EXECUTION VERSION
AMENDED AND RESTATED
LOAN, GUARANTY AND SECURITY AGREEMENT
Dated as of April 20, 1999
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as the Lenders,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as the Agent,
XXXXXXX SPORTS INC.,
as the Parent Guarantor,
XXXXXXX, INC.
ALL AMERICAN SPORTS CORPORATION
VARSITY SPIRIT CORPORATION
and
VARSITY SPIRIT FASHIONS & SUPPLIES, INC.
collectively, as the Borrower
and
ALL OTHER SUBSIDIARIES OF THE PARENT GUARANTOR,
collectively, as the Subsidiary Guarantors
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TABLE OF CONTENTS
Section Page
ARTICLE 1 INTERPRETATION OF THIS AGREEMENT . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . 35
1.3 Interpretive Provisions . . . . . . . . . . . . . . . 35
ARTICLE 2 LOANS AND LETTERS OF CREDIT . . . . . . . . . . . . . 36
2.1 Total Facility . . . . . . . . . . . . . . . . . . . 36
2.2 Revolving Loans . . . . . . . . . . . . . . . . . . . 36
2.3 [INTENTIONALLY OMITTED] . . . . . . . . . . . . . . . 43
2.4 Letters of Credit. . . . . . . . . . . . . . . . . . 43
ARTICLE 3 INTEREST AND FEES . . . . . . . . . . . . . . . . . . 50
3.1 Interest . . . . . . . . . . . . . . . . . . . . . . 50
3.2 Conversion and Continuation Elections . . . . . . . . 51
3.3 Maximum Interest Rate . . . . . . . . . . . . . . . . 52
3.4 Closing Fee . . . . . . . . . . . . . . . . . . . . . 53
3.5 Unused Line Fee . . . . . . . . . . . . . . . . . . . 53
3.6 Letter of Credit Fee. . . . . . . . . . . . . . . . . 54
3.7 Agent's Fee . . . . . . . . . . . . . . . . . . . . . 54
3.8 Seasonal Overadvance Fee . . . . . . . . . . . . . . 54
ARTICLE 4 PAYMENTS AND PREPAYMENTS . . . . . . . . . . . . . . 54
4.1 Revolving Loans . . . . . . . . . . . . . . . . . . . 54
4.2 Termination or Reduction of Facility . . . . . . . . 55
4.3 [INTENTIONALLY OMITTED] . . . . . . . . . . . . . . . 56
4.4 [INTENTIONALLY OMITTED] . . . . . . . . . . . . . . . 56
4.5 [INTENTIONALLY OMITTED] . . . . . . . . . . . . . . . 56
4.6 Payments by the Borrower . . . . . . . . . . . . . . 56
4.7 Payments as Revolving Loans . . . . . . . . . . . . . 56
4.8 Apportionment, Application and Reversal of Payments . 57
4.9 Indemnity for Returned Payments . . . . . . . . . . . 57
4.10 Agent's and Lenders' Books and Records; Monthly
Statements . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . 58
5.1 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 58
5.2 Illegality . . . . . . . . . . . . . . . . . . . . . 59
5.3 Increased Costs and Reduction of Return . . . . . . . 60
5.4 Funding Losses . . . . . . . . . . . . . . . . . . . 60
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5.5 Inability to Determine Rates . . . . . . . . . . . . 61
5.6 Certificates of Lenders . . . . . . . . . . . . . . . 61
5.7 Survival . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE 6 COLLATERAL . . . . . . . . . . . . . . . . . . . . . 61
6.1 Grant of Security Interest . . . . . . . . . . . . . 61
6.2 Perfection and Protection of Security Interest . . . 63
6.3 Location of Collateral . . . . . . . . . . . . . . . 66
6.4 Title to, Liens on, and Sale and Use of Collateral . 66
6.5 Appraisals . . . . . . . . . . . . . . . . . . . . . 66
6.6 Access and Examination; Confidentiality . . . . . . . 67
6.7 Collateral Reporting . . . . . . . . . . . . . . . . 68
6.8 Accounts . . . . . . . . . . . . . . . . . . . . . . 68
6.9 Collection of Accounts; Payments . . . . . . . . . . 70
6.10 Inventory; Perpetual Inventory . . . . . . . . . . . 71
6.11 Equipment . . . . . . . . . . . . . . . . . . . . . . 72
6.12 Assigned Contracts . . . . . . . . . . . . . . . . . 73
6.13 Documents, Instruments, and Chattel Paper . . . . . . 74
6.14 Right to Cure . . . . . . . . . . . . . . . . . . . . 74
6.15 Power of Attorney . . . . . . . . . . . . . . . . . . 74
6.16 The Agent's and Lenders' Rights, Duties and Liabilities 75
6.17 Site Visits, Observations and Testing . . . . . . . . 75
6.18 Further Assurances Regarding Real Estate Collateral . 76
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION;
NOTICES . . . . . . . . . . . . . . . . . . . . . . . 77
7.1 Books and Records . . . . . . . . . . . . . . . . . . 77
7.2 Financial Information . . . . . . . . . . . . . . . . 78
7.3 Notices to the Lenders . . . . . . . . . . . . . . . 81
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS . . . . . . . 83
8.1 Authorization, Validity, and Enforceability of this
Agreement
and the Loan Documents . . . . . . . . . . . . . . . 83
8.2 Validity and Priority of Security Interest . . . . . 84
8.3 Organization and Qualification . . . . . . . . . . . 84
8.4 Corporate Name; Prior Transactions . . . . . . . . . 84
8.5 Subsidiaries and Affiliates . . . . . . . . . . . . . 85
8.6 Financial Statements and Projections . . . . . . . . 85
8.7 Capitalization . . . . . . . . . . . . . . . . . . . 85
8.8 Solvency . . . . . . . . . . . . . . . . . . . . . . 85
8.9 Debt . . . . . . . . . . . . . . . . . . . . . . . . 86
8.10 Distributions . . . . . . . . . . . . . . . . . . . . 86
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8.11 Title to Property . . . . . . . . . . . . . . . . . . 86
8.12 Real Estate; Leases . . . . . . . . . . . . . . . . . 86
8.13 Proprietary Rights . . . . . . . . . . . . . . . . . 86
8.14 Trade Names and Terms of Sale . . . . . . . . . . . . 87
8.15 Litigation . . . . . . . . . . . . . . . . . . . . . 87
8.16 Restrictive Agreements . . . . . . . . . . . . . . . 87
8.17 Labor Disputes . . . . . . . . . . . . . . . . . . . 87
8.18 Environmental Laws . . . . . . . . . . . . . . . . . 87
8.19 No Violation of Law . . . . . . . . . . . . . . . . . 89
8.20 No Default . . . . . . . . . . . . . . . . . . . . . 89
8.21 ERISA Compliance . . . . . . . . . . . . . . . . . . 89
8.22 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 90
8.23 Regulated Entities . . . . . . . . . . . . . . . . . 90
8.24 Use of Proceeds; Margin Regulations . . . . . . . . . 90
8.25 Copyrights, Patents, Trademarks and Licenses . . . . 90
8.26 No Material Adverse Change . . . . . . . . . . . . . 90
8.27 Full Disclosure . . . . . . . . . . . . . . . . . . . 90
8.28 Material Agreements . . . . . . . . . . . . . . . . . 91
8.29 Bank Accounts . . . . . . . . . . . . . . . . . . . . 91
8.30 Governmental Authorization . . . . . . . . . . . . . 91
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS . . . . . . . . . 91
9.1 Taxes and Other Obligations . . . . . . . . . . . . . 91
9.2 Corporate Existence and Good Standing . . . . . . . . 92
9.3 Compliance with Law and Agreements; Maintenance of
Licenses . . . . . . . . . . . . . . . . . . . . . . 92
9.4 Maintenance of Property . . . . . . . . . . . . . . . 92
9.5 Insurance . . . . . . . . . . . . . . . . . . . . . . 92
9.6 Condemnation . . . . . . . . . . . . . . . . . . . . 94
9.7 Environmental Laws . . . . . . . . . . . . . . . . . 95
9.8 Compliance with ERISA . . . . . . . . . . . . . . . . 95
9.9 Mergers, Consolidations or Sales . . . . . . . . . . 96
9.10 Distributions; Capital Change; Restricted Investments 97
9.11 Transactions Affecting Collateral or Obligations . . 97
9.12 Guaranties . . . . . . . . . . . . . . . . . . . . . 97
9.13 Debt . . . . . . . . . . . . . . . . . . . . . . . . 97
9.14 Prepayment . . . . . . . . . . . . . . . . . . . . . 98
9.15 Transactions with Affiliates . . . . . . . . . . . . 98
9.16 Investment Banking and Finder's Fees . . . . . . . . 99
9.17 [Intentionally Omitted]. . . . . . . . . . . . . . . 99
9.18 Business Conducted . . . . . . . . . . . . . . . . . 99
9.19 Liens . . . . . . . . . . . . . . . . . . . . . . . . 99
9.20 Sale and Leaseback Transactions . . . . . . . . . . . 99
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9.21 New Subsidiaries . . . . . . . . . . . . . . . . . . 99
9.22 Fiscal Year . . . . . . . . . . . . . . . . . . . . . 99
9.23 Capital Expenditures . . . . . . . . . . . . . . . . 99
9.24 Operating Lease Obligations . . . . . . . . . . . . . 100
9.25 Net Worth . . . . . . . . . . . . . . . . . . . . . . 100
9.26 Fixed Charge Coverage Ratio . . . . . . . . . . . . . 101
9.27 Use of Proceeds . . . . . . . . . . . . . . . . . . . 101
9.28 NFL and Umbro Consents; Collateral License
Agreement Assignments . . . . . . . . . . . . . . . . 101
9.29 Further Assurances . . . . . . . . . . . . . . . . . 102
ARTICLE 10 CONDITIONS OF LENDING . . . . . . . . . . . . . 102
10.1 Conditions Precedent to Making of Loans on the Closing
Date . . . . . . . . . . . . . . . . . . . . . . . . 102
10.2 Conditions Precedent to Each Loan . . . . . . . . . . 104
ARTICLE 11 DEFAULT; REMEDIES . . . . . . . . . . . . . . . 105
11.1 Events of Default . . . . . . . . . . . . . . . . . . 105
11.2 Remedies . . . . . . . . . . . . . . . . . . . . . . 108
ARTICLE 12 TERM AND TERMINATION . . . . . . . . . . . . . . 110
12.1 Term and Termination . . . . . . . . . . . . . . . . 110
ARTICLE 13 AMENDMENTS; WAIVER; PARTICIPATIONS;
ASSIGNMENTS; SUCCESSORS . . . . . . . . . . . . 110
13.1 No Waivers Cumulative Remedies . . . . . . . . . . . 110
13.2 Amendments and Waivers . . . . . . . . . . . . . . . 111
13.3 Assignments; Participations . . . . . . . . . . . . . 112
ARTICLE 14 THE AGENT . . . . . . . . . . . . . . . . . . . 114
14.1 Appointment and Authorization . . . . . . . . . . . . 114
14.2 Delegation of Duties . . . . . . . . . . . . . . . . 115
14.3 Liability of Agent . . . . . . . . . . . . . . . . . 115
14.4 Reliance by Agent . . . . . . . . . . . . . . . . . . 115
14.5 Notice of Default . . . . . . . . . . . . . . . . . . 116
14.6 Credit Decision . . . . . . . . . . . . . . . . . . . 116
14.7 Indemnification . . . . . . . . . . . . . . . . . . . 116
14.8 Agent in Individual Capacity . . . . . . . . . . . . 117
14.9 Successor Agent . . . . . . . . . . . . . . . . . . . 117
14.10 Withholding Tax . . . . . . . . . . . . . . . . 118
14.11 [Intentionally Omitted . . . . . . . . . . . . . 119
14.12 Collateral Matters . . . . . . . . . . . . . . . 120
14.13 Restrictions on Actions by Lenders; Sharing of
Payments . . . . . . . . . . . . . . . . . . . . . . 121
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14.14 Agency for Perfection . . . . . . . . . . . . . 121
14.15 Payments by Agent to Lenders . . . . . . . . . . 122
14.16 Concerning the Collateral and the Related Loan
Documents . . . . . . . . . . . . . . . . . . . . . . 122
14.17 Field Audit and Examination Reports; Disclaimer by
Lenders . . . . . . . . . . . . . . . . . . . . . . . 122
14.18 Relation Among Lenders . . . . . . . . . . . . . 123
ARTICLE 15 MISCELLANEOUS . . . . . . . . . . . . . . . . . 123
15.1 Cumulative Remedies; No Prior Recourse to Collateral 123
15.2 Severability . . . . . . . . . . . . . . . . . . . . 123
15.3 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver . . . . . . . . . . . . . . . . . . 123
15.4 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . 124
15.5 Survival of Representations and Warranties . . . . . 125
15.6 Other Security and Guaranties . . . . . . . . . . . . 125
15.7 Fees and Expenses . . . . . . . . . . . . . . . . . . 125
15.8 Notices . . . . . . . . . . . . . . . . . . . . . . . 126
15.9 Waiver of Notices . . . . . . . . . . . . . . . . . . 127
15.10 Binding Effect . . . . . . . . . . . . . . . . . 127
15.11 Indemnity of the Agent and the Lenders by the
Borrower . . . . . . . . . . . . . . . . . . . . . . 128
15.12 Limitation of Liability . . . . . . . . . . . . 129
15.13 Final Agreement . . . . . . . . . . . . . . . . 129
15.14 Counterparts . . . . . . . . . . . . . . . . . . 129
15.15 Captions . . . . . . . . . . . . . . . . . . . . 129
15.16 Right of Setoff . . . . . . . . . . . . . . . . 129
15.17 Borrower Joint and Several Liability . . . . . . 130
15.18 Contribution and Indemnification
among the Borrowers 131
15.19 Agency of the Parent Guarantor for each Borrower
and other Loan Party . . . . . . . . . . . . . 131
ARTICLE 16 GUARANTEE . . . . . . . . . . . . . . . . . . . 132
16.1 Guaranteed Obligations . . . . . . . . . . . . . . . 132
16.2 Guarantee Absolute; Alteration of Obligations . . . . 132
16.3 Obligations Joint and Several; Rights Not Exclusive . 135
16.4 Waivers . . . . . . . . . . . . . . . . . . . . . . . 135
16.5 Contribution and Indemnification; Subrogation . . . . 136
16.6 Subordination . . . . . . . . . . . . . . . . . . . . 137
16.7 No Effect on Guarantee . . . . . . . . . . . . . . . 138
16.8 Continuing Guarantee . . . . . . . . . . . . . . . . 138
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EXHIBITS AND SCHEDULES
EXHIBIT A - INTENTIONALLY OMITTED
EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - LIST OF CLOSING DOCUMENTS
EXHIBIT E - NOTICE OF BORROWING
EXHIBIT F - NOTICE OF CONVERSION/CONTINUATION
EXHIBIT G - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE 1--NOTICE OF ASSIGNMENT AND ACCEPTANCE
SCHEDULE 1.1--MATERIAL LICENSE AGREEMENTS
SCHEDULE 6.3--LOCATION OF COLLATERAL
SCHEDULE 8.3--ORGANIZATION AND QUALIFICATION
SCHEDULE 8.4--CORPORATE NAME; PRIOR TRANSACTIONS
SCHEDULE 8.5--SUBSIDIARIES AND AFFILIATES
SCHEDULE 8.9--DEBT
SCHEDULE 8.12--REAL ESTATE; LEASES
SCHEDULE 8.13--PROPRIETARY RIGHTS
SCHEDULE 8.14--TRADE NAMES AND TERMS OF SALE
SCHEDULE 8.15--LITIGATION
SCHEDULE 8.17--LABOR DISPUTES
SCHEDULE 8.18--ENVIRONMENTAL LAWS
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SCHEDULE 8.21--ERISA COMPLIANCE
SCHEDULE 8.28--MATERIAL AGREEMENTS
SCHEDULE 8.29--BANK ACCOUNTS
SCHEDULE 9.5--INSURANCE
SCHEDULE 9.19--LIENS
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AMENDED AND RESTATED
LOAN, GUARANTY AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN, GUARANTY AND SECURITY AGREEMENT, dated as
of April 20, 1999, is among the financial institutions listed on the signature
pages hereof (such financial institutions, together with their respective
successors and assigns (provided such assignees satisfy the conditions in
Article 13 hereof), are referred to hereinafter each individually as a "Lender"
and collectively as the "Lenders"), Bank of America National Trust and Savings
Association, a national banking association ("Bank of America") with an office
at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000, as agent for the Lenders (in its
capacity as agent), together with its successors (including Bank of America (as
defined below)) in its capacity as agent (the "Agent"), Xxxxxxx Sports Inc., a
Delaware corporation, with offices at 00 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx
Xxxx, XX 00000 (the "Parent Guarantor"), each of Xxxxxxx, Inc., an Illinois
corporation, with offices at 0000 X. Xxxxxxxxx Xxxxxx, Xxxxxxx, XX 00000, All
American Sports Corporation, a Delaware corporation, with offices at 0000
Xxxxxx Xxxxxx, Xxxxxx, XX 00000, Varsity Spirit Corporation, a Tennessee
corporation, with offices at 0000 Xxxxxxx Xxxx Xxxxx, Xxxxx Xxx, Xxxxxxx, XX
00000, and Varsity Spirit Fashions & Supplies, Inc., a Minnesota corporation,
with offices at 0000 Xxxxxxx Xxxx Xxxxx, Xxxxx Xxx, Xxxxxxx, XX 00000
(collectively, the "Borrower"), and each of Equilink Licensing Corporation, a
Delaware corporation, with offices at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxxx, XX 00000, MacMark Corporation, a Delaware corporation, with offices
at 00 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000, RHC Licensing
Corporation, a Delaware corporation, with offices at 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxxx, XX 00000, Ridmark Corporation, a Delaware corporation,
with offices at 00 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000, Proacq
Corp., a Delaware corporation, with offices at 0000 Xxxxxx Xxxxxx, Xxxxxx, XX
00000, Varsity USA, Inc., a Tennessee corporation, with offices at 0000 Xxxxxxx
Xxxx Xxxxx, Xxxxx Xxx, Xxxxxxx, XX 00000, Varsity/Intropa Tours, Inc., a
Tennessee corporation, with offices at 0000 Xxxxxxx Xxxx Xxxxx, Xxxxx Xxx,
Xxxxxxx, XX 00000, and International Logos, Inc., a Tennessee corporation, with
offices at 0000 Xxxxxxx Xxxx Xxxxx, Xxxxx Xxx, Xxxxxxx, XX 00000 (collectively,
the "Subsidiary Guarantors").
W I T N E S S E T H
WHEREAS, the Parent Guarantor as borrower, the Borrower and the Subsidiary
Guarantors (other than Proacq Corp. and MacMark Corporation) as guarantors, NBD
Bank, as administrative and collateral agent (the "Prior Administrative
Agent"), NationsBank, N.A., as documentation agent (the "Prior Documentation
Agent"), and certain lenders (the "Prior Lenders") are party to a certain
Credit Agreement, dated as of June 19, 1997 (as amended, the "Prior Credit
Agreement");
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WHEREAS, the Lenders acquired the rights and obligations of the Prior
Lenders under the Prior Credit Agreement and the other Credit Documents (as
defined in the Prior Credit Agreement) pursuant to the Loan Purchase and
Assignment Agreement, dated as of the date hereof (the "Loan Assignment
Agreement"), and the Lenders have replaced the Prior Lenders;
WHEREAS, the Parent, the Borrower and the Subsidiary Guarantors have
requested (i) an increase in the maximum available revolving line of credit for
loans and letters of credit to an amount not to exceed $48,000,000 and which
extensions of credit the Borrower will use for its working capital needs and
general business purposes, (ii) an extension of the maturity date of the credit
facility, (iii) changes to the interest rates on the loans, and (iv) certain
other amendments to the Prior Credit Agreement and the other Credit Documents,
and the Lenders and the Agent have agreed thereto on the terms and subject to
the conditions set forth herein;
WHEREAS, to effectuate the foregoing, the parties hereto desire to amend
and restate the Prior Credit Agreement and the Security Agreement (as defined
in the Prior Credit Agreement, the "Prior Security Agreement") as hereinafter
set forth, and the Lenders have agreed to make available to the Borrower a
revolving credit facility described herein upon the terms and conditions set
forth in this Agreement;
WHEREAS, the Borrower is a wholly-owned subsidiary of the Parent Guarantor
and the Subsidiary Guarantors are wholly-owned subsidiaries of the Parent
Guarantor, and each of the Parent Guarantor and the Subsidiary Guarantors
desires to guaranty such extensions of credit to induce the Lenders to make
available to the Borrower such extensions of credit, as the Parent Guarantor
and each of the Subsidiary Guarantors will directly benefit therefrom and which
extensions of credit and guarantees thereof will further the promotion, conduct
and attainment of the business of the Parent Guarantor and the Subsidiary
Guarantors; and
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the Lenders, the Agent, the Parent
Guarantor, the Borrower and the Subsidiary Guarantors hereby amend and restate
the Prior Credit Agreement and the Prior Security Agreement, and agree, as
follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
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"Accounts" means all of each Loan Party's now owned or hereafter
acquired or arising accounts and receivables, and any other rights to payment
for the sale or lease of goods or rendition of services, whether or not they
have been earned by performance.
"Account Debtor" means each Person obligated in any way on or in
connection with an Account.
"Adjusted Net Earnings from Operations" means, with respect to any
fiscal period of the Parent Guarantor, the Parent Guarantor's consolidated net
income after provision for income taxes for such fiscal period, as determined
in accordance with GAAP and reported on the Financial Statements for such
period, excluding any and all of the following included in such net income:
(a) gain or loss arising from the sale of any capital assets; (b) gain arising
from any write-up in the book value of any asset; (c) earnings of any
corporation, substantially all the assets of which have been acquired by the
Borrower, with the consent of the Lenders, in any manner, to the extent
realized by such other corporation prior to the date of acquisition; (d)
earnings of any business entity in which the Parent Guarantor or any of its
Subsidiaries has an ownership interest unless (and only to the extent) such
earnings shall actually have been received by the Parent Guarantor or any of
its Subsidiaries in the form of cash distributions; (e) earnings of any Person
to which assets of the Parent Guarantor or any of its Subsidiaries shall have
been sold, transferred or disposed of, or into which the Parent Guarantor or
any of its Subsidiaries shall have been merged, or which has been a party with
the Parent Guarantor or any of its Subsidiaries to any consolidation or other
form of reorganization, prior to the date of such transaction, unless (and only
to the extent) such earnings shall actually have been received by the Parent
Guarantor or any of its Subsidiaries in the form of cash distributions; (f)
gain arising from the acquisition of debt or equity securities of the Parent
Guarantor or any of its Subsidiaries or from cancellation or forgiveness of
Debt; and (g) gain or non-cash loss (meaning that non-cash losses when
initially recorded for accounting purposes shall be excluded from the
calculation of net income, but to the extent cash is paid at a later date
(other than cash expenses paid in 1999 and 2000 constituting part of the
$925,000 restructuring charge taken in 1998) in respect of such non-cash loss,
such cash payment (other than cash expenses paid in 1999 and 2000 constituting
part of the $925,000 restructuring charge taken in 1998), and all other losses
paid in cash, shall be included in the calculation of net income (that is,
deducted from income) for the period in which such cash is paid) arising from
extraordinary items, as determined in accordance with GAAP, or from any other
non-recurring transaction.
"Affiliate" means, 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 or which owns, directly or indirectly, ten percent (10%) or
more of the outstanding equity interest of such Person. A Person shall be
deemed to control another Person if the controlling Person possesses, directly
or indirectly, the power to direct or cause the direction of the
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management and policies of the other Person, whether through the ownership of
voting securities, by contract, or otherwise.
"Agent" means Bank of America, solely in its capacity as agent for
the Lenders, and any successor agent.
"Agent Advances" has the meaning specified in Section 2.2(i).
"Agent's Fee" has the meaning specified in Section 3.7.
"Agent's Liens" means the Liens in the Collateral granted to the
Agent, for the ratable benefit of the Lenders, Bank of America, and Agent
pursuant to this Agreement and the other Loan Documents.
"Agent-Related Persons" means the Agent and any successor agent,
together with their respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Additional Debt and Investment Basket Amount" means the
maximum amount of all Restricted Investments permitted to be outstanding under
clause (m) of the definition of such term and the maximum amount of Debt
permitted to be outstanding under clause (g) of Section 9.13, which when
aggregated together shall not exceed $3,000,000 outstanding at any time.
"Aggregate Revolver Outstandings" means, at any time: the sum of (a)
the unpaid principal balance of Revolving Loans, (b) the aggregate amount of
Pending Revolving Loans, (c) one hundred percent (100%) of the aggregate
undrawn face amount of all outstanding Letters of Credit, and (d) the aggregate
amount of any unpaid reimbursement obligations in respect of Letters of Credit.
"Agreement" means this Amended and Restated Loan, Guaranty and
Security Agreement, as amended, supplemented or otherwise modified from time to
time.
"Anniversary Date" means each anniversary of the Closing Date.
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"Applicable Margin" means, for LIBOR Rate Loans, Base Rate Loans and
Letter of Credit Fees, as the case may be, for the period from the date hereof
to and including December 31, 1999, 2.25% for LIBOR Rate Loans, 0.75% for Base
Rate Loans and 2.25% for Letter of Credit Fees, and, thereafter, the
applicable percentage corresponding to the Leverage Ratio in effect as shown
below:
Applicable
Applicable Applicable Margin for
Margin For Margin Letter of
Pricing LIBOR Rate For Base Credit
Level Leverage Ratio Loans Rate Loans Fees
------- --------------- ---------- ---------- ----------
I less than 4.50:1 1.75% .25% 1.75%
II greater than or 2.00% .50% 2.00%
equal to 4.50:1
and less than
5.25:1
III greater than or 2.25% .75% 2.25%
equal to 5.25:1
and less than
5.75:1
IV greater than or 2.50% 1.00% 2.50%
equal to 5.75:1
and less than
6.25:1
V greater than or 2.75% 1.25% 2.75%
equal to 6.25:1
After December 31, 1999 (beginning with the Calculation Date or
Substitution Calculation Date, as the case may be, with respect to the
financial statements referred to in Section 7.2(a) due within one hundred
fifteen days after December 31, 1999), the Applicable Margin for Revolving
Loans and Letter of Credit Fees shall, in each case, be determined and adjusted
quarterly on the date (each a "Calculation Date") five (5) Business Days after
the date by which the Parent Guarantor is required to provide the applicable
financial statements in accordance with the provisions of Section 7.2(a) or (c)
provided that if the Parent Guarantor fails to provide the applicable financial
statements required by Section 7.2(a) or (c) on or before the most recent
Calculation Date, the Applicable Margin for Revolving Loans and the Letter of
Credit Fees from such Calculation Date shall be based on Pricing Level V until
such time as the applicable financial statements are provided such date being
referred to herein as (the "Substitution Calculation Date") whereupon the
Pricing Level shall be determined by the then current Leverage Ratio; provided,
however, in no event shall the Lenders be obligated to provide any refund,
rebate, credit or other repayment of interest or fees paid hereunder and in no
event shall the Borrower be permitted to set-off or deduct any amounts against
or from any interest, fees or other amounts payable hereunder. Each Applicable
Margin shall be effective from one Calculation Date (or Substitution
Calculation Date, as the case may be) until the next Calculation Date. Any
adjustment in the Applicable Margin shall be applicable to all existing Loans
and Letters of Credit as well as any new Loans made or Letters of Credit
issued; provided, however, in no event shall the
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Lenders be obligated to provide any refund, rebate, credit or other repayment
of interest or fees paid hereunder and in no event shall the Borrower be
permitted to set-off or deduct any amounts against or from any interest, fees
or other amounts payable hereunder.
"Assigned Contracts" means, collectively, all of the Loan Party's
rights and remedies under, and all moneys and claims for money due or to become
due to the Loan Party under, those contracts set forth on Schedule 1.1
(including the Material License Agreements) and any other material contracts,
and any and all amendments, supplements, extensions, and renewals thereof
including, without limitation, all rights and claims of the Loan Party now or
hereafter existing: (i) under any insurance, indemnities, warranties, and
guarantees provided for or arising out of or in connection with any of the
foregoing agreements; (ii) for any damages arising out of or for breach or
default under or in connection with any of the foregoing contracts; (iii) to
all other amounts from time to time paid or payable under or in connection with
any of the foregoing agreements; or (iv) to exercise or enforce any and all
covenants, remedies, powers and privileges thereunder.
"Assignee" has the meaning specified in Section 13.3(a).
"Assignment and Acceptance" has the meaning specified in Section
13.3(a).
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel engaged by the Agent,
the allocated cost of internal legal services of the Agent and all expenses and
disbursements of internal counsel of the Agent.
"Availability" means, at any time: (a) the lesser of (i) the Maximum
Revolver Amount or (ii) the sum of (A) eighty percent (80%) of the Net Amount
of Eligible Accounts; (B) sixty percent (60%) of the value (lower of FIFO cost
or market) of the first quality finished goods Eligible Inventory; (C) forty
percent (40%) of the value (lower of FIFO cost or market) of Eligible Work-In-
Process Inventory; (D) fifty percent (50%) of the value (lower of FIFO cost or
market) of Eligible Raw Material Inventory; (E) (without duplication) forty-
five percent (45%) of the value of Eligible Inventory covered by documentary
Letters of Credit issued or caused to be issued by the Agent pursuant to
Section 2.4 which Inventory is consigned to and all bills of lading, airway
bills or other documents of title or other similar documents are issued in the
name of the Agent and upon which the Agent has a first priority security
interest; plus (F) the Seasonal Overadvance; provided, that at no time shall
the sum of outstanding Revolving Loans based upon the value of Eligible
Inventory exceed $20,000,000 except during the Seasonal Overadvance Period,
when the sum of outstanding Revolving Loans based upon the value of Eligible
Inventory shall not exceed $25,000,000 ("Maximum Inventory Loan"); provided,
further, that at no time shall the sum of outstanding Revolving Loans based
upon the value of Eligible Unbilled Accounts Receivable exceed $12,000,000;
minus (b) the sum of (i) the Aggregate Revolver Outstandings (ii) reserves for
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accrued interest on the Obligations, (iii) the Environmental Compliance
Reserve, and (iv) all other reserves which the Agent deems necessary in the
exercise of its reasonable credit judgment to maintain with respect to the
Borrower's account, including, without limitation, (x) reserves for amounts
that may be payable by the Agent or any Lender to or for the benefit of the
Prior Lenders or their Affiliates or other institutions at which a Loan Party
maintains accounts in connection with transitioning the bank account and other
cash management arrangement(s) from the Prior Credit Agreement to this
Agreement including under Section 2 of the Loan Assignment Agreement, or in
connection with lockbox account or blocked account arrangements, (y) reserves
for any amounts which the Agent or any Lender may be obligated to pay in the
future for the account of the Borrower royalties, and (z) reserves for
royalties, license fees, rent, processing charges and any other amounts which
the Agent in the exercise of its reasonable credit judgment believes may have
to be paid to third parties in connection with exercise of the Agent's or the
Lenders' rights or remedies under this Agreement or any other Loan Document.
"Bank of America" has the meaning specified in the introductory
paragraph of this Agreement.
"Bank of America Loan" and "Bank of America Loans" have the meanings
specified in Section 2.2(h).
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
[section] 101 et seq.).
"Base Rate" means, for any day, the rate of interest on a per annum
basis (rounded upwards, if necessary, to the nearest whole multiple of 1/100 of
1%) equal to the greater of (a) the Federal Funds Rate in effect on such day
plus 1/2 of 1% or (b) the rate of interest in effect for such day as publicly
announced from time to time by Bank of America in Charlotte, North Carolina, as
its "reference rate" or "prime rate" (the "reference rate" or "prime rate"
being a rate set by Bank of America based upon various factors including Bank
of America's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate). Any change in the reference
rate announced by Bank of America shall take effect at the opening of business
on the day specified in the public announcement of such change. Each Interest
Rate based upon the Base Rate shall be adjusted simultaneously with any change
in the Base Rate.
"Base Rate Loans" means a Revolving Loan during any period in which
it bears interest based on the Base Rate.
"Borrowing" means a borrowing hereunder consisting of Revolving Loans
made on the same day by the Lenders to the Borrower (or by Bank of America in
the case
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of a Borrowing funded by Bank of America Loans) or by the Agent in the case of
a Borrowing consisting of an Agent Advance.
"Borrowing Base Certificate" means a certificate by a Responsible
Officer of the Borrower, substantially in the form of Exhibit B (or another
form acceptable to the Agent) setting forth the calculation of the
Availability, including a calculation of each component thereof, as of the
close of business no more than five (5) Business Days prior to the date of such
certificate, all in such detail as shall be satisfactory to the Agent. All
calculations of Availability in connection with the preparation of any
Borrowing Base Certificate shall originally be made by the Borrower and
certified to the Agent; provided, that the Agent shall have the right to review
and adjust, in the exercise of its reasonable credit judgment, any such
calculation (1) (with three (3) Business Days' prior written notice to
Borrower) to reflect its reasonable estimate of declines in value of any of the
Collateral described therein, and (2) (without prior notice) to the extent that
such calculation is not in accordance with this Agreement.
"Business Day" means: (a) any day that is not a Saturday, Sunday, or
a day on which banks in San Francisco, California, are required or permitted to
be closed, and (b) with respect to all notices, determinations, fundings and
payments in connection with the LIBOR Rate or LIBOR Rate Loans, any day that is
a Business Day pursuant to clause (a) above and that is also a day on which
trading in Dollars is carried on by and between banks in the London interbank
market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a
bank.
"Capital Expenditures" means all payments due (whether or not paid)
in respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those costs arising in connection with the
direct or indirect acquisition of such asset by way of increased product or
service charges or offset items or in connection with a Capital Lease,
including all payments due in respect of the acquisition of any division,
operating unit or other assets of any business, and including all payments due
(whether or not paid) in respect of the cost of data or other information
processing products or services.
"Capital Lease" means any lease of property by a Person which, in
accordance with GAAP, is or should be reflected as a capital lease on the
balance sheet of such Person.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-
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voting) in equity of such Person, whether outstanding on the Closing Date or
issued thereafter.
"Change of Control" means either of the following events: (a) any
"person" or "group" (within the meaning of Section 13(d) or 14(d) of the
Exchange Act), in each case, other than the Principals and the Related Parties,
has become, directly or indirectly, the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), by way of merger, consolidation or otherwise, of 35% or more
of the voting power of the Capital Stock of the Parent Guarantor on a fully-
diluted basis, after giving effect to the conversion and exercise of all
outstanding warrants, options and other securities of the Parent Guarantor
(whether or not such securities are then currently convertible or exercisable),
(b) the first day on which a majority of the members of the Board of Directors
of the Parent Guarantor are not Continuing Directors or (c) a "change in
control" (as defined in the documentation evidencing the Senior Notes or the
Subordinated Debt) occurs.
"Closing Date" means the date of this Agreement.
"Closing Fee" has the meaning specified in Section 3.4.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute, and regulations promulgated thereunder.
"Collateral" has the meaning specified in Section 6.1.
"Collateral License Agreement Assignment" has the meaning specified
in clause (f)(ii)(y) of the definition of Eligible Inventory.
"Commitment" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on the signature pages of this Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 13.3, as such Commitment
may be adjusted from time to time in accordance with the provisions of Section
13.3, and "Commitments" means, collectively, the aggregate amount of the
commitments of all of the Lenders.
"Credit Support" has the meaning specified in Section 2.4(a).
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or
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waste, asbestos in any form or condition, polychlorinated biphenyls ("PCBs"),
or any constituent of any such substance or waste.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Parent Guarantor who (i) was a member
of such Board of Directors on the date of this Agreement or (ii) was nominated
for election or elected to such Board of Directors with the approval of a
majority of the Continuing Directors who were members of such Board at the time
of such nomination or election.
"Copyright" means any and all copyrights in works of authorship of
any kind in any country or political subdivision thereof throughout the world,
for the full term thereof, and all applications, registrations and recordings
thereof in the Office of the United States Register of Copyrights, Library of
Congress, or in any similar office or agency of any country or political
subdivision thereof throughout the world, including but not limited to those
set forth on Schedule 8.13 (as from time to time amended, modified or
supplemented in accordance with the terms hereof) attached hereto and made a
part hereof, together with all extensions, renewals and corrections thereof,
whether such rights are vested, contingent or reversionary under any copyright
law now or hereafter in force or effect throughout the world, and all licenses
thereof, and all causes of action or claims arising out of or pertaining
thereto (including but not limited to claims of infringement) and any legal,
beneficial or equitable right to the use or ownership of the works to which
they relate, by means of any technology now known or hereafter developed,
including but not limited to the rights to reproduce, adapt, transform, derive,
distribute, perform, record, display or otherwise exploit in any way those
works.
