver same, together with any related Intercompany Demand
Loan Documents, to the Agent (for the ratable benefit of the Lenders), together
with all of the other documents necessary to perfect the Agent's first Lien
therein.
(ii) On or prior to each date hereafter upon which two or more
Subsidiaries (which are not individually Material Subsidiaries) hold 15% or more
of the Consolidated assets of the Parent or account for more than 15% of the
Consolidated EBIDTA, as shown on the most recently delivered financial
statements of the Parent and its Subsidiaries (a) deliver such certificates,
stock powers and other documents as would be required by Section 5.11(a)(i)
and/or Section 5.11(c)(i) as if one or more such Subsidiaries were a Material
Subsidiary as of the first Borrowing Date or as otherwise may be required hereby
and/or by the Borrower Security Agreement and/or by the Subsidiary Guaranty and
Security Agreement and such other documents as the Agent shall request, (b)
cause one or more of such Subsidiaries that is a Domestic Subsidiary to become a
party to the Subsidiary Guaranty and Security Agreement and provide and execute
all documents requested by the Agent to perfect a Lien in Collateral granted
thereunder (to the extent such Material Subsidiary owns Property of the type
described as Collateral in such Subsidiary Guaranty and Security Agreement) and
(c) cause one or more of such Subsidiaries that is not a Domestic Subsidiary to
execute an Intercompany Demand Note to the order of Parent or a Subsidiary of
Parent and Parent, or its Subsidiary, as the case may be, shall endorse such
note in blank and deliver same, together with any related Intercompany Demand
Loan Documents, to the Agent (for the ratable benefit of the Lenders), together
with all of the other documents necessary to perfect the Agent's first Lien
therein so that, after the delivery of the documents and other items required
under sub-sections (i), (ii) and (iii), not more than 15% of the Consolidated
assets of the Parent is held by, and not more than 15% of the Consolidated
EBITDA is attributable to any two or more Subsidiaries which are not Material
Subsidiaries.
8. NEGATIVE COVENANTS
Each Borrower agrees that, so long as this Agreement is in effect, any
Loan or Reimbursement Obligation (contingent or otherwise) in respect of any
Letter of Credit remains outstanding and unpaid, or any other amount is owing
under any Loan Document to any Lender, the Issuing Bank or the Agent, no
Borrower shall, directly or indirectly:
8.1. Indebtedness
Create, incur, assume or suffer to exist any liability for
Indebtedness, or permit any other Credit Party or any Foreign Subsidiary so to
do, except:
(a) Indebtedness of the Borrowers to the Lenders and the Agent under
this Agreement and the Loan Documents;
(b) Current liabilities incurred in the ordinary course of business
not incurred through (i) the borrowing of money, or (ii) the obtaining of credit
except for credit on an open account basis customarily extended and in fact
extended in connection with purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor; materials and supplies to the extent
that payment therefor shall not at the time be required to be made;
(d) Indebtedness in respect of judgments or awards that do not
constitute an Event of Default under Section 9.1(j);
(e) Performance or other guaranties given by any Borrower in respect
of Indebtedness of the other Borrowers that is otherwise permitted pursuant to
this Section 8.1 and in respect of other obligations of the other Borrowers
permitted under this Agreement;
(f) Intercompany Indebtedness;
(g) Indebtedness not otherwise permitted under this Section 8.1 (other
than to Subsidiaries of the Borrowers not organized under the laws of the United
States or any state thereof or to the joint ventures referred to in Schedule
8.1) in aggregate principal amount not to exceed $500,000 at any one time
outstanding;
(h) Indebtedness in respect of deferred liabilities other than for
deferred taxes and other than for borrowed money, including without limitation,
deferred compensation, provided that the aggregate amount of such Indebtedness
of the Borrowers and Material Subsidiaries incurred on or after the date hereof
shall not exceed at any one time outstanding (i) $2,000,000 in the aggregate in
the case of the GPC Group, (ii) $500,000 in the case of Parent, (iii) $500,000
in the case of MXL and (iv) $500,000 in the aggregate for all Material
Subsidiaries (other than those covered in clauses (i) and (iii));
(i) Indebtedness in respect of deferred taxes;
(j) Indebtedness secured by the security interests referred to in
subsection 8.2(viii) hereof and Capitalized Lease Obligations, in each case
incurred only if, after giving effect thereto, the limit on Capital Expenditures
set forth in Section 8.7 hereof would not be breached;
(k) Subordinated Debt;
(l) Indebtedness existing on the date hereof as set forth on Schedule
8.1 hereto and other Indebtedness described in Schedule 8.1 hereto.
(m) (i) Contingent Obligations set forth on Schedule 8.1 hereto and
renewals, extensions or replacements of Contingent Obligations set forth on
Schedule 8.1 hereto in respect of obligations in amounts not exceeding the
amount guaranteed under the Contingent Obligation set forth in Schedule 8.1;
(ii) other Contingent Obligations if (A) at the time of entering into any such
Contingent Obligation the Borrowers shall be in compliance with all of the terms
and conditions of this Agreement and (B) the aggregate amount outstanding of all
Contingent Obligations entered into pursuant to this subsection 8.1(m)(ii)
(whether guarantees of payment or performance) shall at no time exceed
$5,000,000. For the purposes hereof, if more than one Borrower and/or Material
Subsidiary shall have a Contingent Obligation of the same obligations of another
Person, the amount of only one of such Contingent Obligation shall be counted
for purposes of this Section 8.1(m)(ii), and (iii) Contingent Obligations in
respect of the Indebtedness described in Section 8.1(n).
(n) Indebtedness not to exceed $2,000,000 to finance the purchase and
renovation by MXL of real property in Illinois which shall be used by MXL in the
operation of its business.
8.2. Liens
Create, incur, assume or suffer to exist any Lien upon any of its
Property, whether now owned or hereafter acquired, or permit any other Credit
Party or any Foreign Subsidiary so to do, except
(i) Liens for Taxes in the ordinary course of business which are not
delinquent or which are being contested in accordance with Section 7.4, provided
that enforcement of such Liens is stayed pending such contest,
(ii) Liens in connection with workers' compensation, unemployment
insurance or other social security obligations (but not ERISA),
(iii) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in the ordinary
course of business,
(iv) zoning ordinances, easements, rights of way, minor defects,
irregularities, and other similar restrictions affecting real Property which do
not adversely affect the value of such real Property or the financial condition
of any Borrower or any Subsidiary or impair its use for the operation of the
business of any Borrower or any Subsidiary,
(v) Liens arising by operation of law such as mechanics',
materialmen's, carriers', warehousemen's liens incurred in the ordinary course
of business which are not delinquent by more than 90 days or which are being
contested in accordance with Section 7.6, provided that enforcement of such
Liens is stayed pending such contest,
(vi) Liens arising out of judgments or decrees which are being
contested in accordance with Section 7.6, provided that enforcement of such
Liens is stayed pending such contest,
(vii) Liens in favor of the Agent and the Lenders under the Loan
Documents and Liens in connection with the Intercompany Demand Loan Documents,
(viii) Liens under capital leases and Liens on Property (including, in
the event such Property constitutes capital stock of a newly acquired
Subsidiary, Liens on the Property of such Subsidiary) acquired by a Borrower or
a Material Subsidiary after the Effective Date and either existing on such
Property when acquired, or created contemporaneously with such acquisition to
secure the payment or financing of the purchase price thereof, provided that (w)
such Liens attach only to the Property so purchased or acquired, (x) the
Indebtedness secured by such Liens is permitted by Section 8.1(j), (y) the
Indebtedness secured or covered by any such Lien shall not exceed the lesser of
the cost or fair market value of the Property acquired and shall not be renewed
or extended or prepaid from the proceeds of any borrowing by a Borrower and (z)
the aggregate amount of all Indebtedness secured by Liens of the type permitted
by this subsection 8.2(viii) on a Consolidated basis shall not at any time
exceed, (A) in the case of MXL and its Subsidiaries, $500,000 at any one time
outstanding, (B) in the case of the GPC Group, $300,000 incurred in any fiscal
year or $900,000 at any one time outstanding, or (C) in the case of Parent and
its Subsidiaries (other than those referred to in the preceding clauses (A) and
(B)), $500,000 at any one time outstanding,
(ix) Liens on Margin Stock to the extent that a prohibition on such
Liens would result in the Agent and the Lenders being deemed to be "indirectly
secured" by Margin Stock under Regulation U of the Board of Governors of the
Federal Reserve System, as amended, taking into account the value of Margin
Stock owned by the applicable Borrower and its Subsidiaries and any other
relevant facts and circumstances,
(x) Liens on Property of any Credit Party or Foreign Subsidiary
existing on the Effective Date as set forth on Schedule 8.2 as renewed from time
to time, but not any increases in the amounts secured thereby or extensions
thereof to additional Property,
(xi) Liens on Property of any Credit Party or Foreign Subsidiary
acquired after the Effective Date provided that such Liens are limited to the
Property so acquired and were not created in contemplation of such acquisition,
(xii) any interest or title of a lessor in assets being leased by any
of the Borrowers or any Material Subsidiary under an operating lease,
(xiii) Liens on the Property of MXL to secure the Indebtedness
described in Section 8.1(n),
(xiv) the right reserved to or vested in any Governmental Authority by
any statutory provision, or by the terms of any lease, license, franchise, grant
or permit of such Person, to terminate any such lease, license, franchise, grant
or permit or to require annual or other payments as a condition to the
continuance thereof,
(xv) any Lien resulting from security given to a public utility or
Governmental Authority when required by such utility or such Governmental
Authority in connection with the operation of the business of any Borrower, and
(xvi) the reservations, limitations, provisos and conditions, if any,
expressed in any original grants of real property from Her Majesty the Queen in
the Right of the Province of Ontario.
