1
EXHIBIT 10(h)
CREDIT AGREEMENT (this "Agreement"), dated as of November 1,
1995 between METROMEDIA INTERNATIONAL GROUP, INC. (formerly known as The Actava
Group Inc.), a Delaware corporation (the "Borrower"), and CHEMICAL BANK, a New
York banking corporation, as lender (the "Lender").
WHEREAS, pursuant to the Amended and Restated Agreement and Plan of
Merger dated as of September 27, 1995 (as amended, supplemented or otherwise
modified from time to time, the "Merger Agreement"), the Borrower, the
Guarantor, Orion Pictures Corporation ("Orion"), MCEG Sterling Incorporated
("Sterling"), OPC Merger Corp. and MITI Merger Corp. have agreed to certain
mergers (the "Mergers") as more particularly described in the Joint Proxy
Statement of the Borrower, the Guarantor, Orion and Sterling dated September
28, 1995 (the "Proxy Statement"); and
WHEREAS, in order to refinance indebtedness of Orion in connection
with the Mergers and for other general corporate purposes of the Borrower, the
Borrower has requested the Lender to make revolving credit loans to it;
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall
mean the rate of interest per annum publicly announced from time to
time by the Lender as its prime rate in effect at its principal office
in New York City (the Prime Rate not being intended to be the lowest
rate of interest charged by Chemical Bank in connection with
extensions of credit to debtors); "Base CD Rate" shall mean the sum of
(a) the product of (i) the Three-Month Secondary CD Rate and (ii) a
fraction, the numerator of which is one and the denominator of which
is one minus the C/D Reserve Percentage and (b) the C/D Assessment
Rate; "Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not be
a Business Day, the next preceding Business Day) by the Board through
the public information telephone line of the Federal Reserve Bank of
New York (which rate will, under the current practices of the Board,
be published in Federal Reserve Statistical Release H.15(519) during
the week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day, the
2
2
average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such day
(or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Lender from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it;
and " Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Lender from three federal
funds brokers of recognized standing selected by it. Any change in
the ABR due to a change in the Prime Rate, the Base CD Rate or the
Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate, the
Base CD Rate or the Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which
is based upon the ABR.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person, provided
that an individual shall not be deemed an Affiliate of another Person
solely because such individual serves as an officer or director of
such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 10% or
more of the securities having ordinary voting power for the election
of directors of such Person or (b) direct or cause the direction of
the management and policies of such Person, whether by contract or
otherwise.
"Agreement": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"Applicable Margin": for each Type of Loan, the rate per
annum set forth under the relevant column heading below:
Eurodollar
ABR Loans Loans
------------ ----------
1.00% 2.00%
"Available Commitment": at any time, an amount equal to the
excess, if any, of (a) the amount of the Lender's Commitment at such
time over (b) the aggregate principal amount of all Loans made by the
Lender then outstanding.
"Board": the Board of Governors of the Federal Reserve System
of the United States.
3
3
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.2 as a date on which the Borrower requests
the Lender to make Loans hereunder.
"Business": as defined in subsection 3.17.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in
a Person (other than a corporation) and any and all warrants or
options to purchase any of the foregoing.
"Cash Equivalents": (a) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed
or insured by the United States Government or any agency or
instrumentality thereof, (b) certificates of deposit and eurodollar
time deposits with maturities of one year or less from the date of
acquisition and overnight bank deposits of any Lender or of any
commercial bank having capital and surplus in excess of $500,000,000,
(c) repurchase obligations of any Lender or of any commercial bank
satisfying the requirements of clause (b) of this definition, having a
term of not more than 30 days with respect to securities issued or
fully guaranteed or insured by the United States Government, (d)
commercial paper of a domestic issuer rated at least A-2 by Standard
and Poor's Ratings Group (" S&P") or P-2 by Xxxxx'x Investors Service,
Inc. (" Moody's") or carrying an equivalent rating by a nationally
recognized rating agency if both of the two named rating agencies
cease publishing ratings of such investments, (e) securities with
maturities of one year or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such
state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may
be) are rated at least A by S&P or A by Moody's, (f) securities with
maturities of one year or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition or (g)
shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a)
through (f) of this definition.
"C/D Assessment Rate": for any day as applied to any ABR Loan,
the annual assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund maintained by the Federal Deposit
Insurance Corporation (the "FDIC") classified as well-capitalized and
within supervisory subgroup "B" (or a comparable successor assessment
risk classification) within the meaning of 12 C.F.R. Section 327.(d)
(or any successor provision) to the FDIC (or any successor) for the
FDIC's
4
4
(or such successor's) insuring time deposits at offices of such
institution in the United States.
"C/D Reserve Percentage": for any day as applied to any ABR
Loan, that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board, for determining the maximum
reserve requirement for a Depositary Institution (as defined in
Regulation D of the Board) in respect of new non-personal time
deposits in Dollars having a maturity of 30 days or more.
"Closing Date": the date on which the conditions precedent
set forth in subsection 4.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all assets of the Loan Parties, now owned or
hereinafter acquired, upon which a Lien is purported to be created by
any Security Document.
"Commitment": the Lender's obligation to make Loans to the
Borrower hereunder in an aggregate principal amount at any one time
outstanding not to exceed $35,000,000, as such amount may be reduced
from time to time in accordance with the provisions of this Agreement.
"Commitment Period": the period from and including the
Closing Date to but not including the Termination Date or such earlier
date on which the Commitments shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or
any of its property is bound.
"Default": any of the events specified in Section 7, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Environmental Laws": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
5
5
protection of human health or the environment, as now or may at any
time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D
of such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate at which the Lender is offered Dollar deposits at or
about 10:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery
on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 7,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Financing Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the
lessee.
"Form 10-Q": the Form 10-Q of the Borrower for the quarter
ended September 30, 1995.
6
6
"GAAP": generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the " primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of the guaranteeing person, whether or not contingent, (i) to purchase
any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for
the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of
any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary obligation
in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good
faith.
"Guarantor": Metromedia International Telecommunications, Inc.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities and accrued expenses incurred in the ordinary course of
business and payable in accordance with customary practices), (b) any
other indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations of such Person
under Financing Leases, (d) all obligations of such Person in respect
of acceptances issued or created for the account of such Person and
(e) all liabilities secured by any Lien on any property owned by
7
7
such Person even though such Person has not assumed or otherwise
become liable for the payment thereof.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intercreditor Agreement": the Intercreditor Agreement to be
entered into by Snapper, the Borrower, the Lender and the Snapper
Lender substantially in the form of Exhibit E, as the same may be
amended, supplemented or otherwise modified from time to time.
"Interest Payment Date": (a) as to any ABR Loan, the last day
of each March, June, September and December, (b) as to any Eurodollar
Loan having an Interest Period of three months or less, the last day
of such Interest Period, and (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day which is three
months or a whole multiple thereof, after the first day of such
Interest Period and the last day of such Interest Period.
"Interest Period": (a) with respect to any Eurodollar Loan:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six
months thereafter, as selected by the Borrower in its notice
of borrowing or notice of conversion, as the case may be,
given with respect thereto; and
(ii) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to
such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice
to the Lender not less than three Business Days prior to the
last day of the then current Interest Period with respect
thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend
beyond the Termination Date shall end on the Termination Date;
and
8
8
(3) any Interest Period pertaining to a Eurodollar
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 a calendar month.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Financing Lease having substantially the
same economic effect as any of the foregoing).
"Loan": as defined in subsection 2.1.
"Loan Documents": this Agreement, any Notes, the MITI
Guarantee, the Mortgage, the Security Agreement, the Stock Pledge
Agreement and the Intercreditor Agreement.
"Loan Parties": the Borrower, the Guarantor and Snapper.
"Market Value": with respect to any Roadmaster Stock at any
time of determination, the closing sale price on the New York Stock
Exchange for such Roadmaster Stock on the Business Day preceding the
date of determination.
"Material Adverse Effect": a material adverse effect on (a)
the business, operations, property or condition (financial or
otherwise) of the Borrower and its Subsidiaries taken as a whole or
(b) the validity or enforceability of this or any of the other Loan
Documents or the rights or remedies of the Lender hereunder or
thereunder.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Mergers": as defined in the recitals hereto.
"Merger Agreement": as defined in the recitals hereto.
"MITI Guarantee": the reference to the guarantee to be made
by the Guarantor in favor of the Lender substantially in the form of
Exhibit D, as the same may be amended, supplemented or otherwise
modified from time to time.
9
9
"Mortgage": the Mortgage to be executed and delivered by
Snapper in favor of the Lender, substantially in the form of Exhibit
F, as the same may be amended, supplemented or otherwise modified from
time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Non-Excluded Taxes": as defined in subsection 2.17.
"Notes": as defined in subsection 2.5.
"Obligations": all Indebtedness of the Borrower under or
evidenced by this Agreement, or with the consent of the Borrower any
refinancing thereof, or with the consent of the Borrower other
evidences of Indebtedness issued in evidence of or in exchange for any
such Indebtedness, and all other obligations of every nature of the
Borrower from time to time and to the Lender under the Loan Documents,
including, without limitation, all obligations in respect of payments
or prepayments of principal, interest (including any interest accruing
subsequent to the commencement of any proceeding against or with
respect to the Borrower under any bankruptcy or insolvency law,
whether or not the claim for such interest is allowed as a claim in
such proceeding), premium, if any, reimbursement obligations,
commitment and other fees, indemnities and reimbursements for
reasonable costs and expenses (including, without limitation, all
reasonable fees and disbursements of counsel to the Lender) incurred
in connection with the enforcement of the Loan Documents, and any
other amounts payable thereunder in connection therewith.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Properties": as defined in subsection 3.17.
"Proxy Statement": as defined in the recitals hereto and
including all exhibits and documents incorporated by reference therein
and supplements thereto.
"Regulation U": Regulation U of the Board as in effect from
time to time.
10
10
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. Section 2615.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"Responsible Officer": the chief executive officer and the
president of the Borrower or, with respect to financial matters, the
chief financial officer of the Borrower.
"Roadmaster Stock": the shares of Roadmaster Industries, Inc.
("Roadmaster"), owned and pledged by the Borrower to the Lender
pursuant to the Stock Pledge Agreement.
"SEC Filings": the filings made by the Borrower, the
Guarantor, Orion and Sterling since December 31, 1994 and prior to the
Closing Date with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended.
"Security Agreement": the Security Agreement to be executed
and delivered by Snapper, substantially in the form of Exhibit G, as
the same may be amended, supplemented or otherwise modified from time
to time.
"Security Documents": the collective reference to the MITI
Guarantee, the Mortgage, the Security Agreement, the Stock Pledge
Agreement and each other agreement, if any, entered into by a Loan
Party securing or guaranteeing repayment of the Obligations or
securing any such guarantee.
"Senior Debt": in respect of the Indenture between Xxxxx
Industries, Inc. and Chemical Bank dated August 1, 1987 (as amended,
supplemented or otherwise modified from time to time, the "1987
Indenture"), "Senior Debt" (as defined therein); in respect of the
Indenture dated as of August 1, 1973 between Xxxxx Industries, Inc.
and Chemical Bank, as trustee (as amended, supplemented or otherwise
modified from time to time, the "1973 Indenture"), "Superior
Indebtedness" (as defined therein); in respect of the Indenture dated
October 1, 1974 between National Industries, Inc. and First National
City Bank, as trustee (as amended, supplemented or otherwise modified
from time to time, the "1974 Indenture"), "Senior Indebtedness" (as
defined therein); and in respect of the Indenture dated as of March
15, 1977 between Xxxxx Industries, Inc. and The Chase Manhattan Bank
11
11
(National Association), as trustee (as amended, supplemented or
otherwise modified from time to time, the "1977 Indenture"), "Senior
Debt" (as defined therein).
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Snapper": Snapper, Inc., a wholly-owned Subsidiary of the
Borrower.
"Snapper Indebtedness": Indebtedness of Snapper to the
Snapper Lender in an aggregate principal amount not to exceed
$50,000,000 at any one time outstanding.
"Snapper Lender": Deutsche Financial Services Corporation.
"Stock Pledge Agreement": the Stock Pledge Agreement to be
executed and delivered by the Borrower, substantially in the form of
Exhibit H, as the same may be amended, supplemented or otherwise
modified from time to time.
"Subordinated Debt": the Indebtedness of the Borrower
pursuant to the 10% Subordinated Debentures due 1999 under the 1974
Indenture, the 6 1/2% Convertible Subordinated Debentures due 2002
under the 1987 Indenture, the 9 7/8% Senior Subordinated Debentures
due March 15, 1997 under the 1977 Indenture and the 9 1/2%
Subordinated Debentures due August 1, 1998 under the 1973 Indenture.
"Subordinated Debt Documents": the collective reference to
the 1987 Indenture, the 1973 Indenture, the 1974 Indenture and the
1977 Indenture.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
"Termination Date": October 30, 1996.
"Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on
the same date and end on the same later date (whether or not such
Loans shall originally have been made on the same day).
"Type": as to any Loan, its nature as an ABR Loan or a
Eurodollar Loan.
12
12
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in any Notes or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in any Notes, and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Borrower not defined in subsection 1.1 and accounting terms partly defined
in subsection 1.1, to the extent not defined, shall have the respective
meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENT
2.1 Commitment. (a) Subject to the terms and conditions
hereof, the Lender agrees to make revolving credit loans ("Loans") to the
Borrower from time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding not to exceed the amount of the
Lender's Commitment. During the Commitment Period the Borrower may use the
Commitments by borrowing, prepaying the Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) The Loans may from time to time be (i) Eurodollar Loans,
(ii) ABR Loans, or (iii) a combination thereof, as determined by the Borrower
and notified to the Lender in accordance with subsections 2.2 and 2.7, provided
that no Loan shall be made as a Eurodollar Loan after the day that is one month
or 30 days, respectively, prior to the Termination Date.
2.2 Procedure for Borrowing. The Borrower may borrow under
the Commitments during the Commitment Period on any Business Day, provided that
the Borrower shall give the Lender irrevocable notice (which notice must be
received by the Lender prior to 10:00 A.M., New York City time, (a) three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Loans are to be initially Eurodollar Loans, or (b) one Business Day
prior to the requested Borrowing Date, otherwise), specifying (i) the amount to
be borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is
to be of Eurodollar Loans, ABR Loans, or a combination thereof and (iv) if the
borrowing is to be entirely or partly of Eurodollar Loans, the respective
amounts of each such Type of Loan and the respective lengths of the initial
Interest Periods therefor. Each borrowing under the Commitments shall be in an
amount equal to (x) in the case of ABR Loans, $100,000 or a whole multiple
thereof (or, if the then Available Commitments are less than $100,000, such
lesser amount) and (y) in the case of Eurodollar
13
13
Loans, $500,000 or a whole multiple of $100,000 in excess thereof. The Lender
will make the amount of each borrowing available for the account of the
Borrower at the office of the Lender specified in subsection 8.2 prior to 11:00
A.M., New York City time, on the Borrowing Date requested by the Borrower by
crediting the account of the Borrower on the books of such office with the
amount of the Loans requested by the Borrower.
2.3 Commitment Fee. The Borrower agrees to pay to the Lender
a commitment fee for the period from and including the first day of the
Commitment Period to the Termination Date, computed at the rate of 0.50% of 1%
per annum on the average daily amount of the Available Commitment of the Lender
during the period for which payment is made, payable quarterly in arrears on
the last day of each March, June, September and December and on the Termination
Date or such earlier date as the Commitment shall terminate as provided herein,
commencing on the first of such dates to occur after the date hereof.
2.4 Termination or Reduction of Commitment. The Borrower
shall have the right, upon not less than five Business Days' notice to the
Lender, to terminate the Commitment or, from time to time, to reduce the amount
of the Commitment. Any such reduction shall be in an amount equal to $100,000
or a whole multiple thereof and shall reduce permanently the Commitment then in
effect.
2.5 Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Lender the then unpaid principal
amount of each Loan of such Lender on the Termination Date (or such earlier
date on which the Loans become due and payable pursuant to Section 7). The
Borrower hereby further agrees to pay interest on the unpaid principal amount
of the Loans from time to time outstanding from the date hereof until payment
in full thereof at the rates per annum, and on the dates, set forth in
subsection 2.10.
(b) The Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to the
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to the Lender from time to
time under this Agreement.
(c) The account of the Lender maintained pursuant to
subsection 2.5(b) shall, to the extent permitted by applicable law, be prima
facie evidence of the existence and amounts of the obligations of the Borrower
therein recorded; provided, however, that the failure of the Lender to maintain
such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made
to such Borrower by the Lender in accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request by the Lender,
the Borrower will execute and deliver to the Lender a promissory note of the
Borrower evidencing the Loans of the Lender, substantially in the form of
Exhibit A with appropriate insertions as to date and principal amount (a
"Note").
14
14
2.6 Optional Prepayments. The Borrower may, at any time and
from time to time, prepay the Loans, in whole or in part, without premium or
penalty, upon at least three (or, in the case of ABR Loans only, one Business
Day's) Business Days' irrevocable notice to the Lender, specifying the date and
amount of prepayment and whether the prepayment is of Eurodollar Loans, ABR
Loans or a combination thereof, and, if of a combination thereof, the amount
allocable to each. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with
any amounts payable pursuant to subsection 2.18.
2.7 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Eurodollar Loans to ABR Loans, by giving
the Lender at least one Business Day's prior irrevocable notice of such
election, provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert ABR Loans to Eurodollar Loans by giving
the Lender at least three Business Days' prior irrevocable notice of such
election. Any such notice of conversion to Eurodollar Loans shall specify the
length of the initial Interest Period or Interest Periods therefor. All or any
part of outstanding Eurodollar Loans and ABR Loans may be converted as provided
herein, provided that (i) no Loan may be converted into a Eurodollar Loan when
any Event of Default has occurred and is continuing and the Lender has
determined that such a conversion is not appropriate and (ii) no Loan may be
converted into a Eurodollar Loan after the date that is one month prior to the
Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Lender, in accordance with the applicable
provisions of the term "Interest Period" set forth in subsection 1.1, of the
length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan may be continued as such (i) when any Event of Default
has occurred and is continuing and the Lender has determined that such a
continuation is not appropriate or (ii) after the date that is one month prior
to the Termination Date and provided, further, that if the Borrower shall fail
to give such notice or if such continuation is not permitted such Loans shall
be automatically converted to ABR Loans on the last day of such then expiring
Interest Period.
2.8 Minimum Amounts and Maximum Number of Tranches. All
borrowings, conversions and continuations of Loans hereunder and all selections
of Interest Periods hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate principal
amount of the Loans comprising each Tranche shall be equal to $500,000 or a
whole multiple of $100,000 in excess thereof. In no event shall there be more
than 10 Tranches outstanding at any time.
