Exhibit 10.1

 

EXECUTION COPY

 

 

FORBEARANCE AGREEMENT

 

This FORBEARANCE AGREEMENT, dated as of March 31, 2015 (this “Agreement”), is by
and among Corinthian Colleges, Inc. (the “Domestic Borrower”), the Guarantors
party hereto, the Lenders party hereto and Bank of America, N.A., as Domestic
Administrative Agent (in such capacity, the “Domestic Administrative Agent”) and
Canadian Agent (in such capacity, the “Canadian Administrative Agent”; the
Domestic Administrative Agent and the Canadian Administrative Agent are referred
to herein collectively as the “Administrative Agents”). Capitalized terms which
are used in this Agreement without definition and which are defined in the
Credit Agreement shall have the same meanings herein as in the Credit Agreement.

 

R E C I T A L S:

 

WHEREAS, the Borrower, Everest Colleges Canada, Inc. (the “Canadian Borrower”;
the Domestic Borrower and the Canadian Borrower are referred to herein
collectively as the “Borrowers”), the lenders party thereto from time to time
(the “Lenders”) and the Administrative Agents are parties to that certain Fourth
Amended and Restated Credit Agreement, dated as of May 17, 2012 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”);

 

WHEREAS, the Domestic Borrower has informed the Administrative Agents and the
Lenders of the Events of Default arising under the Credit Agreement listed on
Schedule I hereto (together, the “Specified Defaults”);

 

WHEREAS, the Domestic Borrower has requested that the Administrative Agents and
the Lenders agree to temporarily forbear from the exercise of certain remedies
available to them under the Credit Agreement with respect to the Specified
Defaults (but not waive the Specified Defaults); and

 

WHEREAS, the Administrative Agents and the Lenders party hereto are willing to
grant such forbearance on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, and subject to the terms and conditions hereof,
the parties hereto agree as follows:

 

section 1.     FORBEARANCE AND RELATED PROVISIONS.

 

1.1     Forbearance. Subject to the satisfaction of the conditions precedent set
forth in Section 2 hereof, the Administrative Agents and the Lenders hereby
agree to forbear from taking any of the “Enforcement Actions” defined below as a
result of the occurrence and continuation of the Specified Defaults solely
during the period beginning on the Effective Date and ending immediately upon
the earliest of (such period being referred to herein as the “Forbearance
Period”): (a) April 30, 2015, (b) the occurrence of any Default under Section
8.01(f) or (g) of the Credit Agreement with respect to any Domestic Loan Party
and (c) the termination of the Forbearance Period by the Domestic Administrative
Agent, acting at the direction of the Required Lenders, due to: (i) the
occurrence of any Default other than the Specified Defaults or (ii) the failure
of any Domestic Loan Party to timely comply with any undertaking set forth in
this Agreement, or the breach by any Domestic Loan Party in any material respect
of any representation or warranty set forth in this Agreement, in each case
unless the Required Lenders, in writing, waive such noncompliance or breach.
“Enforcement Actions” shall mean any (1) commencement of judicial or
non-judicial enforcement proceedings against any Domestic Loan Party with
respect to the payment of any Obligations or (2) commencement of any
foreclosure, enforcement or levy against or seizure or transfer of all or any
portion of the Domestic Collateral; provided, that Enforcement Action shall not
include any action by the Domestic Administrative Agent with respect to any
deposit account of the Domestic Loan Parties subject to a garnishment action or
similar action or proceeding with respect to claims by other creditors of the
Domestic Loan Parties. “Domestic Loan Parties” shall mean, collectively, the
Domestic Borrower and the Domestic Guarantors.

 

 
 

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1.2     Reservation of Rights. The Administrative Agents and the Lenders
expressly reserve the right to exercise all rights and remedies under the Credit
Agreement, the other Loan Documents and applicable law immediately upon the
expiration of the Forbearance Period, including, without limitation, the
Enforcement Actions, in respect of the Specified Defaults and any other Default
then existing. Except for the forbearance to the extent expressly set forth
above, the Administrative Agents and the Lenders reserve each and every right
and remedy they may have under the Loan Documents and under applicable law with
respect to the Specified Defaults. Nothing in this Agreement shall be deemed to
constitute a waiver by the Administrative Agents or any Lender of the Specified
Defaults or any other Default, whether now existing or hereafter arising, or of
any right or remedy that the Administrative Agents and the Lenders may have
under any of the Loan Documents or applicable law. The Domestic Loan Parties
acknowledge that the Administrative Agents and the Lenders may, among other
actions, demand cash collateral, payments and other conditions in connection
with any disposition of assets or any other transaction, notwithstanding the
forbearance set forth herein.

