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Exhibit 10.1
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SECOND AMENDED AND RESTATED
FINANCING AND SECURITY AGREEMENT
BY AND AMONG
AAi.FOSTERGRANT, INC.
AND
NATIONSBANK, N.A., AGENT
AND
NATIONSBANK, N.A., AND OTHER LENDERS
DATED: JULY 21, 1998
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS 2
Section 1.1 Certain Defined Terms. 2
Section 1.2 Accounting Terms and Other Definitional Provisions. 29
ARTICLE II THE CREDIT FACILITIES 29
Section 2.1 The Revolving Credit Facility. 29
2.1.1 Revolving Credit Facility. 29
2.1.2 Procedure for Making Advances Under the Revolving Loan;
Lender Protection Loans. 30
2.1.3 Borrowing Base. 31
2.1.4 Borrowing Base Report. 32
2.1.5 Revolving Credit Notes. 33
2.1.6 Mandatory Prepayments of Revolving Loan. 33
2.1.7 Optional Prepayments of Revolving Loan. 34
2.1.8 The Collateral Account. 34
2.1.9 Revolving Loan Account. 35
2.1.10 Revolving Credit Unused Line Fee. 35
2.1.11 Early Termination Fee. 36
2.1.12 Required Availability under the Revolving Credit Facility. 36
Section 2.2 The Letter of Credit Facility. 37
2.2.1 Letters of Credit. 37
2.2.2 Letter of Credit Fees. 37
2.2.3 Terms of Letters of Credit. 37
2.2.4 Procedure for Letters of Credit. 38
2.2.5 Participations in the Letters of Credit. 38
2.2.6 Payments by the Lenders to the Agent. 38
Section 2.3 Interest. 39
2.3.1 Applicable Interest Rates. 39
2.3.2 Selection of Interest Rates. 40
2.3.3 Inability to Determine LIBOR Base Rate. 42
2.3.4 Indemnity. 42
2.3.5 Payment of Interest. 43
Section 2.4 General Financing Provisions. 44
2.4.1 Communications and Inter-Company Advances. 44
2.4.2 Use of Proceeds of the Loan. 44
2.4.3 Field Examination Fees. 44
2.4.4 Computation of Interest and Fees. 45
2.4.5 Payments. 45
2.4.6 Liens; Setoff. 45
2.4.7 Requirements of Law. 46
2.4.8 Funds Transfer Services. 46
2.4.9 Guaranty. 47
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2.4.10 No Novation. 50
Section 2.5 Settlement Among Lenders. 51
2.5.1 Revolving Loan. 51
2.5.2 Settlement Procedures as to Revolving Loan. 51
2.5.3 Settlement of Other Obligations. 53
2.5.4 Presumption of Payment. 54
ARTICLE III THE COLLATERAL 55
Section 3.1 Debt and Obligations Secured. 55
Section 3.2 Grant of Liens. 55
Section 3.3 Collateral Disclosure List. 55
Section 3.4 Inventory and Receivables. 56
3.4.1 Chattel Paper, Promissory Notes, etc. 56
3.4.2 Trademarks. 56
Section 3.5 Record Searches. 57
Section 3.6 Costs. 57
Section 3.7 Release. 57
Section 3.8 Inconsistent Provisions. 58
ARTICLE IV REPRESENTATIONS AND WARRANTIES 58
Section 4.1 Representations and Warranties. 58
4.1.1 Ownership Interests. 58
4.1.2 Good Standing. 58
4.1.3 Power and Authority. 58
4.1.4 Binding Agreements. 59
4.1.5 No Conflicts. 59
4.1.6 No Defaults, Violations. 59
4.1.7 Compliance with Laws. 59
4.1.8 Margin Stock. 60
4.1.9 Investment Company Act; Margin Securities. 60
4.1.10 Litigation. 60
4.1.11 Financial Condition. 60
4.1.12 Full Disclosure. 61
4.1.13 Indebtedness for Borrowed Money. 61
4.1.14 Taxes. 61
4.1.15 ERISA. 62
4.1.16 Title to Properties. 62
4.1.17 Patents, Trademarks, Etc. 62
4.1.18 Employee Relations. 62
4.1.19 Presence of Hazardous Materials or Hazardous Materials
Contamination. 63
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4.1.20 Perfection and Priority of Collateral. 63
4.1.21 Places of Business and Location of Collateral. 63
4.1.22 Business Names and Addresses. 64
4.1.23 Inventory. 64
4.1.24 Accounts. 64
4.1.25 Compliance with Eligibility Standards. 64
4.1.26 Original Financing Agreement. 65
4.1.27 Year 2000. 65
Section 4.2 Survival; Updates of Representations and Warranties. 65
ARTICLE V CONDITIONS PRECEDENT 65
Section 5.1 Conditions to the Initial Advance and Initial Letter of Credit. 65
5.1.1 Organizational Documents - Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma. 66
5.1.2 Opinion of Obligors' Counsel. 67
5.1.3 Organizational Documents - Corporate Guarantors. 67
5.1.4 Consents, Licenses, Approvals, Etc. 68
5.1.5 Notes. 68
5.1.6 Financing Documents and Collateral. 68
5.1.7 Other Financing Documents. 69
5.1.8 Other Documents, Etc. 69
5.1.9 Payment of Fees. 69
5.1.10 Collateral Disclosure List. 69
5.1.11 Recordings and Filings. 69
5.1.12 Insurance Certificate. 69
5.1.13 Landlord's Waivers. 69
5.1.14 Bailee Acknowledgements. 70
5.1.15 Field Examination. 70
5.1.16 Credit Insurance. 70
5.1.17 Senior Notes. 70
Section 5.2 Conditions to all Extensions of Credit. 70
5.2.1 Compliance. 70
5.2.2 Borrowing Base. 70
5.2.3 Default. 71
5.2.4 Representations and Warranties. 71
5.2.5 Material Adverse Change. 71
5.2.6 Legal Matters. 71
ARTICLE VI COVENANTS OF THE BORROWER 71
Section 6.1 Affirmative Covenants. 71
6.1.1 Financial Statements. 71
6.1.2 Recordkeeping, Rights of Inspection, Field Examination, Etc. 73
6.1.3 Existence. 74
6.1.4 Compliance with Laws. 74
6.1.5 Preservation of Properties. 75
6.1.6 Line of Business. 75
6.1.7 Insurance. 75
6.1.8 Taxes. 75
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6.1.9 ERISA. 76
6.1.10 Notification of Events of Default and Adverse Developments. 76
6.1.11 Hazardous Materials; Contamination. 77
6.1.12 Disclosure of Significant Transactions. 78
6.1.13 Financial Covenants. 78
6.1.14 Collection of Receivables. 79
6.1.15 Assignments of Receivables. 80
6.1.16 Government Accounts. 80
6.1.17 Inventory. 81
6.1.18 Insurance With Respect to and Inventory. 81
6.1.19 Credit Insurance. 82
6.1.20 Maintenance of the Collateral. 82
6.1.21 Defense of Title and Further Assurances. 82
6.1.22 Business Names; Locations. 83
6.1.23 Subsequent Opinion of Counsel as to Recording Requirements. 83
6.1.24 Use of Premises and Equipment. 83
6.1.25 Protection of Collateral. 84
Section 6.2 Negative Covenants. 84
6.2.1 Capital Structure, Merger, Acquisition or Sale of Assets. 84
6.2.2 Subsidiaries. 85
6.2.3 Issuance of Stock. 85
6.2.4 Purchase or Redemption of Securities, Distribution
Restrictions; Payment of Indebtedness for Borrowed Money. 85
6.2.5 Indebtedness. 86
6.2.6 Investments, Loans and Other Transactions. 86
6.2.7 Capital Expenditures. 87
6.2.8 Subordinated Indebtedness. 88
6.2.9 Liens. 88
6.2.10 Transactions with Affiliates. 88
6.2.11 Other Businesses. 89
6.2.12 ERISA Compliance. 89
6.2.13 Prohibition on Hazardous Materials. 89
6.2.14 Method of Accounting; Fiscal Year. 89
6.2.15 Compensation. 90
6.2.16 Transfer of Collateral. 90
6.2.17 Sale and Leaseback. 90
6.2.18 Disposition of Collateral. 90
ARTICLE VII DEFAULT AND RIGHTS AND REMEDIES 90
Section 7.1 Events of Default. 90
7.1.1 Failure to Pay. 91
7.1.2 Breach of Representations and Warranties. 91
7.1.3 Failure to Comply with Covenants. 91
7.1.4 Default Under Other Financing Documents or Obligations. 91
7.1.5 Receiver; Bankruptcy. 91
7.1.6 Involuntary Bankruptcy, etc. 92
7.1.7 Judgment. 92
7.1.8 Execution; Attachment. 92
7.1.9 Default Under Other Borrowings. 92
7.1.10 Challenge to Agreements. 92
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7.1.11 Change in Ownership. 93
7.1.12 Liquidation, Termination, Dissolution, Change in
Management, etc. 93
Section 7.2 Remedies. 93
7.2.1 Acceleration. 93
7.2.2 Further Advances. 93
7.2.3 Uniform Commercial Code. 94
7.2.4 Specific Rights With Regard to Collateral. 94
7.2.5 Application of Proceeds. 95
7.2.6 Performance by Agent. 96
7.2.7 Other Remedies. 96
Section 7.3 Consent. 96
ARTICLE VIII THE AGENT 97
Section 8.1 Appointment. 97
Section 8.2 Nature of Duties. 97
8.2.1 In General. 97
8.2.2 Express Authorization. 97
Section 8.3 Rights, Exculpation, Etc. 98
Section 8.4 Reliance. 99
Section 8.5 Indemnification. 99
Section 8.6 NationsBank Individually. 100
Section 8.7 Successor Agent. 100
8.7.1 Resignation. 100
8.7.2 Appointment of Successor. 100
8.7.3 Successor Agent. 100
Section 8.8 Collateral Matters. 101
8.8.1 Release of Collateral. 101
8.8.2 Confirmation of Authority, Execution of Releases. 101
8.8.3 Absence of Duty. 102
Section 8.9 Agency for Perfection. 102
Section 8.10 Exercise of Remedies. 102
Section 8.11 Consents. 102
Section 8.12 Circumstances Where Consent of all of the Lenders
is Required. 103
Section 8.13 Dissemination of Information. 104
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Section 8.14 Discretionary Advances. 104
ARTICLE IX MISCELLANEOUS 104
Section 9.1 Notices. 104
Section 9.2 Amendments; Waivers. 105
Section 9.3 Cumulative Remedies. 106
Section 9.4 Severability. 107
Section 9.5 Assignments by Lenders. 107
Section 9.6 Participations by Lenders. 108
Section 9.7 Disclosure of Information by Lenders. 108
Section 9.8 Successors and Assigns. 108
Section 9.9 Continuing Agreements. 109
Section 9.10 Enforcement Costs. 109
Section 9.11 Applicable Law; Jurisdiction. 109
9.11.1 Applicable Law. 109
9.11.2 Submission to Jurisdiction. 109
9.11.3 Appointment of Agent for Service of Process. 110
9.11.4 Consent to Service of Process. 110
Section 9.12 Duplicate Originals and Counterparts. 110
Section 9.13 Headings. 110
Section 9.14 No Agency. 111
Section 9.15 Date of Payment. 111
Section 9.16 Entire Agreement. 111
Section 9.17 Waiver of Trial by Jury. 111
Section 9.18 Liability of the Agent and the Lenders. 111
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SECOND AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT (this
"Agreement") is made as of the 21st day of July, 1998, by and among
AAi.FOSTERGRANT, INC. (formerly known as Accessories Associates, Inc.),
a corporation organized and existing under the laws of the State of Rhode Island
("the Borrower");
▇▇▇▇▇▇ ▇▇▇▇▇ GROUP, L.P., a limited partnership organized under the
laws of the State of Delaware ("▇▇▇▇▇▇ ▇▇▇▇▇") and FANTASMA, LLC, a limited
liability company organized under the laws of the State of Delaware
("Fantasma");
F.G.G. INVESTMENTS, INC., a corporation organized and existing under the
laws of the State of Delaware, THE ▇▇▇▇▇▇▇ COMPANY, a corporation organized and
existing under the laws of the State of Texas, ▇▇▇▇▇▇▇ HOLDINGS, INC., a
corporation organized and existing under the laws of the State of Delaware,
▇▇▇▇▇▇▇ GENERAL, INC., a corporation organized and existing under the laws of
the State of Delaware, ▇▇▇▇▇▇ ▇▇▇▇▇ HOLDINGS, INC., a corporation organized and
existing under the laws of the State of Delaware, and O-RAY HOLDINGS, INC., a
corporation organized and existing under the laws of the State of Delaware (the
"Corporate Guarantors"):
NATIONSBANK, N.A., a national banking association ("NationsBank") and
each other financial institution which is a party to this Agreement, whether by
execution of this Agreement or otherwise (collectively, the "Lenders" and
individually, a "Lender"); and
NATIONSBANK, N.A., a national banking association, in its capacity as
both collateral and administrative agent for each of the Lenders (the "Agent").
RECITALS
A. The Borrower, together with certain other related entities, the Agent
and NationsBank (as sole Lender) entered into an Amended and Restated Financing
and Security Agreement dated May 9, 1997 (the same, as amended by First
Amendment to Amended and Restated Financing and Security Agreement dated March
4, 1998, the "Original Financing Agreement"). The Original Financing Agreement
provides for some of the agreements between the Borrower and the other related
entities party thereto and the Lenders with respect to the "Credit Facilities"
(as that term is defined in the Original Financing Agreement), including the
Revolving Credit Facility (as that term is defined in the Original Financing
Agreement) in an amount not to exceed $60,000,000 and the Letter of Credit
Facility which is part of the Revolving Credit Facility.
B. In connection with the sale of senior debt by the Borrower, the
Obligors (as hereinafter defined) have requested that the Lenders agree to
recast the Credit Facilities to consist of a revolving credit facility in the
maximum principal amount of $60,000,000, including a letter
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of credit facility in the amount of $3,000,000 to be used by the Borrower for
the Permitted Uses described in this Agreement and guaranteed by the Guarantors.
C. The Lenders are willing to make the recast credit facilities
available to the Borrower upon the terms and subject to the conditions set forth
in this Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Agent, the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma and the Lenders agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 CERTAIN DEFINED TERMS.
As used in this Agreement, the terms defined in the Preamble and
Recitals hereto shall have the respective meanings specified therein, and the
following terms shall have the following meanings:
"Account" individually and "Accounts" collectively mean all presently
existing or hereafter acquired or created accounts, accounts receivable,
contract rights, notes, drafts, instruments, acceptances, Chattel Paper, leases
and writings evidencing a monetary obligation or a security interest in, or a
lease of, goods, all rights to receive the payment of money or other
consideration under present or future contracts (including, without limitation,
all rights to receive payments under presently existing or hereafter acquired or
created letters of credit), or by virtue of merchandise sold or leased, services
rendered, loans and advances made or other considerations given, by or set forth
in or arising out of any present or future chattel paper, note, draft, lease,
acceptance, writing, bond, insurance policy, instrument, document or general
intangible, and all extensions and renewals of any thereof, all rights under or
arising out of present or future contracts, agreements or general interest in
merchandise which gave rise to any or all of the foregoing, including all goods,
all claims or causes of action now existing or hereafter arising in connection
with or under any agreement or document or by operation of law or otherwise, all
collateral security of any kind (including, without limitation, real property
mortgages and deeds of trust) and letters of credit given by any Person with
respect to any of the foregoing, all books and records in whatever media (paper,
electronic or otherwise) recorded or stored, with respect to any or all of the
foregoing and all rights of access to all equipment and general intangibles
necessary or beneficial to retain, access and/or process the information
contained in those books and records, and all proceeds (cash and non-cash) of
the foregoing.
"Account Debtor" means any Person who is obligated on a Receivable and
"Account Debtors" mean all Persons who are obligated on the Receivables.
"Additional Obligor" means any Person (a) that becomes a Subsidiary of
the Borrower in connection with a Permitted Acquisition and has executed and
delivered an Additional Obligor
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Joinder Supplement and (b) any other Person that has executed and delivered an
Additional Obligor Joinder Supplement that has been accepted and approved by the
Agent.
"Additional Obligor Joinder Supplement" means an Additional Obligor
Joinder Supplement in substantially the form attached hereto as EXHIBIT "D",
with the blanks appropriately completed and executed and delivered by the
Additional Obligor and accepted by the Borrower.
"Affiliate" means, with respect to any designated Person, any other
Person, (a) directly or indirectly controlling, directly or indirectly
controlled by, or under direct or indirect common control with the Person
designated, (b) directly or indirectly owning or holding five percent (5%) or
more of any equity interest in such designated Person, or (c) five percent (5%)
or more of whose stock or other equity interest is directly or indirectly owned
or held by such designated Person. For purposes of this definition, the term
"control" (including with correlative meanings, the terms "controlling",
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of voting securities or
other equity interests or by contract or otherwise.
"Agent" means the Person defined as the "Agent" in the preamble of this
Agreement and shall also include any successor Agent appointed pursuant to
Section 8.7 (Successor Agent).
"Agent's Obligations" shall mean any and all Obligations payable solely
to and for the exclusive benefit of the Agent by any or all of the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma under the terms of this Agreement and/or any of the
other Financing Documents, including, without limitation, any and all Field
Examination Fees.
"Agreement" means this Second Amended and Restated Financing and
Security Agreement (which amends and restates the Original Financing Agreement),
as amended, restated, supplemented or otherwise modified in writing in
accordance with the provisions of Section 9.2 (Amendments; Waivers).
"AAi Group" means collectively each of the Borrower, AAi Company of
Canada, AAi ▇▇▇▇▇▇ ▇▇▇▇▇ Limited and Fantasma and each of the ▇▇▇▇▇▇ Group, and
their respective successors and assigns.
"Applicable Interest Rate" means (a) the LIBOR Rate, or (b) the Base
Rate, as the case may be.
"Applicable Margin" means the applicable rate per annum to be added to
the LIBOR Base Rate or the Prime Rate, as set forth in Section 2.3.1 (Applicable
Interest Rates).
"Asset Disposition" means the disposition of any or all of the Assets of
any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma, whether by sale, lease, transfer
or other disposition (including any such disposition effected by way of merger
or consolidation) other than Permitted Asset Dispositions.
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"Assets" means at any date all assets that, in accordance with GAAP
consistently applied, should be classified as assets on a consolidated balance
sheet of the Borrower and its Subsidiaries.
"Assignee" means any Person to which any Lender assigns all or any
portion of its interests under this Agreement, any Commitment, and any Loan, in
accordance with the provisions of Section 9.5 (Assignments by Lenders), together
with any and all successors and assigns of such Person; "Assignees" means the
collective reference to all Assignees.
"Assignment of Credit Insurance" means (a) that certain assignment of
credit insurance as collateral dated May 9, 1997 (and as amended, restated,
reissued, supplemented or otherwise modified in writing at any time and from
time to time) from the Borrower to the Agent for the benefit of the Lenders
ratably and the Agent, which assignment of credit insurance assigns to the Agent
all of the right, title and interest of the Borrower in, and to, that certain
Accounts Servicing and Purchase Agreement dated November 27, 1995 (as amended,
restated, reissued, supplemented or otherwise modified in writing at any time
and from time to time) between the Borrower and Congress ▇▇▇▇▇▇▇ Corporation (b)
that certain assignment of credit insurance as collateral dated May 9, 1997 (and
as amended, restated, reissued, supplemented or otherwise modified in writing at
any time and from time to time) from ▇▇▇▇▇▇ ▇▇▇▇▇ to the Agent for the benefit
of the Lenders ratably and the Agent, which assignment of credit insurance
assigns to the Agent all of the right, title and interest of ▇▇▇▇▇▇ ▇▇▇▇▇ in,
and to, that certain Accounts Servicing and Purchase Agreement dated November
27, 1995 (as amended, restated, reissued, supplemented or otherwise modified in
writing at any time and from time to time) between ▇▇▇▇▇▇ ▇▇▇▇▇ and Congress
▇▇▇▇▇▇▇ Corporation and (c) any subsequent assignment of credit insurance as
collateral executed by Fantasma (and as amended, restated, reissued,
supplemented or otherwise modified in writing at any time and from time to time)
from Fantasma to the Agent for the benefit of the Lenders ratably and the Agent,
which assignment of credit insurance shall assign to the Agent all of the right,
title and interest of Fantasma in, and to, any Accounts Servicing and Purchase
Agreement (as amended, restated, reissued, supplemented or otherwise modified in
writing at any time and from time to time).
"Assignment of Trademarks" means that certain collateral assignment of
trademarks as security dated as of the Original Closing Date from BEC and ▇▇▇▇▇▇
▇▇▇▇▇ to the Agent for the benefit of the Lenders ratably and the Agent, as
amended, restated, supplemented or otherwise modified in writing at any time and
from time to time, including, but not limited to, an amendment of even date
herewith limiting the Agent's rights thereunder to non-exclusive use of the
trademarks in the disposition of the Inventory to which such trademarks are
attached.
"Assignment of Trademarks (Borrower)" means that certain collateral
assignment of trademarks as security dated May 9, 1997 from Borrower to the
Agent for the benefit of the Lenders ratably and the Agent, as amended,
restated, supplemented or otherwise modified in writing at any time and from
time to time, including, but not limited to, an amendment of even date herewith
limiting the Agent's rights thereunder to non-exclusive use of the trademarks in
the disposition of the Inventory to which such trademarks are attached.
"Bankruptcy Code" means the United States Bankruptcy Code, as amended
from time to time, and any successor Laws.
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"Base Rate" means the sum of (a) the Prime Rate, plus (b) the Applicable
Margin.
"Base Rate Loan" means any Loan for which interest is to be computed
with reference to the Base Rate.
"BEC" means F.G.G. Investments, Inc., a corporation organized and
existing under the laws of the State of Delaware formerly known as "BEC
Distribution, Inc.", and its successors and assigns.
"BEC Licensing Agreements" means all of the licensing agreements by and
between ▇▇▇▇▇▇ ▇▇▇▇▇, as licensee, and BEC, as licensor, pursuant to which BEC
grants to ▇▇▇▇▇▇ ▇▇▇▇▇ a non-exclusive license to use certain Trademarks owned
by BEC and necessary or desirable for the successful operation of ▇▇▇▇▇▇ ▇▇▇▇▇'▇
business, all as amended, restated, supplemented or otherwise modified.
"▇▇▇▇▇▇▇ Company" means The ▇▇▇▇▇▇▇ Company, a corporation organized and
existing under the laws of the State of Texas, and its successors and assigns.
"▇▇▇▇▇▇▇ General" means ▇▇▇▇▇▇▇ General, Inc., a corporation organized
and existing under the laws of the State of Delaware, and its successors and
assigns.
"▇▇▇▇▇▇▇ Holdings" means ▇▇▇▇▇▇▇ Holdings, Inc., a corporation organized
and existing under the laws of the State of Delaware, and its successors and
assigns.
"Borrowing Base" has the meaning described in Section Borrowing Base.
(Borrowing Base).
"Borrowing Base Deficiency" has the meaning described in Section 2.1.3
(Borrowing Base).
"Borrowing Base Report" has the meaning described in Section 2.1.4
(Borrowing Base Report).
"Business Day" means any day other than a Saturday, Sunday or other day
on which (a) in the case of NationsBank (as Agent and Lender), commercial banks
in the State are authorized or required to close and (b) in the case of the
Lenders other than NationsBank, those Lenders are open for the transaction of
business at the addresses stated after their names on the signature pages of
this Agreement.
"Buybacks" means collective reference to displays, racks, trade fixtures
and inventory which a Secured Debtor, in the ordinary course of its business,
purchases from a customer as an inducement to the customer to discontinue the
sale of the inventory purchased.
"Capital Expenditure" means an expenditure (whether payable in cash or
other property or accrued as a liability) for Fixed or Capital Assets,
including, without limitation, the entering into of a Capital Lease.
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"Capital Lease" means with respect to any Person any lease of real or
personal property, for which the related Lease Obligations have been or should
be, in accordance with GAAP consistently applied, capitalized on the balance
sheet of that Person.
"Cash Equivalents" means (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 thereof, (b) certificates of deposit with
maturities of one (1) year or less from the date of acquisition of, or money
market accounts maintained with, the Agent, any Affiliate of the Agent, or any
other domestic commercial bank having capital and surplus in excess of One
Hundred Million Dollars ($100,000,000.00) or such other domestic financial
institutions or domestic brokerage houses to the extent disclosed to, and
approved by, the Agent and (c) commercial paper of a domestic issuer rated at
least either A-1 by Standard & Poor's Corporation (or its successor) or P-1 by
▇▇▇▇▇'▇ Investors Service, Inc. (or its successor) with maturities of six (6)
months or less from the date of acquisition.
"Chattel Paper" means a writing or writings which evidence both a
monetary obligation and a security interest in or lease of specific goods; any
returned, rejected or repossessed goods covered by any such writing or writings
and all proceeds (in any form including, without limitation, accounts, contract
rights, documents, chattel paper, instruments and general intangibles) of such
returned, rejected or repossessed goods; and all proceeds (cash and non-cash) of
the foregoing.
"Closing Date" means the Business Day, in any event not later than July
__, 1998, on which the Agent shall be satisfied that the conditions precedent
set forth in Section 5.1 (Conditions to Initial Advance) have been fulfilled or
otherwise waived by the Agent.
"Collateral" means all property of each and every Secured Debtor subject
from time to time to the Liens of this Agreement, any of the Security Documents
and/or any of the other Financing Documents, together with any and all cash and
non-cash proceeds and products thereof.
"Collateral Account" has the meaning described in Section 2.1.8 (The
Collateral Account).
"Collateral Disclosure List" has the meaning described in Section 3.3
(Collateral Disclosure List).
"Collection" means each check, draft, cash, money, instrument, item, and
other remittance in payment or on account of payment of the Accounts or
otherwise with respect to any Collateral, including, without limitation, cash
proceeds of any returned, rejected or repossessed goods, the sale or lease of
which gave rise to an Account, and other proceeds of Collateral; and
"Collections" means the collective reference to all of the foregoing.
"Commitment" means with respect to each Lender, such Lender's Revolving
Credit Commitment or Letter of Credit Commitment, as the case may be, and
"Commitments" means the collective reference to the Revolving Credit Commitments
and the Letter of Credit Commitments of all of the Lenders.
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"Committed Amount" means with respect to each Lender, such Lender's
Revolving Loan Committed Amount or Letter of Credit Committed Amount, as the
case may be, and "Committed Amounts" means collectively the Revolving Loan
Committed Amount and the Letter of Credit Committed Amount of each of the
Lenders.
"Compliance Certificate" means a periodic Compliance Certificate
described in Section 6.1.1 (Financial Statements).
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with any Obligor within the meaning
of Section 414(b) or (c) of the Internal Revenue Code.
"Consolidated Net Income" means, for any period, the net income (or net
loss) of the Borrower and its Subsidiaries for such period, after all expenses,
taxes and other proper charges, determined in accordance with GAAP and after
eliminating (a) all intercompany items, (b) all earnings attributable to equity
interests in Persons other than Subsidiaries unless actually received by the
Borrower or its Subsidiaries, (c) all income arising from the forgiveness,
adjustment or negotiated settlement of any Indebtedness, (d) any extraordinary
items of income or expense (including any one-time charges or write-offs
associated with the discontinuance of operations at the Texas Property) and (e)
any increase or decrease of income arising from any change in the method of
accounting for any item from that employed in the preparation of the financial
statements.
"Copyrights" means and includes, in each case whether now existing or
hereafter arising, all of each of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and Fantasma's
rights, title and interest in and to (a) all copyrights, rights and interests in
copyrights, works protectable by copyright, copyright registrations, copyright
applications, and all renewals of any of the foregoing and (b) all rights
corresponding to any of the foregoing throughout the world.
"Corporate Guarantor" means BEC, ▇▇▇▇▇▇▇ Company, ▇▇▇▇▇▇▇ Holdings,
▇▇▇▇▇▇▇ General, ▇▇▇▇▇▇ Holdings and O-Ray Holdings, as the case may be and each
of their respective successors and assigns, and "Corporate Guarantors" means
BEC, ▇▇▇▇▇▇▇ Company, ▇▇▇▇▇▇▇ Holdings, ▇▇▇▇▇▇▇ General, ▇▇▇▇▇▇ Holdings and
O-Ray Holdings and each of their respective successors and assigns.
"Corporate Guaranty" means that certain guaranty of payment dated as of
the Original Closing for the benefit of the Lenders ratably and the Agent to the
Agent, as agent, from the Corporate Guarantors, as the same may from time to
time be amended, restated, supplemented or otherwise modified.
"Credit Facility" means with respect to each Lender, such Lender's Pro
Rata Share of the Revolving Credit Facility or the Letter of Credit Facility, as
the case may be, and "Credit Facilities" means collectively the Revolving Credit
Facility and Letter of Credit Facility of each of the Lenders and any and all
other credit facilities now or hereafter extended under or secured by this
Agreement.
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"Default" means an event that, with the giving of notice or lapse of
time, or both, would constitute an Event of Default under the provisions of this
Agreement.
"Early Termination Fee" has the meaning described in Section 2.1.11
(Early Termination Fee).
"EBITDA" means for any period, the Consolidated Net Income of the
Borrower and its Subsidiaries for such period after all expenses except
depreciation, interest, amortization and taxes.
"Eligible Inventory" means all of the Secured Debtors' Inventory held
for sale in the ordinary course of business, valued at the lowest of (i) net
acquisition cost (exclusive of purchase accounting) or (ii) any ceiling prices
which may be established by any Law of any Governmental Authority, EXCLUDING,
however, any Inventory which consists of:
(a) any goods located outside of the United
States except for goods in transit subject to negotiable bills of lading
which have been delivered and negotiated to the Agent,
(b) any goods located outside of a state, in
which the Agent has properly and unavoidably perfected the security
interests of the Agent and the Lenders by filing in that state, free and
clear of all other Liens,
(c) any goods not in the actual possession of
a Secured Debtor, except to the extent provided in subsection (a) above
or (d) below,
(d) any goods in the possession of a bailee,
warehouseman, consignee or similar third party, except to the extent
that such bailee, warehouseman, consignee or similar third party has
entered into an agreement with the Agent in which such bailee,
warehouseman, consignee or similar third party consents and agrees to
the Lien of the Agent and the Lenders on such goods and to such other
terms and conditions as may be reasonably required by the Agent,
(e) any goods located on premises leased or
rented to a Secured Debtor or otherwise not owned by a Secured Debtor,
unless, the Agent has received a waiver and consent from the lessor,
landlord and/or owner, in form and substance reasonably satisfactory to
the Agent and from any mortgagee of such lessor, landlord or owner to
the extent required by the Agent,
(f) any goods the sale or other disposition of
which has given rise to a Receivable,
(g) any goods which fail to meet in any
material respect all standards and requirements imposed by any
Governmental Authority over such goods, their production, storage, use
or sale,
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(h) Buybacks, work-in-process (other than
finished goods which are not carded or packaged and for which the Agent
has received any information requested), supplies, displays, packaging
and promotional materials, and
(i) any goods which the Agent in the good
faith exercise of its sole and absolute discretion has deemed to be
ineligible because the Agent otherwise considers the collateral value to
the Agent and the Lenders to be impaired or its or their ability to
realize such value to be insecure.
In the event of any dispute under the foregoing criteria, as to whether goods
are, or have ceased to be, Eligible Inventory, the decision of the Agent in the
good faith exercise of its sole and absolute discretion shall control.
"Eligible Receivable" and "Eligible Receivables" mean, at any time of
determination thereof, the unpaid portion of each account receivable in United
States Dollars of each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, provided each
account receivable conforms and continues to conform to the following criteria
to the satisfaction of the Agent:
(a) the account arose in the ordinary course
of business of a Secured Debtor from a bona fide outright sale of goods
by a Secured Debtor or from services performed by a Secured Debtor;
(b) the account is a valid, legally
enforceable obligation of the Account Debtor and requires no further act
on the part of any Person under any circumstances to make the account
payable by the Account Debtor;
(c) the account is based upon an enforceable
order or contract, written or oral, for goods shipped or for services
performed, and the same were shipped or performed in accordance with
such order or contract;
(d) if the account arises from the sale of
goods, the goods the sale of which gave rise to the account have been
shipped or delivered to the Account Debtor on an absolute sale basis
(except for the effect of seasonal accounts and returns, to the extent
the same arise in the ordinary course of business) and not on a ▇▇▇▇ and
hold sale basis, a consignment sale basis, a guaranteed sale basis, or
on the basis of any other similar understanding;
(e) if the account arises from the performance
of services, such services have been fully rendered and do not relate to
any warranty claim or obligation;
(f) the account is evidenced by an invoice or
other documentation in form reasonably acceptable to the Agent, dated no
later than the date of shipment or performance and containing only terms
normally offered by a Secured Debtor;
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(g) the amount shown on the books of any
Secured Debtor and on any invoice, certificate, schedule or statement
delivered to the Agent is owing to the Secured Debtor, as applicable,
and no partial payment has been received unless reflected with that
delivery;
(h) meets the requirements of either (i) the
account is covered by the credit insurance acceptable to the Agent and
covered by the Assignment of Credit Insurance; or (ii) the account is
not covered by the credit insurance acceptable to the Agent, and is not
past due more than ninety (90) days after its due date (which shall not
be later than thirty (30) days after the invoice date) or (iii) the
account is net of any applicable reserve;
(i) the Account Debtor has not returned,
rejected or refused to retain, or otherwise notified the Secured Debtor
of any dispute concerning, or claimed nonconformity of, any of the goods
or services from the sale or furnishing of which the account arose,
provided that the account shall be excluded from Eligible Receivables
only to the extent of the amount owing with respect to those returned,
rejected or refused goods or services;
(j) the account is not subject to any present
or contingent (and no facts exist which are the basis for any future)
offset, claim, deduction or counterclaim, dispute or defense in law or
equity on the part of such Account Debtor, or any claim for credits,
allowances, or adjustments by the Account Debtor because of returns
outside of the ordinary course of business, inferior, or damaged goods
or unsatisfactory services, or for any other reason including, without
limitation, those arising on account of a breach of any express or
implied representation or warranty (provided that the account shall be
excluded from Eligible Receivables only to the extent the Account Debtor
is refusing to pay because of those returned, inferior, or damaged goods
or unsatisfactory services);
(k) the Account Debtor is not a partner or
Affiliate of a Secured Debtor or an employee, officer, director of
shareholder of a Secured Debtor or any partner or Affiliate of a Secured
Debtor;
(l) the Account Debtor is not incorporated or
primarily conducting business or otherwise located in any jurisdiction
outside of the United States of America or any other country approved by
the Agent;
(m) unless the Account Debtor has obtained
adequate financing under Chapter 11 of the Bankruptcy Code (or similar
bankruptcy laws of other jurisdictions) and is operating as a going
concern, the Account Debtor with respect to such account is not
insolvent or the subject of any bankruptcy or insolvency proceedings of
any kind or of any other proceeding or action, threatened or pending;
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(n) the Account Debtor is not a Governmental
Authority, unless the applicable Secured Debtor, is in compliance with
Section 0 (Government Accounts);
(o) no Secured Debtor is indebted in any
manner to the Account Debtor (as creditor, lessor, supplier or
otherwise), with the exception of customary credits, adjustments and/or
discounts given to an Account Debtor by the Secured Debtors in the
ordinary course of their business;
(p) the account does not arise from services
under or related to any warranty obligation of any of the Secured
Debtors or out of service charges, finance charges or other fees for the
time value of money;
(q) the account is not evidenced by chattel
paper or an instrument of any kind and is not secured by any letter of
credit;
(r) except for the Assignment of Credit
Insurance, the title of the Secured Debtor to the account is absolute
and is not subject to any prior assignment, claim, Lien, or security
interest;
(s) no bond or other undertaking by a
guarantor or surety has been or is required to be obtained, supporting
the performance of the Secured Debtor in respect of any its agreements
with the Account Debtor;
(t) no bond or other undertaking by a
guarantor or surety has been or is required to be obtained, supporting
the account and any of the Account Debtor's obligations in respect of
the account;
(u) the Secured Debtor has the full and
unqualified right and power to assign and grant a security interest in,
and Lien on, the account to the Agent and the Lenders as security and
collateral for the payment of the Obligations;
(v) the account does not arise out of a
contract with, or order from, an Account Debtor that, by its terms,
forbids or makes void or unenforceable the assignment or grant of a
security interest by the Secured Debtor to the Agent and the Lenders of
the account arising from such contract or order;
(w) the account is subject to a Lien in favor
of the Lender, which Lien is perfected as to the account by the filing
of financing statements and which Lien upon such filing constitutes a
first priority security interest and Lien;
(x) the goods giving rise to the account were
not, at the time of the sale thereof, subject to any Lien, except those
in favor of the Agent and the Lenders;
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(y) the Agent in the good faith exercise of
its discretion has not deemed the account ineligible because of
uncertainty as to the creditworthiness of the Account Debtor or because
the Agent otherwise considers the collateral value of such account to
the Agent and the Lenders to be impaired or its or their ability to
realize such value to be insecure.