"Debt" means, with respect to any Person, all liabilities,
obligations and indebtedness of such Person to any other Person, of any kind or
nature, now or hereafter owing, arising, due or payable, howsoever evidenced,
created, incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or otherwise, and including, without in any way limiting the
generality of the foregoing: (i) liabilities and obligations to trade
creditors; (ii) all Obligations; (iii) all obligations and liabilities of any
Person secured by any Lien on such Person's property, even though such Person
shall not have assumed or become liable for the payment thereof; provided,
however, that all such obligations and liabilities which are limited in
recourse to such property shall be included in Debt only to the extent of the
book value of such property as would be shown on a balance sheet of such Person
prepared in accordance with GAAP; (iv) all obligations or liabilities created
or arising under any Capital Lease or conditional sale or other title retention
agreement with respect to property used or acquired by such Person, even if the
rights and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property and all obligations and liabilities under any
synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but is classified as an
operating lease in accordance
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with GAAP; provided, however, that all such obligations and liabilities which
are limited in recourse to such property shall be included in Debt only to the
extent of the book value of such property as would be shown on a balance sheet
of such Person prepared in accordance with GAAP; (v) all accrued pension fund
and other employee benefit plan obligations and liabilities; (vi) all
obligations and liabilities under Guaranties; (vii) all obligations in respect
of deferred taxes; (viii) all obligations in respect of Hedging Agreements; and
(ix) all obligations in respect of preferred stock issued by such Person and
required by the terms thereof to pay dividends or to be redeemed, or for which
mandatory sinking fund payments are due within one (1) year of the date of
determination.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Defaulting Lender" has the meaning specified in Section 2.2(g)(ii).
"Default Rate" means a fluctuating per annum interest rate at all
times equal to the sum of: (a) the otherwise applicable Interest Rate plus (b)
two percent (2%). Each Default Rate shall be adjusted simultaneously with any
change in the applicable Interest Rate. In addition, with respect to Letters
of Credit, the Default Rate shall mean an increase in the Letter of Credit Fee
by two (2) percentage points.
"Distribution" means, in respect of any corporation: (a) the payment
or making of any dividend or other distribution of property in respect of
capital stock (or any options or warrants for such stock) of such corporation,
other than distributions in capital stock (or any options or warrants for such
stock) of the same class; or (b) the redemption or other acquisition by such
corporation of any capital stock (or any options or warrants for such stock) of
such corporation.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" means dollars in the lawful currency of the United
States.
"EBITDA" means, for any period, with respect to the Parent Guarantor
and its Subsidiaries on a consolidated basis, the sum of (a) Adjusted Net
Earnings from Operations for such period plus (b) an amount which, in the
determination of Adjusted Net Earnings from Operations for such period has been
deducted for (i) Interest Expense for such period, (ii) total Federal, state,
foreign or other income taxes for such period, and (iii) all depreciation and
amortization for such period, all as determined in accordance with GAAP.
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"Eligible Accounts" means all Accounts of the Borrower created in the
ordinary course of its business arising out of the sale of the Borrower's
Inventory or the rendition of services by the Borrower, which the Agent in the
exercise of its reasonable commercial discretion determines to be Eligible
Accounts. Without limiting the discretion of the Agent to reasonably establish
other criteria of ineligibility, Eligible Accounts shall not, unless the Agent
in its sole discretion elects, include any Account:
(a) with respect to which a valid invoice has not been issued
(provided, that an invoice shall not be required to have been issued in respect
of Eligible Unbilled Accounts Receivable) or more than 270 days have elapsed
since the date of the original invoice therefor or which is "Past Due" (As
used herein, "Past Due" means (i) for the period from February 1 to October 31
of any calendar year, an Account with respect to which the invoice therefor has
not been paid within 120 days of the invoice date in the case of Varsity Spirit
Fashions & Supplies, Inc., or within 90 days of its due date in the case of All
American Sports Corporation, Xxxxxxx, Inc. or any other Borrower and (ii) for
the period from November 1 to January 31 of any calendar year, an Account with
respect to which the invoice therefor has not been paid within 60 days of the
invoice date in the case of Varsity Spirit Fashions & Supplies, Inc. or within
30 days of its due date in the case of All American Sports Corporation,
Xxxxxxx, Inc. or any other Borrower);
(b) with respect to which any of the representations,
warranties, covenants, and agreements contained in Section 6.8 are not or have
ceased to be complete and correct or have been breached;
(c) with respect to which, in whole or in part, a check,
promissory note, draft, trade acceptance or other instrument for the payment of
money has been received, presented for payment and returned uncollected for any
reason (unless resulting solely from a bank clerical error);
(d) which represents a progress billing (as hereinafter
defined) or as to which the Borrower has extended the time for payment to a
date that without such extension such Account would have been "Past Due" as
defined in clause (a) above, without the consent of the Agent (which consent,
however, shall not make such Account an Eligible Account); for the purposes
hereof, "progress billing" means any invoice (provided no invoice is required,
as provided above, for any Eligible Unbilled Accounts Receivable) for goods
sold or leased or services rendered under a contract or agreement pursuant to
which the Account Debtor's obligation to pay such invoice is conditioned upon
the Borrower's completion of any further performance under the contract or
agreement (provided that, for the sake of clarification, "progress billing"
does not include the allocable and severable portion of an invoice for goods
sold and shipped or services rendered for which payment is not conditional,
even if other portions of such invoice are for future sales or shipments of
goods or future performance of services);
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(e) as to which any one or more of the following events has
occurred with respect to the Account Debtor on such Account: death or judicial
declaration of incompetency of an Account Debtor who is an individual; the
filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as
a bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making of any general
assignment by the Account Debtor for the benefit of creditors; the appointment
of a receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or taking
possession by a "custodian," as defined in the Federal Bankruptcy Code; the
institution by or against the Account Debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States or otherwise) or of
any formal or informal proceeding for the dissolution or liquidation of,
settlement of claims against, or winding up of affairs of, the Account Debtor;
the sale, assignment, or transfer of all or any material part of the assets of
the Account Debtor; the nonpayment generally by the Account Debtor of its debts
as they become due; or the cessation of the business of the Account Debtor as a
going concern;
(f) if fifty percent (50%) or more of the aggregate Dollar
amount of outstanding Accounts owed at such time by the Account Debtor thereon
is classified as ineligible under the other criteria set forth herein or
otherwise established by the Agent (provided that an Account for which the
Account Debtor thereon is a school shall not be ineligible under this clause
(f) solely because more than 50% of the aggregate Dollar amount of outstanding
Accounts for such Account Debtor are "Past Due" as defined in clause (a)
above);
(g) owed by an Account Debtor which: (i) does not maintain its
chief executive office in the United States; or (ii) is not organized under the
laws of the United States or any state thereof; or (iii) is the government of
any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof; except to the
extent that either (i) such Account is secured or payable by a letter of credit
satisfactory to the Agent in its discretion or (ii) such Account is approved by
the Agent in its sole discretion to be an Eligible Account (which determination
may be made by the Agent without the consent of the Majority Lenders or
Required Lenders so long as not more than $1,000,000 of such Accounts are
Eligible Accounts at any one time);
(h) owed by an Account Debtor which is an Affiliate or employee
of the Borrower; except to the extent that such Account is for a bona fide sale
of goods at fair market prices and otherwise on "arms-length" terms to an
Affiliate listed on Schedule 8.5 hereto;
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(i) except as provided in (k) below, as to which either the
perfection, enforceability, or validity of the Agent's Lien in such Account, or
the Agent's right or ability to obtain direct payment to the Agent of the
proceeds of such Account, is governed by any federal, state, or local statutory
requirements other than those of the UCC;
(j) which is owed by an Account Debtor to which the Borrower is
indebted in any way, or which is subject to any right of setoff or recoupment
by the Account Debtor, unless the Account Debtor has entered into an agreement
acceptable to the Agent to waive setoff rights; or if the Account Debtor
thereon has disputed liability or made any claim with respect to any other
Account due from such Account Debtor; but in each such case only to the extent
of such indebtedness, setoff, recoupment, dispute, or claim;
(k) which is owed by the government of the United States of
America, or any department, agency, public corporation, or other
instrumentality thereof, unless the Federal Assignment of Claims Act of 1940,
as amended (31 U.S.C. [section] 3727 et seq.), and any other steps
necessary to perfect
the Agent's Lien therein, have been complied with to the Agent's satisfaction
with respect to such Account; except to the extent that such Account is
approved by the Agent in its sole discretion to be an Eligible Account (which
determination may be made by the Agent without the consent of the Majority
Lenders or Required Lenders so long as not more than $1,000,000 of such
Accounts are Eligible Accounts at any one time);
(l) which is owed by any state, municipality, or other
political subdivision of the United States of America, or any department,
agency, public corporation, or other instrumentality thereof and as to which
the Agent determines that its Lien therein is not or cannot be perfected;
(m) which represents a sale on a xxxx-and-hold, guaranteed
sale, sale and return, sale on approval, consignment, or other repurchase or
return basis;
(n) which is evidenced by a promissory note or other instrument
or by chattel paper;
(o) if the Agent believes, in the exercise of its reasonable
judgment, that the prospect of collection of such Account is impaired or that
the Account may not be paid by reason of the Account Debtor's financial
inability to pay;
(p) with respect to which the Account Debtor is located in any
state requiring the filing of a Notice of Business Activities Report or similar
report in order to permit the Borrower to seek judicial enforcement in such
State of payment of such Account, unless such Borrower has qualified to do
business in such state or has filed a Notice of Business Activities Report or
equivalent report for the then current year;
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(q) which arises out of a sale not made in the ordinary course
of the Borrower's business;
(r) as to which the goods giving rise to such Account have not
been shipped and delivered to and accepted by the Account Debtor or the
services giving rise to such Account have not been performed by the Borrower,
and, if applicable, accepted by the Account Debtor, or the Account Debtor
revokes its acceptance of such goods or services;
(s) is owed by an Account Debtor which is obligated to the
Borrower respecting Accounts the aggregate unpaid balance of which exceeds
fifteen percent (15%) of the aggregate unpaid balance of all Accounts owed to
the Borrower at such time by all of the Borrower's Account Debtors, but only to
the extent of such excess;
(t) arises out of an enforceable contract or order which, by
its terms, forbids, restricts or makes void or unenforceable the granting of a
Lien by the Borrower to the Agent with respect to such Account;
(u) is owed by any National Football League team subject to the
Promotional Rights Agreement dated June 1, 1990 between Xxxxxxx, Inc. and NFL
Properties, Inc. or any replacement or substitution agreement thereof or any
similar agreement entered into by the Borrower; or
(v) which is not subject to a first priority and perfected
security interest in favor of the Agent for the benefit of the Lenders.
If any Account at any time ceases to be an Eligible Account by reason of
any of the foregoing exclusions or any failure to meet any other eligibility
criteria established by the Agent in the exercise of its reasonable discretion
then such Account shall promptly be excluded from the calculation of Eligible
Accounts.
"Eligible Inventory" means Inventory of the Borrower, valued at the
lower of cost (on a FIFO basis) or market, that constitutes "first quality
finished goods" Inventory and that, unless the Agent in its sole discretion
elects: (a) is not, in the Agent's reasonable opinion, obsolete, slow moving,
or unmerchantable; (b) is located at premises owned by the Borrower or on
premises otherwise reasonably acceptable to the Agent, provided, however, that
Inventory located on premises leased to the Borrower, on a vendor's premises or
otherwise on premises owned by a Person other than the Borrower shall not be
Eligible Inventory unless (i) the Borrower shall have delivered to the Agent a
written waiver, duly executed on behalf of the appropriate landlord, vendor or
other Person and in form and substance acceptable to the Agent, of all Liens or
other rights which the landlord for such premises, vendor or other Person may
be entitled to assert against such Inventory, or (ii) unless Eligible Inventory
having a book value (determined on a FIFO basis if applicable) of
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less than $100,000 is located on such premises and, if the Agent or the
Majority Lenders so elect in its or their sole discretion, as to which reserves
in an amount for ninety (90) days rent at such premises, estimated processing
charges and other applicable charges for lessors, vendors or such other Persons
have been established under clause (b) (iv) (z) of the definition of
Availability; (c) upon which the Agent for the benefit of the Lenders has a
first priority perfected security interest; (d) is not work-in-process or raw
materials, (e) is not spare parts, packaging and shipping materials, supplies,
xxxx-and-hold Inventory for Account Debtors, returned or defective Inventory,
or Inventory delivered to the Borrower on consignment; (f) is not subject to a
Material License Agreement unless (i) the Material License Agreement is in full
force and effect and (ii) the Agent has received (y) a collateral assignment of
license agreement (a "Collateral License Agreement Assignment") for such
Material License Agreement and (z) a consent thereto from all other parties to
such Material License Agreement, each in a form reasonably acceptable to it
(provided, that, until the date ninety (90) days after the Closing Date, the
consents of the NFL and Umbro (and the applicable Collateral License Agreement
Assignments with respect to the NFL and Umbro) will not be required for the
applicable Inventory subject to Material License Agreements with the NFL or
Umbro to be Eligible Inventory); and (g) the Agent, in the exercise of its
reasonable commercial discretion, deems eligible as the basis for Revolving
Loans based on such collateral and credit criteria as the Agent may from time
to time establish. If any Inventory at any time ceases to be Eligible
Inventory, such Inventory shall promptly be excluded from the calculation of
Eligible Inventory.
"Eligible Raw Material Inventory" means raw material Inventory of the
Borrower meeting all of the requirements of clauses (a), (b), (c), (e), (f) and
(g) of the definition of Eligible Inventory.
"Eligible Unbilled Account Receivable" means, solely during the
period of April 1 to September 1 of each calendar year and not at any other
time, an Account of Varsity Spirit Fashions & Supplies, Inc. or All American
Sports Corporation that has been created and is outstanding during such period
in such year (and not created during such period in a prior year or created
during any other period), but has not yet been invoiced, that represents an
obligation for payment created by shipment of Inventory to the Account Debtor
pursuant to a purchase order issued to Varsity Spirit Fashions & Supplies, Inc.
or All American Sports Corporation, in the ordinary course of business. During
the period of September 2 to December 31 and January 1 to March 31 of each year
there will be no Eligible Unbilled Account Receivables.
"Eligible Work-In-Process Inventory" means work-in-process Inventory
of the Borrower meeting all of the requirements of clauses (a), (b), (c), (e),
(f) and (g) of the definition of Eligible Inventory and consisting of football
helmets, football helmet shells, football helmet face masks and padding for
football helmets.
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"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"Environmental Compliance Reserve" means any reserves which the
Agent, after the Closing Date, and upon three (3) days' prior written notice to
the Borrower, establishes from time to time for amounts that are reasonably
likely (as determined by the Borrower and the Agent or by an independent
environmental consultant engaged by the Agent or the Borrower and reasonably
acceptable to the Agent) to be expended by the Borrower in order for the
Borrower and its operations and property: (a) to comply with any notice from a
Governmental Authority asserting material non-compliance with Environmental
Laws, or (b) to correct any such material non-compliance identified in a report
delivered to the Agent and the Lenders pursuant to Section 9.7.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative
orders, directed duties, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Authority, in each case relating to
environmental, health, safety and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for: (1) any liability under any Environmental Laws, or (2) damages
arising from, or costs incurred by such Governmental Authority in response to,
a Release or threatened Release of a Contaminant into the environment.
"Environmental Property Transfer Act" means any applicable
requirement of law that conditions, restricts, prohibits or requires any
notification or disclosure triggered by the closure of any property or the
transfer, sale or lease of any property or deed or title for any property for
environmental reasons, including, but not limited to, any so-called
"Environmental Cleanup Responsibility Acts" or "Responsible Property Transfer
Acts."
"Equipment" means all of each Loan Party's now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (except Inventory), including motor vehicles with
respect to which a certificate of title has been issued, aircraft, dies, tools,
jigs, and office equipment, as well as all of such types of property leased by
any Loan Party and all of each Loan Party's rights and interests with respect
thereto under such leases (including, without limitation, options to purchase);
together with all present and future additions and accessions thereto,
replacements therefor, component and auxiliary parts and supplies used or to be
used in connection therewith, and all substitutes for any of the foregoing, and
all manuals, drawings, instructions, warranties and rights with respect
thereto; wherever any of the foregoing is located.
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"ERISA" means the Employee Retirement Income Security Act of 1974,
and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means: (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multi-employer Plan or notification that a Multi-employer Plan
is in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multi-employer Plan; (e) the occurrence of an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multi-employer Plan; or (f) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
"Event of Default" has the meaning specified in Section 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
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"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Fee Letter" means the letter dated as of the date hereof by and
between Bank of America and the Borrower with respect to the Closing Fee and
the Agent's Fee.
"FIFO" means the "first-in, first-out" method of calculating the book
value of inventory in accordance with GAAP.
"Financial Statements" means, according to the context in which it is
used, the financial statements referred to in Section 8.6 or any other
financial statements required to be given to the Lenders pursuant to this
Agreement.
"Fiscal Year" means the Parent Guarantor's fiscal year for financial
accounting purposes. The current Fiscal Year of the Parent Guarantor will end
on December 31, 1999.
"Fixed Assets" means Equipment and Real Estate of any Loan Party.
"Fixed Charge Coverage Ratio" means, for the applicable period, the
ratio of (a) EBITDA minus Capital Expenditures to (b) cash Interest Expense
during such period and Scheduled Principal Payments during such period.
"Funded Debt" means, without duplication, the sum of (a) all Debt of
the Parent Guarantor and its Subsidiaries for borrowed money, (b) all purchase
money Debt of the Parent Guarantor and its Subsidiaries, (c) the principal
portion of all obligations of the Parent Guarantor and its Subsidiaries under
Capital Leases and the principal portion under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP, (d) all obligations, contingent or otherwise, relative to
the face amount of all letters of credit (other than letters of credit
supporting trade payables in the ordinary course of business), whether or not
drawn, and banker's acceptances issued for the account of such Person (it being
understood that, to the extent an undrawn letter of credit supports another
obligation consisting of Indebtedness, in calculating aggregated Indebtedness
only such other obligation shall be included), (e) any Guaranty of the Parent
Guarantor and its Subsidiaries with respect to Funded Debt of another Person,
(f) all Funded Debt of another entity secured by a Lien on any property of the
Parent Guarantor or any of its Subsidiaries whether or not such Funded Debt has
been assumed by a Parent Guarantor or any of its Subsidiaries, and (g) all
Funded Debt of any partnership, limited liability company or unincorporated
joint venture to the extent the Parent Guarantor or one of its Subsidiaries is
legally obligated or
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has a reasonable expectation of being liable with respect thereto, net of any
assets of such partnership or joint venture.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies
with similar functions of comparable stature and authority within the U.S.
accounting profession), which are applicable to the circumstances as of the
Closing Date.
"General Intangibles" means all of each Loan Party's now owned or
hereafter acquired general intangibles, choses in action and causes of action
and all other intangible personal property of any Loan Party of every kind and
nature (other than Accounts, goods and money), including, without limitation,
all contract rights, Proprietary Rights, corporate or other business records,
inventions, designs, blueprints, plans, specifications, patents, patent
applications, trademarks, service marks, trade names, trade secrets, goodwill,
copyrights, computer software, customer lists, registrations, licenses,
franchises, tax refund claims, any funds which may become due to any Loan Party
in connection with the termination of any Plan or other employee benefit plan
or any rights thereto and any other amounts payable to any Loan Party from any
Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, property, casualty or any similar type of insurance and any
proceeds thereof, proceeds of insurance covering the lives of key employees on
which any Loan Party is beneficiary, and any letter of credit, guarantee,
claim, security interest or other security held by or granted to any Loan
Party.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guarantee" has the meaning specified in Section 16.1.
"Guarantor" has the meaning specified in Section 16.1.
"Guaranty" means, with respect to any Person, all obligations of such
Person which in any manner directly or indirectly guarantee or assure, or in
effect guarantee or assure, the payment or performance of any indebtedness,
dividend or other obligations of any
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other Person (the "guaranteed obligations"), or assure or in effect assure the
holder of the guaranteed obligations against loss in respect thereof,
including, without limitation, any such obligations incurred through an
agreement, contingent or otherwise: (a) to purchase the guaranteed obligations
or any property constituting security therefor; (b) to advance or supply funds
for the purchase or payment of the guaranteed obligations or to maintain a
working capital or other balance sheet condition; or (c) to lease property or
to purchase any debt or equity securities or other property or services.
"Hedging Agreements" means, collectively, interest rate protection
agreements, foreign currency exchange agreements, commodity purchase or option
agreements or other interest or exchange rate or commodity price hedging
agreements, in each case, entered into or purchased by the Parent Guarantor or
any of its Subsidiaries.
"Indenture" has the meaning specified in the definition of Senior
Notes.
"Insolvency Proceeding" has the meaning specified in clause (v) of
Section 16.2(b).
"Intellectual Property" means the present and future Patents,
Trademarks, Copyrights and related licenses and rights held by the Loan
Parties.
"Intercompany Accounts" means all assets and liabilities, however
arising, which are due to a Loan Party from, which are due from a Loan Party
to, or which otherwise arise from any transaction by a Loan Party with, any
Affiliate.
"Interest Expense" means, for any period, total interest expense of
the Parent Guarantor and its Subsidiaries during such period, including the
interest portion of Capital Leases and "synthetic" and other such off-balance
sheet leases as described in the definition of Debt.
"Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two, three or six months thereafter as selected by the
Borrower in its Notice of Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the following
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 preceding Business Day;
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(ii) any Interest Period pertaining to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of the calendar month
at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Stated
Termination Date.
"Interest Rate" means each or any of the interest rates, including
the Default Rate, set forth in Section 3.1.
"Inventory" means all of each Loan Party's now owned and hereafter
acquired inventory, goods and merchandise, wherever located, to be furnished
under any contract of service or held for sale or lease, all returned goods,
raw materials, work in process, other materials and supplies of any kind,
nature or description which are or might be consumed in the Loan Party's
business or used in connection with the printing, packing, shipping,
advertising, selling, leasing or finishing of such goods, merchandise and such
other personal property, and all documents of title or other documents
representing them.
"Investment Property" means: (a) a security, whether certificated or
uncertificated; (b) a security entitlement; (c) a securities account; (d) a
commodity contract; or (e) a commodity account.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Latest Projections" means: (a) on the Closing Date and thereafter
until the Agent receives new projections pursuant to Section 7.2(f), the
projections of the Borrower's financial condition, results of operations, and
cash flow, for the period commencing on January 1, 1999 and ending on December
31, 1999 and delivered to the Agent prior to the Closing Date; and (b)
thereafter, the projections most recently received by the Agent pursuant to
Section 7.2(f).
"Lender" and "Lenders" have the meanings specified in the
introductory paragraph hereof and shall include the Agent to the extent of any
Agent Advance outstanding and Bank of America to the extent of any Bank of
America Loan outstanding; provided that no such Agent Advance or Bank of
America Loan shall be taken into account in determining any Lender's Pro Rata
Share.
"Letter of Credit" means a standby Letter of Credit or documentary
Letter of Credit issued or caused to be issued for the account of the Borrower
pursuant to Section 2.4.
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"Letter of Credit Fee" has the meaning specified in Section 3.6.
"Leverage Ratio" means, as of the end of each fiscal quarter, the
ratio of (a) total Funded Debt on such date to (b) EBITDA for the twelve month
period ending on such date.
"LIBOR Interest Payment Date" means, with respect to a LIBOR Rate
Loan, the last day of each Interest Period applicable to such Loan; provided,
however, if an Interest Period is longer than three (3) months, interest will
be payable in arrears on, and "LIBOR Interest Payment Date" shall mean, each of
the last day of such three (3) month period and the last day of such Interest
Period.
"LIBOR Rate" means, for any Interest Period, with respect to LIBOR
Rate Loans comprising part of the same Borrowing, the rate of interest per
annum (rounded upward to the next 1/100th of 1.0%) determined by the Agent as
follows:
LIBOR Rate = LIBOR
--------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for
any Interest Period the maximum reserve percentage
(expressed as a decimal, rounded upward to the next 1/100th
of 1%) in effect on such day (whether or not applicable to
any Lender) under regulations issued from time to time by
the Federal Reserve Board for determining the maximum
reserve requirement (including any emergency, supplemental
or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum (rounded
upward to the next 1/100th of 1%) notified to the Agent by
Bank of America as the rate of interest at which dollar
deposits in the approximate amount of the Loan to be made
or continued as, or converted into, a LIBOR Rate Loan and
having a maturity comparable to such Interest Period would
be offered by Bank of America's applicable lending office
to major banks in the London eurodollar market at
approximately 11:00 a.m. (London time) two Business Days
prior to the commencement of such Interest Period.
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"LIBOR Rate Loans" means a Revolving Loan during any period in which
it bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an obligation
owed to, or a claim by, a Person other than the owner of the property, whether
such interest is based on the common law, statute, or contract, and including
without limitation, a security interest, charge, claim, or lien arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, agreement, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes; and (b) to
the extent not included under clause (a), any reservation, exception,
encroachment, easement, right-of-way, covenant, condition, restriction, lease
or other title exception or encumbrance affecting property.
"Loan Account" means the loan account of the Borrower, which account
shall be maintained by the Agent.
"Loan Documents" means this Agreement, the Pledge Agreement, the
Intellectual Property Security Agreement, the Mortgages, the Collateral License
Agreement Assignments and any other agreements, instruments, and documents
heretofore, now or hereafter evidencing, securing, guaranteeing or otherwise
relating to the Obligations, the Collateral, or any other aspect of the
transactions contemplated by this Agreement.
"Loan Party" means each Person defined as the Borrower, the Parent
Guarantor, each Person defined as a Subsidiary Guarantor, and their permitted
successors and assigns.
"Loans" means, collectively, all loans and advances provided for in
Article 2.
"Majority Lenders" means at anytime Lenders whose Pro Rata shares
aggregate more than 50.1% of the Commitments or, if no Commitments shall then
be in effect, Lenders who hold more than 50.1% of the aggregate principal
amount of the Loans then outstanding.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U of the Federal Reserve Board.
"Material Adverse Effect" means: (a) a material adverse change in, or
a material adverse effect upon, the operations, business, properties, condition
(financial or otherwise), profits or prospects of the Loan Parties, taken as a
whole, or the value or condition of the Collateral; (b) a material impairment
of the ability of the Parent or the Borrower or the Loan Parties taken as a
whole to perform satisfactorily under any Loan Document or to avoid any Event
of Default; or (c) a material adverse effect upon the legality,
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validity, binding effect or enforceability against the Parent or the Borrower
or the Loan Parties taken as a whole or any third party of any Loan Document or
the Lien on the Collateral in favor of the Agent.
"Material License Agreements" means (a) all License Agreements set
forth on Schedule 1.1 and (b) all other license agreements entered into by the
Borrower or any of its Subsidiaries pursuant to which (i) Borrower or such
Subsidiary either Guarantees or actually pays royalties to the licensor party
to such license agreement in an amount equal or greater than $100,000 per year
or (ii) Borrower carries Eligible Inventory with a book value of in excess of
$100,000.
"Maximum Revolver Amount" means $48,000,000 (or such lesser amount to
which the Total Facility may be permanently reduced by the Borrower pursuant to
Section 4.2 hereof).
"Mortgages" means: (a) each Amended and Restated Mortgage, Security
Agreement, and Assignments of Leases and Rents dated the date hereof between
the Borrower and the Agent and delivered to the Agent; and (b) all other real
property mortgages, leasehold mortgages, assignments of leases, mortgage deeds,
deeds of trust, deeds to secure debt, security agreements, and other similar
instruments hereafter entered into which provide the Agent a lien, for the
benefit of the Agent and Lenders, on or other interest in any portion of the
Premises or the Real Estate or which relate to any such Lien or interest.
"Multi-employer Plan" means a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding six (6) years contributed to by the Borrower or
any ERISA Affiliate.
"Net Amount of Eligible Accounts" means, at any time, the gross
amount of Eligible Accounts less sales, excise or similar taxes, and less
returns, discounts, claims, credits and allowances of any nature at any time
issued, owing, granted, outstanding, available or claimed.
"Net Worth" means, at any date: (a) the book value (after deducting
related depreciation, obsolescence, amortization, valuation, and other proper
reserves as determined in accordance with GAAP) at which the assets would be
shown on a balance sheet of the Parent Guarantor and its consolidated
Subsidiaries at such date prepared in accordance with GAAP; less (b) the amount
at which the Parent Guarantor's and its consolidated Subsidiaries' liabilities
would be shown on such balance sheet, including as liabilities all Debt and
reserves for contingencies and other potential liabilities which would be
required to be shown on such balance sheet.
"Notice of Borrowing" has the meaning specified in Section 2.2(b).
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"Notice of Conversion/Continuation" has the meaning specified in
Section 3.2(b).
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrower or
any other Loan Party to the Agent and/or any Lender, arising under or pursuant
to this Agreement or any of the other Loan Documents, or any Hedge Agreement,
whether or not evidenced by any note, or other instrument or document, whether
arising from an extension of credit, opening of a letter of credit, acceptance,
loan, guaranty, indemnification or otherwise, whether direct or indirect
(including, without limitation, those acquired by assignment from others,
absolute or contingent, due or to become due, primary or secondary, as
principal or guarantor, and including, without limitation, all principal,
interest, charges, expenses, fees, attorneys' fees, filing fees and any other
sums chargeable to the Borrower or any other Loan Party hereunder or under any
of the other Loan Documents. "Obligations" includes, without limitation, all
debts, liabilities, and obligations now or hereafter owing from the Borrower to
the Agent and/or any Lender under or in connection with the Letters of Credit
and includes, without limitation, all interest that would have accrued but for
the commencement of any Insolvency Proceeding with respect to any Person.
"Other Guarantor" has the meaning specified in Section 16.2(a).
"Other Taxes" means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Loan Documents.
"Participant" means any Person who shall have been granted, pursuant
and subject to the terms and conditions of Article 13 hereof, the right by any
Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form
and substance satisfactory to such Lender.
"Patent" means any and all letters patent and applications therefor,
and all registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office, or in any similar office or agency of the United States, or
any state thereof, or in any similar office or agency of any country or
political subdivision thereof throughout the world, including, but not limited
to, those described in Schedule 8.13 (as from time to time amended, modified or
supplemented in accordance with the terms hereof) attached hereto and made a
part hereof, together with all re-examinations, reissues, continuations,
continuations-in-part, divisions, improvements and extensions thereof and all
licenses thereof or pertaining thereto, including, without limitation, the
License Agreements with respect thereto, and all claims for infringement
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thereof or pertaining thereto, and the rights to make, use and sell, and all
other rights with respect to, the inventions disclosed or claimed therein, all
inventions, designs, proprietary or technical information, know-how, other data
or information, software, databases, all embodiments or fixations thereof and
related documentation, and all other trade secret rights not described above.
"Payment Account" means each blocked bank account established
pursuant to Section 6.9, to which the funds of a Loan Party (including, without
limitation, proceeds of Accounts and other Collateral) are deposited or
credited, and which is maintained in the name of the Agent or such Loan Party,
as the Agent may determine, on terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the aggregate principal
amount of all Revolving Loans requested in any Notice(s) of Borrowing received
by the Agent which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Parent Guarantor or any of its
Subsidiaries sponsors, maintains, or to which it makes, is making, or is
obligated to make contributions, or in the case of a Multi-employer Plan has
made contributions at any time during the immediately preceding five (5) plan
years.
"Permitted Liens" means:
(a) Liens for taxes not delinquent; or statutory Liens for
taxes in an amount not to exceed $1,000,000 outstanding at any one time,
provided that the payment of such taxes which are due and payable is being
contested in good faith and by appropriate proceedings diligently pursued and
as to which reserves in such amount have been established under clause (b)(iv)
of the definition of Availability and adequate financial reserves have been
established on the applicable Loan Party's books and records and a stay of
enforcement of any such Lien is in effect.
(b) the Agent's Liens;
(c) deposits under worker's compensation, unemployment
insurance, social security and other similar laws, or to secure the performance
of bids, tenders, leases (other than Capital Leases) or contracts (other than
for the repayment of borrowed money) or to secure indemnity, performance or
other similar bonds for the performance of bids, tenders or contracts (other
than for the repayment of borrowed money)
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or to secure statutory obligations (other than liens arising under ERISA or
Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business;
(d) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons, provided
that if any such Lien arises from the nonpayment of such claims or demand when
due, such claims or demands do not exceed $1,000,000 in the aggregate unless
such Lien is being contested in good faith by appropriate proceedings
diligently pursued and as to which reserves in such amount have been
established under clause (b)(iv) of the definition of Availability and adequate
financial reserves have been established on the applicable Loan Party's books
and records;
(e) Reservations, exceptions, encroachments, easements, rights
of way, covenants running with the land, and other similar title exceptions or
encumbrances affecting any Real Estate; provided that they do not in the
aggregate materially detract from the value of the Real Estate or materially
interfere with its use in the ordinary conduct of any Loan Party's business;
(f) Judgment and other similar Liens arising in connection with
court proceedings to the extent the attachment or enforcement of such Liens
would not result in an Event of Default hereunder;
(g) Liens existing on the date hereof as set forth on Schedule
9.19;
(h) Permitted encumbrances, as set forth in Schedule B of the
title policy delivered in connection with the Mortgage (which shall not include
items 12A, 12B, 13 or any delinquent taxes shown in such title policy);
(i) The security interest granted by MacMark Corporation in
certain licensing agreements pursuant to Section 5(f) of that certain
Settlement Agreement dated December 29, 1998 by and among Equilink Licensing
Corporation, MacMark Corporation and Xxxxxxx X. Xxxx, Xx., as bankruptcy
trustee for RDM Sports Group, Inc. and Hutch Sports USA, Inc., with respect to
the licensing of the MacGregor trademark; and
(j) Liens securing Debt as and to the extent permitted under
clause (f) of Section 9.13; and
(k) a Lien on the Capital Stock of Fox Athletic LLC to secure
Debt of Fox Athletic LLC for which neither Parent Guarantor nor any Subsidiary
has any liability in respect of such Debt other than the potential loss of such
Capital Stock on foreclosure of such Lien thereon.
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"Permitted Rentals" has the meaning specified in Section 9.24.
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
Governmental Authority, or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Parent Guarantor or any of its Subsidiaries sponsors or
maintains or to which the Parent Guarantor or any of its Subsidiaries makes, is
making, or is obligated to make contributions and includes any Pension Plan.
"Pledge Agreement" means the Pledge Agreement dated as of the date
hereof executed and delivered to the Agent by the Parent Guarantor and each of
its Subsidiaries that holds any Capital Stock of the Borrower or any other
Subsidiary of the Parent Guarantor, or any promissory note representing any
intercompany Debt issued by the Parent Guarantor or any Subsidiary thereof to
the Parent Guarantor or any Subsidiary thereof, to evidence and perfect the
Agent's security interest for the benefit of itself and the Lenders in all
Capital Stock of the Borrower, each other Subsidiary of the Parent Guarantor,
and in all promissory notes representing any intercompany Debt issued by the
Parent Guarantor or any Subsidiary thereof to the Parent Guarantor or any
Subsidiary thereof.
"Premises" means the land identified by addresses on Schedule 8.12,
together with all buildings, improvements, and fixtures thereon and all
tenements, hereditaments, and appurtenances belonging or in any way
appertaining thereto, and which constitutes all of the real property in which
any Loan Party has any interests on the Closing Date.
"Principals" means Xxxxxx X. Xxxxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxx
XxXxxxxxxxx, Xx., Xxxxx Xxxxx, Xxxxxxx X. Xxxx or Xxxxx Xxxxxxxxxx.
"Prior Credit Agreement" has the meaning specified in the Recitals
hereto.
"Pro Rata Share" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Obligations owed to such Lender and the denominator of which is the aggregate
amount of the Obligations owed to the Lenders.
"Proprietary Rights" means all of each Loan Party's now owned and
hereafter arising or acquired: all Intellectual Property and, to the extent not
covered in such definition, all other licenses, franchises, permits, patents,
patent rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, patent,
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trademark and service xxxx applications, and all licenses and rights related to
any of the foregoing, including, without limitation, those patents, trademarks,
service marks, trade names and copyrights set forth on Schedule 8.13 hereto,
and all other rights under any of the foregoing, all extensions, renewals,
reissues, divisions, continuations, and continuations-in-part of any of the
foregoing, and all rights to xxx for past, present and future infringement of
any of the foregoing.
"Real Estate" means all of the present and future interests of each
Loan Party, as owner, lessee, or otherwise, in the Premises, including, without
limitation, any interest arising from an option to purchase or lease the
Premises or any portion thereof.
"Related Party" means, with respect to any Principal, (A) any spouse
or immediate family member of such Principal, (B) the estate or any heir of
such Principal, (C) any Subsidiary of any of the Principals or any other
Related Party or (D) any trust, the beneficiaries of whom are Principals or
Related Parties.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"Rentals" has the meaning specified in Section 9.24.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Required Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than 66.7% of the Commitments or, if no Commitments shall then
be in effect, Lenders who hold more than 66.7% of the aggregate principal
amount of the Loans then outstanding.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or final non-appealable determination of an
arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any of
its property is subject.
"Responsible Officer" means the chief executive officer or the
president of the Parent Guarantor, or any other officer having substantially
the same authority and responsibility; or, with respect to compliance with
financial covenants and the preparation of the Borrowing Base Certificate, the
chief financial officer, the treasurer or the chief
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accounting officer of the Borrower, or any other officer having substantially
the same authority and responsibility.