2.9 Maintenance, of Loan to Value Ratio. If at any time the
aggregate principal amount of all outstanding Loans is more than 65% of the
Market Value of all Roadmaster Stock, the Borrower shall prepay the Loans so
that, after giving effect to such prepayment, the ratio of (x) the aggregate
principal amount of all outstanding Loans to (y) the Market Value of all
Roadmaster Stock is no more than 65%.
15
15
2.10 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
day plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum
equal to the ABR plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan,
(ii) any interest payable thereon, (iii) any commitment fee or (iv) any other
amount payable hereunder shall not be paid when due (taking into account any
applicable grace period) (whether at the stated maturity, by acceleration or
otherwise), any such overdue principal, interest, commitment fee or other
amount shall bear interest at a rate per annum which is the higher of the rate
that would otherwise be applicable thereto pursuant to the foregoing provisions
of this subsection plus 2% or the ABR plus 3%, from the date of such
non-payment until such overdue principal, interest, commitment fee or other
amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
2.11 Computation of Interest and Fees. (a) Commitment fees
and, whenever it is calculated on the basis of the Prime Rate, interest shall
be calculated on the basis of a 365- (or 366-, as the case may be) day year for
the actual days elapsed; and, otherwise, interest shall be calculated on the
basis of a 360-day year for the actual days elapsed. The Lender shall as soon
as practicable notify the Borrower of each determination of a Eurodollar Rate.
Any change in the interest rate on a Loan resulting from a change in the ABR or
the Eurocurrency Reserve Requirements shall become effective as of the opening
of business on the day on which such change becomes effective. The Lender
shall as soon as practicable notify the Borrower of the effective date of each
such change in any interest rate.
(b) Each determination of an interest rate by the Lender
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lender in the absence of manifest error. The Lender
shall, at the request of the Borrower, deliver to the Borrower a statement
showing the quotations used by the Lender in determining any interest rate
pursuant to subsection 2.10(a) or (c).
2.12 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period the Lender shall have determined (which
determination, in the absence of manifest error, shall be conclusive and
binding upon the Borrower) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Interest Period, the Lender shall give telecopy or
telephonic notice thereof to the Borrower as soon as practicable thereafter.
If such notice is given (x) any Eurodollar Loans requested to be made on the
first day of such Interest Period shall be made as ABR Loans (provided that
prior to 1:00 p.m. on the Business Day preceding the first day of such Interest
Period the Borrower may revoke its notice of
16
16
borrowing, in which case no such Loans shall be made), (y) any Loans that were
to have been converted on the first day of such Interest Period to Eurodollar
Loans shall be converted to or continued as ABR Loans and (z) any outstanding
Eurodollar Loans shall be converted, on the last day of the Interest Periods
therefor, to ABR Loans. Until such notice has been withdrawn by the Lender,
which the Lender agrees to do when the circumstances that prompted the delivery
of such notice no longer exist, no further Eurodollar Loans shall be made or
continued as such, nor shall the Borrower have the right to convert Loans to
Eurodollar Loans.
2.13 Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for the Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of the Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert ABR Loans to Eurodollar Loans shall
forthwith be cancelled and (b) the Lender's Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to ABR Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay to the
Lender such amounts, if any, as may be required pursuant to subsection 2.16.
If circumstances subsequently change so that it is no longer unlawful for the
Lender to make or maintain Eurodollar Loans as contemplated hereunder, the
Lender will, as soon as reasonably practicable after the Lender becomes aware
of such change in circumstances, notify the Borrower and upon receipt of such
notice, the obligations of such Lender to make or continue Eurodollar Loans or
to convert ABR Loans into Eurodollar Loans shall be reinstated.
2.14 Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof or compliance by the Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:
(i) shall subject the Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note or any Eurodollar
Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for Non-Excluded Taxes covered by
subsection 2.15 and changes in the rate of tax on the overall net
income of the Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of the Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on the Lender any other condition;
17
17
and the result of any of the foregoing is to increase the cost to the Lender,
by an amount which the Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay the Lender such additional amount or amounts as will compensate
the Lender for such increased cost or reduced amount receivable.
(b) If the Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by the Lender or any
corporation controlling the Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on the Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which the Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration the Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by the Lender to
be material, then from time to time after submission by the Lender to the
Borrower of a written request therefor, the Borrower shall promptly pay to the
Lender such additional amount or amounts as will compensate the Lender for such
reduction. Notwithstanding any other provision of this subsection 2.14(b), the
Lender shall not demand compensation for any increased cost or reduction
referred to above if it shall not at the time be the general policy or practice
of the Lender to demand such compensation in similar circumstances under
comparable provisions of other credit agreements, if any.
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower of
the event by reason of which it has become so entitled. A certificate as to
any additional amounts payable pursuant to this subsection submitted by the
Lender to the Borrower shall be conclusive in the absence of manifest error.
The agreements in this subsection shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
2.15 Taxes. All payments made by the Borrower under this
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding (i) any taxes imposed upon it by any
jurisdiction other than the United States or any political subdivision thereof,
(ii) any taxes imposed by the United States or any political subdivision
thereof by means of withholding at the source, if and to the extent that such
taxes shall be in effect and shall be applicable on the date hereof, to
payments to be made to such Lender and (iii) any net income taxes, including
without limitation any branch tax, and franchise taxes (imposed in lieu of net
income taxes) imposed on the Lender as a result of a present or former
connection between the Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from the
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or any other Loan
18
18
Document). If any such non-excluded taxes, levies, imposts, duties, charges,
fees deductions or withholdings ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to the Lender or under any Note, the amounts
so payable to the Lender shall be increased to the extent necessary to yield to
the Lender (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in
this Agreement. Whenever any Non-Excluded Taxes are payable by the Borrower,
as promptly as possible thereafter the Borrower shall send to the Lender for
its own account a certified copy of an original official receipt received by
the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Lender the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lender for any incremental taxes,
interest or penalties that may become payable by the Lender as a result of any
such failure. The agreements in this subsection shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
2.16 Indemnity. The Borrower agrees to indemnify the Lender
and to hold the Lender harmless from any loss or expense which the Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment or conversion of
Eurodollar Loans on a day which is not the last day of an Interest Period with
respect thereto. Such indemnification may include an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
amount so prepaid, or not so borrowed, converted or continued, for the period
from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of such Interest Period (or, in the case of a failure
to borrow, convert or continue, the Interest Period that would have commenced
on the date of such failure) in each case at the applicable rate of interest
for such Loans provided for herein (excluding, however, the Applicable Margin
included therein, if any or any amounts payable under subsection 2.10(c)) over
(ii) the amount of interest (as reasonably determined by the Lender) which
would have accrued to the Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
2.17 Change of Lending Office. The Lender agrees that if it
makes any demand for payment under subsection 2.14 or 2.15, or if any adoption
or change of the type described in subsection 2.13 shall occur with respect to
it, it will use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its sole discretion) to designate a
different lending office if the making of such a designation would reduce or
obviate the need for the Borrower to make payments under subsection 2.14 or
2.15, or would eliminate or reduce the effect of any adoption or change
described in subsection 2.13.
19
19
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make
the Loans, the Borrower hereby represents and warrants to the Lender that:
3.1 Financial Condition. The consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at December 31, 1994 and the
related consolidated statements of income and of cash flows for the fiscal year
ended on such date, reported on by Ernst & Young, copies of which have
heretofore been furnished to the Lender, are complete and correct and present
fairly in all material respects the consolidated financial condition of the
Borrower and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated cash flows for
the fiscal year then ended. The unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at June 30, 1995 and the related
unaudited consolidated statements of income and of cash flows for the six-month
period ended on such date, certified by a Responsible Officer, copies of which
have heretofore been furnished to the Lender, present fairly in all material
respects the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of
their operations and their consolidated cash flows for the six-month period
then ended (subject to normal year-end audit adjustments). All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer, as the
case may be, and as disclosed therein). [Except as set forth in Schedule 3.1,]
neither the Borrower nor any of its consolidated Subsidiaries had, at the date
of the most recent balance sheet referred to above, any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including, without limitation, any
interest rate or foreign currency swap or exchange transaction, which is not
reflected in the foregoing statements or in the notes thereto. Except as
contemplated by the Proxy Statement, during the period from December 31, 1994
to and including the date hereof there has been no sale, transfer or other
disposition by the Borrower or any of its consolidated Subsidiaries of any
material part of its business or property and no purchase or other acquisition
of any business or property (including any capital stock of any other Person)
material in relation to the consolidated financial condition of the Borrower
and its consolidated Subsidiaries at December 31, 1994.
3.2 No Change. Except as contemplated by, or disclosed in,
the Proxy Statement or any SEC Filing, (a) since December 31, 1994 there has
been no development or event which has had or could reasonably be expected to
have a Material Adverse Effect, and (b) during the period from December 31,
1994 to and including the date hereof no dividends or other distributions have
been declared, paid or made upon the Capital Stock of the Borrower nor has any
of the Capital Stock of the Borrower been redeemed, retired, purchased or
otherwise acquired for value by the Borrower or any of its Subsidiaries.
3.3 Existence; Compliance with Law. Each of the Borrower and
the other Loan Parties (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
power and authority, and the legal right, to
20
20
own and operate its property, to lease the property it operates as lessee and
to conduct the business in which it is currently engaged, (c) except as set
forth on Schedule 3.3 is duly qualified as a foreign corporation or other
entity and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification except to the extent that the failure to be so
qualified and in good standing could not be reasonably likely to have a
Material Adverse Effect and (d) is in compliance with all Requirements of Law
except to the extent that the failure to comply therewith could not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations.
The Borrower has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party and to
borrow hereunder and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement and any Notes and to
authorize the execution, delivery and performance of the Loan Documents to
which it is a party. No consent or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority or any other Person
is required in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of the Loan Documents to
which the Borrower is a party other than (i) any filings required in order to
perfect and/or insure the priority of Liens created pursuant to the Security
Documents, (ii) those the failure to obtain or make could not be reasonably
likely to have a Material Adverse Effect and (iii) those which have been
obtained and are in full force and effect. This Agreement has been, and each
other Loan Document to which it is a party will be, duly executed and delivered
on behalf of the Borrower. This Agreement constitutes, and each other Loan
Document to which it is a party when executed and delivered will constitute, a
legal, valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
3.5 No Legal Bar. The execution, delivery and performance of
the Loan Documents to which the Borrower is a party, the borrowings hereunder
and the use of the proceeds thereof will not violate any Requirement of Law or
Contractual Obligation of the Borrower or of any of the other Loan Parties
except to the extent such violations could not, in the aggregate, be reasonably
expected to have a Material Adverse Effect, and will not result in, or require,
the creation or imposition of any Lien on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or Contractual
Obligation (other than Liens (i) created or permitted by the Loan Documents or
(ii) which in the aggregate could not reasonably be expected to have a Material
Adverse Effect).
3.6 No Material Litigation. Except as contemplated by, or
disclosed in, the Proxy Statement or any SEC Filing, no litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of the Borrower, threatened by or
against the Borrower or any of the other Loan Parties or against any of its
21
21
or their respective properties or revenues (a) with respect to any of the Loan
Documents or any of the transactions contemplated hereby or thereby, or (b)
which could reasonably be expected to have a Material Adverse Effect.
3.7 No Default. Except as contemplated by, or disclosed in,
the Proxy Statement or any SEC Filing, neither the Borrower nor any of the
other Loan Parties is in default under or with respect to any of its
Contractual Obligations in any respect which could reasonably be expected to
have a Material Adverse Effect. No Default or Event of Default has occurred
and is continuing.
3.8 Ownership of Property; Liens. Each of the Borrower and
the other Loan Parties has good record and marketable title in fee simple to,
or a valid leasehold interest in, all its real property, and good title to, or
a valid leasehold interest in, all its other property (other than Intellectual
Property), and none of such property is subject to any Lien except as permitted
by subsection 6.2 and except for Liens which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
3.9 Intellectual Property. The Borrower and each of the
other Loan Parties owns, or is licensed to use or otherwise has the right to
use, all trademarks, tradenames, copyrights, technology, know-how and processes
reasonably necessary for the conduct of its business as currently conducted
except for those the failure to own or license which could not reasonably be
expected to have a Material Adverse Effect (the "Intellectual Property"). No
claim has been asserted and is pending by any Person challenging or questioning
the use of any such Intellectual Property or the validity or effectiveness of
any such Intellectual Property, nor does the Borrower know of any valid basis
for any such claim which, in either case, could reasonably be expected to have
a Material Adverse Effect. The use of such Intellectual Property by the
Borrower and the other Loan Parties does not infringe any valid and enforceable
patent, trademark or copyright of any Person, except for such claims and
infringements that, in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.
3.10 Taxes. Except for any of the following the failure of
which to occur could not reasonably be expected to have a Material Adverse
Effect, each of the Borrower and its Subsidiaries has filed or caused to be
filed all tax returns which, to the knowledge of the Borrower, are required to
be filed and has paid all taxes shown to be due and payable on said returns or
on any assessments made against it or any of its property and all other taxes,
fees or other charges imposed on it or any of its property by any Governmental
Authority (other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the
Borrower or its Subsidiaries, as the case may be); no tax Lien has been filed,
and, to the knowledge of the Borrower, no claim is being asserted, with respect
to any such tax, fee or other charge which could reasonably be expected to have
a Material Adverse Effect.
3.11 Federal Regulations. No part of the proceeds of any
Loans will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of
22
22
the quoted terms under Regulation G or Regulation U of the Board as now and
from time to time hereafter in effect. If requested by the Lender, the
Borrower will furnish to the Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-1 or FR Form U-1 referred to in
said Regulation G or Regulation U, as the case may be.
3.12 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. Except as set forth on Schedule 3.12, no termination of
a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan
has arisen, during such five-year period. Except as set forth on Schedule
3.12, the present value of all accrued benefits under each Single Employer Plan
(based on those assumptions used to fund such Plans) did not, as of the last
annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such
accrued benefits. Except as set forth on Schedule 3.12, neither the Borrower
nor any Commonly Controlled Entity has during the past five years had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
3.13 Investment Company Act; Other Regulations. The Borrower
is not an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
The Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
3.14 Subsidiaries. All of the domestic Subsidiaries of the
Borrower at the date hereof are listed on Schedule 3.14.
3.15 Purpose of Loans. The proceeds of the Loans shall be
used by the Borrower for general corporate purposes of the Borrower and its
subsidiaries, including the refinancing of the indebtedness of Orion.
3.16 Priority of Indebtedness. The Indebtedness of the
Borrower hereunder constitutes Senior Debt under the Subordinated Debt
Documents.
3.17 Environmental Matters.
(a) To the best knowledge of the Borrower, except as set
forth in the Proxy Statement and the SEC Filings and on Schedule 3.17,
the facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the
23
23
"Properties") do not contain, and have not previously contained, any
Materials of Environmental Concern in amounts or concentrations which
(i) constitute or constituted a violation of, or (ii) could reasonably
be expected to give rise to liability under, any Environmental Law
except in either case insofar as such violation or liability, or any
aggregation thereof, is not reasonably likely to result in a Material
Adverse Effect.
(b) To the best knowledge of the Borrower, except as set
forth in the Proxy Statement and the SEC Filings and on Schedule 3.17,
the Properties and all operations at the Properties are in compliance,
and have in the last five years been in compliance, with all
applicable Environmental Laws, and there is no contamination at, under
or about the Properties or violation of any Environmental Law with
respect to the Properties or the business operated by the Borrower or
any of its Subsidiaries (the "Business") which could reasonably be
expected to interfere with the continued operation of the Properties
in any material respect or impair the fair saleable value thereof in
any material respect.
(c) Neither the Borrower nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the
Properties or the Business, nor does the Borrower have knowledge or
reason to believe that any such notice will be received or is being
threatened except insofar as such notice or threatened notice, or any
aggregation thereof, does not involve a matter or matters that is or
are reasonably likely to result in a Material Adverse Effect.
(d) To the best knowledge of the Borrower, except as set
forth in the Proxy Statement and the SEC Filings and on Schedule 3.17,
materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to
a location which could not reasonably be expected to give rise to
liability under, any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed of
at, on or under any of the Properties in violation of, or in a manner
that could not reasonably be expected to give rise to liability under,
any applicable Environmental Law except insofar as any such violation
or liability referred to in this paragraph, or any aggregation
thereof, is not reasonably likely to result in a Material Adverse
Effect.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened,
under any Environmental Law to which the Borrower or any Subsidiary is
named as a party with respect to the Properties or the Business, nor
are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with
respect to the Properties or the Business except insofar as such
proceeding, action, decree, order or other requirement, or any
aggregation thereof, is not reasonably likely to result in a Material
Adverse Effect.
24
24
(f) To the best knowledge of the Borrower, except as set
forth in the Proxy Statement and the SEC Filings and on Schedule 3.17,
there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or
related to the operations of the Borrower or any Subsidiary in
connection with the Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that could not
reasonably be expected to give rise to liability under Environmental
Laws except insofar as any such violation or liability referred to in
this paragraph, or any aggregation thereof, is not reasonably likely
to result in a Material Adverse Effect.
3.18 Regulation H. The Mortgage does not encumber improved real
property which is located in an area that has been identified by the Secretary
of Housing and Urban Development as an area having special flood hazards and in
which flood insurance has been made available under the National Flood
Insurance Act of 1968.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Loans. The agreement of the Lender
to make the initial Loan requested to be made by it is subject to the
satisfaction, immediately prior to or concurrently with the making of such Loan
on the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Lender shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the
Borrower, (ii) the Stock Pledge Agreement, executed and delivered by a
duly authorized officer of the Borrower, (iii) the MITI Guarantee,
executed and delivered by a duly authorized officer of the Guarantor,
(iv) the Security Agreement, executed and delivered by a duly
authorized officer of Snapper, (v) the Mortgage, executed and
delivered by a duly authorized officer of Snapper, (vi) the
Intercreditor Agreement, executed and delivered by a duly authorized
officer of Snapper, the Borrower and the Snapper Lender and (vii) a
Note duly completed and executed by a duly authorized officer of the
Borrower.
(b) Mergers. The Mergers and the financing transactions
contemplated by the Proxy Statement to have occurred concurrently with
the Mergers shall have been consummated.
(c) Closing Certificate. The Lender shall have received a
certificate of the Borrower, dated the Closing Date, substantially in
the form of Exhibit C, with appropriate insertions and attachments,
satisfactory in form and substance to the Lender, executed by the
President or any Vice President and the Secretary or any Assistant
Secretary of the Borrower.
(d) Corporate Proceedings of Loan Parties. The Lender shall
have received a copy of the resolutions, in form and substance
satisfactory to the Lender, of the Board
25
25
of Directors of each Loan Party authorizing (i) the execution,
delivery and performance of the Loan Documents to which it is a party,
(ii) in the case of the Borrower, the borrowings contemplated
hereunder and (iii) the granting by it of the Liens created pursuant
to the Security Documents to which it is a party, certified by the
Secretary or an Assistant Secretary of such Loan Party as of the
Closing Date, which certificate shall be in form and substance
reasonably satisfactory to the Lender and shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(e) Incumbency Certificates. The Lender shall have received
a Certificate of each Loan Party, dated the Closing Date, as to the
incumbency and signature of the officers of such Loan Party executing
any Loan Documents, satisfactory in form and substance to the Lender,
executed by the President or any Vice President and the Secretary or
any Assistant Secretary of such Loan Party.