 

1.3     Forbearance Fee. The Domestic Borrower shall pay to the Domestic
Administrative Agent, for the ratable benefit of the Lenders in accordance with
their respective share of the Total Outstandings, a forbearance fee equal to (x)
$10,000 on April 10, 2015 and (y) $250,000 on April 24, 2015 (each, a
“Forbearance Fee”).

 

1.4     Other Covenants. (a)     The Domestic Borrower hereby agrees to repay
all outstanding L/C Borrowings of the Canadian Borrower (in the amounts shown on
Item 3 of Schedule I hereto), together with all accrued and unpaid interest
thereon, pursuant to its obligations under the Third Amended and Restated
Guaranty (Canadian Obligations) in full in cash on April 17, 2015 from the
Specified Account to the extent of funds on deposit in the Specified Account as
of such date. If such amounts are not repaid in full on April 17, 2015, the
Domestic Borrower shall repay all outstanding L/C Borrowings of the Canadian
Borrower (in the amounts shown on Item 3 of Schedule I hereto), together with
all accrued and unpaid interest thereon, pursuant to its obligations under the
Third Amended and Restated Guaranty (Canadian Obligations) from the Specified
Account in full in cash no later than April 24, 2015. “Specified Account” shall
have the meaning set forth in that certain Consent Agreement, dated as of
September 26, 2014, among the Loan Parties, the Lenders party thereto and the
Administrative Agents.

 

 
 

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(b) The Domestic Borrower has established, and shall hereafter maintain, the
Specified Account, which account shall (i) be subject to a control agreement in
favor of the Domestic Administrative Agent in accordance with Section 6.17 of
the Credit Agreement and (ii) contain solely non-Title IV funds. The Loan
Parties shall cause all amounts representing non-Title IV revenue to be either
deposited directly to the Specified Account or transferred to the Specified
Account directly from the accounts where the deposits are received. The Domestic
Borrower shall not deposit, and shall not permit any other Person to deposit,
any Title IV funds in the Specified Account at any time.

 

1.5     Second Everest Plus Closing. The Lenders hereby authorize the Domestic
Administrative Agent to execute and deliver the Release Letter attached hereto
as Exhibit A in connection with the Everest Plus Sale, together with such
closing memoranda, releases, termination statements, agreements, documents and
instruments as may be reasonably requested by the Loan Parties or the Purchaser
(as defined in the Everest Plus Consent) to evidence the lien releases described
therein, in form and substance acceptable to the Domestic Administrative Agent.

 

section 2.     CONDITIONS. This Agreement shall become effective as of the date
hereof (the “Effective Date”) upon receipt by the Administrative Agent of duly
executed counterparts to this Agreement from the Domestic Loan Parties, the
Administrative Agents and the Lenders.

 

section 3.     REPRESENTATION AND WARRANTIES.

 

3.1     Enforceability. Each Domestic Loan Party hereby represents and warrants
that this Agreement is the legal, valid and binding obligation of such Domestic
Loan Party and is enforceable against such Domestic Loan Party in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability.

 

3.2     Authorization; No Conflicts. Each Domestic Loan Party hereby represents
and warrants that its execution and delivery of this Agreement (i) have been
duly authorized by all necessary corporate or other organizational action on the
part of such Domestic Loan Party and are within such Domestic Loan Party’s
corporate or other organizational power and authority, (ii) do not (A)
contravene the terms of such Domestic Loan Party’s Organization Documents, (B)
conflict with or result in any breach or contravention of, or the creation of
any Lien under (i) any Contractual Obligation to which such Domestic Loan Party
is a party or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Domestic Loan Party or its
property is subject; or (C) violate any Law.

 

section 4.     RATIFICATION AND RELEASE.