8.3. Merger, Consolidations and Acquisitions
Consolidate with, be acquired by, amalgamate with, merge or wind up
into or with any Person, make any Acquisition or enter into any binding
agreement to do any of the foregoing which is not contingent on obtaining the
consent of the Required Lenders, or permit any Credit Party or Foreign
Subsidiary so to do, except:
(a) Capital Expenditures permitted by Section 8.7;
(b) provided that (i) the Agent shall have received ten days' prior
written notice thereof and (ii) immediately before and after giving effect
thereto no Default or Event of Default shall exist, any direct or indirect
wholly-owned Subsidiary of a Borrower may merge or consolidate with such
Borrower or any other direct or indirect wholly-owned Subsidiary of such
Borrower, provided that in the event of a merger or amalgamation of such
Borrower and such wholly-owned Subsidiary, such Borrower shall be the survivor;
(c) mergers or amalgamations involving a Borrower or a Subsidiary
Guarantor as part of an Acquisition permitted by subsection (e) below as long as
such Borrower or such Subsidiary Guarantor is the surviving entity;
(d) Investments permitted by Section 8.5; and
(e) Acquisitions, provided, however, that the Acquisition Cost in
respect thereof (excluding the Learning Technologies Acquisition) shall not
exceed (i) $10,000,000 with respect to any individual Acquisition and of which
not more than $7,500,000 shall be paid in cash or debt instruments; and (ii)
$20,000,000 in the aggregate for Parent, GP Canada and their Subsidiaries during
any fiscal year (of which not more than $2,000,000 shall be in respect of
Acquisitions by MXL of businesses of the kind conducted by MXL) and of which not
more than $15,000,000 shall be paid in cash or debt instruments and, provided
further with respect to any Acquisition whenever consummated, that:
(i) no Default or Event of Default shall exist immediately before or
after giving effect thereto;
(ii) the Person, business or assets acquired in connection with such
Acquisition are related to businesses conducted by Physics and its Subsidiaries
or MXL on the Effective Date;
(iii) the Parent shall have delivered to the Agent and each Lender,
not less than 10 days prior to the consummation of such Acquisition, (i) a
certificate of a Financial Officer thereof, in all respects reasonably
satisfactory to the Agent and dated the date of such consummation, attaching a
pro-forma Compliance Certificate (after giving effect to such Acquisition and
based on the most recent financial statements delivered to the Agent and each
Lender pursuant to Section 7.1) and (ii) copies of the purchase or merger
agreement or any other material documents executed in connection with the
Acquisition;
(iv) immediately after giving effect to each such Acquisition, all of
the representations and warranties contained in Section 4 shall be true and
correct as if then made;
(v) the Acquisition shall have the approval of the target companies
board of directors (or similar governing body);
(vi) the conditions of Section 8.14 shall have been satisfied in
connection with such Acquisition; and
(vii) the Agent shall have received such other information or
documents as it shall have reasonably requested in connection with such
Acquisition.
8.4. Dispositions
Make any Disposition, or permit any other Credit Party or any Foreign
Subsidiary so to do, except:
(a) Dispositions of any Investments permitted under Section 8.5(a);
(b) Dispositions of Property which, in the reasonable opinion of the
applicable Borrower, Credit Party or Foreign Subsidiary, is obsolete or no
longer useful in the conduct of its business;
(c) Dispositions as to which the following conditions have been
satisfied:
(i) the Agent and the Required Lenders shall have consented thereto,
(ii) no Default or Event of Default shall exist immediately before or
after giving effect thereto,
(iii) the total consideration received or to be received therefor by
the Parent, any Credit Party or any of the Foreign Subsidiaries shall be payable
in cash or non-cash consideration of up to $2,000,000 on or before the closing
thereof and shall not be less than the fair market value thereof as reasonably
determined by the Managing Person of the Parent, such Credit Party or such
Foreign Subsidiary,
(iv) Parent shall (a) apply an amount equal to 100% of the Net Cash
Proceeds thereof within one Business Day of the receipt thereof, to the
mandatory reduction of the Aggregate Parent Commitment Amount pursuant to
Section 2.4, unless such Disposition is of Property owned by GP Canada, in which
case GP Canada, subject to Section 2.2(c) shall apply 100% of the Net Cash
Proceeds thereof within one Business Day of the receipt thereof, to the
mandatory reduction of the Aggregate GP Canada Credit Exposure pursuant to
Section 2.4, and (b) deliver to the Agent 100% of the non-cash consideration to
hold as collateral for the obligations of the Borrowers and Credit Parties to
the Agent and the other Lenders, and
(v) within ten Business Days prior to each such Disposition, the Agent
and the Lenders shall have received a certificate in respect thereto signed by
an Authorized Signatory of each Borrower identifying the Property to be sold or
otherwise disposed of and stating (x) that immediately before or after giving
effect thereto, no Default or Event of Default shall exist, (y) that the
consideration received or to be received by the Borrowers or such Subsidiary for
such Property has been determined by the Managing Person thereof to be not less
than the fair market value of such Property and (z) the total consideration to
be paid in respect of such Disposition, together with estimates of items to be
deducted therefrom in arriving at the Net Cash Proceeds thereof;
(d) Dispositions of marketable securities by the Parent; provided,
that, to the extent that the total consideration therefor (including any
deferred consideration) exceeds $2,000,000 in the aggregate for all such
Dispositions, Parent shall apply 100% of the proceeds in excess of $2,000,000
within one Business Day of the receipt thereof, to the mandatory reduction of
the Aggregate Parent Commitment Amount pursuant to Section 2.4; and
(e) Dispositions of Margin Stock to the extent that a prohibition or
restriction on such Dispositions would result in the Agent and the Lenders being
deemed to be "indirectly secured" by such Margin Stock under Regulation U of the
Board of Governors of the Federal Reserve System, as amended, taking into
account the value of the Margin Stock owned by the applicable Borrower and its
Subsidiaries and any other relevant facts and circumstances.
8.5. Investments, Loans, Etc.
At any time, directly or indirectly, purchase or otherwise hold, own,
acquire or invest in the Capital Stock of, evidence of indebtedness or other
obligation or security issued by, any other Person, or make any loan or advance
to, or enter into any arrangement for the purpose of providing funds or credit
to, or make any Acquisition (other than a Permitted Acquisition), or become a
partner or joint venturer in any partnership or joint venture, or enter into any
Interest Rate Protection Arrangement, or make any other investment (whether in
cash or other Property) in any other Person, or make any commitment or otherwise
to agree to do any of the foregoing (all of which are sometimes referred to
herein as "Investments"), or permit any of its Subsidiaries so to do, except:
(a) Investments in Cash Equivalents;
(b) Investments existing on the Effective Date as set forth on
Schedule 8.5;
(c) normal business banking accounts and short-term certificates of
deposit and time deposits in, or issued by, federally insured institutions in
amounts not exceeding the limits of such insurance;
(d) Investments in Interest Rate Protection Arrangements (where used
for hedging purposes) covering a notional principal amount not in excess of the
Aggregate Commitment Amount;
(e) deposits in connection with potential Permitted Acquisitions,
provided that (i) no Default or Event of Default would exist before and after
giving effect to any such Permitted Acquisition, (ii) the aggregate amount of
such deposits at any one time on deposit for all such Acquisitions does not
exceed $1,000,000, and (iii) the deposit (together with earnings thereon) is to
be applied in full to the purchase price if such Permitted Acquisition is
consummated and (iv) such deposit is invested in Cash Equivalents pending such
application;
(f) loans and extensions of credit to employees of a Credit Party or
Foreign Subsidiary not in excess of $1,000,000 in the aggregate at any one time
outstanding;
(g) Investments by any Borrower or any Subsidiary in Intercompany
Indebtedness permitted under Section 8.1;
(h) Investments in the form of a subordinated note not in excess of
$5,000,000 payable to Parent in connection with the Disposition of Five Star;
(i) shares of stock owned by Parent and/or its Subsidiaries on the
date hereof as set forth on Schedule 8.5;
(j) Investments of the Borrowers described on Schedule 8.1;
(k) Investments by Parent in GP(UK); and
(l) other Investments in an aggregate amount not to exceed $1,500,000
at any time outstanding.
8.6. Restricted Payments.
Declare or pay any Restricted Payments payable in cash or otherwise,
apply any of its Property thereto or set apart any sum therefor, or permit any
of its Subsidiaries to do so, except:
(i) Parent may declare and pay any dividend payable solely in shares
of its common stock;
(ii) any Subsidiary may declare and pay dividends to its immediate
parent.
8.7. Capital Expenditures; Operating Leases.
(a) Make any Capital Expenditures, or incur any obligation to make
Capital Expenditures, or permit any other Credit Party or any Foreign Subsidiary
so to do, in an aggregate Consolidated amount in excess of $3,500,000 in any
fiscal year. Capital Expenditures shall be calculated on a noncumulative basis
so that amounts not expended in a fiscal year may not be carried over and
expended in any subsequent fiscal year.