"Restricted Investment" means, as to any Person, any acquisition of
property by such Person in exchange for cash or other property, whether in the
form of an acquisition of stock, debt, or other indebtedness or obligation, or
the purchase or acquisition of any other property, or a loan, advance, capital
contribution, or subscription, except holdings or acquisitions of the
following: (a) Equipment to be used in the business of the Borrower or any
Loan Party so long as the acquisition costs thereof constitute Capital
Expenditures permitted hereunder; (b) Inventory in the ordinary course of
business; (c) current assets arising from the sale or lease of goods or the
rendition of services in the ordinary course of business of the Borrower or any
Loan Party; (d) direct obligations of the United States of America, or any
agency thereof, or obligations guaranteed by the United States of America,
which are subject to a first-priority perfected Lien in favor of the Agent,
provided that such obligations mature within one year from the date of
acquisition thereof; (e) certificates of deposit maturing within one year from
the date of acquisition, bankers' acceptances, Eurodollar bank deposits, or
overnight bank deposits, in each case issued by, created by, or with a bank or
trust company organized under the laws of the United States or any state
thereof having capital and surplus aggregating at least $100,000,000, which are
subject to a first-priority perfected Lien in favor of the Agent; (f)
commercial paper given a rating of "A2" or better by Standard & Poor's
Corporation or "P2" or better by Xxxxx'x Investors Service, Inc. and maturing
not more than 270 days from the date of creation thereof, which are subject to
a first-priority perfected Lien in favor of the Agent; (g) Capital Stock or
Debt of the Borrower or other Subsidiaries and in Fox Athletic LLC held by the
Parent Guarantor and disclosed on Schedule 8.5; (h) Capital Stock or Debt of
the Subsidiary Guarantors or Fox Athletic LLC or Debt of the Parent Guarantor
held by the Borrower and disclosed on Schedule 8.5; (i) (w) additional
investments after the date hereof made by the Borrower consisting of Debt of
another Person within the definition of the Borrower or made by a Subsidiary
Guarantor consisting of Debt of the Borrower, (x) additional investments after
the date hereof made by the Borrower consisting of Debt of the Subsidiary
Guarantors owing to the Borrower which is pari passu with the Senior Notes not
to exceed at any time outstanding the applicable amounts set forth on Schedule
8.9 hereto, (y) additional investments made after the date hereof by the
Borrower consisting of Debt of the Parent Guarantor owing to the Borrower which
is pari passu with the Senior Notes and is advanced to the Parent Guarantor to
pay interest on the Senior Notes when due, scheduled payments of principal and
interest on the Subordinated Debt when due and the Parent Guarantor's expenses
incurred in the ordinary course of its business consistent with customary
business practices and (z) additional investments after the date hereof made by
the Parent Guarantor in the form of contributions of equity to or Capital Stock
(pledged to the Agent hereunder) of the Borrower; (j) investments consisting of
Debt or Capital Stock received in connection with the bankruptcy or
reorganization of suppliers and customers in settlement of delinquent
obligations of, and other bona fide disputes with, suppliers and customers; (k)
deposit
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accounts maintained by any Loan Party which, except for travel agent escrow
accounts, are subject to a Lien in favor of the Agent; (l) loans and advances
made to employees in the ordinary course of employment consistent with past
practices; (m) investments in Persons other than the Parent Guarantor and its
Subsidiaries consisting of Debt or Capital Stock not to exceed the Aggregate
Additional Debt and Investment Basket Amount at any time outstanding; (n) the
prepayment of those certain royalty obligations owing by the Parent Guarantor
under the Settlement Agreement referred to in clause (i) of the definition of
Permitted Liens so long as after giving effect to such prepayment there is a
positive difference between the amount of Availability and the sum of the
Aggregate Revolver Outstandings plus all payables more than 30 days past due
that equals or exceeds 10% of the Maximum Revolver Amount; and (o) investments
consisting of money market accounts with the Agent, a Lender or another
financial institution reasonably acceptable to the Agent, provided such money
market accounts are subject to a first-priority perfected Lien in favor of the
Agent; provided, that in each case an investment of any type described in
clauses (d) through (o) shall not be a made if a Default or Event of Default
has occurred and is continuing or would result therefrom.
"Revolving Loans" has the meaning specified in Section 2.2 and
includes each Agent Advance and Bank of America Loan.
"Scheduled Principal Payments" means all principal payments in
respect of Funded Debt (other than under this Agreement) scheduled to be made
or actually made pursuant to the terms thereof during the applicable period;
which shall include, in the case of reducing revolving commitments, the
difference between the revolving commitment amount on the first day of such
period and the revolving commitment amount at the end of such period, but shall
not include revolving loan repayments.
"Seasonal Overadvance" means one or more Loans made during the
Seasonal Overadvance Period pursuant to the Borrower's request for such Loan as
a Seasonal Overadvance, and which shall be repaid on or prior to the last day
of the Seasonal Overadvance Period, to finance seasonal working capital needs
for the Seasonal Overadvance Period, which Loan shall not, at any time, exceed
the lesser of (a) the sum of (i) ten percent (10%) of the value of the Net
Amount of Eligible Accounts (exclusive of any Eligible Unbilled Account
Receivables); (ii) ten percent (10%) of the value of the first-quality finished
goods Eligible Inventory; (iii) ten percent (10%) of Eligible Raw Material
Inventory; and (iv) (without duplication) ten percent (10%) of the value of
Eligible Inventory covered by documentary letters of credit, or (b) $5,000,000.
"Seasonal Overadvance Period" means a sixty (60) consecutive calendar
day period selected by the Borrower in its Notice of Borrowing for the Seasonal
Overadvance between March 15th and June 15, and not before March 15 or after
June 15, of any calendar year.
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"Senior Notes" means the $115,000,000 of 10 1/2% Senior Notes due 2007
issued pursuant to the Indenture by and between the Borrower and Marine Midland
Bank, dated June 19, 1997 (the "Indenture").
"Settlement" and "Settlement Date" have the meanings specified in
Section 2.2(j)(i).
"Solvent" means when used with respect to any Person that at the time
of determination:
(i) the assets of such Person, at a fair valuation, are in excess of
the total amount of its debts (including, without limitation, contingent
liabilities); and
(ii) the present fair saleable value of its assets is greater than
its probable liability on its existing debts as such debts become absolute
and matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as
they mature; and
(iv) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability 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.
"Stated Termination Date" means December 31, 2003.
"Subordinated Debt" means those certain convertible subordinated
notes issued by the Parent Guarantor, in the aggregate amount of $7,500,000,
and maturing on November 1, 2004.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than fifty
percent (50%) of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or indirectly
by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Parent Guarantor.
"Swap Transactions" means Hedging Agreements providing for any
interest rate swap transaction, forward rate transaction, treasury lock
transaction, interest rate cap,
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floor or collar transaction, any similar transaction, any option to enter into
any of the foregoing, or any combination of any of the foregoing.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by each Lender's
net income by the jurisdiction (or any political subdivision thereof) under the
laws of which such Lender or the Agent, as the case may be, is organized or
maintains a lending office.
"Termination Date" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date the Total Facility is terminated either by the
Borrower pursuant to Section 4.2 or by the Agent or the Majority Lenders
pursuant to Section 11.2, and (iii) the date this Agreement is otherwise
terminated for any reason whatsoever (provided, that this clause (iii) shall
not be construed as giving any party hereto any right hereunder to terminate
this Agreement).
"Total Facility" has the meaning specified in Section 2.1.
"Trademark" means any and all trademarks, trade names, trade styles,
service marks, corporate names, company names, business names, fictitious
business names, logos, emblems, designs, prints and labels, all elements of
package, trade styles or trade dress of goods and services, and all general
intangibles of like nature, together with the goodwill of each Grantor's
business connected with the use thereof and symbolized thereby, and all
applications, registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office, or in any similar office or agency of the United
States, or in any office of the Secretary of State (or equivalent) of any state
thereof, or in any similar office or agency of any country or political
subdivision thereof throughout the world, including, but not limited to, those
described in Schedule 8.13 (as from time to time amended, modified or
supplemented in accordance with the terms hereof) attached hereto and made a
part hereof, together with all extensions, renewals and corrections thereof,
and all licenses thereof or pertaining thereto, including, without limitation,
the License Agreements with respect thereto, and all claims for infringement or
dilution thereto or injury to goodwill of the business connected.
"UCC" means the Uniform Commercial Code (or any successor statute) of
the State of New York or of any other state the laws of which are required by
Section 9-103 thereof to be applied in connection with the issue of perfection
of security interests.
"Umbro" has the meaning specified in Section 9.28.
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"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"Unused Letter of Credit Subfacility" means an amount equal to
$10,000,000 minus the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit plus (b) the aggregate unpaid reimbursement
obligations with respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in Section 3.5.
1.2 Accounting Terms. Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations hereunder shall
be computed, unless otherwise specifically provided herein, in accordance with
GAAP as consistently applied and using the same method for inventory valuation
as used in the preparation of the Financial Statements.
1.3 Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and Subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including," the
words "to" and "until" each mean "to but excluding" and the word "through"
means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, supplementing
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or interpreting the statute or regulation; provided, that any representation or
warranty by any Loan Party made herein or in any other Loan Document (or
certificate given hereunder or thereunder) with respect to compliance with any
statute or regulation shall be limited to the statutes and regulations in
effect on the date of such representation and/or warranty; and, provided,
further, that the immediately preceding proviso shall not limit any Loan
Party's covenants contained in this Agreement or any other Loan Document to
comply with statutes and regulations.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Borrower
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Lenders or the Agent merely because of the
Agent's or Lenders' involvement in their preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Total Facility. Subject to all of the terms and conditions of this
Agreement, the Lenders severally agree to make available a total credit
facility of up to $48,000,000 (as such amount is, if at all, reduced pursuant
to Section 4.2, the "Total Facility") for the Borrower's use from time to time
during the term of this Agreement. The Total Facility shall be comprised of a
revolving line of credit consisting of revolving loans and letters of credit up
to the Maximum Revolver Amount, as described in Sections 2.2 and 2.4.
2.2 Revolving Loans. (a) Amounts. Subject to the satisfaction of the
conditions precedent set forth in Article 10, each Lender severally agrees,
upon the Borrower's request from time to time on any Business Day during the
period from the Closing Date to the Termination Date, to make revolving loans
(the "Revolving Loans") to the Borrower, in amounts not to exceed (except for
Bank of America with respect to Bank of America Loans or Agent Advances) such
Lender's Pro Rata Share of the Borrower's Availability. The Lenders, however,
in their discretion, may elect to make Revolving Loans or participate (as
provided for in Section 2.4(f)) in the credit support or enhancement provided
through the Agent to the issuers of Letters of Credit in excess of the
Availability on one or more
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occasions, but if they do so, neither the Agent nor the Lenders shall be deemed
thereby to have changed the limits of the Maximum Revolver Amount or the
Availability or to be obligated to exceed such limits on any other occasion.
If the Aggregate Revolver Outstandings exceed the Availability (with the
Availability for this purpose calculated as if the Aggregate Revolver
Outstandings were zero), the Lenders may refuse to make or otherwise restrict
the making of Revolving Loans as the Lenders determine until such excess has
been eliminated, subject to the Agent's authority, in its sole discretion, to
make Agent Advances pursuant to the terms of Section 2.2(i).
(b) Procedure for Borrowing. (1) Each Borrowing shall be made upon
the Borrower's irrevocable written notice delivered to the Agent in the form of
a notice of borrowing ("Notice of Borrowing") together with a Borrowing Base
Certificate reflecting sufficient Availability (which must be received by the
Agent prior to 12:00 p.m. (New York City time) (i) three (3) Business Days
prior to the requested Funding Date, in the case of LIBOR Rate Loans and (ii)
no later than 12:00 p.m. (New York City time) on the requested Funding Date, in
the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing;
(B) the requested Funding Date, which shall be a Business
Day;
(C) whether the Revolving Loans requested are to be Base
Rate Loans or LIBOR Rate Loans; and
(D) the duration of the Interest Period if the requested
Revolving Loans are to be LIBOR Rate Loans. If the Notice of Borrowing fails
to specify the duration of the Interest Period for any Borrowing comprised of
LIBOR Rate Loans, such Interest Period shall be one month;
provided, however, that with respect to the Borrowing to be made on the Closing
Date, such Borrowings will consist of Base Rate Loans only.
(2) With respect to any request for Base Rate Loans, in lieu of
delivering the above-described Notice of Borrowing the Borrower may give the
Agent telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing within 24 hours of the giving of
such notice but the Agent shall be entitled to rely on the telephonic notice in
making such Revolving Loans.
(c) Reliance upon Authority. On or prior to the Closing Date and
thereafter prior to any change with respect to any of the information contained
in the following clauses (i) and (ii), the Borrower shall deliver to the Agent
a writing setting forth
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(i) the account of the Borrower to which the Agent is authorized to transfer
the proceeds of the Revolving Loans requested pursuant to this Section 2.2, and
(ii) the names of the persons authorized to request Revolving Loans on behalf
of the Borrower, and shall provide the Agent with a specimen signature of each
such person. The Agent shall be entitled to rely conclusively on such person's
authority to request Revolving Loans on behalf of the Borrower, the proceeds of
which are to be transferred to any of the accounts specified by the Borrower
pursuant to the immediately preceding sentence, until the Agent receives
written notice from the Borrower to the contrary. The Agent shall have no duty
to verify the identity of any individual representing him or herself as one of
the officers authorized by the Borrower to make such requests on its behalf.
(d) No Liability. The Agent shall not incur any liability to the
Borrower as a result of acting upon any notice referred to in Sections 2.2(b)
and (c), which notice the Agent believes in good faith to have been given by an
officer duly authorized by the Borrower to request Revolving Loans on its
behalf or for otherwise acting in good faith under this Section 2.2, and the
crediting of Revolving Loans to the Borrower's deposit account, or transmittal
to such Person as the Borrower shall direct, shall conclusively establish the
obligation of the Borrower to repay such Revolving Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to Section 2.2(b) shall be irrevocable
and the Borrower shall be bound to borrow the funds requested therein in
accordance therewith.
(f) Agent's Election. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof) pursuant to Section 2.2(b),
the Agent shall elect, in its discretion, (i) to have the terms of Section
2.2(g) apply to such requested Borrowing, or (ii) to request Bank of America to
make a Bank of America Loan pursuant to the terms of Section 2.2(h) in the
amount of the requested Borrowing; provided, however, that if Bank of America
declines in its sole discretion to make a Bank of America Loan pursuant to
Section 2.2(h), the Agent shall elect to have the terms of Section 2.2(g) apply
to such requested Borrowing.
(g) Making of Revolving Loans. (i) In the event that the Agent
shall elect to have the terms of this Section 2.2(g) apply to a requested
Borrowing as described in Section 2.2(f), then promptly after receipt of a
Notice of Borrowing or telephonic notice pursuant to Section 2.2(b), the Agent
shall notify the Lenders by telecopy, telephone or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing available to the Agent
in same day funds, to such account of the Agent as the Agent may designate, not
later than 1:30 p.m. (New York City time) on the Funding Date applicable
thereto. After the Agent's receipt of the proceeds of such Revolving Loans,
upon satisfaction of the applicable conditions precedent set forth in Article
10, the Agent shall make the proceeds of such
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Revolving Loans available to the Borrower on the applicable Funding Date by
transferring same day funds equal to the proceeds of such Revolving Loans
received by the Agent to the account of the Borrower, designated in writing by
the Borrower and acceptable to the Agent; provided, however, that the amount of
Revolving Loans so made on any date shall in no event exceed the Availability
on such date.
(ii) Unless the Agent receives notice from a Lender on or prior
to the Closing Date or, with respect to any Borrowing after the Closing Date,
at least one Business Day prior to the date of such Borrowing, that such Lender
will not make available as and when required hereunder to the Agent for the
account of the Borrower the amount of that Lender's Pro Rata Share of the
Borrowing, the Agent may assume that each Lender has made such amount available
to the Agent in immediately available funds on the Funding Date and the Agent
may (but shall not be so required), in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent any Lender shall not have made its full amount available to the Agent in
immediately available funds and the Agent in such circumstances has made
available to the Borrower such amount, that Lender shall on the Business Day
following such Funding Date make such amount available to the Agent, together
with interest at the Federal Funds Rate for each day during such period. A
notice of the Agent submitted to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest error. If such amount is
so made available, such payment to the Agent shall constitute such Lender's
Loan on the payment date for all purposes of this Agreement. If such amount is
not made available to the Agent on the Business Day following the Funding Date,
the Agent will notify the Borrower of such failure to fund and, upon demand by
the Agent, the Borrower shall pay such amount to the Agent for the Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the Interest Rate applicable at
the time to the Loans comprising such Borrowing. The failure of any Lender to
make any Loan on any Funding Date (any such Lender, prior to the cure of such
failure, being hereinafter referred to as a "Defaulting Lender") shall not
relieve any other Lender of any obligation hereunder to make a Loan on such
Funding Date, but no Lender shall be responsible for the failure of any other
Lender to make the Loan to be made by such other Lender on any Funding Date.
(iii) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrower to the Agent for the Defaulting
Lender's benefit; nor shall a Defaulting Lender be entitled to the sharing of
any payments hereunder. Amounts payable to a Defaulting Lender shall instead
be paid to or retained by the Agent. The Agent may hold and, in its
discretion, re-lend to Borrower the amount of all such payments received or
retained by it for the account of such Defaulting Lender. Any amounts so re-
lent to the Borrower shall bear interest at the rate applicable to Base Rate
Loans and for all other purposes of this Agreement shall be treated as if they
were Revolving Loans, provided, however, that for purposes of voting or
consenting to matters with respect to the Loan
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Documents and determining Pro Rata Shares, such Defaulting Lender shall be
deemed not to be a "Lender" and such Lender's Commitment shall be deemed to be
zero (-0-). Until a Defaulting Lender cures its failure to fund its Pro Rata
Share of any Borrowing (1) such Defaulting Lender shall not be entitled to any
portion of the Unused Line Fee and (2) the Unused Line Fee shall accrue in
favor of the Lenders which have funded their respective Pro Rata Shares of such
requested Borrowing and shall be allocated among such performing Lenders
ratably based upon their relative Commitments. This section shall remain
effective with respect to such Lender until such time as the Defaulting Lender
shall no longer be in default of any of its obligations under this Agreement.
The terms of this Section shall not be construed to increase or otherwise
affect the Commitment of any Lender, or relieve or excuse the performance by
the Borrower of its duties and obligations hereunder.
(h) Making of Bank of America Loans. (i) In the event the Agent
shall elect, with the consent of Bank of America, to have the terms of this
Section 2.2(h) apply to a requested Borrowing as described in Section 2.2(f),
Bank of America shall make a Revolving Loan in the amount of such Borrowing
(any such Revolving Loan made solely by Bank of America pursuant to this
Section 2.2(h) being referred to as a "Bank of America Loan" and such Revolving
Loans being referred to collectively as "Bank of America Loans") available to
the Borrower on the Funding Date applicable thereto by transferring same day
funds to an account of the Borrower, designated in writing by the Borrower and
acceptable to the Agent. Each Bank of America Loan is a Revolving Loan
hereunder and shall be subject to all the terms and conditions applicable to
other Revolving Loans except that all payments thereon shall be payable to Bank
of America solely for its own account (and for the account of the holder of any
participation interest with respect to such Revolving Loan). The Agent shall
not request Bank of America to make any Bank of America Loan if (i) the Agent
shall have received written notice from any Lender, or otherwise has actual
knowledge, that one or more of the applicable conditions precedent set forth in
Article 10 will not be satisfied on the requested Funding Date for the
applicable Borrowing, or (ii) the requested Borrowing would exceed the
Availability on such Funding Date. Bank of America shall not otherwise be
required to determine whether the applicable conditions precedent set forth in
Article 10 have been satisfied or the requested Borrowing would exceed the
Availability on the Funding Date applicable thereto prior to making, in its
sole discretion, any Bank of America Loan.
(ii) The Bank of America Loans shall be secured by the
Collateral, shall constitute Revolving Loans and Obligations hereunder, and
shall bear interest at the rate applicable to the Revolving Loans from time to
time.
(i) Agent Advances. (i) Subject to the limitations set forth in
the provisos contained in this Section 2.2(i), the Agent is hereby authorized
by the Borrower and the Lenders, from time to time in the Agent's sole
discretion, (1) after the occurrence of a Default or an Event of Default, or
(2) at any time that any of the other applicable conditions
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precedent set forth in Article 10 have not been satisfied, to make Revolving
Loans to the Borrower on behalf of the Lenders which the Agent, in its
reasonable business judgment, deems necessary or desirable (A) to preserve or
protect the Collateral, or any portion thereof, (B) to enhance the likelihood
of, or maximize the amount of, repayment of the Loans and other Obligations, or
(C) to pay any other amount chargeable to the Borrower pursuant to the terms of
this Agreement, including, without limitation, costs, fees and expenses as
described in Section 15.7 (any of the advances described in this Section 2.2(i)
being hereinafter referred to as "Agent Advances"); provided, that the Required
Lenders may at any time revoke the Agent's authorization contained in this
Section 2.2(i) to make Agent Advances, any such revocation to be in writing and
to become effective prospectively upon the Agent's receipt thereof; provided,
further, that an Agent Advance which results in Aggregate Revolver Outstandings
to be in excess of the Borrower's Availability shall not by itself alone cause
an Event of Default hereunder; and provided, further, that an Agent Advance for
an amount not paid by the Borrower when due shall not be considered to have
cured any such failure to pay when due.
(ii) The Agent Advances shall be secured by the Collateral,
shall constitute Revolving Loans and Obligations hereunder, and shall bear
interest at the rate applicable to the Revolving Loans from time to time. The
Agent shall notify each Lender in writing of each such Agent Advance.
(j) Settlement. It is agreed that each Lender's funded portion of
the Revolving Loan is intended by the Lenders to be equal at all times to such
Lender's Pro Rata Share of the outstanding Revolving Loans. Notwithstanding
such agreement, the Agent, Bank of America, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by the Borrower) that
in order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Revolving Loans, the Bank of America
Loans and the Agent Advances shall take place on a periodic basis in accordance
with the following provisions:
(i) The Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by the
Agent, (1) on behalf of Bank of America, with respect to each outstanding Bank
of America Loan, (2) for itself, with respect to each Agent Advance, and (3)
with respect to collections received, in each case, by notifying the Lenders of
such requested Settlement by telecopy, telephone or other similar form of
transmission, of such requested Settlement, no later than 11:00 a.m. (New York
City time) on the date of such requested Settlement (the "Settlement Date").
Each Lender (other than Bank of America, in the case of Bank of America Loans)
shall make the amount of such Lender's Pro Rata Share of the outstanding
principal amount of the Bank of America Loans and Agent Advances with respect
to which Settlement is requested available to the Agent, for itself or for the
account of Bank of America, in same day funds, to such account of the Agent as
the Agent may designate, not later than 1:30 p.m. (New York
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City time), on the Settlement Date applicable thereto, regardless of whether
the applicable conditions precedent set forth in Article 10 have then been
satisfied. Such amounts made available to the Agent shall be applied against
the amounts of the applicable Bank of America Loan or Agent Advance and,
together with the portion of such Bank of America Loan or Agent Advance
representing Bank of America's Pro Rata Share thereof, shall constitute
Revolving Loans of such Lenders. If any such amount is not made available to
the Agent by any Lender on the Settlement Date applicable thereto, the Agent
shall be entitled to recover such amount on demand from such Lender together
with interest thereon at the Federal Funds Rate for the first three (3) days
from and after the Settlement Date and thereafter at the Interest Rate then
applicable to the Revolving Loans.
(ii) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or after the
occurrence of a Default or an Event of Default and regardless of whether the
Agent has requested a Settlement with respect to a Bank of America Loan or
Agent Advance), each other Lender shall irrevocably and unconditionally
purchase and receive from Bank of America or the Agent, as applicable, without
recourse or warranty, an undivided interest and participation in such Bank of
America Loan or Agent Advance to the extent of such Lender's Pro Rata Share
thereof by paying to the Agent, in same day funds, an amount equal to such
Lender's Pro Rata Share of such Bank of America Loan or Agent Advance. If such
amount is not in fact made available to the Agent by any Lender, the Agent
shall be entitled to recover such amount on demand from such Lender together
with interest thereon at the Federal Funds Rate for the first three (3) days
from and after such demand and thereafter at the Interest Rate then applicable
to the Revolving Loans.
(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Bank of America Loan
or Agent Advance pursuant to subsection (ii) above, the Agent shall promptly
distribute to such Lender at such address as such Lender may request in
writing, such Lender's Pro Rata Share of all payments of principal and interest
and all proceeds of Collateral received by the Agent in respect of such Bank of
America Loan or Agent Advance.
(iv) Between Settlement Dates, the Agent, to the extent no Agent
Advances or Bank of America Loans are outstanding, may pay over to Bank of
America any payments received by the Agent, which in accordance with the terms
of this Agreement would be applied to the reduction of the Revolving Loans, for
application to Bank of America's other outstanding Revolving Loans. If, as of
any Settlement Date, collections received since the then immediately preceding
Settlement Date have been applied to Bank of America's other outstanding
Revolving Loans other than to Bank of America Loans or Agent Advances, as
provided for in the previous sentence, Bank of America shall pay to the Agent
for the accounts of the Lenders, to be applied to the outstanding Revolving
Loans of such Lenders, an amount such that each Lender shall, upon receipt of
such amount, have, as
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of such Settlement Date, its Pro Rata Share of the Revolving Loans. During the
period between Settlement Dates, Bank of America with respect to Bank of
America Loans, the Agent with respect to Agent Advances, and each Lender with
respect to the Revolving Loans other than Bank of America Loans and Agent
Advances, shall be entitled to interest at the applicable rate or rates payable
under this Agreement on the actual average daily amount of funds employed by
Bank of America, the Agent and the other Lenders.
(k) Notation. The Agent shall record on its books the principal
amount of the Revolving Loans owing to each Lender, including the Bank of
America Loans owing to Bank of America, and the Agent Advances owing to the
Agent, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Revolving Loans in its books and records, including
computer records, such books and records constituting rebuttably presumptive
evidence, absent manifest error, of the accuracy of the information contained
therein.
(l) Lenders' Failure to Perform. All Loans (other than Bank of
America Loans and Agent Advances) shall be made by the Lenders simultaneously
and in accordance with their Pro Rata Shares. It is understood that (a) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Loans hereunder, nor shall any Commitment of any Lender
be increased or decreased as a result of any failure by any other Lender to
perform its obligation to make any Loans hereunder, (b) no failure by any
Lender to perform its obligation to make any Loans hereunder shall excuse any
other Lender from its obligation to make any Loans hereunder, and (c) the
obligations of each Lender hereunder shall be several, not joint and several.
2.3 [INTENTIONALLY OMITTED]
2.4 Letters of Credit.
(a) Agreement to Cause Issuance. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations and
warranties of the Borrower herein set forth, the Agent agrees (i) to issue or
cause to be issued by Bank of America or any of its Affiliates or another
financial institution that has its principal place of business in the United
States and combined capital and surplus of at least $400,000,000 for the
account of the Borrower one or more documentary and standby letters of credit
(" Letters of Credit") and (ii) to provide credit support or other enhancement
to banks acceptable to Agent, which issue Letters of Credit for the account of
the Borrower (any such credit support or enhancement being herein referred to
as a "Credit Support") in accordance with this Section 2.4 from time to time
during the term of this Agreement.
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(b) Amounts; Outside Expiration Date. The Agent shall not have any
obligation to take steps to cause to be issued any Letter of Credit or to
provide Credit Support for any Letter of Credit at any time if: (1) the maximum
undrawn amount of the requested Letter of Credit is greater than the Unused
Letter of Credit Subfacility at such time; (2) the maximum undrawn amount of
the requested Letter of Credit and all commissions, fees, and charges due from
the Borrower in connection with the opening thereof exceed the Availability of
the Borrower at such time; or (3) such Letter of Credit has an expiration date
later than ten (10) days prior to the Stated Termination Date or more than
twelve (12) months from the date of issuance in the case of a stand-by Letter
of Credit (or 180 days in the case of a documentary Letter of Credit);
provided, however, that standby Letters of Credit shall, upon Borrower's
request, have "evergreen" clauses providing for automatic annual renewals
unless terminated by the Agent and/or the issuer thereof by written notice to
the beneficiary thereof thirty (30) days prior to the annual renewal date.
(c) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Article 10,
the obligation of the Agent to issue or cause to be issued any Letter of Credit
or to provide Credit Support for any Letter of Credit is subject to the
following conditions precedent having been satisfied in a manner satisfactory
to the Agent:
(1) The Borrower shall have delivered to the proposed issuer of
such Letter of Credit, at such times and in such manner as such proposed issuer
may prescribe, an application in form and substance satisfactory to such
proposed issuer and the Agent for the issuance of the Letter of Credit and such
other documents as may be required pursuant to the terms thereof, and the form
and terms of the proposed Letter of Credit shall be satisfactory to the Agent
and such proposed issuer; and
(2) As of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to enjoin or
restrain money center banks generally from issuing letters of credit of the
type and in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit,
or request that the proposed issuer of such Letter of Credit refrain from, the
issuance of letters of credit generally or the issuance of such Letters of
Credit.
(d) Issuance of Letters of Credit.
(1) Request for Issuance. The Borrower shall give the Agent
three (3) Business Days' prior written notice of the Borrower's request for
the issuance of a Letter of Credit. Such notice shall be irrevocable and shall
specify the original face amount of the Letter of Credit requested, the
effective date (which date shall be a Business Day) of issuance
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of such requested Letter of Credit, whether such Letter of Credit may be drawn
in a single or in partial draws, the date on which such requested Letter of
Credit is to expire (which date shall be a Business Day), the purpose for which
such Letter of Credit is to be issued, and the beneficiary of the requested
Letter of Credit. The Borrower shall attach to such notice the proposed form
of the Letter of Credit.
(2) Responsibilities of the Agent; Issuance. The Agent shall
determine, as of the Business Day immediately preceding the requested effective
date of issuance of the Letter of Credit set forth in the notice from the
Borrower pursuant to Section 2.4(d)(1), (i) the amount of the applicable Unused
Letter of Credit Subfacility and (ii) the Availability as of such date. If (i)
the undrawn amount of the requested Letter of Credit is not greater than the
applicable Unused Letter of Credit Subfacility and (ii) the issuance of such
requested Letter of Credit and all commissions, fees, and charges due from the
Borrower in connection with the opening thereof would not exceed the
Availability of the Borrower, the Agent shall issue or cause such issuer to
issue the requested Letter of Credit on such requested effective date of
issuance.
(3) Notice of Issuance. On each Settlement Date the Agent
shall give notice to each Lender of the issuance of all Letters of Credit
issued since the last Settlement Date.
(4) No Extensions or Amendment. The Agent shall not be
obligated to cause any Letter of Credit to be extended or amended unless the
requirements of this Section 2.4(d) are met as though a new Letter of Credit
were being requested and issued. With respect to any Letter of Credit which
contains any "evergreen" or automatic renewal provision, each Lender shall be
deemed to have consented to any such extension or renewal unless any such
Lender shall have provided to the Agent, not less than 30 days prior to the
last date on which the applicable issuer can in accordance with the terms of
the applicable Letter of Credit decline to extend or renew such Letter of
Credit, written notice that it declines to consent to any such extension or
renewal, provided, that if all of the requirements of this Section 2.4 are met
and no Default or Event of Default exists, no Lender shall decline to consent
to any such extension or renewal.
(e) Payments Pursuant to Letters of Credit.
(1) Payment of Letter of Credit Obligations. The Borrower
agrees to reimburse the issuer for any draw under any Letter of Credit and the
Agent for the account of the Lenders upon any payment pursuant to any Credit
Support immediately upon demand, and to pay the issuer of the Letter of Credit
the amount of all other obligations and other amounts payable to such issuer
under or in connection with any Letter of Credit immediately when due,
irrespective of any claim, setoff, defense or other right which the Borrower
may have at any time against such issuer or any other Person (it being
understood and agreed that
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no such payment shall be deemed a waiver of any claim the Borrower may have
against the Agent or the Lenders for a breach of its obligations under this
Agreement and/or any issuer for the breach of its obligations under a Letter of
Credit).
(2) Revolving Loans to Satisfy Reimbursement Obligations. In
the event that the issuer of any Letter of Credit honors a draw under such
Letter of Credit or the Agent shall have made any payment pursuant to any
Credit Support and the Borrower shall not have repaid such amount to the issuer
of such Letter of Credit or the Agent, as applicable, pursuant to
Section 2.4(e)(1), the Agent shall, upon receiving notice of such failure,
notify each Lender of such failure, and each Lender shall unconditionally pay
to the Agent, for the account of such issuer or the Agent, as applicable, as
and when provided hereinbelow, an amount equal to such Lender's Pro Rata Share
of the amount of such payment in Dollars and in same day funds. If the Agent
so notifies the Lenders prior to 11:00 a.m. (New York City time) on any
Business Day, each Lender shall make available to the Agent the amount of such
payment, as provided in the immediately preceding sentence, on such Business
Day. Such amounts paid by the Lenders to the Agent shall constitute Revolving
Loans which shall be deemed to have been requested by the Borrower pursuant to
Section 2.2 as set forth in Section 4.7.
(f) Participations.
(1) Purchase of Participations. Immediately upon issuance of
any Letter of Credit in accordance with Section 2.4(d), each Lender shall be
deemed to have irrevocably and unconditionally purchased and received without
recourse or warranty, an undivided interest and participation in the Letter of
Credit or the Credit Support provided through the Agent to such issuer in
connection with the issuance of such Letter of Credit, equal to such Lender's
Pro Rata Share of the face amount of such Letter of Credit or the amount of
such Credit Support (including, without limitation, all obligations of the
Borrower with respect thereto, and any security therefor or guaranty pertaining
thereto).
(2) Sharing of Reimbursement Obligation Payments. Whenever the
Agent receives a payment from the Borrower on account of reimbursement
obligations in respect of a Letter of Credit or Credit Support as to which the
Agent has previously received for the account of the issuer thereof payment
from a Lender pursuant to Section 2.4(e)(2), the Agent shall promptly pay to
such Lender such Lender's Pro Rata Share of such payment from the Borrower in
Dollars. Each such payment shall be made by the Agent on the Business Day on
which the Agent receives immediately available funds paid to such Person
pursuant to the immediately preceding sentence, if received prior to 1:30 p.m.
(New York City time) on such Business Day and otherwise on the next succeeding
Business Day.
(3) Documentation. Upon the request of any Lender, the Agent
shall furnish to such Lender copies of any Letter of Credit, reimbursement
agreements
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executed in connection therewith, application for any Letter of Credit and
credit support or enhancement provided through the Agent in connection with the
issuance of any Letter of Credit, and such other documentation as may
reasonably be requested by such Lender.
(4) Obligations Irrevocable. The obligations of each Lender to
make payments to the Agent with respect to any Letter of Credit or with respect
to any Credit Support provided through the Agent with respect to a Letter of
Credit, and the obligations of the Borrower to make payments to the Agent, for
the account of the Lenders, shall be irrevocable, not subject to any
qualification or exception whatsoever , including, without limitation, any of
the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower may have at any time against a beneficiary named in a
Letter of Credit or any transferee of any Letter of Credit (or any Person for
whom any such transferee may be acting), any Lender, the Agent, the issuer of
such Letter of Credit, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transactions between the
Borrower or any other Person and the beneficiary named in any Letter of Credit)
(provided that no such payment shall be deemed a waiver of any claim the
Borrower may have);
(iii) any draft, certificate or any other document
presented under the Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents; or
(v) the occurrence of any Default or Event of Default.
(g) Recovery or Avoidance of Payments. In the event any payment by
or on behalf of the Borrower received by the Agent with respect to any Letter
of Credit or Credit Support provided for any Letter of Credit (or any guaranty
by the Borrower or reimbursement obligation of the Borrower relating thereto)
and distributed by the Agent to the Lenders on account of their respective
participations therein is thereafter set aside, avoided or recovered from the
Agent in connection with any receivership, liquidation or bankruptcy
proceeding, the Lenders shall, upon demand by the Agent, pay to the Agent their
respective Pro Rata Shares of such amount set aside, avoided or recovered,
together with
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interest at the rate required to be paid by the Agent upon the amount required
to be repaid by it.
(h) Compensation for Letters of Credit.
(1) Letter of Credit Fee. The Borrower agrees to pay to the
Agent with respect to each Letter of Credit, for the account of the Lenders,
the Letter of Credit Fee specified in, and in accordance with the terms of,
Section 3.6.
(2) Issuer Fees and Charges. The Borrower shall pay to the
issuer of any Letter of Credit, or to the Agent, for the account of the issuer
of any such Letter of Credit, solely for such issuer's account, such fees and
other charges as are charged by such issuer for letters of credit issued by it,
including, without limitation, its standard fees for issuing, administering,
amending, renewing, paying and canceling letters of credit and all other fees
associated with issuing or servicing letters of credit, as and when assessed.
(i) Indemnification; Exoneration; Power of Attorney
(1) Indemnification. In addition to amounts payable as
elsewhere provided in this Section 2.4, the Borrower hereby agrees to protect,
indemnify, pay and save the Lenders and the Agent harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) which any Lender or the Agent
may incur or be subject to as a consequence, direct or indirect, of the
issuance of any Letter of Credit or the provision of any credit support or
enhancement in connection therewith, except to the extent resulting directly
from the gross negligence or willful misconduct of the Agent or such Lender.
The agreement in this Section 2.4(i)(1) shall survive payment of all
Obligations.
(2) Assumption of Risk by the Borrower. As among the Borrower,
the Lenders, and the Agent, the Borrower assumes all risks of the acts and
omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation
of the foregoing, the Lenders and the Agent shall not be responsible for: (A)
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any Person in connection with the application for and
issuance of and presentation of drafts with respect to any of the Letters of
Credit, even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (C) the failure of the beneficiary of any Letter of Credit to comply
duly with conditions required in order to draw upon such Letter of Credit; (D)
errors, omissions, interruptions, or delays in transmission or delivery of any
messages, by mail, cable,
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telegraph, telex or otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the transmission or
otherwise of any document required in order make a drawing under any Letter of
Credit or of the proceeds thereof; (G) the misapplication by the beneficiary of
any Letter of Credit of the proceeds of any drawing under such Letter of
Credit; or (H) any consequences arising from causes beyond the control of the
Lenders or the Agent, including, without limitation, any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
Governmental Authority. None of the foregoing shall affect, impair or prevent
the vesting of any rights or powers of the Agent or any Lender under this
Section 2.4(i).