In determining the amount receivable, the Agent shall be satisfied that
the Secured Debtors have made appropriate allowances for returns, discounts,
claims, credits, charges, accrued rebates or other allowances, offsets,
deductions, counterclaims, disputes or other defenses and reserves. In the event
of any dispute, under the foregoing criteria, as to whether an account is, or
has ceased to be, an Eligible Receivable, the decision of the Agent in the good
faith exercise of its discretion shall control.
"Enforcement Costs" means all expenses, charges, costs and fees
whatsoever (including, without limitation, reasonable outside counsel attorney's
fees and expenses) of any nature whatsoever paid or incurred by or on behalf of
the Agent and/or any of the Lenders in connection with (a) any or all of the
Obligations, this Agreement and/or any of the other Financing Documents, (b) the
creation, perfection, collection, maintenance, preservation, defense,
protection, realization upon, disposition, sale or enforcement of all or any
part of the Collateral, this Agreement or any of the other Financing Documents,
including, without limitation, those costs and expenses more specifically
enumerated in Section 3.6 (Costs) and/or Section 9.10 (Enforcement Costs), and
(c) the monitoring, administration, processing and/or servicing of any or all of
the Obligations, the Financing Documents, and/or the Collateral.
"Equipment" means all equipment, machinery, computers, chattels, tools,
parts, machine tools, furniture, furnishings, fixtures and supplies of every
nature, presently existing or hereafter acquired or created and wherever
located, whether or not the same shall be deemed to be affixed to real property,
together with all accessions, additions, fittings, accessories, special tools,
and improvements thereto and substitutions therefor and all parts and equipment
which may be attached to or which are necessary or beneficial for the operation,
use and/or disposition of such personal property.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Business Day" means any Business Day on which dealings in
United States Dollar deposits are carried out on the London interbank market and
on which commercial banks are open for domestic and international business
(including dealings in Dollar deposits) in London, England.
"Eurodollar Lending Office" means with respect to each Lender such
branch or office of that Lender as designated by that Lender, as applicable,
from time to time as the branch or office at which the LIBOR Loans are to be
made or maintained.
"Event of Default" has the meaning described in ARTICLE VII (Defaults
and Rights and Remedies).
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"Fantasma Agreements" means and includes that certain Member Agreement
dated as of June 23, 1998 by and among the Borrower, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Houdini
Capital LTD and that certain Member Agreement dated as of June 23, 1998 by and
between the Borrower and ▇▇▇▇ ▇▇▇▇▇▇▇▇.
"Federal Funds Rate" means for any day of determination, 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 for such
day (or, if such day is not a Business Day) by the Federal Reserve Bank for the
next preceding Business Day) by the Federal Reserve Bank of Richmond or, if such
rate is not so published for any day that is a Business Day, the average of
quotations for such day on such transactions received by the Agent from three
(3) Federal funds brokers of recognized standing selected by the Agent.
"Fees" means the collective reference to each fee payable to the Agent,
for its own account or for the ratable benefit of the Lenders, under the terms
of this Agreement or under the terms of any of the other Financing Documents,
including, without limitation, any and all Revolving Credit Unused Line Fees,
any and all Letter of Credit Fees, the Early Termination Fee any and all Field
Examination Fees.
"Field Examination Fee" and "Field Examination Fees" have the meanings
described in Section 2.4.3 (Field Examination Fees).
"Financial Institution" means bank, finance company or other Person or
other Governmental Authority that in the ordinary course of business makes or
purchases interests in commercial credit facilities.
"Financing Documents" means at any time collectively this Agreement, the
Notes, the Security Documents, the Letter of Credit Documents and any other
instrument, agreement or document previously, simultaneously or hereafter
executed and delivered by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma, any Obligor
and/or any other Person, singly or jointly with another Person or Persons,
evidencing, securing, guarantying or in connection with this Agreement, any
Note, any of the Security Documents, and/or any of the Obligations.
"Fixed or Capital Assets" of a Person at any date means all assets which
would, in accordance with GAAP consistently applied, be classified on the
balance sheet of such Person as property, plant or equipment at such date and
displays included in other Assets which are depreciated in accordance with GAAP
consistently applied to the Borrower and its Subsidiaries.
"Fixed Charge Coverage Ratio" means for the period of any determination
thereof the ratio of (a) EBITDA to (b) Fixed Charges.
"Fixed Charges" means for any period of determination thereof, the
scheduled or required payments (including, without limitation, principal and
interest) made in cash on all Indebtedness for Borrowed Money of the Borrower
and its Subsidiaries, plus Capital Expenditures made in cash (and Permitted
Acquisitions to the extent not included in Capital Expenditures) of the Borrower
and its Subsidiaries, plus cash payments of Taxes.
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"Foreign Exchange Protection Agreement" means any foreign exchange,
currency spot, foreign exchange forward contracts and other similar agreements
and arrangements between any Obligor and a Person, acceptable to the Agent in
its reasonable credit judgement, providing for the transfer or mitigation of
foreign exchange currency risks either generally or under specific
contingencies.
"Foreign Exchange Exposure" means at any time and from time to time of
determination, the amount of the obligations and liabilities of any or all of
the Obligors with respect to each Foreign Exchange Protection Agreement with a
Person who is the Agent, a Lender or an Affiliate of the Agent or any Lender
arising as a result of a determination of the amount of Dollars required at such
time to purchase such amount of the foreign currency covered by such Foreign
Exchange Protection Agreement at the spot rate.
"▇▇▇▇▇▇ Group" means collectively each of ▇▇▇▇▇▇ ▇▇▇▇▇, each of the
Corporate Guarantors and Opti-Ray, Inc., and their respective successors and
assigns.
"▇▇▇▇▇▇ Holdings" means ▇▇▇▇▇▇ ▇▇▇▇▇ Holdings, Inc., a corporation
organized and existing under the laws of the State of Delaware, and its
successors and assigns.
"Funded Debt" means Indebtedness for Borrowed Money MINUS any obligation
under a employee stock ownership plan or other similar employee benefit plan.
"GAAP" means generally accepted accounting principles in the United
States of America in effect on the date of this Agreement.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any department, agency or instrumentality thereof.
"Gross Receivables" means, at any time of determination thereof, the
amount equal to the sum of (a) the amount shown under the caption "Trade
Receivables" in the most recent balance sheet of the Borrower and its
Subsidiaries on a consolidated basis furnished to the Agent in accordance with
Section 6.1.1(c) (Monthly Statements and Certificates), but only to the extent
such Trade Receivables are shown to the Agent's reasonable satisfaction to be
owing to the Secured Debtors, plus (b) the Secured Debtors' reserve for returns
for the same date as the balance sheet and prepared in accordance with GAAP
applied on a consistent basis to the Borrower and its Subsidiaries.
"Guarantors" means the Corporate Guarantors, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma.
"Hazardous Materials" means (a) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976, as amended from time to time,
and regulations promulgated thereunder; (b) any "hazardous substance" as defined
by the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, and regulations promulgated thereunder; (c)
any substance the presence of which on any property now or hereafter owned,
acquired or operated by any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma
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is prohibited by any Law similar to those set forth in this definition; and (d)
any other substance which by Law requires special handling in its collection,
storage, treatment or disposal.
"Hazardous Materials Contamination" means the contamination (whether
presently existing or occurring after the date of this Agreement) by Hazardous
Materials of any property owned, operated or controlled by any of the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma or for which any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or
Fantasma has responsibility, including, without limitation, improvements,
facilities, soil, ground water, air or other elements on, or of, any property
now or hereafter owned, acquired or operated by any of the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ or Fantasma, and any other contamination by Hazardous Materials for which
any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma is, or is claimed to be,
responsible.
"Headquarters Property" means (a) that certain real estate known as 500
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Highway, Smithfield, Rhode Island, and includes, without
limitation, the office and warehouse buildings now thereon, all other buildings,
structures and improvements now or hereafter located thereon, the rights,
alleys, ways, tenements, easements, appurtenances, passages, riparian rights,
liberties, advantages, accessions and privileges now or hereafter appertaining
thereto, condemnation awards and the rents, royalties, issues, profits,
revenues, income, accounts and other benefits thereof, or derived from or
arising out of the use or enjoyment of all or any portion thereof, or from any
lease, sublease, contract of sale or other agreement pertaining thereto, (b) all
building materials, fixtures, equipment (including, without limitation,
conveyors, shelving and racks), whether now owned or hereafter acquired, which
is used in the construction of, or is placed upon or used in connection with the
maintenance, use, occupancy or enjoyment of, such real estate and/or the
expansions or improvements now or hereafter located thereon, and (c) Borrower's
interest in all building materials and fixtures located on, contained in or upon
or attached to those buildings, together with all replacements thereof,
substitutions therefor and additions thereto and all proceeds thereof.
"Indebtedness" of a Person means at any date the total Liabilities of
such Person at such time determined in accordance with GAAP consistently
applied.
"Indebtedness for Borrowed Money" of a Person means at any time the sum
at such time of (a) Indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, (b) any obligations of such
Person in respect of letters of credit, banker's acceptances or similar
obligations issued or created for the account of such Person, (c) Lease
Obligations of such Person with respect to Capital Leases, (d) all liabilities
secured by any Lien on any property owned by such Person, to the extent attached
to such Person's interest in such property, even though such Person has not
assumed or become personally liable for the payment thereof, (e) obligations of
third parties which are being guarantied or indemnified against by such Person
or which are secured by the property of such Person; (f) any obligation of such
Person under a employee stock ownership plan or other similar employee benefit
plan; (g) any obligation of such Person or a Commonly Controlled Entity to a
Multi-employer Plan; and (h) any obligations, liabilities or indebtedness,
contingent or otherwise (on an estimated "marked-to market" basis), under or in
connection with, each Foreign Exchange Protection Agreement and each Interest
Rate Protection Agreement, net of liabilities owed to the respective Obligor or
Obligors by the counterparties on any such Foreign Exchange Protection Agreement
and/or
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Interest Rate Protection Agreement; but excluding trade and other accounts
payable in the ordinary course of business in accordance with the Obligors'
customary trade terms and which are not overdue (as determined in accordance
with the Obligors' customary trade practices) or which are being disputed in
good faith by such Person and for which adequate reserves are being provided on
the books of such Person in accordance with GAAP.
"Indenture" means that certain Indenture dated as of July __, 1998 (as
amended, supplemented or otherwise modified from time to time), between the
Borrower, the Borrower's domestic Subsidiaries, and the Trustee.
"Instrument" means a negotiable instrument (as defined under Article 3
of the Uniform Commercial Code), a "certificated security" (as defined under
Article 8 of the Uniform Commercial Code), or any other writing which evidences
a right to payment of money and is not itself a security agreement or lease and
is of a type which is in the ordinary course of business negotiated by transfer
and delivery with any necessary indorsement.
"Interest Payment Date" means the first day of each calendar month
commencing on August 1, 1998 and continuing thereafter until the Obligations
have been irrevocably paid in full.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the Income Tax Regulations issued and proposed to
be issued thereunder.
"Interest Period" means as to any LIBOR Loan, the period commencing on
and including the date such LIBOR Loan is made (or on the effective date of the
Borrower's election to convert any Base Rate Loan to a LIBOR Loan in accordance
with the provisions of this Agreement) and ending on and including the day which
is 30, 60, 90 or 180 days thereafter, as selected by the Borrower in accordance
with the provisions of this Agreement, and thereafter, each period commencing on
the last day of the then preceding Interest Period for such LIBOR Loan and
ending on and including the day which is 30, 60, 90 or 180 days thereafter, as
selected by the Borrower in accordance with the provisions of this Agreement;
provided, however that:
(a) the first day of any Interest Period shall
be a Eurodollar Business Day;
(b) if any Interest Period would end on a day
that shall not be a Eurodollar Business Day, such Interest Period shall
be extended to the next succeeding Eurodollar Business Day unless such
next succeeding Eurodollar Business Day would fall in the next calendar
month, in which case, such Interest Period shall end on the next
preceding Eurodollar Business Day; and
(c) no Interest Period shall extend beyond the
Revolving Credit Expiration Date.
"Interest Rate Election Notice" has the meaning described in Section
2.3.2(e) (Selection of Interest Rates).
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"Interest Rate Protection Agreement" means any interest rate exchange,
swap, cap, future, protection, floor, collar or similar agreements between any
Obligor and any Person, acceptable to the Agent in its reasonable credit
judgement, providing for the transfer or mitigation of interest rate risks
either generally or under specific contingencies.
"Interest Rate Protection Reserve" means at any time of determination,
the aggregate of the obligations of any or all of the Obligors under all
Interest Rate Protection Agreements to which any Obligor is a party with a
Person who is the Agent, a Lender or an Affiliate of the Agent or any of the
Lenders in the event of a termination of any such Interest Rate Protection
Agreements on an estimated "marked-to market" basis.
"Inventory" means all inventory of each of the Secured Debtors and all
right, title and interest of each of the Secured Debtors in and to all of its
now owned and hereafter acquired goods, merchandise and other personal property
furnished under any contract of service or intended for sale or lease,
including, without limitation, all raw materials, work-in-progress, finished
goods and materials and supplies of any kind, nature or description which are
used or consumed in the any of the Secured Debtors' business or are or might be
used in connection with the manufacture, packing, shipping, advertising, selling
or finishing of such goods, merchandise and other licenses, warranties,
franchises, general intangibles, personal property and all documents of title or
documents relating to the same and all proceeds (cash and non-cash) of the
foregoing.
"Item of Payment" means each check, draft, cash, money, instrument,
item, and other remittance in payment or on account of payment of the
Receivables or otherwise with respect to any Collateral, including, without
limitation, cash proceeds of any returned, rejected or repossessed goods, the
sale or lease of which gave rise to a Receivable, and other proceeds of
Collateral; and "Items of Payment" means the collective reference to all of the
foregoing.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any Governmental Authority or political
subdivision or agency thereof, or any court or similar entity established by any
thereof.
"Lease Obligations" of a Person means for any period the rental
commitments of such Person for such period under leases for real and/or personal
property (net of rent from subleases thereof, but including taxes, insurance,
maintenance and similar expenses which such Person, as the lessee, is obligated
to pay under the terms of said leases, except to the extent that such taxes,
insurance, maintenance and similar expenses are payable by sublessees),
including rental commitments under Capital Leases.
"Lender" and "Lenders" shall have meaning set forth at the beginning of
this Agreement. "Lender" and "Lenders" shall also include, without limitation,
each other Person which becomes a party to this Agreement as a "Lender", whether
by execution of this Agreement or otherwise.
"Letter of Credit" and "Letters of Credit" shall have the meanings
described in Section 2.2.1 (Letters of Credit).
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"Letter of Credit Agreement" means the collective reference to each
letter of credit application and agreement substantially in the form of the
Agent's then standard form of application for letter of credit or such other
form as may be approved by the Agent, executed and delivered by the Borrower in
connection with the issuance of a Letter of Credit, as the same may from time to
time be amended, restated, supplemented or modified; and "Letter of Credit
Agreements" means all of the foregoing in effect at any time and from time to
time.
"Letter of Credit Documents" means any and all drafts under or
purporting to be under a Letter of Credit, any Letter of Credit Agreement, and
any other instrument, document or agreement executed and/or delivered by the
Borrower or any other Person under, pursuant to or in connection with a Letter
of Credit or any Letter of Credit Agreement.
"Letter of Credit Facility" means the facility established pursuant to
Section 2.2 (Letter of Credit Facility).
"Letter of Credit Fee" and "Letter of Credit Fees" have the meanings
described in Section 2.2.2 (Letter of Credit Fees).
"Letter of Credit Obligations" means the collective reference to all
Obligations of any one or more of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma with
respect to the Letters of Credit and the Letter of Credit Agreements.
"Liabilities" means at any date all liabilities that in accordance with
GAAP consistently applied should be classified as liabilities on a balance sheet
of the Borrower and its Subsidiaries on a consolidated basis.
"LIBOR Base Rate" means for any Interest Period with respect to any
LIBOR Loan, the rate per annum (rounded upward, if necessary, to the nearest
next 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in United States Dollars at
approximately 11:00 a.m. (London time) two (2) Eurodollar Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period. If for any reason such rate is not available, the term "LIBOR Base Rate"
shall mean, for any LIBOR Loan for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
United States Dollars at approximately 11:00 a.m. (London time) two (2)
Eurodollar Business Days prior to the first day of such Interest Period;
PROVIDED, HOWEVER, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates. For
purposes of this definition, Telerate Page 3750 refers to the British Bankers
Association Libor Rates (determined at approximately 11:00 a.m. (London time))
that are published by Dow ▇▇▇▇▇ Telerate, Inc.
"LIBOR Loan" means any Loan for which interest is to be computed with
reference to the LIBOR Rate.
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"LIBOR Rate" means for any Interest Period with respect to any LIBOR
Loan, (a) the Applicable Margin, PLUS (b) the per annum rate of interest
calculated pursuant to the following formula:
LIBOR BASE RATE
-------------------------
1.00 - Reserve Percentage
"Lien" means any mortgage, deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, lien,
hypothecation, provision in any instrument or other document for confession of
judgment, cognovit or other similar right or remedy, claim or charge of any
kind, whether perfected or unperfected, avoidable or unavoidable, including,
without limitation, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction,
excluding the precautionary filing of any financing statement by any lessor in a
true lease transaction, by any ▇▇▇▇▇▇ in a true bailment transaction or by any
consignor in a true consignment transaction under the Uniform Commercial Code of
any jurisdiction or the agreement to give any financing statement by any lessee
in a true lease transaction, by any bailee in a true bailment transaction or by
any consignee in a true consignment transaction.
"Line of Business" has the meaning described in Section 6.1.6 (Line of
Business).
"Loan" means the Revolving Loan.
"Loan Notice" has the meaning described in Section 2.1.2 (Procedure for
Making Advances).
"Lockbox" has the meaning described in Section 2.1.8 (The Collateral
Account).
"Material Adverse Effect" means an effect, either in any case or in the
aggregate, which would result in a material adverse change (a) in the business,
condition, affairs or operations of the Borrower and its Subsidiaries taken as a
whole, (b) to any of the material properties or assets of the Borrower and its
Subsidiaries on a consolidated basis, (c) in the right or ability of the
Borrower and its Subsidiaries on a consolidated basis to carry on a substantial
portion of their operations as now conducted or proposed to be conducted, or (d)
to the value of, or the ability of the Agent or any of the Lenders to realize
upon, the Collateral in any material respect.
"Maximum Amount" means an amount equal to ninety five percent (95%) of
the amount by which (a) the present fair saleable value of a Guarantor's assets
exceeds (b) the total liabilities of such Guarantor (including the maximum
amount reasonably expected to come due in respect of contingent liabilities
other than contingent liabilities of such Guarantor hereunder), in each case
determined on the date of the first advance under the Revolving Loan under this
Agreement or on the day any demand is made under this Agreement or the Corporate
Guaranty, whichever date results in the higher amount.
"Multi-employer Plan" means a Plan that is a multi-employer plan as
defined in Section 4001(a)(3) of ERISA.
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"Net Book Value of Receivables" means, at any time of determination
thereof, the amount shown under the caption "Trade Receivables-Net" in the most
recent balance sheet of the Borrower and its Subsidiaries on a consolidated
basis furnished to the Agent in accordance with Section 0 (Financial Statements)
and prepared in accordance with GAAP applied on a consistent basis to the
Borrower and its Subsidiaries, but only to the extent such Trade Receivables are
shown to the Agent's reasonable satisfaction to be owing to the Borrower or one
of its Subsidiaries.
"Net Proceeds" means gross proceeds (cash and non-cash) or other
consideration paid to, or received by, any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or
Fantasma from any Asset Disposition (including, without limitation, issuance or
assumption of Indebtedness or the issuance of Securities), net of customary and
reasonable settlement costs, fees and expenses of such Asset Disposition.
"Net Outstandings" of any Lender means, at any time, the sum of (a) all
amounts paid by such Lender (other than pursuant to Section 8.5
(Indemnification)) to the Agent in respect to the Revolving Loan or otherwise
under this Agreement, minus (b) all amounts paid by the Agent to such Lender
which are received by the Agent and which, pursuant to this Agreement, are paid
over to such Lender for application in reduction of the outstanding principal
balance of the Revolving Loan.
"Non-Ratable Loan" means an advance under the Revolving Loan made by
NationsBank in accordance with the provisions of Section 2.5.2(c) (Non-Ratable
Loans and Payments).
"Note" means any Revolving Credit Note, and "Notes" means collectively
each Revolving Credit Note, and any other promissory note which may from time to
time evidence all or any portion of the Obligations.
"Obligations" means all present and future indebtedness, duties,
obligations, and liabilities, whether now existing or contemplated or hereafter
arising, of any one or more of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma to the
Lenders and/or the Agent under, arising pursuant to, in connection with and/or
on account of the provisions of this Agreement, each Note, each Security
Document, and/or any of the other Financing Documents, and/or the Loan,
including, without limitation, the principal of, and interest on, each Note,
late charges, the Fees, Enforcement Costs, and prepayment fees (if any), letter
of credit fees or fees charged with respect to any guaranty of any letter of
credit, any Interest Rate Protection Agreement with the Agent, any Lender or any
Affiliate of the Agent or any of the Lenders, and any Foreign Exchange
Protection Agreement with the Agent, any Lender or any Affiliate of the Agent or
any of the Lenders; also means all other present and future indebtedness,
liabilities and obligations, whether now existing or contemplated or hereafter
arising, of any one or more of the Obligors to the Agent and/or to NationsBank
or its Affiliates of any nature whatsoever regardless of whether such debts,
obligations and liabilities be direct, indirect, primary, secondary, joint,
several, joint and several, fixed or contingent; and also means any and all
renewals, extensions, substitutions, amendments, restatements and rearrangements
of any such debts, obligations and liabilities.
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"Obligors" means the Borrower and the Guarantors and "Obligor" means any
of the Borrower or any Guarantor.
"Offering Memorandum" means Borrower's Offering Memorandum dated July
__, 1998, pursuant to which the Senior Notes are offered.
"Offering Transaction" means the sale of the Senior Notes as described
in the Offering Memorandum.
"O-Ray Holdings" means O-Ray Holdings, Inc., a corporation organized and
existing under the laws of the State of Delaware, and its successors and
assigns.
"Original Closing Date" means December 12, 1996.
"Outstanding Letter of Credit Obligations" has the meaning described in
Section 2.2.3 (Terms of Letters of Credit).
"Patents" means and includes, in each case whether now existing or
hereafter arising, all of each of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and Fantasma's
rights, title and interest in and to (a) any and all patents and patent
applications, (b) any and all inventions and improvements described and claimed
in such patents and patent applications, (c) reissues, divisions, continuations,
renewals, extensions and continuations-in-part of any patents and patent
applications and (d) all rights corresponding to any of the foregoing throughout
the world.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Acquisitions" means the acquisition or purchase of, or
investment in, any Person, any operating division or unit of any Person engaged
substantially in the Line of Business, or the stock or assets of any Person;
provided, however that (a) the aggregate purchase price of, investment in,
and/or expenditures relating to, acquisitions, purchases, or investments cannot
exceed in any fiscal year the amount by which the Borrowing Base is increased as
a result of such acquisition, purchase or investment by more than Seven Million
Dollars ($7,000,000), (b) such acquisition, purchase or investment cannot
otherwise constitute or give rise to a Default or an Event of Default, (c) the
Borrower shall have furnished financial projections to the Agent and the Lenders
which give effect to such acquisition, purchase or investment and which indicate
that such acquisition, purchase and/or investment could not or would not cause a
Default or Event of Default, (d) all Accounts, Inventory, Chattel Paper,
Instruments, rights to non-exclusive use of the Trademarks in the disposition of
the Inventory to which such Trademarks are attached and any real property and
fixtures so acquired (except those which are held by a Person organized under
the Laws of a country other than the United States or securing debt that was
incurred prior to the acquisition and not in contemplation thereof), whether
acquired directly or indirectly through the acquisition of stock of another
Person, shall be subject to a first priority security interest, perfected by
filing or possession, in favor of the Agent and the Lenders securing the
Obligations and the Agent's Obligations, and (e) a Phase I environmental
assessment of any real property to be acquired or purchased by any of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or
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Fantasma or owned by any Person to be acquired or purchased by any of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma or owned by any Person in which any of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma intends to make an investment, has been
performed by a reputable and recognized environmental consulting firm reasonably
acceptable to the Lender and has revealed no Material Hazardous Materials
Contamination or Material violations of any Environmental Laws.
"Permitted Affiliate Distributions" shall mean (a) an amount permitted
to be paid under Section 5.10.6 of the Securities Purchase Agreement, (b)
dividends provided for on the date of this Agreement under the Borrower's
preferred stock, (c) distributions or dividends by, or transfer of assets by,
any Subsidiary to its parent or, if different, to the Borrower, (d) the
following distributions by ▇▇▇▇▇▇ ▇▇▇▇▇ to any partner of ▇▇▇▇▇▇ ▇▇▇▇▇ or by
Fantasma to any member of Fantasma, that is not within the scope of the
preceding subsection (c) (and any further distribution of such amounts by any
such partner to any direct or indirect shareholders of such partner):
(i) Distributions to each of its
partners/members in an amount sufficient to cover that
partner's/member's actual tax liability due and payable by such
partner/member as a result of income attributed to such
partner/member by virtue of its ownership interest in the
partnership/limited liability company;
(ii) Distributions to ▇▇▇▇▇▇ Holdings to
enable ▇▇▇▇▇▇ Holdings to pay actual out-of-pocket expenses
reasonably incurred by ▇▇▇▇▇▇ Holdings in connection with the
preparation of financial statements and compliance with all
financial reporting requirements; but only to the extent such
expenses are payable to Persons other than Affiliates of any
Obligor or any member of the AAi Group; and
(iii) Distributions by ▇▇▇▇▇▇ ▇▇▇▇▇ to
BEC to pay royalties due BEC with respect to any Trademarks
licensed to ▇▇▇▇▇▇ ▇▇▇▇▇ by BEC; and
(e) redemption of preferred stock of FosterGrant Holdings, redemption of the
Borrower's Series A Preferred Stock and redemption or purchase of the Borrower's
or any Subsidiary's stock or other ownership interest on death, disability or
termination of employment of shareholders under stockholder and other
agreements; (f) payments by any Subsidiary under tax sharing arrangements with
the Borrower and other Subsidiaries; and (g) payments by any Obligor to another
Obligor.
"Permitted Asset Disposition" means the following Asset Dispositions:
(a) an Asset Disposition (excluding any Asset
Disposition permitted under subsections (b), (c) or (d) below), for which the
sum of (i) the Net Proceeds to be paid to or received by any or all of the
Obligor (individually and collectively) with respect to such Asset Disposition,
plus (ii) the aggregate amount of all Net Proceeds paid to or received by any or
all of the Obligor (individually and collectively) with respect to all other
Asset Dispositions (excluding all Asset Dispositions permitted under subsections
(b), (c) or (d) below) made during the then current fiscal year, is less than or
equal to Five Hundred Thousand Dollars ($500,000) for such fiscal year,
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(b) sales of Inventory (including, without
limitation, the liquidation of slow moving and obsolete Inventory) in the
ordinary course of business,
(c) the licensing of business names, Patents,
Trademarks and/or Copyrights, in the ordinary course of business,
(d) sales or other dispositions of worn, used,
surplus or obsolete Equipment in the ordinary course of business, including,
without limitation, dispositions of conveyors, racks and shelving at formerly
leased locations,
(e) sales, liquidations or other dispositions
of Buybacks in the ordinary course of business, and
(f) sales of membership interests in Fantasma
to existing members in accordance with the Fantasma Agreements.
provided that no Asset Dispositions shall be permitted at any time following the
occurrence and during the continuance of an Event of Default.
"Permitted Liens" means:
(a) Liens existing as of the date hereof and
as set forth in SCHEDULE 4.1.20 attached hereto, including, but not limited to,
renewals and extensions that do not increase the amount secured by or subject to
the lien, PROVIDED, HOWEVER, that any such Lien that is released after the date
hereof may not thereafter re-attach or otherwise become permitted by this
Section item (a);
(b) Liens imposed by law for Taxes of any
Governmental Authority for claims not yet due or which (i) the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma, as appropriate, is contesting in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with GAAP, (ii)
the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, as appropriate, has the financial
ability to pay, with all penalties and interest, at all times without materially
and adversely affecting the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, and (iii) are
not, and will not be with appropriate filing, the giving of notice and/or the
passage of time, entitled to priority over any Lien of the Agent and the
Lenders;
(c) Liens in respect of purchase money
indebtedness in connection with the acquisition of tangible personal property
and real property; PROVIDED that (i) the original principal balance of the
Indebtedness secured by such Lien constitutes not more than 80% of the purchase
price of the property acquired and (ii) such Lien extends only to the property
acquired with the proceeds of the Indebtedness so secured;
(d) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than ninety
(90) days from the date of creation thereof for amounts not yet due or which are
being contested in good faith by appropriate
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proceedings diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with GAAP;
(e) Liens incurred or deposits made in the
ordinary course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations or arising as a result of
progress payments under government contracts;
(f) leases, subleases, licenses, easements
(including, without limitation, reciprocal easement agreements and utility
agreements), rights-of-way, covenants, contests, reservations, encroachments,
variations and zoning and other restrictions, charges or encumbrances (whether
or not recorded), which do not interfere with the ordinary conduct of the
business of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and do not impair the use of
the property to which they attach to the extent that such interference or
impairment could reasonably be expected to have a Material Adverse Effect;
(g) Liens incurred in connection with Capital
Lease obligations permitted hereunder;
(h) Liens imposed by environmental laws which
(i) the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma, as appropriate, is contesting in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP and (ii) the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma, as
appropriate, has the financial ability to pay, with all penalties and interest,
at all times without materially and adversely affecting the Borrower; and
(i) Liens granted on the assets of any
Subsidiary of any of Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma, which Subsidiary is
organized under the laws of a jurisdiction other than the United States.
"Permitted Senior Note Purchases" means the collective reference to each
purchase by the Borrower of Senior Notes provided, however that (i) the
aggregate purchase price of all such purchases (net of cash proceeds received on
resales of the same) cannot exceed Five Million Dollars ($5,000,000) in the
aggregate unless the Agent and the Lenders have given their prior written
consent to such excess, (ii) such purchase cannot otherwise constitute or give
rise to a Default or an Event of Default and shall not be made at any time when
a Default or Event of Default exists; and (iii) the Borrower has furnished
financial projections in form and content reasonably acceptable to the Agent and
the Lenders which give effect to such purchase and which indicate that such
purchase could not or would not cause a Default or Event of Default.
"Permitted Uses" means (a) re-evidence, without novation, of amounts
outstanding under the Original Financing Agreement, (b) the furnishing of
working capital (including the sale of inventory) to AAi/Joske's S. de ▇.▇. de
C.V. in an aggregate amount outstanding not to exceed $750,000, (c) the
furnishing of working capital to Vendome Accessories Ltd. in an aggregate
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amount outstanding not to exceed $250,000, (d) loans and advances to the
Subsidiaries and for other general corporate purposes other than those not
permitted under this Agreement, (e) Permitted Affiliate Distributions and (f)
Permitted Acquistions.
"Person" means and includes an individual, a corporation, a partnership,
a joint venture, a limited liability company or partnership, a trust, an
unincorporated association, a Governmental Authority, or any other organization
or entity.
"Plan" means any pension plan that is covered by Title IV of ERISA and
in respect of which any Obligor or a Commonly Controlled Entity is an "employer"
as defined in Section 3 of ERISA.
"Post-Default Rate" means with respect to the principal balance of any
of the Obligations, the then Applicable Interest Rate, plus two percent (2%) per
annum.
"Prepayment" means a Revolving Loan Mandatory Prepayment or a Revolving
Loan Optional Prepayment, as the case may be, and "Prepayments" mean
collectively all Revolving Loan Mandatory Prepayments and all Revolving Loan
Optional Prepayments.
"Pricing Ratio" means the Fixed Charge Coverage Ratio.