(f) Corporate Documents. The Lender shall have received true
and complete copies of the certificate of incorporation and by-laws of
each Loan Party, certified as of the Closing Date as complete and
correct copies thereof by the Secretary or an Assistant Secretary of
such Loan Party.
(g) Fees. The Lender shall have received the fees to be
received on the Closing Date pursuant to the Commitment Letter dated
October 2, 1995 between the Borrower and the Lender.
(h) Legal Opinions. The Lender shall have received the
executed legal opinion of Long Xxxxxxxx & Xxxxxx, counsel to the
Borrower and Snapper, Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx, counsel to
the Guarantor and Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, special
New York counsel to the Loan Parties collectively, covering the
matters set forth on Exhibit B which opinions shall cover such other
matters incident to the transactions contemplated by this Agreement as
the Lender may reasonably require.
(i) Pledged Stock; Stock Powers;. The Lender (or, in the
case of the Stock of Snapper, an agent of the Lender under the
Intercreditor Agreement) shall have received the certificates
representing the shares pledged pursuant to the Stock Pledge
Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the
pledgor thereof. The Lender shall have received the Acknowledgements
attached to the Stock Pledge Agreement from the Issuers named therein.
(j) Actions to Perfect Liens. The Lender shall have received
evidence in form and substance satisfactory to it that all filings,
recordings, registrations and other actions, including, without
limitation, the filing of duly executed financing statements on form
UCC-1, necessary or, in the opinion of the Lender, desirable to
perfect the Liens created by the Security Documents shall have been or
will promptly be completed.
26
26
(k) Surveys. The Lender shall have received, and the title
insurance company issuing the policy referred to in subsection 4.1(l)
(the "Title Insurance Company") shall have received, maps or plats of
an as-built survey of the sites of the property covered by the
Mortgage certified to the Lender and the Title Insurance Company in a
manner satisfactory to them, dated a date satisfactory to the Lender
and the Title Insurance Company by an independent professional
licensed land surveyor satisfactory to the Lender and the Title
Insurance Company, which maps or plats and the surveys on which they
are based shall 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 and 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 or necessary or desirable 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.
(l) Title Insurance Policy. The Lender shall have received
in respect of each parcel covered by each Mortgage a mortgagee's title
policy (or policies) or marked up unconditional binder for such
insurance dated the Closing Date. Each such policy shall (i) be in an
amount satisfactory to the Lender; (ii) be issued at ordinary rates;
(iii) insure that the Mortgage insured thereby creates a valid second
Lien on tract A, B and D and a third Lien on tract C of such parcel
free and clear of all defects and encumbrances, except such as may be
approved by the Lender; (iv) name the Lender as the insured
thereunder; (v) be in the form of ALTA Loan Policy - 10/17/92; (vi)
contain such endorsements and affirmative coverage as the Lender may
request and (vii) be issued by title companies satisfactory to the
Lender (including any such title companies acting as co-insurers or
reinsurers, at the option of the Lender). The Lender shall have
received evidence satisfactory to it that all premiums in respect of
each such policy, and all charges for mortgage recording tax, if any,
have been paid.
(m) Flood Insurance. If requested by the Lender, the Lender
shall have received (i) a policy of flood insurance which (A) covers
any parcel of improved real property which is encumbered by any
Mortgage (B) is written in an amount not less than the outstanding
principal amount of the indebtedness secured by such Mortgage which is
reasonably allocable to such real property or the maximum limit of
coverage made available with respect to the particular type of
property under the Act, whichever is less, and (C) has a term ending
not later than the maturity of the indebtedness secured by such
Mortgage and (ii) confirmation that the Company has received the
notice required pursuant to Section 208(e)(3) of Regulation H of the
Board of Governors of the Federal Reserve System.
27
27
(n) Copies of Documents. The Lender shall have received a
copy of all recorded documents referred to, or listed as exceptions to
title in, the title policy or policies referred to in subsection
4.1(l) and a copy, certified by such parties as the Lender may deem
appropriate, of all other documents affecting the property covered by
the Mortgage.
(o) No Litigation. Except as contemplated by, or disclosed
in, the Proxy Statement or any SEC Filing, no litigation, inquiry,
injunction or restraining order shall be pending, entered or, to the
Borrower's knowledge, threatened against the Borrower or any
Subsidiary which, in the reasonable opinion of the Lender, could have
a Material Adverse Effect.
(p) Approvals. All governmental and third party approvals
necessary or advisable in connection with the financing contemplated
hereby and the continuing operations of the Borrower and its
subsidiaries shall have been obtained and be in full force and effect
except where the failure to obtain any such approval could not
reasonably be expected to have a Material Adverse Effect.
(q) Lien Searches. The Lender shall have received the
results of a recent lien search in each of the jurisdictions and
offices where assets of the Borrower and Snapper are located or
recorded, and such search shall reveal no liens on any of the assets
of the Borrower or Snapper except for liens permitted by the Loan
Documents.
(r) Form FR-1. The Lender shall have received a Form FR-1
executed by the Borrower with respect to the Roadmaster Stock.
(s) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance
to the Lender, and the Lender shall have received such other documents
in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
4.2 Conditions to Each Loan. The agreement of the Lender to
make any Loan requested to be made by it on any date (including, without
limitation, its initial Loan) is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrower and the other Loan
Parties in or pursuant to the Loan Documents shall be true and correct
in all material respects on and as of such date as if made on and as
of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Loans requested to be made on such date.
28
28
(c) Outstanding Loans. After giving effect to such Loan, the
aggregate principal amount of all outstanding Loans will not exceed
60% of the Market Value of the Roadmaster Stock.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date thereof that the conditions contained
in this subsection 4.2 have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitment
remains in effect or any amount is owing to the Lender hereunder or under any
other Loan Document, the Borrower shall and in the case of delivery of
financial information and reports pursuant to subsections 5.1(c) and (d) only,
shall cause the Guarantor to:
5.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower, the consolidated
balance sheet of the Borrower and its consolidated Subsidiaries, as at
the end of such year and the related consolidated statements of income
and retained earnings and of cash flows of the Borrower and its
consolidated Subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by KPMG Peat
Marwick LLP, Ernst & Young L.L.P. or other independent certified
public accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of
each fiscal year of the Borrower, the unaudited consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end
of such quarter and the related unaudited consolidated statements of
income and retained earnings and of cash flows of the Borrower and its
consolidated Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each
case in comparative form the figures for the previous year, certified
by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
(c) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Guarantor, the consolidated
balance sheets of the Guarantor and its consolidated Subsidiaries, as
at the end of such year and the related consolidated statements of
income and retained earnings and of cash flows of each of the
Guarantor and its consolidated Subsidiaries for such year, setting
forth in each case in comparative form the figures for the previous
year, reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of
29
29
the audit, by KPMG Peat Marwick LLP, Ernst & Young L.L.P. or other
independent certified public accountants of nationally recognized
standing; and
(d) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of
each fiscal year of the Guarantor, the unaudited consolidated balance
sheet of the Guarantor and its consolidated Subsidiaries as at the end
of such quarter and the related unaudited consolidated statements of
income and retained earnings and of cash flows of the Guarantor and
its consolidated Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each
case in comparative form the figures for the previous year, certified
by an officer of the Guarantor as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except (i) as approved by such accountants or officer, as the case may
be, and disclosed therein and except that the quarterly financial statements
provided pursuant to subsection 5.1(b) and (d) shall only be required to
include footnotes to the extent such footnotes would be required to be included
on Form 10-Q filed with the Securities and Exchange Commission and (ii) the
Guarantor accounts for its interest in its foreign Affiliates and foreign
Subsidiaries (collectively the "Joint Ventures") by recording its equity
interest in the losses of such Joint Ventures based on a three month lag (so
that, by way of example only, any reference in the annual financial statements
of the Guarantor to the Guarantor's interest in or the results of operations or
financial condition or financial statements of the Joint Ventures will reflect
the Guarantor's policy of accounting for such Joint Ventures as of and for a
period ended three months prior to the date that the Guarantor's annual
financial statements have been prepared as of and for, so that such annual
financial statements will reflect the period ending on, and twelve months of
activity ending on September 30 for such Joint Ventures).
5.2 Certificates; Other Information. Furnish to the Lender:
(a) concurrently with the delivery of the financial
statements referred to in subsection 5.1(a), a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except
as specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsections 5.1(a) and (b), a certificate of
a Responsible Officer stating that, to the best of such Responsible
Officer's knowledge, the Borrower during such period has observed or
performed all of its covenants and other agreements, and satisfied
every condition, contained in this Agreement and the other Loan
Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event
of Default except as specified in such certificate;
30
30
(c) not later than thirty days after the end of each fiscal
year of the Borrower, a copy of the projections by the Borrower of the
operating budget and cash flow budget of the Borrower and its
Subsidiaries for the succeeding fiscal year, such projections to be
accompanied by a certificate of a Responsible Officer to the effect
that such projections have been prepared on the basis of reasonable
assumptions and that such Responsible Officer has no reason to believe
they are incorrect or misleading in any material respect;
(d) within five days after the same are sent, copies of all
financial statements and reports which the Borrower sends to its
stockholders, and within five days after the same are filed, copies of
all financial statements and reports which the Borrower may make to,
or file with, the Securities and Exchange Commission or any successor
or analogous Governmental Authority; and
(e) promptly, such additional financial and other information
as the Lender may from time to time reasonably request.
5.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be.
5.4 Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as is contemplated by,
or described in, the Proxy Statement and preserve, renew and keep in full force
and effect its corporate existence and take all reasonable action to maintain
all rights, privileges and franchises necessary or desirable in the normal
conduct of its business except if (i) in the reasonable business judgment of
the Borrower it is in its best economic interest not to preserve and maintain
such rights, privileges or franchises, and (ii) such failure to preserve and
maintain such rights, privileges or franchises would not, in the aggregate, be
reasonably likely to have a Material Adverse Effect; comply with all
Contractual Obligations and Requirements of Law except to the extent that
failure to comply therewith could not, in the aggregate, be reasonably expected
to have a Material Adverse Effect.
5.5 Maintenance of Property; Insurance. Keep all property
useful and necessary in its business in good working order and condition
(normal wear and tear excepted), except to the extent that the failure to do so
with respect to any such property would not individually or in the aggregate to
be reasonably likely to have a Material Adverse Effect; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but
including in any event public liability, product liability and business
interruption) as are usually insured against in the same general area by
companies engaged in the same or a similar business (or, in lieu of or
supplemental to such insurance, adopt such other plan or method of protection,
whether by the establishment of an insurance fund or reserve to be held and
applied to make good
31
31
losses from casualties or liabilities, or otherwise, and consistent with sound
business practice, as may be determined by the Board of Directors of the
Borrower); and furnish to the Lender, upon written request, full information as
to the insurance carried.
5.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and activities; and
permit representatives of the Lender to visit and inspect any of its properties
and examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired and to discuss the
business, operations, properties and financial and other condition of the
Borrower and its Subsidiaries with officers and employees of the Borrower and
its Subsidiaries and with its independent certified public accountants;
provided that the Lender shall notify the Borrower prior to any contact with
such accountants and shall give the Borrower the opportunity to participate in
such discussions.
5.7 Notices. Promptly give notice to the Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental
Authority, which in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower in
which the amount involved is $1,000,000 or more and not covered by
insurance or in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any
event within 30 days after the Borrower knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or any withdrawal from, or
the termination, Reorganization or Insolvency of, any Multiemployer
Plan or (ii) the institution of proceedings or the taking of any other
action by the PBGC or the Borrower or any Commonly Controlled Entity
or any Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan; and
(e) any development or event which could reasonably be
expected to have a Material Adverse Effect.
32
32
Each notice pursuant to this subsection shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower proposes to take with respect
thereto.
5.8 Environmental Laws. (a) Comply with, and use its best
efforts to cause compliance by all tenants and subtenants, if any, with, all
applicable Environmental Laws and obtain and use its best efforts to comply in
all material respects with and maintain, and ensure that all tenants and
subtenants obtain and comply in all material respects with and maintain, any
and all licenses, approvals, notifications, registrations or permits required
by applicable Environmental Laws except to the extent that failure to do so
could not be reasonably expected to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required
under Environmental Laws and comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except, in each case, to the extent that the same are being contested in
good faith by appropriate proceedings and the pendency of such proceedings
could not be reasonably expected to have a Material Adverse Effect.
5.9 Registration of Stock of Roadmaster Industries, Inc. Use
its reasonable best efforts to cause Roadmaster Industries, Inc. to file,
become effective and maintain effective a "shelf" registration statement under
the Securities Act of 1933 covering the shares of stock of Roadmaster
Industries, Inc. pledged pursuant to the Stock Pledge Agreement.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitment
remains in effect or any amount is owing to the Lender hereunder or under any
other Loan Document, the Borrower shall not:
6.1 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness of the Borrower to any Subsidiary;
(c) Indebtedness outstanding on the date hereof and listed on
Schedule 6.1 and any refinancings refundings, renewals or extensions
thereof;
(d) Indebtedness with respect to any surety bonds required in
the ordinary course of business of the Borrower, provided that such
Indebtedness shall not at any time exceed $250,000 in the aggregate;
and
(e) additional Indebtedness (not otherwise permitted
hereunder) not exceeding $1,000,000 in aggregate principal amount at
any one time outstanding.
33
33
6.2 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP;
(b) supplier's, carriers', warehousemen's, mechanics',
materialmen's, repairmen's, landlord's or other like Liens arising in
the ordinary course of business which are not overdue for a period of
more than 60 days or which are being contested in good faith by
appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers
under insurance or self-insurance arrangements;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(e) leases, subleases, easements, rights-of-way,
encroachments and other survey defects, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule
6.2, securing Indebtedness permitted by subsection 6.1(c) and
replacement Liens securing any Indebtedness refinanced as permitted by
subsection 6.1(c), provided that no such Lien (or replacement Lien) is
spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding $5,000,000 in aggregate amount at any time
outstanding;
(h) Liens created pursuant to the Security Documents;
(i) Liens on the Capital Stock of Snapper securing the
Snapper Indebtedness;
(j) attachment or judgment liens (other than any Liens
described in subsection 6.2(k)) individually or in the aggregate not
in excess of $1,000,000 (exclusive of (i) any amounts that are duly
bonded to the reasonable satisfaction of the Lender or (ii)
34
34
any amount adequately covered by insurance as to which the insurance
company has not disclaimed or disputed in writing its obligations for
coverage);
(k) any Lien arising pursuant to any order of attachment,
distraint or other legal process in connection with court or
arbitration proceedings so long as the execution or other enforcement
thereof is effectively stayed, the claims secured thereby are being
contested in good faith by appropriate proceedings, adequate reserves
have been established with respect to such claims in accordance with
GAAP and no Event of Default would occur as a result thereof; and
(l) Liens incidental to licensing agreements with respect to
Intellectual Property in the ordinary course of business.
6.3 Limitation on Guarantee Obligations. Create, incur,
assume or suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and
listed on Schedule 6.3 and any renewals, extensions or modification
thereof;
(b) Guarantee Obligations incurred after the date hereof in
an aggregate amount not to exceed $10,000,000 at any one time
outstanding; and
(c) the guarantee by the Borrower of the Snapper Indebtedness.
6.4 Limitation on Fundamental Changes. Enter into any
merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets, or make any material change in its present method of
conducting business, except any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation).
6.5 Limitation on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, except:
(a) the sale, abandonment or other disposition of obsolete or
worn out property in the ordinary course of business;
(b) the sale or other disposition of any property in the
ordinary course of business;
(c) transfers constituting advances, loans, extensions of
credit, capital contributions, purchases, investments and the like
permitted by subsection 6.7;
35
35
(d) licensing agreements with respect to Intellectual
Property in the ordinary course of business; and
(e) the transfer of any stock of any Subsidiary pursuant to
the merger, consolidation, amalgamation, liquidation or dissolution of
such Subsidiary with or into another Subsidiary.
6.6 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock of the Borrower) on, or
make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Borrower or any
warrants or options to purchase any such Capital Stock, whether now or
hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
the Borrower or any Subsidiary.
6.7 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person,
except :
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) loans to officers of the Borrower listed on Schedule 6.7
in aggregate principal amounts outstanding not to exceed the
respective amounts set forth for such officers on said Schedule;
(d) loans and advances to officers, directors and other
employees of the Borrower or its Subsidiaries for (i) travel and
entertainment expenses in the ordinary course of business and (ii)
relocation and other similar expenses in an aggregate amount for the
Borrower and its Subsidiaries not to exceed $500,000 at any one time
outstanding;
(e) investments by the Borrower in its Subsidiaries and
investments by such Subsidiaries in the Borrower and in other
Subsidiaries;
(f) loans by the Borrower to its employees in connection with
management incentive plans in an aggregate amount not to exceed
$500,000;
(g) investments, loans and advances in existence on the date
hereof, and extensions, renewals, modifications or restatements
thereof;
(h) if in the reasonable judgment of the Borrower, any
customer is deemed to be in a reorganization or unable to make a
timely cash payment on Indebtedness of
36
36
such customer owing to it, the Borrower may invest in securities
issued by such customer or any affiliate thereof in lieu of cash
payments; provided that the Borrower has paid no new consideration
(other than forgiveness of Indebtedness or other obligations)
therefor; and
(i) so long as after giving effect thereto no Default or
Event of Default shall have occurred and be continuing, acquisitions
of, or investments in, one or more businesses or lines of business, in
an aggregate amount not to exceed $10,000,000 (not including the
amount of any common stock of the Borrower issued as consideration for
such acquisition or investment) provided such acquisition or
investment results in the creation or acquisition of, or is
consummated by, a Subsidiary, all of the Capital Stock of which owned
by the Borrower is pledged to the Lender to secure the Borrower's
obligations hereunder and under the other Loan Documents.
6.8 Limitation on Optional Payments and Modifications of Debt
Instruments. (a) Make any optional payment or prepayment on or redemption or
purchase of any Indebtedness of the Borrower (other than the Loans), (b) amend,
modify or change, or consent or agree to any amendment, modification or change
to any of the terms of such Indebtedness (other than any such amendment,
modification or change which would extend the maturity or reduce the amount of
any payment of principal thereof or which would reduce the rate or extend the
date for payment of interest thereon), or (c) amend the subordination
provisions of the Subordinated Indebtedness.