(3) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action taken or
omitted by the Agent or any Lender under or in connection with any of the
Letters of Credit or any related certificates, if taken or omitted in the
absence of gross negligence or willful misconduct, shall not put the Agent or
any Lender under any resulting liability to the Borrower or relieve the
Borrower of any of its obligations hereunder to any such Person.
(4) Power of Attorney. In connection with all Inventory
financed by Letters of Credit, the Borrower hereby appoints the Agent, or the
Agent's designee, as its attorney, with full power and authority: (a) to sign
and/or endorse the Borrower's name upon any warehouse or other receipts; (b) to
sign the Borrower's name on bills of lading and other negotiable and non-
negotiable documents; (c) to clear Inventory through customs in the Agent's or
the Borrower's name, and to sign and deliver to customs officials powers of
attorney in the Borrower's name for such purpose; (d) to complete in the
Borrower's or the Agent's name, any order, sale, or transaction, obtain the
necessary documents in connection therewith, and collect the proceeds thereof;
and (e) to do such other acts and things as are necessary in order to enable
the Agent to obtain possession of the Inventory and to obtain payment of the
Obligations. Neither the Agent nor its designee, as the Borrower's attorney,
will be liable for any acts or omissions, nor for any error of judgment or
mistakes of fact or law, except to the extent directly resulting from the
Agent's (or the Agent's designee's) gross negligence or willful misconduct.
This power, being coupled with an interest, is irrevocable until all
Obligations have been paid and satisfied.
(5) Account Party. The Borrower hereby authorizes and directs
any issuer of a Letter of Credit to name the Borrower as the "Account Party"
therein and to deliver to the Agent all instruments, documents and other
writings and property received by the issuer pursuant to the Letter of Credit,
and to accept and rely upon the Agent's instructions and agreements with
respect to all matters arising in connection with the Letter of Credit or the
application therefor.
(6) Control of Inventory. In connection with all Inventory
financed by Letters of Credit, the Borrower will, at the Agent's request,
instruct all suppliers,
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carriers, forwarders, warehouses or others receiving or holding cash, checks,
Inventory, documents or instruments in which the Agent holds a security
interest to deliver them to the Agent and/or subject to the Agent's order, and
if they shall come into the Borrower's possession, to deliver them, upon
request, to the Agent in their original form. The Borrower shall also, at the
Agent's request, designate the Agent as the consignee on all bills of lading
and other negotiable and non-negotiable documents.
(j) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 2.4(b) and Section 12.1 any Letter of
Credit is outstanding upon the termination of this Agreement, then upon such
termination the Borrower shall deposit with the Agent, for the ratable benefit
of the Agent and the Lenders, with respect to each Letter of Credit then
outstanding, as the Majority Lenders, in their discretion shall specify, either
(A) a standby letter of credit (a "Supporting Letter of Credit") in form and
substance satisfactory to the Agent, issued by an issuer reasonably
satisfactory to the Agent in an amount equal to the greatest amount for which
such Letter of Credit may be drawn plus any fees and expenses associated with
such Letter of Credit, under which Supporting Letter of Credit the Agent is
entitled to draw amounts necessary to reimburse the Agent and the Lenders for
payments made by the Agent and the Lenders under such Letter of Credit or under
any credit support or enhancement provided through the Agent with respect
thereto and any fees and expenses associated with such Letter of Credit, or (B)
cash in amounts necessary to reimburse the Agent and the Lenders for payments
made by the Agent or the Lenders under such Letter of Credit or under any
credit support or enhancement provided through the Agent with respect thereto
and any fees and expenses associated with such Letter of Credit. Such
Supporting Letter of Credit or deposit of cash shall be held by the Agent, for
the ratable benefit of the Agent and the Lenders, as security for, and to
provide for the payment of, the aggregate undrawn amount of such Letters of
Credit remaining outstanding, and shall be returned by the Agent upon the
Borrower's request, to the extent not utilized, at the end of the 91-day period
following the expiration of such Letter of Credit and the payment of all fees
and expenses associated with such Letter of Credit.
ARTICLE 3
INTEREST AND FEES
3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall bear interest
on the unpaid principal amount thereof (including, to the extent permitted by
law, on interest thereon not paid when due) from the date made until paid in
full in cash at a rate determined by reference to the Base Rate or, in the case
of LIBOR Rate Loans, the LIBOR Rate and Sections 3.1(a)(i) or (ii), as
applicable, but not to exceed the Maximum Rate described in Section 3.3.
Subject to the provisions of Section 3.2, any of the Loans may be converted
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into, or continued as, Base Rate Loans or LIBOR Rate Loans in the manner
provided in Section 3.2. If at any time Loans are outstanding with respect to
which notice has not been delivered to the Agent in accordance with the terms
of this Agreement specifying the basis for determining the interest rate
applicable thereto, then those Loans shall be Base Rate Loans and shall bear
interest at a rate determined by reference to the Base Rate until notice to the
contrary has been given to the Agent in accordance with this Agreement and such
notice has become effective. Except as otherwise provided herein, the
outstanding Obligations shall bear interest as follows:
(i) For all Base Rate Loans and other Obligations (other than
LIBOR Rate Loans) at a fluctuating per annum rate equal to the Base Rate plus
the Applicable Margin; and
(ii) For all LIBOR Rate Loans at a per annum rate equal to the
LIBOR Rate plus the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate described
in clause (i) above as of the effective date of such change. All interest
charges shall be computed on the basis of a year of 360 days and actual days
elapsed (which results in more interest being paid than if computed on the
basis of a 365-day year). Interest accrued on (i) all Base Rate Loans will be
payable in arrears on the first day of each month hereafter and (ii) all LIBOR
Rate Loans will be payable in arrears on the applicable LIBOR Interest Payment
Date.
(b) Default Rate. If any Event of Default occurs and is continuing
and the Majority Lenders in their discretion so elect, then, while any such
Event of Default is outstanding, all of the Obligations shall bear interest at
the Default Rate applicable thereto.
3.2 Conversion and Continuation Elections.
(a) The Borrower may, upon irrevocable written notice to the Agent
in accordance with Section 3.2(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans to convert any such Loans (or any part thereof in an amount not less than
$1,000,000, or that is in an integral multiple of $100,000 in excess thereof)
into LIBOR Rate Loans; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Rate Loans having Interest Periods expiring on
such day (or any part thereof in an amount not less than $1,000,000, or that is
in an integral multiple of $100,000 in excess thereof);
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provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the
right of the Borrower to continue such Loans as, and convert such Loans into,
LIBOR Rate Loans, as the case may be, shall terminate.
(b) The Borrower shall deliver a notice of conversion/continuation
("Notice of Conversion/Continuation") to be received by the Agent not later
than 12:00 p.m. (New York City time) at least three (3) Business Days in
advance of the Conversion/Continuation Date, if the Loans are to be converted
into or continued as LIBOR Rate Loans and specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or renewed;
(iii) the type of Loans resulting from the proposed
conversion or continuation; and
(iv) the duration of the requested Interest Period; provided
however, that the Borrower may not select an Interest Period that extends
beyond the Stated Termination Date.
(c) If upon the expiration of any Interest Period applicable to
LIBOR Rate Loans, the Borrower has failed to select timely a new Interest
Period to be applicable to LIBOR Rate Loans or if any Default or Event of
Default then exists, the Borrower shall be deemed to have elected to convert
such LIBOR Rate Loans into Base Rate Loans effective as of the expiration date
of such Interest Period.
(d) The Agent will promptly notify each Lender of its receipt of a
Notice of Conversion/Continuation. All conversions and continuations shall be
made ratably according to the respective outstanding principal amounts of the
Loans with respect to which the notice was given held by each Lender.
(e) During the existence of a Default or Event of Default, the
Borrower may not elect to have a Loan converted into or continued as a LIBOR
Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than five (5) different Interest Periods in effect.
3.3 Maximum Interest Rate. In no event shall any interest rate provided
for hereunder exceed the maximum rate legally chargeable by any Lender under
applicable law
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for loans of the type provided for hereunder (the "Maximum Rate"). If, in any
month, any interest rate, absent such limitation, would have exceeded the
Maximum Rate, then the interest rate for that month shall be the Maximum Rate,
and, if in future months, that interest rate would otherwise be less than the
Maximum Rate, then that interest rate shall remain at the Maximum Rate until
such time as the amount of interest paid hereunder equals the amount of
interest which would have been paid if the same had not been limited by the
Maximum Rate. In the event that, upon payment in full of the Obligations, the
total amount of interest paid or accrued under the terms of this Agreement is
less than the total amount of interest which would, but for this Section 3.3,
have been paid or accrued if the interest rates otherwise set forth in this
Agreement had at all times been in effect, then the Borrower shall, to the
extent permitted by applicable law, pay the Agent, for the account of the
Lenders, an amount equal to the excess of (a) the lesser of (i) the amount of
interest which would have been charged if the Maximum Rate had, at all times,
been in effect or (ii) the amount of interest which would have accrued had the
interest rates otherwise set forth in this Agreement, at all times, been in
effect over (b) the amount of interest actually paid or accrued under this
Agreement. In the event that a court determines that the Agent and/or any
Lender has received interest and other charges hereunder in excess of the
Maximum Rate, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the Obligations other than interest, in the
inverse order of maturity, and if there are no Obligations outstanding, the
Agent and/or such Lender shall refund to the Borrower such excess.
3.4 Closing Fee. The Borrower agrees to pay the Agent, for the account
of the Lenders, in accordance with their respective Pro Rata Share on the
Closing Date a closing fee (the "Closing Fee") in the amount set forth in the
Fee Letter, which Closing Fee shall be non-refundable and fully earned by the
Lenders on the Closing Date. The Agent, the Lenders and the Borrower agree
that the Closing Fee shall be financed by the Lenders as a Revolving Loan.
3.5 Unused Line Fee. Until the Obligations have been paid in full and
the Agreement terminated, the Borrower agrees to pay, on the first day of each
month and on the Termination Date, to the Agent, for the ratable account of the
Lenders, an unused line fee equal to three-eighths of one percent (0.375%) per
annum on the average daily amount by which the lesser of $40,000,000 or the
Maximum Revolver Amount exceeded the sum of the average daily outstanding
amount of Revolving Loans and the undrawn face amount of all outstanding
Letters of Credit, during the immediately preceding month or shorter period if
calculated on the Termination Date. The unused line fee shall be computed on
the basis of a 360-day year for the actual number of days elapsed. All
payments received by the Agent on account of Accounts or as proceeds of other
Collateral shall be deemed to be credited to the Borrower's Loan Account
immediately upon receipt for purposes of calculating the unused line fee
pursuant to this Section 3.5.
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3.6 Letter of Credit Fee. The Borrower agrees to pay to the Agent, for
the ratable account of the Lenders, for each Letter of Credit, a percent per
annum fee (the "Letter of Credit Fee") equal to the Applicable Margin
identified in the definition of such term as the Letter of Credit Fee of the
undrawn face amount of each Letter of Credit issued for the Borrower's account
at the Borrower's request, plus all out-of-pocket costs, fees and expenses
incurred by the Agent in connection with the application for, issuance of, or
amendment to any Letter of Credit, which costs, fees and expenses could include
a "fronting fee" required to be paid by the Agent to such issuer for the
assumption of the settlement risk in connection with the issuance of such
Letter of Credit; The Letter of Credit Fee shall be payable monthly in arrears
on the first day of each month following any month in which a Letter of Credit
was issued and/or in which a Letter of Credit remains outstanding. The Letter
of Credit Fee shall be computed on the basis of a 360-day year for the actual
number of days elapsed.
3.7 Agent's Fee. The Borrower agrees to pay to the Agent for its own
account a monthly administration fee (the "Agent's Fee") on the Closing Date
and on the first day of each month thereafter in the amount set forth in the
Fee Letter, which fee shall be payable in advance, non-refundable and fully
earned on each such payment date.
3.8 Seasonal Overadvance Fee. The Borrower agrees to pay to the Agent,
for the ratable account of the Lenders on the date of the first Seasonal
Overadvance of any Seasonal Overadvance Period a fee of $15,000, which fee
shall be non-refundable and fully earned on each such payment date.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans. The Borrower shall repay the outstanding principal
balance of the Revolving Loans, plus all accrued but unpaid interest thereon,
on the Termination Date; provided, however, that the Borrower shall repay the
outstanding principal balance of any Seasonal Overadvance, plus all accrued but
unpaid interest thereon, on the last day of the Seasonal Overadvance Period
applicable to such Seasonal Overadvance. The Borrower may prepay Revolving
Loans at any time, and reborrow subject to the terms of this Agreement;
provided, however, that with respect to any LIBOR Rate Loans prepaid by the
Borrower prior to the expiration date of the Interest Period applicable
thereto, the Borrower promises to pay to the Agent for account of the Lenders
the amounts described in Section 5.4. In addition, and without limiting the
generality of the foregoing, upon demand the Borrower promises to pay to the
Agent, for account of the Lenders, the amount, without duplication, by which
the Aggregate Revolver Outstanding exceeds the Availability (with Availability
for this purpose calculated as if the Aggregate Revolver Outstandings were
zero).
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4.2 Termination or Reduction of Facility. (a) The Borrower may terminate
this Agreement upon at least thirty (30) days' prior notice to the Agent and
the Lenders, upon (i) the payment in full of all outstanding Revolving Loans,
together with accrued interest thereon, and the cancellation of all outstanding
Letters of Credit (or payment of sufficient cash or delivery of a supporting
letter of credit in accordance with Section 2.4(j) if any such Letter of Credit
cannot be canceled), (ii) the payment of the early termination fee set forth in
the next sentence, (iii) the payment in full in cash of all other Obligations
together with accrued interest thereon, and (iv) with respect to any LIBOR Rate
Loans prepaid in connection with such termination prior to the expiration date
of the Interest Period applicable thereto, the payment of the amounts described
in Section 5.4. If this Agreement is terminated at any time prior to the
Stated Termination Date, whether pursuant to this Section or pursuant to
Section 11.2, the Borrower shall pay to the Agent, for the account of the
Lenders, an early termination fee determined in accordance with the following
table:
Period during which
early termination Early Termination
occurs Fee
------------------ -------------------------
On or prior to the o n e-half of one percent
first Anniversary (0.50%) of the Loans and
Date L e t t e rs of Credit
outstanding during the 180
days (or lesser period if
w i thin 180 days of the
Closing Date) prior to the
date of termination.
After the first one-quarter of one percent
Anniversary Date but (0.25%) of the average Loans
on or prior to the and Letters of Credit
third Anniversary outstanding during the 180
Date days prior to the date of
termination.
(b) The Borrower may from time to time permanently reduce the amount
of the Total Facility upon thirty (30) days prior notice to the Agent and the
Lenders by an aggregate amount of $5,000,000 or a higher integral multiple of
$1,000,000; provided that (i) the Borrower pays an early reduction fee in an
amount equal to the fee provided for in paragraph (a) above multiplied by a
fraction the numerator of which is the amount of the reduction and the
denominator of which is $48,000,000, (ii) the amount of the Total Facility
after giving effect to the reduction is not less than $30,000,000, (iii)
Aggregate Revolver Outstandings shall not exceed the Total Facility amount
after giving effect to such reduction, and (iv) all Unused Line Fee on the
amount of the reduction and all other Obligations then due and payable shall
have been paid in full.
(c) Except as expressly provided in this Section 4.2, the Borrower
may not reduce the Total Facility or terminate this Agreement.
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4.3 [INTENTIONALLY OMITTED]
4.4 [INTENTIONALLY OMITTED]
4.5 [INTENTIONALLY OMITTED]
4.6 Payments by the Borrower. (a) All payments to be made by the
Borrower shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Borrower shall be made
to the Agent for the account of the Lenders at the Agent's address set forth in
Section 15.8, and shall be made in Dollars and in immediately available funds,
no later than 1:00 p.m. (New York City time) on the date specified herein. Any
payment received by the Agent later than 1:00 p.m. (New York City time) shall
be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrower prior to the
date on which any payment is due to the Lenders that the Borrower will not make
such payment in full as and when required, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent the Borrower
has not made such payment in full to the Agent, each Lender shall repay to the
Agent on demand such amount distributed to such Lender, together with interest
thereon at the Federal Funds Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
4.7 Payments as Revolving Loans. All payments of principal, interest,
reimbursement obligations in connection with Letters of Credit, fees, premiums
and other sums payable hereunder, including all reimbursement for expenses
pursuant to Section 15.7, may, at the option of the Agent, in its sole
discretion, subject only to the terms of this Section 4.7, be paid from the
proceeds of Revolving Loans made hereunder, whether made following a request by
the Borrower pursuant to Section 2.2 or a deemed request as provided in this
Section 4.7. The Borrower hereby irrevocably authorizes the Agent to charge
the Loan Account for the purpose of paying principal, interest, reimbursement
obligations in connection with Letters of Credit, fees, premiums and other sums
payable hereunder, including reimbursing expenses pursuant to Section 15.7, and
agrees that all such amounts charged shall constitute Revolving Loans
(including Bank of America Loans and Agent
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Advances) and that all such Revolving Loans so made shall be deemed to have
been requested by Borrower pursuant to Section 2.2.
4.8 Apportionment, Application and Reversal of Payments. Aggregate
principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Loans to which such payments
relate held by each Lender) and payments of the fees shall, as applicable, be
apportioned ratably among the Lenders. All payments shall be remitted to the
Agent and all such payments not relating to principal or interest of specific
Loans, or not constituting payment of specific fees, and all proceeds of
Accounts or other Collateral received by the Agent, shall be applied, ratably,
subject to the provisions of this Agreement: first, to pay any fees,
indemnities or expense reimbursements then due to the Agent from the Borrower;
second, to pay any fees or expense reimbursements then due to the Lenders from
the Borrower; third, to pay interest due in respect of all Revolving Loans,
including Bank of America Loans and Agent Advances; fourth, to pay or prepay
principal of the Bank of America Loans and Agent Advances; fifth, to pay or
prepay principal of the Revolving Loans (other than Bank of America Loans and
Agent Advances) and unpaid reimbursement obligations in respect of Letters of
Credit; and sixth, to the payment of any other Obligation due to the Agent or
any Lender by the Borrower. Notwithstanding anything to the contrary contained
in this Agreement, unless so directed by the Borrower, or unless an Event of
Default is outstanding, neither the Agent nor any Lender shall apply any
payments which it receives to any LIBOR Rate Loan, except (a) on the expiration
date of the Interest Period applicable to any such LIBOR Rate Loan, or (b) in
the event, and only to the extent, that there are no outstanding Base Rate
Loans. The Agent shall promptly distribute to each Lender, pursuant to the
applicable wire transfer instructions received from each Lender in writing,
such funds as it may be entitled to receive, subject to a Settlement delay as
provided for in Section 2.2(j). The Agent and the Lenders shall have the
continuing and exclusive right to apply and reverse and reapply any and all
such proceeds and payments to any portion of the Obligations.
4.9 Indemnity for Returned Payments. If, after receipt of any payment
of, or proceeds applied to the payment of, all or any part of the Obligations,
the Agent or any Lender is for any reason compelled to surrender such payment
or proceeds to any Person, because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for
any other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continue and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Agent or such
Lender, and the Borrower shall be liable to pay to the Agent, and hereby does
indemnify the Agent and the Lenders and hold the Agent and the Lenders harmless
for, the amount of such payment or proceeds surrendered. The provisions of
this Section 4.9 shall be and remain effective notwithstanding any contrary
action which may have been taken by the Agent or any Lender in reliance upon
such payment or application of proceeds, and any such contrary action so
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taken shall be without prejudice to the Agent's and the Lenders' rights under
this Agreement and shall be deemed to have been conditioned upon such payment
or application of proceeds having become final and irrevocable. The provisions
of this Section 4.9 shall survive the termination of this Agreement.
4.10 Agent's and Lenders' Books and Records; Monthly Statements. The
Borrower agrees that the Agent's and each Lender's books and records showing
the Obligations and the transactions pursuant to this Agreement and the other
Loan Documents shall be admissible in any action or proceeding arising
therefrom, and shall constitute rebuttably presumptive proof thereof,
irrespective of whether any Obligation is also evidenced by a promissory note
or other instrument. The Agent will provide to the Borrower a monthly
statement of Loans, payments, and other transactions pursuant to this
Agreement. Such statement shall be deemed correct, accurate, and binding on
the Borrower and an account stated (except for reversals and reapplications of
payments made as provided in Section 4.8 and corrections of errors discovered
by the Agent), unless the Borrower notifies the Agent in writing to the
contrary within sixty (60) days after such statement is rendered. In the event
a timely written notice of objections is given by the Borrower, only the items
to which exception is expressly made will be considered to be disputed by the
Borrower.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 Taxes. (a) Any and all payments by the Borrower to each Lender or
the Agent under this Agreement and any other Loan Document shall be made free
and clear of, and without deduction or withholding for any Taxes (except Taxes
that a Borrower is required by law to withhold). In addition, the Borrower
shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each Lender
and the Agent for the full amount of Taxes or Other Taxes (including any Taxes
or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by the Lender or the Agent and any liability (including
penalties, interest, additions to tax and reasonable expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. Payment under this indemnification shall
be made within 30 days after the date the Lender or the Agent makes written
demand therefor and provides evidence in reasonable detail of the payment of,
or the obligation to make payment of, such Taxes, Other Taxes or other
liability arising therefrom or with respect thereto.
(c) If the Borrower shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, then:
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(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) such
Lender or the Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) the Borrower shall also pay to each Lender or the Agent for
the account of such Lender, at the time interest is paid, all additional
amounts which the respective Lender specifies as necessary to preserve the
after-tax yield the Lender would have received if such Taxes or Other Taxes had
not been imposed.
(d) Within 30 days after the date of any payment by the Borrower of
Taxes or Other Taxes, the Borrower shall furnish the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment reasonably satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to any
Lender or the Agent pursuant to subsection (c) of this Section, then such
Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its lending office so as to
eliminate any such additional payment by the Borrower which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
5.2 Illegality. (a) If any Lender determines that, in each case
occurring after the Closing Date, the introduction of any Requirement of Law,
or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable lending office to make LIBOR Rate Loans, then,
on notice thereof by the Lender to the Borrower through the Agent, any
obligation of that Lender to make LIBOR Rate Loans shall be suspended until the
Lender notifies the Agent and the Borrower that the circumstances giving rise
to such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any LIBOR
Rate Loan, the Borrower shall, upon its receipt of notice of such fact and
demand from such Lender (with a copy to the Agent), prepay in full such LIBOR
Rate Loans of that Lender then outstanding, together with interest accrued
thereon and amounts required under Section
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5.4, either on the last day of the Interest Period thereof, if the Lender may
lawfully continue to maintain such LIBOR Rate Loans to such day, or
immediately, if the Lender may not lawfully continue to maintain such LIBOR
Rate Loan. If the Borrower is required to so prepay any LIBOR Rate Loan, then
concurrently with such prepayment, the Borrower shall borrow from the affected
Lender, in the amount of such repayment, a Base Rate Loan.
5.3 Increased Costs and Reduction of Return. (a) If any Lender
determines that, due to either (i) the introduction of or any change in the
interpretation of any law or regulation occurring after the Closing Date or
(ii) the compliance after the Closing Date by that Lender with any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to such
Lender of agreeing to make or making, funding or maintaining any LIBOR Rate
Loans, then the Borrower shall be liable for, and shall from time to time, upon
demand (with a copy of such demand to be sent to the Agent), pay to the Agent
for the account of such Lender, additional amounts as are sufficient to
compensate such Lender for such increased costs.
(b) If any Lender shall have determined that, in each case occurring
after the Closing Date, (i) the introduction of any Capital Adequacy
Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any
change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Lender or
any corporation or other entity controlling the Lender with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by the Lender or any corporation or other entity
controlling the Lender and (taking into consideration such Lender's or such
corporation's or other entity's policies with respect to capital adequacy and
such Lender's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitments, loans, credits or
obligations (including to participate in Letters of Credit) under this
Agreement, then, upon demand of such Lender to the Borrower through the Agent,
the Borrower shall pay to the Lender, from time to time as specified by the
Lender, additional amounts sufficient to compensate the Lender for such
increase.
5.4 Funding Losses. The Borrower shall reimburse each Lender and hold
each Lender harmless from any loss or expense which the Lender may sustain or
incur as a consequence of:
(a) the failure of the Borrower to make on a timely basis any
payment of principal of any LIBOR Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert a
Loan after the Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation;
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(c) the prepayment or other payment (including after acceleration
thereof) of an LIBOR Rate Loan on a day that is not the last day of the
relevant Interest Period; including any such loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain its LIBOR Rate
Loans or from fees payable to terminate the deposits from which such funds were
obtained.
5.5 Inability to Determine Rates. If the Agent reasonably determines
that for any reason adequate and reasonable means do not exist for determining
the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan, or that the LIBOR Rate for any requested Interest Period with
respect to a proposed LIBOR Rate Loan does not adequately and fairly reflect
the cost to the Lenders of funding such Loan, the Agent will promptly so notify
the Borrower and each Lender. Thereafter, the obligation of the Lenders to
make or maintain (I) LIBOR Rate Loans hereunder (if the Agent is unable to
determine LIBOR Rate for all of the Interest Periods permitted hereunder) or
(II) a certain LIBOR Rate Loan (if the Agent is unable to determine LIBOR Rate
for a specific Interest Rate Period, but can determine it for other Interest
Rate Periods permitted hereunder) shall be suspended until the Agent revokes
such notice in writing. Upon receipt of such notice, the Borrower may revoke
any Notice of Borrowing or Notice of Conversion/Continuation then submitted by
it. If the Borrower does not revoke such Notice, the Lenders shall make,
convert or continue the applicable Loans, as proposed by the Borrower, in the
amount specified in the applicable notice submitted by the Borrower, but such
Loans shall be made, converted or continued as Base Rate Loans instead of LIBOR
Rate Loans.
5.6 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article 5 shall deliver to the Borrower (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to the Lender hereunder and such certificate shall be conclusive and binding on
the Borrower in the absence of manifest error.
5.7 Survival. The agreements and obligations of the Borrower in this
Article 5 shall survive the payment of all other Obligations and the
termination of this Agreement.
ARTICLE 6
COLLATERAL
6.1 Grant of Security Interest. (a) As security for all present and
future Obligations, each Loan Party hereby grants to the Agent, for the ratable
benefit of the Agent and the Lenders, a continuing security interest in, lien
on, assignment of and right of set-off against, all of the following property
of such Loan Party, whether now owned or existing or hereafter acquired or
arising, regardless of where located:
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(i) all Accounts;
(ii) all Inventory;
(iii) all contract rights, letters of credit, Assigned
Contracts (excluding all license agreements in which a Loan Party is a
licensee, except there shall be included in the security interest granted
hereunder (i) license agreements that do not expressly prohibit the granting of
a security interest therein and/or assignment for security thereof by such Loan
Party, (ii) the Material License Agreement with Umbro, and (iii) automatically
upon obtaining the consent of the licensor referred to in or if otherwise
permitted as described in Section 6.2(e) of this Agreement, all rights and
interests under other Material License Agreements (that is other than with
Umbro and other than those that do not expressly prohibit the granting of a
security interest therein or assignment for security thereof by such Loan
Party), chattel paper, instruments, notes, documents and documents of title
with respect to or arising out of or resulting from any Accounts, Inventory or
Equipment;
(iv) all Equipment (other than Equipment subject to a Lien
described in clause (j) of the definition of Permitted Liens the terms of which
expressly prohibit the granting of this Lien thereon);
(v) all money, Investment Property, securities accounts,
securities and other property of any kind of such Loan Party in the possession
or under the control of the Agent or any Lender, any assignee of or participant
in the Obligations, or a bailee of any such party or such party's affiliates,
or any other financial institution;
(vi) all of such Loan Party's deposit accounts, credits, and
balances with and other claims against the Agent or any Lender or any of its
affiliates or any other financial institution with which such Loan Party
maintains deposits;
(vii) all books, records and other property related to or
referring to any of the foregoing, including, without limitation, books,
records, account ledgers, data processing records, computer software and other
property, and General Intangibles at any time evidencing or relating to any of
the foregoing; and
(viii) all accessions to, substitutions for and replacements,
products and proceeds of any of the foregoing, including, but not limited to,
proceeds of any insurance policies (including insurance proceeds payable on
account of business interruption), claims against third parties, and
condemnation or requisition payments with respect to all or any of the
foregoing.
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All of the foregoing, together with the Real Estate covered by the Mortgage(s),
all other "Collateral" as defined in any other Loan Document and all other
property of any Loan Party in which the Agent or any Lender may at any time be
granted a Lien, is herein collectively referred to as the "Collateral."
(b) As security for all Obligations, each applicable Loan Party
shall simultaneously herewith execute and deliver, or cause to be executed and
delivered, to the Agent the Mortgage(s), the Material License Agreement
Assignments and the Pledge Agreement to grant to the Agent, for the ratable
benefit of the Agent and the Lenders, a continuing mortgage lien on the Real
Estate and Premises owned by a Loan Party and a security interest in all
"Collateral" as defined in any such document.
(c) All of the Obligations shall be secured by all of the
Collateral.
(d) Upon the termination, expiration or defeasance of and, with the
consent of the requisite percentage of the holders of the Senior Notes, which
consent the Parent Guarantor shall use reasonable efforts to obtain unless the
Parent Guarantor has a reasonable basis for concluding that a request for
consent to the granting of such security interest would materially prejudice
its ability to obtain such amendment, modification or change, upon any material
amendment, modification or change to the Indenture, each of the Loan Parties
shall (i) grant to the Agent, for the ratable benefit of the Agent and the
Lenders, a continuing security interest in, lien on, assignment of and right of
set-off against, all General Intangibles and Intellectual Property of such Loan
Party, whether now owned or existing or hereafter acquired or arising,
regardless of where located and (ii) execute and deliver a security agreement
and applicable assignments with respect thereto in forms acceptable to the
Agent and the Majority Lenders.
6.2 Perfection and Protection of Security Interest. (a) Each Loan Party
shall, at its expense, perform all steps requested by the Agent at any time to
perfect, maintain, protect, and enforce the Agent's Liens, including, without
limitation: (i) executing, delivering and/or filing and recording of the
Mortgage(s) and executing and filing financing or continuation statements, and
amendments thereof, in form and substance satisfactory to the Agent;
(ii) delivering to the Agent the originals of all instruments, documents,
certificates, and chattel paper, and all other Collateral of which the Agent
determines it should have physical possession in order to perfect and protect
the Agent's security interest therein, duly pledged, endorsed or assigned to
the Agent or in blank without restriction; (iii) after a Default or Event of
Default, delivering to the Agent warehouse receipts covering any portion of the
Collateral located in warehouses and for which warehouse receipts are issued
and certificates of title covering any portion of the collateral for which
certificates of title have been issued; (iv) when an Event of Default exists,
transferring Inventory to warehouses designated by the Agent; (v) placing
notations on such Loan Party's books of account to disclose the Agent's
security interest; (vi) delivering to the Agent all letters of credit on which
such Loan Party
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is named beneficiary; and (vii) taking such other steps as are deemed necessary
or desirable by the Agent to maintain and protect the Agent's Liens. To the
extent permitted by applicable law, the Agent may file, without any Loan
Party's signature, one or more financing statements disclosing the Agent's
Liens. Each Loan Party agrees that a carbon, photographic, photostatic, or
other reproduction of this Agreement or of a financing statement is sufficient
as a financing statement.
(b) If any Collateral having a book value (determined on a FIFO
basis if applicable) of $100,000 or more is at any time located at, or in the
possession or control of any warehouseman, bailee or any of a Loan Party's
agents, vendors or processors, then such Loan Party shall notify the Agent
thereof and shall, at the request of Agent, notify such Person of the Agent's
security interest in such Collateral , obtain a lien waiver from such Person in
form and substance reasonably acceptable to the Agent and instruct such Person
to hold all such Collateral for the Agent's account subject to the Agent's
instructions (which instructions the Agent will not give unless an Event of
Default has occurred and is continuing). If at any time any Collateral having
a book value (determined on a FIFO basis if applicable) of $100,000 or more is
located on any operating facility of a Loan Party which is not owned by such
Loan Party, then such Loan Party shall, at the request of the Agent, obtain
written waivers, in form and substance satisfactory to the Agent, of all
present and future Liens to which the owner or lessor of such premises may be
entitled to assert against the Collateral.
(c) From time to time, each Loan Party shall, upon the Agent's
request, execute and deliver confirmatory written instruments pledging to the
Agent, for the ratable benefit of the Agent and the Lenders, the Collateral
with respect to such Loan Party, but such Loan Party's failure to do so shall
not affect or limit any security interest or any other rights of the Agent or
any Lender in and to the Collateral with respect to such Loan Party. So long
as this Agreement is in effect and until all Obligations have been fully
satisfied, the Agent's Liens shall continue in full force and effect in all
Collateral (whether or not deemed eligible for the purpose of calculating the
Availability or as the basis for any advance, loan, extension of credit, or
other financial accommodation).
(d) Without limiting Section 9.21, if Fox Athletic LLC becomes a
Subsidiary of the Parent Guarantor or if the Lenders permit the creation or
acquisition of any new Subsidiary, at the time any Person becomes a Subsidiary
of the Parent Guarantor, the Parent Guarantor shall so notify the Agent and
promptly thereafter (but in any event within 30 days after the date thereof)
shall (i) cause such Person to become a party to this Agreement in a manner
acceptable to the Agent, (ii) cause all of the Capital Stock of such Person to
be delivered to the Agent (together with undated stock powers signed in blank)
and pledged to the Agent pursuant to an appropriate Pledge Agreement in
substantially the form of the Pledge Agreement and otherwise in a form
reasonably acceptable to the Agent, (iii) pledge all of its assets to the
Lenders pursuant to this Agreement and such other security
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agreements consistent with this Agreement as may be requested by the Agent,
including a separate collateral assignment of any Material License Agreements
to which it is a party, (iv) if such Person has any Subsidiaries, (y) deliver
all of the Capital Stock of such Subsidiaries (together with undated stock
powers signed in blank) to the Agent and (z) execute a pledge agreement in
substantially the form of the Pledge Agreement and otherwise in a form
reasonably acceptable to the Agent, (v) if such Person owns any Real Estate,
execute any and all necessary mortgages, deeds of trust, deeds to secure debt
or other appropriate real estate collateral documentation in a form
substantially similar to the Mortgages, and (vi) deliver such other
documentation as the Agent may reasonably request in connection with the
foregoing, including appropriate UCC-1 financing statements, real estate title
insurance policies, environmental reports, certified resolutions and other
organizational and authorizing documents of such Person and favorable opinions
of counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to
above subject to standard assumptions, qualifications and limitations that are
customary in legal opinions of such type), all in form, content and scope
reasonably satisfactory to the Agents; provided, however, that the requirements
of clauses (i), (iii), (iv), (v) and (vi) shall apply in the case of Fox
Athletic LLC becoming a Subsidiary only to the extent that the Parent Guarantor
through the direct and indirect exercise of its manager, voting or other
control rights can cause (using its reasonable efforts) such requirements to be
met without breaching the terms of the Fox Athletic LLC operating agreement as
in effect on the date hereof, and the requirement of clause (ii) shall apply
only to all Capital Stock held directly or indirectly by or for the benefit of
the Parent Guarantor or any of its Subsidiaries. In the event that any of the
requirements in clauses (i) and (iii) through (vi) above cannot be met as so
provided, Fox Athletic LLC shall not be considered a Subsidiary hereunder for
the purposes of the definition of Restricted Investments, Fox Athletic LLC must
be an "Unrestricted Subsidiary" as defined in the Indenture and comply with all
requirements applicable thereto even if the Indenture is no longer in effect
and its net income shall not be included in Adjusted Net Earnings from
Operations except to the extent received in cash distributions by the Parent
Guarantor or any of its other Subsidiaries.
(e) If, subsequent to the Closing Date, any Loan Party shall (i)
acquire any Real Estate or (ii) acquire any intellectual property or any
Capital Stock or other personal property required to be delivered to the Agent
as Collateral hereunder or under any of the Loan Documents, or (iii) enter into
any Material License Agreement, the Parent Guarantor shall immediately notify
the Agent of same. Subject to the proviso in Section 6.2(d) above in the case
of Fox Athletic LLC, the Parent Guarantor and its applicable Subsidiaries shall
take such action, as requested by the Agent and at the Borrower's own expense,
to ensure that (x) the Lenders have a perfected Lien in all owned Real Estate
and personal property of the Parent Guarantor and its Subsidiaries as set forth
in the Loan Documents (whether now owned or hereafter acquired), subject only
to Permitted Liens, (y) the Lenders have Collateral License Agreement
Assignments of all Material License Agreements in the form requested by the
Agent to the extent permitted under the terms of the applicable Material
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License Agreement (and, if not so permitted, the Borrower agrees to use prompt
continuing reasonable efforts to obtain the consent of the licensor under each
Material License Agreement to such Collateral License Agreement Assignment),
and (z) during the occurrence of a Default or Event of Default, the Agent and
the Lenders have the right to use all Proprietary Rights of the Parent
Guarantor and its Subsidiaries as set forth in Section 11.2(b).