 

4.1     Ratification. Each Domestic Loan Party hereby (a) ratifies and reaffirms
all of its payment and performance obligations, contingent or otherwise, and
each grant of security interests and liens in favor of each Administrative
Agent, the L/C Issuers or the Lenders, as the case may be, under each Loan
Document, (b) agrees and acknowledges that the liens in favor of each
Administrative Agent, the L/C Issuers or the Lenders under each Loan Document
constitute valid, binding, enforceable and perfected first priority liens and
security interests and are not subject to avoidance, disallowance or
subordination pursuant to any requirement of Law, (c) agrees and acknowledges
the Obligations constitute legal, valid and binding obligations of the Domestic
Loan Parties and that (x) no offsets, defenses or counterclaims to the
Obligations or any other causes of action with respect to the Obligations or the
Loan Documents exist and (y) no portion of the Obligations is subject to
avoidance, disallowance, reduction or subordination pursuant to any requirement
of Law, (d) agrees that such ratification and reaffirmation is not a condition
to the continued effectiveness of the Loan Documents, and (e) agrees that
neither such ratification and reaffirmation, nor the Administrative Agents’, the
L/C Issuers’ nor any Lender’s solicitation of such ratification and
reaffirmation, constitutes a course of dealing giving rise to any obligation or
condition requiring a similar or any other ratification or reaffirmation from
each party to the Loan Documents with respect to any subsequent modifications,
consent or waiver with respect to the Credit Agreement or other Loan Documents.
This Agreement shall not constitute a waiver of, or (except as expressly set
forth herein with respect to the Specified Defaults) forbearance with respect
to, any Default, whether known or unknown, and the Administrative Agent and the
Lenders shall reserve all rights and remedies in respect thereof. This Agreement
shall constitute a “Loan Document” for purposes of the Credit Agreement.

 

 
 

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4.2     Release; Covenant Not to Sue; Acknowledgement. (a) Each Domestic Loan
Party hereby absolutely and unconditionally releases and forever discharges each
Administrative Agent, each L/C Issuer, each Swing Line Lender, each Lender and
each of their respective Related Parties (each a “Released Party”) from any and
all claims, demands or causes of action of any kind, nature or description,
whether arising in law or equity or upon contract or tort or under any state or
federal law or otherwise, which any Domestic Loan Party has had, now has or has
made claim to have against any such Person for or by reason of any act,
omission, matter, cause or thing whatsoever arising out of or with respect to
the Obligations, the Credit Agreement, this Agreement or any other Loan Document
from the beginning of time to and including the Effective Date, whether such
claims, demands and causes of action are matured or unmatured or known or
unknown. It is the intention of each Domestic Loan Party in providing this
release that the same shall be effective as a bar to each and every claim,
demand and cause of action specified. Each Domestic Loan Party acknowledges that
it may hereafter discover facts different from or in addition to those now known
or believed to be true with respect to such claims, demands, or causes of action
and agrees that this instrument shall be and remain effective in all respects
notwithstanding any such differences or additional facts. Each Domestic Loan
Party understands, acknowledges and agrees that the release set forth above may
be pleaded as a full and complete defense and may be used as a basis for an
injunction against any action, suit or other proceeding which may be instituted,
prosecuted or attempted in breach of the provisions of such release. Nothing in
this Section 4.2 shall relieve any Administrative Agent or Lender of any
continuing contractual obligations under this Agreement.

 

(b)     Each Domestic Loan Party, on behalf of itself and its successors,
assigns, and other legal representatives, hereby absolutely, unconditionally and
irrevocably, covenants and agrees with and in favor of each Released Party above
that it will not sue (at law, in equity, in any regulatory proceeding or
otherwise) any Released Party on the basis of any claim released, remised and
discharged by any Domestic Loan Party pursuant to the above release. If any
Domestic Loan Party or any of their successors, assigns or other legal
representatives violates the foregoing covenant, each Domestic Loan Party, for
itself and its successors, assigns and legal representatives, agrees to pay, in
addition to such other damages as any Released Party may sustain as a result of
such violation, all reasonable attorneys’ fees and costs incurred by such
Released Party as a result of such violation.

 

 
 

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(c)     Each Domestic Loan Party represents and warrants that, to its knowledge,
there are no liabilities, claims, suits, debts, liens, losses, causes of action,
demands, rights, damages or costs, or expenses of any kind, character or nature
whatsoever, fixed or contingent, which any Domestic Loan Party may have or claim
to have against any Released Party arising with respect to the Obligations, the
Credit Agreement, this Agreement or any other Loan Document.

 

(d)     Each of the Domestic Loan Parties has been advised by counsel with
respect to the release contained in this Section 4.2. Upon advice of such
counsel, each of the Domestic Loan Parties hereby waives and relinquishes all of
the rights and benefits each Domestic Loan Party has, or may have, with respect
to the claims released under Section 1542 of the California Civil Code or any
other similar statute. Section 1542 states as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

section 5.     MISCELLANEOUS.