6.9 Limitation on Transactions with Affiliates. Except as
disclosed on Schedule 6.9, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any Affiliate unless such transaction is (a) otherwise
permitted under this Agreement, (b) in the ordinary course of the Borrower's
business and (c) upon fair and reasonable terms no less favorable to the
Borrower. as the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
6.10 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the Borrower of real
or personal property which has been or is to be sold or transferred by the
Borrower to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of the Borrower or such Subsidiary.
6.11 Limitation on Lines of Business. Enter into any
business, either directly or through any Subsidiary, except for those
businesses which, as contemplated by or disclosed in the Proxy Statement, the
Borrower and its Subsidiaries are or will be engaged or which are reasonably
related thereto.
37
37
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
when due in accordance with the terms thereof or hereof; or the
Borrower shall fail to pay any interest on any Loan, or any other
amount payable hereunder, within five days after any such interest or
other amount becomes due in accordance with the terms thereof or
hereof and, in the case of any such other amount, the Borrower has
received at least two days' notice thereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document
or which is contained in any certificate, document or financial or
other statement furnished by it at any time under or in connection
with this Agreement or any such other Loan Document shall prove to
have been incorrect in any material respect on or as of the date made
or deemed made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 6,
Section 5 of the Stock Pledge Agreement, and Section 5 of the Security
Agreement; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days from the earlier of (i)
the date any Responsible Officer obtains or should have obtained
knowledge of such default and (ii) the date the Borrower receives
notice of such default from the Lender; or
(e) The Borrower or Snapper shall (i) default in any payment
of principal of or interest of any Indebtedness (other than the Loans)
or in the payment of any Guarantee Obligation, in either case, in an
aggregate principal amount in excess of $1,000,000, beyond the period
of grace (not to exceed 30 days), if any, provided in the instrument
or agreement under which such Indebtedness or Guarantee Obligation was
created after giving effect to any consent or waivers relating
thereto; or (ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or Guarantee
Obligation or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice
if required, such Indebtedness to become due prior to its stated
maturity or such Guarantee Obligation to become payable, in either
case, in an aggregate principal amount in excess of $1,000,000; or
38
38
(f) (i) The Borrower or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of
its assets, or the Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there
shall be commenced against the Borrower or any of its Subsidiaries any
case, proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall
be commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order
for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof;
or (iv) the Borrower or any of its Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) the Borrower or any of its Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor of
the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion
of the Lender, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Lender is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
the Borrower involving in the aggregate a liability (not paid or fully
covered by insurance) of $1,000,000 or more, and all such judgments or
decrees shall not have been vacated,
39
39
discharged, stayed or bonded pending appeal within 60 days from the
entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any
reason (except as permitted under subsection 6.4), to be in full force
and effect, or the Borrower or any other Loan Party which is a party
to any of the Security Documents shall so assert or (ii) the Lien
created by any of the Security Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby;
or
(j) (i) Any Person or "group" (within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended)
(other than Metromedia Company, Xxxx Xxxxx, Xxxxxx Xxxxxxxxx or any of
their respective Affiliates or any "group" that includes any of the
foregoing) (A) shall have acquired beneficial ownership of 33 1/3% or
more of any outstanding class of Capital Stock having ordinary voting
power in the election of directors of the Borrower or (B) shall obtain
the power (whether or not exercised) to elect a majority of the
Borrower's directors or (ii) the Board of Directors of the Borrower
shall not consist of a majority of Continuing Directors; " Continuing
Directors" shall mean the directors of the Borrower on the Closing
Date and each other director, if such other director's nomination for
election to the Board of Directors of the Borrower is recommended by a
majority of the then Continuing Directors or if such Director is
appointed by a majority of the Continuing Directors;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Borrower, automatically the Commitment shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions
may be taken: (i) the Lender may, by notice to the Borrower, declare the
Commitment to be terminated forthwith, whereupon the Commitment shall
immediately terminate; and (ii) the Lender may, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement to be due and payable forthwith, whereupon
the same shall immediately become due and payable. Except as expressly
provided above in this Section, presentment, demand, protest and all other
notices of any kind are hereby expressly waived.
SECTION 8. MISCELLANEOUS
8.1 Amendments and Waivers. Neither this Agreement nor any
terms hereof may be amended, supplemented or modified except by a written
amendment, supplement or modification hereto signed by the Borrower and the
Lender. The Lender may, from time to time, waive, on such terms and conditions
as the Lender may specify in such instrument, any of the requirements of this
Agreement, any Note or the other Loan Documents or any Default or Event of
Default and its consequences. Any such waiver and any such amendment,
supplement or modification shall be binding upon the Borrower, the Lender and
all future holders of the Loans. In the case of any waiver, the Borrower and
the Lender
40
40
shall be restored to their former positions and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
8.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Borrower and the Lender, or to such other address as
may be hereafter notified by the respective parties hereto:
The Borrower: Metromedia International Group, Inc.
000 Xxxx Xxxxx Xxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to: Metromedia Company
Xxx Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
Long, Xxxxxxxx & Xxxxxx
One Peachtree Center
Suite 5300
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Fax: (000) 000-0000
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
The Lender: Chemical Bank
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Fax: (000) 000-0000
41
41
provided that any notice, request or demand to or upon the Lender pursuant to
subsection 2.2, 2.4, 2.6, 2.8, 2.9 or 2.14 shall not be effective until
received.
8.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Lender, any right, remedy, power
or privilege hereunder or under the other Loan Documents shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
8.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
8.5 Payment of Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse the Lender for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Lender, (b) to pay or reimburse the Lender for
all its reasonable costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the other Loan
Documents and any such other documents, including, without limitation, the
reasonable fees and disbursements of counsel to the Lender, (c) to pay,
indemnify, and hold the Lender harmless from, any and all recording and filing
fees and any and all liabilities with respect to, or resulting from any delay
in paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold the Lender and its officers,
directors, employees, agents and Affiliates harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance
and administration of this Agreement, the other Loan Documents, the Merger
Agreement, the Mergers or the use of the proceeds of the Loans in connection
with the Mergers and any such other documents, including, without limitation,
any of the foregoing relating to the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of the
Borrower, any of its Subsidiaries or any of the Properties (all the foregoing
in this clause (d), collectively, the "indemnified liabilities"), provided,
that the Borrower shall have no obligation hereunder to any Person with respect
to indemnified liabilities arising from (i) the gross negligence or willful
misconduct of such Person or (ii) legal proceedings commenced against the
Lender by any security holder or creditor thereof arising out of and based upon
rights afforded any such
42
42
security holder or creditor solely in its capacity as such. The agreements in
this subsection shall survive repayment of the Loans and all other amounts
payable hereunder.
8.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Borrower, the Lender and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Lender.
8.7 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of
the copies of this Agreement signed by all the parties shall be lodged with the
Borrower and the Lender.
8.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrower and the Lender with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the Lender relative to subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.
8.10 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.11 Submission To Jurisdiction; Waivers. (a) The Borrower
hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents
to which it is a party, or for recognition and enforcement of any
judgement in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
43
43
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in subsection 8.2 or
at such other address of which the Lender shall have been notified
pursuant thereto;
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to xxx in any other jurisdiction; and
(b) Each of the Borrower and the Lender waives, to the
maximum extent not prohibited by law, any right it may have to claim
or recover in any legal action or proceeding referred to in this
subsection any special, exemplary, punitive or consequential damages.
8.12 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) the Lender does not have any fiduciary relationship with
or duty to the Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship
between the Lender and the Borrower, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby between the Borrower and the Lender.
8.13 WAIVERS OF JURY TRIAL. THE BORROWER AND THE LENDER
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
8.14 Confidentiality. The Lender agrees to keep confidential
all non-public information provided to it by the Borrower pursuant to this
Agreement and each other Loan Document that is designated by the Borrower in
writing as confidential; provided that nothing herein shall prevent the Lender
from disclosing any such information (i) to any transferee which agrees to
comply with the provisions of this subsection, (ii) to its employees,
directors, agents, attorneys, accountants and other professional advisors,
(iii) upon the request or demand of any Governmental Authority having
jurisdiction over the Lender, (provided that notice of such request or demand
shall be furnished to the Borrower unless such notice is legally prohibited or
such Governmental Authority request that such notice not be furnished to the
Borrower or such request is in connection with normal oversight activities by
such Governmental Authority), (iv) in response to any order of any court or
other
44
44
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law (provided that notice of such order or requirement shall be
furnished to the Borrower unless such notice is legally prohibited or such
court or Governmental Authority requests that such notice or requirement not be
furnished to the Borrower), (vi) which has been publicly disclosed other than
in breach of this Agreement, or (vii) in connection with the exercise of any
remedy hereunder.
45
45
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
METROMEDIA INTERNATIONAL GROUP, INC.
(formerly known as, The Actava Group, Inc.)
By:
---------------------------------------
Title:
CHEMICAL BANK
By:
---------------------------------------
Title:
46
EXHIBIT A TO
CREDIT AGREEMENT
REVOLVING CREDIT NOTE
$35,000,000.00 New York, New York
November 1, 1995
FOR VALUE RECEIVED, the undersigned, METROMEDIA INTERNATIONAL GROUP,
INC., a Delaware corporation (the "Borrower"), hereby unconditionally promises
to pay to the order of CHEMICAL BANK (the "Lender") at its offices, located at
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, in lawful money of the United States
of America and in immediately available funds, on the Termination Date the
principal amount of (a) THIRTY FIVE MILLION DOLLARS ($35,000,000.00), or, if
less, (b) the aggregate unpaid principal amount of all Revolving Credit Loans
made by the Lender to the Borrower pursuant to subsection 2.1 of the Credit
Agreement, as hereinafter defined. The Borrower further agrees to pay interest
in like money at such office on the unpaid principal amount hereof from time to
time outstanding at the rates and on the dates specified in subsection 2.10 of
the Credit Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date, Type and amount of each
Revolving Credit Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof, each conversion of all or a portion thereof to another Type and, in
the case of Eurodollar Loans, the length of each Interest Period with respect
thereto. Each such endorsement shall constitute prima facie evidence of the
accuracy of the information endorsed. The failure to make any such endorsement
shall not affect the obligations of the Borrower in respect of such Revolving
Credit Loan.
This Note (a) is one of the Notes referred to in the Credit Agreement
dated as of November 1, 1995 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement") between the Borrower and the Lender,
(b) is subject to the provisions of the Credit Agreement and (c) is subject to
optional and mandatory prepayment in whole or in part as provided in the Credit
Agreement. This Note is secured and guaranteed as provided in the Loan
Documents. Reference is hereby made to the Loan Documents for a description of
the properties and assets in which a security interest has been granted, the
nature and extent of the security and the guarantees, the terms and conditions
upon which the security interests and each guarantee were granted and the
rights of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
47
2
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
METROMEDIA INTERNATIONAL GROUP, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
48
EXHIBIT B TO
CREDIT AGREEMENT
OPINION OF COUNSEL TO BORROWER
November 1, 1995
Chemical Bank
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
We have acted as counsel to METROMEDIA INTERNATIONAL GROUP, INC., a
Delaware corporation (the "Borrower"), METROMEDIA INTERNATIONAL
TELECOMMUNICATIONS, INC. (the "Guarantor") and SNAPPER, INC. ("Snapper",
together with the Borrower and the Guarantor, the "Credit Parties") in
connection with (a) the Credit Agreement, dated as of November 1, 1995 (the
"Credit Agreement") between the Borrower and CHEMICAL BANK (the "Lender"), and
(b) the Note and the other Loan Documents referred to in the Credit Agreement.
The opinions expressed below are furnished to you pursuant to subsection
4.1(h) of the Credit Agreement. Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them
in the Credit Agreement.
In arriving at the opinions expressed below,
(a) we have examined and relied on the originals, or copies certified or
otherwise identified to our satisfaction, of each of (1) the Credit Agreement,
(2) the Note dated the date hereof and (3) the other Loan Documents listed on
Schedule 1 attached hereto (the Credit Agreement, the Note and such other
documents being hereinafter referred to collectively as the "Transaction
Documents"); and
(b) we have examined such corporate documents and records of the Credit
Parties and such other instruments and certificates of public officials,
officers and representatives of the Credit Parties and other Persons as we have
deemed necessary or appropriate for the purposes of this opinion.
In arriving at the opinions expressed below, we have made such
investigations of law, in each case as we have deemed appropriate as a basis
for such opinions.
In rendering the opinions expressed below, we have assumed, with your
permission, without independent investigation or inquiry, (a) the authenticity
of all documents submitted to us as originals, (b) the genuineness of all
signatures on all documents that
49
Chemical Bank -2- November 1, 1995
we examined and (c) the conformity to authentic originals of documents
submitted to us as certified, conformed or photostatic copies.
When our opinions expressed below are stated "to the best of our
knowledge," we have made reasonable and diligent investigation of the subject
matters of such opinions and have no reason to believe that there exist any
facts or other information that would render such opinions incomplete or
incorrect.
Based upon and subject to the foregoing, we are of the opinion that:
1. Each of the Borrower and its Subsidiaries (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization (b) has the corporate power and authority and the legal right to
own and operate its property, to lease the property it operates as lessee and
to conduct the business in which it is currently engaged and (c) is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification, except to the extent that the
failure to be so qualified could not, in the aggregate, have a Material Adverse
Effect.
2. Each Credit Party has the corporate power and authority, and the
legal right, to make, deliver and perform its obligations under the Transaction
Documents to which it is a party and, in the case of the Borrower, to borrow
under the Credit Agreement. The Borrower has taken all necessary corporate
action to authorize the borrowings on the terms and conditions of the Credit
Agreement and the other Transaction Documents. Each Credit Party has taken all
necessary corporate action to grant the security interests contemplated by the
Security Documents to which it is a party and to authorize the execution,
delivery and performance of the Transaction Documents to which it is a party.
Except for the filings and recordings described on Schedules 2 and 3 attached
hereto, no consent or authorization of, approval by, notice to, filing with or
other act by or in respect of, any Governmental Authority or any other Person
is required in connection with the borrowings under the Credit Agreement or
with the execution, delivery, performance, validity or enforceability of the
Credit Agreement and the other Transaction Documents or the perfection of the
security interests created by the Security Documents.
3. Each of the Credit Agreement and the other Transaction Documents to
which any Credit Party is a party has been duly executed and delivered on
behalf of such Credit Party and constitutes a legal, valid and binding
obligation of such Credit Party, enforceable against such Credit Party in
accordance with its terms.
4. The execution and delivery of the Credit Agreement and the other
Transaction Documents to which each Credit Party is a party, the performance by
each Credit Party of its obligations thereunder, the consummation of the
transactions contemplated thereby, the compliance by the Borrower and each of
its Subsidiaries with any of the provisions
50
Chemical Bank -3- November 1, 1995
thereof, the borrowings under the Credit Agreement and the use of proceeds
thereof, all as provided therein, (a) will not violate, or constitute a default
under, any Requirement of Law or, to the best of our knowledge, any Contractual
Obligations of the Borrower or of any of its Subsidiaries and (b) will not
result in, or require, the creation or imposition of any Lien on any of its or
their respective properties or revenues, except the security interests created
pursuant to the Security Documents.
5. To the best of our knowledge, no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues (a) with respect to the
Credit Agreement or any of the other Transaction Documents, or (b) which could
have a Material Adverse Effect.
6. The Borrower is not (1) an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended, or (2) a "holding company" as defined in, or
otherwise subject to regulation under, the Public Utility Holding Company Act
of 1935. The Borrower is not subject to regulation under any Federal or state
statute or regulation which limits its ability to incur Indebtedness.
7.(a) The provisions of the Stock Pledge Agreement create in favor of
the Lender a legal, valid and enforceable security interest in the Pledged
Stock and the Proceeds (as those terms are defined in the Stock Pledge
Agreement).
(b) The actions specified in paragraph 4.1(i) of the Credit Agreement
are all the actions necessary to perfect the security interest of the Lender in
the Pledged Stock, and the security interest of the Lender in the Pledged Stock
is a perfected security interest. Assuming the Lender acquired its interest in
the Pledged Stock in good faith and without notice of any adverse claims and
that each certificate evidencing shares of Pledged Stock is either in bearer
form or registered form, issued or indorsed in the name of Lender or its bailee
or in blank, the Lender acquired its security interest in the Pledged Stock
free of adverse claims.
(c) All of the shares of capital stock described on Schedule 1 to the
Stock Pledge Agreement have been duly authorized and validly issued, and are
fully paid and nonassessable and represent the percentages of the issued and
outstanding capital stock of the issuers thereof specified on Schedule 1 to the
Stock Pledge Agreement.
8.(a) The provisions of the Security Agreement create in favor of the
Lender a legal, valid and enforceable security interest in the Collateral (as
defined in the Security Agreement).
51
Chemical Bank -4- November 1, 1995
(b) Upon filing of UCC-1 financing statements describing the Collateral
granted by Snapper pursuant to the Security Agreement and listing Snapper as
debtor and the Lender as secured party in the filing offices listed on Schedule
2, the Lender will have a perfected security interest in that Collateral as to
which security interests may be perfected by filing a financing statement under
the Georgia UCC.
9. The Mortgage:
(a) constitutes a legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms;
(b) is in proper form for recording;
(c) complies as to form with all existing Requirements of Law;
(d) creates in favor of the Agent for the ratable benefit of the
Lenders a legal, valid and binding lien on the real property and fixtures
described in such Mortgage, enforceable as such against Snapper and, when
recorded in the applicable office listed on Schedule 3, all other Persons; and
(e) has been duly and properly recorded in the applicable office listed
on Schedule 3 and constitutes a perfected lien on the real property and
fixtures described in such Mortgage.
The facts that (a) the Mortgage secures obligations arising under a
revolving line of credit and (b) the Loans may from time to time be repaid in
full or in part and reborrowed in accordance with the terms of the Credit
Agreement will not result in a subordination of the lien of the Mortgage to any
other lien on the real property and fixtures described in such Mortgage or
otherwise impair the priority of the lien of such Mortgage.
Our opinions set forth in paragraphs 3, 7, 8 and 9 above are subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
Very truly yours,
52
Schedule 1
TRANSACTION DOCUMENTS
(1) Guarantee made by Guarantor in favor of the Lender
(2) Mortgage by Snapper in favor of the Lender
(3) Security Agreement executed by Snapper in favor of the Lender
(4) Stock Pledge Agreement executed by the Borrower in favor of the Lender
53
Schedule 2
FINANCING STATEMENTS
State Filing Office
----- -------------
54
Schedule 3
MORTGAGE RECORDINGS
Description of Mortgage Recording Office
----------------------- ----------------
55
EXHIBIT C TO
CREDIT AGREEMENT
BORROWING CERTIFICATE
METROMEDIA INTERNATIONAL GROUP, INC.