(b) Expend, or permit any other Credit Party or any Foreign Subsidiary
so to do, in an aggregate Consolidated amount in excess of $15,000,000 in any
fiscal year for the lease, rental or hire of real or personal property pursuant
to any rental agreement therefor other then in connection with Capital Lease
Obligations.
8.8. Business and Name Changes
(i) Materially change the nature of the business of any Borrower or
its Subsidiaries as conducted on the Effective Date, or alter or modify its
structure or status, or change its fiscal year from that in effect on the
Effective Date, or permit any of the Credit Parties or Foreign Subsidiaries so
to do, or
(ii) Change the name or chief executive office of any Borrower, any
other Credit Party or any Foreign Subsidiary unless the Agent shall have
received (1) 30 days' notice prior to a change in name or chief executive office
of any such Person and (2) such documents as the Agent may request to continue
the perfection of any Liens on the Property of such Borrower, any such other
Credit Party or such Foreign Subsidiary whose name or chief executive office is
to be changed.
8.9. ERISA
Cause any Pension Plan to have a Funded Current Liability Percentage
of less than 60%, or increase benefits, or permit any of its Subsidiaries so to
do, under any Employee Benefit Plan or establish or contribute to any new
Employee Benefit Plan except to the extent that the same could not reasonably be
expected to result in a Material Adverse Effect.
8.10. Prepayments of Indebtedness
Prepay or obligate itself to prepay, in whole or in part, any
Indebtedness (other than the Indebtedness under the Loan Documents), or permit
any other Credit Party or any Foreign Subsidiary so to do other than provided no
Default or Event of Default exists before and after giving effect to any such
prepayment (i) payments to another Credit Party, (ii) the Parent may pay up to
$500,000 in the aggregate to purchase, redeem or prepay its outstanding Swiss
Franc denominated bonds described on Schedule 8.1 and (iii) the Parent may
purchase, redeem or prepay such Swiss Franc denominated bonds by issuing shares
of common stock or other securities permitted to be issued pursuant to Section
8.13 hereof as payment therefor.
8.11. Amendments, Etc. of Certain Agreements
Subject to Section 8.8(ii) in respect of GP Canada, enter into or
agree to any amendment, modification or waiver of any term or condition of its
Organizational Documents in any way which could reasonably be expected to have a
Material Adverse Effect, or permit any of its Subsidiaries so to do.
8.12. Transactions with Affiliates
Become a party to any transaction with an Affiliate (other than a
Credit Party or a Foreign Subsidiary), or permit any Credit Party or any of the
Foreign Subsidiaries so to do, unless the Parent's, the applicable Credit
Party's or applicable Foreign Subsidiary's Managing Person shall have determined
that the terms and conditions relating thereto are as favorable to the Parent,
GP Canada, such Credit Party, or such Foreign Subsidiary as those which would be
obtainable at the time in a comparable arms-length transaction with a Person
other than an Affiliate.
8.13. Issuance of Additional Capital Stock
Issue any additional Capital Stock, or permit any Credit Party or any
Foreign Subsidiary so do do, except that the Parent (i) may issue additional
Capital Stock in connection with, and as part of the Acquisition Cost of, a
Permitted Acquisition (other than Capital Stock subject to mandatory redemption
or redemption at the option of the holder thereof, in whole or in part),
provided that no Default or Event of Default would exist before and after giving
effect thereto, (ii) may issue additional Capital Stock in connection with a
prepayment described in and permitted by Section 8.10 or (iii) may issue
additional Capital Stock in connection with the payment of any dividend.
8.14. Limitation on Upstream Dividends by Subsidiaries
Permit or cause any of its Subsidiaries to enter into or agree, or
otherwise be or become subject, to any agreement, contract or other arrangement
(other than this Agreement) with any Person pursuant to the terms of which (i)
such Subsidiary is or would be prohibited from declaring or paying any cash
dividends on any class of its Capital Stock owned directly or indirectly by a
Borrower or any of the other Subsidiaries or from making any other distribution
on account of any class of any such Capital Stock (herein referred to as
"Upstream Dividends"), or (ii) the declaration or payment of Upstream Dividends
by a Subsidiary to a Borrower or another Subsidiary, on an annual or cumulative
basis, is or would be otherwise limited or restricted.
8.15. Limitation on Negative Pledges
Enter into any agreement, other than (i) this Agreement and (ii)
purchase money mortgages or capital leases permitted by this Agreement (in which
cases, any prohibition or limitation shall only be effective against the assets
financed thereby), or permit any of its Subsidiaries so to do, which prohibits
or limits the ability of any Borrower or any Subsidiary to create, incur, assume
or suffer to exist any Lien upon any of its Property or revenues, whether now
owned or hereafter acquired.
9. DEFAULT
9.1. Events of Default
The following shall each constitute an "Event of Default" hereunder:
(a) The (i) failure of any Borrower to make any payment of principal
on any Note, or any reimbursement payment hereunder or under any Reimbursement
Agreement, when due and payable, or (ii) failure of Parent to make any deposit
into the Cash Collateral Account when required hereby; or
(b) The failure of any Borrower to make any payment of interest, Fees,
expenses or other amounts payable under any Loan Document (or otherwise to the
Agent with respect to the loan facilities established hereunder) within five
Business Days of the date when due and payable; or
(c) The failure of any Borrower to observe or perform any covenant or
agreement contained in Sections 2.6, 7.1, 7.3, 7.11, 7.12 or Section 8; or
(d) The failure of any Credit Party to observe or perform any other
term, covenant, or agreement contained in any Loan Document and such failure
shall have continued unremedied for a period of 30 days after such Credit Party
shall have obtained knowledge thereof; or
(e) Any representation or warranty made by any Credit Party (or by an
officer thereof on its behalf) in any Loan Document or in any certificate,
report, opinion (other than an opinion of counsel) or other document delivered
or to be delivered pursuant thereto, shall prove to have been incorrect or
misleading (whether because of misstatement or omission) in any material respect
when made; or
(f) Liabilities and/or other obligations of any Borrower (other than
its obligations hereunder), any of its Foreign Subsidiaries or any other Credit
Party, whether as principal, guarantor, surety or other obligor, for the payment
of any Indebtedness or operating leases in an aggregate amount in excess of
$500,000 (or the foreign currency equivalent) (i) shall become or shall be
declared to be due and payable prior to the expressed maturity thereof, or (ii)
shall not be paid when due or within any grace period for the payment thereof,
(iii) any holder of any such obligation shall have the right to declare such
obligation due and payable prior to the expressed maturity thereof or (iv) as a
consequence of the occurrence or continuation of any event or condition, any
Borrower, any of its Foreign Subsidiaries or any other Credit Party, has become
obligated to purchase or repay any Indebtedness before its regularly scheduled
maturity date; or
(g) Any license, franchise, permit, right, approval or agreement of
any Borrower, any of its Foreign Subsidiaries or any other Credit Party, is not
renewed, or is suspended, revoked or terminated and the non-renewal, suspension,
revocation or termination thereof has a Material Adverse Effect; or
(h) Any Borrower, any of its Foreign Subsidiaries or any other Credit
Party, shall (i) suspend or discontinue its business, (ii) make an assignment
for the benefit of creditors, (iii) generally not be paying its debts as such
debts become due, (iv) admit in writing its inability to pay its debts as they
become due, (v) file a voluntary petition in bankruptcy, (vi) become insolvent
(however such insolvency shall be evidenced), (vii) file any petition or answer
or institute any proceeding seeking for itself any reorganization, arrangement,
composition, readjustment of debt, liquidation or dissolution or similar relief,
including any plan of compromise or arrangement or other corporate proceeding
involving or affecting its creditors, under any present or future statute, law
or regulation of any jurisdiction, (viii) petition or apply to any tribunal for
any receiver, custodian or any trustee or other similar official for it or any
substantial part of its Property, (ix) be the subject of any such proceeding
filed against it which remains undismissed for a period of 60 days, (x) file any
answer admitting or not contesting the material allegations of any such petition
filed against it or any order, judgment or decree approving such petition in any
such proceeding, (xi) seek, approve, consent to, or acquiesce in any such
proceeding, or in the appointment of any trustee, receiver, sequestrator,
custodian, liquidator, or fiscal agent for it, or any substantial part of its
Property, or an order is entered appointing any such trustee, receiver,
custodian, liquidator or fiscal agent and such order remains in effect for 60
days, or (xii) take any formal action for the purpose of effecting any of the
foregoing or looking to the liquidation or dissolution of such Borrower, such
Foreign Subsidiary or such other Credit Party; or
(i) An order for relief is entered under the bankruptcy or insolvency
laws of any jurisdiction or any other decree or order is entered by a court
having jurisdiction (i) adjudging any Borrower, any of its Foreign Subsidiaries
or any other Credit Party, bankrupt or insolvent, (ii) approving as properly
filed a petition seeking reorganization, liquidation, arrangement, adjustment or
composition of or in respect of any Borrower, any of its Foreign Subsidiaries or
any other Credit Party, under the bankruptcy or insolvency laws of any
jurisdiction, (iii) appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of any Borrower, any of its
Foreign Subsidiaries or any other Credit Party, or of any substantial part of
the Property of any thereof, or (iv) ordering the winding up or liquidation of
the affairs of any Borrower, any of its Foreign Subsidiaries or any other Credit
Party, and any such decree or order continues unstayed and in effect for a
period of 60 days; or
(j) Judgments or decrees against any Borrower, any of its Foreign
Subsidiaries or any other Credit Party, aggregating in excess of $500,000 (or
the foreign currency equivalent) shall remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of 60 days; or
(k) Any Loan Document shall cease, for any reason, to be in full force
and effect, or any Credit Party shall so assert in writing or shall disavow any
of its obligations under any Loan Document, or any "Event of Default" shall have
occurred under, and as such term is defined in, any Loan Document; or
(l) The occurrence of a Change in Management; or
(m) (i) Any Termination Event shall occur; (ii) any Accumulated
Funding Deficiency, whether waived, shall exist with respect to any Pension
Plan; (iii) any Person shall engage in any Prohibited Transaction involving any
Employee Benefit Plan; (iv) any Borrower, any of its Subsidiaries or any ERISA
Affiliate shall fail to pay when due an amount which is payable by it to the
PBGC or to a Pension Plan under Title IV of ERISA; (v) the imposition of any tax
under Section 4980B(a) of the Code; (vi) the assessment of a civil penalty with
respect to any Employee Benefit Plan under Section 502(c) of ERISA; or (vii) any
other event or condition shall occur or exist with respect to an Employee
Benefit Plan which in the case of clauses (i) through (vii) would, individually
or in the aggregate, have a Material Adverse Effect; or
(n) If a sale in bulk by the Seller to GP Canada is set aside or
declared void and either (i) any material portion of the Learning Technologies
Acquisition Assets have been returned to the Sellers (or another Person) as a
result thereof, or (ii) such sale in bulk has been so set aside or declared void
pursuant to a final judgment by a court of competent jurisdiction under the Bulk
Sales Act (Ontario) or any similar legislation in any other Canadian
jurisdiction, in respect of which all periods for appeal have expired and no
appeals have been instituted (provided, that, as to this Event of Default set
forth in this subsection 9.1(n) only, the remedies set forth below in Section
9.2 shall only apply to the Term Loan).