"Prime Rate" means the floating and fluctuating per annum prime
commercial lending rate of interest of the Agent, as established and declared by
the Agent at any time or from time to time. The Prime Rate shall be adjusted
automatically, without notice, as of the effective date of any change in such
prime commercial lending rate. The Prime Rate does not necessarily represent the
lowest rate of interest charged by the Agent or any of the Lenders to borrowers.
"Pro Rata Share" means at any time and as to any Lender, the percentage
derived by dividing the unpaid principal amount of the Loan and Letter of Credit
Obligations owing to that Lender by the aggregate unpaid principal amount of all
Loan and Letter of Credit Obligations then outstanding; or if no Loan or Letter
of Credit Obligations are outstanding, by dividing the total amount of such
Lender's Commitments by the total amount of the Commitments of the Agent and all
of the Lenders.
"Receivable" means each of the Secured Debtors' now owned and hereafter
owned, acquired or created Accounts, Chattel Paper and Instruments; and
"Receivables" means all of each of the Secured Debtors' now or hereafter owned,
acquired or created Accounts, Chattel Paper and Instruments, and all cash and
non-cash proceeds and products thereof.
"Reportable Event" means any of the events set forth in Section 4043(c)
of ERISA or the regulations thereunder.
"Requisite Lenders" means at any time of determination one or more of
the Lenders holding at least sixty-six and two-thirds percent (66-2/3%) of the
Commitments.
"Reserve Percentage" means, at any time, the then current maximum rate
for which reserves (including any basic, supplemental, marginal and emergency
reserves) are required to be
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maintained by member banks of the Federal Reserve System under Regulation D of
the Board of Governors of the Federal Reserve System against "Eurocurrency
liabilities", as that term is defined in Regulation D. The LIBOR Rate shall be
adjusted automatically on and as of the effective date of any change in the
Reserve Percentage.
"Responsible Officer" means the Chairman, Chief Executive Officer or
Chief Financial Officer of the Borrower or, with respect to financial matters,
the Chief Financial Officer of the Borrower.
"Revolving Credit Commitment" means the agreement of a Lender relating
to the making the Revolving Loan and advances thereunder subject to and in
accordance with the provisions of this Agreement; and "Revolving Credit
Commitments" means the collective reference to the Revolving Credit Commitment
of each of the Lenders.
"Revolving Credit Commitment Period" means the period of time from the
Closing Date to the Business Day preceding the Revolving Credit Termination
Date.
"Revolving Credit Committed Amount" has the meaning described in Section
2.1.1 (Revolving Credit Facility).
"Revolving Credit Expiration Date" means July 31, 2003, extending
automatically for successive periods of one (1) year each, unless any of the
Lenders in the exercise of its sole and absolute discretion has notified the
Borrower or the Borrower in the exercise of its sole and absolute discretion has
notified the Agent, no later than the date which is sixty (60) days immediately
preceding the next scheduled Revolving Credit Expiration Date, of its intention
to terminate the Revolving Credit Facility as of the next scheduled Revolving
Credit Expiration Date. Neither the Borrower nor any of the Lenders has any
obligation or commitment to extend the Revolving Credit Expiration Date for any
successive one (1) year period.
"Revolving Credit Facility" means the facility established by the
Lenders pursuant to Section 2.1 (Revolving Credit Facility).
"Revolving Credit Note" and "Revolving Credit Notes" have the meanings
described in Section 2.1.5 (Revolving Credit Notes).
"Revolving Credit Pro Rata Share" has the meaning described in Section
2.1.1 (Revolving Credit Facility).
"Revolving Credit Termination Date" means the earlier of (a) the
Revolving Credit Expiration Date, or (b) the date on which the Revolving Credit
Commitments are terminated pursuant to Section 7.2 (Remedies) or otherwise.
"Revolving Credit Unused Line Fee" and "Revolving Credit Unused Line
Fees" have the meanings described in Section 2.1.10 (Revolving Credit Unused
Line Fee).
"Revolving Loan" has the meaning described in Section 2.1.1 (Revolving
Credit Facility).
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"Revolving Loan Account" has the meaning described in Section 2.1.9
(Revolving Loan Account).
"Revolving Loan Mandatory Prepayment" and "Revolving Loan Mandatory
Prepayments" have the meanings described in Section 2.1.6 (Mandatory Prepayments
of Revolving Loan).
"Revolving Loan Optional Prepayment" and "Revolving Loan Optional
Prepayments" have the meanings described in Section 2.1.7 (Optional Prepayments
of Revolving Loan).
"Secured Debtor" means any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇, Fantasma or
any Additional Obligor and "Secured Debtors" means the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇,
Fantasma and all Additional Obligors, collectively.
"Securities" means the collective reference to each and every
certificated or uncertificated security which constitutes a "security" under the
provisions of Title 8 of the Uniform Commercial Code, and all proceeds (cash and
non-cash) of the foregoing.
"Securities Purchase Agreement" means that certain Securities Purchase
Agreement dated May 31, 1996, among the Borrower, Weston Presidio Capital II,
L.P., and certain other "Investors."
"Security Documents" means collectively any assignment, pledge
agreement, security agreement, mortgage, deed of trust, deed to secure debt,
financing statement and any similar instrument, document or agreement under or
pursuant to which a Lien is now or hereafter granted to, or for the benefit of,
the Agent and/or the Lenders on any real or personal property of any Person to
secure all or any portion of the Obligations, all as the same may from time to
time be amended, restated, supplemented or otherwise modified, including,
without limitation, this Agreement, the Corporate Guaranty, the Assignment of
Credit Insurance, the Assignment of Trademarks and the Assignment of Trademarks
(Borrower).
"Security Procedures" means the rules, policies and procedures adopted
and implemented by the Agent and its Affiliates at any time and from time to
time with respect to security procedures and measures relating to electronic
funds transfers, all as the same may be amended, restated, supplemented,
terminated, or otherwise modified at any time and from time to time by the Agent
in its sole and absolute discretion.
"Senior Notes" means any and all 10 3/4% Senior Notes due 2006 to be
issued from time to time under the Indenture, in the principal amount of
$75,000,000.
"Senior Notes Documents" means, collectively, the Indenture and the
Senior Notes.
"Settlement Date" means each Business Day after the Closing Date
selected by the Agent in its sole discretion subject to and in accordance with
the provisions of Section 2.5.2(a) (Settlement Procedures; In General) as of
which a Settlement Report is delivered by the Agent and on which settlement is
to be made among the Lenders in accordance with the provisions of Section 2.5.2
(Settlement Procedures as to Revolving Loan).
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"Settlement Report" means each report prepared by the Agent and
delivered to each Lender and setting forth, among other things, as of the
Settlement Date indicated thereon and as of the next preceding Settlement Date,
the aggregate outstanding principal balance of the Revolving Loan, each Lender's
Revolving Credit Pro Rata Share thereof, each Lender's Net Outstandings and all
Non-Ratable Loans made, and all payments of principal, interest and Fees
received by the Agent from the Borrower during the period beginning on such next
preceding Settlement Date and ending on such Settlement Date.
"State" means the State of Maryland.
"Subordinated Indebtedness" means all Indebtedness, incurred at any time
by any one or more of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma, which is in
amounts, subject to repayment terms, and subordinated to the Obligations, as set
forth in one or more written agreements, all in form and substance satisfactory
to the Agent in its sole and absolute discretion.
"Subsidiary" means any corporation, company or other entity the majority
of the voting shares or interests of which at the time are owned directly by any
of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and/or by one or more Subsidiaries of
any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma.
"Taxes" means all taxes and assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character
(including all penalties or interest thereon), which at any time may be
assessed, levied, confirmed or imposed by any Governmental Authority on any or
all of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma or any of its or their properties
or assets or any part thereof or in respect of any of its or their franchises,
businesses, income or profits.
"Texas Property" means the real property and fixtures located at Valley
View Lane, Farmers Branch, Texas, which are leased by ▇▇▇▇▇▇ ▇▇▇▇▇.
"Total Revolving Credit Committed Amount" has the meaning described in
Section 2.1.1 (Revolving Credit Facility).
"Trademarks" means and includes in each case whether now existing or
hereafter arising, all of each of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ or Fantasma's
rights, title and interest in and to (a) any and all trademarks (including
service marks), trade names and trade styles, and applications for registration
thereof and the goodwill of the business symbolized by any of the foregoing, (b)
any and all licenses of trademarks, service marks, trade names and/or trade
styles, whether as licensor or licensee, (c) any renewals of any and all
trademarks, service marks, trade names, trade styles and/or licenses of any of
the foregoing and (d) all rights corresponding to any of the foregoing
throughout the world.
"Trustee" has the meaning given to such term in the Indenture.
"Uniform Commercial Code" means, unless otherwise provided in this
Agreement, the Uniform Commercial Code as adopted by and in effect from time to
time in the State or in any other jurisdiction, as applicable.
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"Wire Transfer Procedures" means the rules, policies and procedures
adopted and implemented by the Agent and its Affiliates at any time and from
time to time with respect to electronic funds transfers, including, without
limitation, the Security Procedures, all as the same may be amended, restated,
supplemented, terminated or otherwise modified at any time and from time to time
by the Agent in its sole and absolute discretion.
"Year 2000 Problem" has the meaning set forth in Section 4.1.27 (Year
2000).
Section 1.2 ACCOUNTING TERMS AND OTHER DEFINITIONAL PROVISIONS.
Unless otherwise defined herein, as used in this Agreement and in any
certificate, report or other document made or delivered pursuant hereto,
accounting terms not otherwise defined herein, and accounting terms only partly
defined herein, to the extent not defined, shall have the respective meanings
given to them under GAAP. Unless otherwise defined herein, all terms used herein
which are defined by the Uniform Commercial Code shall have the same meanings as
assigned to them by the Uniform Commercial Code unless and to the extent varied
by this Agreement. 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 article,
section, subsection, schedule and exhibit references are references to articles,
sections or subsections of, or schedules or exhibits to, as the case may be,
this Agreement unless otherwise specified. As used herein, the singular number
shall include the plural, the plural the singular and the use of the masculine,
feminine or neuter gender shall include all genders, as the context may require.
Reference to any one or more of the Financing Documents shall mean the same as
the foregoing may from time to time be amended, restated, substituted, extended,
renewed, supplemented or otherwise modified. Reference in this Agreement and the
other Financing Documents to the "Obligor", the "Obligors", "each Obligor" or
otherwise with respect to any one or more of the Obligors shall mean each and
every Obligor and any one or more of the Obligors, jointly and severally, unless
a specific Obligor is expressly identified.
ARTICLE II
THE CREDIT FACILITIES
Section 2.1 THE REVOLVING CREDIT FACILITY.
2.1.1 REVOLVING CREDIT FACILITY.
Subject to and upon the provisions of this Agreement, the
Lenders collectively, but severally, establish a revolving credit facility in
favor of the Borrower. The aggregate of all advances under the Revolving Credit
Facility is sometimes referred to in this Agreement collectively as the
"Revolving Loan".
The amount set forth below opposite each Lender's name is
herein called such Lender's "Revolving Credit Committed Amount" and the total of
each Lender's Revolving Credit Committed Amount is herein called the "Total
Revolving Credit Committed Amount".
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The proportionate share set forth below opposite each Lender's name is herein
called such Lender's "Revolving Credit Pro Rata Share":
Revolving Credit Revolving Credit
Lender Committed Amount Pro Rata Share
------ ---------------- ----------------
NationsBank $27,692,340 46%
LaSalle $18,461,520 31%
PNC $13,846,140 23%
Total Revolving Credit $60,000,000 100%
Committed Amount
Neither the Agent nor any of the Lenders shall be
responsible for the Revolving Credit Commitment of any other Lender, nor will
the failure of any Lender to perform its obligations under its Revolving Credit
Commitment in any way relieve any other Lender from performing its obligations
under its Revolving Credit Commitment.
During the Revolving Credit Commitment Period, the
Borrower may request advances under the Revolving Credit Facility in accordance
with the provisions of this Agreement; provided that after giving effect to the
Borrower's request:
(a) the outstanding principal balance of each
Lender's Pro Rata Share of the Revolving Loan and of the Letter of
Credit Obligations would not exceed the lesser of (i) such Lender's
Revolving Credit Committed Amount or (ii) such Lender's Pro Rata Share
of the then most current Borrowing Base; and,
(b) the aggregate outstanding principal balance of
the Revolving Loan and all Letter of Credit Obligations would not exceed
the lesser of (i) the Total Revolving Credit Committed Amount or (ii)
the then most current Borrowing Base.
If at any time the unpaid principal balance of the
Revolving Loan exceeds the Total Revolving Credit Committed Amount in effect
from time to time, the Borrower shall pay such excess to the Agent for the
benefit of the Lenders ON DEMAND.
2.1.2 PROCEDURE FOR MAKING ADVANCES UNDER THE REVOLVING
LOAN; LENDER PROTECTION LOANS.
The Borrower may borrow under the Revolving Credit
Facility on any Business Day. Advances under the Revolving Loan shall be
deposited to a demand deposit account of the Borrower with the Agent or shall be
otherwise applied as directed by the Borrower, which direction the Agent may
require to be in writing. Not later than 1:30 p.m. (Baltimore City Time) on the
date of the requested borrowing, the Borrower shall give the Agent
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oral or written notice (a "Loan Notice") of the amount and (if requested by the
Agent) the purpose of the requested borrowing. Any oral Loan Notice shall be
confirmed in writing by the Borrower within three (3) Business Days after the
making of the requested advance under the Revolving Loan. Upon receipt of any
such Loan Notice, the Agent shall promptly notify each Lender of the amount of
each advance to be made by such Lender on the requested borrowing date.
Not later than 2:30 p.m. (Baltimore City Time) on each
requested borrowing date for the making of advances under the Revolving Loan,
each Lender shall, if it has received timely notice from the Agent of the
Borrower's request for such advances, make available to the Agent, in funds
immediately available to the Agent at the Agent's office set forth in Notices.
(Notices), such Lender's Pro Rata Share of the advances to be made on such date.
In addition, the Borrower hereby irrevocably authorizes
the Lenders at any time and from time to time, without further request from or
notice to the Borrower, to make advances under the Revolving Loan which the
Agent, in its sole and absolute discretion, deems necessary or appropriate to
protect the interests of the Agent and/or any or all of the Lenders under this
Agreement, including, without limitation, advances under the Revolving Loan made
to cover debit balances in the Revolving Loan Account, principal of, and/or
interest on, the Loan, any of the Obligations any Letter of Credit Obligations,
and/or Enforcement Costs, prior to, on, or after the termination of other
advances under this Agreement, regardless of whether the outstanding principal
amount of the Revolving Loan which the Lenders may advance hereunder exceeds the
Total Revolving Credit Committed Amount. The Agent agrees to give the Borrower
notice of any such advances made by the Lenders promptly after the making of any
such advance; the Agent agrees to use its best efforts to give such notice to
the Borrower on the same day that any such advance is made.
2.1.3 BORROWING BASE.
As used in this Agreement, "Borrowing Base" means at any
time, an amount equal to the aggregate of
(a) eighty-five percent (85%) of the amount of
Eligible Receivables,
PLUS
(b) the lesser of
(i) (A) fifty-five percent (55%) of the
amount of Eligible Inventory (other than optical
Inventory)
PLUS
(B) sixty-five (65%) of the amount
of Eligible Inventory consisting of optical
Inventory; or
(ii) Thirty Million Dollars
($30,000,000)
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LESS
(c) the Interest Rate Protection Reserve and
the Foreign Exchange Exposure.
The Borrowing Base shall be computed based on the
Borrowing Base Report most recently delivered to and accepted by the Agent in
its discretion. In the event the Borrower fails to furnish a Borrowing Base
Report required by Section 2.1.4 (Borrowing Base Report), or in the event the
Agent believes that a Borrowing Base Report is no longer accurate, the Agent
may, in its good faith discretion exercised from time to time and without
limiting other rights and remedies under this Agreement, direct the Lenders to
suspend the making of or limit advances under the Revolving Loan. The Borrowing
Base shall be subject to reduction by amounts credited to the Collateral Account
since the date of the most recent Borrowing Base Report and by the amount of any
Receivable or any Inventory which was included in the Borrowing Base but which
the Agent in good faith determines fails to meet the respective criteria
applicable from time to time for Eligible Receivables or Eligible Inventory.
If at any time the total of the aggregate principal
amount of the Revolving Loan and Outstanding Letter of Credit Obligations
exceeds the Borrowing Base, a borrowing base deficiency ("Borrowing Base
Deficiency") equal to the amount of such excess shall exist. Each time a
Borrowing Base Deficiency exists, the Borrower at the sole and absolute
discretion of the Agent exercised from time to time shall pay the Borrowing Base
Deficiency ON DEMAND to the Agent for the benefit of the Lenders from time to
time.
Without implying any limitation on the Agent's discretion
with respect to the Borrowing Base, the criteria for Eligible Receivables and
for Eligible Inventory contained in the respective definitions of Eligible
Receivables and of Eligible Inventory are in part based upon the business
operations of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma existing on or about the
Closing Date and upon information and records furnished to the Agent by the
Borrower. If at any time or from time to time hereafter, the business operations
of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma change or such information and
records furnished to the Agent is incorrect or misleading, the Agent in its good
faith discretion, may at any time and from time to time during the duration of
this Agreement change such criteria or add new criteria; provided, however, if
the inclusion of new criteria would immediately result in a reduction to the
Borrowing Base of $500,000 or more, the Agent agrees to give the Borrower no
less than two (2) Business Days prior notice thereof. The Agent shall
communicate such changed or additional criteria to the Borrower from time to
time either orally or in writing.
2.1.4 BORROWING BASE REPORT.
The Borrower will furnish to the Agent no less frequently
than the 10th Business Day after the last day of each month and at such other
times as may be requested by the Agent or any of the Lenders a report of the
Borrowing Base (each a "Borrowing Base Report"; collectively, the "Borrowing
Base Reports") in the form required from time to time by the Agent,
appropriately completed and duly signed. The Borrowing Base Report shall contain
the amount and payments on the Receivables (with a detailed breakdown as between
Gross Receivables and Net Book Value of Receivables, unless the Agent consents
otherwise from time to time), the
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value of Inventory, and the calculations of the Borrowing Base, all in such
detail, and accompanied by such supporting and other information, as the Agent
may from time to time request. Upon the Agent's request and upon the creation of
any Receivables, or at such intervals as the Agent may require, the Borrower
will provide the Agent with (a) confirmatory assignment schedules; (b) copies of
Account Debtor invoices; (c) evidence of shipment or delivery; and (d) such
further schedules, documents and/or information regarding the Receivables and
the Inventory as the Agent may reasonably require. The items to be provided
under this subsection shall be in form satisfactory to the Agent, and certified
as true and correct by a Responsible Officer, and delivered to the Agent from
time to time solely for the Agent's convenience in maintaining records of the
Collateral. The Borrower's failure to deliver any of such items to the Agent
shall not affect, terminate, modify, or otherwise limit the Liens of the Agent
and the Lenders in the Collateral.
2.1.5 REVOLVING CREDIT NOTES.
The obligation of the Borrower to pay each Lender's Pro
Rata Share of the Revolving Loan, with interest, shall be evidenced by a series
of promissory notes (as from time to time extended, amended, restated,
supplemented or otherwise modified, collectively the "Revolving Credit Notes"
and individually a "Revolving Credit Note") substantially in the form of EXHIBIT
"A" attached hereto and made a part hereof, with appropriate insertions. Each
Lender's Revolving Credit Note shall be dated as of the Closing Date, shall be
payable to the order of such Lender at the times provided in the Revolving
Credit Note, and shall be in the principal amount of such Lender's Revolving
Credit Pro Rata Share. The Borrower acknowledges and agrees that, if the
outstanding principal balance of the Revolving Loan outstanding from time to
time exceeds the aggregate face amount of the Revolving Credit Notes, the excess
shall bear interest at the rates provided from time to time for advances under
Revolving Loan evidenced by the Revolving Credit Notes and shall be payable,
with accrued interest, ON DEMAND. The Revolving Credit Notes shall not operate
as a novation of any of the Obligations or nullify, discharge, or release any
such Obligations or the continuing contractual relationship of the parties
hereto in accordance with the provisions of this Agreement.
2.1.6 MANDATORY PREPAYMENTS OF REVOLVING LOAN.
Subject to the provisions of Section 2.1.11 (Early
Termination Fee) and Section 2.3.4 (Indemnity), the Borrower shall make the
mandatory prepayments of the Revolving Loan (each a "Revolving Loan Mandatory
Prepayment" and collectively, the "Revolving Loan Mandatory Prepayments") in the
following amounts and at the following times:
(a) The Borrower shall make a Revolving Loan
Mandatory Prepayment at any time and from time to time in such amounts
requested by the Agent pursuant to Section 2.1.3 (Borrowing Base) in
order to cover any Borrowing Base Deficiency; and
(b) The Borrower shall make a Revolving Loan
Mandatory Prepayment on such dates and in such amounts to achieve
compliance with the provisions of Section 2.1.12 (Required
Availability).
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2.1.7 OPTIONAL PREPAYMENTS OF REVOLVING LOAN.
Subject to the provisions of Section 2.1.11 (Early
Termination Fee) and Section 2.3.4 (Indemnity), the Borrower shall have the
option at any time and from time to time prepay (each a "Revolving Loan Optional
Prepayment" and collectively the "Revolving Loan Optional Prepayments") the
Revolving Loan, in whole or in part without premium or penalty.
2.1.8 THE COLLATERAL ACCOUNT.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will deposit, or
cause to be deposited, all Items of Payment to a bank account designated by the
Agent and from which the Agent alone has power of access and withdrawal (the
"Collateral Account"). Each deposit shall be made not later than the next
Business Day after the date of receipt of the Items of Payment. The Items of
Payment shall be deposited in precisely the form received, except for the
endorsements of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma where necessary to permit
the collection of any such Items of Payment, which endorsement the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma hereby jointly and severally agree to make. In the
event the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma fail to do so, the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma hereby authorize the Agent to make the endorsement in
the name of any or all of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma. Prior to such
a deposit, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will not commingle any Items
of Payment with any of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ or Fantasma's other funds
or property, but will hold them separate and apart in trust and for the account
of the Agent for the benefit of the Lenders ratably and the Agent.
In addition, if so directed by the Agent, the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall direct the mailing of all Items of Payment from
their Account Debtors to one or more post-office boxes designated by the Agent,
or to such other additional or replacement post-office boxes pursuant to the
request of the Agent from time to time (collectively, the "Lockbox") monitored
by the Agent or by a commercial bank chosen by the Borrower and accepted by the
Agent in writing, which acceptance shall not be unreasonably withheld. The Agent
shall have unrestricted and exclusive access (through such commercial bank, if
applicable) to the Lockbox.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma hereby authorize
the Agent to inspect all Items of Payment, endorse all Items of Payment in the
name of any or all of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, and deposit such
Items of Payment in the Collateral Account. The Agent reserves the right,
exercised in its sole and absolute discretion from time to time, to provide to
the Collateral Account credit prior to final collection of an Item of Payment
and to disallow credit for any Item of Payment which is unsatisfactory to the
Agent. In the event Items of Payment are returned to the Agent for any reason
whatsoever, the Agent may, in the exercise of its discretion from time to time,
forward such Items of Payment a second time. Any returned Items of Payment shall
be charged back to the Collateral Account, the Revolving Loan Account, or other
account, as appropriate.
The Agent will apply the whole or any part of the
collected funds credited to the Collateral Account against the Revolving Loan
(or with respect to Items of Payment which are not proceeds of Accounts or
Inventory or after a Default or an Event of Default, against any of the
Obligations) or credit such collected funds to a depository account of any or
all of the
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Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma with the Agent, the order and method of such
application to be in the sole discretion of the Agent.
IN CONSIDERATION FOR THE AGENT'S AGREEMENT TO CREDIT THE
COLLATERAL ACCOUNT AS OF THE BUSINESS DAY ON WHICH THE AGENT RECEIVES ITEMS OF
PAYMENT AND TO REIMBURSE THE AGENT FOR THE COST OF DELAYS IN THE COLLECTION AND
CLEARANCE OF ITEMS OF PAYMENT, THE BORROWER, ▇▇▇▇▇▇ ▇▇▇▇▇ AND FANTASMA HEREBY
CONSENT AND AGREE THAT IN COMPUTING INTEREST ON THE OBLIGATIONS ALL ITEMS OF
PAYMENT SHALL BE DEEMED RECEIVED BY THE AGENT ONE (1) BUSINESS DAY AFTER THE
AGENT'S ACTUAL RECEIPT THEREOF.
2.1.9 REVOLVING LOAN ACCOUNT.
The Agent will establish and maintain a loan account on
its books (the "Revolving Loan Account") to which the Agent will (a) DEBIT (i)
the principal amount of each advance under the Revolving Loan made by the
Lenders hereunder as of the date made, (ii) the amount of any interest accrued
on the Revolving Loan as and when due, and (iii) any other amounts due and
payable by the Borrower to the Agent and/or the Lenders from time to time under
the provisions of this Agreement in connection with the Revolving Loan,
including, without limitation, Enforcement Costs, Fees, late charges, and
service, collection and audit fees, as and when due and payable, and (b) CREDIT
all payments made by the Borrower to the Agent on account of the Revolving Loan
as of the date made including, without limitation, funds credited to the
Revolving Loan Account from the Collateral Account. The Agent may debit the
Revolving Loan Account for the amount of any Item of Payment that is returned to
the Agent unpaid. All credit entries to the Revolving Loan Account are
conditional and shall be readjusted as of the date made if final and
indefeasible payment is not received by the Agent in cash or solvent credits.
Any and all periodic or other statements or reconciliations, and the information
contained in those statements or reconciliations, of the Revolving Loan Account
shall be final, binding and conclusive upon the Borrower in all respects, absent
manifest error, unless the Agent receives specific written objection thereto
from the Borrower within ninety (90) Business Days after such statement or
reconciliation shall have been sent by the Agent.
2.1.10 REVOLVING CREDIT UNUSED LINE FEE.
The Borrower shall pay to the Agent for the ratable
benefit of the Lenders a monthly revolving credit facility fee (collectively,
the "Revolving Credit Unused Line Fees" and individually, a "Revolving Credit
Unused Line Fee") in an amount equal to three-eighths of one percent (.375%) per
annum on the average daily unused and undisbursed portion of the Total Revolving
Credit Committed Amount in effect from time to time accruing during each
calendar month, minus the average amount by which borrowings under the Revolving
Loan were reduced due to the operation of Section 2.1.12 (Required
Availability). The accrued and unpaid portion of the Revolving Credit Unused
Line Fee shall be paid in arrears by the Borrower to the Agent on the first day
of each month, commencing on the first such date following the date hereof, and
on the Revolving Credit Termination Date.
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2.1.11 EARLY TERMINATION FEE.
In the event of the termination by, or on behalf of, the
Borrower, of the Revolving Credit Commitments at any time prior to the Revolving
Credit Expiration Date (as extended from time to time in accordance with the
provisions of this Agreement), the Borrower shall pay a fee (the "Early
Termination Fee") equal to following amount at the following times:
-------------------------------------------------------------------------------
Period Early Termination Fee
-------------------------------------------------------------------------------
Closing Date, through and including, day $500,000
preceding the first anniversary date of the
Closing Date
-------------------------------------------------------------------------------
First anniversary date of the Closing Date, $300,000
through and including, day preceding the
second anniversary date of the Closing Date
-------------------------------------------------------------------------------
At any time on or after the second anniversary $100,000
date of the Closing Date
-------------------------------------------------------------------------------
Payment of the Revolving Loan in whole or in part by or
on behalf of the Borrower, by court order or otherwise, following and as a
result of the institution of any bankruptcy proceeding by or against the
Borrower, shall be deemed to be a prepayment of the Revolving Loan subject to
the Early Termination Fee provided in this subsection.
Notwithstanding the foregoing, the Borrower shall not be
required to pay the Early Termination Fee in connection with a termination of
the Revolving Credit Commitments if the repayment of all Obligations is from (a)
the proceeds of an issuance of common stock by ▇▇▇▇▇▇ Holdings, (b) the proceeds
of an issuance of common stock by the Borrower, (c) a replacement credit
facility extended by NationsBank, or its successors, to the Borrower, which
generates sufficient proceeds and is in fact used to repay all Obligations
(including all Letter of Credit Obligations) in full and, if, in connection with
such repayment of all Obligations, all Letters of Credit are terminated or (d) a
replacement credit facility extended by another lender to the Borrower on terms
and conditions that the Agent and the Lenders did not offer to the Borrower
after having been provided a copy of such other lender's commitment and having
had not less than thirty (30) days to review, approve and commit to in writing a
comparable credit facility.
2.1.12 REQUIRED AVAILABILITY UNDER THE REVOLVING CREDIT
FACILITY.
(a) The Borrower shall not at any time after the
Closing Date permit the outstanding principal amount of the Revolving Loan plus
the Outstanding Letter of Credit Obligations to exceed an amount equal to the
lesser of (i) the Total Revolving Credit Committed Amount or (ii) the Borrowing
Base, minus (A) on the Closing Date One Million Dollars ($1,000,000) or (B)
after the Closing Date Seven Hundred Fifty Thousand Dollars ($750,000).
(b) The Borrower shall make a Revolving Loan
Mandatory Prepayment pursuant to the provisions of Section 2.1.6 (Mandatory
Prepayments of Revolving Loan) to the extent necessary to achieve compliance
with this Section.
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Section 2.2 THE LETTER OF CREDIT FACILITY.
2.2.1 LETTERS OF CREDIT.
Subject to and upon the provisions of this Agreement, and
as a part of the Revolving Credit Commitments, the Borrower, upon the prior
approval of the Agent, may obtain standby and documentary letters of credit (as
the same may from time to time be amended, supplemented or otherwise modified,
each a "Letter of Credit" and collectively the "Letters of Credit") from the
Agent from time to time from the Closing Date until the Business Day preceding
the Revolving Credit Termination Date. The Borrower will not be entitled to
obtain a Letter of Credit hereunder unless (a) after giving effect to the
request, the outstanding principal balance of the Revolving Loan and of the
Letter of Credit Obligations would not exceed the lesser of (i) the Total
Revolving Credit Committed Amount, or (ii) the most current Borrowing Base, and
(b) the sum of the aggregate face amount of the then outstanding Letters of
Credit (including the face amount of the requested Letter of Credit) does not
exceed Three Million Dollars ($3,000,000). The Agent confirms that the amount
available for borrowing under the Revolving Credit Facility is not reduced
except to the extent Letters of Credit and/or Letter of Credit Obligations are
outstanding.
2.2.2 LETTER OF CREDIT FEES.
Prior to or simultaneously with the opening of each
Letter of Credit, the Borrower shall pay to the Agent for the ratable benefit of
the Lenders, a letter of credit fee (each a "Letter of Credit Fee" and
collectively the "Letter of Credit Fees") in an amount equal to two hundred
fifty (250) basis points per annum of the face amount of the Letter of Credit.
The Letter of Credit Fees shall be paid upon the opening of each Letter of
Credit and upon each anniversary thereof. In addition, the Borrower shall pay to
the Agent, for its own account, any and all additional issuance, negotiation,
processing, transfer or other fees to the extent and as and when required by the
provisions of any Letter of Credit Agreement. All such additional fees are
included in and are a part of the "Fees" payable by the Borrower under the
provisions of this Agreement and are for the sole and exclusive benefit of the
Agent and are a part of the Agent's Obligations.
2.2.3 TERMS OF LETTERS OF CREDIT.
Each Letter of Credit shall (a) be opened pursuant to a
Letter of Credit Agreement, and (b) expire on a date not later than the Business
Day preceding the Revolving Credit Expiration Date; provided, however, if any
Letter of Credit does have an expiration date later than the Business Day
preceding the Revolving Credit Termination Date, as of the Business Day
preceding the Revolving Credit Termination Date an advance of the Revolving Loan
Credit Facility shall be made by the Lenders in the face amount of such Letter
of Credit (or Letters of Credit) and the proceeds thereof shall be deposited in
an account titled in the name of the Agent as trustee for the Borrower. The
proceeds of the trustee account referred to in the immediately preceding
sentence shall be held as collateral for the Letter of Credit (or Letters of
Credit) and in the event of a draw under the Letter of Credit (or Letters of
Credit) used to pay any such draw. The aggregate face amount of all Letters of
Credit at any one time outstanding and issued by the Agent pursuant to the
provisions of this Agreement, plus the amount of any unpaid Letter of
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Credit Fees accrued or scheduled to accrue thereon, and less the aggregate
amount of all drafts issued under or purporting to have been issued under such
Letters of Credit that have been paid by the Agent, is herein called the
"Outstanding Letter of Credit Obligations".
2.2.4 PROCEDURE FOR LETTERS OF CREDIT.
The Borrower shall give the Agent written notice at least
three (3) Business Days prior to the date on which a Letter of Credit is
requested to be opened of its request for a Letter of Credit. Such notice shall
be accompanied by a duly executed and delivered Letter of Credit Agreement. Upon
receipt of the Letter of Credit Agreement and the Letter of Credit Fee, the
Agent shall process such Letter of Credit Agreement in accordance with its
customary procedures and open such Letter of Credit on the Business Day
specified in such notice.
2.2.5 PARTICIPATIONS IN THE LETTERS OF CREDIT.
Each Lender hereby irrevocably authorizes the Agent to
issue Letters of Credit in accordance with the provisions of this Agreement. As
of the date each Letter of Credit is opened or issued by the Agent pursuant to
the provisions of this Agreement, each Lender shall have an undivided
participating interest in (i) the rights and obligations of the Agent under such
Letter of Credit, and (ii) the Outstanding Letter of Credit Obligations of the
Borrower with respect to such Letter of Credit, in an amount equal to each
Lender's Revolving Credit Pro Rata Share of such Outstanding Letter of Credit
Obligations.
2.2.6 PAYMENTS BY THE LENDERS TO THE AGENT.
If the Borrower fails to pay to the Agent any Current
Letter of Credit Obligations as and when due and payable, the Agent shall
promptly notify each of the Lenders and shall demand payment from each of the
Lenders such Lender's Revolving Credit Pro Rata Share of such unpaid Current
Letter of Credit Obligations. In addition, if any amount paid to the Agent on
account of Current Letter of Credit Obligations is rescinded or required to be
restored or turned over by the Agent upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or upon or as a
result of the appointment of a receiver, intervenor, trustee, conservator or
similar officer for the Borrower, or is otherwise not indefeasibly covered by an
advance under the Revolving Loan, the Agent shall promptly notify each of the
Lenders and shall demand payment from each of the Lenders of its Revolving
Credit Pro Rata Share of its portion of the Current Letter of Credit Obligations
to be remitted to the Borrower.