(a Delaware corporation)
Pursuant to subsection 4.1(c) of the Credit Agreement dated as of
November 1, 1995 between Metromedia International Group, Inc. (the "Borrower")
and Chemical Bank, as lender (the "Lender") (the "Agreement"; terms defined
therein being used herein as therein defined), the undersigned
_________________________ and Secretary of the Borrower each hereby certifies
as follows:
1. The representations and warranties of the Borrower set forth
in the Agreement and each of the other Loan Documents to which the
Borrower is a party or which are contained in any certificate, document
or financial or other statement furnished by or on behalf of the
Borrower, pursuant to or in connection with any Loan Documents are true
and correct in all material respects on and as of the date hereof with
the same effect as if made on the date hereof except for representations
and warranties stated to relate to a specific earlier date, in which
case such representations and warranties are true and correct in all
material respects as of such earlier date;
2. Exhibit A hereto sets forth all consents or authorizations of,
filings with, notices to or other acts by or in respect of, any
Governmental Authority or any other Person required in connection with
the execution, delivery, performance, validity or enforceability of, or
the granting of any security interests under, the Agreement and the
other Loan Documents, and such consents, authorizations and filings are
in full force and effect;
3. No Default or Event of Default has occurred and is continuing
as of the date hereof or after giving effect to the Loans to be made on
the date hereof and/or the issuance of any Letters of Credit to be
issued on the date hereof;
4. ________________ is and at all times since __________ __, 199_
has been, the duly elected and qualified Secretary of the Borrower and
the signature set forth on the incumbency certificates for such officer
below is such officer's true and genuine signature;
56
2
and the undersigned Secretary of the Borrower hereby certifies as
follows:
5 There are no liquidation or dissolution proceedings pending or
to my knowledge threatened against the Borrower, nor has any other event
occurred adversely affecting or threatening the continued corporate
existence of the Borrower after the date hereof;
6 Attached hereto as Exhibit B is a correct and complete copy of
the Resolutions of the Board of Directors dated ___ __, 1995, adopted in
connection with (i) the execution, delivery and performance of the Loan
Documents to which it is a party and (ii) the transactions contemplated
by the Loan Documents to which the Borrower is a party; such resolutions
have not in any way been amended, modified, revoked or rescinded and
have been in full force and effect since their adoption to and including
the date hereof and are now in full force and effect;
7 Attached hereto as Exhibit C is a correct and complete copy of
the Articles of Incorporation of the Borrower as in effect at all times
since ___ __, 199_ and up to and including the date hereof and such
articles have not been amended, repealed, modified or restated; and
8 Attached hereto as Exhibit D is a correct and complete copy of
the bylaws of the Borrower as in effect at all times since ____ __,
199_ and up to and including the date hereof, and such bylaws have not
been amended, repealed, modified or restated.
IN WITNESS WHEREOF, the undersigned have hereunto set our names.
METROMEDIA INTERNATIONAL GROUP, INC.
----------------------------- ----------------------------
Name: Name:
Title: Title: Secretary
Date: November 1, 1995
57
EXHIBIT D TO
CREDIT AGREEMENT
MITI GUARANTEE
GUARANTEE, dated as of November 1, 1995, made by METROMEDIA
INTERNATIONAL TELECOMMUNICATIONS, INC., a Delaware corporation (the
"Guarantor"), in favor of CHEMICAL BANK, as lender (the "Lender") under the
Credit Agreement, dated as of the date hereof (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), between
METROMEDIA INTERNATIONAL GROUP, INC. (the "Borrower") and the Lender.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lender has agreed to make
Loans to the Borrower upon the terms and subject to the conditions set forth
therein; and
WHEREAS, it is a condition precedent to the obligation of the Lender to
make its Loans to the Borrower under the Credit Agreement that the Guarantor
shall have executed and delivered this Guarantee to the Lender; and
WHEREAS, the Guarantor is a wholly-owned Subsidiary of the Borrower, and
it is to the advantage of the Guarantor that the Lender make the Loans to the
Borrower;
NOW, THEREFORE, in consideration of the premises and to induce the
Lender to enter into the Credit Agreement and to induce the Lender to make its
loans to the Borrower under the Credit Agreement, the Guarantor hereby agrees
with the Lender, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Guarantee shall refer to this Guarantee as a whole and
not to any particular provision of this Guarantee, and section and paragraph
references are to this Guarantee unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Guarantee. (a) Subject to Section 2(d), the Guarantor hereby
unconditionally and irrevocably guarantees to the Lender and its successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations.
58
2
(b) The Guarantor further agrees to pay any and all reasonable expenses
(including, without limitation, all reasonable fees and disbursements of
counsel) which may be paid or incurred by the Lender in enforcing, or obtaining
advice of counsel in respect of, any rights with respect to, or collecting, any
or all of the Obligations and/or enforcing any rights with respect to, or
collecting against, the Guarantor under this Guarantee. This Guarantee shall
remain in full force and effect until the Obligations are paid in full and the
Commitments are terminated, notwithstanding that from time to time prior
thereto the Borrower may be free from any Obligations.
(c) No payment or payments made by the Borrower or any other Person or
received or collected by the Lender from the Borrower or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of the Guarantor hereunder which shall remain, notwithstanding
any such payment or payments, until the Obligations are paid in full and the
Commitments are terminated.
(d) The maximum liability of the Guarantor hereunder shall in no
event exceed the amount which can be guaranteed by the Guarantor under
applicable federal and state laws relating to the insolvency of debtors.
3. No Subrogation. Notwithstanding any payment or payments made by the
Guarantor hereunder, or any set-off or application of funds of the Guarantor by
the Lender, the Guarantor shall not be entitled to be subrogated to any of the
rights of the Lender against the Borrower or against any collateral security or
guarantee or right of offset held by the Lender for the payment of the
Obligations, nor shall the Guarantor seek or be entitled to seek any
contribution or reimbursement from the Borrower in respect of payments made by
the Guarantor hereunder, until all amounts owing to the Lender by the Borrower
on account of the Obligations are paid in full and the Commitment is
terminated. If any amount shall be paid to the Guarantor on account of such
subrogation rights at any time when all of the Obligations shall not have been
paid in full, such amount shall be held by the Guarantor in trust for the
Lender, segregated from other funds of the Guarantor, and shall, forthwith upon
receipt by the Guarantor, be turned over to the Lender in the exact form
received by the Guarantor (duly indorsed by the Guarantor to the Lender, if
required), to be applied against the Obligations, whether matured or unmatured.
4. Amendments, etc. with respect to the Obligations; Waiver of Rights.
The Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against the Guarantor, and without notice to or
further assent by the Guarantor, any demand for payment of any of the
Obligations made by the Lender may be rescinded by the Lender, and any of the
Obligations continued, and the Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by the Lender, and the Credit Agreement, any
Notes, and the other Loan Documents and any other documents executed and
delivered in connection therewith may be amended, modified,
59
3
supplemented or terminated, in whole or in part, as the Lender may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Lender for the payment of the Obligations may be
sold, exchanged, waived, surrendered or released. The Lender shall not have
any obligation to protect, secure, perfect or insure any Lien at any time held
by it as security for the Obligations or for this Guarantee or any property
subject thereto. When making any demand hereunder against the Guarantor, the
Lender may, but shall be under no obligation to, make a similar demand on the
Borrower or any other guarantor, and any failure by the Lender to make any such
demand or to collect any payments from the Borrower or any such other guarantor
or any release of the Borrower or such other guarantor shall not relieve the
Guarantor of its obligations or liabilities hereunder, and shall not impair or
affect the rights and remedies, express or implied, or as a matter of law, of
the Lender against the Guarantor. For the purposes hereof "demand" shall
include the commencement and continuance of any legal proceedings.
5. Guarantee Absolute and Unconditional. The Guarantor waives (to the
extent permitted by applicable law) any and all notice of the creation,
renewal, extension or accrual of any of the Obligations and notice of or proof
of reliance by the Lender upon this Guarantee or acceptance of this Guarantee;
the Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Guarantee; and all dealings between the Borrower or the
Guarantor, on the one hand, and the Lender, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. The Guarantor waives (to the extent permitted by applicable law)
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Borrower or the Guarantor with respect to the
Obligations. This Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity,
regularity or enforceability of the Credit Agreement, any Note, or any other
Loan Document, any of the Obligations or any other collateral security therefor
or guarantee or right of offset with respect thereto at any time or from time
to time held by the Lender, (b) any defense, set-off or counterclaim (other
than a defense of payment or performance) which may at any time be available to
or be asserted by the Borrower against the Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or the Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Obligations, or of the
Guarantor under this Guarantee, in bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder against the Guarantor, the Lender
may, but shall be under no obligation to, pursue such rights and remedies as it
may have against the Borrower or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset with respect
thereto, and any failure by the Lender to pursue such other rights or remedies
or to collect any payments from the Borrower or any such other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Borrower or any such other Person or of
any such collateral security, guarantee or right of offset, shall not relieve
the Guarantor of any liability hereunder, and shall not impair or affect the
rights and remedies, whether express, implied or available as a matter of law,
of the Lender against the Guarantor. This Guarantee shall remain in full force
and effect and be binding in accordance with and to the extent of its terms
upon the Guarantor and its successors and assigns thereof,
60
4
and shall inure to the benefit of the Lender, and its successors, indorsees,
transferees and assigns, until all the Obligations and the obligations of the
Guarantor under this Guarantee shall have been satisfied by payment in full and
the Commitment shall be terminated, notwithstanding that from time to time
during the term of the Credit Agreement the Borrower may be free from any
Obligations.
6. Reinstatement. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned
by the Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any substantial part of its property, or otherwise, all as though
such payments had not been made.
7. Payments. The Guarantor hereby agrees that the Obligations will be
paid to the Lender without set-off or counterclaim in U.S. Dollars at the
office of the Lender located at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
8. Representations and Warranties. The Guarantor represents and
warrants to the Lender that:
(a) the Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of Delaware and has the corporate power and
authority and the legal right to own and operate its property, to lease the
property it operates and to conduct the business in which it is currently
engaged;
(b) the Guarantor has the corporate power and authority and the legal
right to execute and deliver, and to perform its obligations under, this
Guarantee, and has taken all necessary corporate action to authorize its
execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding obligation
of the Guarantor enforceable against the Guarantor in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting the enforcement of creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing;
(d) the execution, delivery and performance of this Guarantee by the
Guarantor will not violate any provision of any Requirement of Law or
Contractual Obligation of the Guarantor, except for violations which in the
aggregate could not reasonably be expected to have a Material Adverse Effect,
and will not result in or require the creation or imposition of any Lien on any
of the properties or revenues of the Guarantor pursuant to any Requirement of
Law or Contractual Obligation of the Guarantor except as provided in the
Security Documents and except for such Liens which in the aggregate could not
reasonably be expected to have a Material Adverse Effect;
61
5
(e) no consent or authorization of, filing with, or other act by or
in respect of, any arbitrator or Governmental Authority and no consent of any
other Person (including, without limitation, any stockholder or creditor of the
Guarantor) is required in connection with the execution, delivery, performance,
validity or enforceability of this Guarantee other than those with respect to
which the failure to obtain or make could not reasonably be expected to have a
Material Adverse Effect;
(f) Except as contemplated by, or disclosed in, the Proxy Statement
or on Schedule 8(f), no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the knowledge of the
Guarantor, threatened by or against the Guarantor or against any of its
properties or revenues (1) with respect to this Guarantee or any of the
transactions contemplated hereby, (2) which could reasonably be expected to
have a Material Adverse Effect;
(g) Except as contemplated by, or disclosed in, the Proxy Statement
or on Schedule 8(f), since December 31, 1994 there has been no development or
event (other than any events or developments caused by or attributable to
general economic conditions, political or governmental instability or
uncertainty, civil disturbances or unrest, war or other similar acts of force
majeure) which has had or could reasonably be expected to have a Material
Adverse Effect, and (b) during the period from December 31, 1994 to and
including the date hereof no dividends or other distributions have been
declared, paid or made upon the Capital Stock of the Guarantor nor has any of
the Capital Stock of the Guarantor been redeemed, retired, purchased or
otherwise acquired for value by the Guarantor or any of its Subsidiaries;
(h) Except for any of the following the failure of which to occur
could not reasonably be expected to have a Material Adverse Effect, the
Guarantor has filed or caused to be filed all tax returns of the Guarantor
which, to the knowledge of the Guarantor, are required to be filed by the
Guarantor and has paid all taxes shown to be due and payable on said returns or
on any assessments made against it or any of its property and all other taxes,
fees or other charges imposed on it or any of its property by any Governmental
Authority (other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the
Guarantor); no tax Lien has been filed, and, to the knowledge of the Guarantor,
no claim is being asserted, with respect to any such tax, fee or other charge
the effect of which could reasonably be expected to have a Material Adverse
Effect;
(i) The consolidated balance sheet of the Guarantor and its
consolidated domestic Subsidiaries as at December 31, 1994 and the related
consolidated statements of income and of cash flows for the fiscal year ended
on such date, reported on by KPMG Peat Marwick LLP ("KPMG"), copies of which
have heretofore been furnished to the Lender by the Borrower, are complete and
correct and present fairly in all material respects the consolidated financial
condition of the Guarantor and its consolidated domestic Subsidiaries as at
such date, and the consolidated results of their operations and their
consolidated cash flows for the fiscal year then ended. The unaudited
consolidated balance sheet of the Guarantor and its consolidated domestic
Subsidiaries as at June 30, 1995 and the related unaudited consolidated
62
6
statements of income and of cash flows for the six-month period ended on such
date, copies of which have heretofore been furnished to the Lender, present
fairly in all material respects the consolidated financial condition of the
Guarantor and its consolidated domestic Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated cash flows for
the six-month period then ended (subject to normal year-end audit adjustments).
Except with respect to a "going concern" qualification contained in KPMG's
report for the Guarantor's consolidated balance sheet as at December 31, 1994
and the related consolidated statements of income and of cash flows for the
fiscal year ended on such date and except that during fiscal year 1994 the
Guarantor changed its policy of accounting for its interest in its foreign
Affiliates and foreign Subsidiaries (collectively the "Joint Ventures") by
recording its equity interest in the losses of such Joint Ventures based on a
three month lag (so that, by way of example only, any reference in the annual
financial statements of the Guarantor to the Guarantor's interest in or the
results of operations or financial condition or financial statements of the
Joint Ventures will reflect the Guarantor's policy of accounting for such Joint
Ventures as of and for a period ended three months prior to the date that the
Guarantor's annual financial statements have been prepared as of and for, so
that such annual financial statements will reflect the period ending on, and
twelve months of activity ending on September 30 for such Joint Ventures), all
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants or an executive
officer of the Guarantor , as the case may be, and as disclosed therein).
Except as set forth in Schedule 8(i), neither the Guarantor nor any of its
consolidated domestic Subsidiaries had, at the date of the most recent balance
sheet referred to above, any material Guarantee Obligation, material contingent
liability or material liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including, without limitation, any interest
rate or foreign currency swap or exchange transaction, which is not reflected
in the foregoing statements or in the notes thereto. Except (i) as
contemplated by, or disclosed in, the Proxy Statement or (ii) as set forth on
Schedule 8(i) hereto or (iii) as reflected in the financial statements referred
to in this Section 8(i), during the period from December 31, 1994 to and
including the date hereof there has been no sale, transfer or other disposition
by the Guarantor or any of its consolidated domestic Subsidiaries of any
material part of its business or property and no purchase or other acquisition
of any business or property (including any capital stock of any other Person)
material in relation to the consolidated financial condition of the Guarantor
and its consolidated domestic Subsidiaries at December 31, 1994.
The Guarantor agrees that the foregoing representations and warranties
shall be deemed to have been made by the Guarantor on the date of each
borrowing by the Borrower under the Credit Agreement on and as of such date of
borrowing as though made hereunder on and as of such date.
9. Notices. All notices, requests and demands to or upon the Lender or
the Guarantor to be effective shall be in writing (or by telex, fax or similar
electronic transfer confirmed in writing) and shall be deemed to have been duly
given or made (1) when delivered by hand or (2) if given by mail, three days
after being deposited in the mails by certified mail, return
63
7
receipt requested, or (3) if by telex, fax or similar electronic transfer, when
sent and receipt has been confirmed, addressed as follows:
(a) if to the Lender, at its address or transmission number for
notices provided in subsection 8.2 of the Credit Agreement; and
(b) if to the Guarantor, at its address or transmission number for
notices set forth under its signature below.
Each of the Lender and the Guarantor may change its address and
transmission numbers for notices by notice in the manner provided in this
Section.
10. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11. Integration. This Guarantee represents the agreement of the
Guarantor with respect to the subject matter hereof and there are no promises
or representations by the Lender relative to the subject matter hereof not
reflected herein.
12. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None
of the terms or provisions of this Guarantee may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Guarantor and the Lender, provided that any provision of this Guarantee for
the benefit of the Lender may be waived by the Lender in a letter or agreement
executed by the Lender or by telex or facsimile transmission from the Lender.
(b) The Lender shall not by any act (except by a written instrument
pursuant to paragraph 12(a) hereof), delay, indulgence, omission or otherwise
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Lender, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Lender would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
13. Section Headings. The section headings used in this Guarantee
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
64
8
14. Successors and Assigns. This Guarantee shall be binding upon the
successors and assigns of the Guarantor and shall inure to the benefit of the
Lender and their successors and assigns.
15. Governing Law. This Guarantee shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.
65
9
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly
executed and delivered by its duly authorized officer as of the day and year
first above written.
METROMEDIA INTERNATIONAL
TELECOMMUNICATIONS, INC.
By:
----------------------------
Title:
-------------------------
Address for Notices:
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
President
Fax: (000) 000-0000
With a copy to:
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
66
EXHIBIT G TO
CREDIT AGREEMENT
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of November 1, 1995, made by
METROMEDIA INTERNATIONAL GROUP, INC., a Delaware corporation (the "Borrower")
in favor of Chemical Bank, as lender (the "Lender") under the Credit Agreement
dated as of the date hereof (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement") between the Borrower and the Lender.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lender has agreed to make
Loans to the Borrower upon the terms and subject to the conditions set forth
therein; and
WHEREAS, the Borrower is the legal and beneficial owner of the shares of
Pledged Stock (as hereinafter defined) issued by the Issuers (as hereinafter
defined); and
WHEREAS, it is a condition precedent to the obligation of the Lender to
make its Loans to the Borrower under the Credit Agreement that the Borrower
shall have executed and delivered this Pledge Agreement to the Lender;
NOW, THEREFORE, in consideration of the premises and to induce
the Lender to enter into the Credit Agreement and to induce the Lender to make
its respective Loans under the Credit Agreement, the Borrower hereby agrees
with the Lender as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them
in the Credit Agreement.
(b) The following terms shall have the following meanings:
"Agreement": this Pledge Agreement, as the same may be amended, modified
or otherwise supplemented from time to time.
"Code": the Uniform Commercial Code from time to time in effect in the
State of New York.
"Collateral": the Pledged Stock and all Proceeds.
"Collateral Account": any account established to hold money Proceeds,
maintained under the sole dominion and control of the Lender (or, in the case
of Snapper Stock, the Snapper Lender, as agent of, and bailee for, the Lender).