 

5.1     Effect. Except as specifically set forth in this Agreement, the
execution, delivery and effectiveness of this Agreement shall not (i) limit,
impair, constitute an amendment, forbearance or waiver by, or otherwise affect
any right, power or remedy of, any Administrative Agent or any Lender under the
Credit Agreement or any other Loan Document or waive, affect or diminish any
right of any Administrative Agent or any Lender to demand strict compliance and
performance therewith, (ii) constitute a waiver of, or forbearance with respect
to, any Default, whether known or unknown or (iii) alter, modify, amend or in
any way affect any of the terms, conditions, obligations, covenants or
agreements contained in the Credit Agreement or in any of the other Loan
Documents, all of which are ratified and affirmed in all respects and shall
continue in full force and effect.

 

5.2     Severability. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable in any jurisdiction shall
not impair or invalidate the remainder of this Agreement and the effect thereof
shall be confined to the provision so held to be invalid or unenforceable and
will not affect the effectiveness thereof in any other jurisdiction.

 

5.3     Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall be one and the same instrument. This Agreement may also be
executed by facsimile or electronic transmission and each facsimile or
electronic transmission signature hereto shall be deemed for all purposes to be
an original signatory page.

 

 
 

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5.4     GOVERNING LAW. This AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT EACH
ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.

 

5.5     Section Titles. The Section titles contained in this Agreement are and
shall be without substance, meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto.

 

5.6     Reimbursement of each Administrative Agent’s Expenses. Without limiting
any of the Administrative Agents’ rights, or any of Borrowers’ obligations,
under Section 10.04(a) of the Credit Agreement, each Borrower agrees to
reimburse the Administrative Agents for all reasonable and documented
out-of-pocket fees, costs and expenses, including the reasonable fees, costs,
and expenses of the Agent Financial Advisor and Sidley Austin LLP for advice,
assistance or other representation in connection with this Agreement.

 

5.7     Entire Agreement. This Agreement contains the final and complete
integration of all prior expressions by the parties hereto with respect to the
subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof superseding all prior
oral or written understandings or agreements.

 

 

 

[Signature Pages Follow]

 

 
 

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WITNESS the due execution hereof by the respective duly authorized officers of
the undersigned of this Agreement as of the date first written above.

 

 

BORROWERS:

 

        CORINTHIAN COLLEGES, INC.  

 

 

 

 

 

 

 

 

 

By:

/s/ Robert C. Owen 

 

 

 

Name: Robert C. Owen

 

 

 

Title: EVP and CFO

 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 
 

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GUARANTORS: 

 

Ashmead Education, Inc.

Career Choices, Inc.

CDI Education USA, Inc.

Corinthian Property Group, Inc.

Corinthian Schools, Inc.

ECAT Acquisition, Inc.

Eton Education, Inc.

Florida Metropolitan University, Inc.

Grand Rapids Educational Center, Inc.

Heald Capital, LLC

Heald Education, LLC

Heald Real Estate, LLC

MJB Acquisition Corporation

Pegasus Education, Inc.

Rhodes Business Group, Inc.

Rhodes Colleges, Inc.

SD III-B Heald Holdings Corp.

Sequoia Education, Inc.

Socle Education, Inc.

Sp PE VII-B Heald Holdings Corp.

Titan Schools, Inc.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Robert C. Owen   

 

 

 

Name: Robert C. Owen  

 

 

 

Title: EVP, CFO, Treasurer and Assistant Secretary

 

          EVEREST COLLEGE PHOENIX, INC.                     By: /s/ Robert C.
Owen          Name: Robert C. Owen         Title: EVP, CFO and Treasurer        
                    HEALD COLLEGE, LLC                     By: /s/ Robert C.
Owen          Name: Robert C. Owen         Title: CAO  

 

 

 

 

Signature Page to

Forbearance Agreement

 

 
 

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QUICKSTART INTELLIGENCE CORPORATION

 

 

 

 

 

 

 

 

 

 

By:

/s/ Robert C. Owen      

 

 

 

Name: Robert C. Owen

 

 

 

Title: EVP and Treasurer

 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 
 

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BANK OF AMERICA, N.A., as Domestic Administrative Agent

 

 

 

 

 

 

 

 

 

 

By:

/s/ Anthea Del Bianco   

 

 

 

Name: Anthea Del Bianco

 

 

 

Title: Vice President

 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement 

 

 
 

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BANK OF AMERICA, N.A., acting through its Canada Branch, as Canadian
Administrative Agent

 

 

 

 

 

 

 

 

 

 

By:

/s/ Medina Sales de Andrade

 

 

 

Name: Medina Sales de Andrade

 