9.2. Contract Remedies
(a) Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, (i) if such event is an Event of
Default specified in clause (h) or (i) above, the Parent Commitments of all of
the Lenders and the GP Canada Commitments of the Lenders shall immediately and
automatically terminate and the Revolving Credit Loans, the Term Loans, all
accrued and unpaid interest thereon and all other amounts owing under the Loan
Documents shall immediately become due and payable, and the Agent may, and, upon
the direction of the Required Lenders shall, exercise any and all remedies and
other rights provided in the Loan Documents, and (ii) if such event is any other
Event of Default, any or all of the following actions may be taken: (A) with the
consent of the Required Lenders, the Agent may, and upon the direction of the
Required Lenders shall, by notice to the Borrowers, declare the Parent
Commitments of all of the Lenders and the GP Canada Commitments of the Lenders
terminated forthwith, whereupon such Commitments shall immediately terminate,
and (B) with the consent of the Required Lenders, the Agent may, and upon the
direction of the Required Lenders shall, by notice of default to the Borrowers,
declare the Revolving Credit Loans, the Term Loans, all accrued and unpaid
interest thereon and all other amounts owing under the Loan Documents to be due
and payable forthwith, whereupon the same shall immediately become due and
payable, and the Agent may, and upon the direction of the Required Lenders
shall, exercise any and all remedies and other rights provided in the Loan
Documents. Except as otherwise provided in this Section, presentment, demand,
protest and all other notices of any kind are hereby expressly waived. Each
Borrower hereby further expressly waives and covenants not to assert any
appraisement, valuation, stay, extension, redemption or similar laws, now or at
any time hereafter in force which might delay, prevent or otherwise impede the
performance or enforcement of any Loan Document.
(b) In the event that the Commitments of all the Lenders shall have
been terminated or the Revolving Credit Loans, the Term Loans, all accrued and
unpaid interest thereon and all other amounts owing under the Loan Documents
shall have been declared due and payable pursuant to the provisions of this
Section, any funds received by the Agent and the Lenders from or on behalf of
any Borrower shall be applied by the Agent and the Lenders in liquidation of the
Loans of such Borrower and the other obligations of such Borrower under the Loan
Documents in the following manner and order: (i) first, to the payment of
interest on, and then the principal portion of, any Loans which the Agent may
have advanced on behalf of any Lender for which the Agent has not then been
reimbursed by such Lender or such Borrower; (ii) second, to the payment of any
fees or expenses due the Agent from one or both Borrowers, (iii) third, to
reimburse the Agent and the Lenders for any expenses (to the extent not paid
pursuant to clause (ii) above) due from such Borrower pursuant to the provisions
of Section 11.5; (iv) fourth, to the payment of accrued Fees and all other fees,
expenses and amounts due under the Loan Documents (to the extent not paid
pursuant to clause (ii) above) (other than principal and interest on the Loans),
(v) fifth, to the payment, (x) in the case of interest received from or on
behalf of Parent or on account of the Parent Facility, pro rata according to the
Parent Outstanding Percentage of each Lender, of interest due on the Revolving
Credit Loans of each Lender and (y) in the case of interest received from or on
behalf of GP Canada or on account of the GP Canada Facility, pro rata according
to the GP Canada Outstanding Percentage of each Lender, of interest due on the
Term Loans of each Lender; provided, that, to the extent a payment is not
directly from a Borrower, such payment shall be applied, in the sole discretion
of the Required Lenders against Obligations of one or both Borrowers as
determined by such Required Lenders; (vi) sixth, to the payment pro rata (x) in
the case of principal received from or on behalf of Parent or on account of the
Parent Facility, pro rata according to the Parent Outstanding Percentage of each
Lender, of principal outstanding on the Revolving Credit Loans and (y) in the
case of principal received from or on behalf of GP Canada or on account of the
GP Canada Facility, pro rata according to the GP Canada Outstanding Percentage
of each Lender, of principal outstanding on the Term Loans of such Lender;
provided, that, if the Agent determines that a payment is not directly from a
Borrower, such payment shall be applied, in the sole discretion of the Required
Lenders, against Obligations of one or both Borrowers as determined by such
Required Lenders; and (vii) seventh, to the payment of any other amounts owing
to the Agent, the Issuing Bank and the Lenders under any Loan Document.
10. THE AGENT
10.1. Appointment
Each of the Issuing Bank and each Lender hereby irrevocably designates
and appoints Fleet as the Agent of the Issuing Bank and such Lender under the
Loan Documents and each of the Issuing Bank and each Lender hereby irrevocably
authorizes the Agent to take such action on its behalf under the provisions of
the Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of the Loan Documents, together
with such other powers as are reasonably incidental thereto. The duties of the
Agent shall be mechanical and administrative in nature, and, notwithstanding any
provision to the contrary elsewhere in any Loan Document, the Agent shall not
have any duties or responsibilities other than those expressly set forth
therein, or any fiduciary relationship with, or fiduciary duty to, the Issuing
Bank or any Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into the Loan Documents or
otherwise exist against the Agent.
10.2. Delegation of Duties
The Agent may execute any of its duties under the Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to rely upon, and
shall be fully protected in, and shall not be under any liability for, relying
upon, the advice of counsel concerning all matters pertaining to such duties.
10.3. Exculpatory Provisions
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with the Loan Documents (except for its or such Person's own gross
negligence or willful misconduct), or (ii) responsible in any manner to the
Issuing Bank or any of the Lenders for any recitals, statements, representations
or warranties made by any Borrower or any other Credit Party or any officer
thereof contained in the Loan Documents or in any certificate, report, statement
or other document referred to or provided for in, or received by the Agent under
or in connection with, the Loan Documents or for the value, validity,
effectiveness, genuineness, perfection, enforceability or sufficiency of any of
the Loan Documents or for any failure of any Borrower or any other Credit Party
or any other Person to perform its obligations thereunder. The Agent shall not
be under any obligation to the Issuing Bank or any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, the Loan Documents, or to inspect the Property, books or
records of any Borrower or any other Credit Party . The Issuing Bank and the
Lenders acknowledge that the Agent shall not be under any duty to take any
discretionary action permitted under the Loan Documents unless the Agent shall
be instructed in writing to do so by the Issuing Bank and Required Lenders and
such instructions shall be binding on the Issuing Bank and all Lenders and all
holders of the Notes; provided, however, that the Agent shall not be required to
take any action which exposes the Agent to personal liability or is contrary to
law or any provision of the Loan Documents. The Agent shall not be under any
liability or responsibility whatsoever, as Agent, to any Borrower, or any other
Credit Party or any other Person as a consequence of any failure or delay in
performance, or any breach, by the Issuing Bank or any Lender of any of its
obligations under any of the Loan Documents.