67
2
"Issuers": the collective reference to the companies identified on
Schedule 1 attached hereto as the issuers of the Pledged Stock; individually,
each an "Issuer."
"Pledged Stock": the shares of capital stock listed on Schedule 1
hereto, together with all stock certificates, options or rights of any nature
whatsoever that may be issued or granted by any Issuer to the Borrower in
respect of the Pledged Stock while this Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in Section 9-306(1)
of the Uniform Commercial Code in effect in the State of New York on the date
hereof and, in any event, shall include, without limitation, all dividends or
other income from the Pledged Stock, collections thereon or distributions with
respect thereto.
"Registration Rights Agreement": the Registration Rights Agreement
dated as of December 6, 1994 between the Borrower and Roadmaster Industries,
Inc., as amended, supplemented or otherwise modified from time to time.
"Roadmaster Collateral": the Roadmaster Stock and all proceeds thereof.
"Roadmaster Shareholders' Agreement": the Shareholders Agreement dated
as of December 6, 1994 between the Borrower and Roadmaster Industries, Inc., as
amended, supplemented or otherwise modified from time to time.
"Roadmaster Stock": Pledged Stock issued by Roadmaster Industries, Inc.
"Securities Act": the Securities Act of 1933, as amended.
"Snapper Collateral": the Snapper Stock and all proceeds thereof.
"Snapper Stock": Pledged Stock issued by Snapper, Inc.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section and paragraph
references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Pledge; Grant of Security Interest. The Borrower hereby delivers to
the Lender (or, the Snapper Lender, as agent of, and bailee for, the Lender, in
the case of the Snapper Stock) all the Pledged Stock and hereby grants to the
Lender, a security interest in the
68
3
Collateral, as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations.
3. Stock Powers. Concurrently with the delivery to the Lender or the
Snapper Lender, as the case may be, of each certificate representing one or
more shares of Pledged Stock, the Borrower shall deliver an undated stock power
covering such certificate, duly executed in blank by the Borrower with, if the
Lender or the Snapper Lender, as the case may be, so requests, signature
guaranteed.
4. Representations and Warranties. The Borrower represents and
warrants that:
(a) As of November 1, 1995, the shares of Snapper Stock constituted all
the issued and outstanding shares of all classes of the capital stock of
Snapper, Inc. and the shares of Roadmaster Stock constituted approximately
38.5% of the issued and outstanding shares of the common stock of Roadmaster
Industries, Inc.
(b) All the shares of the Snapper Stock and, to the best of the
Borrower's knowledge, all the shares of Roadmaster Stock, have been duly and
validly issued and are fully paid and nonassessable.
(c) The Borrower is the record and beneficial owner of, and has good
and marketable title to, the Pledged Stock, free of any and all Liens except
(i) the security interest created by this Agreement, (ii) the security interest
of the Snapper Lender in the Snapper Stock and (iii) Liens on the Roadmaster
Stock pursuant to the Registration Rights Agreement and the Roadmaster
Shareholders' Agreement.
(d) Upon delivery to the Lender or the Snapper Lender, as the case may
be, of the stock certificates evidencing the Pledged Stock, the security
interest created by this Agreement will constitute a valid, perfected security
interest in the Collateral, enforceable in accordance with its terms against
all creditors of the Borrower and any Persons purporting to purchase any
Collateral from the Borrower, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
(e) The Lender and its successors and assigns (including purchasers of
the Roadmaster Stock) following the foreclosure, sale or other exercise of
remedies will be entitled to the benefits, if any, of the Registration Rights
Agreement (provided that the Lender or each of its successors and assigns or
such purchaser individually acquires at least 1,000,000 shares of Borrower's
Roadmaster Stock pursuant to Section 2.12 of the Registration Rights Agreement
and provided further, that Lender or its successors or assigns or such
purchasers do not acquire such shares in a registered public offering or
pursuant to Rule 144 under the Securities Act).
69
4
5. Covenants. The Borrower covenants and agrees with the Lender that,
from and after the date of this Agreement until this Agreement is terminated
and the security interests created hereby are released:
(a) If the Borrower shall, as a result of its ownership of the Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend
or a distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with any
reorganization), option or rights, whether in addition to, in substitution of,
as a conversion of, or in exchange for any shares of the Pledged Stock, or
otherwise in respect thereof, the Borrower shall accept the same as the agent
of the Lender or, as the case may be, the Snapper Lender and hold the same in
trust for the Lender and deliver the same forthwith to the Lender (or, in the
case Snapper Stock, to the Snapper Lender as agent of, and bailee for, the
Lender) in the exact form received, duly indorsed by the Borrower, if required,
together with an undated stock power covering such certificate duly executed in
blank by the Borrower and with, if the Lender so requests, signature
guaranteed, to be held by the Lender, subject to the terms hereof, as
additional collateral security for the Obligations. To the extent resulting
from a sale or disposition of assets not permitted by Section 6.4 or 6.5 of the
Credit Agreement, any sums paid upon or in respect of the Pledged Stock upon
the liquidation or dissolution of any Issuer shall be paid over to the Lender
(or, in the case of Snapper Stock, to the Snapper Lender as agent of, and
bailee for, the Lender) to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Pledged Stock or any property shall be distributed
upon or with respect to the Pledged Stock pursuant to the recapitalization or
reclassification of the capital of any Issuer or pursuant to the reorganization
thereof, the property so distributed shall be delivered to the Lender (or, in
the case of Snapper Stock, to the Snapper Lender, as agent of, and bailee for,
the Lender) to be held by it hereunder as additional collateral security for
the Obligations. If any sums of money or property so paid or distributed in
respect of the Pledged Stock shall be received by the Borrower, the Borrower
shall, until such money or property is paid or delivered to the Lender (or, in
the case of Snapper Stock, to the Snapper Lender, as agent of, and bailee for,
the Lender), hold such money or property in trust for the Lender or, as the
case may be, the Snapper Lender, segregated from other funds of the Borrower,
as additional collateral security for the Obligations.
(b) Without the prior written consent of the Lender, the Borrower will
not (1) vote to enable, or take any other action to permit, Snapper to issue
any stock or other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any stock or other equity securities of any nature of any Issuer (2) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Collateral, except to the extent permitted pursuant by
subsection 6.4 or 6.5 of the Credit Agreement, (3) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Collateral, or any interest therein, except for the security
interests created by this Agreement or, in the case of the Snapper Stock, the
Snapper
70
5
Lender or Liens on the Roadmaster Stock pursuant to the Registration Rights
Agreement and the Roadmaster Shareholders' Agreement or (4) enter into any
agreement or undertaking restricting the right or ability of the Borrower or
the Lender to sell, assign or transfer any of the Collateral, except for (i)
the credit agreement or any security agreement with the Snapper Lender, (ii)
the Roadmaster Shareholders' Agreement and (iii) the Loan Documents.
(c) Except as permitted by subsection 6.4 or 6.5 of the Credit
Agreement, the Borrower shall maintain the security interest created by this
Agreement as a perfected security interest and shall defend such security
interest against claims and demands of all Persons whomsoever. At any time and
from time to time, upon the written request of the Lender, and at the sole
expense of the Borrower, the Borrower will promptly and duly execute and
deliver such further instruments and documents and take such further actions as
the Lender may reasonably request for the purposes of obtaining or preserving
the full benefits of this Agreement and of the rights and powers herein
granted. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note, other
instrument or chattel paper, such note, instrument or chattel paper shall be
immediately delivered to the Lender or, in the case of the Snapper Stock, the
Snapper Lender as agent of, and bailee for, the Lender, duly endorsed in a
manner satisfactory to the Lender, to be held as Collateral pursuant to this
Agreement.
(d) The Borrower shall pay, and save the Lender harmless from, any and
all liabilities with respect to, or resulting from any delay in paying, any and
all stamp, excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Agreement.
6. Cash Dividends; Voting Rights. Unless an Event of Default shall
have occurred and be continuing, the Borrower shall be permitted to receive all
cash dividends in respect of the Pledged Stock and to exercise all voting and
corporate rights with respect to the Pledged Stock; provided, however, that no
vote shall be cast or corporate right exercised or other action taken which
would result in any violation of any provision of the Credit Agreement, the
Note, this Agreement or any other Loan Document.
7. Rights of the Lender. (a) All money Proceeds received by the
Lender hereunder shall be held by the Lender in a Collateral Account. All
Proceeds while held by the Lender or, the Snapper Lender, as the case may be,
in a Collateral Account (or by the Borrower in trust for the Lender) shall
continue to be held as collateral security for all the Obligations and shall
not constitute payment thereof until applied as provided in paragraph 8(a).
(b) If an Event of Default shall occur and be continuing, (1) the
Lender shall have the right to receive any and all cash dividends paid in
respect of the Pledged Stock and make application thereof to the Obligations
then due and payable, subject to the provisions of Section 4 of the
Intercreditor Agreement in such order as the Lender may determine, and (2)
subject to the Intercreditor Agreement, all shares of the Pledged Stock may, at
the Lender's
71
6
election, be registered in the name of the Lender or its nominee, and the
Lender or its nominee may thereafter exercise (A) all voting, corporate and
other rights pertaining to such shares of the Pledged Stock at any meeting of
shareholders of any Issuer or otherwise and (B) any and all rights of
conversion, exchange, subscription and any other rights, privileges or options
pertaining to such shares of the Pledged Stock as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of the Pledged Stock upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by the Borrower or the Lender of
any right, privilege or option pertaining to such shares of the Pledged Stock,
and in connection therewith, the right to deposit and deliver any and all of
the Pledged Stock with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Lender may
determine), all without liability except to account for property actually
received by it, but the Lender shall have no duty to the Borrower to exercise
any such right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing.
8. Remedies. (a) If an Event of Default shall have occurred and be
continuing, at any time at the Lender's election, the Lender may apply all or
any part of Proceeds held in any Collateral Account held by it in payment of
the Obligations then due and payable subject to the provisions of Section 4 of
the Intercreditor Agreement in such order as the Lender may elect.
(b) If an Event of Default shall have occurred and be continuing, the
Lender may, subject to the Intercreditor Agreement, exercise, in addition to
all other rights and remedies granted in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations,
all rights and remedies of a secured party under the Code. Without limiting
the generality of the foregoing, the Lender, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by law referred to below) to or upon the Borrower or any
other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived to the extent permitted by applicable law), may in
such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, assign, give option
or options to purchase or otherwise dispose of and deliver the Collateral or
any part thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, in the over-the-counter market, at
any exchange, broker's board or office of the Lender or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. The Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Borrower, which right or equity is hereby
waived or released. The Lender shall apply any Proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every
72
7
kind incurred in respect thereof or incidental to the care or safekeeping of
any of the Collateral or in any way relating to the Collateral or the rights of
the Lender hereunder, including, without limitation, reasonable attorneys' fees
and disbursements of counsel to the Lender, to the payment in whole or in part
of the Obligations subject to the provisions of Section 4 of the Intercreditor
Agreement, in such order as the Lender may elect, and only after such
application and after the payment by the Lender of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Lender account for the surplus, if any, to the Borrower. To the
extent permitted by applicable law, the Borrower waives all claims, damages and
demands it may acquire against the Lender arising out of the exercise by it of
any rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition. The
Borrower shall remain liable for any deficiency if the proceeds of any sale or
other disposition of Collateral are insufficient to pay the Obligations and the
reasonable fees and disbursements of any attorneys employed by the Lender to
collect such deficiency.
9. Registration Rights; Private Sales. (a) If the Lender shall
determine to exercise its right to sell any or all of the Snapper Stock
pursuant to Section 8 hereof, and if in the opinion of the Lender it is
necessary or advisable to have the Snapper Stock, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the Borrower will
use its reasonable best efforts thereof to (1) execute and deliver, and cause
the directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as
may be, in the opinion of the Lender, necessary or advisable to register the
Snapper Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (2) to use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of
one year from the date of the first public offering of the Snapper Stock, or
that portion thereof to be sold, and (3) to make all amendments thereto and/or
to the related prospectus which, in the opinion of the Lender, are necessary or
advisable, all in conformity with the requirements of the Securities Act and
the rules and regulations of the Securities and Exchange Commission applicable
thereto. The Borrower agrees to use its reasonable best efforts to cause such
Issuer to comply with the provisions of the securities or "Blue Sky" laws of
any and all jurisdictions which the Lender shall designate and to make
available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) The Borrower recognizes that the Lender may be unable to effect a
public sale of any or all the Pledged Stock, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Borrower acknowledges
and agrees that any such private sale may result in prices and other terms less
favorable than if such sale were
73
8
a public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Lender shall be under no obligation to delay a sale of any of the
Pledged Stock for the period of time necessary to permit the Issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.
(c) The Borrower further agrees to use its reasonable best efforts to
do or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Pledged Stock pursuant to this
Section valid and binding and in compliance with any and all other applicable
Requirements of Law. The Borrower further agrees that a breach of any of the
covenants contained in this Section will cause irreparable injury to the
Lender, that the Lender has no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this Section
shall be specifically enforceable against the Borrower, and the Borrower hereby
waives and agrees not to assert any defenses (to the extent permitted by law)
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred and is continuing under the
Credit Agreement.
10. Irrevocable Authorization and Instruction to Issuer. The Borrower
hereby authorizes and instructs each Issuer to comply with any instruction
received by it from the Lender in writing that (a) states that an Event of
Default has occurred and is continuing and (b) is otherwise in accordance with
the terms of this Agreement, without any other or further instructions from the
Borrower, and the Borrower agrees that each Issuer shall be fully protected in
so complying.
11. Lender's Appointment as Attorney-in-Fact. (a) The Borrower hereby
irrevocably constitutes and appoints the Lender and any officer or agent of the
Lender, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Borrower and in the name of the Borrower or in the Lender's own
name, from time to time in the Lender's discretion, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, including, without
limitation, any financing statements, endorsements, assignments or other
instruments of transfer.
(b) The Borrower hereby ratifies all that said attorneys shall lawfully
do or cause to be done pursuant to the power of attorney granted in paragraph
11(a) provided, however, that nothing herein shall constitute a waiver by the
Borrower of any claim for breach of contract, gross negligence or willful
misconduct by or of said attorneys. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby
are released.
74
9
12. Duty of Lender. The Lender's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Code or otherwise, shall be to deal with
it in the same manner as the Lender deals with similar securities and property
for its own account. Neither the Lender nor its directors, officers, employees
or agents shall be liable for failure to demand, collect or realize upon any of
the Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of the Borrower or
any other Person.
13. Execution of Financing Statements. Pursuant to Section 9-402 of
the Code, the Borrower authorizes the Lender to file financing statements with
respect to the Collateral without the signature of the Borrower in such form
and in such filing offices as the Lender reasonably determines appropriate to
perfect the security interests of the Lender under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction. The Lender agrees to
provide the Borrower with a copy of any such financing statement so filed.
14. Termination; Release of Certain Pledged Stock. (a) At such time as
the Obligations have been paid and performed in full and the Commitment
terminated, the Collateral shall be released from the liens created by this
Agreement, and this Agreement and the security interest created by this
Agreement and all obligations of the Lender and the Borrower hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Borrower. Upon
request of the Borrower following any such termination, the Lender will deliver
(at the sole cost and expense of the Borrower) to the Borrower any Collateral
held by the Lender hereunder, and execute and deliver (at the sole cost of the
Borrower) to the Borrower such documents as the Borrower shall reasonably
request to evidence such termination.
(b) Upon the request of the Borrower, the Lender shall execute and
deliver to the Borrower, at the Borrower's sole cost and expense, any releases,
certificated, stock powers or other documents reasonably necessary for the
release of the security interest granted hereby on any Pledged Stock sold,
transferred or otherwise disposed of in a transaction permitted by the Credit
Agreement.
15. Notices. All notices, requests and demands to or upon the Lender
or the Borrower to be effective shall be in writing (or by telex, fax or
similar electronic transfer confirmed in writing) and shall be deemed to have
been duly given or made (1) when delivered by hand or (2) if given by mail,
three days after being deposited in the mails by certified mail, return receipt
requested, or (3) if by telex, fax or similar electronic transfer, when sent
and receipt has been confirmed, addressed to the Lender or the Borrower at its
address or transmission number for notices provided in subsection 8.2 of the
Credit Agreement. The Lender and the Borrower may change their addresses and
transmission numbers for notices by notice in the manner provided in this
Section.
75
10
16. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
17. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None
of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Borrower and the Lender, provided that any provision of this Agreement for
the benefit of the Lender may be waived by the Lender in a letter or agreement
executed by the Lender or by telex or facsimile transmission from the Lender.
(b) The Lender shall not by any act (except by a written instrument
pursuant to paragraph 17(a) hereof), delay, indulgence, omission or otherwise
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Lender, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Lender would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
18. Section Headings. The section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
19. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Borrower and shall inure to the benefit of the
Lender and its successors and assigns.
20. Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the law of the State of New York.
76
11
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.
METROMEDIA INTERNATIONAL GROUP, INC.
By
---------------------------------
Title
------------------------------
77
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Pledge
Agreement dated November 1, 1995, made by Metromedia International Group, Inc.
for the benefit of Chemical Bank, as Lender (the "Pledge Agreement"). The
undersigned agrees for the benefit of the Lender as follows:
1. The undersigned will be bound by the terms of the Pledge Agreement
and will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Lender promptly in writing of the
occurrence of any of the events described in paragraph 5(a) of the Pledge
Agreement.
3. The terms of the first sentence of paragraph 9(c) of the Pledge
Agreement shall apply to it, mutatis mutandis, with respect to all actions that
may be required of it under or pursuant to or arising out of Section 9 of the
Pledge Agreement; provided the undersigned shall have no obligation to register
any Roadmaster Stock except in accordance with the terms of the Registration
Rights Agreement.
ROADMASTER INDUSTRIES, INC.
By
----------------------------
Title
-------------------------
Address for Notices:
-------------------------------
-------------------------------
Telex:
------------------------
Fax:
--------------------------
78
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Pledge
Agreement dated November 1, 1995, made by Metromedia International Group, Inc.
for the benefit of Chemical Bank, as Lender (the "Pledge Agreement"). The
undersigned agrees for the benefit of the Lender as follows:
4. The undersigned will be bound by the terms of the Pledge Agreement and
will comply with such terms insofar as such terms are applicable to the
undersigned.
5. The undersigned will notify the Lender promptly in writing of the
occurrence of any of the events described in paragraph 5(a) of the Pledge
Agreement.
6. The terms of paragraph 9(c) of the Pledge Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may be required of it under
or pursuant to or arising out of Section 9 of the Pledge Agreement.
SNAPPER, INC.