 

 

Title: Vice President

 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 
 

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BANK OF AMERICA, N.A.,

 

  as a Domestic Lender  

 

 

 

 

 

 

 

 

 

By:

/s/ Janet Sleeper

 

 

 

Name: Janet Sleeper

 

 

 

Title: Senior Vice President

 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 
 

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BANK OF AMERICA, N.A., acting through

 

  its Canada Branch, as a Canadian Lender  

 

 

 

 

 

 

 

 

 

By:

/s/ Medina Sales de Andrade

 

 

 

Name: Medina Sales de Andrade

 

 

 

Title: Vice President

 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 
 

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U.S. BANK NATIONAL ASSOCIATION,

 

  as a Domestic Lender  

 

 

 

 

 

 

 

 

 

By:

/s/ William J. Umscheid

 

 

 

Name: William J. Umscheid

 

 

 

Title: Senior Vice President

 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 
 

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U.S. BANK NATIONAL ASSOCIATION,

 

  as a Canadian Lender  

 

 

 

 

 

 

 

 

 

By:

/s/ John P. Rehob

 

 

 

Name: John P. Rehob

 

 

 

Title: Principal Officer

 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 
 

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MUFG UNION BANK, N.A.,

 

  as a Domestic Lender  

 

 

 

 

 

 

 

 

 

By:

/s/ Andrew Jarvis 

 

 

 

Name: Andrew Jarvis

 

 

 

Title: Associate

 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 
 

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BANK OF THE WEST,

 

  as a Domestic Lender  

 

 

 

 

 

 

 

 

 

By:

/s/ Dennis Boesen

 

 

 

Name: Dennis Boesen

 

 

 

Title: Vice President

 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 
 

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ONEWEST BANK N.A.,

 

  as a Domestic Lender  

 

 

 

 

 

 

 

 

 

By:

/s/ Todd Camp 

 

 

 

Name: Todd Camp

 

 

 

Title: Senior Vice President

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page to

Forbearance Agreement

 

 
 

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SCHEDULE I

 

SPECIFIED DEFAULTS

 

1.     Event of Default arising under Section 8.01(a) of the Credit Agreement
resulting from the failure by the Borrowers to make a mandatory prepayment of
the Loans and/or Cash Collateralize Acceptances and L/C Obligations on September
30, 2014 in the amount required pursuant to Section 2.07(c) of the Credit
Agreement.

 

2.     Event of Default arising under Section 8.01(a) of the Credit Agreement
resulting from the failure by the Borrowers to repay the Loans and Cash
Collateralize Acceptances and L/C Obligations in accordance with the
requirements of Section 2.06(c) of the Credit Agreement upon termination of the
Aggregate Canadian Commitments and Aggregate Domestic Commitments.

 

3.     Events of Default arising under Section 8.01(a) of the Credit Agreement
resulting from the failure by the Borrowers to reimburse the Canadian L/C Issuer
for amounts drawn under Letter of Credit number 7114 SB103490/06 in the amount
of C$3,000,000 on February 19, 2015 and Letter of Credit number 7114 SB105332/10
in the amount of C$107,949 on March 16, 2015.

 

4.     Event of Default arising under Section 8.01(a) of the Credit Agreement
due to the failure of the Borrowers to pay all Obligations and Cash in full on
the Maturity Date.

 

5.     Events of Default arising under Sections 8.01(f) and (g) of the Credit
Agreement resulting from the institution by the Canadian Borrower and Career
Canada C.F.P. Limited of a proceeding under the Bankruptcy & Insolvency Act,
R.S.C., 1985, c. B-3 (BIA) on February 20, 2015.

 

6.     Any Default or Event of Default in respect of or relating to the Canadian
Borrower or Canada C.F.P. Limited arising after February 20, 2015.

 

7.     Event of Default arising under Section 8.01(k) of the Credit Agreement
resulting from the failure by the Borrowers to file audited financial statements
with the Department of Education for the year ended June 30, 2014.

 

8.     Event of Default arising under Section 8.01(e) of the Credit Agreement in
respect of the failure of the Borrowers to make payments to ASFG in excess of
the threshold referenced in Section 8.01(e) of the Credit Agreement.

 

9.     Event of Default arising under Section 8.01(b) of the Credit Agreement in
respect of the failure of the Borrowers to provide monthly financial statements
with respect to February 2015 as required pursuant to Section 2.1(a) of the
Waiver Agreement.

 

 
 

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EXHIBIT A

 

RELEASE LETTER

 

[Attached]