10.4. Reliance by Agent
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
opinion, letter, cablegram, telegram, 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 a proper Person or Persons
and upon advice and statements of legal counsel (including counsel to any
Borrower or any other Credit Party), independent accountants and other experts
selected by the Agent. The Agent may treat the Issuing Bank or each Lender, as
the case may be, or the Person designated in the last notice filed with it under
this Section, as the holder of all of the interests of the Issuing Bank or such
Lender, as the case may be, in its Loans, in its Notes, the Letters of Credit
and the Reimbursement Obligations, as applicable, until written notice of
transfer, signed by the Issuing Bank or such Lender (or the Person designated in
the last notice filed with the Agent) and by the Person designated in such
written notice of transfer, in form and substance satisfactory to the Agent,
shall have been filed with the Agent. The Agent shall not be under any duty to
examine or pass upon the validity, effectiveness, enforceability or genuineness
of the Loan Documents or any instrument, document or communication furnished
pursuant thereto or in connection therewith, and the Agent shall be entitled to
assume that the same are valid, effective and genuine, have been signed or sent
by the proper parties and are what they purport to be. The Agent shall be fully
justified in failing or refusing to take any action under the Loan Documents
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under the Loan Documents in accordance
with a request or direction of the Required Lenders, and such request or
direction and any action taken or failure to act pursuant thereto shall be
binding upon the Issuing Bank, all the Lenders and all future holders of the
Notes and the Reimbursement Obligations.
10.5. Notice of Default
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless the Agent has received
written notice thereof from the Issuing Bank, a Lender or a Borrower. In the
event that the Agent receives such a notice, the Agent shall promptly give
notice thereof to the Issuing Bank, the Lenders and a Borrower. The Agent shall
take such action with respect to such Default or Event of Default as shall be
directed by the Required Lenders, provided, however, that unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem to be in the best interests
of the Lenders.
10.6. Non-Reliance on Agent and Other Lenders
Each of the Issuing Bank and each Lender expressly acknowledges that
neither the Agent nor any of its respective officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any representations or
warranties to it and that no act by the Agent hereinafter, including any review
of the affairs of any Borrower or any other Credit Party, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each of
the Issuing Bank and each Lender represents to the Agent that it has,
independently and without reliance upon the Agent, the Issuing Bank or any
Lender, and based on such documents and information as it has deemed appropriate
made its own evaluation of and investigation into the business, operations,
Property, financial and other condition and creditworthiness of each Borrower
and each other Credit Party and the value and Lien status of any collateral
security and made its own decision to enter into this Agreement. Each of the
Issuing Bank and each Lender also represents that it will, independently and
without reliance upon the Agent, the Issuing Bank or any Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, evaluations and decisions in taking or
not taking action under any Loan Document, 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 each Borrower and each
other Credit Party and the value and Lien status of any collateral security.
Except for notices, reports and other documents expressly required to be
furnished to the Issuing Bank and/or the Lenders by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide the Issuing Bank or
any Lender with any credit or other information concerning the business,
operations, Property, financial and other condition or creditworthiness of any
Borrower and any other Credit Party which at any time may come into the
possession of the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
10.7. Indemnification
Each Lender agrees to indemnify and hold harmless the Agent in its
capacity as such (to the extent not promptly reimbursed by the Borrowers and
without limiting the obligation of the Borrowers to do so), ratably according to
its Aggregate Commitment Percentage or, in the event any Loans shall be
outstanding, its Outstanding Percentage, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever including any amounts
paid to the Lenders (through the Agent) by a Borrower or any other Credit Party
pursuant to the terms of the Loan Documents, that are subsequently rescinded or
avoided, or must otherwise be restored or returned, which may at any time
(including at any time following the payment of the Revolving Credit Loans and
Revolving Credit Notes) be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of the Loan Documents or any other
documents contemplated by or referred to therein or the transactions
contemplated thereby or any action taken or omitted to be taken by the Agent
under or in connection with any of the foregoing; provided, however, that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements to the extent resulting from the finally adjudicated
gross negligence or willful misconduct of the Agent. Without limitation of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its pro rata share of any unpaid costs and expenses (including reasonable fees
and expenses of counsel) payable by a Borrower under Section 11.5 to the extent
that the Agent has not been paid such fees or has not been reimbursed for such
costs and expenses, by such Borrower. The failure of any Lender to reimburse the
Agent promptly upon demand for its pro rata share of any amount required to be
paid by the Lenders to the Agent as provided in this Section shall not relieve
any other Lender of its obligation hereunder to reimburse the Agent for its pro
rata share of such amount, but no Lender shall be responsible for the failure of
any other Lender to reimburse the Agent for such other Lender's pro rata share
of such amount. The agreements in this Section shall survive the termination of
the Commitments of all of the Lenders and the payment of all amounts payable
under the Loan Documents.
10.8. Agent in Its Individual Capacity
Fleet and its affiliates may make secured or unsecured loans to,
accept deposits from, issue letters of credit for the account of, act as trustee
under indentures of, and generally engage in any kind of business with, either
Borrower or any other Credit Party as though Fleet were not Agent hereunder and
Fleet did not arrange the transactions contemplated hereby. With respect to the
Commitments made or renewed by Fleet and the Notes issued to, and the
Reimbursement Obligations owing to, Fleet, Fleet shall have the same rights and
powers under the Loan Documents as any Lender and may exercise the same as
though it were not the Agent, and the terms "Lender" and "Lenders" shall in each
case include Fleet.
10.9. Successor Agent
If at any time the Agent deems it advisable, in its sole discretion,
it may submit to the Issuing Bank, each of the Lenders and the Parent a written
notice of its resignation as Agent under the Loan Documents, such resignation to
be effective upon the earlier of (i) the written acceptance of the duties of the
Agent under the Loan Documents by a successor Agent and (ii) on the 30th day
after the date of such notice. Upon any such resignation, the Required Lenders
shall have the right to appoint from among the Lenders which is a commercial
bank a successor Agent. If no successor Agent shall have been so appointed by
the Required Lenders and accepted such appointment in writing within 30 days
after the retiring Agent's giving of notice of resignation, then the retiring
Agent may, on behalf of the Issuing Bank and the Lenders, appoint a successor
Agent, which successor Agent shall be a commercial bank organized under the laws
of the United States or any State thereof and having a combined capital,
surplus, and undivided profits of at least $250,000,000 and which shall be
reasonably acceptable to the Parent. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent's rights, powers, privileges and
duties as Agent under the Loan Documents shall be terminated. Each Borrower, the
other Credit Parties, the Issuing Bank and the Lenders shall execute such
documents as shall be necessary to effect such appointment. After any retiring
Agent's resignation as Agent, the provisions of the Loan Documents shall inure
to its benefit as to any actions taken or omitted to be taken by it, and any
amounts owing to it, while it was Agent under the Loan Documents. If at any time
there shall not be a duly appointed and acting Agent, each Borrower agrees to
make each payment due under the Loan Documents directly to the Issuing Bank and
the Lenders entitled thereto during such time.
11. OTHER PROVISIONS
11.1. Amendments and Waivers
Notwithstanding anything to the contrary contained in any Loan
Document, with the written consent of the Required Lenders, the Agent and the
appropriate parties to the Loan Documents (other than the Issuing Bank and the
Lenders) may, from time to time, enter into written amendments, supplements or
modifications thereof and, with the consent of the Required Lenders, the Agent
on behalf of the Issuing Bank and the Lenders, may execute and deliver to any
such parties a written instrument waiving or consenting to the departure from,
on such terms and conditions as the Agent may specify in such instrument, any of
the requirements of the Loan Documents or any Default or Event of Default and
its consequences; provided, however, that no such amendment, supplement,
modification, waiver or consent shall:
(a) without the consent of all of the Lenders (i) increase the Parent
Commitment Amount of any Lender, (ii) extend the Parent Commitment Period, (iii)
reduce the rate or amount, or extend the time of payment, of the Parent
Commitment Fee or the Letter of Credit Commissions, (iv) reduce the rate or
amount of, or extend the time of payment of, interest on any Revolving Credit
Loan or any Revolving Credit Note or Reimbursement Obligation, (v) reduce the
amount, or extend the time of payment of any installment or other payment of
principal on any Revolving Credit Loan or any Revolving Credit Note or
Reimbursement Obligation, (vi) decrease or forgive the principal amount of any
Revolving Credit Loan or any Revolving Credit Note or Reimbursement Obligation,
or (vii) consent to any assignment or delegation by Parent of any of its rights
or obligations under any Loan Document;
(b) without the consent of all of the Lenders (i) increase the GP
Canada Commitment Amount of any Lender, (ii) reduce the rate or amount, or
extend the time of payment of, interest on any Term Loan or any Term Note, (iii)
reduce the amount, or extend the time of payment of any installment or other
payment of principal on any Term Loan or any Term Note, (iv) decrease or forgive
the principal amount of any Term Loan or any Term Note, or (v) consent to any
assignment or delegation by GP Canada of any of its rights or obligations under
any Loan Document;
(c) without the consent of all the Lenders (i) change the provisions
of Section 3.5, 3.6, 3.7, 3.9, 3.10, 9.1(a), this Section 11.1 or Section
11.7(a), (ii) change the definition of "Required Lenders", or any provision of
this Agreement requiring the consent or approval of all Lenders (iii) change the
several nature of the Lenders' obligations, (iv) change any provision governing
the sharing of payments and liabilities among the Lenders, (v) release all or
substantially all of the obligations of any Credit Party under any Loan
Document, (other than in connection with (A) a Disposition permitted under
Section 8.4, or (B) any release specifically provided for in the Collateral
Documents), or (vi) release any substantial portion of the Collateral or any
security interest therein (other than in connection with (A) a Disposition
permitted under Section 8.4, (B) a dissolution permitted by Section 7.3, or (C)
any release specifically provided for in the Collateral Documents);
(d) without the written consent of the Issuing Bank, amend, modify or
waive any provision of Sections 2.7, 2.8, 2.9 or 3.2(b)(ii) or otherwise change
any of the rights or obligations of the Issuing Bank under any Loan Document;
and
(e) without the written consent of the Agent, amend, modify or waive
any provision of Section 10 or otherwise change any of the rights or obligations
of the Agent under any Loan Document.