6.3 Location of Collateral. Each Loan Party represents and warrants to
the Agent and the Lenders that: (a) Schedule 6.3 is a correct and complete
list of its chief executive office, the location of its books and records, the
locations of the Collateral, and the locations of all of its other places of
business; and (b) Schedule 6.3 correctly identifies any of such facilities and
locations that are not owned by it and sets forth the names of the owners and
lessors or sublessors of and, to the best of its knowledge, the holders of any
mortgages on, such facilities and locations. Each Loan Party covenants and
agrees that it will not (i) maintain any Collateral at any location other than
those locations listed for it on Schedule 6.3, (ii) otherwise change or add to
any of such locations, or (iii) change the location of its chief executive
office from the location identified in Schedule 6.3, unless it gives the Agent
at least thirty (30) days' prior written notice thereof and executes any and
all financing statements and other documents that the Agent requests in
connection therewith. Without limiting the foregoing, except as otherwise
permitted in Section 6.2(b), each Loan Party represents that all of its
Inventory (other than Inventory in transit) is, and covenants that all of its
Inventory will be, located either (a) on premises owned by it, (b) on premises
leased by it, provided that the Agent has, if requested by the Agent, received
an executed landlord waiver from the landlord of such premises in form and
substance satisfactory to the Agent, or (c) in a public warehouse, provided
that the Agent has, if requested by the Agent, received an executed bailee
letter from the applicable public warehouseman in form and substance
satisfactory to the Agent.
6.4 Title to, Liens on, and Sale and Use of Collateral. Each Loan Party
represents and warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that: (a) all of the Collateral is and will continue to be
owned by it free and clear of all Liens whatsoever, except for Permitted Liens;
(b) the Agent's Liens in the Collateral will not be subject to any prior Lien
(other than Permitted Liens described in clause (a), (d), (e), (h) or (j) of
the definition of such term); (c) it will use, store, and maintain the
Collateral with all reasonable care and will use such Collateral for lawful
purposes only; and (d) it will not, without the Agent's prior written approval,
sell, or dispose of or permit the sale or disposition of any of the Collateral
except for sales of Inventory in the ordinary course of business and sales of
Equipment as permitted by Section 6.11. The inclusion of proceeds in the
Collateral shall not be deemed to constitute the Agent's or any Lender's
consent to any sale or other disposition of the Collateral except as expressly
permitted herein.
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6.5 Appraisals. Whenever a Default or an Event of Default exists, each
Loan Party shall, at its expense and upon the Agent's request, provide the
Agent with appraisals or updates thereof of any or all of the Collateral from
an appraiser, and prepared on a basis, satisfactory to the Agent, such
appraisals and updates to include, without limitation, information required by
applicable law and regulation and by the internal policies of the Lenders.
6.6 Access and Examination; Confidentiality. (a) The Agent, accompanied
by any Lender which so elects, may at all reasonable times during regular
business hours (and at any time when a Default or Event of Default exists and
is continuing) have access to, examine, audit, make extracts from or copies of
and inspect any or all of any Loan Party's records, files, and books of account
and the Collateral, and discuss any Loan Party's affairs with its and the
Parent Guarantor's officers and management. Each Loan Party will deliver to
the Agent any instrument necessary for the Agent to obtain records from any
service bureau maintaining records for such Loan Party. The Agent may, and at
the direction of the Majority Lenders shall, at any time when a Default or
Event of Default exists, and at the Borrower's expense, make copies of all of
any Loan Party's books and records, or require any Loan Party to deliver such
copies to the Agent. The Agent may, without expense to the Agent, use such of
any Loan Party's respective personnel, supplies, and premises as may be
reasonably necessary for maintaining or enforcing the Agent's Liens. The Agent
shall have the right, at any time, in the Agent's name or in the name of a
nominee of the Agent, to verify the validity, amount or any other matter
relating to the Accounts, Inventory, or other Collateral, by mail, telephone,
or otherwise.
(b) Each Loan Party agrees that, subject to the Parent Guarantor's
prior consent for uses other than in a traditional tombstone, which consent
shall not be unreasonably withheld or delayed, the Agent and each Lender may
use any Loan Party's name in advertising and promotional material and in
conjunction therewith disclose the general terms of this Agreement. The Agent
and each Lender agree to take normal and reasonable precautions and exercise
due care to maintain the confidentiality of all information identified as
"confidential" or "secret" by a Loan Party and provided to the Agent or such
Lender by or on behalf of such Loan Party, under this Agreement or any other
Loan Document, and neither the Agent, nor such Lender nor any of their
respective Affiliates shall use any such information other than in connection
with or in enforcement of this Agreement and the other Loan Documents, except
to the extent that such information (i) was or becomes generally available to
the public other than as a result of disclosure by the Agent or such Lender, or
(ii) was or becomes available on a nonconfidential basis from a source other
than such Loan Party, provided that such source is not bound by a
confidentiality agreement with such Loan Party known to the Agent or such
Lender; provided, however, that the Agent and any Lender may disclose such
information (1) at the request or pursuant to any requirement of any
Governmental Authority to which the Agent or such Lender is subject or in
connection with an examination of the Agent or such Lender by any such
Governmental
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Authority; (2) pursuant to subpoena or other court process; (3) when required
to do so in accordance with the provisions of any applicable requirement of
law; (4) to the extent reasonably required in connection with any litigation or
proceeding (including, but not limited to, any bankruptcy proceeding) to which
the Agent, any Lender or their respective Affiliates may be party; (5) to the
extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Loan Document; (6) to the Agent's or such Lender's
independent auditors, accountants, attorneys and other professional advisors;
(7) to any prospective Participant or assignee under any Assignment and
Acceptance, actual or potential, provided that such prospective Participant or
assignee agrees to keep such information confidential to the same extent
required of the Agent and the Lenders hereunder; (8) as expressly permitted
under the terms of any other document or agreement regarding confidentiality to
which such Loan Party is party or is deemed party with the Agent or such
Lender, and (9) to its Affiliates.
6.7 Collateral Reporting. The Borrower shall provide the Agent with the
following documents at the following times in form satisfactory to the Agent:
(a) on a weekly basis, or more frequently if requested by the Agent, a schedule
of the Borrower's Accounts (with the information for Eligible Unbilled Account
Receivables separately broken out and stated) created since the last such
schedule and a Borrowing Base Certificate; (b) on a monthly basis, or more
frequently if requested by Agent, an aging of the Borrower's Accounts, together
with a reconciliation to the previous month's aging of the Borrower's Accounts
and to the Borrower's general ledger, in each case with the information for
Eligible Unbilled Account Receivables separately broken out and stated; (c) on
a monthly basis, or more frequently if requested by Agent, an aging of the
Borrower's accounts payable; (d) on a monthly basis (or more frequently if
requested by the Agent), Inventory reports by category, with additional detail
showing additions to and deletions from the Inventory; (e) upon request, copies
of invoices in connection with the Borrower's Accounts, customer statements,
credit memos, remittance advices and reports, deposit slips, shipping and
delivery documents in connection with the Borrower's Accounts (with the
information for Eligible Unbilled Account Receivables separately broken out and
stated) and for Inventory and Equipment acquired by the Borrower, purchase
orders and invoices; (f) upon request, a statement of the balance of each of
the Intercompany Accounts; (g) such other reports as to the Collateral of the
Borrower as the Agent shall reasonably request from time to time (with the
information for Eligible Unbilled Account Receivables separately broken out and
stated); and (h) with the delivery of each of the foregoing, a certificate of
the Borrower executed by an officer thereof certifying as to the accuracy and
completeness of the foregoing. If any of the Borrower's records or reports of
the Collateral are prepared by an accounting service or other agent, the
Borrower hereby authorizes such service or agent to deliver such records,
reports, and related documents to the Agent, for distribution to the Lenders.
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6.8 Accounts. (a) Each Loan Party hereby represents and warrants to the
Agent and the Lenders, with respect to the Loan Parties' Accounts, that: (i)
each existing Account represents, and each future Account will represent, a
bona fide sale or lease and delivery of goods by such Loan Party, or rendition
of services by such Loan Party, in the ordinary course of such Loan Party's
business; (ii) each existing Account is, and each future Account will be, for a
liquidated amount payable by the Account Debtor thereon on the terms set forth
in the invoice therefor (or, in the case of Eligible Unbilled Account
Receivables, will be so invoiced) or in the schedule thereof delivered to the
Agent, without any offset, deduction, defense, or counterclaim except those
known to such Loan Party and disclosed to the Agent and the Lenders pursuant to
this Agreement; (iii) no payment will be received with respect to any Account,
and no credit, discount, or extension, or agreement therefor will be granted on
any Account, except as reported to the Agent and the Lenders in accordance with
this Agreement; (iv) each copy of an invoice delivered to the Agent by such
Loan Party will be a genuine copy of the original invoice sent to the Account
Debtor named therein; and (v) all goods described in any invoice representing a
sale of goods will have been delivered to the Account Debtor and all services
of such Loan Party described in each invoice will have been performed.
(b) No Loan Party shall re-date any invoice or sale or make sales on
extended dating beyond that customary in the Borrower's business or, except as
and to the extent permitted in clause (d) of the definition of Eligible
Accounts, extend or modify any Account. If a Loan Party becomes aware of any
matter adversely affecting the collectability of any Account or Account Debtor
involving an amount greater than $100,000, including information regarding the
Account Debtor's creditworthiness, such Loan Party will promptly so advise the
Agent.
(c) No Loan Party shall accept any note or other instrument (except
a check or other instrument for the immediate payment of money) with respect to
any Account without the Agent's written consent. If the Agent consents to the
acceptance of any such instrument, it shall be considered as evidence of the
Account and not payment thereof and such Loan Party will promptly deliver such
instrument to the Agent, endorsed by such Loan Party to the Agent in a manner
satisfactory in form and substance to the Agent. Regardless of the form of
presentment, demand, notice of protest with respect thereto, the Loan Party
shall remain liable thereon until such instrument is paid in full.
(d) Each Loan Party shall notify the Agent promptly of all disputes
and claims in excess of $25,000 with any Account Debtor, and agrees to settle,
contest, or adjust such dispute or claim at no expense to the Agent or any
Lender. No discount, credit or allowance shall be granted to any such Account
Debtor without the Agent's prior written consent, except for discounts, credits
and allowances made or given in the ordinary course of the Borrower's business
when no Event of Default exists hereunder. Each Loan Party shall issue
promptly and report to the Agent promptly any credit memorandum and shall
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send the Agent a copy of each credit memorandum in excess of $100,000 as soon
as issued. The Agent may, and at the direction of the Majority Lenders shall,
at all times when an Event of Default exists hereunder, settle or adjust
disputes and claims directly with Account Debtors for amounts and upon terms
which the Agent or the Majority Lenders, as applicable, shall consider
advisable and, in all cases, the Agent will credit the Borrower's Loan Account
with only the net amounts received by the Agent in payment of any Accounts.
(e) Except for de minimus exchanges of Inventory, if an Account
Debtor returns any Inventory to a Loan Party when no Event of Default exists,
then such Loan Party shall promptly determine the reason for such return and
shall issue a credit memorandum to the Account Debtor in the appropriate
amount. Such Loan Party shall immediately report to the Agent any return
involving an amount in excess of $50,000. Each such report shall indicate the
reasons for the returns and the locations and condition of the returned
Inventory. In the event any Account Debtor returns Inventory to a Loan Party
when an Event of Default exists, such Loan Party upon request of the Agent,
shall: (i) hold the returned Inventory in trust for the Agent; (ii) segregate
all returned Inventory from all of its other property; (iii) dispose of the
returned Inventory solely according to the Agent's written instructions; and
(iv) not issue any credits or allowances with respect thereto without the
Agent's prior written consent. All returned Inventory shall be subject to the
Agent's Liens thereon. Whenever any Inventory is returned, the related Account
shall be deemed ineligible to the extent of the amount owing by the Account
Debtor with respect to such returned Inventory.
6.9 Collection of Accounts; Payments. (a) Each Loan Party shall
establish a lock-box service and/or other blocked account for collections of
Accounts at a bank acceptable to the Agent and pursuant to documentation
satisfactory to the Agent, including lock-box agreements and blocked account
agreements satisfactory to the Agent. Each Loan Party shall instruct all
Account Debtors to make all payments directly to the address established for
such lock-box service. If, notwithstanding such instructions, a Loan Party
receives any proceeds of Accounts, it shall receive such payments as the
Agent's trustee, and shall immediately deliver such payments to the Agent in
their original form duly endorsed in blank or deposit them into a Payment
Account, as the Agent may direct. All collections received in any such lock-
box or Payment Account or directly by a Loan Party or the Agent, and all funds
in any Payment Account or other account to which such collections are deposited
shall be subject to the Agent's sole control. The Agent or the Agent's
designee may, at any time after the occurrence of an Event of Default, notify
Account Debtors that the Accounts have been assigned to the Agent and of the
Agent's security interest therein, and may collect them directly and charge the
collection costs and expenses to the Borrower's Loan Account as a Revolving
Loan. So long as an Event of Default has occurred and is continuing, each Loan
Party, at the Agent's request, shall execute and deliver to the Agent such
documents as the Agent shall require to grant the Agent access to any post
office box in which collections of Accounts are received.
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(b) If sales of Inventory are made or services are rendered for
cash, each Loan Party shall immediately deliver to the Agent or deposit into a
Payment Account the cash which such Loan Party receives.
(c) All payments, including immediately available funds received by
the Agent at a bank designated by it, received by the Agent on account of
Accounts or as proceeds of other Collateral will be the Agent's sole property
for its benefit and the benefit of the Lenders and will be credited to the
Borrower's Loan Account (conditional upon final collection) on the same
Business Day in the case of wire transfers (received by 1:30 p.m., New York
time, and if not received by such time on the next Business Day) and account
debits and, after allowing three (3) Business Days for collection, in the case
of checks; provided, however, that such payments shall be deemed to be credited
to the Borrower's Loan Account, immediately upon receipt, for purposes of (i)
determining Availability, (ii) calculating the unused line fee pursuant to
Section 3.5, and (iii) calculating the amount of interest accrued thereon
solely for purposes of determining the amount of interest to be distributed by
the Agent to the Lenders (but not the amount of interest payable by the
Borrower).
(d) In the event the Borrower repays all of the Obligations upon the
termination of this Agreement or upon acceleration of the Obligations, other
than through the Agent's receipt of payments on account of the Accounts or
proceeds of the other Collateral, such payment will be credited (conditional
upon final collection) to the Borrower's Loan Account one (1) Business Day
after the Agent's receipt of such funds.
(e) Each Loan Party agrees to execute and deliver, and cause to be
executed and delivered, such control agreements, endorsements in blank,
registrations, acknowledgments, transaction statements or other documents as
the Agent may request to perfect, maintain, protect or enforce the Agent's Lien
in Investment Property, securities, securities accounts or other similar
Collateral.
6.10 Inventory; Perpetual Inventory. Each Loan Party represents and
warrants to the Agent and the Lenders and agrees with the Agent and the Lenders
that, except for Inventory used as demonstration or display models, all of the
Inventory owned by such Loan Party is and will be held for sale or lease, or to
be furnished in connection with the rendition of services, in the ordinary
course of such Loan Party's business, and is and will be fit for such purposes.
Each Loan Party will keep its Inventory in good and marketable condition, at
its own expense. No Loan Party will, without the prior written consent of the
Agent, acquire or accept any inventory on consignment or approval, except for
inventory not to exceed $500,000 of book value (determined on a FIFO basis)
held on consignment at any time to be sold for cash. Each Loan Party agrees
that all inventory produced by it in the United States will be produced, and it
will use reasonable efforts to ensure that all inventory produced by others
will be produced, in accordance with the Federal Fair Labor Standards
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Act of 1938, as amended, and all rules, regulations, and orders thereunder.
Each Loan Party will conduct a physical count of the Inventory at least once
per Fiscal Year, and after and during the continuation of an Event of Default,
at such other times as the Agent requests. Each Loan Party will maintain at
all times the inventory reporting system in effect on the date hereof or
another type of inventory reporting system reasonably acceptable to the Agent.
No Loan Party will, without the Agent's written consent, sell any Inventory on
a xxxx-and-hold, guaranteed sale, sale and return, sale on approval,
consignment, or other repurchase or return basis.
6.11 Equipment. (a) Each Loan Party represents and warrants to the Agent
and the Lenders and agrees with the Agent and the Lenders that all of the
Equipment owned by such Loan Party is and will be used or held for use in such
Loan Party's business, and is and will be fit for such purposes. Each Loan
Party shall keep and maintain its Equipment in good operating condition and
repair (ordinary wear and tear and damage from casualty excepted) and shall
make all necessary replacements thereof.
(b) Each Loan Party shall promptly inform the Agent of any material
additions to or deletions from the Equipment. No Loan Party shall permit any
Equipment having a book value (determined on a FIFO basis if applicable) of
$100,000 or more to become a fixture with respect to real property or to become
an accession with respect to other personal property with respect to which real
or personal property the Agent does not have a Lien. No Loan Party will,
without the Agent's prior written consent, alter or remove any identifying
symbol or number on any of such Loan Party's Equipment consisting of
Collateral.
(c) No Loan Party shall, without the Agent's prior written consent,
sell, lease as a lessor, or otherwise dispose of any of such Loan Party's
Equipment; provided, however, that a Loan Party may dispose of obsolete or
unusable Equipment having an orderly liquidation value no greater than $250,000
in the aggregate in any Fiscal Year, or $500,000 in the aggregate during the
term of this Agreement, without the Majority Lenders' consent, subject to the
conditions set forth in the next sentence. In the event any of such Equipment
is sold, transferred or otherwise disposed of pursuant to the proviso contained
in the immediately preceding sentence, (1) if such sale, transfer or
disposition is effected without replacement of such Equipment, or such
Equipment is replaced by Equipment leased by such Loan Party or by Equipment
purchased by such Loan Party subject to a Lien, then such Loan Party shall
deliver all of the cash proceeds of any such sale, transfer or disposition to
the Agent, which proceeds shall be applied ratably to the reduction of the
Obligation as provided in Section 4.8, or (2) if such sale, transfer or
disposition is made in connection with the purchase by such Loan Party of
replacement Equipment, then such Loan Party shall use the proceeds of such
sale, transfer or disposition to purchase such replacement Equipment and
shall deliver to the Agent written evidence of the use of the proceeds for such
purchase (and such proceeds as so expended shall not be considered a Capital
Expenditure for the
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purposes of Section 9.23). All replacement Equipment purchased by a Loan Party
shall be free and clear of all Liens except the Agent's Lien and Liens
described in clause (d) or (j) of the definition of the term Permitted Liens.
6.12 Assigned Contracts. Each Loan Party shall fully perform all of its
material obligations under each of the Assigned Contracts, and shall enforce
all of its rights and remedies thereunder, in each case, as it deems
appropriate in its business judgment; provided, however, that no Loan Party
shall take any action or fail to take any action with respect to its Assigned
Contracts which would cause the termination of a material Assigned Contract, if
the termination of such Assigned Contract could reasonably be expected to have
a Material Adverse Effect unless (i) the other party thereto is in material
default thereunder or (ii) the Loan Party is simultaneously entering into a
similar contract on terms the same as or more favorable to such Loan Party.
Without limiting the generality of, but subject to, the foregoing, each Loan
Party shall take all action necessary or appropriate to permit, and shall not
take any action which would have any materially adverse effect upon, the full
enforcement of all indemnification rights under its Assigned Contracts. No
Loan Party shall, without the Agent's and the Majority Lenders' prior written
consent, modify, amend, supplement, compromise, satisfy, release, or discharge
any of its Assigned Contracts, any collateral securing the same, any Person
liable directly or indirectly with respect thereto, or any agreement relating
to any of its Assigned Contracts or the collateral therefor, if the result of
such action could reasonably be expected to have a Material Adverse Effect.
Each Loan Party shall notify the Agent and the Lenders in writing, promptly
after such Loan Party becomes aware thereof, of any event or fact which could
give rise to a claim by it for indemnification under any of its Assigned
Contracts, and shall diligently pursue any such material right and report to
the Agent on all further developments with respect thereto. Each Loan Party
shall remit directly to the Agent for application to the Obligations in such
order as the Majority Lenders shall determine, all amounts received by such
Loan Party as indemnification or otherwise pursuant to its Assigned Contracts.
If a Loan Party shall fail after the Agent's demand to pursue diligently any
material right under its Assigned Contracts, or if an Event of Default then
exists, the Agent may, and at the direction of the Majority Lenders shall,
directly enforce such right in its own or such Loan Party's name and may enter
into such settlements or other agreements with respect thereto as the Agent or
the Majority Lenders, as applicable, shall determine. In any suit, proceeding
or action brought by the Agent for the benefit of the Lenders under any
Assigned Contract for any sum owing thereunder or to enforce any provision
thereof, the Borrower shall indemnify and hold the Agent and Lenders harmless
from and against all expense, loss or damage suffered by reason of any defense,
setoff, counterclaims, recoupment, or reduction of liability whatsoever of the
obligor thereunder arising out of a breach by a Loan Party of any obligation
thereunder or arising out of any other agreement, indebtedness or liability at
any time owing from a Loan Party to or in favor of such obligor or its
successors. All such obligations of a Loan Party shall be and remain
enforceable only against such Loan Party and shall not be enforceable against
the Agent. Notwithstanding any provision hereof to the contrary, each Loan
Party
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shall at all times remain liable to observe and perform all of its duties and
obligations under its Assigned Contracts, and the Agent's or any Lender's
exercise of any of their respective rights with respect to the Collateral shall
not release such Loan Party from any of such duties and obligations. Neither
the Agent nor any Lender shall be obligated to perform or fulfill any of a Loan
Party's duties or obligations under its Assigned Contracts or to make any
payment thereunder, or to make any inquiry as to the nature or sufficiency of
any payment or property received by it thereunder or the sufficiency of
performance by any party thereunder, or to present or file any claim, or to
take any action to collect or enforce any performance, any payment of any
amounts, or any delivery of any property.
6.13 Documents, Instruments, and Chattel Paper. Each Loan Party
represents and warrants to the Agent and the Lenders that (a) all documents,
instruments, and chattel paper describing, evidencing, or constituting
Collateral, and all signatures and endorsements thereon, are and will be
complete, valid, and genuine, and (b) all goods evidenced by such documents,
instruments, and chattel paper are and will be owned by such Loan Party, free
and clear of all Liens other than Permitted Liens.
6.14 Right to Cure. At any time if a Default or Event of Default exists,
or otherwise after such notice as the Agent deems in good faith can be given
without prejudice to its rights or remedies hereunder, the Agent may, in its
discretion, and shall, at the direction of the Majority Lenders, pay any
amount or do any act required of any Loan Party hereunder or under any other
Loan Document in order to preserve, protect, maintain or enforce the
Obligations, the Collateral or the Agent's Liens therein, and which such Loan
Party fails to pay or do, including, without limitation, payment of any
judgment against such Loan Party, any insurance premium, any warehouse charge,
any finishing or processing charge, any landlord's claim, and any other Lien
upon or with respect to the Collateral. All payments that the Agent makes
under this Section 6.14 and all out-of-pocket costs and expenses that the Agent
pays or incurs in connection with any action taken by it hereunder shall be
charged to the Borrower's Loan Account as a Revolving Loan. Any payment made
or other action taken by the Agent under this Section 6.14 shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
thereafter as herein provided.
6.15 Power of Attorney. Each Loan Party hereby appoints the Agent and the
Agent's designee as such Loan Party's attorney, with power: (a) to endorse
such Loan Party's name on any checks, notes, acceptances, money orders, or
other forms of payment or security that come into the Agent's or any Lender's
possession; (b) to sign such Loan Party's name on any invoice, xxxx of lading,
warehouse receipt or other document of title relating to any Collateral, on
drafts against customers, on assignments of Accounts, on notices of assignment,
financing statements and other public records and to file any such financing
statements by electronic means with or without a signature as authorized or
required by applicable law or filing procedure; (c) so long as any Event of
Default has occurred and is continuing, to notify the post office authorities
to change the address for
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delivery of such Loan Party's mail to an address designated by the Agent and to
receive, open and dispose of all mail addressed to such Loan Party; (d) to send
requests for verification of Accounts to customers or Account Debtors; (e) to
clear Inventory, the purchase of which was financed with Letters of Credit,
through customs in such Loan Party's name, the Agent's name or the name of the
Agent's designee, and to sign and deliver to customs officials powers of
attorney in such Loan Party's name for such purpose; and (f) to do all things
necessary to carry out this Agreement. Each Loan Party ratifies and approves
all acts of such attorney. None of the Lenders or the Agent nor their
attorneys will be liable for any acts or omissions or for any error of judgment
or mistake of fact or law. This power, being coupled with an interest, is
irrevocable until this Agreement has been terminated and the Obligations have
been fully satisfied.
6.16 The Agent's and Lenders' Rights, Duties and Liabilities. Each Loan
Party assumes all responsibility and liability arising from or relating to the
use, sale or other disposition of the Collateral, except as otherwise expressly
provided in Section 11.2. The Obligations shall not be affected by any failure
of the Agent or any Lender to take any steps to perfect the Agent's Liens or to
collect or realize upon the Collateral, nor shall loss of or damage to the
Collateral release any Loan Party from any of the Obligations. Following the
occurrence and continuation of an Event of Default, the Agent may (but shall
not be required to), and at the direction of the Majority Lenders shall,
without notice to or consent from any Loan Party, xxx upon or otherwise
collect, extend the time for payment of, modify or amend the terms of,
compromise or settle for cash, credit, or otherwise upon any terms, grant other
indulgences, extensions, renewals, compositions, or releases, and take or omit
to take any other action with respect to the Collateral, any security therefor,
any agreement relating thereto, any insurance applicable thereto, or any Person
liable directly or indirectly in connection with any of the foregoing, without
discharging or otherwise affecting the liability of any Loan Party for the
Obligations or under this Agreement or any other agreement now or hereafter
existing between the Agent and/or any Lender and any Loan Party.
6.17 Site Visits, Observations and Testing. The Agent and its
representatives will have the right at any reasonable time to enter and visit
the Premises and any other place where any property of any Loan Party is
located for the purposes of observing the Premises, and subject to the terms of
any lease of Premises and if the Agent has a reasonable basis for doing so
(such as a Phase I report recommending any such action), taking and removing
soil or groundwater samples, and conducting tests on any part of the Premises.
The Agent is under no duty, however, to visit or observe the Premises or to
conduct tests, and any such acts by the Agent will be solely for the purposes
of protecting the Agent's Liens and preserving the Agent and the Lenders'
rights under this Agreement. No site visit, observation or testing by the
Agent and the Lenders will result in a waiver of any default of any Loan Party
or impose any liability on the Agent or any Lender (except for the Agent's or
such Lender's gross negligence or willful misconduct). In no event will any
site visit, observation or testing by the Agent be a representation that
hazardous substances are or are
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not present in, on or under the Premises, or that there has been or will be
compliance with any Environmental Law. Neither any Loan Party nor any other
party is entitled to rely on any site visit, observation or testing by the
Agent. The Agent and the Lenders owe no duty of care to protect any Loan Party
or any other party against, or, except to the extent the Agent is required to
do so by applicable Environmental Laws, to inform any Loan Party or any other
party of, any hazardous substances or any other adverse condition affecting the
Premises. The Agent may in its discretion, except to the extent the Agent is
required to do so by applicable Environmental Laws, disclose to any Loan Party
or any other party any report or findings made as a result of, or in connection
with, any site visit, observation or testing by the Agent. Each Loan Party
understands and agrees that the Agent makes no warranty or representation to
any Loan Party or any other party regarding the truth, accuracy or completeness
of any such report or findings that may be disclosed. Each Loan Party also
understands that depending on the results of any site visit, observation or
testing by the Agent and disclosed to such Loan Party, such Loan Party may have
a legal obligation to notify one or more environmental agencies of the results,
that such reporting requirements are site-specific, and are to be evaluated by
such Loan Party without advice or assistance from the Agent. In each instance,
the Agent will give such Loan Party reasonable notice before entering the
Premises or any other place the Agent is permitted to enter under this Section
6.17. The Agent will make reasonable efforts to avoid interfering with such
Loan Party's use of the Premises or any other property in exercising any rights
provided hereunder.
6.18 Further Assurances Regarding Real Estate Collateral.
On the Closing Date, each Loan Party shall provide, or cause to be
delivered, to the Agent:
(a) ALTA or other appropriate form mortgagee title insurance
policies (the "Mortgage Policies") issued by a title insurer reasonably
satisfactory to the Agent (the "Title Insurance Company"), in an amount
reasonably satisfactory to the Agent with respect to each mortgaged property
(which amount shall be $1,000,000 for the Chicago property described on
Schedule 6.3 hereto), assuring the Agent that the applicable Mortgages create
valid and enforceable mortgage liens on the respective mortgaged properties,
free and clear of all defects and encumbrances except Permitted Liens, which
Mortgage Policies shall be in form and substance reasonably satisfactory to the
Agent and containing such endorsements as shall be reasonably satisfactory to
the Agent and for any other matters that the Agent may request, all of the
foregoing in form and substance reasonably satisfactory to Agent;
(b) Surveys. Maps or plats of an as-built survey of the sites of
the mortgaged properties certified to the Agent and the Title Insurance Company
in a manner reasonably satisfactory to them, dated a date satisfactory to the
Agent and the Title Insurance Company by an independent professional licensed
land surveyor reasonably satisfactory to the Agent and the Title Insurance
Company, which maps or plats and the surveys on which
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they are based shall be sufficient to delete any standard printed survey
exception contained in the applicable title policy and be made in accordance
with the Minimum Standard Detail Requirements for Land Title Surveys jointly
established and adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, and, without limiting the generality
of the foregoing, there shall be surveyed ans shown on such maps, plats or
surveys the following: (i) the locations on such sites of all the buildings,
structures and other improvements and the established building setback lines;
(ii) the lines of streets abutting the sites and width thereof; (iii) all
access and other easements appurtenant to the sites necessary to use the sites;
(iv) all roadways, paths, driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the site, whether recorded,
apparent from a physical inspection of the sites or otherwise known to the
surveyor; (v) any encroachments on any adjoining property by the building
structures and improvements on the sites; and (vi) if the site is described as
being on a filed map, a legend relating the survey to said map;
(c) Flood Certificates. Certification from a registered engineer or
land surveyor or other evidence reasonably acceptable to the Agent that none of
the improvements on the mortgaged properties are located within any area
designated by the Director of the Federal Emergency Management Agency as a
"special flood hazard" area or if any improvements on the Mortgaged Properties
are located within a "special flood hazard" area, evidence of a flood insurance
policy from a company and in an amount reasonably satisfactory to the Agent for
the applicable portion of the premises, naming the Agent, for the benefit of
the Lenders, as mortgagee; and
(d) Environmental Reports. A "Phase I" environmental report with
respect to all mortgaged properties by a reputable independent consultant, and,
if requested by the Agent, such other environmental assessment reports and
related documents with respect to all mortgaged properties.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 Books and Records. Each Loan Party shall maintain, at all times,
correct and complete books, records and accounts in which complete, correct and
timely entries are made of its transactions in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 7.2(a). Each Loan Party shall, by means of appropriate
entries, reflect in such accounts and in all Financial Statements proper
liabilities and reserves for all taxes and proper provision for depreciation
and amortization of property and bad debts, all in accordance with GAAP. Each
Loan Party shall maintain at all times books and records pertaining to the
Collateral in such detail, form and scope as the Agent or any Lender shall
reasonably require, including, but not limited to, records of (a) all
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payments received and all credits and extensions granted with respect to the
Accounts; (b) the return, rejections, repossession, stoppage in transit, loss,
damage, or destruction of any Inventory; and (c) all other dealings affecting
the Collateral.
7.2 Financial Information. Each Loan Party shall promptly furnish to
each Lender, all such financial information as the Agent or any Lender shall
reasonably request, and notify its auditors and accountants that the Agent, on
behalf of the Lenders, is authorized to obtain such information directly from
them. Without limiting the foregoing, the Borrower will furnish to the Agent,
in sufficient copies for distribution by the Agent to each Lender, in such
detail as the Agent or the Lenders shall reasonably request, the following:
(a) As soon as available, but in any event not later than one
hundred fifteen (115) days after the close of each Fiscal Year, consolidated
audited, and consolidating unaudited, balance sheets, and statements of income
and expense, cash flow and of stockholders' equity for the Parent Guarantor and
its Subsidiaries for such Fiscal Year, and the accompanying notes thereto,
setting forth in each case in comparative form figures for the previous Fiscal
Year, all in reasonable detail, fairly presenting the financial position and
the results of operations of the Parent Guarantor and its consolidated
Subsidiaries as at the date thereof and for the Fiscal Year then ended, and
prepared in accordance with GAAP. Such audited statements shall be examined in
accordance with generally accepted auditing standards by and, in the case of
such statements performed on a consolidated basis, accompanied by a report
thereon unqualified as to scope of Xxxxx Xxxxxxxx LLP or other independent
certified public accountants selected by the Parent Guarantor and reasonably
satisfactory to the Agent. The Parent Guarantor, simultaneously with retaining
such independent public accountants to conduct such annual audit, shall send a
letter to such accountants, with a copy to the Agent and the Lenders, notifying
such accountants that one of the primary purposes for retaining such
accountants' services and having audited financial statements prepared by them
is for use by the Agent and the Lenders. Each Loan Party hereby authorizes the
Agent to communicate directly with its certified public accountants and, by
this provision, authorizes those accountants to disclose to the Agent any and
all financial statements and other supporting financial documents and schedules
relating to the Borrower and to discuss directly with the Agent the finances
and affairs of the Parent Guarantor and its Subsidiaries.
(b) As soon as available, but in any event not later than forty (40)
days after the end of each month, consolidated unaudited balance sheets of the
Parent Guarantor and its consolidated Subsidiaries as at the end of such month,
and consolidated unaudited statements of income and expense and cash flow for
the Parent Guarantor and its consolidated Subsidiaries for such month and for
the period from the beginning of the Fiscal Year to the end of such month, all
in reasonable detail, fairly presenting the financial position and results of
operations of the Parent Guarantor and its consolidated Subsidiaries as at the
date thereof and for such periods, and prepared in accordance with GAAP applied
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consistently with the audited Financial Statements required to be delivered
pursuant to Section 7.2(a) (provided that such statements may omit earnings per
share amounts, footnotes and other disclosure items otherwise required by
GAAP). The Parent Guarantor shall certify by a certificate signed by its chief
financial officer that all such statements have been prepared in accordance
with GAAP and present fairly, subject to normal year-end adjustments, the
Parent Guarantor's and its consolidated Subsidiaries' financial position as at
the dates thereof and its results of operations for the periods then ended.
(c) As soon as available, but in any event not later than fifty-five
(55) days after the close of each fiscal quarter other than the fourth quarter
of a Fiscal Year, consolidated and consolidating unaudited balance sheets of
the Parent Guarantor and its consolidated Subsidiaries as at the end of such
quarter, and consolidated and consolidating unaudited statements of income and
expense and statement of cash flows for the Parent Guarantor and its
Subsidiaries for such quarter and for the period from the beginning of the
Fiscal Year to the end of such quarter, all in reasonable detail, fairly
presenting the financial position and results of operation of the Parent
Guarantor and its Subsidiaries as at the date thereof and for such periods,
prepared in accordance with GAAP consistent with the audited Financial
Statements required to be delivered pursuant to Section 7.2(a) (provided that
such statements may omit those footnotes and other GAAP disclosures which are
not required to be included in quarterly interim financial statements). The
Parent Guarantor shall certify by a certificate signed by its chief financial
officer that all such statements have been prepared in accordance with GAAP and
present fairly, subject to normal year-end adjustments, the Parent Guarantor's
and its consolidated Subsidiaries' financial position as at the dates thereof
and its results of operations for the periods then ended.
(d) With each of the audited Financial Statements delivered pursuant
to Section 7.2(a), a certificate of the independent certified public
accountants that examined such statement to the effect that they have reviewed
and are familiar with this Agreement and that, in examining such Financial
Statements, they did not become aware of any fact or condition which then
constituted a Default or Event of Default, except for those, if any, described
in reasonable detail in such certificate.
(e) With each of the annual audited Financial Statements delivered
pursuant to Section 7.2(a), and within fifty-five (55) days after the end of
each fiscal quarter, a certificate of the chief financial officer of the Parent
Guarantor (i) setting forth in reasonable detail the calculations required to
establish that the Loan Parties were in compliance with the covenants set forth
in Section 9.23 through 9.26 during the period covered in such Financial
Statements and as at the end thereof and certifying as to the Leverage Ratio
for such period, (ii) stating that, except as explained in reasonable detail
in such certificate, (A) all of the representations and warranties of the Loan
Parties contained in this Agreement and the other Loan Documents are correct
and complete in all material respects as at the date of such certificate as if
made at such time, except for those that speak
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as of a particular day, (B) each Loan Party is, at the date of such
certificate, in compliance in all material respects with all of its respective
covenants and agreements in this Agreement and the other Loan Documents, (C) no
Default or Event of Default then exists or existed during the period covered by
such Financial Statements, (D) describing and analyzing in reasonable detail
all material trends, changes, and developments in each and all Financial
Statements; and (E) explaining the variances of the figures in the
corresponding budgets and prior Fiscal Year financial statements, and (iii)
setting forth in reasonable detail a summary of all pending suits, proceedings
or counterclaims, including all reserves taken with respect thereto. If such
certificate discloses that a representation or warranty is not correct or
complete in any material respect, or that a covenant has not been complied
with, or that a Default or Event of Default existed or exists, such certificate
shall set forth what action the Borrower has taken or proposes to take with
respect thereto.
(f) No sooner than sixty (60) days prior to, and not later than
eighty-five (85) days after, the beginning of each Fiscal Year, annual
forecasts (to include forecasted consolidated and consolidating balance sheets,
statements of income and expenses and statements of cash flow) for the Parent
Guarantor and its Subsidiaries as at the end of and for each month of such
Fiscal Year.
(g) Promptly after filing with the PBGC and the IRS, a copy of each
annual report or other filing filed with respect to each Plan of the Parent
Guarantor or any of its ERISA Affiliates.