By
-----------------------
Title
--------------------
Address for Notices:
--------------------------
--------------------------
Telex:
--------------------
Fax:
---------------------
79
SCHEDULE 1
TO PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
Stock Certificate
Issuer Class of Stock No. No. of Shares
--------------------------- -------------- ------------------ -------------
Snapper, Inc. Common 2 1,0000
Roadmaster Industries, Inc. Common C10624 19,169,000
80
EXHIBIT H TO
CREDIT AGREEMENT
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of November 1, 1995, made by SNAPPER, INC., a
Georgia corporation (the "Pledgor"), in favor of CHEMICAL BANK as Lender (the
"Lender") under the Credit Agreement, dated as of the date hereof, (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
between Metromedia International Group, Inc., a Delaware corporation (the
"Borrower") and the Lender.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lender has agreed to make
Loans to the Borrower upon the terms and subject to the conditions set forth
therein; and
WHEREAS, it is a condition precedent to the obligation of the Lender to
make its Loans to the Borrower under the Credit Agreement that the Pledgor
shall have executed and delivered this Security Agreement to the Lender; and
WHEREAS, the Pledgor is the wholly-owned Subsidiary of the Borrower, and
it is to the advantage of the Pledgor that the Lender make the Loans to the
Borrower;
NOW, THEREFORE, in consideration of the premises and to induce the Lender
to enter into the Credit Agreement and to induce the Lender to make its Loans
to the Borrower, the Pledgor hereby agrees with the Lender as follows:
1. Defined Terms.
1.1 Definitions. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm
Products, General Intangibles, Instruments, Inventory and Proceeds.
(b) The following terms shall have the following meanings:
"Agreement": this Security Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
81
2
"Code": the Uniform Commercial Code as from time to time in effect
in the State of New York.
"Collateral": as defined in Section 2.
"Collateral Account": any collateral account established by the
Lender as provided in subsection 6.2 or subsection 8.2.
"Patents": (a) all letters patent of the United States or any other
country and all reissues and extensions thereof, including, without
limitation, any thereof referred to in Schedule 1, and (b) all
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any thereof referred to in Schedule 1.
"Patent License": all agreements, whether written or oral, providing
for the grant by or to the Pledgor of any right to manufacture, use or
sell any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule 1.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"Trademarks": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications
in connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, including, without limitation, any thereof referred to in
Schedule 2, and (b) all renewals thereof.
"Trademark License" means any agreement, written or oral, providing
for the grant by or to the Pledgor of any right to use any Trademark,
including, without limitation, any thereof referred to in Schedule 2.
1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section, subsection and Schedule references
are to this Agreement unless otherwise specified.
82
3
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Guarantee.
2.1 Guarantee of Obligations. Subject to the provisions of subsections
2.2 and 2.3 below, the Pledgor hereby unconditionally and irrevocably
guarantees to the Lender and its successors, indorsees, transferees and
assigns, the prompt and complete payment and performance by the Borrower when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations.
2.2 Nonrecourse. Anything herein or in any other Loan Document to the
contrary notwithstanding, the Pledgor shall have no personal liability for
payment of the Obligations, and in any action or suit to collect the
Obligations the Lender shall not seek any in personam judgment against the
Pledgor or any judgment for a deficiency but shall look solely to the security
interests hereunder and the collateral described herein and in the Mortgage for
payment of the Obligations. It being understood that the guarantee contained
in this Section 2 is a limited-recourse obligation of the Pledgor and that in
no event shall the maximum liability of the Pledgor hereunder and under the
Loan Documents exceed the amount equal to the proceeds realized by the Lender
upon any sale or other realization of the Collateral pledged pursuant to (and
defined in) this Agreement and the Mortgage. Nothing contained in this
Section shall be construed to impair the validity of the Obligations or any of
the Security Documents to which the Pledgor is a party or to affect or impair
in any way the right of the Lender to exercise its rights and remedies under
the Credit Agreement and any other Loan Documents in accordance with their
terms.
2.3 Limitation of Liability. The maximum liability of the Pledgor
hereunder shall in no event exceed the amount which can be guaranteed by the
Pledgor under applicable federal and state laws relating to the insolvency of
debtors.
3. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations, the Pledgor hereby grants to the
Lender a security interest in all of the following property, to the extent of
the Pledgor's interest therein, now owned or at any time hereafter acquired by
the Pledgor or in which the Pledgor now has or at any time in the future may
acquire any right, title or interest (collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Documents;
83
4
(d) all Equipment (except for any leased Equipment for which the lease
does not permit the Pledgor to grant a security interest in, or otherwise
assign, the Pledgor's interest thereunder);
(e) all General Intangibles (to the extent that, with respect to any
General Intangible, a security interest therein may be granted hereunder
in favor of, and the Pledgor's interest therein may be collaterally
assigned to, the Lender without the prior consent of any third party);
(f) all Instruments;
(g) all Inventory;
(h) all Patents;
(i) all Patent Licenses;
(j) all Trademarks;
(k) all Trademark Licenses;
(l) all books and records pertaining to the Collateral; and
(m) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing and all collateral security and guarantees given
by any Person with respect to any of the foregoing.
4. Representations and Warranties. The Pledgor hereby represents and
warrants that:
4.1 Power and Authority. The Pledgor has the corporate power and
authority and the legal right to execute and deliver, to perform its
obligations under, and to grant the security interest in the Collateral
pursuant to this Agreement and has taken all necessary corporate action to
authorize its execution, delivery and performance of, and grant of the security
interest in the Collateral pursuant to this Agreement.
4.2 Title; No Other Liens. Except for (i) the security interest granted
to the Lender pursuant to this Agreement, (ii) the security interest granted to
the Snapper Lender pursuant to the Finance and Security Agreement, dated as of
October 23, 1992, between Deutsche Financial Services Corporation (formerly ITT
Commercial Finance Corp.) and The Actava Group Inc. (formerly Xxxxx Industries,
Inc.), as amended to date, Deed to Secure Debt between The Actava Group Inc.
(formerly Xxxxx Industries. Inc.) and Deutsche Financial Services Corporation
(formerly ITT Commercial Finance Corp.), dated as of January 18, 1993, filed
January 21, 1993 and recorded at Deed Book 1574, page 15, Xxxxx County, Georgia
Records, to secure an original principal indebtedness not to exceed
$100,000,000.00,
84
5
as amended to date, the Cash Pledge Agreement between Snapper and the Snapper
Lender dated as of November 1, 1995, the Lockbox Agreement, dated October 22,
1992, among Snapper, a division of Xxxxx Industries, Inc., Nationsbank, N.A.,
and Deustch Financial Services Corporation, as assigned to Snapper, and the
Notice of Grant of Collateral Security Interests in Patents, Trademarks and
Copyrights made by Snapper in favor of the Snapper Lender, dated as of November
1, 1995 (collectively, the "Snapper Credit Agreement") and (iii) the other
Liens permitted to exist on the Collateral pursuant to the Credit Agreement and
the Snapper Credit Agreement, the Pledgor owns, or is a licensee with respect
to, each item of the Collateral free and clear of any and all Liens or claims
of others. No financing statement or other public notice with respect to all
or any part of the Collateral is on file or of record in any public office,
except such as have been filed (i) in favor of the Lender pursuant to this
Agreement, (ii) in favor of the Snapper Lender pursuant to the Snapper Credit
Agreement ("Senior Liens") or (iii) as are permitted pursuant to the Credit
Agreement.
4.3 Enforceable Obligation; Perfected Security Interests. This Agreement
constitutes a legal, valid and binding obligation of the Pledgor, enforceable
as such against all creditors of and purchasers from the Pledgor (except
purchasers of Inventory in the ordinary course of business) in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing. The security interests
granted pursuant to this Agreement (a) upon timely consummation of the filings
and other required actions set forth on Schedule 3 hereto, will constitute
perfected security interests on the Collateral in favor of the Lender as
collateral security for the Obligations (except with respect to cash Proceeds
and cash Collateral held by the Snapper Lender to the extent determined not to
be in the dominion and control of the Lender) and (b) are prior to all other
Liens on the Collateral in existence on the date hereof except for Senior Liens
and Liens permitted to exist pursuant to the Credit Agreement. For purposes of
this Section 4.3, "timely" with respect to fillings in the United States Patent
and Trademark Office shall be defined consistently with the provisions of
Section 1060 of 15 U.S.C. and Section 261 of 35 U.S.C.
4.4 No Violation. The execution, delivery and performance of this
Agreement will not violate any provision of any Requirement of Law or
Contractual Obligation of the Pledgor and will not result in the creation or
imposition of any Lien on any of the properties or revenues of the Pledgor
pursuant to any Requirement of Law or Contractual Obligation of the Pledgor,
except the security interests created hereby.
4.5 No Consents Required. No consent or authorization of, filing with,
or other act by or in respect of, any arbitrator or Governmental Authority
except for (i) filing of UCC financing statements and (ii) filings with the
United States Patent and Trademark Office, each as described in Schedule 3 and
no consent of any other Person, other than the Senior Lender (which has been
duly given) (including, without limitation, any stockholder or creditor of the
85
6
Pledgor), is required in connection with the execution, delivery, performance,
validity or enforceability of this Agreement.
4.6 No Litigation. Except as contemplated by, or disclosed in, the Proxy
Statement or any SEC Filing, no litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Pledgor, threatened by or against the Pledgor or against any of its
properties or revenues with respect to this Agreement or any of the
transactions contemplated hereby.
4.7 Inventory and Equipment. The Inventory (other than consigned
Inventory) and the Equipment are kept at the locations listed on Schedule 4
hereto, as said Schedule 4 may be amended or supplemented from time to time
upon 30 days' prior written notice by the Pledgor to the Lender.
4.8 Chief Executive Office. The Pledgor's name is as set forth with its
signature hereto and the Pledgor's chief executive office is located at 000
Xxxxx Xxxx XxXxxxxxx, Xxxxx Xxxxxx, Xxxxxxx 00000, which name and location may
be changed upon 60 days' prior written notice by the Pledgor to the Lender.
4.9 Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
5. Covenants. The Pledgor covenants and agrees with the Lender that,
from and after the date of this Agreement until this Agreement is terminated
and the security interest created hereby are released:
5.1 Maintenance of Property. The Pledgor will keep the Equipment and
Inventory in good working order and condition.
5.2 Inspection of Property; Books and Records; Discussions. The Pledgor
will keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to the Collateral. The Pledgor will
permit representatives of the Lender to visit and inspect any of the Pledgor's
properties where any of the Collateral or any of the Pledgor's books and
records relating to the Collateral are located and to inspect the Collateral
and to examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired and to discuss the
condition and operation of the Collateral with officers and employees of the
Pledgor and with its independent certified public accountants; provided that
the Lender shall notify the Borrower prior to any contact with such accountants
and shall give the Borrower the opportunity to participate in such discussions.
5.3 Maintenance of Insurance. (a) The Pledgor will maintain, with
financially sound and reputable companies, insurance policies (1) insuring the
Inventory and Equipment against loss by fire, explosion, theft and such other
casualties as may be reasonably satisfactory to the
86
7
Lender and (2) insuring the Pledgor and the Lender against liability for
personal injury and property damage relating to such Inventory and Equipment,
such policies to be in such form and amounts and having such coverage as may be
reasonably satisfactory to the Lender, with losses payable to the Pledgor, and
the Lender as their respective interests may appear; provided that in lieu of
or supplemental to any such insurance, the Pledgor may adopt such other plan or
method of protection, whether by the establishment of an insurance fund or
reserve to be held and applied to make good losses, casualties or liabilities
or otherwise, and consistent with sound business practices as may be determined
by the Board of Directors of the Pledgor.
(b) All such insurance shall (1) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by the Lender of written notice thereof,
(2) name the Lender as an insured party, (3) include a breach of warranty
clause and (4) be reasonably satisfactory in all other respects to the Lender.
(c) Upon request of the Lender, the Pledgor shall deliver to the Lender a
report of a reputable insurance broker with respect to such insurance.
5.4 Payment of Obligations. The Pledgor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or profits therefrom,
as well as all claims of any kind (including, without limitation, claims for
labor, materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if the amount or validity thereof is
currently being contested in good faith by appropriate proceedings, reserves in
conformity with GAAP with respect thereto have been provided on the books of
the Pledgor and such proceedings do not involve any material danger of the
sale, forfeiture or loss of any of the Collateral or any interest therein.
5.5 Limitation on Dispositions and Liens; Further Documentation. (a)
The Pledgor will not sell, transfer, lease or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so, except as permitted by the
Snapper Credit Agreement or Section 6.4 or 6.5 of the Credit Agreement and
except for (1) sales of Inventory in the ordinary course of its business and
(2) so long as no Default or Event of Default has occurred and is continuing,
the disposition in the ordinary course of business of items of Equipment which
have become worn out or obsolete or which are otherwise no longer useful in the
conduct of its business.
(b) The Pledgor will not create, incur or permit to exist any Lien or
claim on or to the Collateral, other than the Senior Liens, the security
interests created hereby and other than as permitted pursuant to the Credit
Agreement or the Snapper Credit Agreement, will maintain the security interest
created by this Agreement as a perfected security interest having the priority
described in subsection 4.3 and will defend such security interest against
claims and demands of all Persons whomsoever.
87
8
(c) At any time and from time to time, upon the written request of the
Lender, and at the sole expense of the Pledgor, the Pledgor will promptly and
duly execute and deliver such further instruments and documents and take such
further actions as the Lender may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the security interests created
hereby.
5.6 Delivery of Instruments and Chattel Paper. If any amount payable
under or in connection with any of the Collateral (other than a receivable from
any Subsidiary) in excess of $50,000) shall be or become evidenced by any
Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
immediately delivered to the Lender or the Snapper Lender as agent of, and
bailee for, the Lender, duly indorsed in a manner satisfactory to the Lender or
the Snapper Lender, as the case may be, to be held as Collateral pursuant to
this Agreement.
5.7 Changes in Locations, Name, etc. The Pledgor will not:
(a) permit any of the Inventory (other than consigned Inventory) or
Equipment to be kept at a location other than those listed on Schedule 4
(unless such Inventory or Equipment is conveyed, sold, leased, transferred,
assigned or otherwise disposed of as permitted by this Agreement or Snapper
Credit Agreement); or
(b) change the location of its chief executive office from that specified
in subsection 4.8 without, in either case, giving the Lender 60 days' prior
written notice of such change; or
(c) change its name, identity or corporate structure (other than pursuant
to Section 6.4 or 6.5 of the Credit Agreement), provided that in connection
therewith the Pledgor shall have executed such UCC financing statements and
other documents as the Lender may reasonably request to evidence the Lender's
security interest hereunder to such an extent that any financing statement
filed by the Lender in connection with this Agreement would become seriously
misleading, unless it shall have given the Lender at least 60 days' prior
written notice of such change.
5.8 Further Identification of Collateral. The Pledgor will furnish to
the Lender from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Lender may reasonably request, all in reasonable detail.
5.9 Notices. The Pledgor will advise the Lender promptly, in reasonable
detail, at their respective addresses for notices provided for in the Credit
Agreement, of:
88
9
(a) any Lien (other than the Senior Liens, security interests created
hereby or Liens permitted under the Credit Agreement or the Snapper Credit
Agreement) on any of the Collateral; and
(b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.10 Indemnification. The Pledgor agrees to pay, and to save the Lender
harmless from, any and all liabilities, reasonable costs and expenses
(including, without limitation, reasonable legal fees and expenses) with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement ("indemnified liabilities"), provided that the Pledgor shall
have no obligation hereunder to the Lender with respect to indemnified
liabilities arising from (i) the gross negligence or willful misconduct of the
Lender or (ii) legal proceedings commenced against the Lender by any security
holder or creditor thereof arising out of and based upon rights afforded any
such security holder or creditor solely in its capacity as such. The
agreements in this subsection shall survive repayment of the Loans and all
other amounts payable under the Credit Agreement and the other Loan Documents.
6. Provisions Relating to Receivables.
6.1 Pledgor Remains Liable under Receivables. Anything herein to the
contrary notwithstanding, the Pledgor shall remain liable under each of the
Receivables to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise to each such Receivable. The Lender shall not have
any obligation or liability under any Receivable (or any agreement giving rise
thereto) by reason of or arising out of this Agreement or the receipt by the
Lender of any payment relating to such Receivable pursuant hereto, nor shall
the Lender be obligated in any manner to perform any of the obligations of the
Pledgor under or pursuant to any Receivable (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Receivable (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
6.2 Collections on Receivables. (a) The Lender hereby authorizes the
Pledgor to collect the Receivables, subject to the Lender's direction and
control, and the Lender may curtail or terminate said authority at any time
after the occurrence and during the continuance of an Event of Default. If
required by the Lender at any time after the occurrence and during the
continuance of an Event of Default, any payments of Receivables, when collected
by the Pledgor, (1) shall, subject to the Intercreditor Agreement, be forthwith
(and, in any event, within two Business Days) deposited by the Pledgor in the
exact form received, duly indorsed by the Pledgor to the Lender or the Snapper
Lender as agent for, and bailee of, the Lender, if
89
10
required, in a Collateral Account maintained under the sole dominion and
control of the Lender or the Snapper Lender as agent for, and bailee of, the
Lender, subject to withdrawal by the Lender (or the Snapper Lender (as, the
case may be), only as provided in subsection 8.3, and (2) until so turned over,
shall be held by the Pledgor in trust for the Lender, segregated from other
funds of the Pledgor.
(b) Each such deposit of Proceeds of Receivables shall be accompanied by
a report identifying in reasonable detail the nature and source of the payments
included in the deposit.
(c) At the Lender's request, the Pledgor shall deliver to the Lender or
the Snapper Lender as agent for, and bailee of, the Lender, all original and
other documents evidencing, and relating to, the agreements and transactions
which gave rise to the Receivables, including, without limitation, all original
orders, invoices and shipping receipts, but only to the extent that the Pledgor
is required to do so under the Snapper Credit Agreement.
6.3 Representations and Warranties. (a) No amount payable to the
Pledgor under or in connection with any Receivable in excess of $50,000 is
evidenced by any Instrument or Chattel Paper which has not been delivered to
the Lender.
(b) None of the obligors on any Receivable is a Governmental Authority,
except for Receivables representing, in the aggregate at any time, less than 5%
of all Receivables;
(c) The amounts represented by the Pledgor to the Lender from time to
time as owing to the Pledgor in respect of the Receivables will at such time be
the correct amount actually owing to the Pledgor in respect of the Receivables,
except to the extent that appropriate reserves with respect to the
uncollectibility therefor have been established in the books of the Pledgor in
accordance with GAAP.
6.4 Covenants. (a) Other than in the ordinary course of business
consistent with its past practice, or as permitted under the Snapper Credit
Agreement the Pledgor will not (i) grant any extension of the time of payment
of any Receivable, (ii) compromise or settle any Receivable for less than the
full amount thereof, (iii) release, wholly or partially, any Person liable for
the payment of any Receivable, (iv) allow any credit or discount whatsoever on
any Receivable.