Any such amendment, supplement, modification, waiver or consent shall
apply equally to the Agent, the Issuing Bank and each of the Lenders and shall
be binding upon the parties to the applicable Loan Document, the Lenders, the
Issuing Bank the Agent and all future holders of the Notes and the Reimbursement
Obligations. In the case of any waiver, the parties to the applicable Loan
Document, the Issuing Bank, the Lenders and the Agent shall be restored to their
former position and rights hereunder and under the outstanding Notes and other
Loan Documents to the extent provided for in such waiver, and any Default or
Event of Default waived shall not extend to any subsequent or other Default or
Event of Default, or impair any right consequent thereon. Notwithstanding
anything to the contrary contained in any Loan Document, the Agent may, at any
time and from time to time without the consent of any one or more of the
Lenders, release any Collateral or any security interest therein in connection
with (A) any disposition of such Collateral permitted by Section 8.4, (B) any
dissolution permitted by Section 7.3, or (C) any release specifically provided
for in the Collateral Documents.
11.2. Notices
All notices, requests and demands to or upon the respective parties to
the Loan Documents to be effective shall be in writing and, unless otherwise
expressly provided therein, shall be deemed to have been duly given or made when
delivered by hand, one Business Day after having been sent by overnight courier
service, or when deposited in the mail, first- class postage prepaid, or, in the
case of notice by telecopy, when sent, addressed as follows in the case of
Parent, GP Canada, the Agent or the Issuing Bank, and as set forth in Schedule
11.2 in the case of each Lender, or addressed to such other addresses as to
which the Agent may be hereafter notified by the respective parties thereto or
any future holders of the Revolving Credit Notes:
Parent or GP Canada:
c/o GP Strategies Corporation
9 West 57th Street
Suite 4170
New York, New York 10019
Attention: Scott Greenberg, CFO
Telephone: (212) 230-9529
Telecopy: (212) 230-9500
with a copy to:
David Pollak, Esq.
Morgan, Lewis & Bockius, LLP
101 Park Avenue
New York, New York
Telephone: (212) 309-6814
Telecopy: (212) 309-6273
The Agent or the Issuing Bank:
Fleet Bank, National Association
1185 Avenue of the Americas
New York, New York 10036
Attention: David Sunderwirth
Telephone: (212) 819-5766
Telecopy: (212) 819-4120
with copies to:
Fleet Financial Group, Inc.
1 Federal Street
Boston, MA 02211
Attention: John Mann cla
Telephone: (617) 346-0429
Telecopy: (617) 346-5833
and
Richard M. Skoller, Esq.
Emmet, Marvin & Martin, LLP
120 Broadway
New York, New York 10271
Telephone: (212) 238-3041
Telecopy: (212) 238-3100
except that any notice, request or demand by a Borrower to or upon the Agent,
the Issuing Bank or the Lenders pursuant to Sections 2.3, 2.7 or 3.3 shall not
be effective until received. Any party to a Loan Document may rely on signatures
of the parties thereto which are transmitted by telecopy or other electronic
means as fully as if originally signed.
11.3. No Waiver; Cumulative Remedies
No failure to exercise and no delay in exercising, on the part of the
Agent, the Issuing Bank or any Lender, any right, remedy, power or privilege
under any Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege under any Loan
Document preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges under the Loan Documents are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
11.4. Survival of Representations and Warranties and Certain
Obligations
(a) All representations and warranties made under the Loan Documents
and in any document, certificate or statement delivered pursuant thereto or in
connection therewith shall survive the execution and delivery of the Loan
Documents.
(b) The obligations of the Borrowers under Sections 3.5, 3.6, 3.7,
3.8, 3.9, 3.10, 11.5 and 11.8 shall survive the termination of the Commitments
of all of the Lenders, the Letter of Credit Commitment, and the payment of the
Revolving Credit Loans, the Reimbursement Obligations and all other amounts
payable under the Loan Documents.
11.5. Expenses
Each Borrower agrees, promptly upon presentation of a statement or
invoice therefor, and whether any Revolving Credit Loan is made or any Letter of
Credit is issued (i) to pay or reimburse Fleet (in its capacity as Agent and
arranger) for all its respective out-of-pocket costs and expenses reasonably
incurred in connection with the development, preparation, execution and
syndication of, the Loan Documents and any amendment, supplement or modification
thereto (whether or not executed or effective), any documents prepared in
connection therewith and the consummation of the transactions contemplated
thereby, including the reasonable fees and disbursements of Special Counsel,
(ii) to pay or reimburse each of the Issuing Bank, the Agent and the Lenders for
all of its reasonable out-of-pocket costs and expenses, including reasonable
fees and disbursements of counsel, incurred in connection with (A) any Default
or Event of Default and any enforcement or collection proceedings resulting
therefrom or in connection with the negotiation of any restructuring or
"work-out" (whether consummated or not) of the obligations of any Credit Party
under any of the Loan Documents and (B) the enforcement of this Section and
(iii) to pay, indemnify, and hold each of the Issuing Bank, the Lenders, and the
Agent harmless from and against, any and all recording and filing fees and any
and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
the Loan Documents and any such other documents, and (iv) to pay, indemnify and
hold each of the Issuing Bank, the Lenders and the Agent and each of its
officers, directors and employees harmless from and against any and all other
liabilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including reasonable counsel fees and disbursements) with respect to
the enforcement and performance of the Loan Documents, the use of the proceeds
of the Revolving Credit Loans and the Letters of Credit and the enforcement and
performance of the provisions of any subordination agreement involving the Agent
and the Lenders (all the foregoing, collectively, the "Indemnified Liabilities")
and, if and to the extent that the foregoing indemnity may be unenforceable for
any reason, each Borrower agrees to make the maximum payment not prohibited
under applicable law; provided, however, that the Borrowers shall have no
obligation to pay Indemnified Liabilities to the Agent, the Issuing Bank or any
Lender arising from the finally adjudicated gross negligence or willful
misconduct of the Agent, the Issuing Bank or such Lender or claims between one
indemnified party and another indemnified party. The agreements in this Section
shall survive the termination of the Commitments of all of the Lenders, the
Letter of Credit Commitment and the payment of all amounts payable under the
Loan Documents.
11.6. Lending Offices
(a) Each Lender shall have the right at any time and from time to time
to transfer its Loans and Reimbursement Obligations to a different office,
provided that such Lender shall promptly notify the Agent and each Borrower of
any such change of office. Such office shall thereupon become such Lender's
lending office, provided, however, that no Lender shall be entitled to receive
any greater amount under Sections 3.5, 3.7 and 3.10, as a result of a transfer
of any such Loans and Reimbursement Obligations to a different office of such
Lender than it would be entitled to immediately prior thereto unless such claim
would have arisen even if such transfer had not occurred.
(b) Each Lender agrees that, upon the occurrence of any event giving
rise to any increased cost or indemnity under Sections 3.5, 3.7 and 3.10 with
respect to such Lender, it will, if requested by a Borrower, use reasonable
efforts to designate another lending office for any Loans and Reimbursement
Obligations 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
shall affect or postpone any of the obligations of any Borrower or the right of
any Lender provided in Sections 3.5, 3.6, 3.7 and 3.10.
11.7. Successors and Assigns
(a) This Agreement, the Notes and the other Loan Documents to which
any Borrower is a party shall be binding upon and inure to the benefit of such
Borrower, the Lenders, the Agent, the Issuing Bank all future holders of the
Notes and Reimbursement Obligations and their respective successors and assigns.
No Borrower shall delegate any obligation or duty under any Loan Document
without the prior written consent of the Agent, the Issuing Bank and each
Lender.
(b) Subject to Section 11.7(e), any Lender may at any time assign all
or any portion of its rights under any Loan Document to any Federal Reserve
Bank.