(h) Promptly upon the filing thereof, copies of all reports, if any,
to or other documents filed by the Parent Guarantor or any of its Subsidiaries
with the Securities and Exchange Commission under the Exchange Act, and all
reports, notices, or statements sent or received by the Parent Guarantor or any
of its Subsidiaries to or from the holders of any equity interests of the
Parent Guarantor (other than routine non-material correspondence sent by
shareholders of the Parent Guarantor to the Parent Guarantor) or any such
Subsidiary or of any Funded Debt of the Parent Guarantor or any of its
Subsidiaries registered under the Securities Act of 1933 or to or from the
trustee under any indenture under which the same is issued.
(i) As soon as available, but in any event not later than 15 days
after the Parent Guarantor's receipt thereof, a copy of all management reports
and management letters prepared for the Parent Guarantor by Xxxxx Xxxxxxxx LLP
or any other independent certified public accountants of the Parent Guarantor.
(j) Promptly after their preparation, copies of any and all proxy
statements, financial statements, and reports which the Parent Guarantor makes
available to its shareholders.
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(k) Promptly after filing with the IRS, a copy of each tax return
filed by the Parent Guarantor or by any of its Subsidiaries.
(l) Such additional information as the Agent and/or any Lender may
from time to time reasonably request regarding the financial and business
affairs of the Parent Guarantor or any Subsidiary.
7.3 Notices to the Lenders. Each Loan Party shall notify the Agent and
the Lenders, in writing of the following matters at the following times:
(a) Within one Business Day after a responsible officer of the
Parent Guarantor becomes aware of any Default or Event of Default.
(b) Within one Business Day after a responsible officer of the
Parent Guarantor becomes aware of the assertion by the holder of any capital
stock of the Parent Guarantor or Subsidiary thereof or of any Debt that a
default exists with respect thereto or that the Parent Guarantor or any
Subsidiary thereof is not in compliance with the terms thereof, or the threat
or commencement by such holder of any enforcement action because of such
asserted default or non-compliance.
(c) Within one Business Day after a responsible officer of the
Parent Guarantor becomes aware of any Material Adverse Effect.
(d) Within one Business Day after a responsible officer of the
Parent Guarantor becomes aware of any pending action, suit, proceeding, or
counterclaim by any Person which may have a Material Adverse Effect, or any
pending or threatened investigation by a Governmental Authority, in each case
with respect to any Loan Party or any portion of the Collateral.
(e) Within one Business Day after a responsible officer of the
Parent Guarantor becomes aware of any pending or threatened strike, work
stoppage, unfair labor practice claim, or other labor dispute affecting the
Parent Guarantor or any of its Subsidiaries in a manner which could reasonably
be expected to have a Material Adverse Effect.
(f) Within one Business Day after a responsible officer of the
Parent Guarantor becomes aware of any violation of any law, statute,
regulation, or ordinance of a Governmental Authority affecting the Parent
Guarantor or any Subsidiary which could reasonably be expected to have a
Material Adverse Effect.
(g) Within one Business Day after a responsible officer of the
Parent Guarantor receives any notice of any violation by the Parent Guarantor
or any of its Subsidiaries of any Environmental Law which could reasonably be
expected to have a
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Material Adverse Effect or that any Governmental Authority has asserted that
the Parent Guarantor or any Subsidiary thereof is not in compliance with any
Environmental Law or is investigating the Parent Guarantor's or such
Subsidiary's compliance therewith, and such non-compliance could reasonably be
expected to have a Material Adverse Effect.
(h) Within one Business Day after a responsible officer of the
Parent Guarantor receives any written notice that the Parent Guarantor or any
of its Subsidiaries is or may be liable to any Person as a result of the
Release or threatened Release of any Contaminant or that the Borrower or any
Subsidiary is subject to investigation by any Governmental Authority evaluating
whether any remedial action is needed to respond to the Release or threatened
Release of any Contaminant which, in either case, is reasonably likely to give
rise to liability in excess of $1,000,000.
(i) Within one Business Day after a responsible officer of the
Parent Guarantor receives any written notice of the imposition of any
Environmental Lien against any property of the Parent Guarantor or any of its
Subsidiaries.
(j) Any change in any Loan Party's name, state of incorporation, or
form of organization, trade names under which any Loan Party will sell
Inventory or create Accounts, or to which instruments in payment of Accounts
may be made payable, in each case at least thirty (30) days prior thereto.
(k) Within ten (10) Business Days after a responsible officer of the
Parent Guarantor or any ERISA Affiliate knows or has reason to know, that an
ERISA Event or a prohibited transaction (as defined in Sections 406 of ERISA
and 4975 of the Code) has occurred, and, when known, any action taken or
threatened by the IRS, the DOL or the PBGC with respect thereto.
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within three
(3) Business Days after the filing thereof with the PBGC, the DOL or the IRS,
as applicable, copies of the following: (i) each annual report (form 5500
series), including Schedule B thereto, filed with the PBGC, the DOL or the IRS
with respect to each Plan, (ii) a copy of each funding waiver request filed
with the PBGC, the DOL or the IRS with respect to any Plan and all
communications received by the Parent Guarantor or any ERISA Affiliate from the
PBGC, the DOL or the IRS with respect to such request, and (iii) a copy of each
other filing or notice filed with the PBGC, the DOL or the IRS, with respect to
each Plan of either Borrower or any ERISA Affiliate.
(m) Upon request, copies of each actuarial report for any Plan or
Multi-employer Plan and annual report for any Multi-employer Plan; and within
three (3) Business Days after receipt thereof by the Borrower or any ERISA
Affiliate, copies of the following:
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(i) any notices of the PBGC's intention to terminate a Plan or to have a
trustee appointed to administer such Plan; (ii) any favorable or unfavorable
determination letter from the IRS regarding the qualification of a Plan under
Section 401(a) of the Code; or (iii) any notice from a Multi-employer Plan
regarding the imposition of withdrawal liability.
(n) Within three (3) Business Days after the occurrence thereof: (i)
any changes in the benefits of any existing Plan which increase the Parent
Guarantor's annual costs with respect thereto by an amount in excess of
$1,000,000, or the establishment of any new Plan or the commencement of
contributions to any Plan to which the Parent Guarantor or any ERISA Affiliate
was not previously contributing; or (ii) any failure by the Parent Guarantor or
any ERISA Affiliate to make a required installment or any other required
payment under Section 412 of the Code on or before the due date for such
installment or payment.
(o) Within three (3) Business Days after a responsible officer of
the Parent Guarantor or any ERISA Affiliate knows or has reason to know that
any of the following events has or will occur: (i) a Multi-employer Plan has
been or will be terminated; (ii) the administrator or plan sponsor of a Multi-
employer Plan intends to terminate a Multi-employer Plan; or (iii) the PBGC has
instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multi-employer Plan.
(p) Without limiting Section 6.12, within one Business Day after a
responsible officer of the Parent Guarantor becomes aware of any (i) failure by
a Loan Party to comply with the terms of any Material License Agreement, (ii)
failure of a Material License Agreement to be in full force and effect and
(iii) any material modification or amendment to any Material License Agreement.
Each notice given under this Section shall describe the subject
matter thereof in reasonable detail, and shall set forth the action that the
Parent Guarantor, its Subsidiary, or any ERISA Affiliate, as applicable, has
taken or proposes to take, if any, with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
Each Loan Party warrants and represents to the Agent and the Lenders that
except as hereafter disclosed to and accepted by the Agent and the Majority
Lenders in writing:
8.1 Authorization, Validity, and Enforceability of this Agreement and the
Loan Documents. Each Loan Party has the corporate power and authority to
execute, deliver and perform this Agreement and the other Loan Documents, to
incur the Obligations, and to grant
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to the Agent Liens upon and security interests in the Collateral. Each Loan
Party has taken all necessary corporate action (including, without limitation,
obtaining approval of its stockholders if necessary) to authorize its
execution, delivery, and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and the other Loan Documents
have been duly executed and delivered by it, and constitute the legal, valid
and binding obligations of it, enforceable against it in accordance with their
respective terms without defense, setoff or counterclaim, except as
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally or
by general principles of equity. The Loan Party's execution, delivery, and
performance of this Agreement and the other Loan Documents, and the incurrence
of any Debt and the granting of the Liens hereunder and under the other Loan
Documents, do not and will not conflict with, or constitute a violation or
breach of, or constitute a default under, or result in the creation or
imposition of any Lien (other than the Agent's Lien) upon the property of the
Loan Party or any of its Subsidiaries by reason of the terms of (a) any
contract, mortgage, Lien, lease, agreement, indenture, or instrument to which
the Loan Party is or any of its Subsidiaries is a party or which is binding
upon it, including under the Senior Notes, the Subordinated Debt or any
indenture, loan agreement, note purchase agreement or other document related
thereto, (b) any Requirement of Law applicable to the Loan Party or any of its
Subsidiaries, or (c) the certificate or articles of incorporation or by-laws of
the Loan Parties or any of its Subsidiaries.
8.2 Validity and Priority of Security Interest. The provisions of this
Agreement, the Mortgage(s), and the other Loan Documents create legal and valid
Liens on all the Collateral in favor of the Agent, for the ratable benefit of
the Agent and the Lenders, and such Liens constitute perfected and continuing
Liens on all the Collateral, having priority over all other Liens on the
Collateral (except for Liens described in clause (a), (d), (e), (h) or (j) of
the definition of Permitted Liens, securing all the Obligations, and
enforceable against the Loan Party and all third parties.
8.3 Organization and Qualification. Each Loan Party (a) is duly
incorporated and organized and validly existing in good standing under the laws
of the state of its incorporation, (b) is qualified to do business as a foreign
corporation and is in good standing in the jurisdictions set forth on Schedule
8.3 which, except as set forth in Schedule 8.3, are the only jurisdictions in
which failure to so qualify or be in good standing could reasonably be expected
to have a material adverse effect on such Loan Party's business, operations,
prospects, property or condition (financial or otherwise) or on the value or
collectibility of any Collateral and (c) has all requisite power and authority
to conduct its business and to own its property.
8.4 Corporate Name; Prior Transactions. No Loan Party has, during the
past five (5) years, been known by or used any other corporate or fictitious
name, or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person,
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or acquired any of its property outside of the ordinary course of business,
except in each case as set forth on Schedule 8.4.
8.5 Subsidiaries and Affiliates. Schedule 8.5 is a correct and complete
list of the name and relationship (including the ownership of Capital Stock
with respect thereto) to the Parent Guarantor of each and all of its
Subsidiaries and other Affiliates. Each Subsidiary is (a) duly incorporated
and organized and validly existing in good standing under the laws of its state
of incorporation set forth on Schedule 8.3, and (b), except as set forth in
Schedule 8.3, qualified to do business as a foreign corporation and in good
standing in each jurisdiction in which the failure to so qualify or be in good
standing could reasonably be expected to have a material adverse effect on any
such Subsidiary's business, operations, prospects, property, or condition
(financial or otherwise) or on the value or the collectibility of any
Collateral and (c) has all requisite power and authority to conduct its
business and own its property.
8.6 Financial Statements and Projections. (a) The Parent Guarantor has
delivered to the Agent and the Lenders the audited balance sheet and related
statements of income, retained earnings, cash flows, and changes in
stockholders equity for the Parent Guarantor and its consolidated Subsidiaries
as of December 31, 1998, and for the Fiscal Year then ended, accompanied by the
report thereon of the Parent Guarantor's independent certified public
accountants, Xxxxx Xxxxxxxx LLP. The Parent Guarantor has also delivered to
the Agent and the Lenders the unaudited balance sheet and related statements of
income and cash flows for the Parent Guarantor and its consolidated
Subsidiaries as of September 30, 1998. Such financial statements are attached
hereto as Exhibit C. All such financial statements have been prepared in
accordance with GAAP and present accurately and fairly the financial position
of the Parent Guarantor and its consolidated Subsidiaries as at the dates
thereof and their results of operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as required
herein represent the Parent Guarantor's best estimate of the future financial
performance of the Parent Guarantor and its consolidated Subsidiaries for the
periods set forth therein. The Latest Projections have been prepared on the
basis of the assumptions set forth therein, which the Parent Guarantor believes
are fair and reasonable in light of current and reasonably foreseeable business
conditions at the time submitted to the Lender.
8.7 Capitalization. The Parent Guarantor's authorized capital stock
consists of (i) 40,000,000 shares of common stock, par value $.01 per share, of
which 9,258,957 shares are validly issued and outstanding, fully paid and non-
assessable and not less than 47% of which outstanding shares are owned
beneficially and of record, in the aggregate, by the Principals, and (ii)
5,000,000 shares of preferred stock, par value $.01 per share, of which none
are issued and outstanding. The Parent Guarantor owns directly or indirectly
100% of the issued and outstanding Capital Stock of each other Loan Party.
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8.8 Solvency. Each Loan Party is Solvent prior to and after giving
effect to the making of the Revolving Loans to be made on the Closing Date and
on the date of each Loan thereafter and the issuance of the Letters of Credit
to be issued on the Closing Date and on any date thereafter, and shall remain
Solvent during the term of this Agreement.
8.9 Debt. After giving effect to the making of the Revolving Loans to be
made on the Closing Date, the Loan Party and its Subsidiaries have no Debt,
except (a) the Obligations, (b) the Senior Notes, the Subordinated Debt and the
other Debt described on Schedule 8.9, and (c) trade payables and other
contractual obligations arising in the ordinary course of business.
8.10 Distributions. Since December 31, 1998, no Distribution has been
declared, paid, or made upon or in respect of any Capital Stock or other
securities of the Parent Guarantor.
8.11 Title to Property. Each Loan Party has good and marketable title in
fee simple to its real property listed in Schedule 8.12 hereto, and each Loan
Party has good, indefeasible, and merchantable title to all of its other
property (including, without limitation, the assets reflected on the December
31, 1998 Financial Statements delivered to the Agent and the Lenders, except as
disposed of in the ordinary course of business since the date thereof), free of
all Liens except Permitted Liens.
8.12 Real Estate; Leases. Schedule 8.12 sets forth, as of the Closing
Date, a correct and complete list of all Real Estate owned by the Loan Party or
any of its Subsidiaries, all leases and subleases of real or personal property
by the Loan Party or its Subsidiaries as lessee or sublessee (other than leases
of personal property as to which the Loan Party is lessee or sublessee for
which the value of such personal property is less than $100,000), and all
leases and subleases of real or personal property by the Loan Party or its
Subsidiaries as lessor, lessee, sublessor or sublessee. Each of such leases
and subleases is valid and enforceable in accordance with its terms and is in
full force and effect, and, to the best of such Loan Party's knowledge, no
default by any party to any such lease or sublease exists.
8.13 Proprietary Rights. Schedule 8.13 sets forth a correct and complete
list of all of the Loan Parties' material Proprietary Rights. None of the
material Proprietary Rights is subject to any licensing agreement or similar
arrangement except as set forth on Schedule 8.13. To the best of any Loan
Party's knowledge, none of the Proprietary Rights infringes on or conflicts
with any other Person's property, and no other Person's property infringes on
or conflicts with the Proprietary Rights. The Proprietary Rights described on
Schedule 8.13 constitute all of the property of such type necessary to the
current and anticipated future conduct of the each Loan Party's business.
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8.14 Trade Names and Terms of Sale. All trade names or styles under which
the Loan Party or any of its Subsidiaries will sell Inventory or create
Accounts, or to which instruments in payment of Accounts may be made payable,
are listed on Schedule 8.14.
8.15 Litigation. Except as set forth on Schedule 8.15, there is no
pending or (to the best of any Loan Party's knowledge) threatened, action,
suit, proceeding, or counterclaim by any Person, or investigation by any
Governmental Authority which could reasonably be expected to cause a Material
Adverse Effect.
8.16 Restrictive Agreements. Neither the Loan Party nor any of its
Subsidiaries is a party to any contract or agreement, or subject to any charter
or other corporate restriction, which affects its ability to execute, deliver,
and perform the Loan Documents and repay the Obligations or which materially
and adversely affects or, insofar as any Loan Party can reasonably foresee,
could reasonably be expected to materially and adversely affect, the property,
business, operations, or condition (financial or otherwise) of the Loan Party
or such Subsidiary, or would otherwise in any respect cause a Material Adverse
Effect.
8.17 Labor Disputes. Except as set forth on Schedule 8.17, (a) there is
no collective bargaining agreement or other labor contract covering employees
of the Loan Party or any of its Subsidiaries, (b) no such collective bargaining
agreement or other labor contract is scheduled to expire during the term of
this Agreement, (c) to the best of such Loan Party's knowledge, no union or
other labor organization is seeking to organize, or to be recognized as, a
collective bargaining unit of employees of the Loan Party or any of its
Subsidiaries or for any similar purpose, and (d) there is no pending or (to the
best of any Loan Party's knowledge) threatened, strike, work stoppage, material
unfair labor practice claim, or other material labor dispute against or
affecting the Loan Party or its Subsidiaries or their employees.
8.18 Environmental Laws. Except as otherwise disclosed on Schedule 8.18:
(a) The Loan Party and its Subsidiaries have complied in all
material respects with all Environmental Laws applicable to its Premises and
business, and neither the Loan Party nor any Subsidiary nor, to the best of
such Loan Party's knowledge, any of its present Premises or operations, nor, to
the best of such Loan Party's knowledge, its past property or operations, is
subject to any enforcement order from or liability agreement with any
Governmental Authority or private Person respecting (i) compliance with any
Environmental Law or (ii) any potential liabilities and costs or remedial
action arising from the Release or threatened Release of a Contaminant.
(b) The Loan Party and its Subsidiaries have obtained all permits
necessary for their current operations under Environmental Laws, and all such
permits are
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in good standing and the Loan Party and its Subsidiaries are in material
compliance with all terms and conditions of such permits.
(c) Neither the Loan Party nor any of its Subsidiaries, nor, to the
best of any Loan Party's knowledge, any of its predecessors in interest, has in
violation of applicable law stored, treated or disposed of any hazardous waste
on any Premises, as defined pursuant to 40 CFR Part 261 or any equivalent
Environmental Law.
(d) Neither the Loan Party nor any of its Subsidiaries has received
any summons, complaint, order or similar written notice that it is not
currently in compliance with, or that any Governmental Authority is
investigating its compliance with, any Environmental Laws or that it is or may
be liable to any other Person as a result of a Release or threatened Release of
a Contaminant.
(e) To the best of such Loan Party's knowledge, none of the present
or past operations of the Loan Party and its Subsidiaries is the subject of any
investigation by any Governmental Authority evaluating whether any remedial
action is needed to respond to a Release or threatened Release of a
Contaminant.
(f) To the best of any Loan Party's knowledge, there is not now, nor
has there ever been, on or in the Premises:
(1) any underground storage tanks or surface impoundments,
(2) any asbestos-containing material in a friable condition, or
(3) any polychlorinated biphenyls (PCB's) used in hydraulic
oils, electrical transformers or other equipment.
(g) Neither the Loan Party nor any of its Subsidiaries has filed any
notice under any requirement of Environmental Law reporting a spill or
accidental and unpermitted release or discharge of a Contaminant into the
environment.
(h) Neither the Loan Party nor any of its Subsidiaries has entered
into any negotiations or settlement agreements with any Person (including,
without limitation, the prior owner of its property) imposing material
obligations or liabilities on the Loan Party or any of its Subsidiaries with
respect to any remedial action in response to the Release of a Contaminant or
environmentally related claim (other than customary indemnities under leases
with respect to which no claim has arisen thereunder).
(i) None of the products manufactured, distributed or sold by the
Loan Party or any of its Subsidiaries contain asbestos containing material.
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(j) No Environmental Lien has attached to any Premises of the Loan
Party or any of its Subsidiaries.
8.19 No Violation of Law. Neither the Loan Party nor any of its
Subsidiaries is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it which violation could reasonably be
expected to have a Material Adverse Effect.
8.20 No Default. Neither the Loan Party nor any of its Subsidiaries is in
default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which the Loan Party or such Subsidiary is a party
or by which it is bound, which default could reasonably be expected to have a
Material Adverse Effect.
8.21 ERISA Compliance. Except as specifically disclosed in Schedule 8.21:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best knowledge of any
Loan Party, nothing has occurred which would cause the loss of such
qualification. The Loan Party and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of any Loan
Party, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Loan Party nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan; and
(v) neither the Loan Party nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
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8.22 Taxes. The Loan Party and its Subsidiaries have filed all federal
and other tax returns and reports required to be filed, and have paid all
federal and other taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets otherwise due
and payable.
8.23 Regulated Entities. None of the Borrower, any Person controlling the
Loan Party, or any Subsidiary of it, is an "Investment Company" within the
meaning of the Investment Company Act of 1940. No Loan Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code or law,
or any other federal or state statute or regulation limiting its ability to
incur indebtedness.
8.24 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for working capital purposes. Neither the Loan Party nor any
Subsidiary of it is engaged in the business of purchasing or selling Margin
Stock or extending credit for the purpose of purchasing or carrying Margin
Stock.
8.25 Copyrights, Patents, Trademarks and Licenses. Each Loan Party owns
or is licensed or otherwise has the right to use all of the patents,
trademarks, service marks, trade names, copyrights, contractual franchises,
authorizations and other rights that are reasonably necessary for the operation
of its businesses, without conflict with the rights of any other Person (but
subject to the limitations contained in the Material License Agreements). To
the best knowledge of any Loan Party, no Proprietary Rights, and no slogan or
other advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by the Loan Party or
any Subsidiary infringes upon any valid rights held by any other Person. No
meritorious claim or litigation regarding any of the foregoing is pending or,
to the best of such Loan Party's knowledge, threatened, and no patent,
invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of any Loan Party,
proposed, which, in either case, could reasonably be expected to have a
Material Adverse Effect.
8.26 No Material Adverse Change. No Material Adverse Effect has occurred
since the date of the Financial Statements delivered to the Lender. On the
basis of a comprehensive review and assessment undertaken by the Parent
Guarantor of the Loan Parties' computer applications and inquiry made of the
Loan Parties' material suppliers, vendors and customers, each Loan Party
reasonably believes that the "Year 2000 problem" (that is, the risk that
computer applications used by any person may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999) will not result in a Material Adverse Effect.
8.27 Full Disclosure. None of the representations or warranties made by
the Loan Party or any Subsidiary of it in the Loan Documents as of the date
such representations and
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warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of the Loan
Party or any Subsidiary of it in connection with the Loan Documents (including
the offering and disclosure materials delivered by or on behalf of the Loan
Party to the Lenders prior to the Closing Date), contains any untrue statement
of a material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or
delivered.
8.28 Material Agreements. Schedule 8.28 hereto sets forth all material
agreements and contracts to which the Loan Party or any of its Subsidiaries is
a party or is bound as of the date hereof.
8.29 Bank Accounts. Schedule 8.29 contains a complete and accurate list
of all bank accounts maintained by the Loan Party or any of its Subsidiaries
with any bank or other financial institution.
8.30 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, the
Loan Party or any of its Subsidiaries of this Agreement or any other Loan
Document.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Loan Party covenants to the Agent and each Lender that, so long
as any of the Obligations remain outstanding or this Agreement is in effect:
9.1 Taxes and Other Obligations. The Loan Party shall, and shall cause
each of its Subsidiaries to, (a) file when due (after giving effect to
extensions obtained in accordance with applicable law) all tax returns and
other reports which it is required to file; (b) pay, or provide for the
payment, when due, of all taxes, fees, assessments and other governmental
charges against it or upon its property, income and franchises, make all
required withholding and other tax deposits, and establish adequate reserves
for the payment of all such items, and provide to the Agent and the Lenders,
upon request, satisfactory evidence of its timely compliance with the
foregoing; and (c) pay when due all Debt owed by it and all claims of
materialmen, mechanics, carriers, warehousemen, landlords, processors and other
like Persons, and all other Debt owed by it and perform and discharge in a
timely manner all other obligations undertaken by it; provided, however, so
long as the Loan Party has notified the Agent in writing, neither the Loan
Party nor any of its Subsidiaries need pay any tax, fee, assessment, or
governmental charge, or claims or Debt described in clause (b) or (c), that (i)
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it is contesting in good faith by appropriate proceedings diligently pursued,
(ii) the Loan Party or its Subsidiary, as the case may be, has established
proper reserves for as provided in GAAP, and (iii) no Lien (other than a
Permitted Lien) results from such non-payment.
9.2 Corporate Existence and Good Standing. Except as permitted in
Section 9.9, the Loan Party shall, and shall cause each of its Subsidiaries to,
maintain its corporate existence and its qualification and good standing in all
jurisdictions in which the failure to maintain such existence and qualification
or good standing could reasonably be expected to have a Material Adverse
Effect.
9.3 Compliance with Law and Agreements; Maintenance of Licenses. The
Loan Party shall comply, and shall cause each Subsidiary to comply, in all
material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act). The Loan Party shall, and shall cause each of its Subsidiaries
to, obtain and maintain all licenses, permits, franchises, and governmental
authorizations necessary to own its property and to conduct its business as
conducted on the Closing Date, the failure to obtain or loss of which would
reasonably be expected to result in a Material Adverse Effect. No Loan Party
shall modify, amend or alter its certificate or article of incorporation other
than in a manner which does not adversely affect the rights of the Lenders or
the Agent.
9.4 Maintenance of Property. The Loan Party shall, and shall cause each
of its Subsidiaries to, maintain all of its property necessary and useful in
the conduct of its business, in good operating condition and repair, ordinary
wear and tear excepted.
9.5 Insurance. (a) The Loan Party shall maintain, and shall cause each
of its Subsidiaries to maintain, with financially sound and reputable insurers
having a rating of at least A-VII or better by Best Rating Guide, insurance
against loss or damage by fire with extended coverage; theft, burglary,
pilferage and loss in transit; public liability and third party property
damage; larceny, embezzlement or other criminal liability; business
interruption; public liability and third party property damage; and such other
hazards or of such other types as is customary for Persons engaged in the same
or similar business, as the Agent, in its discretion, or acting at the
direction of the Majority Lenders, shall specify, in amounts, and under
policies reasonably acceptable to the Agent and the Majority Lenders (it being
agreed that the amounts of insurance now being maintained by the Loan Parties,
as described on Schedule 9.5 hereof, is acceptable to the Agent and the
Majority Lenders). Without limiting the foregoing, the Loan Party shall also
maintain, and shall cause each of its Subsidiaries to maintain, flood
insurance, in the event of a designation of the area in which any Real Estate
covered by the Mortgages and any of the Equipment and Inventory located on such
Real Estate is located as "flood prone" or a "flood risk area," (hereinafter
"SFHA") as defined by the Flood Disaster Protection Act of 1973, in an amount
to be reasonably determined by the Agent, and shall comply with the additional
requirements of
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the National Flood Insurance Program as set forth in said Act. The Borrower
shall also maintain flood insurance for its Inventory and Equipment which is,
at any time, located in a SFHA.
(b) The Loan Party shall cause the Agent, for the ratable benefit of
the Agent and the Lenders, to be named in each such policy as secured party or
mortgagee and sole loss payee or additional insured, in a manner acceptable to
the Agent. Each policy of insurance shall contain a clause or endorsement
requiring the insurer to give not less than thirty (30) days' prior written
notice to the Agent in the event of cancellation of the policy for any reason
whatsoever and a clause or endorsement stating that the interest of the Agent
shall not be impaired or invalidated by any act or neglect of the Loan Party or
any of its Subsidiaries or the owner of any premises for purposes more
hazardous than are permitted by such policy. All premiums for such insurance
shall be paid by the Borrower when due, and certificates of insurance and, if
requested by the Agent or any Lender, photocopies of the policies, shall be
delivered to the Agent, in each case in sufficient quantity for distribution by
the Agent to each of the Lenders. If the Loan Party fails to procure such
insurance or to pay the premiums therefor when due, the Agent may, and at the
direction of the Majority Lenders shall, do so from the proceeds of Revolving
Loans.
(c) The Loan Party shall promptly notify the Agent and the Lenders
of any loss, damage, or destruction to the Collateral arising from its use,
whether or not covered by insurance. The Agent is hereby authorized to collect
all insurance proceeds directly, and to apply or remit them as follows:
(i) So long as there does not then exist any Default or Event
of Default, with respect to insurance proceeds relating to property other than
Collateral, after deducting from such proceeds the reasonable expenses, if any,
incurred by the Agent in the collection or handling thereof, the Agent shall
promptly remit to the Loan Party such proceeds.
(ii) With respect to insurance proceeds relating to Collateral
other than Fixed Assets, or if a Default or Event of Default then exists, after
deducting from such proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall apply such
proceeds, ratably, to the reduction of the Obligations in the order provided
for in Section 4.8.
(iii) With respect to insurance proceeds relating to
Collateral consisting of Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or
handling thereof, the Agent shall apply such proceeds to the permanent
reduction of the Revolving Loans Commitment and the payment of the Obligations
in the order provided for in Section 4.8, or at the option of the Majority
Lenders or the Agent, may permit or require the Borrower to use such money, or
any part
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thereof, to replace, repair, restore or rebuild the relevant Fixed Assets in a
diligent and expeditious manner with materials and workmanship of substantially
the same quality as existed before the loss, damage or destruction; provided,
however, that so long as there does not then exist any Default or Event of
Default, the Borrower shall be permitted to use insurance proceeds relating to
Collateral consisting of Fixed Assets in an aggregate amount not to exceed
$1,000,000 with respect to any occurrence, to replace, repair, restore or
rebuild the relevant Fixed Assets, in the manner set forth in this sentence;
and provided, further, that the Loan Party first (i) provides the Agent and the
Majority Lenders with plans and specifications for any such repair or
restoration, if any, which shall be reasonably satisfactory to the Agent and
the Majority Lenders and (ii) demonstrates to the reasonable satisfaction of
the Agent and the Majority Lenders that the funds available to it (taking into
account the insurance proceeds that will be available) will be sufficient to
complete such project in the manner provided therein.
9.6 Condemnation. (a) The Loan Party shall, within one Business Day
after a responsible officer of the Parent Guarantor becomes aware of the
institution of any proceeding for the condemnation or other taking of any of
its property, notify the Agent of the pendency of such proceeding, and agrees
that the Agent may participate in any such proceeding, and the Loan Party from
time to time will deliver to the Agent all instruments reasonably requested by
the Agent to permit such participation.
(b) The Agent is hereby authorized to collect the proceeds of any
condemnation claim or award directly, and to apply or remit them as follows:
(i) So long as there does not then exist any Default or Event of
Default, with respect to condemnation proceeds relating to property other than
Collateral, after deducting from such proceeds the reasonable expenses, if any,
incurred by the Agent in the collection or handling thereof, the Agent shall
remit to the Borrower such proceeds.
(ii) With respect to condemnation proceeds relating to Collateral
other than Fixed Assets, or if a Default or Event of Default then exists, after
deducting from such proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall apply such
proceeds, ratably, to the reduction of the Obligations in the order provided
for in Section 4.8.
(iii) With respect to condemnation proceeds relating to Collateral
consisting of Fixed Assets, after deducting from such proceeds the reasonable
expenses, if any, incurred by the Agent in the collection or handling thereof,
the Agent shall apply such proceeds to the permanent reduction of the Revolving
Loan Commitment and the payment of the Obligations in the order provided for in
Section 4.8, or at the option of the Majority Lenders or the Agent, may permit
or require the Loan Party to use such money, or any part thereof, to replace,
repair, restore or rebuild the relevant Fixed Assets in a diligent and
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expeditious manner with materials and workmanship of substantially the same
quality as existed before the condemnation; provided, however, that so long as
there does not then exist any Default or Event of Default, the Borrower shall
be permitted to use proceeds relating to Collateral consisting of Fixed Assets
in an aggregate amount not to exceed $1,000,000 with respect to any occurrence,
to replace, repair, restore or rebuild the relevant Fixed Assets, in the manner
set forth in this sentence; and provided, further, that plans and
specifications for any such repair or restoration, if any, shall be reasonably
satisfactory to the Agent and the Majority Lenders.
9.7 Environmental Laws. (a) The Loan Party shall, and shall cause each
of its Subsidiaries to, conduct its business in compliance in all material
respects with all Environmental Laws applicable to it, including, without
limitation, those relating to the generation, handling, use, storage, and
disposal of any Contaminant. The Loan Party shall, and shall cause each of its
Subsidiaries to, take prompt and appropriate action to respond to any non-
compliance with Environmental Laws and shall regularly report to the Agent on
such response.
(b) Without limiting the generality of the foregoing, the Loan Party
shall submit to the Agent and the Lenders annually, commencing on the first
Anniversary Date, and on each Anniversary Date thereafter, an update of the
status of each environmental compliance or liability issue. The Agent or any
Lender may request copies of technical reports prepared by the Loan Party and
its communications with any Governmental Authority to determine whether the
Borrower or any of its Subsidiaries is proceeding reasonably to correct, cure
or contest in good faith any alleged non-compliance or environmental liability.
Subject to any express limitations thereon contained in the terms of a lease
for Premises not owned by a Loan Party, the Loan Party shall, at the Agent's or
the Majority Lenders' request and at the Borrower's expense, (a) retain an
independent environmental engineer acceptable to the Agent to evaluate the
site, including tests if appropriate, where the non-compliance or alleged non-
compliance with Environmental Laws has occurred and prepare and deliver to the
Agent, in sufficient quantity for distribution by the Agent to the Lenders, a
report setting forth the results of such evaluation, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof, and (b) provide to the Agent and the Lenders a supplemental
report of such engineer whenever the scope of the environmental problems, or
the response thereto or the estimated costs thereof, shall change in any
material respect.
9.8 Compliance with ERISA. The Loan Party shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) make all required contributions to any
Plan subject to Section 412 of the Code; (d) not engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any
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Plan; and (e) not engage in a transaction that could be subject to Section 4069
or 4212(c) of ERISA.
9.9 Mergers, Consolidations or Sales. Neither the Loan Party nor any of
its Subsidiaries shall enter into any transaction of merger, reorganization, or
consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or
any part of its property, or wind up, liquidate or dissolve, or agree to do any
of the foregoing, except (i) for sales of Inventory in the ordinary course of
its business, (ii) for sales or other dispositions of Equipment in the ordinary
course of business that are obsolete or no longer useable by Loan Party in its
business as permitted by Section 6.11 , (iii) a Subsidiary Guarantor may merge,
reorganize or consolidate with or into, or wind-up, liquidate or dissolve in a
transaction whereby all of the assets of such Subsidiary Guarantor are
transferred to, another Subsidiary Guarantor which is wholly-owned by the
Parent Guarantor or the Borrower so long as the Borrower is the continuing or
surviving Person, (iv) a Borrower may merge, reorganize or consolidate into
another, or transfer all of its assets and liabilities to another, Borrower,
(v) a Loan Party may transfer property to make an investment of the type
described in clauses (a) through (n) of the definition of Restricted Investment
as and to the extent permitted therein or to make Distributions permitted under
Section 9.10 below, and (vi) a Loan Party may dispose of property in a bona
fide arms' length transaction for cash consideration at fair market value so
long as the aggregate amount of consideration for all dispositions from and
including the date hereof does not exceed $5,000,000 and on the last day of the
quarter immediately preceding the date of any such transfer, and after giving
proforma effect to any such transfer, the Parent Guarantor was in compliance by
more than 120% of the consolidated Net Worth required under Section 9.25 and by
more than 120% of the Fixed Charge Coverage Ratio required under Section 9.26;
provided, however, the Parent Guarantor shall give the Agent not less than ten
(10) Business Days prior written notice of any such transaction described in
clauses (iii) through (vi) above setting forth the terms of and parties to such
transaction in reasonable detail, and certifying that it complies with the
requirements of this Section, and no such transaction described in clauses (ii)
through (vi) above shall be permitted if after giving effect thereto a Material
Adverse Effect could reasonably be expected to result therefrom or any other
Default or Event of Default has occurred and is continuing or would result
therefrom; and provided, further, that, in the case of any such transaction
described in clause (iii) or (iv) above, the applicable continuing, surviving
or transferee Person (the "Successor") shall deliver not less than ten (10)
Business Days prior to the consummation of such transaction an agreement in
form and substance satisfactory to the Agent whereby the Successor agrees to
assume and be bound by all of the other Person's obligations under this
Agreement and all other Loan Documents, an opinion of counsel reasonably
satisfactory to the Agent with respect to such agreement, the continued
perfection of all Liens granted hereunder and under the other Loan Documents to
the Agent in all Collateral which is the subject of such transfer and as to all
other matters reasonably requested by the Agent, and such other documents and
take such other actions as the Agent or the Majority Lenders may reasonably
request. Without limiting the foregoing, the Parent Guarantor shall at all
times
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own, directly or indirectly, 100% of the issued and outstanding Capital Stock
of each other Loan Party (other than Fox Athletic LLC or any other Person which
is permitted to become a Subsidiary after the date hereof pursuant to Section
9.21), and no Loan Party shall dispose of any interest in any Capital Stock of
any other Loan Party held by it.