(b) The Pledgor will deliver to the Lender a copy of each material
demand, notice or document received by it that questions the validity or
enforceability of more than 5% of the aggregate amount of the then outstanding
Receivables.
7. Provisions Relating to Patents and Trademarks.
7.1 Representations and Warranties. (1) Schedule 1 includes all
material Patents and Patent Licenses owned by the Pledgor in its own name, or
to which the Pledgor is a party, on the date hereof.
90
11
(b) Schedule 2 includes all material Trademarks and Trademark Licenses
owned by the Pledgor in its own name, or to which the Pledgor is a party, on
the date hereof.
(c) To the best of the Pledgor's knowledge, each material Patent and each
registered Trademark is on the date hereof valid, subsisting, unexpired,
enforceable and has not been abandoned.
(d) Except as set forth in either Schedule 1 or Schedule 2, none of such
material Patents and Trademarks is on the date hereof the subject of any
licensing or franchise agreement.
(e) No holding, decision or judgment has been rendered by any
Governmental Authority which would be reasonably likely to limit, cancel or
question the validity of any material Patent or Trademark in any respect that
could reasonably be expected to have a Material Adverse Effect.
(f) No action or proceeding is pending on the date hereof (1) seeking to
limit, cancel or question the validity of any material Patent or Trademark, or
(2) which would be reasonably likely to have a Material Adverse Effect.
7.2 Covenants.
(a) Except as permitted in the Snapper Credit Agreement and except with
respect to any Trademark that the Pledgor shall reasonably determine is of
insignificant economic benefit to it, the Pledgor (either itself or through
licensees) will (1) continue to use each material Trademark on each and every
trademark class of goods applicable to its current line as reflected in its
current catalogs, brochures and price lists in order to maintain such Trademark
in full force free from any claim of abandonment for non-use, (2) maintain as
in the past the quality of products and services offered under such material
Trademark sufficient to maintain the validity of such Trademark, (3) employ
such Trademark with the appropriate notice of registration or trademark, as
applicable, (4) not adopt or use any xxxx which is confusingly similar or a
colorable imitation of such Trademark unless the Lender shall obtain a
perfected security interest in such xxxx pursuant to this Agreement, and (5)
not (and not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby such Trademark may become invalidated.
(b) Except as permitted by the Snapper Credit Agreement, the Pledgor will
not do any act, or knowingly omit to do any act, whereby any material Patent
may become abandoned or dedicated.
(c) The Pledgor will notify the Lender immediately if it knows, or has
reason to know, that any application or registration relating to any material
Patent or Trademark may become abandoned or dedicated, or of any adverse
determination or development (including, without limitation, the institution
of, or any such determination or development in, any
91
12
proceeding in the United States Patent and Trademark Office or any court or
tribunal in any country), other than non- final determinations of such offices
or court, regarding the Pledgor's ownership of any material Patent or Trademark
or its right to register the same or to keep and maintain the same.
(d) Whenever the Pledgor, either by itself or through any agent,
employee, licensee or designee, shall file an application for any Patent or the
registration of any Trademark with the United States Patent and Trademark
Office or any similar office or agency in any other country or any political
subdivision thereof, the Pledgor shall report such filing to the Lender within
five Business Days after the last day of the fiscal quarter in which such
filing occurs. Upon request of the Lender, the Pledgor shall execute and
deliver any and all agreements, instruments, documents, and papers as the
Lender may reasonably request to evidence the Lender's security interest in any
Patent or Trademark and the goodwill and general intangibles of the Pledgor
relating thereto or represented thereby.
(e) Except with respect to any Patent or Trademark which Pledgor shall
reasonably determine is of insignificant economic benefit to it, the Pledgor
will take all reasonable and necessary steps as it deems appropriate under the
circumstances, including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar office or agency in
any other country or any political subdivision thereof, to maintain and pursue
each application (and to use its best efforts to obtain the relevant
registration) and to maintain each registration of the material Patents and
Trademarks, including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability.
(f) In the event that any material Patent or Trademark included in the
Collateral is infringed, misappropriated or, in the case of any material
Trademark, diluted by a third party in any material respect, the Pledgor shall
take such actions as the Pledgor shall reasonably deem appropriate under the
circumstances to protect such material Patent or Trademark, including, when the
Pledgor in its business judgment deems it appropriate bringing a suit for
infringement, misappropriation or dilution, seeking injunctive relief and
seeking recover any and all damages for such infringement, misappropriation or
dilution. The Pledgor may discontinue or settle any such suit or other action
if the Pledgor deems such discontinuance or settlement to be appropriate in its
reasonable business judgment.
8. Remedies.
8.1 Notice to Obligors. Except as provided in the Intercreditor
Agreement, upon the request of the Lender at any time after the occurrence and
during the continuance of an Event of Default, the Pledgor shall notify
obligors on the Receivables that the Receivables have been assigned to the
Lender and that payments in respect thereof shall be made directly to the
Lender or the Snapper Lender, as agent of and bailee for, the Lender.
8.2 Proceeds to be Turned Over To Lender. In addition to the rights of
the Lender specified in subsection 6.3 with respect to payments of Receivables,
if an Event of Default
92
13
shall occur and be continuing all Proceeds received by the Pledgor consisting
of cash, checks and other near-cash items shall, except as provided in the
Intercreditor Agreement, be held by the Pledgor in trust for the Lender,
segregated from other funds of the Pledgor, and shall, forthwith upon receipt
by the Pledgor, be turned over to the Lender or the Snapper Lender, as agent of
and bailee for, the Lender, in the exact form received by the Pledgor (duly
indorsed by the Pledgor to the Lender or the Snapper Lender, as the case may
be, if required) and held by the Lender or the Snapper Lender, as agent of and
bailee for, the Lender in a Collateral Account maintained under the sole
dominion and control of the Lender or the Snapper Lender, as the case may be.
All Proceeds while held by the Lender in a Collateral Account (or by the
Pledgor in trust for the Lender) shall continue to be held as collateral
security for all the Obligations and shall not constitute payment thereof until
applied as provided in subsection 8.3.
8.3 Application of Proceeds. At such intervals as may be agreed upon by
the Pledgor and the Lender, or, if an Event of Default shall have occurred and
be continuing, at any time at the Lender's election, the Lender may apply all
or any part of Proceeds held in any Collateral Account in payment of the
Obligations subject to Section 4 of the Intercreditor Agreement in such order
as the Lender may elect. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full and the Commitment shall have expired
or otherwise been terminated shall be paid over to the Pledgor or to whomsoever
may be lawfully entitled to receive the same.
8.4 Code Remedies. If an Event of Default shall occur and be continuing,
the Lender may exercise, in addition to all other rights and remedies granted
to it in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Lender, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Pledgor or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived to the extent
permitted by law), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do
any of the foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of the Lender or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as
it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in the Pledgor, which right or
equity is hereby waived or released. The Pledgor further agrees (subject to
Intercreditor Agreement, at the Lender's request, to assemble the Collateral
and make it available to the Lender at places which the Lender shall reasonably
select, whether at the Pledgor's premises or elsewhere. The Lender shall apply
the net proceeds of any action taken by it pursuant to this subsection, after
deducting all
93
14
reasonable costs and expenses of every kind incurred in connection therewith or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Lender hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the
payment in whole or in part of the Obligations in such order as the Lender may
elect, subject to Section 4 of the Intercreditor Agreement, and only after such
application and after the payment by the Lender of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Lender account for the surplus, if any, to the Pledgor. To the
extent permitted by applicable law, the Pledgor waives all claims, damages and
demands it may acquire against the Lender arising out of the exercise by them
of any rights hereunder. If any notice of a proposed sale or other disposition
of Collateral shall be required by law, such notice shall be deemed reasonable
and proper if given at least 10 days before such sale or other disposition.
The Pledgor waives and agrees not to assert any rights or privileges which it
may acquire under Section 9-112 of the Code. In exercising any rights or
remedies under this Section 8.4, the Lender shall not terminate or adversely
affect the rights of the holders of any licenses or sublicenses granted by the
Pledgor, except in accordance with the terms of such licenses or agreements.
9. No Subrogation. Notwithstanding any payment or payments made by the
Pledgor hereunder, or any setoff or application of funds of the Pledgor by the
Lender, or the receipt of any amounts by the Lender with respect to any of the
Collateral, the Pledgor shall not be entitled to be subrogated to any of the
rights of the Lender against the Borrower or against any other collateral
security held by the Lender for the payment of the Obligations, nor shall the
Pledgor seek any reimbursement from the Borrower in respect of payments made by
the Pledgor in connection with this Agreement, or amounts realized by the
Lender in connection with the Collateral, until all amounts owing to the Lender
on account of the Obligations are paid in full and the Commitments shall have
expired or otherwise terminated. If any amount shall be paid to the Pledgor on
account of such subrogation rights at any time when all of the Obligations
shall not have been paid in full, such amount shall be held by the Pledgor in
trust for the Lender, segregated from other funds of the Pledgor, and shall,
forthwith upon receipt by the Pledgor, be turned over to the Lender in the
exact form received by the Pledgor (duly indorsed by the Pledgor to the Lender,
if required) to be applied against the Obligations whether matured or
unmatured, in such order as the Lender may determine subject to Section 4 of
the Intercreditor Agreement.
10. Amendments, etc. with respect to the Obligations; Waiver of Rights.
10.1 Amendments and Waivers. The Pledgor shall remain obligated
hereunder, and the Collateral shall remain subject to the security interests
granted hereby, notwithstanding that, without any reservation of rights against
the Pledgor, and without notice to or further assent by the Pledgor, any demand
for payment of any of the Obligations made by the Lender may be rescinded by
the Lender, and any of the Obligations continued, and the Obligations, or the
liability of the Borrower or any other Person upon or for any part thereof, or
any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time
94
15
to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered, or released by the Lender, and
the Credit Agreement, the other Loan Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or part, as the Lender may deem advisable from time to
time, and any guarantee, right of offset or other collateral security at any
time held by the Lender for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. The Lender shall not have any
obligation to protect, secure, perfect or insure any other Lien at any time
held by it as security for the Obligations or any property subject thereto.
The Pledgor waives (to the extent permitted by applicable law) any and all
notice of the creation, renewal, extension or accrual of any of the Obligations
and notice of or proof of reliance by the Lender upon this Agreement; the
Obligations, and any of them, shall be deemed conclusively to have been
created, contracted or incurred in reliance upon this Agreement; and all
dealings between the Borrower and the Pledgor, on the one hand, and the Lender,
on the other, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Agreement. The Pledgor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or the Pledgor with respect to the Obligations. When
pursuing its rights and remedies hereunder against the Pledgor, the Lender may,
but shall be under no obligation to, pursue such rights and remedies as it may
have against the Borrower or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset with respect
thereto, and any failure by the Lender to pursue such other rights or remedies
or to collect any payments from the Borrower or any such other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Borrower or any such other Person or of
any such collateral security, guarantee or right of offset, shall not relieve
the Pledgor of any liability hereunder, and shall not impair or affect the
rights and remedies, whether express, implied or available as a matter of law,
of the Lender against the Pledgor or the Collateral.
10.2. Limitation of Liability. Anything herein and any other Loan
Document to the contrary notwithstanding, the maximum amount which the Lender
is permitted to realize hereunder and under the Mortgage shall in no event
exceed the amount which can be guaranteed by the Pledgor under applicable
federal and state laws relating to the insolvency of debtors.
11. Lender's Appointment as Attorney-in-Fact; Lender's Performance of
Pledgor's Obligations.
11.1 Powers. The Pledgor hereby irrevocably constitutes and appoints the
Lender and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of the Pledgor and in the name of the Pledgor or in its
own name, from time to time in the Lender's discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the
95
16
foregoing, the Pledgor hereby gives the Lender the power and right, on behalf
of the Pledgor, without notice to or assent by the Pledgor, to do any or all of
the following:
(a) in the case of any Receivable, at any time when the authority of
the Pledgor to collect the Receivable has been curtailed or terminated
pursuant to subsection 6.3(a), or in the case of any other Collateral, at
any time when any Event of Default shall have occurred and is continuing,
in the name of the Pledgor or its own name, or otherwise, take possession
of and indorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any Receivable or Contract
or with respect to any other Collateral and file any claim or take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Lender for the purpose of collecting any and all
such moneys due under any Receivable or Contract or with respect to any
other Collateral whenever payable;
(b) in the case of any Patent or Trademark, execute and deliver any
and all agreements, instruments, documents and papers as the Lender may
request to evidence the Lender's and the Lenders' security interest in
such Patent or Trademark and the goodwill and general intangibles of the
Pledgor relating thereto or represented thereby;
(c) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(d) execute, in connection with the sale provided for in subsection
9.4 hereof, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(e) upon the occurrence and during the continuance of any Event of
Default and subject to the last sentence of Section 8.4 hereof (1) direct
any party liable for any payment under any of the Collateral to make
payment of any and all moneys due or to become due thereunder directly to
the Lender or as the Lender shall direct; (2) ask or demand for, collect,
receive payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out of
any Collateral; (3) sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in
connection with any of the Collateral; (4) commence and prosecute any
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any thereof and to
enforce any other right in respect of any Collateral; (5) defend any suit,
action or proceeding brought against the Pledgor with respect to any
Collateral; (6) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, to give such discharges or
releases as the Lender may deem appropriate; (7) assign any Patent or
Trademark (along with the goodwill of the business to which any such
Patent or Trademark
96
17
pertains), throughout the world for such term or terms, on such
conditions, and in such manner, as the Lender shall in its sole discretion
determine; and (8) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Lender were the absolute owner thereof
for all purposes, and do, at the Lender's option and the Pledgor's
expense, at any time, or from time to time, all acts and things which the
Lender deems necessary to protect, preserve or realize upon the Collateral
and the Lender's security interests therein and to effect the intent of
this Agreement, all as fully and effectively as the Pledgor might do.
Anything in this subsection to the contrary notwithstanding, the
Lender agrees that it will not exercise any rights under the power of
attorney provided for in this subsection unless an Event of Default shall
have occurred and be continuing.
11.2 Performance by Lender of Pledgor's Obligations. If the Pledgor
fails to perform or comply with any of its agreements contained herein, the
Lender, at its option, but without any obligation so to do, may perform or
comply, or otherwise cause performance or compliance, with such agreement.
11.3 Pledgor's Reimbursement Obligation. The reasonable expenses of the
Lender incurred in connection with actions undertaken as provided in this
Section, together with interest thereon at a rate per annum equal to the rate
per annum at which interest would then be payable on past due ABR Loans under
the Credit Agreement, from the date of payment by the Lender to the date
reimbursed by the Pledgor, shall be payable by the Pledgor to the Lender on
demand.
11.4 Ratification; Power Coupled With An Interest. The Pledgor hereby
ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof, provided, however, that nothing herein shall constitute a waiver
by the Pledgor of any claim for breach of contract, gross negligence or willful
misconduct by or of said attorneys. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby
are released.
12. Duty of Lender. The Lender's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Code or otherwise, shall be to deal with it in the
same manner as the Lender deals with similar property for its own account.
Neither the Lender nor any of its officers, directors, employees or agents
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of the Pledgor or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Lender hereunder
are solely to protect the Lender's interests in the Collateral and shall not
impose any duty upon the Lender to exercise any such powers. The Lender shall
be
97
18
accountable only for amounts that it actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to the Pledgor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
13. Execution of Financing Statements. Pursuant to Section 9-402 of the
Code, the Pledgor authorizes the Lender to file financing statements with
respect to the Collateral without the signature of the Pledgor in such form and
in such filing offices as the Lender reasonably determines appropriate to
perfect the security interests of the Lender under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction. The Lender agrees to
provide the Pledgor with a copy of any such financing statement so filed.
14. Release of Collateral and Termination. (a) At such time as the
Obligations have been paid and performed in full and the Commitment terminated,
the Collateral shall be released from the Liens created by this Agreement and
this Agreement and the security interests created thereby and all obligations
of the Lender and the Pledgor hereunder shall terminate, all without delivery
of any instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Pledgor. Upon request of the Pledgor following
any such termination, the Lender will deliver (at the sole cost and expense of
the Pledgor) to the Pledgor any Collateral held by the Lender hereunder, and
execute and deliver (at the sole cost and expense of the Pledgor) to the
Pledgor such documents as the Pledgor shall reasonably request to evidence such
termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by the Pledgor in a transaction permitted by the Credit Agreement
or the Snapper Credit Agreement, then the Lender shall, upon the Pledgor's
request, execute and deliver to the Pledgor (at the sole cost and expense of
the Pledgor) all releases or other documents reasonably necessary for the
release of the Liens created hereby on such Collateral.
15. Notices. All notices, requests and demands to or upon the Lender or
the Pledgor to be effective shall be in writing (including by facsimile
transmission) and shall be deemed to have been duly given or made (1) in the
case of delivery by hand, when delivered, (2) in the case of delivery by mail,
three days after being deposited in the mails, postage prepaid, or (3) in the
case of delivery by facsimile transmission, when sent and receipt has been
confirmed, in each case addressed as follows or to such other address as may be
hereafter notified by the respective parties hereto:
(a) if to the Lender, at its address or transmission number for
notices specified in subsection 8.2 of the Credit Agreement; and
(b) if to the Pledgor, at its address or transmission number for
notices set forth under its signature below.
98
19
The Lender and the Pledgor may change their addresses and
transmission numbers for notices by notice in the manner provided in this
Section.
16. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
17. Integration. This Agreement represents the agreement of the Pledgor
with respect to the subject matter hereof and there are no promises or
representations by the Lender relative to the subject matter hereof not
reflected herein.
18. Amendments in Writing; No Waiver; Cumulative Remedies.
18.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except by
a written instrument executed by the Pledgor and the Lender, provided that any
provision of this Agreement imposing obligations on the Pledgor may be waived
by the Lender in a written instrument (including by facsimile transmission)
executed by the Lender.
18.2 No Waiver by Course of Conduct. The Lender shall not by any act
(except by a written instrument pursuant to subsection 18.1), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default. No failure
to exercise, nor any delay in exercising, on the part of the Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Lender would otherwise have on any future occasion.
18.3 Remedies Cumulative. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
19. Section Headings. The Section and subsection headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
20. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of the
Lender and its successors and assigns.
99
20
21. Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the law of the State of New York.
100
21
IN WITNESS WHEREOF, the undersigned has caused this Security Agreement to
be duly executed and delivered as of the date first above written.
SNAPPER, INC.
By:
----------------------------------
Title:
Address: 000 Xxxxx Xxxx
XxXxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
101
Schedule 1
PATENTS AND PATENT LICENSES
102
Schedule 2
TRADEMARKS AND TRADEMARK LICENSES
103
Schedule 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
[List each office where a financing statement is to be filed]
Patent and Trademark Filings
[List all filings]
Other Actions
[Describe other actions to be taken]
104
Schedule 4
INVENTORY AND EQUIPMENT
Item Location
---- --------