(c) In addition to its rights under Section 11.7(b), each Lender shall
have the right to sell, assign, transfer or negotiate (each an "Assignment") all
or a portion of its Loans, its Commitment and its Notes, to any subsidiary or
Affiliate of such Lender, to any other Lender, or to any other bank, insurance
company, financial institution, pension fund, mutual fund or other similar fund,
provided that (i) each such Assignment shall be of a constant, and not a
varying, percentage of all of the assignor Lender's rights and obligations under
the Loan Documents, (ii) the Commitment Amount of the Commitment assigned shall
be not less than $5,000,000 or the full Commitment Amount of such assignor
Lender's Commitment, (iii) unless the assignee is another Lender or a subsidiary
or Affiliate of any Lender, or unless at the time of such Assignment an Event of
Default shall exist, Parent shall have consented thereto in writing (which
consent shall not be unreasonably withheld), and (iv) the assignor Lender and
such assignee shall deliver to the Agent three copies of an Assignment and
Acceptance Agreement executed by each of them, along with an assignment fee in
the sum of $3,500 for the account of the Agent. Upon receipt of such number of
executed copies of each such Assignment and Acceptance Agreement together with
the assignment fee therefor and Parent's consent to such Assignment, if
required, the Agent shall record the same and execute not less than two copies
of such Assignment and Acceptance Agreement in the appropriate place, deliver
one such copy to the assignor and one such copy to the assignee, and deliver one
photocopy thereof, as executed, to Parent. From and after the Assignment
Effective Date specified in, and as defined in, such Assignment and Acceptance
Agreement, the assignee thereunder shall be a party hereto and shall for all
purposes of this Agreement and the other Loan Documents be deemed a "Lender"
and, to the extent provided in such Assignment and Acceptance Agreement, the
assignor Lender thereunder shall be released from its obligations under this
Agreement and the other Loan Documents. Each Borrower agrees that, if requested,
in connection with each such Assignment, it shall at its own cost and expense
execute and deliver (1) to the Agent or such assignee a Revolving Credit Note in
a maximum principal amount equal to the Parent Commitment Amount of the
Commitment assumed by such assignee, (2) to the Agent or such assignor Lender,
in the event that such assignor Lender shall not have assigned all of its Parent
Commitment, a Revolving Credit Note in a maximum principal amount equal to the
Commitment Amount of the Commitment retained by such assignor, in each case
either in escrow pending the delivery of, or against receipt of, such assignor
Lender's existing Revolving Credit Note, (3) to the Agent or such assignee a
Term Note in a principal amount equal to the GP Canada Credit Exposure assumed
by such assignee, and (4) to the Agent or such assignor Lender, in the event
that such assignor Lender shall not have assigned all of its GP Canada Credit
Exposure, a Term Note in a principal amount equal to the GP Canada Credit
Exposure retained by such assignor, in each case either in escrow pending the
delivery of, or against receipt of, such assignor Lender's existing Revolving
Credit Note. The Agent shall be entitled to rely upon the representations and
warranties made by the assignee under each Assignment and Acceptance Agreement.
(d) In addition to the participations provided for in Section 11.11,
each Lender may grant participations in all or any part of its Loans, its Notes
and its Commitments to one or more banks, insurance companies, pension funds,
mutual funds or other financial institutions, provided that (i) such Lender's
obligations under this Agreement and the other Loan Documents shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
to this Agreement and the other Loan Documents for the performance of such
obligations, (iii) the applicable Borrower, the Agent, the Issuing Bank and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents, (iv) the granting of such participation does not
require that any additional loss, cost or expense be borne by any Borrower at
any time, and (v) the voting rights of any holder of any participation shall be
limited to decisions that in accordance with Section 11.1 require the consent of
all of the Lenders.
(e) No Lender shall, as between and among the Borrowers, the Agent,
the Issuing Bank and such Lender, be relieved of any of its obligations under
the Loan Documents as a result of any assignment of or granting of
participations in, all or any part of its Loans, its Commitment and its Note,
except that a Lender shall be relieved of its obligations to the extent of any
such Assignment of all or any part of its Loans, its Commitments or its Notes
pursuant to Section 11.7(c).
11.8. Indemnity
Each Borrower agrees, to defend, protect, indemnify, and hold harmless
the Agent, the Issuing Bank and each and all of the Lenders, each of their
respective Affiliates and each of the respective officers, directors, employees
and agents of each of the foregoing (each an "Indemnified Person" and,
collectively, the "Indemnified Persons") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the fees and disbursements of counsel to such Indemnified Persons) in
connection with any investigative, administrative or judicial proceeding,
whether direct, indirect or consequential and whether based on any federal,
state or provincial laws or other statutory regulations, including securities
and commercial laws and regulations, under common law or at equitable cause, or
on contract or otherwise, including any liabilities and costs under
environmental laws, Federal, state, provincial or local health or safety laws,
regulations, or common law principles, arising from or in connection with the
past, present or future operations of any Borrower, any other Credit Party, or
their respective predecessors in interest, or the past, present or future
environmental condition of the Property of any Borrower or any of their
Subsidiaries, the presence of asbestos-containing materials at any such
Property, or the release or threatened release of any Hazardous Substance (as
defined under applicable environmental law) into the environment from any such
Property) in any manner relating to or arising out of the Loan Documents, any
commitment letter or fee letter executed and delivered by any Borrower or any of
its Subsidiaries, the Issuing Bank and/or the Agent, the capitalization of any
Borrower or any of its Subsidiaries, the Commitments, the Letter of Credit
Commitment, the making of, issuance of, management of and participation in the
Loans or the Letters of Credit, or the use or intended use of the Letters of
Credit and the proceeds of the Loans hereunder, provided that no Borrower shall
have any obligation under this Section to an Indemnified Person with respect to
any of the foregoing to the extent found in a final judgment of a court having
jurisdiction to have resulted primarily out of the gross negligence or wilful
misconduct of such Indemnified Person or arising solely from claims between one
such Indemnified Person and another such Indemnified Person. The indemnity set
forth herein shall be in addition to any other obligations or liabilities of
either or both Borrowers to each Indemnified Person under the Loan Documents or
at common law or otherwise, and shall survive any termination of the Loan
Documents, the expiration of the Commitments of all of the Lenders, the Letter
of Credit Commitment and the payment of all Indebtedness of the Credit Parties
under the Loan Documents.
11.9. Limitation of Liability
No claim may be made by any Borrower, any other Credit Party, any of
its Subsidiaries, any Lender or other Person against the Agent, any Lender, or
any directors, officers, employees, or agents of any of them for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by any Loan Document, or any act, omission or event
occurring in connection therewith, and each of each Borrower, its Subsidiaries,
such other Credit Party, any such Lender or other Person hereby waives, releases
and agrees not to sue upon any claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
11.10. Counterparts
Each Loan Document (other than the Notes) may be executed by one or
more of the parties thereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
document. It shall not be necessary in making proof of any Loan Document to
produce or account for more than one counterpart signed by the party to be
charged. A counterpart of any Loan Document or to any document evidencing, and
of any an amendment, modification, consent or waiver to or of any Loan Document
transmitted by telecopy shall be deemed to be an originally executed
counterpart. A set of the copies of the Loan Documents signed by all the parties
thereto shall be deposited with each of the Borrowers, the Issuing Bank, the
Agent and the Lenders. Any party to a Loan Document may rely upon the signatures
of any other party thereto which are transmitted by telecopy or other electronic
means to the same extent as if originally signed.
11.11. Adjustments; Set-off
(a) If any Lender (a "Benefitted Parent Lender"), shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of its Revolving Credit Loans, its Revolving
Credit Notes or the Reimbursement Obligations in excess of its Parent
Outstanding Percentage of payments then due and payable on account of the
Revolving Credit Loans, the Revolving Credit Notes and the Reimbursement
Obligations received by all the Lenders, then such Benefitted Parent Lender
shall forthwith purchase, without recourse, for cash, from the other Lenders
such participations in their Revolving Credit Loans and Revolving Credit Notes
as shall be necessary to cause such Benefitted Parent Lender to share such
excess payment with each of them according to their Parent Outstanding
Percentages, provided, however, that if all or any portion of such excess
payment is thereafter recovered from such Benefitted Parent Lender, such
purchase from such other Lenders shall be rescinded, and each such other Lender
shall repay to such Benefitted Parent Lender the purchase price to the extent of
such recovery, together with an amount equal to such other Lender's pro rata
share (according to the proportion of (i) the amount of such other Lender's
required repayment to (ii) the total amount so recovered from such Benefitted
Parent Lender) of any interest or other amount paid or payable by such
Benefitted Parent Lender in respect of the total amount so recovered. Each
Borrower agrees that such Benefitted Parent Lender so purchasing a participation
from such other Lenders pursuant to this subsection (a) may exercise such rights
to payment (including the right of set-off) with respect to such participation
as fully as such Benefitted Parent Lender were the direct creditor of such
Parent in the amount of such participation.
(b) If any Lender (a "Benefitted GP Canada Lender"), shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of its Term Loans, or its Term Notes in excess
of its GP Canada Outstanding Percentage of payments then due and payable on
account of the Term Loans or the Term Notes received by all the Lenders, then
such Benefitted GP Canada Lender shall forthwith purchase, without recourse, for
cash, from the other Lenders such participations in their Term Loans and GP
Canada Revolving Credit Notes as shall be necessary to cause such Benefitted GP
Canada Lender to share such excess payment with each of them according to their
GP Canada Outstanding Percentages, provided, however, that if all or any portion
of such excess payment is thereafter recovered from such Benefitted GP Canada
Lender, such purchase from such other Lenders shall be rescinded, and each such
other Lender shall repay to such Benefitted GP Canada Lender the purchase price
to the extent of such recovery, together with an amount equal to such other
Lender's pro rata share (according to the proportion of (i) the amount of such
other Lender's required repayment to (ii) the total amount so recovered from
such Benefitted GP Canada Lender) of any interest or other amount paid or
payable by such Benefitted GP Canada Lender in respect of the total amount so
recovered. Each Borrower agrees that such Benefitted GP Canada Lender so
purchasing a participation from such other Lenders pursuant to this subsection
(a) may exercise such rights to payment (including the right of set-off) with
respect to such participation as fully as such Benefitted GP Canada Lender were
the direct creditor of GP Canada in the amount of such participation.