Each of the Lenders irrevocably and unconditionally
agrees to honor any such demands for payment under this Section and promises to
pay to the Agent's account on the same Business Day as demanded the amount of
its Revolving Credit Pro Rata Share of the Current Letter of Credit Obligations
in immediately available funds, without any setoff, counterclaim or deduction of
any kind. Any payment by a Lender hereunder shall in no way release, discharge
or lessen the obligation of the Borrower to pay Current Letter of Credit
Obligations to the Agent in accordance with the provisions of this Agreement.
The obligation of each of the Lenders to remit the
amounts of its Revolving Credit Pro Rata Share of Current Letter of Credit
Obligations for the account of the Agent
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pursuant to this Section shall be unconditional and irrevocable under any and
all circumstances and may not be terminated, suspended or delayed for any reason
whatsoever, provided that all payments of such amounts by each of the Lenders
shall be without prejudice to the rights of each of the Lenders with respect to
the Agent's alleged willful misconduct. Any claim any Lender may have against
the Agent as a result of the Agent's alleged willful misconduct may be brought
by such Lender in a separate action against the Agent but may not be used as a
defense to payment under the provisions of this Section.
No failure of any Lender to remit the amount of its
Revolving Credit Pro Rata Share of Current Letter of Credit Obligations to the
Agent pursuant to this Section shall affect the obligations of the Agent under
any Letter of Credit, and if any Lender does not remit to the Agent the amount
of its Revolving Credit Pro Rata Share of Current Letter of Credit Obligations
on the same day as demanded, then without limiting such Lender's obligation to
transmit funds on the same Business Day as demanded, such Lender shall be
obligated to pay, on demand of the Agent and without setoff, counterclaim or
deduction of any kind whatsoever interest on the unpaid amount at the Federal
Funds Rate for each day from the date such amount shall be due and payable to
the Agent until the date such amount shall have been paid in full to the Agent
by such Lender.
Section 2.3 INTEREST.
2.3.1 APPLICABLE INTEREST RATES.
(a) Each Loan shall bear interest until maturity
(whether by acceleration, declaration, extension or otherwise) at either the
Base Rate or the LIBOR Rate, as selected and specified by the Borrower in an
Interest Rate Election Notice furnished to the Agent in accordance with the
provisions of Section 2.3.2(e) (Selection of Interest Rates), or as otherwise
determined in accordance with the provisions of this Section 2.3 (Interest), and
as may be adjusted from time to time in accordance with the provisions of
Section 2.3.3 (Inability to Determine LIBOR Base Rate).
(b) Notwithstanding the foregoing, following the
occurrence and during the continuance of an Event of Default, at the option of
the Agent, all Loan and other Obligations shall bear interest at the
Post-Default Rate.
(c) With resect to the Revolving Loans, the
Applicable Margin for (i) LIBOR Loans shall be two (2%) per annum, and (ii) Base
Rate Loans shall be one-quarter (.25%) per annum.
(d) Changes in the Applicable Margin shall be made
not more frequently than quarterly based on the Borrower's Pricing Ratio,
determined by the Agent in the exercise of its sole and absolute discretion from
the monthly reports required by Section 6.1.1(c)) (Monthly Statements and
Certificates) commencing with the statements for the period ending October 3,
1998. The Applicable Margin shall vary depending upon the Borrower's Pricing
Ratio, as follows:
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-------------------------------------------------------------------------------
Applicable Margin for
Applicable Margin for Base Rate Revolving
Pricing Ratio LIBOR Revolving Loans Loans
-------------------------------------------------------------------------------
Greater than 1.0 to 1.0
but less than 1.15 to 1.0 225 basis points 50 basis points
-------------------------------------------------------------------------------
Greater than 1.15 to
1.0 but less than 1.6 to 1.0 200 basis points 25 basis points
-------------------------------------------------------------------------------
Greater than 1.6 to 1.0
but less than 2.0 to 1.0 175 basis points 0 basis points
-------------------------------------------------------------------------------
Greater than 2.0 to 1.0 150 basis points 0 basis points
-------------------------------------------------------------------------------
2.3.2 SELECTION OF INTEREST RATES.
(a) The Borrower may select the initial
Applicable Interest Rate or Applicable Interest Rates to be charged on the Loan.
(b) From time to time after the date of this
Agreement as provided in this Section, by a proper and timely Interest Rate
Election Notice furnished to the Agent in accordance with the provisions of
Section 2.3.1(c)(e), the Borrower may select an initial Applicable Interest Rate
or Applicable Interest Rates for the Loan or may convert the Applicable Interest
Rate and, when applicable, the Interest Period, for any existing Loan to any
other Applicable Interest Rate or, when applicable, any other Interest Period.
(c) The Borrower's selection of an Applicable
Interest Rate and/or an Interest Period, the Borrower's election to convert an
Applicable Interest Rate and/or an Interest Period to another Applicable
Interest Rate or Interest Period, and any other adjustments in an interest rate
are subject to the following limitations:
(i) the Borrower shall not at any time
select or change to an Interest Period that extends beyond the
Revolving Credit Expiration Date,
(ii) except as otherwise provided in
Section 2.3.4 (Indemnity), no change from the LIBOR Rate to the
Base Rate shall become effective on a day other than a Business
Day and on a day which is the last day of the then current
Interest Period, no change of an Interest Period shall become
effective on a day other than the last day of the then current
Interest Period, and no change from the Base Rate to the LIBOR
Rate shall become effective on a day other than a day which is a
Eurodollar Business Day.
(iii) any Applicable Interest Rate change
for any Loan to be effective on a date on which any principal
payment on account of such Loan is scheduled to be paid shall be
made only after such payment shall have been made,
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(iv) no more than eight (8) different
LIBOR Rates may be outstanding at any time and from time to time,
(v) the first day of each Interest
Period shall be a Eurodollar Business Day,
(vi) as of the effective date of a
selection, there shall not exist a Default or an Event of
Default, and
(vii) the minimum principal amount of a
LIBOR Loan shall be Five Hundred Thousand Dollars ($500,000).
(d) If a request for an advance under the Loan
is not accompanied by an Interest Rate Election Notice or does not otherwise
include a selection of an Applicable Interest Rate and, if applicable, an
Interest Period, or if, after having made a selection of an Applicable Interest
Rate and, if applicable, an Interest Period, the Borrower fails or is not
otherwise entitled under the provisions of this Agreement to continue such
Applicable Interest Rate or Interest Period, the Borrower shall be deemed to
have selected the Base Rate as the Applicable Interest Rate until such time as
the Borrower has selected a different Applicable Interest Rate and specified an
Interest Period in accordance with, and subject to, the provisions of this
Section.
(e) The Lenders will not be obligated to make
advances of the Loan, to convert the Applicable Interest Rate on advances of the
Loan to another Applicable Interest Rate, or to change Interest Periods, unless
the Agent shall have received an irrevocable written or telephonic notice (an
"Interest Rate Election Notice") from the Borrower specifying the following
information:
(i) the amount to be borrowed or
converted,
(ii) a selection of the Base Rate or the
LIBOR Rate,
(iii) the length of the Interest Period
if the Applicable Interest Rate selected is the LIBOR Rate, and
(iv) the requested date on which such
election is to be effective.
Any telephonic notice must be confirmed in writing within three (3) Business
Days. Each Interest Rate Election Notice must be received by the Agent not later
than 1:30 p.m. (Baltimore City time) on the Business Day of any requested
borrowing or conversion in the case of a selection of the Base Rate and not
later than 1:30 p.m. (Baltimore City time) on the third Business Day before the
effective date of any requested borrowing or conversion in the case of a
selection of the LIBOR Rate.
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2.3.3 INABILITY TO DETERMINE LIBOR BASE RATE.
In the event that (a) the Agent shall have determined
that, by reason of circumstances affecting the London interbank eurodollar
market, adequate and reasonable means do not exist for ascertaining the LIBOR
Base Rate for any requested Interest Period with respect to a Loan the Borrower
has requested to be made as or to be converted to a LIBOR Loan or (b) the Agent
shall determine that the LIBOR Base Rate for any requested Interest Period with
respect to a Loan the Borrower has requested to be made as or to be converted to
a LIBOR Loan does not adequately and fairly reflect the cost to the Agent and/or
any of the Lenders of funding or converting such Loan, the Agent shall give
telephonic notice, followed by prompt written notice, or written notice of such
determination to the Borrower at least one (1) Business Day prior to the
proposed date for funding or converting such Loan. If such notice is given, any
request for a LIBOR Loan shall be made as or converted to a Base Rate Loan.
Until such notice has been withdrawn by the Agent, the Borrower will not request
that any Loan be made as or converted to a LIBOR Loan.
2.3.4 INDEMNITY.
The Borrower agrees to indemnify and reimburse the Agent
and each of the Lenders and to hold the Agent and each of the Lenders harmless
from any loss, cost (including administrative costs) or expense which the Agent
and/or any of the Lenders may sustain or incur as a consequence of (a) a default
by the Borrower in payment when due of the principal amount of or interest on
any LIBOR Loan, (b) the failure of the Borrower to make, or convert the
Applicable Interest Rate of, a Loan after the Borrower has given a Loan Notice
or an Interest Rate Election Notice, (c) the failure of the Borrower to make any
prepayment of a LIBOR Loan after the Borrower has given notice of such intention
to make such a prepayment, and/or (d) the making by the Borrower of a prepayment
of a LIBOR Loan on a day which is not the last day of the Interest Period for
such LIBOR Loan, calculated as provided in the following paragraph, including,
without limitation, any such loss or expense arising from the reemployment of
funds obtained by the Agent and/or any of the Lenders to maintain any LIBOR Loan
or from fees payable to terminate the deposits from which such funds were
obtained. This agreement and covenant of the Borrower shall survive termination
or expiration of this Agreement and payment of the other Obligations.
Contemporaneously with any prepayment of principal of a
LIBOR Loan on a date which is not the last date of the applicable Interest
Period, a prepayment fee shall be due and payable to the Lenders in an amount
equal to the PRODUCT of
(A) the amount so prepaid
MULTIPLIED BY
(B) THE DIFFERENCE (but not less than zero) of
(i) the constant maturity 360-day interest yield (as of
the first day of the then effective Interest Period and
expressed as a decimal) for a United States Treasury
▇▇▇▇, note, or bond (a "Treasury obligation") selected by
the Lender, in an aggregate amount comparable to the
amount prepaid,
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and having, as of the first day of the then effective
Interest Period, a remaining term approximately equal to
the original Interest Period,
MINUS
(ii) the 360-day interest yield (as of the Business Day
immediately preceding the prepayment date and expressed
as a decimal) on such Treasury obligation and having, as
of the Business Day immediately preceding the prepayment
date, a remaining term until maturity approximately equal
to the unexpired portion of the Interest Period,
MULTIPLIED BY
(C) THE QUOTIENT of
(y) the number of calendar days in the unexpired portion
of the Interest Period, DIVIDED BY
(x) 360.
The applicable yields on the Treasury obligations described above shall be
determined based upon the Federal Reserve statistical release H.15 published for
the applicable determination dates set forth above. Any Treasury obligation
selected when the related Interest Period is one year or less shall be United
States Treasury Bills. Neither the Agent nor any of the Lenders shall be
obligated or required to have actually reinvested the prepaid amount of the
LIBOR Loan in any such Treasury obligation as a condition precedent to the
Borrower's being obligated to pay a prepayment fee as outlined above. Neither
the Agent nor any of the Lenders shall be obligated to accept any prepayment of
principal unless it is accompanied by the prepayment fee, if any, due in
connection therewith as calculated pursuant to the provisions of this paragraph.
No prepayment fee payable in connection herewith shall in any event or under any
circumstances be deemed or construed as a penalty.
2.3.5 PAYMENT OF INTEREST.
(a) Unpaid and accrued interest on any advance of
the Revolving Loan which consists of a Base Rate Loan shall be paid monthly, in
arrears, on the first day of each calendar month, commencing on the first such
date after the date of this Agreement, and on the first day of each calendar
month thereafter, and at maturity (whether by acceleration, declaration,
extension or otherwise).
(b) Unpaid and accrued interest on any LIBOR Loan
shall be paid on the last Business Day of each Interest Period for such LIBOR
Loan and at maturity (whether by acceleration, declaration, extension or
otherwise); provided, however that any and all unpaid and accrued interest on
any LIBOR Loan prepaid prior to expiration of the then current Interest Period
for such LIBOR Loan shall be paid immediately upon prepayment; and provided
further, further that with respect to any LIBOR Loan for which the Interest
Period is one hundred and eighty (180) days, unpaid and accrued interest shall
be paid quarterly of the first day of each quarterly period during such Interest
Period.
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Section 2.4 GENERAL FINANCING PROVISIONS.
2.4.1 COMMUNICATIONS AND INTER-COMPANY ADVANCES.
(a) Neither the Agent nor any of the Lenders
assumes any responsibility or liability for any errors, mistakes, and/or
discrepancies in the oral, telephonic, written or other transmissions of any
instructions, orders, requests and confirmations between the Agent and the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma or the Agent and any of the Lenders in
connection with the Credit Facilities, any Loan, any Letter of Credit or any
other transaction in connection with the provisions of this Agreement.
(b) Without implying any limitation on the joint
and several nature of the Obligations, the Lenders agree that, notwithstanding
any other provision of this Agreement, the Obligors may create reasonable
inter-company indebtedness between or among the Obligors with respect to the
allocation of the benefits and proceeds of the advances and Credit Facilities
under this Agreement. Each of the Obligors hereby waives all rights of
counterclaim, recoupment and offset between or among themselves arising on
account of that indebtedness and otherwise. None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇
and Fantasma shall evidence the inter-company indebtedness or rights of
contribution by note or other instrument, and shall not secure such indebtedness
or rights of contribution with any Lien or security, even though any such Lien
and security shall be part of the Collateral. Notwithstanding anything contained
in this Agreement to the contrary, the amount covered by each of the Obligors
under the Obligations (including, without limitation, Section 2.4.9 (Guaranty))
shall be limited to an aggregate amount (after giving effect to any collections
from, rights to receive contribution from or payments made by or on behalf of
any other of the Obligors in respect of the Obligations) which, together with
other amounts owing by the Obligors to the Agent and the Lenders under the
Obligations, is equal to the largest amount that would not be subject to
avoidance under the Bankruptcy Code or any applicable provisions of any
applicable, comparable state or other Laws.
2.4.2 USE OF PROCEEDS OF THE LOAN.
The proceeds of the Loan shall be used by the Borrower
for Permitted Uses, and for no other purposes except as may otherwise be agreed
by the Agent in writing. The Borrower understands and agrees that payment of
management bonuses may not be paid with the proceeds of the Loan at any time
following the occurrence and during the continuance of a Default or an Event of
Default. The Borrower shall use the proceeds of the Loan promptly.
2.4.3 FIELD EXAMINATION FEES.
The Borrower shall cause to be paid to the Agent for the
exclusive benefit of the Agent a field examination and loan administration fee
(collectively, the "Field Examination Fees" and individually a "Field
Examination Fee"), which Field Examination Fees shall be payable quarterly on
the first day of each calendar quarter commencing on the first such date
following the Closing Date, and continuing until the last such date prior to
which all Obligations arising out of, or under, the Credit Facilities then
outstanding have been paid in full. Each Field Examination Fee shall be in the
amount equal to the sum of (a) Fifteen Thousand Dollars ($15,000), plus (b) all
reasonable out-of-pocket expenses, if any, reasonably incurred by the Agent in
connection with the conduct and review of the field examination conducted during
such quarter. The Borrower
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agrees that it shall be required to pay a Field Examination Fee to the Agent for
each quarterly period regardless of whether the Agent actually conducts a field
examination during or with respect to such quarterly period, but that no
additional fees for field examination (other than out-of-pocket expenses) or
loan administration shall be payable by the Borrower.
2.4.4 COMPUTATION OF INTEREST AND FEES.
All applicable Fees and interest shall be calculated on
the basis of a year of 360 days for the actual number of days elapsed. Any
change in the interest rate on any of the Obligations resulting from a change in
the Base Rate shall become effective as of the opening of business on the day on
which such change in the Base Rate is announced.
2.4.5 PAYMENTS.
All payments of the Obligations, including, without
limitation, principal, interest, Prepayments, and Fees, shall be paid by the
Borrower without setoff or counterclaim to the Agent (except as otherwise
provided herein) at the Agent's office specified in Section 9.1 (Notices) in
immediately available funds not later than 1:30 p.m. (Baltimore City Time) on
the due date of such payment. All payments received by the Agent after such time
shall be deemed to have been received by the Agent for purposes of computing
interest and Fees and otherwise as of the next Business Day. Payments shall not
be considered received by the Agent until such payments are paid to the Agent in
immediately available funds. Alternatively, at its discretion, the Agent may
charge any deposit account of the Borrower at the Agent or any Affiliate of the
Agent with all or any part of any amount due to the Agent and/or any of the
Lenders under this Agreement or under any of the other Financing Documents to
the extent that the Borrower shall have not otherwise tendered payment to the
Agent. All payments shall be applied first to any unpaid Fees, second to any and
all accrued and unpaid late charges and Enforcement Costs, third to any and all
accrued and unpaid interest on the Agent's Obligations, fourth to the then
unpaid principal balance of the Agent's Obligations, fifth to any and all
accrued and unpaid interest on the other Obligations, and then to the then
unpaid principal balance of the other Obligations, all in such order and manner
as shall be determined by Agent in its sole and absolute discretion.
2.4.6 LIENS; SETOFF.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma hereby grant to
the Agent and to the Lenders a continuing Lien for all of the Obligations
(including, without limitation, the Agent's Obligations) upon any and all
monies, Securities, and other personal property of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇
and Fantasma and the proceeds thereof, now or hereafter held or received by or
in transit to, the Agent, any of the Lenders, and/or any Affiliate of the Agent
and/or any of the Lenders, from or for the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma,
and also upon any and all depository accounts (whether general or special) and
credits of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, if any, with the Agent, any
of the Lenders or any Affiliate of the Agent or any of the Lenders, at any time
existing, excluding any depository accounts held by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇
and Fantasma in their capacity as trustee for other Persons who are not one of
them or Affiliates of one of them. Without implying any limitation on any other
rights the Agent and/or the Lenders may have under the Financing Documents or
applicable Laws, during the continuance of an Event of Default, the Agent is
hereby authorized by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
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Fantasma at any time and from time to time, at the Agent's option, without
notice to, or consent of, the Obligors, to set off, appropriate, seize, freeze
and apply any or all items hereinabove referred to against all Obligations
(including, without limitation, the Agent's Obligations) then outstanding, all
in such order and manner as shall be determined by the Agent in its sole and
absolute discretion.
2.4.7 REQUIREMENTS OF LAW.
In the event that any Lender shall have determined in
good faith that (a) the adoption of any Laws regarding capital adequacy, or (b)
any change in such Laws or in the interpretation or application thereof or (c)
compliance by such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any central bank or Governmental Authority, does or shall have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender, as a consequence of the obligations of the
such Lender hereunder to a level below that which such Lender or any corporation
controlling such Lender would have achieved but for such adoption, change or
compliance (taking into consideration the policies of such Lender and the
corporation controlling such Lender, with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower of a written request therefor and a
statement of the basis for such determination, the Borrower shall pay to such
Lender ON DEMAND such additional amount or amounts in order to compensate such
Lender or its controlling corporation for such reduction.
2.4.8 FUNDS TRANSFER SERVICES.
(a) The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma have
requested that the Agent and its Affiliates make available to the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma electronic funds transfer services and related
security measures in connection with the Obligations. Each of the Borrower
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma acknowledge that the Agent has made available to the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma its Wire Transfer Procedures, a copy of
which is attached to this Agreement as EXHIBIT "B" and which include a
description of security procedures regarding funds transfers executed by the
Agent or an Affiliate bank at the request of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma (the "Security Procedures"). The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma
and the Agent agree that the Security Procedures are commercially reasonable.
Each Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma further acknowledges that the full
scope of the Security Procedures which the Agent or such Affiliate bank offers
and strongly recommends for funds transfers is available only if the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma communicate directly with the Agent or such Affiliate
bank as applicable in accordance with said procedures. If the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ or Fantasma attempts to communicate by any other method or otherwise not
in accordance with the Security Procedures, the Agent or such Affiliate bank, as
applicable, shall not be required to execute such instructions, but if the Agent
or such Affiliate bank, as applicable, does so, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma will be deemed to have refused the Security Procedures that the Agent
or such Affiliate bank as applicable offers and strongly recommends, and the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will be bound by any funds transfer, whether
or not authorized, which is issued in any Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ or
Fantasma's name and accepted by the Agent or such Affiliate bank, as applicable,
in good faith. The Agent or such Affiliate bank, as applicable, may modify Wire
Transfer Procedures including,
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without limitation, the Security Procedures at such time or times and in such
manner as the Agent or such Affiliate bank, as applicable, in its sole
discretion, deems appropriate to meet prevailing standards of good banking
practice. By continuing to use the Agent's or such Affiliate bank's, as
applicable, wire transfer services after receipt of any modification of the Wire
Transfer procedures including, without limitation, the Security Procedures, each
of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma agrees that the Security Procedures,
as modified, are likewise commercially reasonable. Each of the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma further agrees to establish and maintain procedures to
safeguard the Security Procedures and any information related thereto. Neither
the Agent nor any Affiliate of the Agent is responsible for detecting any error
in payment order sent by any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma to the
Agent or any of the Lenders.
(b) The Agent or such Affiliate bank, as
applicable, will generally use the Fedwire funds transfer system for domestic
funds transfers, and the funds transfer system operated by the Society for
Worldwide International Financial Telecommunication (SWIFT) for international
funds transfers. International funds transfers may also be initiated through the
Clearing House InterBank Payment System (CHIPs) or international cable. However,
the Agent or such Affiliate bank, as applicable, may use any means and routes
that the Agent or such Affiliate bank, as applicable, in its sole discretion,
may consider suitable for the transmission of funds. Each payment order, or
cancellation thereof, carried out through a funds transfer system or a
clearinghouse will be governed by all applicable funds transfer system rules and
clearing house rules and clearing arrangements, whether or not the Agent or such
Affiliate bank, as applicable, is a member of the system, clearinghouse or
arrangement and each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma acknowledges
that the Agent's or such Affiliate bank's, as applicable, right to reverse,
adjust, stop payment or delay posting of an executed payment order is subject to
the laws, regulations, rules, circulars and arrangements described herein.
2.4.9 GUARANTY.
(a) Each of the Obligors hereby
unconditionally and irrevocably, guarantees to the Agent and the Lenders:
(i) the due and punctual payment in
full (and not merely the collectibility) by the other Obligors of the
Obligations, including unpaid and accrued interest thereon, in each case
when due and payable, all according to the terms of this Agreement, the
Notes and the other Financing Documents;
(ii) the due and punctual payment in
full (and not merely the collectibility) by the other Obligors of all
other sums and charges which may at any time be due and payable in
accordance with this Agreement, the Notes or any of the other Financing
Documents;
(iii) the due and punctual performance by
the other Obligors of all of the other terms, covenants and conditions
contained in the Financing Documents; and
(iv) all the other Obligations of the
other Obligors.
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(b) The obligations and liabilities of each
Obligor as a guarantor under this Section 2.4.9 (Guaranty) shall be absolute and
unconditional and joint and several, irrespective of the genuineness, validity,
priority, regularity or enforceability of this Agreement, any of the Notes or
any of the Financing Documents or any other circumstance which might otherwise
constitute a legal or equitable discharge of a surety or guarantor. Each Obligor
in its capacity as a guarantor expressly agrees that the Agent and the Lenders
may, in their sole and absolute discretion, without notice to or further assent
of such Obligor and without in any way releasing, affecting or in any way
impairing the joint and several obligations and liabilities of such Obligor as a
guarantor hereunder:
(i) waive compliance with, or any
defaults under, or grant any other indulgences under or with respect to
any of the Financing Documents;
(ii) modify, amend, change or terminate
any provisions of any of the Financing Documents in accordance with the
provisions of this Agreement including, without limitation, the
agreements of necessary parties;
(iii) grant extensions or renewals of or
with respect to the Credit Facilities, the Notes or any of the other
Financing Documents;
(iv) effect any release, subordination,
compromise or settlement in connection with this Agreement, any of the
Notes or any of the other Financing Documents;
(v) agree to the substitution,
exchange, release or other disposition of the Collateral or any part
thereof, or any other collateral for the Loan or to the subordination of
any lien or security interest therein;
(vi) make advances for the purpose of
performing any term, provision or covenant contained in this Agreement,
any of the Notes or any of the other Financing Documents with respect to
which the Obligors shall then be in default;
(vii) make future advances pursuant to
the Financing Agreement or any of the other Financing Documents;
(viii) assign, pledge, hypothecate or
otherwise transfer the Commitments, the Obligations, the Notes, any of
the other Financing Documents or any interest therein, all as and to the
extent permitted by the provisions of this Agreement;
(ix) deal in all respects with the other
Obligors as if this Section 2.4.9 were not in effect;
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(x) effect any release, compromise or
settlement with any of the other Obligors, whether in their capacity as
a Obligor or as a guarantor under this Section 2.4.9, or any other
guarantor; and
(xi) provide debtor-in-possession
financing or allow use of cash collateral in proceedings under the
Bankruptcy Code, it being expressly agreed by all Obligors that any such
financing and/or use would be part of the Obligations.
(c) The obligations and liabilities of each
Obligor, as guarantor under this Section 2.4.9, shall be primary, direct and
immediate, shall not be subject to any counterclaim, recoupment, set off,
reduction or defense based upon any claim that a Obligor may have against any
one or more of the other Obligors, the Agent, any one or more of the Lenders
and/or any other guarantor and shall not be conditional or contingent upon
pursuit or enforcement by the Agent or other Lenders of any remedies it may have
against the Obligors with respect to this Agreement, the Notes or any of the
other Financing Documents, whether pursuant to the terms thereof or by operation
of law. Without limiting the generality of the foregoing, the Agent and the
Lenders shall not be required to make any demand upon any of the Obligors, or to
sell the Collateral or otherwise pursue, enforce or exhaust its or their
remedies against the Obligors or the Collateral either before, concurrently with
or after pursuing or enforcing its rights and remedies hereunder. Any one or
more successive or concurrent actions or proceedings may be brought against each
Obligor under this Section 2.4.9, either in the same action, if any, brought
against any one or more of the Obligors or in separate actions or proceedings,
as often as the Agent may deem expedient or advisable. Without limiting the
foregoing, it is specifically understood that any modification, limitation or
discharge of any of the liabilities or obligations of any one or more of the
Obligors, any other guarantor or any Obligor under any of the Financing
Documents, arising out of, or by virtue of, any bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under federal or
state law initiated by or against any one or more of the Obligors, in their
respective capacities as Obligors and guarantors under this Section 2.4.9, or
under any of the Financing Documents shall not modify, limit, lessen, reduce,
impair, discharge, or otherwise affect the liability of each Obligor under this
Section 2.4.9 in any manner whatsoever, and this Section 2.4.9 shall remain and
continue in full force and effect. It is the intent and purpose of this Section
2.4.9 that each Obligor shall and does hereby waive all rights and benefits
which might accrue to any other guarantor by reason of any such proceeding, and
the Obligors agree that they shall be liable for the full amount of the
obligations and liabilities under this Section 2.4.9, regardless of, and
irrespective to, any modification, limitation or discharge of the liability of
any one or more of the Obligors, any other guarantor or any Obligor under any of
the Financing Documents, that may result from any such proceedings.
(d) Each Obligor, as guarantor under this
Section 2.4.9, hereby unconditionally, jointly and severally, irrevocably and
expressly waives:
(i) presentment and demand for payment
of the Obligations and protest of non-payment;
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(ii) notice of acceptance of this
Section 2.4.9 and of presentment, demand and protest thereof;
(iii) notice of any default hereunder or
under the Notes or any of the other Financing Documents and notice of
all indulgences;
(iv) notice of any increase in the
amount of any portion of or all of the indebtedness guaranteed by this
Section 2.4.9;
(v) demand for observance, performance
or enforcement of any of the terms or provisions of this Section 2.4.9,
the Notes or any of the other Financing Documents;
(vi) all errors and omissions in
connection with the Lender's administration of all indebtedness
guaranteed by this Section 2.4.9, except errors and omissions resulting
from acts of bad faith;
(vii) any right or claim of right to
cause a marshalling of the assets of any one or more of the other
Obligors;
(viii) any act or omission of the Agent or
the Lenders which changes the scope of the risk as guarantor hereunder;
and
(ix) all other notices and demands
otherwise required by law which the Obligor may lawfully waive.
(e) Within ten (10) days following any request
of the Agent so to do, each Obligor will furnish the Agent and the Lenders and
such other persons as the Agent may direct with a written certificate, duly
acknowledged stating in detail whether or not any credits, offsets or defenses
exist with respect to this Section 2.4.9.
(f) Notwithstanding any provision contained
herein to the contrary, the maximum amount payable hereunder by each Guarantor
shall at no time exceed the Maximum Amount of such Guarantor. Each Guarantor
understands, agrees and confirms that the Agent and the Lenders may enforce this
Section up to the full amount of the Obligations against each Guarantor (subject
to the proviso in the preceding sentence) without proceeding against any other
Guarantor or any security for the Obligations, or under any other guaranty
covering all or a portion of the Obligations. All payments by each Guarantor
under this Section shall be made on the same basis as payments by the Borrower
under this Agreement.
2.4.10 NO NOVATION.
The Obligors acknowledge and agree that the Notes
delivered on the date of this Agreement have been delivered in substitution for
the Notes delivered under the terms of the Original Financing Agreement and that
the execution and delivery of the Notes delivered on the date of this Agreement
are not intended to and shall not cause a novation with respect to any or all of
the Obligations.
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Section 2.5 SETTLEMENT AMONG LENDERS.
2.5.1 REVOLVING LOAN.
It is agreed that each Lender's Net Outstandings are
intended by the Lenders to be equal at all times to such Lender's Revolving
Credit Pro Rata Share of the aggregate outstanding principal amount of the
Revolving Loan outstanding. Notwithstanding such agreement, the several and not
joint obligation of each Lender to fund the Revolving Loan made in accordance
with the terms of this Agreement ratably in accordance with such Lender's
Revolving Credit Pro Rata Share and each Lender's right to receive its ratable
share of principal payments on the Revolving Loan in accordance with its
Revolving Credit Pro Rata Share, the Lenders agree that in order to facilitate
the administration of this Agreement and the Financing Documents that settlement
among them may take place on a periodic basis in accordance with the provisions
of this Section 2.5.
2.5.2 SETTLEMENT PROCEDURES AS TO REVOLVING LOAN.
(a) IN GENERAL. To the extent and in the manner
hereinafter provided in this Section 2.5.2, settlement among the Lenders as to
the Revolving Loan may occur periodically on Settlement Dates determined from
time to time by the Agent, which may occur before or after the occurrence or
during the continuance of a Default or Event of Default and whether or not all
of the conditions set forth in 5.1.17 (Conditions to All Extensions of Credit)
have been met. On each Settlement Date payments shall be made by or to
NationsBank and the other Lenders in the manner provided in this Section 2.5.2
in accordance with the Settlement Report delivered by the Agent pursuant to the
provisions of this Section 2.5.2 in respect of such Settlement Date so that as
of each Settlement Date, and after giving effect to the transactions to take
place on such Settlement Date, each Lender's Net Outstandings shall equal such
Lender's Revolving Credit Pro Rata Share of the Revolving Loan outstanding.
(b) SELECTION OF SETTLEMENT DATES. If the Agent
elects, in its discretion, but subject to the consent of NationsBank, to settle
accounts among the Lenders with respect to principal amounts of Revolving Loan
less frequently than each Business Day, then the Agent shall designate periodic
Settlement Dates which may occur on any Business Day after the Closing Date;
provided, however, that the Agent shall designate as a Settlement Date any
Business Day which is an Interest Payment Date; and provided further, that a
Settlement Date shall occur at least once during each seven-day period. The
Agent shall designate a Settlement Date by delivering to each Lender a
Settlement Report not later than 12:00 noon (Baltimore City Time) on the
proposed Settlement Date, which Settlement Report shall be with respect to the
period beginning on the next preceding Settlement Date and ending on such
designated Settlement Date.
(c) NON-RATABLE LOANS AND PAYMENTS. Between
Settlement Dates, the Agent shall request and NationsBank may (but shall not be
obligated to) advance to the Borrower out of NationsBank's own funds, the entire
principal amount of any advance under the Revolving Loan requested or deemed
requested pursuant to Section 2.1.2 (Procedure for Making Advances) (any such
advance under the Revolving Loan being referred to as a "Non-Ratable Loan"). The
making of each Non-Ratable Loan by NationsBank shall be deemed to be a purchase
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by NationsBank of a 100% participation in each other Lender's Revolving Credit
Pro Rata Share of the amount of such Non-Ratable Loan. All payments of
principal, interest and any other amount with respect to such Non-Ratable Loan
shall be payable to and received by the Agent for the account of NationsBank.
Upon demand by NationsBank, with notice to the Agent, each other Lender shall
pay to NationsBank, as the repurchase of such participation, an amount equal to
100% of such Lender's Revolving Credit Pro Rata Share of the principal amount of
such Non-Ratable Loan. Any payments received by the Agent between Settlement
Dates which in accordance with the terms of this Agreement are to be applied to
the reduction of the outstanding principal balance of Revolving Loan, shall be
paid over to and retained by NationsBank for such application, and such payment
to and retention by NationsBank shall be deemed, to the extent of each other
Lender's Revolving Credit Pro Rata Share of such payment, to be a purchase by
each such other Lender of a participation in the advance under the Revolving
Loan (including the repurchase of participations in Non-Ratable Loans) made by
NationsBank. Upon demand by another Lender, with notice thereof to the Agent,
NationsBank shall pay to the Agent, for the account of such other Lender, as a
repurchase of such participation, an amount equal to such other Lender's
Revolving Credit Pro Rata Share of any such amounts (after application thereof
to the repurchase of any participations of NationsBank in such other Lender's
Revolving Credit Pro Rata Share of any Non-Ratable Loans) paid only to
NationsBank by the Agent.