9.10 Distributions; Capital Change; Restricted Investments. Neither the
Loan Party nor any of its Subsidiaries shall (i) directly or indirectly declare
or make, or incur any liability to make, any Distribution, except Distributions
to the Borrower by its Subsidiaries and, so long as no Default or Event of
Default has occurred and is continuing or would result therefrom, (y)
Distributions to the Parent Guarantor to make scheduled payments of interest
on the Senior Notes and scheduled payments of principal and interest on the
Subordinated Debt, and (z) Distributions by the Parent Guarantor constituting
up to 100% of the net proceeds raised from the sale of additional common
Capital Stock of the Parent Guarantor to redeem (in whole or in part) the
Senior Notes, and Distributions of additional common Capital Stock of the
Parent Guarantor to make an acquisition of the property or Capital Stock of any
other Person, and Distributions constituting up to 75% of the net proceeds
raised from the sale of common Capital Stock of the Parent Guarantor to make an
acquisition of the property or Capital Stock of any other Person, so long as in
each such case no Material Adverse Effect could reasonably be expected to
result therefrom and no Default or Event of Default has occurred and is
continuing or would result therefrom (and the Agent and the Majority Lender
will not unreasonably withhold their consent to the creation of a Subsidiary in
connection therewith if all of the requirements of Section 6.2(d) will be
complied with), (ii) make any change in its capital structure which could have
a Material Adverse Effect or (iii) make any Restricted Investment.
9.11 Transactions Affecting Collateral or Obligations. Neither the Loan
Party nor any of its Subsidiaries shall enter into any transaction which would
be reasonably expected to have a Material Adverse Effect.
9.12 Guaranties. Neither the Loan Party nor any of its Subsidiaries shall
make, issue, or become liable on any Guaranty, except Guaranties of the
Obligations in favor of the Agent and Guaranties of Debt permitted as described
in clause (c) or (g) of Section 9.13.
9.13 Debt. Neither the Loan Party nor any of its Subsidiaries shall incur
or maintain any Debt, other than: (a) the Obligations; (b) trade payables and
contractual obligations to suppliers and customers incurred in the ordinary
course of business; (c) the Senior Notes, the Subordinated Debt and other Debt
existing on the Closing Date and reflected in Schedule 8.9 and refinancings,
renewals and extensions of the Senior Notes, the Subordinated Debt and such
other Debt that have been notified to the Agent not less than ten (10) Business
Days prior to the consummation thereof and are on terms and conditions
(including interest rate, principal amortization and term, and, in the case of
the Subordinated Debt, subordination) not less favorable to the Loan Parties
and the Lenders than the terms
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thereof when initially issued; (d) intercompany Debt permitted by clauses (g),
(h) and (i) of the definition of Restricted Investment; (e) Debt consisting of
interest rate Swap Agreements entered into the ordinary course of business with
a Lender; (f) Debt in a principal amount not to exceed $3,000,000 outstanding
at any time owing to, and secured by Liens in favor of, lessors or vendors of
Equipment for the Loan Parties, or financial institutions designated by a
lessor or vendor, exclusive of any Loan Party or any Affiliate thereof, upon
property constituting fixed or capital assets acquired by a Loan Party in
compliance with Section 9.23 hereof; provided, that (i) any such Lien secures
Debt not in excess of the acquisition cost of the item of property subject
thereto, and (ii) such Lien does not extend to or cover any item of property
other than such property; (g) additional Debt not to exceed at any time
outstanding the Aggregate Additional Debt and Investment Basket Amount; and (h)
Debt with respect to orders or judgments for the payment of money the amount of
which would not result in an Event of Default under Section 11.1 hereof.
9.14 Prepayment. Neither the Loan Party nor any of its Subsidiaries shall
voluntarily prepay any Debt, except the Obligations in accordance with the
terms of this Agreement or a refinancing of Debt permitted under Section
9.13(c). Without limiting the foregoing, the Loan Party will not, and it will
not permit any of its Subsidiaries to, (a) make or offer to make any voluntary
or optional principal payments with respect to the Senior Notes or Subordinated
Debt, (b) redeem or offer to redeem any of the Senior Notes or Subordinated
Debt, or (c) deposit any funds intended to discharge or defease any or all of
the Senior Notes or Subordinated Debt. Neither the terms of the Senior Notes
nor the Subordinated Debt shall be amended or modified in any manner without
the prior written consent of the Required Lenders. Notwithstanding the
foregoing, so long as no Default or Event of Default has occurred, is
continuing or could result therefrom, the Parent Guarantor shall be permitted
to prepay the Senior Notes with the net proceeds of common Capital Stock issued
by the Parent Guarantor.
9.15 Transactions with Affiliates. Except for loans or advances to, or
other investments in an Affiliate to the extent (i) existing on the date hereof
and listed on Schedule 8.5 and (ii) permitted to be incurred from and after the
Closing Date by clause (m) of the definition of Restricted Investment and
except as set forth below, neither the Loan Party nor any of its Subsidiaries
shall, sell, transfer, distribute, or pay any money or property, including, but
not limited to, any fees or expenses of any nature (including, but not limited
to, any fees or expenses for management services), to any Affiliate, or lend
or advance money or property to any Affiliate, or invest in (by capital
contribution or otherwise) or purchase or repurchase any stock or indebtedness,
or any property, of any Affiliate, or become liable on any Guaranty of the
indebtedness, dividends, or other obligations of any Affiliate.
Notwithstanding the foregoing, the Loan Party and its Subsidiaries may engage
in transactions with Affiliates in the ordinary course of business consistent
with past practices, in amounts and upon terms fully disclosed to the Agent and
the Lenders, and no
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less favorable to the Loan Party and its Subsidiaries than would be obtained in
a comparable arm's-length transaction with a third party who is not an
Affiliate.
9.16 Investment Banking and Finder's Fees. Neither the Loan Party nor any
of its Subsidiaries shall pay or agree to pay, or reimburse any other party
with respect to, any investment banking or similar or related fee,
underwriter's fee, finder's fee, or broker's fee to any Person in connection
with this Agreement. The Loan Party shall defend and indemnify the Agent and
the Lenders against and hold them harmless from all claims of any Person that
the Loan Party is obligated to pay for any such fees, and all costs and
expenses (including without limitation, attorneys' fees) incurred by the Agent
and/or any Lender in connection therewith.
9.17 [Intentionally Omitted].
9.18 Business Conducted. The Loan Party shall not and shall not permit
any of its Subsidiaries to, engage directly or indirectly, in any line of
business other than the businesses in which the Loan Party is engaged on the
Closing Date, and businesses reasonably incidental thereto.
9.19 Liens. Neither the Loan Party nor any of its Subsidiaries shall
create, incur, assume, or permit to exist any Lien on any property or other
assets (tangible or intangible, real or personal) now owned or hereafter
acquired by any of them, except Permitted Liens.
9.20 Sale and Leaseback Transactions. Neither the Loan Party nor any of
its Subsidiaries shall, directly or indirectly, enter into any arrangement with
any Person providing for the Loan Party or such Subsidiary to lease or rent
property that the Loan Party or such Subsidiary has sold or will sell or
otherwise transfer to such Person.
9.21 New Subsidiaries. Except for Fox Athletic LLC and the proposed joint
venture described on Schedule 8.5 which may become a Subsidiary, the Loan Party
shall not, directly or indirectly, organize, create, acquire or permit to exist
any Subsidiary other than those listed on Schedule 8.5.
9.22 Fiscal Year. The Loan Party shall not change its Fiscal Year.
9.23 Capital Expenditures. Neither the Loan Party nor any of its
Subsidiaries shall make or incur any Capital Expenditure if, after giving
effect thereto, the aggregate amount of all Capital Expenditures by the Parent
Guarantor and its Subsidiaries on a consolidated basis during any Fiscal Year
would exceed the amount set forth below for such Fiscal Year.
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Fiscal Year Ending Permitted Capital Expenditures
------------------ ------------------------------
12/31/99 $2,250,000
12/31/00 2,500,000
12/31/01 2,500,000
12/31/02 3,000,000
12/31/03 3,000,000
9.24 Operating Lease Obligations. Neither the Loan Party nor any of its
Subsidiaries shall enter into, or suffer to exist, any lease of real or
personal property as lessee or sublessee (other than a Capital Lease), if,
after giving effect thereto, the aggregate amount of Rentals (as hereinafter
defined) payable by the Parent Guarantor and its Subsidiaries on a consolidated
basis in any Fiscal Year in respect of such lease and all other such leases
would exceed the amount set forth below for such Fiscal Year (such amount
being referred to herein as "Permitted Rentals"). The term "Rentals" means all
payments due from the lessee or sublessee under a lease, including, without
limitation, basic rent, percentage rent, property taxes, utility or maintenance
costs, and insurance premiums.
Fiscal Year Permitted Rentals
------------ --------------
12/31/99 $3,500,000
12/31/00 4,000,000
12/31/01 4,500,000
12/31/02 5,000,000
12/31/03 5,000,000
9.25 Net Worth. The Parent Guarantor will maintain a consolidated Net
Worth, determined as of the last day of each calendar quarter, of not less than
the amount set forth below for such calendar quarter.
6/30/99 $20,800,000
9/30/99 27,200,000
12/31/99 22,700,000
3/31/00 19,700,000
6/30/00 22,700,000
9/30/00 28,700,000
12/31/00 25,700,000
3/31/01 22,700,000
6/30/01 26,200,000
9/30/01 32,200,000
12/31/01 29,200,000
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3/31/02 26,200,000
6/30/02 30,200,000
9/30/02 25,700,000
12/31/02 32,700,000
3/31/03 29,700,000
6/30/03 34,200,000
9/30/03 39,200,000
12/31/03 36,200,000
9.26 Fixed Charge Coverage Ratio. The Parent Guarantor will maintain a
consolidated Fixed Charge Coverage Ratio as of the last day of each period
consisting of the two quarters ending June 30, 1999, the three quarters ending
September 30, 1999, the four quarters ending December 30, 1999 and each period
of four quarters ending on the last day of each calendar quarter thereafter of
not less than the ratio set forth below opposite such period:
Period Ratio
---------- -------
Two Quarters ending June 30, 1999 0.60
Three Quarters ending September 30, 1999 1.75
Four Quarters ending December 31, 1999 1.10
Each Four Quarter Period ending on March 31, 1.10
June 30, September 30 and December 31
thereafter
9.27 Use of Proceeds. The Loan Party shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance indebtedness of the Loan Party or others incurred to purchase or
carry Margin Stock, (iii) to extend credit for the purpose of purchasing or
carrying any Margin Stock, or (iv) to acquire any security in any transaction
that is subject to Section 13 or 14 of the Exchange Act.
9.28 NFL and Umbro Consents; Collateral License Agreement Assignments.
Within 90 days from the Closing Date, the Parent Guarantor shall deliver to the
Agent a licensor consent from each of the National Football League ("NFL") and
Umbro International, Inc. ("Umbro") in form and substance reasonably
satisfactory to the Agent but, in the case of the NFL, no less favorable than
as currently in place under the Prior Credit Agreement, and execute and deliver
an amended and restated or initial, as the case may be, Collateral License
Agreement Assignment in the form requested by the Agent with respect to the
Material License Agreements with the NFL and Umbro.
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9.29 Further Assurances. The Loan Party shall execute and deliver, or
cause to be executed and delivered, to the Agent and/or the Lenders such
documents and agreements, and shall take or cause to be taken such actions, as
the Agent or any Lender may, from time to time, request to carry out the terms
and conditions of this Agreement and the other Loan Documents.
ARTICLE 10
CONDITIONS OF LENDING
10.1 Conditions Precedent to Making of Loans on the Closing Date. The
obligation of the Lenders to make the initial Revolving Loans on the Closing
Date, and the obligation of the Agent to cause to be issued or provide Credit
Support for any Letter of Credit on the Closing Date and the obligation of the
Lenders to participate in Letters of Credit issued on the Closing Date or in
Credit Support for any Letters of Credit, are subject to the following
conditions precedent having been satisfied in a manner satisfactory to the
Agent and each Lender:
(a) This Agreement and the other Loan Documents have been executed
by each party thereto and each Loan Party shall have performed and complied
with all covenants, agreements and conditions contained herein and the other
Loan Documents which are required to be performed or complied with by the
Borrower before or on such Closing Date.
(b) Upon making the Revolving Loans on the Closing Date (including
such Revolving Loans made to finance the Closing Fee or otherwise pursuant to
Section 4.7 as reimbursement for fees, costs and expenses then payable under
this Agreement) and with all its obligations current, the Borrower would have
Availability in an amount no less than $5,000,000, after giving effect to all
transactions to occur on the Closing Date and after deducting the amount of
accounts payable more than thirty (30) days past due.
(c) All representations and warranties made hereunder and in the
other Loan Documents shall be true and correct in all material respects as of
the Closing Date as if made on such date.
(d) No Default or Event of Default shall exist on the Closing Date,
or would exist after giving effect to the Loans to be made on such date.
(e) The Agent and the Lenders shall have received such opinions of
counsel for the Loan Parties as the Agent or any Lender shall request, each
such opinion to be in a form, scope, and substance satisfactory to the Agent,
the Lenders, and their respective counsel.
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(f) The Agent and the Lenders shall have received title policies, in
form and substance acceptable to Agent, with respect to the Mortgages.
(g) The Agent shall have received:
(i) acknowledgment copies of proper financing statements, duly
filed on or before the Closing Date under the UCC of all jurisdictions as the
Agent may deem necessary or desirable in order to perfect the Agent's Lien in
all Collateral;
(ii) duly executed UCC-3 Termination Statements for any Lien
which is not Permitted Lien, and duly executed UCC Assignment Statements as
described in the Loan Assignment Agreement, and such other instruments, in form
and substance satisfactory to the Agent, as shall be necessary to terminate and
satisfy all Liens on the Property of the Loan Parties except Permitted Liens;
and
(iii) certificates representing all Capital Stock of the
Subsidiaries of the Parent Guarantor, together with assignments separate from
such certificates undated and executed in blank and voting proxies executed in
blank, and all promissory notes representing any intercompany Debt between the
Parent Guarantor and any of its Subsidiaries, together with endorsements
separate from such promissory notes undated and issued in blank.
(h) The Borrower shall have paid all fees and expenses of the Agent
and the Attorney Costs incurred in connection with any of the Loan Documents
and the transactions contemplated thereby to the extent invoiced.
(i) The Agent shall have received evidence, in form, scope, and
substance, reasonably satisfactory to the Agent, of all insurance coverage as
required by this Agreement.
(j) The Agent and the Lenders shall have had an opportunity, if they
so choose, to examine the books of account and other records and files of the
Borrower and to make copies thereof, and to conduct a pre-closing audit which
shall include, without limitation, verification of Inventory, Accounts, and
Availability, and the results of such examination and audit shall have been
satisfactory to the Agent and the Lenders in all respects.
(k) The Prior Credit Agreement, and any and all extensions of credit
thereunder, shall have been assigned to the Lenders, all Obligations of the
Parent Guarantor or any of its Subsidiaries thereunder shall have been paid in
full, except the principal thereof which shall have been assigned to the
Lenders, all Liens securing the Prior Credit Agreement, and any and all
extensions of credit thereunder, shall have been assigned to the
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Agent and the Agent shall have received the cross-receipt, UCC assignments,
mortgage assignment and other instruments provided for in the Loan Assignment
Agreement or otherwise as the Agent may reasonably request and in form and
substance satisfactory to the Agent.
(l) The Agent and the Lenders shall have received copies certified
as being correct and complete of all documentation related to the Senior Notes,
the Subordinated Debt and the Material License Agreements and such
documentation shall be satisfactory to the Agent and the Lenders in all
respects.
(m) All proceedings taken in connection with the execution of this
Agreement, all other Loan Documents and all documents and papers relating
thereto shall be satisfactory in form, scope, and substance to the Agent and
the Lenders.
(n) No Material Adverse Effect shall have occurred since the
Financial Statements dated December 31, 1998. In addition, Borrowers' EBITDA
shall not be less than a negative (-) $1,700,000 on a cumulative basis for the
first fiscal quarter of 1999.
The acceptance by the Borrower of any Loans made on the Closing Date shall
be deemed to be a representation and warranty made by the Borrower to the
effect that all of the conditions precedent to the making of such Loans have
been satisfied, with the same effect as delivery to the Agent and the Lenders
of a certificate signed by a Responsible Officer of the Borrower, dated the
Closing Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (i) all conditions
precedent in this Section 10.1 have been fulfilled to the satisfaction of such
Lender and (ii) the decision of such Lender to execute and deliver to the Agent
an executed counterpart of this Agreement was made by such Lender independently
and without reliance on the Agent or any other Lender as to the satisfaction of
any condition precedent set forth in this Section 10.1.
10.2 Conditions Precedent to Each Loan. The obligation of the Lenders to
make each Loan, including the initial Revolving Loans on the Closing Date, and
the obligation of the Agent to take reasonable steps to cause to be issued or
to provide Credit Support for any Letter of Credit and the obligation of the
Lenders to participate in Letters of Credit or Credit Support for Letters of
Credit, shall be subject to the further conditions precedent that on and as of
the date of any such extension of credit:
(a) the following statements shall be true, and the acceptance by
the Borrower of any extension of credit shall be deemed to be a statement to
the effect set forth in clauses (i) and (ii), with the same effect as the
delivery to the Agent and the Lenders of
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a certificate signed by a Responsible Officer, dated the date of such extension
of credit, stating that:
(i) The representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material respects on
and as of the date of such extension of credit as though made on and as of such
date, other than any such representation or warranty which relates to a
specified prior date and except to the extent the Agent and the Lenders have
been notified by the Borrower that any such representation or warranty is not
correct in any material respect and the Majority Lenders have explicitly waived
in writing compliance with such representation or warranty; and
(ii) No event has occurred and is continuing, or would result
from such extension of credit, which constitutes a Default or an Event of
Default; and
(b) without limiting any other provision hereof, the amount of the
Availability shall be sufficient to make such Revolving Loan without exceeding
the Availability, provided, however, that the foregoing conditions precedent
are not conditions to each Lender participating in or reimbursing Bank of
America or the Agent for such Lenders' Pro Rata Share of any Bank of America
Loan or Agent Advance as provided in Sections 2.2(h), (i) and (j); and
(c) without limiting Section 10.2(a), there shall exist no action,
suit, investigation, litigation, or proceeding pending or threatened in any
court or before any arbitrator or governmental instrumentality that in Lenders'
reasonable judgment could reasonably be expected to have a Material Adverse
Effect.
ARTICLE 11
DEFAULT; REMEDIES
11.1 Events of Default. It shall constitute an event of default
("Event of Default") if any one or more of the following shall occur for any
reason:
(a) any failure to pay the principal of or interest or premium on
any of the Obligations, when due, whether upon demand or otherwise, and, solely
in the case of interest, such failure continues for three (3) Business Days or
more after the due date thereof;
(b) any representation or warranty made or deemed made by any Loan
Party in this Agreement or by any Loan Party in any of the other Loan
Documents, any Financial Statement, or any certificate furnished by any Loan
Party or any of its Subsidiaries at any time to the Agent or any Lender shall
prove to be untrue in any material respect as of the date on which made, deemed
made, or furnished;
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(c)(i) any default shall occur in the observance or performance of
any of the agreements contained in Article 6, Article 7 or Article 9 (other
than Sections 9.3, 9.4, 9.6, 9.7(b), 9.16 or 9.29) of this Agreement (provided,
however, to the extent that any covenant in Article 6 or Sections 7.2(a)
through (f) specifies the number of days within which the Loan Party must
comply (including, without limitation, for the giving of notice or delivery, of
a financial statement, forecast or report), the Loan Party shall have the
number of days specified in such covenant within which to comply, plus in the
case of Sections 7.2(a) through (f) five (5) additional days after notice
thereof from the Agent or any Lender of the failure to provide such material,
before such non-compliance becomes an Event of Default under this clause (i)),
or (ii) any default shall occur in the observance or performance of any of the
agreements contained in any of Sections 9.3, 9.4, 9.6, 9.7(b), 9.16 or 9.29 of
this Agreement and such default shall continue unremedied for a period of 10
days after the earlier to occur of (x) notice thereof from the Agent or any
Lender to any Loan Party or (y) any Loan Party's actual knowledge thereof, or
(iii) any default shall occur in the observance or performance of any of the
agreements contained in this Agreement (other than as specified in clause (a)
or (c)(i) or (ii) above), any other Loan Documents, or any other agreement
entered into at any time to which any Loan Party and the Agent or any Lender
are party and such default shall continue unremedied for a period of 30 days
after the earlier to occur of (x) notice thereof from the Agent or any Lender
to any Loan Party or (y) any Loan Party's actual knowledge thereof, or (iv) if
any agreement or document referred to in clauses (i), (ii) or (iii) above shall
terminate (other than in accordance with its terms or the terms hereof or with
the written consent of the Agent and the Majority Lenders) or become void or
unenforceable, without the written consent of the Agent and the Majority
Lenders; or (v) any default shall occur with respect to the Senior Notes, the
Subordinated Debt or any other Debt (other than the Obligations) in an
outstanding principal amount which exceeds $2,000,000, or under any agreement
or instrument under or pursuant to which any such Debt may have been issued,
created, assumed, or guaranteed by any Loan Party or any of its Subsidiaries,
and such default shall continue for more than the period of grace, if any,
therein specified, if the effect thereof (with or without the giving of notice
or further lapse of time or both) is to accelerate, or to permit the holders of
any such Debt to accelerate, the maturity of any such Debt; or any such Debt
shall be declared due and payable or be required to be prepaid (other than by a
regularly scheduled required prepayment) prior to the stated maturity thereof;
(d) any Loan Party or any of its Subsidiaries shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer or
otherwise commence any action or proceeding seeking reorganization, arrangement
or readjustment of its debts or for any other relief under the federal
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or
law, state, federal or foreign, now or hereafter existing, or take any
corporate action in furtherance of any of the foregoing or consent to, approve
of, or acquiesce in, any such petition, action or proceeding; (ii) apply for or
acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator,
custodian, monitor, trustee or
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similar officer for it or for all or any part of its property; (iii) make an
assignment for the benefit of creditors; or (iv) be unable generally to pay its
debts as they become due;
(e) an involuntary petition or proposal shall be filed or an action
or proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of any Loan Party or any of its
Subsidiaries or for any other relief under the federal Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency act or law, state, federal
or foreign, now or hereafter existing and either (i) such petition, proposal,
action or proceeding shall not have been dismissed within a period of sixty
(60) days after its commencement or (ii) an order for relief against any Loan
Party or such Subsidiary shall have been entered in such proceeding;
(f) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for any Loan Party or any of its
Subsidiaries or for all or any part of its property shall be appointed or a
warrant of attachment, execution or similar process shall be issued against any
part of the property of any Loan Party or any of its Subsidiaries;
(g) except as permitted in Section 9.9, any Loan Party or any of its
Subsidiaries shall file a certificate of dissolution under applicable state law
or shall be liquidated, dissolved or wound-up or shall commence or have
commenced against it any action or proceeding for dissolution, winding-up or
liquidation, or shall take any corporate action in furtherance thereof;
(h) all or any material part of the property of any Loan Party or
any of its Subsidiaries shall be nationalized, expropriated or condemned,
seized or otherwise appropriated, or custody or control of such property or of
any Loan Party or such Subsidiary shall be assumed by any Governmental
Authority or any court of competent jurisdiction at the instance of any
Governmental Authority, except where contested in good faith by proper
proceedings diligently pursued where a stay of enforcement is in effect;
(i) any guaranty of the Obligations shall be terminated, revoked or
declared void or invalid;
(j) one or more judgments or orders for the payment of money
aggregating in excess of $2,000,000 (or, if EBITDA for the most recent four
quarter period prior to such judgment or order exceeds $27,500,000, aggregating
in excess of $3,000,000), not payable by insurance, shall be rendered in any
one Fiscal Year against the Loan Parties and their Subsidiaries taken as a
whole;
(k) any loss, theft, damage or destruction of any item or items of
Collateral or other property of any Loan Party or any Subsidiary of it occurs
which
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materially and adversely affects the property, business, operation, prospects,
or condition of the Borrower or any of its Subsidiaries and is not adequately
covered by insurance;
(l) there occurs a Material Adverse Effect;
(m) there is filed against any Loan Party or any of its Subsidiaries
any civil or criminal action, suit or proceeding under any federal or state
racketeering statute (including, without limitation, the Racketeer Influenced
and Corrupt Organization Act of 1970), which action, suit or proceeding (1) is
not dismissed within one hundred twenty (120) days, and (2) could reasonably be
expected to result in the confiscation or forfeiture of any material portion of
the Collateral;
(n) for any reason other than the failure of the Agent to take any
action available to it to maintain perfection of the Agent's Liens, pursuant to
the Loan Documents, any Loan Document ceases to be in full force and effect or
any Lien with respect to any material portion of the Collateral intended to be
secured thereby ceases to be, or is not, valid, perfected and prior to all
other Liens (other than Permitted Liens described in clause (a) of the
definition thereof) or is terminated, revoked or declared void;
(o) (i) an ERISA Event shall occur with respect to a Pension Plan
or Multi-employer Plan which has resulted or could reasonably be expected to
result in liability of the Borrower under Title IV of ERISA to the Pension
Plan, Multi-employer Plan or the PBGC in an aggregate amount in excess of
$2,000,000; (ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds $2,000,000; or (iii) the Borrower or any
ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multi-employer Plan in an
aggregate amount in excess of $2,000,000; or
(p) there occurs a Change of Control.
11.2 Remedies. (a) If a Default or an Event of Default exists, the Agent
may, in its discretion, and shall, at the direction of the Majority Lenders, do
one or more of the following at any time or times and in any order, without
notice to or demand on the Borrower: (i) reduce the Maximum Revolver Amount,
or the advance rates against Eligible Accounts and/or Eligible Inventory used
in computing the Availability, or reduce one or more of the other elements
used in computing the Availability; (ii) restrict the amount of or refuse to
make Revolving Loans; and (iii) restrict or refuse to arrange for or provide
Letters of Credit or Credit Support. If an Event of Default exists, the Agent
shall, at the direction of the Majority Lenders, do one or more of the
following, in addition to the actions described in the preceding sentence, at
any time or times and in any order, without notice to or demand on the
Borrower: (a) terminate the Commitments and this Agreement; (b) declare any or
all
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Obligations to be immediately due and payable; provided, however, that upon the
occurrence of any Event of Default described in Sections 11.1(e), 11.1(g), or
11.1(h), the Commitments shall automatically and immediately expire and all
Obligations shall automatically become immediately due and payable without
notice or demand of any kind; and (c) pursue its other rights and remedies
under the Loan Documents (including with respect to any and all Collateral
provided hereunder or thereunder) and applicable law.
(b) If an Event of Default has occurred and is continuing: (i) the
Agent shall have for the benefit of the Lenders, in addition to all other
rights of the Agent and the Lenders, the rights and remedies of a secured party
under the UCC; (ii) the Agent may, at any time, take possession of the
Collateral and keep it on any Loan Party's premises, at no cost to the Agent or
any Lender, or remove any part of it to such other place or places as the Agent
may desire, or any Loan Party shall, upon the Agent's demand, at the Borrower's
cost, assemble the Collateral and make it available to the Agent at a place
reasonably convenient to the Agent; and (iii) the Agent may sell and deliver
any Collateral at public or private sales, for cash, upon credit or otherwise,
at such prices and upon such terms as the Agent deems advisable, in its sole
discretion, and may, if the Agent deems it reasonable, postpone or adjourn any
sale of the Collateral by an announcement at the time and place of sale or of
such postponed or adjourned sale without giving a new notice of sale. Without
in any way requiring notice to be given in the following manner, each Loan
Party agrees that any notice by the Agent of sale, disposition or other
intended action hereunder or in connection herewith, whether required by the
UCC or otherwise, shall constitute reasonable notice to such Loan Party if such
notice is mailed by registered or certified mail, return receipt requested,
postage prepaid, or is delivered personally against receipt, at least five (5)
Business Days prior to such action to such Loan Party's address specified in or
pursuant to Section 15.8. If any Collateral is sold on terms other than
payment in full at the time of sale, no credit shall be given against the
Obligations until the Agent or the Lenders receive payment (including partial
payments), and if the buyer defaults in payment, the Agent may resell the
Collateral without further notice to any Loan Party. In the event the Agent
seeks to take possession of all or any portion of the Collateral by judicial
process, each Loan Party irrevocably waives: (a) the posting of any bond,
surety or security with respect thereto which might otherwise be required; (b)
any demand for possession prior to the commencement of any suit or action to
recover the Collateral; and (c) any requirement that the Agent retain
possession and not dispose of any Collateral until after trial or final
judgment. Each Loan Party agrees that the Agent has no obligation to preserve
rights to the Collateral or marshal any Collateral for the benefit of any
Person. The Agent is hereby granted a license or other right to use,
exercisable only after the occurrence of, and during the continuance of a
Default or an Event of Default, without charge, each Loan Party's labels,
patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property or other Proprietary Rights, in
completing production of, advertising or selling any Collateral, and each Loan
Party's rights under all licenses and all franchise agreements shall inure to
the Agent's benefit for such purpose. The proceeds of sale shall be applied
first to all expenses
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of sale, including attorneys' fees, and then to the Obligations in whatever
order the Agent elects. The Agent will return any excess to the Borrower and
the Borrower shall remain liable for any deficiency.
(c) If an Event of Default occurs, each Loan Party hereby waives all
rights to notice and hearing prior to the exercise by the Agent of the Agent's
rights to repossess the Collateral without judicial process or to replevy,
attach or levy upon the Collateral without notice or hearing.
ARTICLE 12
TERM AND TERMINATION
12.1 Term and Termination. The term of this Agreement shall end on the
Stated Termination Date. The Agent upon direction from the Majority Lenders
may terminate this Agreement without notice upon the occurrence of an Event of
Default. Upon the effective date of termination of this Agreement for any
reason whatsoever, all Obligations (including, without limitation, all unpaid
principal, accrued interest and any early termination or prepayment fees or
penalties) shall become immediately due and payable and the Borrower shall
immediately arrange for the cancellation of Letters of Credit then outstanding.
Notwithstanding the termination of this Agreement, until all Obligations are
indefeasibly paid and performed in full in cash, each Loan Party shall remain
bound by the terms of this Agreement and shall not be relieved of any of its
Obligations hereunder, and the Agent and the Lenders shall retain all their
rights and remedies hereunder (including, without limitation, the Agent's
Liens in and all rights and remedies with respect to all then existing and
after-arising Collateral). Without limiting the foregoing or any provision
hereof that by its terms survives termination of this Agreement, the provisions
of Article 5 and Sections 14.7, 15.7, 15.11 and 15.12 shall survive the
termination of this Agreement and the release of any of the Agent's Liens in
any of the Collateral.
ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
13.1 No Waivers Cumulative Remedies. No failure by the Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement thereto, or in any other agreement between or
among any Loan Party and the Agent and/or any Lender, or delay by the Agent or
any Lender in exercising the same, will operate as a waiver thereof. No waiver
by the Agent or any Lender will be effective unless it is in writing, and then
only to the extent specifically stated. No waiver by the Agent or the Lenders
on any occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by any Loan Party of any provision of
this
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Agreement. The Agent's and each Lender's rights under this Agreement will be
cumulative and not exclusive of any other right or remedy which the Agent or
any Lender may have.
13.2 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by any Loan Party therefrom, shall be effective unless the same shall
be in writing and signed by the Majority Lenders (or by the Agent at the
written request of the Majority Lenders) and such Loan Party and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Lenders
and the Borrower and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Lenders (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under any
other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Lenders or any
of them to take any action hereunder;
(e) increase any of the percentages set forth in the definition of
Availability;
(f) amend this Section or any provision of the Agreement providing
for consent or other action by all Lenders;
(g) release Collateral other than as permitted by Section 14.12;
(h) change the definitions of "Majority Lenders" or "Required
Lenders";
(i) increase the Maximum Revolver Amount, the Maximum Inventory
Loan, and Unused Letter of Credit Subfacility.
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent, affect the rights or duties of the Agent under
this Agreement or any other Loan Document.
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13.3 Assignments; Participations.
(a) Any Lender may, with the written consent of the Agent, assign
and delegate to one or more assignees (provided that no written consent of the
Agent shall be required in connection with any assignment and delegation by a
Lender to an Affiliate of such Lender) (each an "Assignee") all, or any ratable
part of all, of the Loans, the Commitments and the other rights and obligations
of such Lender hereunder, in a minimum amount of $10,000,000 or if less the
entire amount of such Lender's Commitment or as the Agent and the Borrower may
otherwise agree; provided, however, that the Borrower and the Agent may
continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Borrower
and the Agent by such Lender and the Assignee; (ii) such Lender and its
Assignee shall have delivered to the Borrower and the Agent a fully executed
and completed Assignment and Acceptance in the form of Exhibit G ("Assignment
and Acceptance"); and (iii) the assignor Lender or Assignee has paid to the
Agent a processing fee in the amount of $3,000.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and payment
of the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations, including, but not
limited to, the obligation to participate in Letters of Credit and Credit
Support have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Lender under the Loan Documents, and
(ii) the assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto; (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Loan Party or the performance or observance by any Loan Party of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto; (3) such Assignee confirms that it has received
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a copy of this Agreement, together with such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (4) such Assignee will, independently and
without reliance upon the Agent, such assigning Lender or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (5) such Assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (6) such Assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of the Borrower (a
"Participant") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) Loan Parties and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, and all amounts payable by the Borrower or any other Loan Party
hereunder shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant that has notified
the Parent Guarantor of its participation shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing under this
Agreement to the same extent and subject to the same limitation as if the
amount of its participating interest were owing directly to it as a Lender
under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR [section] 203.14, and such Federal
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Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
(g) No assignment or participation described in this Section 13.3
shall, on the date of such assignment or participation, result in an Obligation
payable by the Borrower under Section 5.1 or 5.3 in an amount in excess of the
amount that would otherwise have been payable on such date if such assignment
or participation had not occurred.
ARTICLE 14
THE AGENT
14.1 Appointment and Authorization. Each Lender hereby designates and
appoints Bank of America National Trust and Savings Association, and its
successors in the capacity as agent, as its Agent under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes the Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. The
Agent agrees to act as such on the express conditions contained in this Article
14. The provisions of this Article 14 are solely for the benefit of the Agent
and the Lenders and no Loan Party shall have any rights as a third party
beneficiary of any of the provisions contained herein. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Agent. Without limiting the generality of the foregoing sentence, the use of
the term "agent" in this Agreement with reference to the Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising
under agency doctrine of any applicable law. Instead, such term is used merely
as a matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties. Except as
expressly otherwise provided in this Agreement, the Agent shall have and may
use its sole discretion with respect to exercising or refraining from
exercising any discretionary rights or taking or refraining from taking any
actions which the Agent is expressly entitled to take or assert under this
Agreement and the other Loan Documents, including, without limitation, (a) the
determination of the applicability of ineligibility criteria with respect to
the calculation of the Availability, (b) the making of Agent Advances pursuant
to Section 2.2(i), and (c) the exercise of remedies pursuant to Section 11.2,
and any action so taken or not taken shall be deemed consented to by the
Lenders.
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14.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
14.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by Loan Party or any
Subsidiary or Affiliate of any Loan Party, or any officer thereof, contained in
this Agreement or in any other Loan Document, 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, this Agreement or any other Loan Document,
or the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document, or for any failure of any Loan Party
or any other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party or
any of a Loan Party's Subsidiaries or Affiliates.
14.4 Reliance by Agent. (a) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to any Loan Party), independent accountants and other experts selected
by the Agent. The Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Majority Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Majority Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 10.1, each Lender that has executed this Agreement shall
be deemed to have
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consented to, approved or accepted or to be satisfied with, each document or
other matter either sent by the Agent to such Lender for consent, approval,
acceptance or satisfaction, or required thereunder to be consented to or
approved by or acceptable or satisfactory to the Lender.
14.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Lenders, unless the Agent shall
have received written notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Lenders in
accordance with Section 11; provided, however, that unless and until the Agent
has received any such request, 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 advisable.
14.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs of
any Loan Party and its Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of any Loan Party and its Affiliates, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to any Loan
Party. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of any Loan Party.
Except for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Agent, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any Loan Party which may come into the
possession of any of the Agent-Related Persons.
14.7 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the
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extent not reimbursed by or on behalf of the Borrower and without limiting the
obligation of the Borrower to do so), pro rata, from and against any and all
Indemnified Liabilities as such term is defined in Section 15.11; provided,
however, that no Lender shall be liable for the payment to the Agent-Related
Persons of any portion of such Indemnified Liabilities resulting solely from
such Person's gross negligence or willful misconduct. Without limitation of
the foregoing, each Lender shall reimburse the Agent upon demand for its
ratable share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the
Agent is not reimbursed for such expenses by or on behalf of the Borrower. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
14.8 Agent in Individual Capacity. Bank of America and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with any Loan Party
and its Subsidiaries and Affiliates as though Bank of America were not the
Agent hereunder and without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, Bank of America or its
Affiliates may receive information regarding any Loan Party or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of any Loan Party or such Subsidiary) and acknowledge that the Agent
shall be under no obligation to provide such information to them. With respect
to its Loans, Bank of America shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent, and the terms "Lender" and "Lenders" include Bank of America in its
individual capacity.
14.9 Successor Agent. The Agent may resign as Agent upon 30 days' notice
to the Lenders and the Borrower. In the event Bank of America sells all of its
Commitments and Revolving Loans as part of a sale, transfer or other
disposition by Bank of America of substantially all of its loan portfolio, Bank
of America shall resign as Agent and such purchaser or transferee shall become
the successor Agent hereunder. In addition, Bank of America may be merged into
(and transfer its agency thereby to) or transfer its agency hereunder to an
Affiliate without the consent of any Person. If the Agent resigns under this
Agreement, except as provided in the preceding two sentences, the Majority
Lenders shall appoint from among the Lenders a successor agent for the Lenders.
If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Borrower, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor
agent shall succeed to all the rights, powers and duties of the retiring Agent
and
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the term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 14 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the Agent hereunder until such time, if any, as the Majority Lenders appoint a
successor agent as provided for above.