(c) In addition to any rights and remedies of the Issuing Bank and the
Lenders provided by law, upon the occurrence of an Event of Default and the
acceleration of the obligations owing in connection with the Loan Documents, or
at any time upon the occurrence and during the continuance of an Event of
Default, under Sections 9.1(a) or (b), each of the Issuing Bank and the Lenders
shall have the right, without prior notice to any Borrower or any other Credit
Party, any such notice being expressly waived by each Borrower and each other
Credit Party to the extent not prohibited by applicable law, to set-off and
apply against any indebtedness, whether matured or unmatured, of any Borrower or
such other Credit Party, as the case may be, to the Issuing Bank or such Lender,
as the case may be, any amount owing from the Issuing Bank or such Lender, as
the case may be, to any Borrower or such other Credit Party, as the case may be,
at, or at any time after, the happening of any of the above- mentioned events.
To the extent not prohibited by applicable law, the aforesaid right of set-off
may be exercised by the Issuing Bank or such Lender, as the case may be, against
any Borrower or such other Credit Party, as the case may be, or against any
trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit
of creditors, receiver, or execution, judgment or attachment creditor of any
Borrower or such other Credit Party, as the case may be, or against anyone else
claiming through or against any Borrower or such other Credit Party, as the case
may be, or such trustee in bankruptcy, custodian, debtor in possession, assignee
for the benefit of creditors, receiver, or execution, judgment or attachment
creditor, notwithstanding the fact that such right of set-off shall not have
been exercised by the Issuing Bank or such Lender, as the case may be, prior to
the making, filing or issuance, or service upon the Issuing Bank or such Lender,
as the case may be, of, or of notice of, any such petition, assignment for the
benefit of creditors, appointment or application for the appointment of a
receiver, or issuance of execution, subpoena, order or warrant. Each of the
Issuing Bank and the Lenders agrees promptly to notify a Borrower and the Agent
after any such set-off and application made by the Issuing Bank or such Lender,
as the case may be, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
11.12. Construction
Each party to a Loan Document represents that it has been represented
by counsel in connection with the Loan Documents and the transactions
contemplated thereby and that the principle that agreements are to be construed
against the party drafting the same shall be inapplicable.
11.13. Governing Law
The Loan Documents and the rights and obligations of the parties
thereunder shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of New York, without regard to principles
of conflict of laws, but including Section 5-1401 of the General Obligations
Law.
11.14. Headings Descriptive
Section headings have been inserted in the Loan Documents for
convenience only and shall not be construed to be a part thereof.
11.15. Severability
Every provision of the Loan Documents is intended to be severable, and
if any term or provision thereof shall be invalid, illegal or unenforceable for
any reason, the validity, legality and enforceability of the remaining
provisions thereof shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction.
11.16. Integration
All exhibits to a Loan Document shall be deemed to be a part thereof.
Except for agreements between the Agent and the Borrowers with respect to
certain fees, the Loan Documents embody the entire agreement and understanding
among each Borrower, the Agent, the Issuing Bank and the Lenders with respect to
the subject matter thereof and supersede all prior agreements and understandings
among each Borrower, the Agent, the Issuing Bank and the Lenders with respect to
the subject matter thereof.
11.17. Consent to Jurisdiction
Each party to a Loan Document hereby irrevocably submits to the
jurisdiction of any New York State or Federal court sitting in the City of New
York over any suit, action or proceeding arising out of or relating to the Loan
Documents. Each party to a Loan Document hereby irrevocably waives, to the
fullest extent permitted or not prohibited by law, any objection which it may
now or hereafter have to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that any such suit, action or
proceeding brought in such a court has been brought in an inconvenient forum.
Each Credit Party hereby agrees that a final judgment in any such suit, action
or proceeding brought in such a court, after all appropriate appeals, shall be
conclusive and binding upon it.
11.18. Service of Process
Each party to a Loan Document hereby irrevocably consents to the
service of process in any suit, action or proceeding by sending the same by
first class mail, return receipt requested or by overnight courier service, to
the address of such party set forth in Section 11.2 of the applicable Loan
Document executed by such party. Each party to a Loan Document hereby agrees
that any such service (i) shall be deemed in every respect effective service of
process upon it in any such suit, action, or proceeding, and (ii) shall to the
fullest extent enforceable by law, be taken and held to be valid personal
service upon and personal delivery to it.
11.19. No Limitation on Service or Suit
Nothing in the Loan Documents or any modification, waiver, consent or
amendment thereto shall affect the right of the Agent, the Issuing Bank or any
Lender to serve process in any manner permitted by law or limit the right of the
Agent, the Issuing Bank or any Lender to bring proceedings against any Credit
Party in the courts of any jurisdiction or jurisdictions in which such Credit
Party may be served.
11.20. WAIVER OF TRIAL BY JURY
EACH OF THE AGENT, THE ISSUING BANK, THE LENDERS AND EACH BORROWER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREIN.
FURTHER, EACH BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE
ISSUING BANK, THE AGENT, OR THE LENDERS, OR COUNSEL TO THE ISSUING BANK, THE
AGENT OR THE LENDERS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ISSUING
BANK, THE AGENT OR THE LENDERS WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK
TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. EACH BORROWER
ACKNOWLEDGES THAT THE ISSUING BANK, THE AGENT AND THE LENDERS HAVE BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS SECTION.
11.21. Treatment of Certain Information
Each of the Issuing Bank and Lenders understands that some of the
information furnished to it pursuant to this Loan Agreement may be received by
it prior to the time that such information shall have been made public, and each
of the Issuing Bank and Lenders hereby agree that it will keep, and will direct
its officers and employees to keep, all the information provided to it pursuant
to this Loan Agreement confidential prior to its becoming public (through
publication other than as a result of action by Issuing Bank and one of the
Lenders in violation of this Section 11.21) subject, however, to (i) disclosure
to officers, directors, employees, representatives, agents, auditors,
consultants, advisors, lawyers and affiliates of the Issuing Bank or such
Lender, in the ordinary course of business, (ii) disclosure to such officers,
directors, employees, agents and representatives of a prospective assignee or
participant as need to know such information in connection with the evaluation
of a possible participation in the Commitments hereunder (who will be informed
of the confidential nature of the material); (iii) the obligations of the
Issuing Bank and Lenders or a participant under applicable law, or pursuant to
subpoenas or other legal process, to make information available to governmental
agencies and examiners or to others and the right of the Issuing Bank and
Lenders to use such information in proceedings to enforce their rights and
remedies hereunder or under any other Loan Document or in any proceeding against
the Issuing Bank and lenders in connection with this Loan Agreement or under any
other Loan Document or the transactions contemplated hereunder; (iv) disclosure
to the extent such information (A) becomes publicly available other than as a
result of a breach of this Loan Agreement or (B) becomes available to the
Issuing Bank or Lender or a participant on a non-confidential basis, not in
breach of any agreement or other obligation to the Parent, from a source other
than the Parent; (v) disclosure to the extent the Parent shall have consented to
such disclosure in writing; or (vi) the Issuing Bank or each Lender or
participant's right to make information available (A) to any corporation
controlled by the Issuing Bank or Lender or participant or under common control
with the Issuing Bank or Lender or participant in connection with the sale of a
participation by such Lender or participant to such other corporation provided
such transferee agrees to be bound by confidentiality or (B) in accordance with
Section 11.21.
11.22. Judgment Currency
(a) If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due to a Lender in any currency (the "Original
Currency") into another currency (the "Other Currency"), the parties agree, to
the fullest extent that they may effectively do so, that the rate of exchange
used shall be that at which, in accordance with normal banking procedures, such
Lender could purchase the Original Currency with the Other Currency on the
Business Day preceding the day on which final judgment is given or, if permitted
by applicable law, on the day on which the judgment is paid or satisfied.
(b) The obligations of the Borrowers in respect of any sum due in the
Original Currency from it to a Lender under any of the Loan Documents shall,
notwithstanding any judgment in any Other Currency, be discharged only to the
extent that on the Business Day following receipt by the Lender of any sum
adjudged to be so due in the Other Currency, the Lender may, in accordance with
normal banking procedures, purchase the Original Currency with such Other
Currency. If the amount of the Original Currency so purchased is less than the
sum originally due to the Lender in the Original Currency, the applicable
Borrower agrees, as a separate obligation and notwithstanding the judgment, to
indemnify the Lender, against any loss, and, if the amount of the Original
Currency so purchased exceeds the sum originally due to the Lender in the
Original Currency, the Lender shall remit such excess to such Borrower.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.
GP STRATEGIES CORPORATION
By:
Name: Scott N. Greenberg
Title: Vice President and Chief
Financial Officer
GENERAL PHYSICS CANADA LTD.
By:
Name: Scott N. Greenberg
Title: Director
FLEET BANK, NATIONAL ASSOCIATION,
Individually, as Issuing Bank
and as Agent
By:
Name: David T. Sunderwirth
Title: Vice President
KEY BANK, N.A.
By:
Name: Brendan Sachtjen
Title: Senior Vice President
MELLON FINANCIAL SERVICES
CORPORATION
Attorney-in-Fact for
Mellon Bank, N.A.
By:
Name: Bruce A. Watterson
Title: Vice President
SUMMIT BANK
By:
Name: David W. Blood
Title: Vice President
THE DIME SAVINGS BANK
OF NEW YORK, FSB
By:
Name: Robert T. Zabawa
Title: Senior Vice President