(d) NET DECREASE IN OUTSTANDINGS. If on any
Settlement Date the increase, if any, in the dollar amount of any Lender's Net
Outstandings which is required to comply with the first sentence of Section
2.5.1 (Revolving Loan) is less than such Lender's Revolving Credit Pro Rata
Share of amounts received by the Agent but paid only to NationsBank since the
next preceding Settlement Date, such Lender and the Agent, in their respective
records, shall apply such Lender's Revolving Credit Pro Rata Share of such
amounts to the increase in such Lender's Net Outstandings, and NationsBank shall
pay to the Agent, for the account of such Lender, the excess allocable to such
Lender.
(e) NET INCREASE IN OUTSTANDINGS. If on any
Settlement Date the increase, if any, in the dollar amount of any Lender's Net
Outstandings which is required to comply with the first sentence of Section
2.5.1 (Revolving Loan) exceeds such Lender's Revolving Credit Pro Rata Share of
amounts received by the Agent but paid only to NationsBank since the next
preceding Settlement Date, such Lender and the Agent, in their respective
records, shall apply such Lender's Revolving Credit Pro Rata Share of such
amounts to the increase in such Lender's Net Outstandings, and such Lender shall
pay to the Agent, for the account of NationsBank, any excess.
(f) NO CHANGE IN OUTSTANDINGS. If a Settlement
Report indicates that no advance under the Revolving Loan has been made during
the period since the next preceding Settlement Date, then such Lender's
Revolving Credit Pro Rata Share of any amounts received by the Agent but paid
only to NationsBank shall be paid by NationsBank to the Agent, for the account
of such Lender. If a Settlement Report indicates that the increase in the dollar
amount of a Lender's Net Outstandings which is required to comply with the first
sentence of Section 2.5.1 (Revolving Loan) is exactly equal to such Lender's
Revolving Credit Pro Rata Share of amounts received by the Agent but paid only
to NationsBank since the next preceding Settlement Date, such Lender and the
Agent, in their respective records, shall apply such Lender's
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Revolving Credit Pro Rata Share of such amounts to the increase in such Lender's
Net Outstandings.
(g) RETURN OF PAYMENTS. If any amounts
received by NationsBank in respect of the Obligations are later required to be
returned or repaid by NationsBank to the Obligors or any other Obligor or their
respective representatives or successors in interest, whether by court order,
settlement or otherwise, in excess of the NationsBank's Revolving Credit Pro
Rata Share of all such amounts required to be returned by all Lenders, each
other Lender shall, upon demand by NationsBank with notice to the Agent, pay to
the Agent for the account of NationsBank, an amount equal to the excess of such
Lender's Revolving Credit Pro Rata Share of all such amounts required to be
returned by all Lenders over the amount, if any, returned directly by such
Lender.
(h) PAYMENTS TO AGENT, LENDERS.
(i) Payment by any Lender to the Agent
shall be made not later than 2:00 p.m. (Baltimore City Time) on
the Business Day such payment is due, provided that if such
payment is due on demand by another Lender, such demand is made
on the paying Lender not later than 10:00 a.m. (Baltimore City
Time) on such Business Day. Payment by the Agent to any Lender
shall be made by wire transfer, promptly following the Agent's
receipt of funds for the account of such Lender and in the type
of funds received by the Agent, provided that if the Agent
receives such funds at or prior to 12:00 p.m. noon (Baltimore
City Time), the Agent shall pay such funds to such Lender by 2:00
p.m. (Baltimore City Time) on such Business Day. If a demand for
payment is made after the applicable time set forth above, the
payment due shall be made by 2:00 p.m. (Baltimore City Time) on
the first Business Day following the date of such demand.
(ii) If a Lender shall, at any time,
fail to make any payment to the Agent required hereunder, the
Agent may, but shall not be required to, retain payments that
would otherwise be made to such Lender hereunder and apply such
payments to such Lender's defaulted obligations hereunder, at
such time, and in such order, as the Agent may elect in its sole
discretion.
(iii) With respect to the payment of any
funds under this Section 2.5.2, whether from the Agent to a
Lender or from a Lender to the Agent, the party failing to make
full payment when due pursuant to the terms hereof shall, upon
demand by the other party, pay such amount together with interest
on such amount at the Federal Funds Rate.
2.5.3 SETTLEMENT OF OTHER OBLIGATIONS.
All other amounts received by the Agent on account of, or
applied by the Agent to the payment of, any Obligation owed to the Lenders
(including, without limitation, Fees
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payable to the Lenders and proceeds from the sale of, or other realization upon,
all or any part of the Collateral following an Event of Default) that are
received by the Agent not later than 11:00 a.m. (Baltimore City Time) on a
Business Day will be paid by the Agent to each Lender on the same Business Day,
and any such amounts that are received by the Agent after 11:00 a.m. (Baltimore
City Time) will be paid by the Agent to each Lender on the following Business
Day. Unless otherwise stated herein, the Agent shall distribute Fees payable to
the Lenders ratably to the Lenders based on each Lender's Revolving Credit Pro
Rata Share and shall distribute proceeds from the sale of, or other realization
upon, all or any part of the Collateral following an Event of Default ratably to
the Lenders based on the amount of the Obligations then owing to each Lender.
2.5.4 PRESUMPTION OF PAYMENT.
(a) Unless the Agent shall have received notice
from a Lender prior to 2:30 p.m. (Baltimore City Time) on the date of the
requested date for the making of advances under the Revolving Loan that such
Lender will not make available to the Agent, such Lender's Revolving Credit Pro
Rata Share of the advances to be made on such date, the Agent may assume that
such Lender has made such amount available to the Agent on such date in
accordance with this Section 2.5, and the Agent, in its sole discretion may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount on behalf of such Lender.
(b) If and to the extent such Lender shall not
have so made available to the Agent its Revolving Credit Pro Rata Share of the
advances under the Revolving Loan made on such date, and the Agent shall have so
made available to the Borrower a corresponding amount on behalf of such Lender,
such Lender shall, on demand, pay to the Agent such corresponding amount,
together with interest thereon, at the Federal Funds Rate, for each day from the
date such corresponding amount shall have been so available by the Agent to the
Borrower until the date such amount shall have been repaid to the Agent. Such
Lender shall not be entitled to payment of any interest which accrues on the
amount made available by the Agent to the Borrower for the account of such
Lender until such time as such Lender reimburses the Agent for such amount,
together with interest thereon, as provided in this Section 2.5.4.
(c) A certificate of the Agent submitted to any
Lender with respect to any amounts owing to the Agent by such Lender under this
Section 2.5 shall be conclusive and binding on such Lender, absent manifest
error.
(d) Unless the Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the Agent
that the Borrower will not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date and the
Agent in its sole discretion may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent the Borrower shall not have so made such
payment in full to the Agent and the Agent shall have distributed to any Lender
all or any portion of such amount, such Lender shall repay to the Agent on
demand the amount so distributed to such Lender, together with interest thereon
at the Federal Funds Rate, for each day from the date
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such amount is distributed to such Lender until the date such Lender repays such
amount to the Agent.
ARTICLE III
THE COLLATERAL
Section 3.1 DEBT AND OBLIGATIONS SECURED.
All property and Liens assigned, pledged or otherwise granted under or
in connection with this Agreement (including, without limitation, those under
Section 3.2 (Grant of Liens)) or any of the Financing Documents shall secure (a)
the payment of all of the Obligations, including, without limitation, any and
all Agent's Obligations, and (b) the performance, compliance with and observance
by the the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma of the provisions of this
Agreement and all of the other Financing Documents or otherwise under the
Obligations. The security interest and Lien of each Lender in such property
shall rank equally in priority with the interest of each other Lender, but the
security interest and Lien of the Agent with respect to the Agent's Obligations
shall be superior and paramount to the security interest and Lien of the
Lenders.
Section 3.2 GRANT OF LIENS.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma hereby assigns, pledges
and grants to the Agent, for the ratable benefit of the Lenders and for the
benefit of the Agent with respect to the Agent's Obligations, and agrees that
the Agent and the Lenders shall have a perfected and continuing security
interest in, and Lien on, (a) all of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and
Fantasma's Accounts, Inventory, Chattel Paper and Instruments, whether now owned
or existing or hereafter acquired or arising, (b) all returned, rejected or
repossessed goods, the sale or lease of which shall have given or shall give
rise to an Account, (c) all insurance policies relating to the foregoing, (d)
all books and records in whatever media (paper, electronic or otherwise)
recorded or stored, with respect to the foregoing and all rights of access to
all equipment and general intangibles necessary or beneficial to retain, access
and/or process the information contained in those books and records, and (e) all
cash and non-cash proceeds and products of the foregoing. Each of the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma further agrees that the Agent, for the ratable benefit
of the Lenders and for the benefit of the Agent with respect to the Agent's
Obligations, shall have in respect thereof all of the rights and remedies of a
secured party under the Uniform Commercial Code as well as those provided in
this Agreement, under each of the other Financing Documents and under applicable
Laws.
Section 3.3 COLLATERAL DISCLOSURE LIST.
On or prior to the Closing Date, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma
shall deliver to the Agent a list (the "Collateral Disclosure List") which shall
contain such information with respect to each of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇
and Fantasma's business and real and personal property as the Agent may
reasonably require and shall be certified by a Responsible Officer of each of
the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma as applicable, all in the form provided
to the Borrower by the Agent. Promptly after demand by the Agent, the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ or
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Fantasma, as appropriate, shall furnish to the Agent an update of the
information contained in the Collateral Disclosure List at any time and from
time to time as may be requested by the Agent.
Section 3.4 INVENTORY AND RECEIVABLES.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma acknowledge and agree that it is
the intention of the parties to this Agreement that the Agent, for the ratable
benefit of the Lenders and for the benefit of the Agent with respect to the
Agent's Obligations, shall have a first priority, perfected Lien, in form and
substance satisfactory to the Agent and its counsel, on all of the Borrower's,
▇▇▇▇▇▇ ▇▇▇▇▇'▇ and Fantasma's Inventory and Receivables of any kind and nature
whatsoever, whether now owned or hereafter acquired, subject only to the
Permitted Liens, if any. In furtherance of the foregoing:
3.4.1 CHATTEL PAPER, PROMISSORY NOTES, ETC.
(a) On the Closing Date and without implying any
limitation on the scope of Section 3.2 (Grant of Liens), each of the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall deliver to the Agent, for the ratable benefit of
the Lenders and for the benefit of the Agent with respect to the Agent's
Obligations, all originals of all of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and
Fantasma's Chattel Paper and Instruments and, if the Agent so requires, shall
execute and deliver a separate pledge, assignment and security agreement in form
and content acceptable to the Agent, which pledge, assignment and security
agreement shall assign, pledge and ▇▇▇▇▇ ▇ ▇▇▇▇ to the Agent, for the ratable
benefit of the Lenders and for the benefit of the Agent with respect to the
Agent's Obligations on all of each of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and
Fantasma's Chattel Paper and Instruments.
(b) In the event that any of the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ or Fantasma shall acquire after the Closing Date any Chattel Paper or
Instruments, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, as applicable, shall
promptly so notify the Agent and deliver the originals of all of the foregoing
to the Agent promptly and in any event within ten (10) days of each acquisition.
(c) All Chattel Paper and Instruments shall be
delivered to the Agent endorsed and/or assigned as required by the pledge,
assignment and security agreement and/or as the Agent may reasonably require
and, if applicable, shall be accompanied by blank irrevocable and unconditional
stock or bond powers and/or notices as the Agent may require.
3.4.2 TRADEMARKS.
On the Closing Date, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇
and Fantasma shall execute and deliver all Financing Documents and take all
actions requested in good faith by the Agent in order to perfect a first
priority assignment of Trademarks, including, without limitation, any Trademarks
acquired by ▇▇▇▇▇▇ ▇▇▇▇▇ from BEC which assignment shall limit the Agent's
rights thereunder to non-exclusive use of the Trademarks in the disposition of
Inventory to which such Trademarks are attached.
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Section 3.5 RECORD SEARCHES.
As of the Closing Date and thereafter at the time any Financing Document
is executed and delivered by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma pursuant to
this Section, the Agent shall have received, in form and substance satisfactory
in good faith to the Agent, such Lien or record searches with respect to all of
the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and/or any other Person, as appropriate,
and the property covered by such Financing Document showing that the Lien of
such Financing Document will be a perfected first priority Lien on the property
covered by such Financing Document subject only to Permitted Liens or to such
other matters as the Agent may approve.
Section 3.6 COSTS.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma agree to pay, as part of the
Enforcement Costs and to the fullest extent permitted by applicable Laws, on
demand all costs, fees and expenses incurred by the Agent and/or any of the
Lenders in connection with the taking, perfection, preservation, protection
and/or release of a Lien on the Collateral, including, without limitation:
(a) customary fees and expenses incurred by the
Agent and/or any of the Lenders in preparing the Financing Documents from time
to time (including, without limitation, reasonable attorneys' fees incurred in
connection with preparing any of the Financing Documents, including, any
amendments and supplements thereto);
(b) all filing and/or recording taxes or fees;
(c) all costs of Lien and record searches;
(d) reasonable attorneys' fees in connection with
all legal opinions required; and
(e) all related costs, fees and expenses.
Section 3.7 RELEASE.
Upon the payment and performance of all Obligations of the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and all obligations and liabilities of each other
Person, other than the Agent and the Lenders, under this Agreement and all other
Financing Documents, the termination and/or expiration of all of the
Commitments, all Letters of Credit and all Outstanding Letter of Credit
Obligations, upon the Borrower's request and at the Borrower's sole cost and
expense, the Agent shall release and/or terminate any Financing Document but
only if and provided that there is no commitment or obligation (whether or not
conditional) of the Agent and/or any of the Lenders to re-advance amounts which
would be secured thereby and/or no commitment or obligation of the Agent to
issue any Letter of Credit or return or restore any payment of any Current
Letter of Credit Obligations.
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Section 3.8 INCONSISTENT PROVISIONS.
In the event that the provisions of any Financing Document directly
conflict with any provision of this Agreement, the provisions of this Agreement
govern.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 REPRESENTATIONS AND WARRANTIES.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, for themselves and for
each other, represent and warrant to the Agent and the Lenders, as follows:
4.1.1 OWNERSHIP INTERESTS.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma has any
ownership interest, legal, beneficial or otherwise, in any other Person except
as listed on the Collateral Disclosure List furnished to the Agent or before the
Closing Date, which correctly indicates the nature and amount of all ownership
interests held by any of them in any other Person.
4.1.2 GOOD STANDING.
(a) The Borrower (i) is a corporation duly formed
and existing under the laws of the state in which it is formed, (ii) has the
corporate power to own its property and to carry on its business as now being
conducted, and (iii) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned by it therein
or in which the transaction of its business makes such qualification necessary,
except where failure to do so would not have a Material Adverse Effect.
(b) ▇▇▇▇▇▇ ▇▇▇▇▇ (i) is a limited partnership duly
formed, and existing under the laws of the state in which it is formed, (ii) has
the limited partnership power to own its property and to carry on its business
as now being conducted, and (iii) is duly qualified to do business and is in
good standing in each jurisdiction in which the character of the properties
owned or leased by it therein or in which the transaction of its business makes
such qualification necessary, except where failure to do so would not have a
Material Adverse Effect.
(c) Fantasma (i) is a limited liability company
duly formed and existing and the laws of the state in which it is formed, (ii)
has the power and authority to own its property and to carry on its business as
not being conducted and (iii) is duly qualified to do business and is in good
standing in each jurisdiction in which the character of the properties owned or
leased by it therein or in which the transaction of its business makes such
qualification necessary, except where failure to do so would not have a Material
Adverse Effect.
4.1.3 POWER AND AUTHORITY.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma has full
the requisite corporate power or partnership authority, as appropriate, and
authority to execute and deliver this Agreement and the other Financing
Documents, to make the borrowings and request Letters of
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Credit under this Agreement, and to incur and perform the Obligations under this
Agreement and the other Financing Documents, all of which have been duly
authorized by all proper and necessary corporate or partnership action, as
appropriate. No consent or approval of shareholders, partners, members or any
creditors of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, and no consent,
approval, filing or registration with or notice to any Governmental Authority on
the part of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, is required as a
condition to the execution, delivery, validity or enforceability of this
Agreement and the other Financing Documents, the performance by any of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma of the Obligations, or if required the same
has been duly obtained.
4.1.4 BINDING AGREEMENTS.
This Agreement and the other Financing Documents executed
and delivered by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma have been properly
executed and delivered and constitute the valid and legally binding obligations
of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma and are fully enforceable against each
of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma in accordance with their respective
terms, subject to bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the rights and remedies of creditors and
secured parties, and general principles of equity regardless of whether applied
in a proceeding in equity or at law.
4.1.5 NO CONFLICTS.
Except as set forth in SCHEDULE 4.1.5, neither the
execution, delivery and performance of the terms of this Agreement or of any of
the other Financing Documents, the consummation of the transactions contemplated
by this Agreement will conflict with, violate or be prevented by (a) any of the
Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ or Fantasma's charter, bylaws, operating agreements
or partnership agreement, (b) any existing material mortgage, indenture,
contract or agreement binding on any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma
or affecting its property, or (c) any Laws.
4.1.6 NO DEFAULTS, VIOLATIONS.
(a) No Default or Event of Default has occurred
and is continuing.
(b) None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma
is in default under or with respect to any obligation under any existing
mortgage, indenture, contract or agreement binding on it or affecting its
property in any respect which could be materially adverse to the business,
operations, property or financial condition of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇
or Fantasma, or which could materially adversely affect the ability of any of
the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma to perform its obligations under this
Agreement or the other Financing Documents, to which any of the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ or Fantasma is a party.
4.1.7 COMPLIANCE WITH LAWS.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma is in
violation of any applicable Laws (including, without limitation, any Laws
relating to employment practices, to
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environmental, occupational and health standards and controls) or order, writ,
injunction, decree or demand of any court, arbitrator, or any Governmental
Authority affecting any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma or any of its
properties, the violation of which, considered in the aggregate, could
materially adversely affect the business, operations or properties of any of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma.
4.1.8 MARGIN STOCK.
None of the proceeds of the Loan will be used, directly
or indirectly, by any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma or any other
Affiliate of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma for the purpose of
purchasing or carrying, or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry, any "margin
security" within the meaning of Regulation G (12 CFR Part 207), or "margin
stock" within the meaning of Regulation U (12 CFR Part 221), of the Board of
Governors of the Federal Reserve System or for any other purpose which might
make the transactions contemplated in this Agreement a "purpose credit" within
the meaning of said Regulation G or Regulation U, or cause this Agreement to
violate any other regulation of the Board of Governors of the Federal Reserve
System or the Securities Exchange Act of 1934 or the Small Business Investment
Act of 1958, as amended, or any rules or regulations promulgated under any of
such statutes.
4.1.9 INVESTMENT COMPANY ACT; MARGIN SECURITIES.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma is an
investment company within the meaning of the Investment Company Act of 1940, as
amended, nor is it, directly or indirectly, controlled by or acting on behalf of
any Person which is an investment company within the meaning of said Act. None
of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying "margin security" within the meaning of Regulation G (12
CFR Part 207), or "margin stock" within the meaning of Regulation U (12 CFR Part
221), of the Board of Governors of the Federal Reserve System.
4.1.10 LITIGATION.
Except as otherwise disclosed on Schedule 4.1.10 attached
to and made a part of this Agreement, there are no proceedings, actions or
investigations pending or, so far as any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or
Fantasma knows, threatened before or by any court, arbitrator or any
Governmental Authority which, in any one case or in the aggregate, if determined
adversely to the interests of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma,
would have a Material Adverse Effect.
4.1.11 FINANCIAL CONDITION.
The audited consolidated and consolidating financial
statements of the Borrower dated December 31, 1997, are complete and correct in
all material respects and fairly present the financial position of the Borrower
on a consolidated basis as of the date and for the period referred to and have
been prepared in accordance with GAAP applied on a consistent basis throughout
the period involved. There are no liabilities, direct or indirect, fixed or
contingent, of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma as of the date of
such financial statements
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required by GAAP to be reflected therein that are not reflected therein or in
the notes thereto. There has been no material adverse change in the financial
condition or operations of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma since
the date of such financial statements and to the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and
Fantasma's knowledge no such material adverse change is pending or threatened.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma has guaranteed the obligations
of, or made any investment in or advances to, any Person, except as disclosed in
such financial statements and except for the guaranty of the Senior Notes by
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma.
4.1.12 FULL DISCLOSURE.
The financial statements referred to in Section 4.1.11
(Financial Condition), the Financing Documents (including, without limitation,
this Agreement), and the statements, reports or certificates furnished by any of
the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma in connection with the Financing
Documents (a) do not contain any untrue statement of a material fact and (b)
when taken in their entirety, do not omit any material fact necessary to make
the statements contained therein not misleading. There is no fact known to any
of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma which it has not disclosed to the
Agent and the Lenders in writing prior to the date of this Agreement with
respect to the transactions contemplated by the Financing Documents which
materially and adversely affects or which the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma
believe will materially adversely affect the condition, financial or otherwise,
results of operations, business, or assets of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇
or Fantasma.
4.1.13 INDEBTEDNESS FOR BORROWED MONEY.
Except for the Obligations and the Senior Notes and
except as set forth in SCHEDULE 4.1.13 attached to and made a part of this
Agreement, none of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma have any Indebtedness
for Borrowed Money. The Agent has received photocopies of all promissory notes
evidencing any Indebtedness for Borrowed Money set forth in SCHEDULE 4.1.13,
together with any and all subordination agreements, other agreements, documents,
or instruments securing, evidencing, guarantying or otherwise executed and
delivered in connection therewith.
4.1.14 TAXES.
Except for Taxes for which the failure to pay has not
resulted in an Event of Default under this Agreement or for which the failure to
pay would otherwise not have a Material Adverse Effect, each of the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma has filed all returns, reports and forms for Taxes
which, to the knowledge of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, are required
to be filed, and has paid all Taxes as shown on such returns or on any
assessment received by it, to the extent that such Taxes have become due, unless
and to the extent only that such Taxes, assessments and governmental charges are
currently contested in good faith and by appropriate proceedings by the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma, such Taxes are not the subject of any Liens
other than Permitted Liens, and adequate reserves therefor have been established
as required under GAAP. All tax liabilities of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma were as of the date of unaudited financial statements referred to in
Section 4.1.11 (Financial Condition), and are now, adequately provided for on
the books of the Borrower and its
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Subsidiaries. No tax liability has been asserted by the Internal Revenue Service
or any state or local authority against any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or
Fantasma for Taxes in excess of those already paid which would have a Material
Adverse Effect or otherwise constitute an Event of Default.
4.1.15 ERISA.
With respect to any "pension plan" as defined in SECTION
3(2) of ERISA, which plan is now or previously has been maintained or
contributed to by any Obligor and/or by any commonly controlled entity: (a) no
"accumulated funding deficiency" as defined in Code ss.412 or ERISA ss.302 has
occurred, whether or not that accumulated funding deficiency has been waived;
(b) no Reportable Event has occurred; (c) no termination of any plan subject to
Title IV of ERISA has occurred; (d) no Obligor nor any commonly controlled
entity (as defined under ERISA) has incurred a "complete withdrawal" within the
meaning of ERISA ss.4203 from any Multi-employer Plan; (e) no Obligor nor any
commonly controlled entity has incurred a "partial withdrawal" within the
meaning of ERISA ss.4205 with respect to any Multi-employer Plan; (f) no
Multi-employer Plan to which an Obligor or any commonly controlled entity has an
obligation to contribute is in "reorganization" within the meaning of ERISA
ss.4241 nor has notice been received by any Obligor or any commonly controlled
entity that such a Multi-employer Plan will be placed in "reorganization".
4.1.16 TITLE TO PROPERTIES.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma have good and
marketable title (fee, leasehold or otherwise) to all of their respective
properties, including, without limitation, the Collateral and the properties and
assets reflected in the balance sheets described in Section 4.1.11 (Financial
Condition). The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma have legal, enforceable and
uncontested rights to use freely such property and assets, including, without
limitation, rights to use Trademarks owned by BEC and licensed to the Borrower
in accordance with the terms of such license. All of such properties, including,
without limitation, the Collateral which were purchased, were purchased for fair
consideration and reasonably equivalent value in the ordinary course of business
of both the seller and the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma and not, by way of
example only, as part of a bulk sale.
4.1.17 PATENTS, TRADEMARKS, ETC.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma owns,
possesses, or has the right to use all necessary Patents, licenses, Trademarks,
Copyrights, permits and franchises to own its properties and to conduct its
business as now conducted, without known conflict with the rights of any other
Person. Any and all obligations to pay royalties or other charges with respect
to such properties and assets are properly reflected on the financial statements
described in Section 4.1.11 (Financial Condition).
4.1.18 EMPLOYEE RELATIONS.
Except as disclosed on SCHEDULE 4.1.18 attached hereto
and made a part hereof, (a) no Obligor nor any of the Obligor's employees is
subject to any collective bargaining agreement, (b) no petition for
certification or union election is pending with respect to the
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employees of any Obligor and no union or collective bargaining unit has sought
such certification or recognition with respect to the employees of a Obligor,
(c) there are no strikes, slowdowns, work stoppages or controversies pending or,
to the best knowledge of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma after due
inquiry, threatened between any of them and its employees, and (d) none of
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma is subject to any material employment
contract, severance agreement, commission contract, consulting agreement or
bonus agreement. Hours worked and payments made to the employees of any one or
more of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma have not been in violation of the
Fair Labor Standards Act or any other applicable law dealing with such matters.
All payments due from any one or more of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma
or for which any claim may be made against an Obligor, on account of wages and
employee and retiree health and welfare insurance and other benefits have been
paid or accrued in accordance with GAAP as a liability on its books. The
consummation of the transactions contemplated by this Agreement or any of the
other Financing Documents will not, give rise to a right of termination or right
of renegotiation on the part of any union under any collective bargaining
agreement to which any Obligor is a party or by which it is bound.
4.1.19 PRESENCE OF HAZARDOUS MATERIALS OR HAZARDOUS
MATERIALS CONTAMINATION.
To the best of each of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ or
Fantasma's knowledge, except as disclosed on SCHEDULE 4.1.19 attached hereto and
made a part hereof, (a) no Hazardous Materials are located on any real property
owned, controlled or operated by of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or
Fantasma or for which any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma is, or is
claimed to be, responsible, except for reasonable quantities of necessary
supplies for use by of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma in the ordinary
course of its current line of business and stored, used and disposed in
accordance with applicable Laws; and (b) no property owned, controlled or
operated by any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma or for which any of
the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma has, or is claimed to have,
responsibility has ever been used as a manufacturing, storage, or dump site for
Hazardous Materials nor is affected by Hazardous Materials Contamination at any
other property.
4.1.20 PERFECTION AND PRIORITY OF COLLATERAL.
The Agent and the Lenders have, or upon execution and
recording of this Agreement and the Security Documents will have, and will
continue to have as security for the Obligations, a valid and perfected Lien on
and security interest in all Collateral, free of all other Liens, claims and
rights of third parties whatsoever except Permitted Liens, including, without
limitation, those described on SCHEDULE 4.1.20.
4.1.21 PLACES OF BUSINESS AND LOCATION OF COLLATERAL.
The information contained in the Collateral Disclosure
List is complete and correct. The Collateral Disclosure List completely and
accurately identifies the address of (a) the chief executive office of each of
the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma, (b) any and each other place of business
of each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma, (c) the location of all books
and records pertaining to the Collateral, and (d) each location, other than the
foregoing, where any of the Collateral is located.
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4.1.22 BUSINESS NAMES AND ADDRESSES.
Except as disclosed in SCHEDULE 4.1.22 attached hereto
and made a part hereof, in the five (5) years preceding the date hereof, none of
the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma has changed its name, identity or
corporate structure, has conducted business under any name other than its
current name, and has conducted its business in any jurisdiction, other than
those disclosed on the Collateral Disclosure List.
4.1.23 INVENTORY.
The Inventory of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma
is (a) of good and merchantable quality, (b) not stored with a bailee,
warehouseman, carrier, or similar party, (c) not on consignment, sale on
approval, or sale or return, and (d) located at the places of business set forth
on the Collateral Disclosure List. No goods offered for sale by any of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma are consigned to or held on sale or return
terms by that Person.
4.1.24 ACCOUNTS.
With respect to all Accounts and to the best of the
Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and Fantasma's knowledge (a) they are genuine, and in
all respects what they purport to be, and are not evidenced by a judgment, an
Instrument, or Chattel Paper (unless such judgment has been assigned and such
Instrument or Chattel Paper has been endorsed and delivered to the Agent for the
benefit of itself and the Lenders); (b) they represent bona fide transactions
completed in accordance with the terms and provisions contained in the invoices,
purchase orders and other contracts relating thereto, and the underlying
transaction therefor is in accordance with all applicable Laws; (c) the amounts
shown on the respective books and records of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or
Fantasma, with respect thereto are actually and absolutely owing to that entity
and are not contingent or subject to reduction for any reason other than regular
discounts, credits or adjustments allowed by that entity in the ordinary course
of its business; (d) no payments have been or shall be made thereon except
payments turned over to the Agent by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma; (e)
all Account Debtors thereon have the capacity to contract; and (f) the goods
sold, leased or transferred or the services furnished giving rise thereto are
not subject to any Liens except the security interest granted to the Agent and
the Lenders by this Agreement and Permitted Liens.
4.1.25 COMPLIANCE WITH ELIGIBILITY STANDARDS.
Each Account and all Inventory included in the
calculation of the Borrowing Base does and will at all times meet and comply
with all of the standards for Eligible Receivables and Eligible Inventory. With
respect to those Accounts which the Agent has deemed Eligible Receivables (a)
there are no facts, events or occurrences which in any way impair the validity,
collectibility or enforceability thereof or tend to reduce the amount payable
thereunder; and (b) there are no proceedings or actions known to any of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma which are threatened or pending against any
Account Debtor which might result in any material adverse change in the
Borrowing Base.
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4.1.26 ORIGINAL FINANCING AGREEMENT.
No Default or Event of Default (including, without
limitation, those with respect to representations and warranties) existed under
the Original Financing Agreement or under any of the other Financing Documents
immediately before the execution and delivery of this Agreement.
4.1.27 YEAR 2000.
The Borrower has (a) initiated a review and assessment of
all areas within its and each of its Subsidiaries' businesses and operations
(including those affected by suppliers, vendors and customers) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by such of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma or any of
its Subsidiaries (or suppliers, vendors and customers) may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (b) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (c) to
date, implemented that plan in accordance with that timetable. Based on the
foregoing, the Borrower believes that all computer applications (including those
of its suppliers, vendors and customers) that are material to its or any of its
Subsidiaries' business and operations are reasonably expected on a timely basis
to be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 compliant"), except to the extent
that a failure to do so could not reasonably expected to have a Material Adverse
Effect.
Section 4.2 SURVIVAL; UPDATES OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties contained in or made under or in
connection with this Agreement and the other Financing Documents shall survive
the Closing Date, the making of any advance under the Loan, the issuance of any
Letter of Credit, and extension of credit made hereunder, and the incurring of
any other Obligations and shall be deemed to have been made at the time of each
request for, and again at the time the making of, each advance under the Loan or
the issuance of each Letter of Credit, except that the representations and
warranties which relate to financial statements which are referred to in Section
4.1.11 (Financial Condition), shall also be deemed to cover financial statements
furnished from time to time to the Agent and the Lenders pursuant to Section
6.1.1 (Financial Statements).
ARTICLE V
CONDITIONS PRECEDENT
Section 5.1 CONDITIONS TO THE INITIAL ADVANCE AND INITIAL LETTER OF
CREDIT.
The making of the initial advance under the Loan and the issuance of the
initial Letter of Credit is subject to the fulfillment on or before the Closing
Date of the following conditions precedent in a manner satisfactory in form and
substance to the Agent and its counsel:
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5.1.1 ORGANIZATIONAL DOCUMENTS - BORROWER, ▇▇▇▇▇▇ ▇▇▇▇▇
AND FANTASMA.
The Agent shall have received for each of Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, as applicable:
(a) a certificate of good standing certified
by the Secretary of State, or other appropriate Governmental Authority, of the
state of incorporation or formation of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma,
as appropriate;
(b) a certified copy from the appropriate
Governmental Authority under which ▇▇▇▇▇▇ ▇▇▇▇▇ is organized, of ▇▇▇▇▇▇ ▇▇▇▇▇'▇
recorded limited partnership certificate and all recorded amendments thereto;
(c) a certificate of qualification to do
business for the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma certified by the Secretary
of State or other Governmental Authority of each state in which each such entity
conducts business;
(d) a certificate dated as of the Closing Date
by the Secretary or an Assistant Secretary of the Borrower covering:
(i) true and complete copies of the
Borrower's corporate charter, bylaws, and all amendments thereto;
(ii) true and complete copies of the
resolutions of its Board of Directors authorizing (i) the
execution, delivery and performance of the Financing Documents to
which it is a party, (ii) the borrowings hereunder, and (iii) the
granting of the Liens contemplated by this Agreement and the
Financing Documents to which the Borrower is a party;
(iii) the incumbency, authority and
signatures of the officers of the Borrower authorized to sign
this Agreement and the other Financing Documents to which the
Borrower is a party; and
(iv) the identity of the Borrower's
current directors, common stock holders and other equity holders,
as well as their respective percentage ownership interests.
(e) a certificate of the partners (both
general and limited) of ▇▇▇▇▇▇ ▇▇▇▇▇, dated as of the Closing Date:
(i) stating that attached to the
certificate is a true and complete copy of ▇▇▇▇▇▇ ▇▇▇▇▇'▇
Partnership Agreement, with all amendments, modifications,
restatements, substitutions, extensions and renewals thereto;
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(ii) authorizing (A) the execution,
delivery and performance of the Financing Documents to which
▇▇▇▇▇▇ ▇▇▇▇▇, is a party, (B) any and all Obligations, (C) the
granting of the Liens contemplated by this Agreement and the
Security Documents to which ▇▇▇▇▇▇ ▇▇▇▇▇ is a party, and (D) any
and all other actions or agreements taken with respect to the
Obligations or the Collateral by any general partner of ▇▇▇▇▇▇
▇▇▇▇▇ at any time;
(iii) setting forth the identity and
signatures of the general partners of ▇▇▇▇▇▇ ▇▇▇▇▇ and of other
Responsible Officers then authorized to sign this Agreement and
the other Financing Documents and the Security Documents to which
▇▇▇▇▇▇ ▇▇▇▇▇ is a party; and
(iv) identifying ▇▇▇▇▇▇ ▇▇▇▇▇'▇ current
partners and other equity holders, as well as their respective
percentage ownership interests.