14.10 Withholding Tax. (a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver
to the Agent:
(i) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS Forms
1001 and W-8 before the payment of any interest in the first calendar year and
before the payment of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Lender and in each succeeding
taxable year of such Lender during which interest may be paid under this
Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the Code or
other laws of the United States as a condition to exemption from, or reduction
of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Borrower to such Lender, such Lender
agrees to notify the Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of the Borrower to such Lender. To the
extent of such percentage amount, the Agent will treat such Lender's IRS Form
1001 as no longer valid.
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(c) If any Lender claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrower to such Lender, such Lender agrees to undertake sole responsibility
for complying with the withholding tax requirements imposed by Sections 1441
and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent, then the Agent
may withhold from any interest payment to such Lender not providing such forms
or other documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify the Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the
amounts payable to the Agent under this Section, together with all costs and
expenses (including Attorney Costs). The obligation of the Lenders under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of the Agent.
Each such Lender not so incorporated under the laws of the United States
of America or a state thereof agrees to deliver to the Borrower and the Agent
two copies of Form 1001 or 4224 and Form W-8 or W-9, or successor applicable
forms or other manner of certification, as the case may be, on or before the
date that any such form expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent form previously delivered by it
to the Borrower or the Agent, and such extensions or renewals thereof as may
reasonably be requested by the Borrower or the Agent unless in any such case an
event (including any change in treaty, law or regulation) has occurred prior to
the date on which any such delivery would otherwise be required which renders
all such forms inapplicable or which would prevent such Lender from duly
completing and delivering any such form with respect to it and such Lender so
advises the Borrower and the Agent.
14.11 [Intentionally Omitted.]
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14.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release (and upon Borrower's request,
Agent shall so release) any Agent's Lien upon any Collateral (i) upon the
termination of the Commitments and this Agreement and payment and satisfaction
in full by Borrower of all Loans and reimbursement obligations in respect of
Letters of Credit and Credit Support, and the termination of all outstanding
Letters of Credit (whether or not any of such obligations are due) and all
other Obligations; (ii) constituting property being sold or disposed of if the
Borrower certifies to the Agent that the sale or disposition is made in
compliance with Section 9.9 (and the Agent may rely conclusively on any such
certificate, without further inquiry); (iii) constituting property in which a
Loan Party owned no interest at the time the Lien was granted or at any time
thereafter; or (iv) constituting property leased to a Loan Party under a lease
which has expired or been terminated in a transaction permitted under this
Agreement. Except as provided above, the Agent will not release any of the
Agent's Liens without the prior written authorization of the Lenders; provided
that the Agent may, in its discretion, release the Agent's Liens on Collateral
valued in the aggregate not in excess of $5,000,000 during any one year period
without the prior written authorization of the Lenders. Upon request by the
Agent or the Borrower at any time, the Lenders will confirm in writing the
Agent's authority to release any Agent's Liens upon particular types or items
of Collateral pursuant to this Section 14.12.
(b) Upon receipt by the Agent of any authorization required pursuant
to Section 14.12(a) from the Lenders of the Agent's authority to release any
Agent's Liens upon particular types or items of Collateral, and upon at least
five (5) Business Days' prior written request by the Borrower, the Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of the Agent's Liens upon such
Collateral; provided, however, that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
any Loan Party in respect of) all interests retained by any Loan Party,
including (without limitation) the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by any Loan Party or
is cared for, protected or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers
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granted or available to the Agent pursuant to any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it may deem
appropriate, in its sole discretion given the Agent's own interest in the
Collateral in its capacity as one of the Lenders and that the Agent shall have
no other duty or liability whatsoever to any Lender as to any of the foregoing.
14.13 Restrictions on Actions by Lenders; Sharing of Payments. (a)
Each of the Lenders agrees that it shall not, without the express consent of
all Lenders, and that it shall, to the extent it is lawfully entitled to do so,
upon the request of all Lenders, set off against the Obligations, any amounts
owing by such Lender to the Borrower or any accounts of any Loan Party now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by the Agent, take or
cause to be taken any action to enforce its rights under this Agreement or
against any Loan Party, including, without limitation, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations of any Loan Party to such Lender arising under,
or relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from the Agent pursuant to the
terms of this Agreement, or (ii) payments from the Agent in excess of such
Lender's ratable portion of all such distributions by the Agent, such Lender
shall promptly (1) turn the same over to the Agent, in kind, and with such
endorsements as may be required to negotiate the same to the Agent, or in same
day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part
of such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest
except to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
14.14 Agency for Perfection. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting the Lenders' security interest in
assets which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
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14.15 Payments by Agent to Lenders. All payments to be made by the
Agent to the Lenders shall be made by bank wire transfer or internal transfer
of immediately available funds as each party may designate for itself by
written notice to the Agent. Concurrently with each such payment, the Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium or interest on the Revolving Loans or otherwise.
14.16 Concerning the Collateral and the Related Loan Documents. Each
Lender authorizes and directs the Agent to enter into this Agreement and the
other Loan Documents relating to the Collateral, for the ratable benefit of the
Agent and the Lenders. Each Lender agrees that any action taken by the Agent,
Majority Lenders or Required Lenders, as applicable, in accordance with the
terms of this Agreement or the other Loan Documents relating to the Collateral,
and the exercise by the Agent, the Majority Lenders, or the Required Lenders,
as applicable, of their respective powers set forth therein or herein, together
with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Lenders.
14.17 Field Audit and Examination Reports; Disclaimer by Lenders. By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by the Agent;
(b) expressly agrees and acknowledges that neither Bank of America
nor the Agent (i) makes any representation or warranty as to the accuracy of
any Report, or (ii) shall be liable for any information contained in any
Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or other party performing
any audit or examination will inspect only specific information regarding the
Borrower and will rely significantly upon the Loan Parties' books and records,
as well as on representations of the Loan Parties' personnel;
(d) agrees to keep all Reports confidential and strictly for its
internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold the Agent and any
such other Lender preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw from
any Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to any Loan Party, or the indemnifying
Lender's participation in, or the indemnifying
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Lender's purchase of, a loan or loans of the Borrower; and (ii) to pay and
protect, and indemnify, defend and hold the Agent and any such other Lender
preparing a Report harmless from and against, the claims, actions, proceedings,
damages, costs, expenses and other amounts (including, without limitation
Attorney Costs) incurred by the Agent and any such other Lender preparing a
Report as the direct or indirect result of any third parties who might obtain
all or part of any Report through the indemnifying Lender.
14.18 Relation Among Lenders. The Lenders are not partners or co-
venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
ARTICLE 15
MISCELLANEOUS
15.1 Cumulative Remedies; No Prior Recourse to Collateral. The
enumeration herein of the Agent's and each Lender's rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies that the Agent and the
Lenders may have under the UCC or other applicable law. The Agent and the
Lenders shall have the right, in their sole discretion, to determine which
rights and remedies are to be exercised and in which order. The exercise of
one right or remedy shall not preclude the exercise of any others, all of which
shall be cumulative. The Agent and the Lenders may, without limitation, when
an Event of Default exists, proceed directly against the Borrower or any other
Loan Party to collect the Obligations without any prior recourse to the
Collateral. No failure to exercise and no delay in exercising, on the part of
the Agent or any Lender, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.
15.2 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
15.3 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver. (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION
ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE
CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 0 XX XXX XXX) XX XXX XXXXX
XX XXX XXXX;
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PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF EACH LOAN PARTY, THE AGENT AND THE
LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-
EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF EACH LOAN PARTY, THE AGENT AND
THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS
FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
(c) EACH LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWER AT ITS
ADDRESS SET FORTH IN SECTION 15.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS
TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
15.4 WAIVER OF JURY TRIAL. SUBJECT TO THE PROVISIONS OF SECTION 15.3(b),
EACH LOAN PARTY, THE LENDERS AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS
TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION
OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
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AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH LOAN
PARTY, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
15.5 Survival of Representations and Warranties. All of the Loan Parties'
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Agent or the Lenders or their respective agents.
15.6 Other Security and Guaranties. The Agent, may, without notice or
demand and without affecting the Borrower's or any other Loan Party's
obligations hereunder, from time to time: (a) take from any Person and hold
collateral (other than the Collateral) for the payment of all or any part of
the Obligations and exchange, enforce or release such collateral or any part
thereof; and (b) accept and hold any endorsement or guaranty of payment of all
or any part of the Obligations and release or substitute any such endorser or
guarantor, or any Person who has given any Lien in any other collateral as
security for the payment of all or any part of the Obligations, or any other
Person in any way obligated to pay all or any part of the Obligations.
15.7 Fees and Expenses. The Borrower agrees to pay to the Agent, for its
benefit, on demand, all costs and expenses that Agent pays or incurs in
connection with the negotiation, preparation, syndication, consummation,
administration, enforcement, and termination of this Agreement or any of the
other Loan Documents, including, without limitation: (a) Attorney Costs;
(b) costs and expenses (including attorneys' and paralegals' fees and
disbursements which shall include the allocated costs of Agent's in-house
counsel fees and disbursements) for any amendment, supplement, waiver, consent,
or subsequent closing in connection with the Loan Documents and the
transactions contemplated thereby; (c) costs and expenses of lien and title
searches and title insurance; (d) taxes, fees and other charges for recording
the Mortgages, filing trademark, patent or copyright assignments, filing
financing statements and continuations, and other actions to perfect, protect,
and continue the Agent's Liens (including costs and expenses paid or incurred
by the Agent in connection with the consummation of Agreement); (e) sums paid
or incurred to pay any amount or take any action required of the Borrower or
any other Loan Party under the Loan Documents that
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the Borrower or such Loan Party fails to pay or take; (f) costs of appraisals,
inspections, and verifications of the Collateral, including, without
limitation, travel, lodging, and meals for inspections of the Collateral and
the Borrower's operations by the Agent plus the Agent's then customary charge
for field examinations and audits and the preparation of reports thereof (such
charge is currently $750 per day (or portion thereof) for each agent or
employee of the Agent with respect to each field examination or audit);
(g) costs and expenses of forwarding loan proceeds, collecting checks and other
items of payment, and establishing and maintaining Payment Accounts and lock
boxes; (h) costs and expenses of preserving and protecting the Collateral; and
(i) costs and expenses (including attorneys' and paralegals' fees and
disbursements which shall include the allocated cost of Agent's in-house
counsel fees and disbursements) paid or incurred to obtain payment of the
Obligations, enforce the Agent's Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents
(including Section 15.11), or to defend any claims made or threatened against
the Agent or any Lender arising out of the transactions contemplated hereby
(including without limitation, preparations for and consultations concerning
any such matters and including in connection with any insolvency,
reorganization or other proceedings). The foregoing shall not be construed to
limit any other provisions of the Loan Documents regarding costs and expenses
to be paid by the Borrower or any other Loan Party. All of the foregoing costs
and expenses shall be charged to the Borrower's Loan Account as Revolving Loans
as described in Section 4.7.
15.8 Notices. Except as otherwise provided herein, all notices, demands
and requests that any party is required or elects to give to any other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) four (4) days after it shall have been mailed by United States
mail, first class, certified or registered, with postage prepaid, or (c) in the
case of notice by such a telecommunications device, when properly transmitted,
in each case addressed to the party to be notified as follows:
If to the Agent or to Bank of America:
Bank of America NT & SA
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Region Manager
Fax No.: (000) 000-0000
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with copies to:
Bank of America NT & SA
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Attention: Xxxxx Xxxxxxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
If to the Borrower or any other Loan Party:
c/x Xxxxxxx Sports Inc.
00 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx/Chief Financial Officer
Fax No.: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxx & Brandeis, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
and Xxxxxxxx X. Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
15.9 Waiver of Notices. Unless otherwise expressly provided herein, each
Loan Party waives presentment, protest and notice of demand or dishonor and
protest as to any instrument, notice of intent to accelerate the Obligations
and notice of acceleration of the Obligations, as well as any and all other
notices to which it might otherwise be entitled. No notice to or demand on the
Borrower or any other Loan Party which the Agent or any Lender may elect to
give shall entitle the Borrower or any other Loan Party to any or further
notice or demand in the same, similar or other circumstances.
15.10 Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto; provided, however, that, except
in connection with a merger or other combination
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permitted by Section 9.9 hereof, no interest herein may be assigned by the
Borrower or any other Loan Party without prior written consent of the Agent and
each Lender. The rights and benefits of the Agent and the Lenders hereunder
shall, if such Persons so agree, inure to any party acquiring any interest in
the Obligations or any part thereof.
15.11 Indemnity of the Agent and the Lenders by the Borrower.
(a) The Borrower agrees to defend, indemnify and hold the Agent-
Related Persons, and each Lender and each of its respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and payment of all other Obligations, the termination of
this Agreement and the termination, resignation or replacement of the Agent or
replacement of any Lender) be imposed on, incurred by or asserted against any
such Person in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement, any other
Loan Document, or the Loans or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Borrower shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting solely from the willful misconduct or gross negligence of
such Indemnified Person. The agreements in this Section shall survive payment
of all other Obligations.
(b) The Borrower agrees to indemnify, defend and hold harmless the
Agent and the Lenders from any loss or liability directly or indirectly arising
out of the use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal or presence of a hazardous substance
relating to the Borrower's operations, business or property unless resulting
from gross negligence or willful misconduct of the Agent. This indemnity will
apply whether the hazardous substance is on, under or about the Borrower's
property or operations or property leased to the Borrower. The indemnity
includes but is not limited to reasonable attorneys' fees (including the
reasonable estimate of the allocated cost of in-house counsel and staff). The
indemnity extends to the Agent and the Lenders, their parents, affiliates,
subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns. "Hazardous substances" means any substance,
material or waste that is or becomes designated or regulated as "toxic,"
"hazardous," "pollutant," or "contaminant" or a similar designation or
regulation under any federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative
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interpretation of such, including without limitation petroleum or natural gas.
This indemnity will survive repayment of all other Obligations.
15.12 Limitation of Liability. No claim may be made by any Loan
Party, any Lender or other Person against the Agent, any Lender, or the
affiliates, 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 this Agreement or any other Loan
Document, or any act, omission or event occurring in connection therewith, and
each Loan Party and each Lender hereby waive, release and agree not to xxx upon
any claim for such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.
15.13 Final Agreement. This Agreement and the other Loan Documents
are intended by the Loan Parties, the Agent and the Lenders to be the final,
complete, and exclusive expression of the agreement between them. This
Agreement supersedes any and all prior oral or written agreements relating to
the subject matter hereof. No modification, rescission, waiver, release, or
amendment of any provision of this Agreement or any other Loan Document shall
be made, except by a written agreement signed by the applicable Loan Party and
a duly authorized officer of each of the Agent and the requisite Lenders.
15.14 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and each Loan Party in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document.
15.15 Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not
be construed to modify, enlarge, or restrict any provision.
15.16 Right of Setoff. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to any Loan Party, any such notice being waived by each
Loan Party to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender to or
for the credit or the account of any Loan Party against any and all Obligations
owing to such Lender, now or hereafter existing, irrespective of whether or not
the Agent or such Lender shall have made demand under this Agreement or any
Loan Document and although such Obligations may be contingent or unmatured.
Each Lender agrees promptly to notify the Borrower and the Agent after any such
set-off and application made by such Lender;
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provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. NOTWITHSTANDING THE FOREGOING, NO
LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST
ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY LOAN PARTY HELD OR MAINTAINED BY SUCH
LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.
15.17 Borrower Joint and Several Liability. Each Person defined as
the "Borrower" shall be liable for all amounts due to the Agent and/or any
Lender under this Agreement, regardless of which Borrower actually receives
Loans or other extensions of credit hereunder or the amount of such Loans
received or the manner in which the Agent and/or such Lender accounts for such
Loans or other extensions of credit on its books and records. The Borrower's
Obligations with respect to Loans made to it, and the Borrower's Obligations
arising as a result of the joint and several liability of the Borrower
hereunder, with respect to Loans made to the other Borrower hereunder, shall be
separate and distinct obligations, but all such Obligations shall be primary
obligations of each Person defined as the "Borrower."
The Borrower's Obligations arising as a result of the joint and several
liability of the Borrower hereunder with respect to Loans or other extensions
of credit made to the other Borrower hereunder shall, to the fullest extent
permitted by law, be unconditional irrespective of (i) the validity or
enforceability, avoidance or subordination of the Obligations of the other
Borrower or of any promissory note or other document evidencing all or any part
of the Obligations of the other Borrower, (ii) the absence of any attempt to
collect the Obligations from the other Borrower, any other guarantor, or any
other security therefor, or the absence of any other action to enforce the
same, (iii) the waiver, consent, extension, forbearance or granting of any
indulgence by the Agent and/or any Lender with respect to any provision of any
instrument evidencing the Obligations of the other Borrower, or any part
thereof, or any other agreement now or hereafter executed by the other Borrower
and delivered to the Agent and/or any Lender, (iv) the failure by the Agent
and/or any Lender to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for the
Obligations of the other Borrower, (v) the Agent's and/or any Lender's
election, in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or
grant of a security interest by the other Borrower, as debtor-in-possession
under Section 364 of the Bankruptcy Code, (vii) the disallowance of all or any
portion of the Agent's and/or any Lender's claim(s) for the repayment of the
Obligations of the other Borrower under Section 502 of the Bankruptcy Code, or
(viii) any other circumstances which might constitute a legal or equitable
discharge or defense of a guarantor or of the other Borrower. With respect to
the Borrower's Obligations arising as a result of the joint and several
liability of the Borrower hereunder with respect to Loans or other extensions
of credit made to either of the other Borrower hereunder, the Borrower waives,
until the Obligations shall have been paid
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in full and the Loan Agreement shall have been terminated, any right to enforce
any right of subrogation or any remedy which the Agent and/or any Lender now
has or may hereafter have against the Borrower, any endorser or any guarantor
of all or any part of the Obligations, and any benefit of, and any right to
participate in, any security or collateral given to the Agent and/or any Lender
to secure payment of the Obligations or any other liability of the Borrower to
the Agent and/or any Lender.
Upon any Event of Default, the Agent may proceed directly and at once,
without notice, against the Borrower to collect and recover the full amount, or
any portion of the Obligations, without first proceeding against the other
Borrower or any other Person, or against any security or collateral for the
Obligations. The Borrower consents and agrees that the Agent shall be under no
obligation to marshal any assets in favor of the Borrower or against or in
payment of any or all of the Obligations.
15.18 Contribution and Indemnification among the Borrowers. Each
Borrower is obligated to repay the Obligations as joint and several obligors
under this Agreement. To the extent that any Borrower shall, under this
Agreement as a joint and several obligor, repay any of the Obligations
constituting Loans made to another Borrower hereunder or other Obligations
incurred directly and primarily by any other Borrower (an "Accommodation
Payment"), then the Borrower making such Accommodation Payment shall be
entitled to contribution and indemnification from, and be reimbursed by, each
of the other Borrowers in an amount, for each of such other Borrowers, equal to
a fraction of such Accommodation Payment, the numerator of which fraction is
such other Borrower's "Allocable Amount" (as defined below) and the denominator
of which is the sum of the Allocable Amounts of all of the Borrowers. As of
any date of determination, the "Allocable Amount" of each Borrower shall be
equal to the maximum amount of liability for Accommodation Payments which could
be asserted against such Borrower hereunder without (a) rendering such Borrower
"insolvent" within the meaning of Section 101 (31) of the Bankruptcy Code,
Section 2 of the Uniform Fraudulent Transfer Act ("UFTA") or Section 2 of the
Uniform Fraudulent Conveyance Act ("UFCA"), (ii) leaving such Borrower with
unreasonably small capital or assets, within the meaning of Section 548 of the
Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (iii)
leaving such Borrower unable to pay its debts as they become due within the
meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or
Section 5 of the UFCA. All rights and claims of contribution, indemnification,
subrogation and reimbursement under this section shall be subordinate in right
of payment to the prior payment in full of the Obligations. The provisions of
this section shall, to the extent expressly inconsistent with any provision in
any Loan Document, supersede such inconsistent provision.
15.19 Agency of the Parent Guarantor for each Borrower and other Loan
Party. Each of the Borrowers and each other Loan Party appoints the Parent
Guarantor as its agent for all purposes relevant to this Agreement, including
(without limitation) the giving and
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receipt of notices and execution and delivery of all documents, instruments and
certificates contemplated herein and all modifications hereto. Any
acknowledgment, consent, direction, certification or other action which might
otherwise be valid or effective only if given or taken by all of the Borrowers
and other Loan Parties or acting singly, shall be valid and effective if gent
or taken only by the Parent Guarantor, whether or not either of the Borrowers
or any other Loan Party joins therein.
ARTICLE 16
GUARANTEE
16.1 Guaranteed Obligations. By its execution of this Agreement, each of
Parent Guarantor and each Subsidiary Guarantor (each a "Guarantor") hereby,
jointly and severally, irrevocably and unconditionally guarantees the payment
and performance, in full, when due (whether at stated maturity, by acceleration
or otherwise), of any and all Obligations (including all amounts payable with
respect to all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including
Attorney Costs) with respect thereto, and all fees, costs expenses and other
amounts payable by the Borrower under this Agreement or under any provision of
any other Loan Document (the "Guarantee"). Nothing in this Article 16 shall,
or shall be deemed to, waive any of the notice or cure periods contained in
Article 11 hereof and neither Agent nor Lenders shall be entitled to enforce
the Guarantee unless an Event of Default shall have occurred and be continuing;
provided, neither the foregoing nor any other provision of the Guarantee shall
be construed as requiring as a condition to enforcement of the Guarantee any
notice to a Guarantor.
16.2 Guarantee Absolute; Alteration of Obligations.
(a) The obligations of each Guarantor hereunder are those of a
primary obligor, and not merely a surety, and are independent of the
Obligations. A separate action or actions may be brought against the Borrower
or any Other Guarantor (each an "Other Guarantor"), whether or not an action is
brought against the Borrower, any Other Guarantor or any other obligor in
respect of the Obligations or whether the Borrower, any Other Guarantor or any
other obligor in respect of the Obligations is joined in any such action or
actions. Neither the Agent's nor any Lender's rights hereunder shall be
exhausted by its exercise of any of its rights or remedies or by any such
action or by any number of successive actions unless and until all Obligations
and all other obligations hereunder have been paid and fully performed.
(b) Each Guarantor, jointly and severally, irrevocably guarantees
that the Obligations will be paid and performed strictly in accordance with the
terms of this Agreement, and the other Loan Documents regardless of any law,
regulation or order now
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or hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Lenders with respect thereto. The liability of each
Guarantor under this Guarantee shall be absolute and unconditional irrespective
of:
(i) any lack of genuineness, validity, legality or
enforceability of this Agreement, any other Loan Document or any other
document, agreement or instrument relating thereto or any assignment or
transfer of any thereof;
(ii) any change in the time, manner or place of payment of, or
in any other term of (including a reduction or an increase), in the rate
of interest on, or other payment in respect of the Loans) all or any of
the Obligations, or any waiver, indulgence, compromise, renewal,
extension, amendment, modification of, or addition, supplement, or consent
to, or departure from, or any other action or inaction under or in respect
of, the Obligations or this Agreement, or any other Loan Document or any
document, instrument or agreement relating to the Obligations or any other
instrument or agreement referred to herein or any assignment or transfer
of any thereof;
(iii) any change, subordination, impairment or release of
all or any of the Obligations or the absence of any attempt to collect the
Obligations from the Borrower or any other Guarantor or any suspension of
any right or remedy of the Agent or any Lender against any Person,
including the Borrower, any Other Guarantor or other obligor in respect of
the Obligations; and no such event shall in any way affect any of the
obligations of any Guarantor hereunder or give any Guarantor any recourse
against the Agent or any Lender;
(iv) any failure to perfect, or preserve any rights to, or any
change, subordination, impairment or release of, all or any part of the
Collateral or any furnishing of any additional security (including letters
of credit and surety bonds) for any of the Obligations;
(v) any insolvency, reorganization, bankruptcy or similar
proceeding ("Insolvency Proceedings") (whether voluntary or involuntary)
in respect of the Borrower, any Other Guarantor or any other obligor in
respect of the Obligations is commenced or filed or any action is taken
with respect to this Guarantee by any trustee or receiver, or by any
court, in any such proceeding;
(vi) any modification or termination of any intercreditor or
subordination agreement pursuant to which the claims of other creditors of
the Borrower or any Other Guarantor are subordinated to those of the Agent
or any Lender;
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(vii) the Agent's or any Lender's election, in any
proceeding under the Bankruptcy Code, of the application of Section
1111(b)(2) of the Bankruptcy Code;
(viii) any borrowing or grant of a security interest by any
Other Guarantor or the Borrower, or debtor-in-possession under Section 364
of the Bankruptcy Code;
(ix) any disallowance of all or any portion of the Agent's or
any Lender's claim(s) for the repayment of the Obligations of any Other
Guarantor or the Borrower under Section 502 of the Bankruptcy code; or
(x) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable discharge of,
any Guarantor.
(c) This Guarantee shall continue to be effective or be reinstated,
as the case may be, if at any time payment of the Obligations, or any part
thereof, is, upon any Insolvency Proceeding in respect of the Borrower or any
Guarantor or otherwise pursuant to applicable law, rescinded or reduced in
amount or must otherwise be restored or returned by the Agent or any Lender,
all as though such payment had not been made.
(d) If an event permitting the acceleration of any of the
Obligations shall at any time have occurred and be continuing and such
acceleration shall at such time be prevented by reason of the pendency against
the Borrower of any Insolvency Proceeding, each Guarantor agrees that, for
purposes of this Guarantee and its obligations hereunder, the Obligations shall
be deemed to have been accelerated and each Guarantor shall forthwith pay the
Obligations (including interest which, but for the filing of such Insolvency
Proceeding with respect to the Company, would accrue on such Obligations),
without any further notice or demand.
(e) Anything contained herein to the contrary notwithstanding, but
without limiting the direct liability of any Guarantor hereunder, the maximum
joint and several liability of any Subsidiary Guarantor for the Obligations
shall not exceed the largest amount that would not render on the applicable
date of determination such Subsidiary Guarantor's liability in respect of the
Obligations (i) subject to avoidance under Section 548 of the Bankruptcy Code,
or the equivalent provisions of any other applicable law, or (ii) otherwise
void, voidable, invalid or unenforceable, as and to the extent (if any) that
such Section 548 or other law is held to be applicable, after giving effect to
all other contingent and fixed liabilities of such Subsidiary Guarantor and
after giving effect to any rights of subrogation or contribution against, and
any collections from or payments made by or on behalf of, any Other Guarantor
or the Borrower in respect of the obligations of such Other Guarantor under
this Guarantee or the Borrower hereunder.
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16.3 Obligations Joint and Several; Rights Not Exclusive. The obligations
of each Guarantor hereunder are joint and several. The rights provided for
this Guarantee are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.
16.4 Waivers. In consideration of this Agreement, the Loan Documents and
the agreements of the Agent and the Lenders hereunder, each Guarantor hereby
relinquishes all rights and remedies accorded by applicable law to sureties or
guarantors which such Guarantor may have in connection with this Guarantee, and
agrees not to assert or take advantage of any such rights or remedies,
including:
(a) any right to require the Agent or any Lender to proceed against
the Borrower, the Other Guarantors or any other Person or to proceed against or
exhaust any security, letter of credit or surety bond issued in respect of the
Obligations held by the Agent or to require any Lender at any time to pursue
any other remedy in its power before proceeding against such Guarantor;
(b) the defense of the statute of limitations in any action
hereunder or in any action for the collection of the Obligations guaranteed
hereunder or any of the other obligations of any Guarantor hereunder;
(c) any defense that may arise by reason of the release of any Other
Guarantor;
(d) acceptance of this Guarantee, demand, presentment, protest,
promptness, diligence and notice of any kind, including notice of the
existence, creation or incurrence of any new or additional Debt or Obligation
or of any action or non-action on the part of the Borrower, the Agent, any
Lender, any Other Guarantor or any endorser or creditor of the Company or any
Guarantor or on the part of any other Person under this or any other instrument
in connection with any obligation or evidence of indebtedness held by the Agent
or any Lender as collateral or support or in connection with the Obligations or
any other obligations hereby guaranteed;
(e) all rights and defenses arising out of an election of remedies
by the Agent or any Lender, even though that election of remedies, such as a
non-judicial foreclosure with respect to security for a guaranteed obligation,
has destroyed or may destroy such Guarantor's right of subrogation and
reimbursement against the Borrower, or any Other Guarantor, if any;
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(f) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(g) any duty on the part of the Agent or any Lender to disclose to
any Guarantor any facts the Agent or any Lender may now or hereafter know about
the Borrower or any Other Guarantor, regardless of whether the Administrative
Agent or any Lender has reason to believe that any such facts materially
increase the risk beyond that which such Guarantor intended to assume, or has
reason to believe that such facts are unknown to such Guarantor, or has a
reasonable opportunity to communicate such facts to such Guarantor, since each
Guarantor acknowledges that such Guarantor is fully responsible for being and
keeping informed of the financial condition of the Borrower and the Other
Guarantors and of all circumstances bearing on the risk of nonperformance of
any obligations hereby guaranteed;
(h) any defense based upon any borrowing or grant of any security
interest under Section 364 of the Bankruptcy Code or any similar provision
under the Bankruptcy Law;
(i) any requirement that at any time any action be taken by any
Person against the Borrower or any other Person;
(j) any right to which it may be entitled in connection with any
obligation of the Lenders to xxx the Borrower or any other Guarantor prior to a
claim being made against the Guarantor hereunder;
(k) any right to which it may be entitled to have the assets of the
Borrower first be used as payment of the Borrower's or any Guarantor's
obligations hereunder prior to any amounts being claimed from or paid by any
such Guarantor hereunder; and
(l) any and all other rights and remedies accorded by applicable law
to guarantors or sureties.
16.5 Contribution and Indemnification; Subrogation. Each Guarantor is
obligated to repay the Obligations as joint and several obligors under this
Agreement. To the extent that any Guarantor shall, under this Agreement as a
joint and several obligor, repay any of the Obligations constituting Loans made
to the Borrower hereunder or other Obligations incurred directly and primarily
by the Borrower (an "Guarantor Accommodation Payment"), then the Guarantor
making such Guarantor Accommodation Payment shall be entitled to contribution
and indemnification from, and be reimbursed by, each of the individual
Borrowers and Other Guarantors in an amount, for each of the individual
Borrowers and Other Guarantors, equal to a fraction of such Guarantor
Accommodation Payment, the
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numerator of which fraction is such Borrower's or Other Guarantor's "Allocable
Amount" (as defined below) and the denominator of which is the sum of the
Allocable Amounts of all of the individual Borrowers and Other Guarantors. As
of any date of determination, the "Allocable Amount" of each Borrower or Other
Guarantor shall be equal to the maximum amount of liability for Guarantor
Accommodation Payments which could be asserted against such Borrower or Other
Guarantor hereunder without (a) rendering such Borrower or Other Guarantor
"insolvent" within the meaning of Section 101 (31) of the Bankruptcy Code,
Section 2 of the Uniform Fraudulent Transfer Act ("UFTA") or Section 2 of the
Uniform Fraudulent Conveyance Act ("UFCA"), (ii) leaving such Borrower or Other
Guarantor with unreasonably small capital or assets, within the meaning of
Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the
UFCA, or (iii) leaving such Borrower or Other Guarantor unable to pay its debts
as they become due within the meaning of Section 548 of the Bankruptcy Code or
Section 4 of the UFTA, or Section 5 of the UFCA. All rights and claims of
contribution, indemnification, subrogation and reimbursement under this Section
shall be subordinate in right of payment to the prior payment to the Agent and
the Lender of the Obligations. In furtherance of the foregoing,
notwithstanding any payment or payments made by any Guarantor hereunder, or any
set-off or application of funds of any Guarantor by the Agent or any Lender, no
Guarantor shall be entitled to be subrogated to any of the rights of the
Administrative Agent or any Lender against the Borrower or any Other Guarantor
or against any Collateral, support or guaranty or right of offset held by the
Agent or any Lender for the payment of the Obligations, nor shall any Guarantor
seek or be entitled to seek any contribution, indemnification or reimbursement
from the Borrower or any Other Guarantor in respect of payments made hereunder,
unless and until such time as all Obligations have been paid in full to the
Agent and the Lenders and this Agreement has been terminated. If any amount
shall be paid to any Guarantor on account of any subrogation, contribution,
indemnification or reimburesement rights at any time when all of the
Obligations shall not have been finally paid in full and the Agreement
terminated, such amount shall be held by such Guarantor in trust for the Agent
and the Lenders, segregated from other funds of such Guarantor, and shall,
forthwith upon receipt by such Guarantor, be turned over to the Agent in the
exact form received by such Guarantor (duly indorsed by such Guarantor to the
Agent, if required), to be held and/or applied to the Obligations, whether
matured or unmatured, in such order as the Agent may determine, but without
reducing or affecting in any manner the liability of such Guarantor under this
Guarantee.
16.6 Subordination. Each Guarantor hereby expressly covenants and agrees
for the benefit of the Agent and each Lender that all existing and future Debt
of the Borrower or any Other Guarantor or any of its Subsidiaries (including
all rights of contribution, reimbursement or subrogation), including any Debt
listed on Schedule 8.9 or described in the definition of Restricted Investment,
to such Guarantor and any right of such Guarantor or any of its Subsidiaries to
the return or withdrawal of any capital invested by such Guarantor or any of
its Subsidiaries in the Borrower or any Other Guarantor, shall be subordinated
to and junior in right of payment to the Obligations. Without the prior written
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consent of the Agent, such subordinated Debt shall not be paid or withdrawn in
whole or in part, nor shall any Guarantor or any of its Subsidiaries accept any
payment of, or on account of, any such Debt or as a withdrawal of capital while
this Guarantee is in effect, except in each case from the cash proceeds of the
issuance of common Capital Stock of the Parent Guarantor. Any such payment to
any Guarantor or any of its Subsidiaries in violation of this Guarantee shall
be received by such Guarantor or such Subsidiary, as the case may be, in trust
for the benefit of the Agent and the Lenders, segregated from other funds of
such Guarantor or such Subsidiary, and shall, forthwith upon receipt by such
Guarantor or such Subsidiary, be turned over to the Agent in the exact form
received by such Guarantor or such Subsidiary (duly endorsed by such Guarantor
or such Subsidiary to the Agent, if required), to be held and/or applied
against the Obligations, whether matured or unmatured, in such order as the
Agent may determine, but without reducing or affecting in any manner the
liability of such Guarantor under this Guarantee.
16.7 No Effect on Guarantee. The obligations of any Guarantor under this
Guarantee shall not be altered, limited or affected by any Insolvency
Proceeding of the Borrower or any of the Other Guarantors, or by any defense
which the Borrower or any Other Guarantor may have by reason of any order,
decree or decision of any court or administrative body resulting from any such
proceeding.
16.8 Continuing Guarantee. This Guarantee is a continuing guarantee and
shall (a) remain in full force and effect until termination of the Commitment
and payment in full of all Obligations and all of Guarantors' obligations
hereunder; (b) be binding upon each Guarantor, its successors and assigns; and
(c) inure to the benefit of the Agent-Related Persons, the Agent and each
Lender and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing, the Agent and each Lender may assign
or otherwise transfer its rights under this Guarantee to any Person to whom a
transfer by the Agent or Lender is permitted under this Agreement, and such
Person shall thereupon become vested with all the benefits in respect hereof
granted to the Agent or Lender herein or otherwise, all as provided in, and to
the extent set forth in, this Agreement. No Guarantor may assign or otherwise
transfer any of its obligations hereunder to any Person without the prior
written consent of the Agent and all Lenders other than in connection with a
merger or other combination permitted under Section 9.9 hereof.
[Remainder of Page Intentionally Left Blank-
Counterpart Signature Pages Follow]
-138-
139
IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
"PARENT GUARANTOR"
Xxxxxxx Sports Inc.
By: /s/ XXXXX XXXXXXXXXX
-----------------------------------
Title:
"BORROWERS"
Xxxxxxx, Inc.
By: /s/ XXXXX XXXXXXXXXX
-----------------------------------
Title:
All American Sports Corporation
By: /s/ XXXXX XXXXXXXXXX
-----------------------------------
Title:
Varsity Spirit Fashions & Supplies, Inc.
By: /s/ XXXXX XXXXXXXXXX
-----------------------------------
Title:
Varsity Spirit Corporation
By: /s/ XXXXX XXXXXXXXXX
-----------------------------------
Title:
-139-
140
"SUBSIDIARY GUARANTORS"
Equilink Licensing Corp.
By: /s/ XXXXX XXXXXXXXXX
-----------------------------------
Title:
MacMark Corporation
By: /s/ XXXXX XXXXXXXXXX
-----------------------------------
Title:
RHC Licensing Corp.
By: /s/ XXXXX XXXXXXXXXX
-----------------------------------
Title:
Ridmark Corporation
By: /s/ XXXXX XXXXXXXXXX
-----------------------------------
Title:
Proacq. Corp.
By: /s/ XXXXX XXXXXXXXXX
-----------------------------------
Title:
Varsity USA, Inc.
By: /s/ XXXXX XXXXXXXXXX
-----------------------------------
Title:
Varsity/Intropa Tours, Inc.
By: /s/ XXXXX XXXXXXXXXX
-----------------------------------
Title:
International Logos, Inc.
By: /s/ XXXXX XXXXXXXXXX
-----------------------------------
Title:
-140-
141
"AGENT"
Bank of America National Trust and Savings
Association, as the Agent
By: /s/ XXX X. XXXXXXXXXXX
-----------------------------------
Vice President
"LENDERS"
Bank of America National Trust and Savings
Association, as a Lender
Commitment: $_____________ By: /s/ XXX X. XXXXXXXXXXX
-----------------------------------
Vice President
-141-