(f) a certificate of the Secretary of
Fantasma, dated as of the Closing Date:
(i) stating that attached to the
certificate is a true and complete copy of Fantasma's Operating
Agreement, with all amendments, modifications, restatements,
substitutions, extensions and renewals thereto;
(ii) authorizing (A) the execution,
delivery and performance of the Financing Documents to which
Fantasma, is a party, (B) any and all Obligations, (C) the
granting of the Liens contemplated by this Agreement and the
Security Documents to which Fantasma is a party, and (D) any and
all other actions or agreements taken with respect to the
Obligations or the Collateral by the members of Fantasma at any
time;
(iii) setting forth the identity and
signatures of the members of Fantasma and of other Responsible
Officers then authorized to sign this Agreement and the other
Financing Documents and the Security Documents to which Fantasma
is a party; and
(iv) identifying Fantasma's current
members, as well as their respective percentage ownership
interests.
5.1.2 OPINION OF OBLIGORS' COUNSEL.
The Agent shall have received the favorable opinion of
counsel for the Obligors addressed to the Agent and the Lenders in form
satisfactory to the Agent.
5.1.3 ORGANIZATIONAL DOCUMENTS - CORPORATE GUARANTORS.
The Agent shall have received for each Corporate
Guarantor:
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(a) a certificate of good standing certified
by the Secretary of State, or other appropriate Governmental Authority, of the
state of incorporation for such Corporate Guarantor;
(b) a certificate of qualification to do
business certified by the Secretary of State or other Governmental Authority of
each state in which such Corporate Guarantor conducts business; and
(c) a certificate dated as of the Closing Date
by the Secretary or an Assistant Secretary of such Corporate Guarantor covering:
(i) true and complete copies of such
Corporate Guarantor's corporate charter, bylaws, and all
amendments thereto;
(ii) true and complete copies of the
resolutions of the Board of Directors of such Corporate Guarantor
authorizing the execution, delivery and performance of the
Financing Documents to which such Corporate Guarantor is a party
and the granting of the Liens contemplated by any of the
Financing Documents to which such Corporate Guarantor is a party;
(iii) the incumbency, authority and
signatures of the officers of such Corporate Guarantor authorized
to sign the Corporate Guaranty and all other Financing Documents
to which such Corporate Guarantor is a party; and
(iv) the identity of such Corporate
Guarantor's current directors, common stock holders and other
equity holders, as well as their respective percentage ownership
interests.
5.1.4 CONSENTS, LICENSES, APPROVALS, ETC.
Except as set forth in SCHEDULE 5.1.4, the Agent shall
have received copies of all material consents, licenses and approvals, required
in connection with the execution, delivery, performance, validity and
enforceability of the Financing Documents, and such consents, licenses and
approvals shall be in full force and effect.
5.1.5 NOTES.
The Agent shall have received for delivery to each of the
Lenders the Revolving Credit Notes, each conforming to the requirements hereof
and executed by a Responsible Officer of the Borrower and attested by a duly
authorized representative of the Borrower.
5.1.6 FINANCING DOCUMENTS AND COLLATERAL.
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Each Obligor shall have executed and delivered the
Financing Documents to be executed by it, and shall have delivered original
Chattel Paper, Instruments and related Collateral and all opinions, and other
documents contemplated by ARTICLE III (The Collateral).
5.1.7 OTHER FINANCING DOCUMENTS.
In addition to the Financing Documents to be delivered by
the Obligors, the Agent shall have received the Financing Documents duly
executed and delivered by Persons other than the Obligors.
5.1.8 OTHER DOCUMENTS, ETC.
The Agent shall have received such other certificates,
opinions, documents and instruments confirmatory of or otherwise relating to the
transactions contemplated hereby as may have been reasonably requested by the
Agent.
5.1.9 PAYMENT OF FEES.
The Agent and the Lenders shall have received payment of
any Fees due on or before the Closing Date.
5.1.10 COLLATERAL DISCLOSURE LIST.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall
have delivered the Collateral Disclosure List required under the provisions of
Section 3.3 (Collateral Disclosure List) duly executed by a Responsible Officer
of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma, as appropriate.
5.1.11 RECORDINGS AND FILINGS.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and such other
Persons, as appropriate, shall have: (a) executed and delivered all Financing
Documents (including, without limitation, UCC-1 and UCC-3 statements) required
to be filed, registered or recorded in order to create, in favor of the Agent
and the Lenders, a perfected Lien in the Collateral (subject only to the
Permitted Liens) in form and in sufficient number for filing, registration, and
recording in each office in each jurisdiction in which such filings,
registrations and recordations are required, and (b) delivered such evidence as
the Agent may reasonably require that all necessary filing fees and all
recording and other similar fees, and all Taxes and other expenses related to
such filings, registrations and recordings will be or have been paid in full.
5.1.12 INSURANCE CERTIFICATE.
The Agent shall have received an insurance certificate in
accordance with the provisions of Section 6.1.7 (Insurance) and Section 6.1.18
(Insurance With Respect to Equipment and Inventory).
5.1.13 LANDLORD'S WAIVERS.
Except as otherwise agreed by the Agent, the Agent shall
have received a landlord's waiver from each landlord of each and every business
premise leased by each of the
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Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and on which any of the Collateral is or may
hereafter be located, which landlords' waivers must be reasonably acceptable to
the Agent and its counsel in their sole and absolute discretion.
5.1.14 BAILEE ACKNOWLEDGEMENTS.
The Agent shall have received an agreement acknowledging
the Liens of the Agent and the Lenders from each bailee, warehouseman, consignee
or similar third party which has possession of any of the Collateral, which
agreements must be reasonably acceptable to the Agent and its counsel in their
sole and absolute discretion.
5.1.15 FIELD EXAMINATION.
The Agent shall have completed a field examination and
audit of each of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and Fantasma's business,
operations and income, the results of which field examination and audit shall be
in all respects acceptable to the Agent in its sole and absolute discretion and
shall include reference discussions with key customers and vendors.
5.1.16 CREDIT INSURANCE.
The Agent shall have received a copy of all agreements
related to the credit insurance covered by the Assignment of Credit Insurance,
all of which shall be in form and content satisfactory to the Agent, together
with the fully executed duplicate originals of the Assignment of Credit
Insurance.
5.1.17 SENIOR NOTES.
The Agent shall have received a certificate signed by a
Responsible Officer, certifying to the Agent and the Lenders that the Borrower
(a) has received the proceeds of sale of the Senior Notes, in accordance with,
and pursuant to, the terms and conditions of the Senior Note Documents, and has
applied the same to such purposes as has been previously disclosed to the Agent
and the Lenders, and (b) has delivered to the Agent and the Lenders a true and
correct photocopy of all Senior Note Documents.
Section 5.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
The making of all advances under the Loan and the issuance of all
Letters of Credit is subject to the fulfillment of the following conditions
precedent in a manner satisfactory in form and substance to the Agent and its
counsel:
5.2.1 COMPLIANCE.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma shall have
complied and shall then be in compliance with all terms, covenants, conditions
and provisions of this Agreement and the other Financing Documents that are
binding upon it.
5.2.2 BORROWING BASE.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall have
furnished all Borrowing Base Reports required by Section 2.1.4 (Borrowing Base
Report), there shall exist no
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Borrowing Base Deficiency, and as evidence thereof, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇
and Fantasma shall have furnished to the Agent such reports, schedules,
certificates, records and other papers as may be requested by the Agent, and the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall be in compliance with the provisions
this Agreement both immediately before and immediately after the making of the
advance requested.
5.2.3 DEFAULT.
There shall exist no Event of Default or Default
hereunder.
5.2.4 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of each of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma contained among the provisions of this
Agreement shall be true in all material respects and with the same effect as
though such representations and warranties had been made at the time of the
making of, and of the request for, each advance under the Loan or the issuance
of each Letter of Credit, except that the representations and warranties which
relate to financial statements which are referred to in Section 4.1.11
(Financial Condition), shall also be deemed to cover financial statements
furnished from time to time to the Agent pursuant to Section 6.1.1 (Financial
Statements).
5.2.5 MATERIAL ADVERSE CHANGE.
No material adverse change shall have occurred in the
condition (financial or otherwise), operations or business of any of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma that would, in the good faith judgment of
the Agent, materially impair the ability of that entity to pay or perform any of
the Obligations.
5.2.6 LEGAL MATTERS.
All legal documents incident to each advance under the
Loan and each of the Letters of Credit shall be reasonably satisfactory to
counsel for the Agent.**
ARTICLE VI
COVENANTS OF THE BORROWER
Section 6.1 AFFIRMATIVE COVENANTS.
So long as any of the Obligations (or any the Commitments therefor)
shall be outstanding hereunder, the Borrower agrees with the Agent and the
Lenders as follows:
6.1.1 FINANCIAL STATEMENTS.
The Borrower shall furnish to the Agent and the Lenders:
(a) ANNUAL STATEMENTS AND CERTIFICATES. The
Borrower shall furnish to the Agent and the Lenders as soon as available, but in
no event no later one hundred twenty (120) days after the close of each fiscal
year of the Borrower thereafter, (i) a copy of the annual consolidated and
consolidating financial statement in reasonable detail satisfactory to the
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Agent relating to the Borrower and its Subsidiaries on a consolidated basis,
prepared in accordance with GAAP and examined and certified by independent
certified public accountants satisfactory to the Agent, which financial
statement shall include a balance sheet as of the end of such fiscal year and
statements of income, cash flows and changes in equity for such fiscal year and
(ii) a Compliance Certificate, in substantially the form attached to this
Agreement as EXHIBIT "C", as may be amended by the Agent from time to time,
containing a detailed computation of each financial covenant which is applicable
for the period reported, a certification that no material change has occurred to
the information contained in the Collateral Disclosure List (except as set forth
in a schedule attached to the certification), each prepared by a Responsible
Officer of the Borrower in a format acceptable to the Agent. The Borrower shall
furnish to the Agent and the Lenders as soon as available, but in no event later
than June 30 of each calendar year, a management letter for the then preceding
fiscal year in the form prepared by the Borrower's independent certified public
accountants.
(b) ANNUAL OPINION OF ACCOUNTANT. The Borrower
shall furnish to the Agent and the Lenders as soon as available, but in no event
more than one hundred twenty (120) days after the close of the Borrower's fiscal
year, a letter or opinion of the accountant who examined and certified the
annual financial statement relating to the Borrower stating whether anything in
such accountant's examination has revealed the occurrence of a Default or an
Event of Default hereunder, and, if so, stating the facts with respect thereto.
(c) MONTHLY STATEMENTS AND CERTIFICATES. The
Borrower shall furnish to the Agent and the Lenders as soon as available, but in
no event more than thirty (30) days after the close of each fiscal month of the
Borrower consolidated and consolidating balance sheets of the Borrower as of the
close of such period, income, cash flows and changes in equity statements for
such period (which statements shall be preliminary for the month of December and
shall be followed by final statements no later than (60) days after the close of
such month), and a detailed computation of each financial covenant in this
Agreement which is applicable for the period reported, all as prepared and
certified by a Responsible Officer of the Borrower and accompanied by a
certificate of that officer stating whether any event has occurred which
constitutes a Default or an Event of Default hereunder, and, if so, stating the
facts with respect thereto.
(d) MONTHLY REPORTS. The Borrower shall
furnish, or cause to be furnished, to the Agent and the Lenders within fifteen
(15) Business Days after the end of each fiscal month, a report containing the
following information for each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma:
(i) a detailed aging schedule of all
Receivables by Account Debtor, in such detail, and accompanied by
such supporting information, as the Agent may from time to time
reasonably request;
(ii) a detailed aging of all accounts
payable by supplier, in such detail, and accompanied by such
supporting information, as the Agent may from time to time
reasonably request;
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(iii) a listing of all Inventory by
component, category and location, in such detail, and accompanied
by such supporting information as the Agent may from time to time
reasonably request; and
(iv) such other information as the Agent
may reasonably request.
(e) ANNUAL BUDGET AND PROJECTIONS. The
Borrower shall furnish to the Agent and the Lenders (i) as soon as available,
but in no event later than the 10th day before the end of each fiscal year a
budget and pro forma financial statements on a month-to-month basis for the
following fiscal year, and (ii) as soon as available, but in no event later than
March 31 of each year, three year projections.
(f) CONSOLIDATING SCHEDULES. The Borrower
shall furnish or cause to be furnished to the Agent and the Lenders as soon as
available, but in no event later than September 15 of each calendar year, copies
of all tax returns filed by the Borrower on a consolidated basis.
(g) ADDITIONAL REPORTS AND INFORMATION. The
Borrower shall furnish to the Agent and the Lenders promptly, such additional
information, reports or statements as the Agent may from time to time reasonably
request with respect to the Borrower and its Subsidiaries.
(h) CERTAIN INFORMATION FURNISHED TO TRUSTEE.
The Borrower will furnish to the Agent and the Lenders, at the same time sent to
the Trustee, at least one (l) copy of all financial statements, reports, and
other information sent by the Borrower to the holders of the Senior Notes and
the Trustee pursuant to Section 4.03 (a) of the Indenture as in effect on the
Closing Date.
6.1.2 RECORDKEEPING, RIGHTS OF INSPECTION, FIELD
EXAMINATION, ETC.
(a) Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma shall maintain (i) a standard system of accounting in accordance with
GAAP, and (ii) proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
properties, business and activities.
(b) Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma shall permit authorized representatives of the Agent, who may be
accompanied by the Lenders at their own expense, to visit and inspect the
properties of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma, to review, audit,
check and inspect the Collateral at any time with reasonable notice prior to the
occurrence of a Default or Event of Default or without notice following and
during the continuance of a Default or an Event of Default, to review, audit,
check and inspect any of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and Fantasma's other
books of record at any time with reasonable notice prior to the occurrence of a
Default or Event of Default or without notice following and during the
continuance of a Default or an Event of Default and to make abstracts and
photocopies thereof, and to discuss the affairs, finances and accounts of any of
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, with the officers, directors, employees and
other representatives of any or all of the
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Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and its or their accountants, all at such
times during normal business hours and other reasonable times and as often as
the Agent may reasonably request.
(c) Without implying any limitation on
subsection (b) above, through and including the period ending December 31, 1997,
the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall permit authorized representatives
of the Agent to conduct a quarterly appraisal of each such entity's Inventory,
all at such times during normal business hours as may be reasonably requested by
the Agent.
(d) Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma hereby irrevocably authorizes and directs all accountants and auditors
employed by any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma at any time prior to
the repayment in full of the Obligations to exhibit and deliver to the Agent
copies of any and all of the financial statements, trial balances, management
letters, or other accounting records of any nature of any of Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ or Fantasma in the accountant's or auditor's possession, and to disclose
to the Agent any information they may have concerning the financial status and
business operations of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma; provided,
however, that the Agent agrees that any and all such accountants and/or auditors
shall first be given a reasonable opportunity to consult with the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma prior to responding to any request from the Agent, and
provided further that the accountants may decline to provide information which
accountants generally may not provide to third parties even if so directed by
their clients. Further, each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma hereby
authorizes all Governmental Authorities to furnish to the Agent copies of
reports or examinations relating to any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma, whether made by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma or otherwise.
(e) Any and all costs and expenses reasonably
incurred by, or on behalf of, the Agent in connection with the conduct of any of
the foregoing shall be part of the Enforcement Costs and shall be payable to the
Agent upon demand. The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma acknowledge and agree
that such reasonable expenses may include, but shall not be limited to, any and
all out-of-pocket costs and expenses of the Agent's employees and agents
reasonably incurred in, and when, travelling to any of the Borrower's, ▇▇▇▇▇▇
▇▇▇▇▇'▇ or Fantasma's facilities.
6.1.3 EXISTENCE.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall
maintain its corporate, partnership or limited liability existence, as
appropriate, in good standing in the jurisdiction in which it is organized or
incorporated, as appropriate, and in each other jurisdiction where it is
required to register or qualify to do business if the failure to do so in such
other jurisdiction might have a Material Adverse Effect.
6.1.4 COMPLIANCE WITH LAWS.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall
comply with all applicable Laws and observe the valid requirements of
Governmental Authorities, the noncompliance with or the nonobservance of which
might have a Material Adverse Effect.
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6.1.5 PRESERVATION OF PROPERTIES.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will at
all times (a) maintain, preserve, protect and keep its properties, whether owned
or leased, in reasonably satisfactory operating condition, working order and
repair (ordinary wear and tear excepted), and from time to time will make all
proper repairs, maintenance, replacements, additions and improvements thereto
needed to maintain such properties in reasonably satisfactory operating
condition, working order and repair, except to the extent the same is the
subject of a Permitted Asset Disposition, and (b) do or cause to be done all
things necessary to preserve and to keep in full force and effect its material
franchises, leases of real and personal property, trade names, patents,
trademarks and permits which are necessary for the orderly continuance of its
business.
6.1.6 LINE OF BUSINESS.
The Borrower will continue to engage substantially only
in the business of distributing and selling personal and fashion accessories
including, but not limited to, jewelry, sunglasses, reading glasses, key chains,
small leather goods, handbags and watches and clocks. ▇▇▇▇▇▇ ▇▇▇▇▇ will continue
to engage substantially only in the business of distributing and selling
sunglasses, reading glasses, watches, clocks, accessories and related consumer
goods.
6.1.7 INSURANCE.
(a) Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma will at all times maintain with "A" or better rated insurance companies
such insurance as is required by applicable Laws and such other insurance, in
such amounts, of such types and against such risks, hazards, liabilities,
casualties and contingencies as are usually insured against in the same
geographic areas by business entities engaged in the same or similar business.
Without limiting the generality of the foregoing, each of the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma will keep adequately insured all of its property against loss
or damage resulting from fire or other risks insured against by extended
coverage and maintain public liability insurance against claims for personal
injury, death or property damage occurring upon, in or about any properties
occupied or controlled by it, or arising in any manner out of the businesses
carried on by it, all in such amounts not less than the Agent shall reasonably
determine from time to time.
(b) Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma shall deliver to the Agent on the Closing Date (and thereafter on each
date there is a material change in the insurance coverage) a certificate of a
Responsible Officer of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, as applicable,
containing a detailed list of the insurance then in effect and stating the names
of the insurance companies, the types, the amounts and rates of the insurance,
dates of the expiration thereof and the properties and risks covered thereby.
Within thirty (30) days after notice in writing from the Agent, the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will obtain such additional insurance as the Agent may
reasonably request.
6.1.8 TAXES.
Except to the extent that the validity or amount thereof
is being contested in good faith and by appropriate proceedings, each of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will pay and discharge all Taxes prior to
the date when any interest or penalty would accrue for
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the nonpayment thereof. The Agent agrees that the failure of any of Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma to pay and discharge Taxes in an amount not greater
than Fifty Thousand Dollars ($50,000), individually or in the aggregate, shall
not constitute a violation of this Section 6.1.8. Each of the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma shall furnish to the Agent at such times as the Agent may
require proof reasonably satisfactory to the Agent of the making of payments or
deposits required by applicable Laws including, without limitation, payments or
deposits with respect to amounts withheld by any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇
and Fantasma from wages and salaries of employees and amounts contributed by any
of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma on account of federal and other
income or wage taxes and amounts due under the Federal Insurance Contributions
Act, as amended.
6.1.9 ERISA.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will, and
will cause each of its Affiliates which is a Corporate Guarantor to, comply with
the funding requirements of ERISA with respect to employee pension benefit plans
for its respective employees. Upon the Agent's request, the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma will deliver to the Agent a copy of the most recent actuarial
report, financial statements and annual report completed with respect to any
"defined benefit plan", as defined in ERISA.
6.1.10 NOTIFICATION OF EVENTS OF DEFAULT AND ADVERSE
DEVELOPMENTS.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall
promptly notify the Agent upon obtaining knowledge of the occurrence of:
(a) any Event of Default;
(b) any Default;
(c) any litigation instituted or threatened
against any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma and of the entry of any
judgment or Lien (other than any Permitted Liens) against any of the assets or
properties of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma where the claims
against any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma exceed One Million Dollars
($1,000,000) and are not covered by insurance;
(d) any event, development or circumstance whereby
the financial statements furnished hereunder fail in any material respect to
present fairly, in accordance with GAAP, the financial condition and operational
results of the Borrower and its Subsidiaries;
(e) any judicial, administrative or arbitral
proceeding pending against any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and
any judicial or administrative proceeding known by any of the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma to be threatened against any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇
and Fantasma which, if adversely decided, could have a Material Adverse Effect;
(f) the receipt by any of the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma of any notice, claim or demand from any Governmental
Authority which alleges that
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any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma is in violation of any of the
terms of, or has failed to comply with any applicable Laws regulating its
operation and business, including, but not limited to, the Occupational Safety
and Health Act and the Environmental Protection Act; provided that any such
violation would constitute a Material Adverse Effect; and
(g) any other development in the business or
affairs of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma which may have a
Material Adverse Effect; in each case describing in detail reasonably
satisfactory to the Agent the nature thereof and the action the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma propose to take with respect thereto.
6.1.11 HAZARDOUS MATERIALS; CONTAMINATION.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma agree to:
(a) give notice to the Agent immediately upon
acquiring knowledge of the presence of any Hazardous Materials or any Hazardous
Materials Contamination on any property owned, operated or controlled by any of
the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma or for which any of the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma is, or is claimed to be, responsible (provided that such
notice shall not be required for Hazardous Materials placed or stored on such
property in accordance with applicable Laws in the ordinary course (including,
without limitation, quantity) of Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and Fantasma's line
of business expressly described in this Agreement), with a full description
thereof;
(b) promptly comply with any Laws requiring the
removal, treatment or disposal of Hazardous Materials or Hazardous Materials
Contamination and provide the Agent with satisfactory evidence of such
compliance;
(c) provide the Agent, within thirty (30) days
after a demand by the Agent, with a bond, letter of credit or similar financial
assurance evidencing to the Agent's reasonable satisfaction that the necessary
funds are available to pay the cost of removing, treating, and disposing of such
Hazardous Materials or Hazardous Materials Contamination and discharging any
Lien which may be established as a result thereof on any property owned,
operated or controlled by any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma or for
which any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma is, or is claimed to be,
responsible; and
(d) as part of the Obligations, defend, indemnify
and hold harmless the Agent, each of the Lenders and each of their respective
agents, employees, trustees, successors and assigns from any and all claims
which may now or in the future (whether before or after the termination of this
Agreement) be asserted as a result of the presence of any Hazardous Materials or
any Hazardous Materials Contamination on any property owned, operated or
controlled by any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma for which any of
the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma is, or is claimed to be, responsible.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma acknowledges and agrees that
this indemnification shall survive the termination of this Agreement and the
Commitments and the payment and performance of all of the other Obligations.
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6.1.12 DISCLOSURE OF SIGNIFICANT TRANSACTIONS.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall
deliver to the Agent a written notice describing in detail each transaction by
it involving the purchase, sale, lease, or other acquisition or loss or casualty
to or disposition of an interest in Fixed or Capital Assets (other than displays
sold in the ordinary course of business), which exceeds Five Hundred Thousand
Dollars ($500,000.00), said notices to be delivered to the Agent within thirty
(30) days of the occurrence of each such transaction.
6.1.13 FINANCIAL COVENANTS.
(a) FIXED CHARGE COVERAGE RATIO. The Borrower and
its Subsidiaries on a consolidated basis will maintain, tested on the last
Business Day of each of the Borrower's fiscal quarters beginning on the last
Business Day of the fiscal quarter ending closest to December 31, 1998, for the
four (4) quarter period ending on such date, a Fixed Charge Coverage Ratio of
not less than the following:
--------------------------------------------------------
FISCAL QUARTER ENDING CLOSEST TO: RATIO
--------------------------------------------------------
December 31, 1998 through and 1.00 to 1.0
including September 30, 1999
--------------------------------------------------------
December 31, 1999 through and 1.20 to 1.0
including September 30, 2000
--------------------------------------------------------
December 31, 2000 through and 1.25 to 1.0
including September 30, 2001
--------------------------------------------------------
December 31, 2001 through and 1.30 to 1.0
including September 30, 2002
--------------------------------------------------------
December 31, 2002 through and 1.35 to 1.0
including September 30, 2003
--------------------------------------------------------
December 31, 2003 and thereafter 1.40 to 1.0
--------------------------------------------------------
(b) LEVERAGE RATIO. The Borrower and its
Subsidiaries on a consolidated basis will at all times maintain, tested as of
the last Business Day of each of Borrower's fiscal quarters beginning with the
fiscal quarter ending closest to December 31, 1998, as of the last day of each
of the Borrower's fiscal quarters for the four (4) quarter period ending on such
date, a ratio of Funded Debt to EBITDA so that it is not more than the
following:
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---------------------------------------------------------
FISCAL QUARTER ENDING CLOSEST TO: RATIO
---------------------------------------------------------
December 31, 1998 through and 6.20 to 1.0
including September 30, 1999
---------------------------------------------------------
December 31, 1999 through and 3.50 to 1.0
including September 30, 2000
---------------------------------------------------------
December 31, 2000 through and 3.25 to 1.0
including September 30, 2001
---------------------------------------------------------
December 31, 2001 through and 3.00 to 1.0
including September 30, 2002
---------------------------------------------------------
December 31, 2002 through and 2.75 to 1.0
including September 30, 2003
---------------------------------------------------------
December 31, 2003 and thereafter 2.50 to 1.0
(applicable if the Revolving Credit
Termination Date has not sooner
occurred)
---------------------------------------------------------
(c) EBITDA. The Borrower and its Subsidiaries on a
consolidated basis will maintain, tested on the last Business Day of each of the
Borrower's fiscal quarters beginning on the last Business Day of the fiscal
quarter ending closest to December 31, 1998 for the four (4) quarter period
ending on such date, EBITDA of not less than the following:
=========================================================
FISCAL QUARTER ENDING CLOSEST TO: AMOUNT
---------------------------------------------------------
December 31, 1998 $13,250,000
---------------------------------------------------------
March 31, 1999 $24,750,000
---------------------------------------------------------
June 30, 1999 $27,000,000
---------------------------------------------------------
September 30, 1999 $29,250,000
---------------------------------------------------------
December 31, 1999 $31,500,000
---------------------------------------------------------
Thereafter $34,000,000
---------------------------------------------------------
6.1.14 COLLECTION OF RECEIVABLES.
Until such time that the Agent shall notify the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma of the revocation of such privilege, the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall at their own expense have the privilege for the
account of, and in trust for, the Agent and the Lenders of collecting their
Receivables and receiving in respect thereto all Items of Payment and
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shall otherwise completely service all of the Receivables including (a) the
billing, posting and maintaining of complete records applicable thereto, (b) the
taking of such action with respect to the Receivables as the Agent may request
or in the absence of such request, as each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma may deem advisable; and (c) the granting, in the ordinary course of
business, to any Account Debtor, any rebate, refund or adjustment to which the
Account Debtor may be lawfully entitled, and may accept, in connection
therewith, the return of goods, the sale or lease of which shall have given rise
to a Receivable and may take such other actions relating to the settling of any
Account Debtor's claim as may be commercially reasonable. The Agent may, at its
option, at any time or from time to time after and during the continuance of a
Default hereunder, revoke the collection privilege given in this Agreement to
any one or more of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma by either giving
notice of its assignment of, and Lien on the Collateral to the Account Debtors
or giving notice of such revocation to the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma.
The Agent shall not have any duty to, and the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma hereby release the Agent and the Lenders from all claims of loss or
damage caused by the delay or failure to collect or enforce any of the
Receivables or to preserve any rights against any other party with an interest
in the Collateral. The Agent shall be entitled at any time and from time to time
to confirm and verify Receivables.
6.1.15 ASSIGNMENTS OF RECEIVABLES.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will
promptly, upon request, execute and deliver to the Agent written assignments, in
form and content acceptable to the Agent, of specific Receivables or groups of
Receivables; provided, however, the Lien and/or security interest granted to the
Agent, for the ratable benefit of the Lenders and for the benefit of the Agent
with respect to the Agent's Obligations, under this Agreement shall not be
limited in any way to or by the inclusion or exclusion of Receivables within
such assignments. Receivables so assigned shall secure payment of the
Obligations and are not sold to the Agent and/or the Lenders whether or not any
assignment thereof, which is separate from this Agreement, is in form absolute.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma agree that neither any assignment to the
Lender nor any other provision contained in this Agreement or any of the other
Financing Documents shall impose on the Agent or the Lenders any obligation or
liability of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma with respect to that
which is assigned and the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma hereby agree
jointly and severally to indemnify the Agent and the Lenders and hold the Agent
and the Lenders harmless from any and all claims, actions, suits, losses,
damages, costs, expenses, fees, obligations and liabilities which may be
incurred by or imposed upon the Agent and/or any of the Lenders by virtue of the
assignment of and Lien on any of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ or Fantasma's
rights, title and interest in, to, and under the Collateral.
6.1.16 GOVERNMENT ACCOUNTS.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will immediately
notify the Agent if any of the Receivables arise out of contracts with the
United States or with any other Governmental Authority, and, as appropriate,
execute any Instruments and take any steps required by the Agent in order that
all moneys due and to become due under such contracts shall be assigned to the
Agent, for the ratable benefit of the Lenders and for the benefit of the Agent
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with respect to the Agent's Obligations, and notice thereof given to the
Governmental Authority under the Federal Assignment of Claims Act or any other
applicable Laws.
6.1.17 INVENTORY.
With respect to the Inventory, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇
and Fantasma will: (a) as soon as possible upon demand by the Agent from time to
time, prepare and deliver to the Agent designations of Inventory specifying the
Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ or Fantasma's standard cost, which generally
represents average cost, of Inventory, and such other matters and information
relating to the Inventory as the Agent may reasonably request; (b) keep correct
and accurate records itemizing and describing the kind, type, quality and
quantity of Inventory, consistent with past practices, the Borrower's, ▇▇▇▇▇▇
▇▇▇▇▇'▇ or Fantasma's cost therefor and the selling price thereof, all of which
records shall be available to the officers, employees or agents of the Agent
upon demand for inspection and copying thereof; (c) except for Inventory located
with freight forwarders in the ordinary course of shipment, not store any
Inventory with a bailee, warehouseman or similar Person without the Agent's
prior written consent, which consent may be conditioned on, among other things,
delivery by the bailee, warehouseman or similar Person to the Agent of warehouse
receipts, in form acceptable to the Agent, in the name of the Agent evidencing
the storage of Inventory and the interests of the Agent and the Lenders therein;
and (d) permit the Agent and its agents or representatives to inspect and
examine the Inventory and to check and test the same as to quality, quantity,
value and condition at any time or times hereafter during the Borrower's, ▇▇▇▇▇▇
▇▇▇▇▇'▇ or Fantasma's usual business hours or at other reasonable times,
provided that, absent an Event of Default, the Agent shall take reasonable steps
not to interfere with the conduct of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ or
Fantasma's business except to the extent reasonably necessary to complete the
Agent's activities. The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall be permitted
to sell their Inventory in the ordinary course of business until the occurrence
of a Default or an Event of Default.
6.1.18 INSURANCE WITH RESPECT TO AND INVENTORY.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will (a) maintain
hazard insurance with fire and extended coverage and naming the Agent as an
additional insured with loss payable to the Agent as its respective interest may
appear on the Inventory in an amount at least equal to the lesser amount of the
outstanding principal amount of the Obligations or the fair market value of the
Inventory (but in any event sufficient to avoid any co-insurance obligations)
and with a specific endorsement to each such insurance policy pursuant to which
the insurer agrees to give the Agent at least thirty (30) days written notice
before any alteration or cancellation of such insurance policy and that no act
or default of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall affect the
right of the Agent to recover under such policy in the event of loss or damage;
(b) file with the Agent, upon its request, a detailed list of the insurance then
in effect and stating the names of the insurance companies, the amounts and
rates of the insurance, dates of the expiration thereof and the properties and
risks covered thereby; and (c) within thirty (30) days after notice in writing
from the Agent, obtain such additional insurance as the Agent may reasonably
request.
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6.1.19 CREDIT INSURANCE.
The Borrower and ▇▇▇▇▇▇ ▇▇▇▇▇ shall at all times
maintain, subject to the Lien of the Assignment of Credit Insurance, credit
insurance with a responsible insurer on insurance terms and other terms
substantially no less favorable than that credit insurance covered by the
Assignment of Credit Insurance on the date of this Agreement. No later than
thirty (30) days after the date of this Agreement, Fantasma shall obtain for its
accounts, and thereafter shall at all times maintain, subject to the Lien of the
Assignment of Credit Insurance, credit insurance with a responsible insurer on
insurance terms and other terms substantially no less favorable than the
Borrower's and ▇▇▇▇▇▇ ▇▇▇▇▇'▇ credit insurance covered by the Assignment of
Credit Insurance on the date of this Agreement.
6.1.20 MAINTENANCE OF THE COLLATERAL.
(a) The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will
maintain the Collateral in satisfactory order, saving and excepting ordinary
wear and tear, and will not permit anything to be done to the Collateral that
may materially impair the value thereof.
(b) The Agent, or an agent designated by the
Agent, shall be permitted to enter the premises of each of the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma and examine, audit and inspect the Collateral at any
reasonable time and from time to time without notice. Absent an Event of
Default, the Agent shall take reasonable steps not to interfere with the conduct
of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ or Fantasma's business except to the extent
reasonably necessary to complete the Agent's activities.
(c) The Agent shall not have any duty to, and the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma hereby release the Agent and the Lenders
from all claims of loss or damage caused by the delay or failure to collect or
enforce any of the Receivables or to, preserve any rights against any other
party with an interest in the Collateral.
6.1.21 DEFENSE OF TITLE AND FURTHER ASSURANCES.
At their expense, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma
will defend the title to the Collateral (and any part thereof), and will
immediately execute, acknowledge and deliver any financing statement, renewal,
affidavit, deed, assignment, continuation statement, security agreement,
certificate or other document which the Agent may require in order to perfect,
preserve, maintain, continue, protect and/or extend the Lien or security
interest granted to the Agent, for the ratable benefit of the Lenders and for
the benefit of the Agent with respect to the Agent's Obligations, under this
Agreement, under any of the other Financing Documents and the first priority of
that Lien, subject only to the Permitted Liens. The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma will from time to time do whatever the Agent may require by way of
obtaining, executing, delivering, and/or filing financing statements, landlords'
or mortgagees' waivers, notices of assignment and other notices and amendments
and renewals thereof and the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will take any
and all steps and observe such formalities as the Agent may require, in order to
create and maintain a valid Lien upon, pledge of, or security interest in, the
Collateral, subject to the Permitted Liens. The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma shall pay to the Agent on demand all taxes, costs and expenses incurred
by the Agent in connection with the preparation, execution, recording and filing
of any such document or instrument. To the
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extent that the proceeds of any of the Accounts or Receivables of the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma are expected to become subject to the control of, or in
the possession of, a party other than the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma or
the Agent, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall cause all such parties
to execute and deliver on the Closing Date security documents, financing
statements or other documents as requested by the Agent and as may be necessary
to evidence and/or perfect the security interest of the Agent, for the ratable
benefit of the Lenders and for the benefit of the Agent with respect to the
Agent's Obligations, in those proceeds. The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma
agree that a copy of a fully executed security agreement and/or financing
statement shall be sufficient to satisfy for all purposes the requirements of a
financing statement as set forth in Article 9 of the applicable Uniform
Commercial Code. Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma hereby
irrevocably appoints the Agent as the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and Fantasma's
attorney-in-fact, with power of substitution, in the name of the Agent or in the
name of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma or otherwise, for the use and
benefit of the Agent for itself and the Lenders, but at the cost and expense of
the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and without notice to the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, to execute and deliver any and all of the instruments
and other documents and take any action which the Lender may require pursuant to
the foregoing provisions of this Section 6.1.21.
6.1.22 BUSINESS NAMES; LOCATIONS.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will
notify the Agent not less than thirty (30) days prior to (a) any change in the
name under which the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma conducts its business,
(b) any change of the location of the chief executive office of the applicable
party, and (c) the opening of any new place of business or the closing of any
existing place of business, and any change in the location of the places where
the Collateral, or any part thereof, or the books and records, or any part
thereof, are kept.
6.1.23 SUBSEQUENT OPINION OF COUNSEL AS TO RECORDING
REQUIREMENTS.
In the event that any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma shall transfer its principal place of business or the office where it
keeps its records pertaining to the Collateral, upon the Agent's request the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma, as applicable, will provide to the Agent a
subsequent opinion of counsel as to the filing, recording and other requirements
with which the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma, as applicable, have complied
to maintain the Lien and security interest in favor of the Agent, for the
ratable benefit of the Lenders and for the benefit of the Agent with respect to
the Agent's Obligations, in the Collateral.
6.1.24 USE OF PREMISES AND EQUIPMENT.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma agree that until
the Obligations are fully paid and all of the Commitments and the Letters of
Credit have been terminated or have expired, the Agent (a) after and during the
continuance of a Default or an Event of Default, may use any of the Borrower's,
▇▇▇▇▇▇ ▇▇▇▇▇'▇ and Fantasma's owned or leased lifts, hoists, trucks and other
facilities or equipment for handling or removing the Collateral; and (b) shall
have, and is hereby granted, a right of ingress and egress to the places where
the Collateral is located, and may
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proceed over and through any of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and Fantasma's
owned or leased property.
6.1.25 PROTECTION OF COLLATERAL.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma agree that the
Agent may at any time following an Event of Default take such steps as the Agent
deems reasonably necessary to protect the interest of the Agent and the Lenders
in, and to preserve the Collateral, including, the hiring of such security
guards or the placing of other security protection measures as the Agent deems
appropriate, may employ and maintain at any of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇
and Fantasma's premises a custodian who shall have full authority to do all acts
necessary to protect the interests of the Agent and the Lenders in the
Collateral and may lease warehouse facilities to which the Agent may move all or
any part of the Collateral to the extent commercially reasonable. The Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma agree to cooperate fully with the Agent's efforts to
preserve the Collateral and will take such actions to preserve the Collateral as
the Agent may reasonably direct. All of the Agent's expenses of preserving the
Collateral, including any reasonable expenses relating to the compensation and
bonding of a custodian, shall part of the Enforcement Costs.
Section 6.2 NEGATIVE COVENANTS.
So long as any of the Obligations or the Commitments or Letters of
Credit therefor shall be outstanding hereunder, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma agree with the Agent and the Lenders that without the prior written
consent of the Agent:
6.2.1 CAPITAL STRUCTURE, MERGER, ACQUISITION OR SALE OF
ASSETS.
(a) None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma will enter into any merger or consolidation or amalgamation (other than
with another Obligor or Subsidiary), or windup or dissolve themselves (or suffer
any liquidation or dissolution) or enter into an Asset Disposition (except for
Permitted Asset Dispositions) or acquire all or substantially all the assets of
any Person (except for Permitted Acquisitions). Any consent of the Agent to an
Asset Disposition (other than a Permitted Asset Disposition) may be conditioned
on a specified use of the proceeds of disposition.
(b) Notwithstanding the provisions of subsection
(a) above, the Lenders agree that the Borrower may acquire all or a portion of
the member interest of Fantasma, or other ownership interests of a Subsidiary,
not owned by the Borrower.
(c) Notwithstanding the provisions of subsection
(a) above, the Lenders agreement to mergers, consolidations, reorganizations and
restructurings, and other circumstances permitted by Section 6.2.1(a), by and
among the Borrower, the other Obligors and/or Subsidiaries, shall be conditioned
upon the following: (i) the Lenders are given at least fifteen (15) days prior
written notice of any such proposed merger, consolidation, reorganization and
restructuring and such information with respect to such transaction as may be
reasonably requested by any of the Lenders, (ii) the merger, consolidation,
reorganization and/or restructuring would not otherwise constitute or give rise
to a Default or an Event of Default, (iii)
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the Borrower shall furnish such information as any of the Lenders may request to
reconcile any actual changes to the then most current financial statements of
the Borrower available to the Lenders and any actual and projected changes to
financial covenants under this Agreement and to the financial condition and
operations of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and each other member of
the AAi Group affected by any such merger, consolidation, reorganization or
restructuring, (iv) that the Lien of the Agent and the Lenders in the Collateral
shall continue without impairment, (v) each Obligor, and each successor to any
Obligor shall execute and deliver to the Agent any and all such confirmations,
ratifications, affirmations and such other agreements as the Agent may
reasonably request to confirm, reaffirm, preserve, ratify or validate the
Obligations and/or to preserve, maintain, protect or perfect any and all Liens
of the Agent and the Lenders, and (vi) the Agent shall be satisfied that the
closing and consummation of the proposed transaction will not have a Material
Adverse Effect.
6.2.2 SUBSIDIARIES.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will
create or acquire any Subsidiaries other than the Subsidiaries identified on the
Collateral Disclosure List, except (a) to the extent necessary to close and
consummate any merger, consolidation, reorganization, restructuring or other
circumstances permitted under the provisions of Section 6.2.1 (Capital
Structure, etc.) or (b) where upon such creation or acquisition all Accounts,
Inventory, Chattel Paper, Instruments, rights to non-exclusive use of Trademarks
in the disposition of the Inventory to which such Trademarks are attached and
any real property and fixtures acquired are pledged to the Lenders.
6.2.3 ISSUANCE OF STOCK.
None of the Obligors other than the Borrower, as
appropriate, will issue, or grant any option or right to purchase, any of its
capital stock, limited liability membership interest or partnership interests,
except to the extent necessary to close and consummate any merger,
consolidation, reorganization, restructuring, or other circumstances permitted
under the provisions of Section 6.2.1 (Capital Structure, etc.) and except for
the issuance or transfer of stock or interests such that the Borrower owns
(directly or indirectly) no less than fifty one percent (51%) of all such stock
or interests. The Borrower will not issue or grant any option or right to
purchase, any Disqualified Stock (as defined in the Indenture).
6.2.4 PURCHASE OR REDEMPTION OF SECURITIES, DISTRIBUTION
RESTRICTIONS; PAYMENT OF INDEBTEDNESS FOR BORROWED MONEY.
Except as permitted in Section 6.2.1 (Capital Structure,
etc.), ▇▇▇▇▇▇ ▇▇▇▇▇ will neither make any distribution by reduction of capital
or otherwise in respect of, any partnership or other equity interests in ▇▇▇▇▇▇
▇▇▇▇▇ nor set aside any funds for any such purpose, except for Permitted
Affiliate Distributions made at a time when there is no Event of Default. Except
for Permitted Affiliate Distributions made at a time when there is no Event of
Default, the Borrower, will not purchase, redeem or otherwise acquire any shares
of its capital stock or warrants now or hereafter outstanding, declare or pay
any dividends thereon (other than stock dividends), apply any of its property or
assets to the purchase, redemption or other retirement of, set apart any sum for
the payment of any dividends on, or for the purchase, redemption, or other
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retirement of, make any distribution by reduction of capital or otherwise in
respect of, any shares of any class of capital stock, or any warrants, make any
distribution to stockholders or set aside any funds for any such purpose, except
to the extent necessary to close and consummate a merger, consolidation,
reorganization, restructuring or other circumstances permitted by the provisions
of Section 6.2.1 (Capital Structure, etc.). In addition, the Borrower shall not
prepay, purchase or redeem any Indebtedness for Borrowed Money other than the
Obligations (except through the issuance of Exchange Notes for its Senior Notes
and except for Permitted Senior Note Purchases). Notwithstanding the foregoing,
and provided there shall exist no Default or Event of Default, the Borrower may
distribute to certain of its shareholders an amount sufficient to cover that
shareholder's actual tax liability due and payable as a result of income of the
Borrower that is attributed to such shareholder as a result of the Borrower
having been an S corporation under the Internal Revenue Code.
6.2.5 INDEBTEDNESS.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will
create, incur, assume or suffer to exist any Indebtedness for Borrowed Money,
except:
(a) the Obligations;
(b) accounts payable arising in the ordinary
course;
(c) Indebtedness secured by Permitted Liens;
(d) intercompany debt among the Borrower and its
Subsidiaries incurred in the ordinary course of business and not otherwise
prohibited by this Agreement and intercompany loans among the Borrower and its
Subsidiaries;
(e) the Senior Notes and any Subordinated
Indebtedness;
(f) Indebtedness of the Obligors existing on the
date hereof and reflected on the financial statements furnished pursuant to
Section 4.1.11 (Financial Condition);
(g) endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business;
(h) other Indebtedness in the aggregate not to
exceed $5,000,000; and
(i) Indebtedness incurred in connection with
Permitted Acquisitions.
6.2.6 INVESTMENTS, LOANS AND OTHER TRANSACTIONS.
Except for the Permitted Uses and except for Permitted
Senior Note Purchases, investments of one Obligor in another Obligor, and as
otherwise provided in this Agreement, none of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma will (a) make, assume, acquire or continue to hold any investment in
any real property (unless used in connection with their business
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and treated as a Fixed or Capital Asset of any Obligor) or any Person, whether
by stock purchase, capital contribution, acquisition of Indebtedness of such
Person or otherwise (including, without limitation, investments in any joint
venture or partnership), (b) guaranty or otherwise become contingently liable
for the Indebtedness or obligations of any Person (other than another Obligor),
or (c) make any loans or advances, or otherwise extend credit to any Person,
except:
(i) loans existing on the date of this
Agreement and reflected on the consolidated balance sheet of the
Borrower and its Subsidiaries furnished to the Agent;
(ii) loans made to officers or employees
under 401(k) and other qualified pension plans;
(iii) any advance to an officer or
employee of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma for
travel or other business expenses in the ordinary course of
business, provided that the aggregate amount of all such advances
by all of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma (taken as a
whole) outstanding at any time shall not exceed One Hundred
Thousand Dollars ($100,000);
(iv) the endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business;
(v) any investment in Cash Equivalents,
which are pledged to the Agent, for the ratable benefit of the
Lenders and for the benefit of the Agent with respect to the
Agent's Obligations, as collateral and security for the
Obligations;
(vi) trade credit extended to customers
in the ordinary course of business;
(vii) indebtedness permitted under
Section 6.2.5 (Indebtedness);
(viii) loans to shareholders partners and
limited liability company members evidencing Permitted Affiliate
Distributions;
(ix) Permitted Acquisitions; and
(x) acquisitions of investments in
connection with the bankruptcy or reorganization of customers and
suppliers.
6.2.7 CAPITAL EXPENDITURES.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will not,
directly or indirectly (by way of the acquisition of the securities of a Person
or otherwise), make any Capital Expenditures (excluding, however, any Buybacks
otherwise included as a Capital Expenditure) in
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the aggregate for the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma (taken as a whole) in
any fiscal year exceeding $10,000,000, except the purchase and sale/leaseback of
the Headquarter's Property.
6.2.8 SUBORDINATED INDEBTEDNESS.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will
make:
(a) any payment of principal of, or interest on,
any of the Subordinated Indebtedness, if a Default or an Event of Default then
exists hereunder or would result from such payment;
(b) any payment of the principal or interest due
on the Subordinated Indebtedness as a result of acceleration thereunder or a
mandatory prepayment thereunder;
(c) any amendment or modification of or supplement
to the documents evidencing or securing the Subordinated Indebtedness that would
accelerate payments, increase the principal amount or increase the interest rate
or other amounts payable thereunder; and
(d) payment of principal or interest on the
Subordinated Indebtedness other than when due (without giving effect to any
acceleration of maturity or mandatory prepayment) except that the Borrower may
offset the amount of any sums payable under the Subordinated Indebtedness
against amounts owed by the holders of the Subordinated Indebtedness.
6.2.9 LIENS.
Each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma agrees
that it (a) will not create, incur, assume or suffer to exist any Lien upon any
of its properties or assets, whether now owned or hereafter acquired, except for
Liens securing the Obligations and Permitted Liens, (b) will not agree to,
assume or suffer to exist any provision in any instrument or other document for
confession of judgment, cognovit or other similar right or remedy, (c) will not
allow or suffer to exist any Permitted Liens to be superior to Liens securing
the Obligations, (d) will not enter into any contracts for the consignment of
goods, will not execute or suffer the filing of any financing statements or the
posting of any signs giving notice of consignments, and will not, as a material
part of its business, engage in the sale of goods belonging to others, and (e)
will not allow or suffer to exist the failure of any Lien described in the
Security Documents to attach to, and/or remain at all times perfected on, any of
the property described in the Security Documents.
6.2.10 TRANSACTIONS WITH AFFILIATES.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will
enter into or participate in any transaction including, without limitation,
leases of real property (a) with any Affiliate (other than another Obligor),
except as permitted in Section 6.2.6 (Investments, etc.) and except in the
ordinary course on reasonable and arm's length basis and which does not
otherwise violate the provisions of this Agreement or the other Financing
Documents, or (b) except in the ordinary course of business, with the officers,
directors, employees and other representatives of
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any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, (c) except Permitted Uses, or
(d) existing real estate leases.
6.2.11 OTHER BUSINESSES.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will
engage directly or indirectly in any substantial respect in any business other
than the Line of Business.
6.2.12 ERISA COMPLIANCE.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma nor any
Commonly Controlled Entity shall: (a) engage in or permit any "prohibited
transaction" (as defined in ERISA); (b) cause any "accumulated funding
deficiency" as defined in ERISA and/or the Internal Revenue Code; (c) terminate
any pension plan in a manner which could result in the imposition of a Lien on
the property of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma pursuant to
ERISA; (d) terminate or consent to the termination of any Multi-employer Plan;
or (e) incur a complete or partial withdrawal with respect to any Multi-employer
Plan. The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will not permit with respect to
any employee benefit plan or plans covered by Title IV of ERISA (a) any
prohibited transaction or transactions under ERISA or the Internal Revenue Code,
which results, or may result, in any material liability of any of the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and/or any of their Affiliates which is a Guarantor,
or (b) any Reportable Event if, upon termination of the plan or plans with
respect to which one or more such Reportable Events shall have occurred, there
is or would be any material liability of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma and/or any of their Affiliates which is a guarantor to the PBGC.
6.2.13 PROHIBITION ON HAZARDOUS MATERIALS.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall
place, manufacture or store or permit to be placed, manufactured or stored any
Hazardous Materials on any property owned, operated or controlled by any of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma or for which any of the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma is responsible other than Hazardous Materials placed or
stored on such property in accordance with applicable Laws in the ordinary
course of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and Fantasma's business expressly
described in this Agreement.
6.2.14 METHOD OF ACCOUNTING; FISCAL YEAR.
(a) The Borrower shall not change the method of
accounting employed in the preparation of any financial statements furnished to
the Agent under the provisions of Section 6.1.1 (Financial Statements), unless
required to conform to GAAP or unless prior thereto the Borrower has given the
Agent no less than sixty (60) days prior written notice thereof and the
Borrower's, certified public accountants shall confirm the changes are in
accordance with GAAP, shall furnish such information as the Agent may request to
reconcile to the good faith satisfaction of the Agent the changes with the
Borrower's, prior financial statements, with the Borrowing Base, and with the
financial and other covenants under this Agreement, and the Agent and the
Borrower shall have entered into an agreement acknowledging the same.
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(b) The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will
not change their fiscal year from a year ending on the last Saturday of the
calendar year closest to December 31st.
6.2.15 COMPENSATION.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will pay
any bonuses, fees, compensation, commissions, salaries, drawing accounts, or
other payments (cash and non-cash), whether direct or indirect, to any
stockholders, partners or members of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma or any Affiliate of any of them, other than Permitted Affiliate
Distributions and reasonable compensation for actual services rendered by
partners, stockholders or Affiliates in their capacity as officers or employees,
except for reasonable compensation in transactions not prohibited by Section
6.2.10 (Transactions with Affiliates) and obligations under existing agreements
that have been previously disclosed to the Agent and the Lenders..
6.2.16 TRANSFER OF COLLATERAL.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will
transfer, or permit the transfer, to another location of any of the Collateral
or the books and records related to any of the Collateral, except to a place
where the Agent has previously perfected the security interest of the Agent and
the Lenders in the Collateral by filing of financing statements.
6.2.17 SALE AND LEASEBACK.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will
directly or indirectly enter into any arrangement to sell or transfer all or any
substantial part of its fixed assets and thereupon or within one year thereafter
rent or lease the assets so sold or transferred; provided, however, the
sale/leaseback of the Headquarter's Property is specifically permitted.
6.2.18 DISPOSITION OF COLLATERAL.
None of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma will
sell, discount, allow credits or allowances, transfer, assign, extend the time
for payment on, convey, lease, assign, transfer or otherwise dispose of the
Collateral, except, prior to an Event of Default, Permitted Asset Dispositions,
other dispositions expressly permitted elsewhere in this Agreement, the sale of
Inventory (including, without limitation, the liquidation of slow moving and
obsolete Inventory) in the ordinary course of business.
ARTICLE VII
DEFAULT AND RIGHTS AND REMEDIES
Section 7.1 EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default" under the provisions of this Agreement:
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7.1.1 FAILURE TO PAY.
The failure of the Borrower to pay any of the Obligations
as and when due and payable in accordance with the provisions of this Agreement,
the Notes and/or any of the other Financing Documents, and, except in the case
of the failure make any payment of principal and in the case of the failure to
pay any Obligation at its maturity (whether by acceleration or otherwise), such
failure continues uncured for a period of five (5) days;
7.1.2 BREACH OF REPRESENTATIONS AND WARRANTIES.
Any representation or warranty made in this Agreement or
in any report, statement, schedule, certificate, opinion (including any opinion
of counsel for the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma), financial statement or
other document furnished in connection with this Agreement, any of the other
Financing Documents, or the Obligations, shall prove to have been false or
misleading when made (or, if applicable, when reaffirmed) in any material
respect.
7.1.3 FAILURE TO COMPLY WITH COVENANTS.
The failure of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma to
perform, observe or comply with any covenant, condition or agreement contained
in this Agreement and, only with respect to a failure under Sections 6.1.1(a)
(Recordkeeping), 6.1.3 (Existence), Section 6.1.4 (Compliance with Laws),
Section 6.1.5 (Preservation of Properties), Section 6.1.7(a) (Insurance),
Section 6.1.8 (Taxes) which does not relate to Taxes due or claimed to be due in
excess of $50,000 in the aggregate, Section 6.1.9 (ERISA), Section 6.1.7(a)
(Inventory), Section 6.1.18(a) (Insurance with Respect to Equipment and
Inventory) or Section 6.1.20(a) (Maintenance of the Collateral), if the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma after discovering such failure, fail to
diligently and continuously pursue the cure of such failure or such failure
continues uncured thirty (30) days after discovery.
7.1.4 DEFAULT UNDER OTHER FINANCING DOCUMENTS OR
OBLIGATIONS.
A default shall occur under any of the other Financing
Documents or under any other Obligations, and such default is not cured within
any applicable grace period provided therein.
7.1.5 RECEIVER; BANKRUPTCY.
Any of the Obligors or any general partner of any of the
Obligors shall (a) apply for or consent to the appointment of a receiver,
trustee or liquidator of itself or any of its property, (b) admit in writing its
inability to pay its debts as they mature, (c) make a general assignment for the
benefit of creditors, (d) be adjudicated a bankrupt or insolvent, (e) file a
voluntary petition in bankruptcy or a petition or an answer seeking or
consenting to reorganization or an arrangement with creditors or to take
advantage of any bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation law or statute, or an answer admitting the material
allegations of a petition filed against it in any proceeding under any such law,
or take corporate action for the purposes of effecting any of the foregoing, or
(f) by any act indicate its consent to, approval of or acquiescence in any such
proceeding or the appointment of any receiver of or trustee for any of its
property, or suffer any such receivership, trusteeship or proceeding to continue
undischarged for a period of ninety (90) days, or (g) by any act indicate its
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consent to, approval of or acquiescence in any order, judgment or decree by any
court of competent jurisdiction or any Governmental Authority enjoining or
otherwise prohibiting the operation of a material portion of any Obligor's, or
any general partner's business or the use or disposition of a material portion
of any Obligor's, or any general partner's assets.
7.1.6 INVOLUNTARY BANKRUPTCY, ETC.
(a) An order for relief shall be entered in any
involuntary case brought against any Obligor or any general partner of any
Obligor under the Bankruptcy Code, or (b) any such case shall be commenced
against any Obligor or any general partner of any Obligor and shall not be
dismissed within ninety (90) days after the filing of the petition, or (c) an
order, judgment or decree under any other Law is entered by any court of
competent jurisdiction or by any other Governmental Authority on the application
of a Governmental Authority or of a Person other than any Obligor or any general
partner of any Obligor (i) adjudicating any Obligor or any general partner of
any Obligor bankrupt or insolvent, or (ii) appointing a receiver, trustee or
liquidator of any Obligor or any general partners of any Obligor, or of a
material portion of any Obligor's or any general partner's of any Obligor's
assets, or (iii) enjoining, prohibiting or otherwise limiting the operation of a
material portion of any Obligor's or any general partner of any Obligor's
business or the use or disposition of a material portion of any Obligor's or any
general partner of any Obligor's assets, and such order, judgment or decree
continues unstayed and in effect for a period of thirty (30) days from the date
entered.
7.1.7 JUDGMENT.
Unless adequately insured in the opinion of the Agent,
the entry of a final judgment for the payment of money involving more than One
Million Dollars ($1,000,000) against any Obligor or any general partner of any
Obligor, and the failure by such Obligor or general partner to discharge the
same, or cause it to be discharged, within thirty (30) days from the date of the
order, decree or process under which or pursuant to which such judgment was
entered, or to secure a stay of execution pending appeal of such judgment.
7.1.8 EXECUTION; ATTACHMENT.
Any execution or attachment shall be levied against the
Collateral, or any part thereof, and such execution or attachment shall not be
set aside, discharged or stayed within forty-five (45) days after the same shall
have been levied.
7.1.9 DEFAULT UNDER OTHER BORROWINGS.
Default shall be made with respect to any Indebtedness
for Borrowed Money of any of the Obligors (other than the Loan) in excess of
$1,000,000 in the aggregate, if the effect of such default is to accelerate the
maturity of such Indebtedness for Borrowed Money or to permit the holder or
obligee thereof or other party thereto to cause such Indebtedness for Borrowed
Money to become due prior to its stated maturity.
7.1.10 CHALLENGE TO AGREEMENTS.
Any Obligor or any general partner of any Obligor shall
challenge the validity and binding effect of any provision of any of the
Financing Documents or shall state its
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intention to make such a challenge of any of the Financing Documents or any of
the Financing Documents shall for any reason (except to the extent permitted by
its express terms) cease to be effective or to create a valid and perfected
first priority Lien (except for Permitted Liens) on, or security interest in,
any of the Collateral purported to be covered thereby.
7.1.11 CHANGE IN OWNERSHIP.
Any change shall occur in the ownership of any of ▇▇▇▇▇▇
▇▇▇▇▇ or Fantasma, except as otherwise permitted by the provisions of Section
6.2.1 (Capital Structure, etc.), and except the acquisition of stock or other
ownership interests of Subsidiaries by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma.
7.1.12 LIQUIDATION, TERMINATION, DISSOLUTION, CHANGE IN
MANAGEMENT, ETC.
Any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma shall
liquidate, dissolve or terminate its existence except as permitted by 6.2.1
(Capital Structure, etc.) or as a result of the acquisition of stock or other
ownership interests of Subsidiaries by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ or Fantasma.
Section 7.2 REMEDIES.
Upon the occurrence of any Default or Event of Default, and in the event
such Default or Event of Default is not cured or otherwise remedied to the
satisfaction of the Requisite Lenders on or before such date the Agent exercises
any rights or remedies, the Agent may, in the exercise of its sole and absolute
discretion from time to time, and shall, at the direction of the Requisite
Lenders of the Lenders, at any time thereafter exercise any one or more of the
following rights, powers or remedies:
7.2.1 ACCELERATION.
The Agent may, and shall, at the direction of the
Requisite Lenders, declare any or all of the Obligations to be immediately due
and payable, notwithstanding anything contained in this Agreement or in any of
the other Financing Documents to the contrary, without presentment, demand,
protest, notice of protest or of dishonor, or other notice of any kind, all of
which the Obligors hereby waive.
7.2.2 FURTHER ADVANCES.
The Agent may, and shall, at the direction of the
Requisite Lenders, from time to time without notice to the Obligors suspend,
terminate or limit any further advances, loans or other extensions of credit
under the Commitment, under this Agreement and/or under any of the other
Financing Documents. Further, upon the occurrence of an Event of Default or
Default specified in Sections 7.1.5 (Receiver; Bankruptcy) or 7.1.6 (Involuntary
Bankruptcy, etc.) above, the Revolving Credit Commitments, the Letter of Credit
Commitments and any agreement in any of the Financing Documents to provide
additional credit and/or to issue Letters of Credit shall immediately and
automatically terminate and the unpaid principal amount of the Notes (with
accrued interest thereon) and all other Obligations then outstanding, shall
immediately become
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due and payable without further action of any kind and without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived
by the Obligors.
7.2.3 UNIFORM COMMERCIAL CODE.
The Agent shall have all of the rights and remedies of a
secured party under the applicable Uniform Commercial Code and other applicable
Laws. Upon demand by the Agent, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall
assemble the Collateral and make it available to the Agent, at a place
designated by the Agent. The Agent or its agents may without notice from time to
time enter upon any of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ or Fantasma's premises to
take possession of the Collateral, to remove it, to render it unusable, to
process it or otherwise prepare it for sale, or to sell or otherwise dispose of
it.
Any written notice of the sale, disposition or other
intended action by the Agent with respect to the Collateral which is sent in the
manner set forth in 0 (Notices), or such other address of the Obligors which may
from time to time be shown on the Agent's records, at least ten (10) days prior
to such sale, disposition or other action, shall constitute commercially
reasonable notice to the Obligors. The Agent may alternatively or additionally
give such notice in any other commercially reasonable manner. Nothing in this
Agreement shall require the Agent to give any notice not required by applicable
Laws.
If any consent, approval, or authorization of any state,
municipal or other Governmental Authority or of any other Person or of any
Person having any interest therein, should be necessary to effectuate any sale
or other disposition of the Collateral, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma
agree to execute all such applications and other instruments, and to take all
other action, as may be required in connection with securing any such consent,
approval or authorization.
7.2.4 SPECIFIC RIGHTS WITH REGARD TO COLLATERAL.
In addition to all other rights and remedies provided
hereunder or as shall exist at law or in equity from time to time, the Agent may
(but shall be under no obligation to), without notice to any of the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, and each of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma
hereby irrevocably appoints the Agent as its attorney-in-fact, with power of
substitution, in the name of the Agent and/or any or all of the Lenders and/or
in the name of any or all of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma or
otherwise, for the use and benefit of the Agent and the Lenders, but at the cost
and expense of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and without notice to the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma:
(a) request any Account Debtor obligated on any of
the Accounts to make payments thereon directly to the Agent, with the Agent
taking control of the cash and non-cash proceeds thereof;
(b) compromise, extend or renew any of the
Collateral or deal with the same as it may deem advisable;
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(c) make exchanges, substitutions or surrenders of
all or any part of the Collateral;
(d) copy, transcribe, or remove from any place of
business of any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma all books, records,
ledger sheets, correspondence, invoices and documents, relating to or evidencing
any of the Collateral or without cost or expense to the Agent or the Lenders,
make such use of any of the Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ or Fantasma's place(s) of
business as may be reasonably necessary to administer, control and collect the
Collateral;
(e) repair, alter or supply goods if necessary to
fulfill in whole or in part the purchase order of any Account Debtor;
(f) demand, collect, receipt for and give
renewals, extensions, discharges and releases of any of the Collateral;
(g) institute and prosecute legal and equitable
proceedings to enforce collection of, or realize upon, any of the Collateral;
(h) settle, renew, extend, compromise, compound,
exchange or adjust claims in respect of any of the Collateral or any legal
proceedings brought in respect thereof;
(i) endorse or sign the name of any of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma upon any Items of Payment, certificates of
title, Instruments, Securities, stock powers, documents, documents of title,
financing statements, assignments, notices or other writing relating to or part
of the Collateral and on any proof of claim in Bankruptcy against an Account
Debtor;
(j) notify the Post Office authorities to change
the address for the delivery of mail to the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma
to such address or Post Office Box as the Agent may designate and receive and
open all mail addressed to any of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma; and
(k) take any other action necessary or beneficial
to realize upon or dispose of the Collateral or to carry out the terms of this
Agreement.
7.2.5 APPLICATION OF PROCEEDS.
Any proceeds of sale or other disposition of the
Collateral will be applied by the Agent to the payment first of any and all
Agent's Obligations, then to any and all Enforcement Costs, and any balance of
such proceeds will be remitted to the Lenders in like currency and funds
received ratably in accordance with their respective Pro Rata Shares of such
balance. Each Lender shall apply any such proceeds received from the Agent to
its Obligations in such order and manner as such Lender shall determine. If the
sale or other disposition of the Collateral fails to fully satisfy the
Obligations, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall remain liable to the
Agent and the Lenders for any deficiency.
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7.2.6 PERFORMANCE BY AGENT.
If the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall fail to
pay the Obligations or otherwise fail to perform, observe or comply with any of
the conditions, covenants, terms, stipulations or agreements contained in this
Agreement or any of the other Financing Documents, the Agent without notice to
or demand upon the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and without waiving or
releasing any of the Obligations or any Default or Event of Default, may (but
shall be under no obligation to) at any time thereafter make such payment or
perform such act for the account and at the expense of the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma, and may enter upon the premises of the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma for that purpose and take all such action thereon as the
Agent may consider necessary or appropriate for such purpose and each of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma hereby irrevocably appoints the Agent as its
attorney-in-fact to do so, with power of substitution, in the name of the Agent,
in the name of any or all of the Lenders, or in the name of any or all of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma or otherwise, for the use and benefit of the
Agent, but at the cost and expense of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma
and without notice to the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma. All sums so paid
or advanced by the Agent together with interest thereon from the date of
payment, advance or incurring until paid in full at the Post-Default Rate and
all costs and expenses, shall be deemed part of the Enforcement Costs, shall be
paid by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma to the Agent on demand, and
shall constitute and become a part of the Agent's Obligations.
7.2.7 OTHER REMEDIES.
The Agent may from time to time proceed to protect or
enforce the rights of the Agent and/or any of the Lenders by an action or
actions at law or in equity or by any other appropriate proceeding, whether for
the specific performance of any of the covenants contained in this Agreement or
in any of the other Financing Documents, or for an injunction against the
violation of any of the terms of this Agreement or any of the other Financing
Documents, or in aid of the exercise or execution of any right, remedy or power
granted in this Agreement, the Financing Documents, and/or applicable Laws. The
Agent and each of the Lenders is authorized to offset and apply to all or any
part of the Obligations all moneys, credits and other property of any nature
whatsoever of any or all of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma now or at
any time hereafter in the possession of, in transit to or from, under the
control or custody of, or on deposit with, the Agent, any of the Lenders or any
Affiliate of the Agent or any of the Lenders.
Section 7.3 CONSENT.
For purposes of the affirmative and negative covenants set forth in
ARTICLE VI (Covenants of the Borrower), except for compliance with Section
6.1.13 (Financial Covenants), the Agent and the Lenders, by their execution of
this Agreement, consent to the events, circumstances and transactions expressly
set forth in the Preliminary Offering Memorandum dated June 24, 1998 by the
Borrower.
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ARTICLE VIII
THE AGENT
Section 8.1 APPOINTMENT.
Each Lender hereby designates and appoints NationsBank as its agent
under this Agreement and the Financing Documents, and each Lender hereby
irrevocably authorizes the Agent to take such action or to refrain from taking
such action on its behalf under the provisions of this Agreement and the
Financing Documents and to exercise such powers as are set forth herein or
therein, together with such other powers as are reasonably incidental thereto.
The Agent agrees to act as such on the express conditions contained in this
ARTICLE VIII. The provisions of this ARTICLE VIII are solely for the benefit of
the Agent and the Lenders and neither the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma
nor any Person shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Agent shall act solely as an administrative representative of the Lenders
and does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for the Lenders, the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma or any Person. The Agent may perform any of its duties
hereunder, or under the Financing Documents, by or through its agents or
employees.
Section 8.2 NATURE OF DUTIES.
8.2.1 IN GENERAL.
The Agent shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
Financing Documents. The duties of the Agent shall be mechanical and
administrative in nature. The Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender. Each Lender shall make its own
independent investigation of the financial condition and affairs of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma in connection with the extension of credit
hereunder and shall make its own appraisal of the credit worthiness of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, and the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the Closing Date or at any time or times thereafter,
except as expressly set forth in Section 8.13 (Dissemination of Information). If
the Agent seeks the consent or approval of any of the Lenders to the taking or
refraining from taking of any action hereunder, then the Agent shall send notice
thereof to each Lender. The Agent shall promptly notify each Lender any time
that the applicable percentage of the Lenders have instructed the Agent to act
or refrain from acting pursuant hereto.
8.2.2 EXPRESS AUTHORIZATION.
The Agent is hereby expressly and irrevocably authorized
by each of the Lenders, as agent on behalf of itself and the other Lenders:
(a) To receive on behalf of each of the Lenders
any payment or collection on account of the Obligations and to distribute to
each Lender its Pro Rata Share of all such payments and collections so received
as provided in this Agreement;
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(b) To receive all documents and items to be
furnished to the Lenders under the Financing Documents (nothing contained herein
shall relieve the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma of any obligation to
deliver any item directly to the Lenders to the extent expressly required by the
provisions of this Agreement);
(c) To act or refrain from acting in this
Agreement and in the other Financing Documents with respect to those matters so
designated for the Agent;
(d) To act as nominee for and on behalf of the
Lenders in and under this Agreement and the other Financing Documents;
(e) To arrange for the means whereby the funds of
the Lenders are to be made available to the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma;
(f) To distribute promptly to the Lenders, if
required by the terms of this Agreement, all written information, requests,
notices, Loan Notices, payments, Prepayments, documents and other items received
from the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma or other Person;
(g) To amend, modify, or waive any provisions of
this Agreement or the other Financing Documents on behalf of the Lenders subject
to the requirement that certain of the Lenders' consent be obtained in certain
instances as provided in 0 (Circumstances Where Consent Required);
(h) To deliver to the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma and other Persons, all requests, demands, approvals, notices, and
consents received from any of the Lenders;
(i) To exercise on behalf of each Lender all
rights and remedies of the Lenders upon the occurrence of any Event of Default
and/or Default specified in this Agreement and/or in any of the other Financing
Documents or applicable Laws;
(j) To execute any of the Security Documents and
any other documents on behalf of the Lenders as the secured party for the
benefit of the Agent and the Lenders; and
(k) To take such other actions as may be requested
by the Requisite Lenders.
Section 8.3 RIGHTS, EXCULPATION, ETC.
Neither the Agent nor any of its officers, directors, employees or
agents shall be liable to any Lender for any action taken or omitted by them
hereunder or under any of the Financing Documents, or in connection herewith or
therewith, except that the Agent shall be obligated on the terms set forth
herein for performance of its express obligations hereunder, and except that the
Agent shall be liable with respect to its own gross negligence or willful
misconduct. The Agent shall not be liable for any apportionment or distribution
of payments made by it in good faith and
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if any such apportionment or distribution is subsequently determined to have
been made in error the sole recourse of any Lender to whom payment was due but
not made, shall be to recover from other the Lenders any payment in excess of
the amount to which they are determined to be entitled (and such other Lenders
hereby agree to return to such Lender any such erroneous payments received by
them). The Agent shall not be responsible to any Lender for any recitals,
statements, representations or warranties herein or for the execution,
effectiveness, genuineness, validity, enforceability, collectible, or
sufficiency of this Agreement or any of the Financing Documents or the
transactions contemplated thereby, or for the financial condition of any Person.
The Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any of the Financing Documents or the financial condition of any
Person, or the existence or possible existence of any Default or Event of
Default. The Agent may at any time request instructions from the Lenders with
respect to any actions or approvals which by the terms of this Agreement or of
any of the Financing Documents the Agent is permitted or required to take or to
grant, and the Agent shall be absolutely entitled to refrain from taking any
action or to withhold any approval and shall not be under any liability
whatsoever to any Person for refraining from any action or withholding any
approval under any of the Financing Documents until it shall have received such
instructions from the applicable percentage of the Lenders. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the Agent
as a result of the Agent acting or refraining from acting under this Agreement
or any of the other Financing Documents in accordance with the instructions of
the applicable percentage of the Lenders and notwithstanding the instructions of
the Lenders, the Agent shall have no obligation to take any action if it, in
good faith believes that such action exposes the Agent to any liability.
Section 8.4 RELIANCE.
The Agent shall be entitled to rely upon any written notices,
statements, certificates, orders or other documents or any telephone message or
other communication (including any writing, telex, telecopy or telegram)
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person, and with respect to all matters pertaining to
this Agreement or any of the Financing Documents and its duties hereunder or
thereunder, upon advice of counsel selected by it. The Agent may deem and treat
the original Lenders as the owners of the respective Notes for all purposes
until receipt by the Agent of a written notice of assignment, negotiation or
transfer of any interest therein by the Lenders in accordance with the terms of
this Agreement. Any interest, authority or consent of any holder of any of the
Notes shall be conclusive and binding on any subsequent holder, transferee, or
assignee of such Notes. The Agent shall be entitled to rely upon the advice of
legal counsel, independent accountants, and other experts selected by the Agent
in its sole discretion.
Section 8.5 INDEMNIFICATION.
Each Lender, severally, agrees to reimburse and indemnify the Agent for
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances or disbursements including,
without limitation, Enforcement Costs, of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of this Agreement or any of the Financing Documents
or any
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action taken or omitted by the Agent under this Agreement for any of the
Financing Documents, in proportion to each Lender's Pro Rata Share, all of the
foregoing as they may arise, be asserted or be imposed from time to time;
provided, however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements resulting from the Agent's gross
negligence or willful misconduct. The obligations of the Lenders under this
Section 8.5 shall survive the payment in full of the Obligations and the
termination of this Agreement.
Section 8.6 NATIONSBANK INDIVIDUALLY.
With respect to its Commitments and the Loan made by it, and the Notes
issued to it, NationsBank shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and to the
extent set forth herein for any other Lender. The terms "the Lenders" or
"Requisite Lenders" or any similar terms shall, unless the context clearly
otherwise indicates, include NationsBank in its individual capacity as a Lender
or one of the Requisite Lenders. NationsBank and its Affiliates may lend money
to, accept deposits from and generally engage in any kind of banking, trust or
other business with the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, any Affiliate of
any of them, or any other Person or any of their officers, directors and
employees as if NationsBank were not acting as the Agent pursuant hereto and the
Agent may accept fees and other consideration from the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇
and Fantasma, any Affiliate of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma or any of
their officers, directors and employees (in addition to the Agency Fees or other
arrangements fees heretofore agreed to between the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma and the Agent) for services in connection with this Agreement or
otherwise without having to account for or share the same with the Lenders.
Section 8.7 SUCCESSOR AGENT.
8.7.1 RESIGNATION.
The Agent may resign from the performance of all its
functions and duties hereunder at any time by giving at least thirty (30)
Business Days' prior written notice to the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma
and the Lenders. Such resignation shall take effect upon the acceptance by a
successor Agent of appointment pursuant to Section 8.7.2 (Appointment of
Successor) or as otherwise provided below.
8.7.2 APPOINTMENT OF SUCCESSOR.
Upon any such notice of resignation pursuant to Section
8.7.1 (Resignation), the Requisite Lenders shall appoint a successor to the
Agent. If a successor to the Agent shall not have been so appointed within said
thirty (30) Business Day period, the Agent retiring, upon notice to the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, shall then appoint a successor Agent who
shall serve as the Agent until such time, as the Requisite Lenders appoint a
successor the Agent as provided above.
8.7.3 SUCCESSOR AGENT.
Upon the acceptance of any appointment as the Agent under
the Financing Documents by a successor Agent, such successor to the Agent shall
thereupon succeed to and
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become vested with all the rights, powers, privileges and duties of the Agent
retiring, and the Agent retiring shall be discharged from its duties and
obligations under the Financing Documents. After any Agent's resignation as the
Agent under the Financing Documents, the provisions of this ARTICLE VIII shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Agent under the Financing Documents.
Section 8.8 COLLATERAL MATTERS.
8.8.1 RELEASE OF COLLATERAL.
The Lenders hereby irrevocably authorize the Agent, at
its option and in its discretion, to release any Lien granted to or held by the
Agent upon any property covered by this Agreement or the Financing Documents:
(a) upon termination of the Commitments and
payment and satisfaction of all Obligations;
(b) constituting property being sold or disposed
of if the Borrower certifies to the Agent that the sale or disposition is made
in compliance with the provisions of this Agreement (and the Agent may rely in
good faith conclusively on any such certificate, without further inquiry);
(c) constituting property leased to the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma under a lease which has expired or been terminated in
a transaction permitted under this Agreement or is about to expire and which has
not been, and is not intended by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma to be,
renewed or extended; or
(d) constituting property covered by Permitted
Liens with lien priority superior to those Liens in favor or for the benefit of
the Lenders.
In addition during any fiscal year of the Borrower (x)
the Agent may release Collateral having a book value of not more than 5% of the
book value of all Collateral, (y) the Agent, with the consent of Requisite
Lenders, may release Collateral having a book value of not more than 25% of the
book value of all Collateral and (z) the Agent, with the consent of the Lenders
having 90% of (i) the Commitments and (ii) the Loan, may release all the
Collateral.
8.8.2 CONFIRMATION OF AUTHORITY, EXECUTION OF RELEASES.
Without in any manner limiting the Agent's authority to
act without any specific or further authorization or consent by the Lenders as
set forth in Section 8.8.1 (Release of Collateral), each Lender agrees to
confirm in writing, upon request by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, the
authority to release any property covered by this Agreement or the Financing
Documents conferred upon the Agent under Section 8.8.1 (Release of Collateral).
So long as no Event of Default is then continuing, upon receipt by the Agent of
confirmation from the requisite percentage of the Lenders, of its authority to
release any particular item or types of property covered by this Agreement or
the Financing Documents, and upon at least five (5) Business Days prior written
request by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, the Agent shall (and is
hereby irrevocably authorized by the Lenders to) execute such documents as may
be necessary to
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evidence the release of the Liens granted to the Agent for the benefit of the
Lenders herein or pursuant hereto upon such Collateral; PROVIDED, HOWEVER, that
(i) the Agent shall not be required to execute any such document on terms which,
in the Agent's opinion, would expose the Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations of
any Person, in respect of), all interests retained by any Person, including,
without limitation, the proceeds of any sale, all of which shall continue to
constitute part of the property covered by this Agreement or the Financing
Documents.
8.8.3 ABSENCE OF DUTY.
The Agent shall have no obligation whatsoever to any
Lender, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma or any other Person to assure
that the property covered by this Agreement or the Financing Documents exists or
is owned by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma or is cared for, protected
or insured or has been encumbered or that the Liens granted to the Agent on
behalf of the Lenders herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
the Agent in this Section 8.8.3 (Absence of Duty) or in any of the Financing
Documents, it being understood and agreed that in respect of the property
covered by this Agreement or the Financing Documents or any act, omission or
event related thereto, the Agent may act in any manner it may deem appropriate,
in its discretion, given the Agent's own interest in property covered by this
Agreement or the Financing Documents as one of the Lenders and that the Agent
shall have no duty or liability whatsoever to any of the other the Lenders.
Section 8.9 AGENCY FOR PERFECTION.
Each Lender hereby appoints the Agent and each other Lender as agent for
the purpose of perfecting the Lenders' Liens in Collateral which, in accordance
with Article 9 of the Uniform Commercial Code in any applicable jurisdiction or
otherwise, can be perfected only by possession. Should any Lender (other than
the Agent) obtain possession of any such Collateral, such Lender shall notify
the Agent thereof, and, promptly upon the Agent's request therefor, shall
deliver such Collateral to the Agent or in accordance with the Agent's
instructions.
Section 8.10 EXERCISE OF REMEDIES.
Each Lender agrees that it will not have any right individually to
enforce or seek to enforce this Agreement or any Financing Document or to
realize upon any collateral security for the Loan, it being understood and
agreed that such rights and remedies may be exercised only by the Agent.
Section 8.11 CONSENTS.
(a) In the event the Agent requests the consent of
a Lender and does not receive a written denial thereof, or a written notice from
a Lender that due cause
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consideration of the request requires additional time, in each case, within ten
(10) Business Days after such Lender's receipt of such request, then such Lender
will be deemed to have given such consent.
(b) In the event the Agent requests the consent of
a Lender and such consent is denied, then NationsBank may, at its option,
require such Lender to assign its interest in the Loan to NationsBank for a
price equal to the then outstanding principal amount thereof PLUS accrued and
unpaid interest, fees and costs and expenses due such Lender under the Financing
Documents, which principal, interest, fees and costs and expenses will be paid
on the date of such assignment. In the event that NationsBank elects to require
any Lender to assign its interest to NationsBank, NationsBank will so notify
such Lender in writing within thirty (30) days following such Lender's denial,
and such Lender will assign its interest to NationsBank no later than five (5)
days following receipt of such notice.
Section 8.12 CIRCUMSTANCES WHERE CONSENT OF ALL OF THE LENDERS IS
REQUIRED.
Notwithstanding anything to the contrary contained herein, no amendment,
modification, change or waiver shall be effective without the consent of all of
the Lenders to:
(a) extend the maturity of the principal of, or
interest on, any Note or of any of the other Obligations;
(b) reduce the principal amount of any Note or of
any of the other Obligations or the rate of interest thereon, except as
expressly permitted therein;
(c) change the date of payment of principal of, or
interest on, any Note or of any of the other Obligations;
(d) change the method of calculation utilized in
connection with the computation of interest and Fees;
(e) change the manner of pro rata application by
the Agent of payments made by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, or any
other payments required hereunder or under the other Financing Documents;
(f) modify this Section, Section 8.8.1 (Release of
Collateral), Section 8.14 (Discretionary Advances) or the definition of
"Requisite Lenders";
(g) release or subordinate any material portion of
any Collateral or Financing Document (except to the extent provided herein or
therein); or
(h) change the definition of "Borrowing Base."
Additionally, no change may be made to the amount of a Lender's
Commitment or to the Lender's percentage of all Commitments without the prior
written consent of that Lender. Nothing in this Section 8.12 (Circumstances
Where Consent Required) is, however, intended to or shall imply any limitation
on the right of the Agent alone to exercise that discretion and
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otherwise to make those determinations provided for the Agent in the definitions
of "Eligible Inventory" and "Eligible Receivables" and provided for the Agent
elsewhere in this Agreement.
Section 8.13 DISSEMINATION OF INFORMATION.
The Agent will provide the Lenders with any information received by the
Agent from the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma which is required to be
provided to the Agent or to the Lenders hereunder; PROVIDED, HOWEVER, that the
Agent shall not be liable to any one or more the Lenders for any failure to do
so, except to the extent that such failure is attributable to the Agent's gross
negligence or willful misconduct.
Section 8.14 DISCRETIONARY ADVANCES.
The Agent may, in its sole discretion, make, for the account of the
Lenders on a pro rata basis, advances under the Revolving Loan of up to ten
percent (10%) in excess of the Borrowing Base but not in excess of the
limitation set forth in aggregate Revolving Credit Commitments for a period of
not more than thirty (30) consecutive days.
ARTICLE IX
MISCELLANEOUS
Section 9.1 NOTICES.
All notices, requests and demands to or upon the parties to this
Agreement shall be in writing and shall be deemed to have been given or made
when delivered by hand on a Business Day, or two (2) days after the date when
deposited in the mail, postage prepaid by registered or certified mail, return
receipt requested, or when sent by overnight courier, on the Business Day next
following the day on which the notice is delivered to such overnight courier,
addressed as follows:
Obligors: c/o AAi.FosterGrant, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
AAi.FosterGrant, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
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Agent: NATIONSBANK, N. A.
NationsBank Business Credit
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esquire
Miles & Stockbridge P. C.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Lenders: NATIONSBANK, N. A.
NationsBank Business Credit
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By written notice, each party to this Agreement may change the address to which
notice is given to that party, provided that such changed notice shall include a
street address to which notices may be delivered by overnight courier in the
ordinary course on any Business Day.
Section 9.2 AMENDMENTS; WAIVERS.
This Agreement and the other Financing Documents may not be amended,
modified, or changed in any respect except by an agreement in writing signed by
the Agent, the Requisite Lenders and the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma,
and to the extent provided in Section 8.12 (Circumstances Where Consent
Required) by an agreement in writing signed by all of the Lenders and the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma. No waiver of any provision of this
Agreement or of any of the other Financing Documents, nor consent to any
departure by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma therefrom, shall in any
event be effective unless the same shall be in writing. No course of dealing
between the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and the Agent and/or any of the
Lenders and no act or failure to act from time to time on the part of the Agent
and/or any of the Lenders shall constitute a waiver, amendment or modification
of any provision of this Agreement or any of the other Financing Documents or
any right or remedy under this Agreement, under any of the other Financing
Documents or under applicable Laws.
Without implying any limitation on the foregoing, and subject to the
provisions of Section 8.12 (Circumstances Where Consent Required):
(a) Any waiver or consent shall be effective only
in the specific instance, for the terms and purpose for which given, subject to
such conditions as the Agent may specify in any such instrument.
(b) No waiver of any Default or Event of Default
shall extend to any subsequent or other Default or Event of Default, or impair
any right consequent thereto.
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(c) No notice to or demand on the Borrower, ▇▇▇▇▇▇
▇▇▇▇▇ and Fantasma in any case shall entitle the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma to any other or further notice or demand in the same, similar or other
circumstance.
(d) No failure or delay by the Lender to insist
upon the strict performance of any term, condition, covenant or agreement of
this Agreement or of any of the other Financing Documents, or to exercise any
right, power or remedy consequent upon a breach thereof, shall constitute a
waiver, amendment or modification of any such term, condition, covenant or
agreement or of any such breach or preclude the Agent from exercising any such
right, power or remedy at any time or times.
(e) By accepting payment after the due date of any
amount payable under this Agreement or under any of the other Financing
Documents, the Agent shall not be deemed to waive the right either to require
prompt payment when due of all other amounts payable under this Agreement or
under any of the other Financing Documents, or to declare a default for failure
to effect such prompt payment of any such other amount.
Section 9.3 CUMULATIVE REMEDIES.
The rights, powers and remedies provided in this Agreement and in the
other Financing Documents are cumulative, may be exercised concurrently or
separately, may be exercised from time to time and in such order as the Agent
shall determine, subject to the provisions of this Agreement, and are in
addition to, and not exclusive of, rights, powers and remedies provided by
existing or future applicable Laws. In order to entitle the Agent to exercise
any remedy reserved to it in this Agreement, it shall not be necessary to give
any notice, other than such notice as may be expressly required in this
Agreement. Without limiting the generality of the foregoing and subject to the
terms of this Agreement, the Agent may:
(a) proceed against any one or more of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma with or without proceeding against any other
Person (including, without limitation, any one or more of the Corporate
Guarantors) who may be liable (by endorsement, guaranty, indemnity or otherwise)
for all or any part of the Obligations;
(b) proceed against any one or more of the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma with or without proceeding under any of the
other Financing Documents or against any Collateral or other collateral and
security for all or any part of the Obligations;
(c) without reducing or impairing the obligation
of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and without notice, release or
compromise with any guarantor or other Person liable for all or any part of the
Obligations under the Financing Documents or otherwise;
(d) without reducing or impairing the obligations
of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and without notice thereof: (i) fail
to perfect the Lien in any or all Collateral or to release any or all the
Collateral or to accept substitute Collateral, (ii) approve the making of
advances under the Revolving Loan under this Agreement, (iii) waive any
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provision of this Agreement or the other Financing Documents, (iv) exercise or
fail to exercise rights of set-off or other rights, or (v) accept partial
payments or extend from time to time the maturity of all or any part of the
Obligations.
Section 9.4 SEVERABILITY.
In case one or more provisions, or part thereof, contained in this
Agreement or in the other Financing Documents shall be invalid, illegal or
unenforceable in any respect under any Law, then without need for any further
agreement, notice or action:
(a) the validity, legality and enforceability of
the remaining provisions shall remain effective and binding on the parties
thereto and shall not be affected or impaired thereby;
(b) the obligation to be fulfilled shall be
reduced to the limit of such validity;
(c) if such provision or part thereof pertains to
repayment of the Obligations, then, at the sole and absolute discretion of the
Agent, all of the Obligations of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma to the
Agent and the Lenders shall become immediately due and payable; and
(d) if the affected provision or part thereof does
not pertain to repayment of the Obligations, but operates or would prospectively
operate to invalidate this Agreement in whole or in part, then such provision or
part thereof only shall be void, and the remainder of this Agreement shall
remain operative and in full force and effect.
Section 9.5 ASSIGNMENTS BY LENDERS.
Any Lender may, with the consent of the Agent (which consent shall not
be unreasonably withheld or denied), but without the consent of the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, assign to (x) if there shall exist no Event of
Default, any Financial Institution, other than those Financial Institutions
listed on SCHEDULE 9.5 attached hereto, or (y) if there shall exist an Event of
Default, any Financial Institution or other Person, other than those Financial
Institutions and Persons listed on SCHEDULE 9.5 attached hereto (each an
"Assignee" and collectively, the "Assignees") all or a portion of such Lender's
Pro Rata Share of the Commitments; provided that, (i) except as provided in item
(ii) below, after giving effect to such assignment, NationsBank or an Affiliate,
or a successor of either, shall be the collateral agent with respect to this
Agreement, NationsBank and each assignee must continue to hold a proportionate
share of the commitments at least equal to Five Million Dollars ($5,000,000),
and (ii) the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma may, for a period of ninety
(90) days after notice to the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma of an
assignment which does not meet the requirements of item (i), prepay all of the
Obligations without payment of the Early Termination Fee, but only if the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma have within thirty (30) days following
receipt of such notice, notified the Agent and the assigning Lender of the
Borrower's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and Fantasma's intention to do so. Upon request
following an assignment made in accordance with this Section, the Borrower,
▇▇▇▇▇▇
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Grant and Fantasma shall issue new Notes to the assigning Lender and its
Assignee reflecting such assignment, in exchange for the existing Note held by
the assigning Lender. Any Lender (other than NationsBank) which elects to make
such an assignment shall pay to the Agent, for the exclusive benefit of the
Agent, an administrative fee for processing each such assignment in the amount
of Three Thousand Five Hundred Dollars ($3,500.00). Such Lender and its Assignee
shall notify the Agent and the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma in writing of
the date on which the assignment is to be effective (the "Adjustment Date"). On
or before the Adjustment Date, the assigning Lender, the Agent, the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma and the respective Assignee shall execute and deliver
a written assignment agreement in a form acceptable to the Agent, which shall
constitute an amendment to this Agreement to the extent necessary to reflect
such assignment. In addition, notwithstanding the foregoing, any Lender may at
any time pledge all or any portion of such Lender's rights under this Agreement,
any of the Commitments or any of the Obligations to a Federal Reserve Bank.
Section 9.6 PARTICIPATIONS BY LENDERS.
Any Lender may at any time sell to one or more financial institutions
participating interests in any of such Lender's Obligations or Commitments;
provided, however, that (a) no such participation shall relieve such Lender from
its obligations under this Agreement or under any of the other Financing
Documents to which it is a party, (b) such Lender shall remain solely
responsible for the performance of its obligations under this Agreement and
under all of the other Financing Documents to which it is a party, and (c) the
Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Financing
Documents.
Section 9.7 DISCLOSURE OF INFORMATION BY LENDERS.
In connection with any sale, transfer, assignment or participation by
any Lender in accordance with Section 9.6 (Participations by Lenders) or Section
9.7 (Disclosure of Information), each Lender shall have the right to disclose to
any actual or potential purchaser, assignee, transferee or participant all
financial records, information, reports, financial statements and documents
obtained in connection with this Agreement and/or any of the other Financing
Documents or otherwise.
Section 9.8 SUCCESSORS AND ASSIGNS.
This Agreement and all other Financing Documents shall be binding upon
and inure to the benefit of the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma, the Agent
and the Lenders and their respective heirs, personal representatives, successors
and assigns, except that the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Agent and the Requisite Lenders of the Lenders.
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Section 9.9 CONTINUING AGREEMENTS.
All covenants, agreements, representations and warranties made by the
Obligors in this Agreement, in any of the other Financing Documents, and in any
certificate delivered pursuant hereto or thereto shall survive the making by the
Lenders of the Loan, the issuance of Letters of Credit by the Agent and the
execution and delivery of the Notes, shall be binding upon the Obligors
regardless of how long before or after the date hereof any of the Obligations
were or are incurred, and shall continue in full force and effect so long as any
of the Obligations are outstanding and unpaid. From time to time upon the
Agent's request, and as a condition of the release of any one or more of the
Security Documents, the Obligors and other Persons obligated with respect to the
Obligations shall provide the Agent with such acknowledgments and agreements as
the Agent may require to the effect that there exists no defenses, rights of
setoff or recoupment, claims, counterclaims, actions or causes of action of any
kind or nature whatsoever against the Agent, any or all of the Lenders, and/or
any of its or their agents and others, or to the extent there are, the same are
waived and released.
Section 9.10 ENFORCEMENT COSTS.
The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma agree to pay to the Agent on
demand all reasonable Enforcement Costs. Enforcement Costs shall be immediately
due and payable at the time advanced or incurred, whichever is earlier. Without
implying any limitation on the foregoing, the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and
Fantasma agree, as part of the Enforcement Costs, to pay upon demand any and all
stamp and other Taxes and fees payable or determined to be payable in connection
with the execution and delivery of this Agreement and the other Financing
Documents and to save the Agent and the Lenders harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
omission to pay any Taxes or fees referred to in this Section. The provisions of
this Section shall survive the execution and delivery of this Agreement, the
repayment of the other Obligations and shall survive the termination of this
Agreement.
Section 9.11 APPLICABLE LAW; JURISDICTION.
9.11.1 APPLICABLE LAW.
As a material inducement to the Agent and the Lenders to
enter into this Agreement, the Obligors acknowledge and agree that the Financing
Documents, including, this Agreement, shall be governed by the Laws of the
State, as if each of the Financing Documents and this Agreement had each been
executed, delivered, administered and performed solely within the State even
though for the convenience and at the request of the Obligors, one or more of
the Financing Documents may be executed elsewhere. The Agent and the Lenders
acknowledge, however, that remedies under certain of the Financing Documents
that relate to property outside the State may be subject to the laws of the
state in which the property is located.
9.11.2 SUBMISSION TO JURISDICTION.
The Obligors irrevocably submit to the jurisdiction of
any state or federal court sitting in the State over any suit, action or
proceeding arising out of or relating to this
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Agreement or any of the other Financing Documents. The Obligors irrevocably
waive, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Final
judgment in any such suit, action or proceeding brought in any such court shall
be conclusive and binding upon the Obligors and may be enforced in any court in
which the Obligors are subject to jurisdiction, by a suit upon such judgment,
provided that service of process is effected upon the Obligors in one of the
manners specified in this Section or as otherwise permitted by applicable Laws.
9.11.3 APPOINTMENT OF AGENT FOR SERVICE OF PROCESS.
The Obligors hereby irrevocably designate and appoint
Prentice Hall Corporation as the Obligors' authorized agent to receive on the
Obligors' behalf service of any and all process that may be served in any suit,
action or proceeding of the nature referred to in this Section in any state or
federal court sitting in the State. If such agent shall cease so to act, the
Obligors shall irrevocably designate and appoint without delay another such
agent in the State satisfactory to the Agent and shall promptly deliver to the
Agent evidence in writing of such other agent's acceptance of such appointment
and its agreement that such appointment shall be irrevocable.
9.11.4 CONSENT TO SERVICE OF PROCESS.
The Obligors hereby consent to process being served in
any suit, action or proceeding of the nature referred to in this Section by (a)
the mailing of a copy thereof by registered or certified mail, postage prepaid,
return receipt requested, to the Obligors at the Obligors' address designated in
or pursuant to Section 9.1 (Notices), and (b) serving a copy thereof upon the
agent, if any, designated and appointed by the Obligors as the Obligor's agent
for service of process by or pursuant to this Section. The Obligors irrevocably
agree that such service (y) shall be deemed in every respect effective service
of process upon the Obligors in any such suit, action or proceeding, and (z)
shall, to the fullest extent permitted by law, be taken and held to be valid
personal service upon the Obligors. Nothing in this Section shall affect the
right of the Agent to serve process in any manner otherwise permitted by law or
limit the right of the Agent otherwise to bring proceedings against the Obligors
in the courts of any jurisdiction or jurisdictions.
Section 9.12 DUPLICATE ORIGINALS AND COUNTERPARTS.
This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be deemed
to be an original and all taken together shall constitute but one and the same
instrument.
Section 9.13 HEADINGS.
The headings in this Agreement are included herein for convenience only,
shall not constitute a part of this Agreement for any other purpose, and shall
not be deemed to affect the meaning or construction of any of the provisions
hereof.
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Section 9.14 NO AGENCY.
Nothing herein contained shall be construed to constitute the Obligors
as the agent of the Agent or any of the Lenders for any purpose whatsoever or to
permit the Obligors to pledge any of the credit of the Agent or any of the
Lenders. Neither the Agent nor any of the Lenders shall be responsible or liable
for any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof.
Neither the Agent nor any of the Lenders shall, by anything herein or in any of
the Financing Documents or otherwise, assume any of the Obligors' obligations
under any contract or agreement assigned to the Agent and/or the Lenders, and
neither the Agent nor any of the Lenders shall be responsible in any way for the
performance by the Obligors of any of the terms and conditions thereof.
Section 9.15 DATE OF PAYMENT.
Should the principal of or interest on the Notes become due and payable
on other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and in the case of principal, interest shall be payable
thereon at the rate per annum specified in the Notes during such extension.
Section 9.16 ENTIRE AGREEMENT.
This Agreement is intended by the Agent, the Lenders and the Obligors to
be a complete, exclusive and final expression of the agreements contained
herein. Neither the Agent, the Lenders nor the Obligors shall hereafter have any
rights under any prior agreements pertaining to the matters addressed by this
Agreement but shall look solely to this Agreement for definition and
determination of all of their respective rights, liabilities and
responsibilities under this Agreement.
Section 9.17 WAIVER OF TRIAL BY JURY.
THE OBLIGORS, THE AGENT AND THE LENDERS HEREBY JOINTLY AND SEVERALLY
WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE OBLIGOR AND THE
AGENT AND/OR ANY OR ALL OF THE LENDERS MAY BE PARTIES, ARISING OUT OF OR IN ANY
WAY PERTAINING TO (A) THIS AGREEMENT, (B) ANY OF THE FINANCING DOCUMENTS, OR (C)
THE COLLATERAL. THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS
AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST
PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT.
This waiver is knowingly, willingly and voluntarily made by the
Obligors, the Agent and the Lenders, and the Obligors, the Agent and the Lenders
hereby represent that no representations of fact or opinion have been made by
any individual to induce this waiver of trial by jury or to in any way modify or
nullify its effect. The Obligors, the Agent and the Lenders further represent
that they have been represented in the signing of this Agreement and in the
making of this waiver by independent legal counsel, selected of their own free
will, and that they have had the opportunity to discuss this waiver with
counsel.
Section 9.18 LIABILITY OF THE AGENT AND THE LENDERS.
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The Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma hereby agree that neither the
Agent nor any of the Lenders shall be chargeable for any negligence, mistake,
act or omission of any accountant, examiner, agency or attorney employed by the
Agent and/or any of the Lenders in making examinations, investigations or
collections, or otherwise in perfecting, maintaining, protecting or realizing
upon any lien or security interest or any other interest in the Collateral or
other security for the Obligations, except for acts of willful misconduct or
gross negligence.
By inspecting the Collateral or any other properties of the Borrower,
▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma or by accepting or approving anything required to be
observed, performed or fulfilled by the Borrower, ▇▇▇▇▇▇ ▇▇▇▇▇ and Fantasma or
to be given to the Agent and/or any of the Lenders pursuant to this Agreement or
any of the other Financing Documents, neither the Agent nor any of the Lenders
shall be deemed to have warranted or represented the condition, sufficiency,
legality, effectiveness or legal effect of the same, and such acceptance or
approval shall not constitute any warranty or representation with respect
thereto by the Agent and/or the Lenders.
IN WITNESS WHEREOF, each of the parties hereto have executed and
delivered this Agreement under their respective seals as of the day and year
first written above.
WITNESS: AAI.FOSTERGRANT, INC. (formerly known as
Accessories Associates, Inc.)
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Seal)
------------------------- ------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
WITNESS: ▇▇▇▇▇▇ ▇▇▇▇▇ GROUP, L.P.
By: ▇▇▇▇▇▇▇ General, Inc.
General Partner
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Seal)
------------------------- -------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
WITNESS: FANTASMA LLC
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Seal)
------------------------- ------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Treasurer
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WITNESS OR ATTEST: F.G.G. INVESTMENTS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Seal)
------------------------- ------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Financial Officer
WITNESS OR ATTEST: THE ▇▇▇▇▇▇▇ COMPANY
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Seal)
------------------------- ------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Financial Officer
WITNESS OR ATTEST: ▇▇▇▇▇▇▇ GENERAL, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Seal)
------------------------- ------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Financial Officer
WITNESS OR ATTEST: ▇▇▇▇▇▇▇ HOLDINGS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Seal)
------------------------- ------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Financial Officer
WITNESS OR ATTEST: ▇▇▇▇▇▇ ▇▇▇▇▇ HOLDINGS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Seal)
------------------------- ------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Financial Officer
WITNESS OR ATTEST: O-RAY HOLDINGS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Seal)
------------------------- ------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Financial Officer
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WITNESS: NATIONSBANK, N.A.
in its capacity as Agent
/s/ ▇▇▇▇ ▇. Kliensmith By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (Seal)
------------------------- ------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
WITNESS: NATIONSBANK, N.A.
in its capacity as a Lender
/s/ ▇▇▇▇ ▇. Kliensmith By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (Seal)
------------------------- ------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
WITNESS OF ATTEST: LASALLE BUSINESS CREDIT, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇ By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (Seal)
------------------------- ---------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: First Vice President
WITNESS: PNC BUSINESS CREDIT
/s/ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (Seal)
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
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AGREED AND ACCEPTED
AAi COMPANY OF CANADA
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
AGREED AND ACCEPTED
AAi ▇▇▇▇▇▇ ▇▇▇▇▇ LIMITED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
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LIST OF EXHIBITS
A. Revolving Credit Note
B. Wire Transfer Procedures
C. Form of Compliance Certificate
D. Additional Obligor Joinder Supplement
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LIST OF SCHEDULES
Schedule 4.1.5 - No Conflicts
Schedule 4.1.10 - Litigation
Schedule 4.1.13 - Indebtedness for Borrowed Money
Schedule 4.1.18 - Employee Relations
Schedule 4.1.19 - Hazardous Materials
Schedule 4.1.20 - Permitted Liens
Schedule 4.1.22 - Business Names and Addresses
Schedule 5.1.4 - Consents, Licenses, Approvals, Etc.
Schedule 9.5 - Financial Institutions
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